[Federal Register Volume 78, Number 247 (Tuesday, December 24, 2013)]
[Proposed Rules]
[Pages 78071-78103]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-29817]



[[Page 78071]]

Vol. 78

Tuesday,

No. 247

December 24, 2013

Part VI





Environmental Protection Agency





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40 CFR Part 82





Protection of Stratospheric Ozone: Adjustments to the Allowance System 
for Controlling HCFC Production, Import and Export; Proposed Rule

Federal Register / Vol. 78 , No. 247 / Tuesday, December 24, 2013 / 
Proposed Rules

[[Page 78072]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 82

[EPA-HQ-OAR-2013-0263; FRL-9900-52-OAR]
RIN 2060-AR04


Protection of Stratospheric Ozone: Adjustments to the Allowance 
System for Controlling HCFC Production, Import and Export

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of proposed rulemaking.

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SUMMARY: EPA is seeking comment on options for adjusting the allowance 
system controlling United States consumption and production of 
hydrochlorofluorocarbons (HCFCs). Under Title VI of the Clean Air Act, 
EPA is required to phase out production and import of these chemicals 
in accordance with United States obligations under the Montreal 
Protocol on Substances that Deplete the Ozone Layer (Protocol). Under 
the Protocol and the Clean Air Act, total United States HCFC production 
and consumption is capped, and will be completely phased out by 2030. 
Beginning January 1, 2015, United States production and consumption of 
all HCFCs must be no more than ten percent of the established cap. 
Existing EPA regulations prohibit production and consumption of HCFC-22 
and HCFC-142b as of January 1, 2020. At that time, all other HCFC 
production and consumption must not exceed 0.5 percent of the cap, and 
is limited to use as a refrigerant in existing air conditioning and 
refrigeration equipment. Given these requirements, EPA is seeking 
comment on how best to implement the 2015 stepdown to no more than 10 
percent of the cap. Since the beginning of the HCFC phaseout program, 
the agency has tried to ensure a smooth transition out of HCFCs into 
non-ozone depleting alternatives. Essential to a smooth transition are 
the recycling and emissions reductions requirements mandated by section 
608 of the Clean Air Act. This proposal also includes a request for 
comment on potential changes to regulations promulgated under that 
authority, found in 40 CFR part 82 subpart F. In addition to taking 
comment on the implementation of phaseout requirements and proposed 
changes to section 608 regulations, the agency is also highlighting 
important Clean Air Act requirements that take effect in 2015, 
specifically the section 611 labeling requirements and the section 605 
restrictions on HCFC use and introduction into interstate commerce.

DATES: Comments on this notice of proposed rulemaking must be received 
on or before February 24, 2014, unless a public hearing is held. If a 
public hearing is held, comments must be received on or before March 
10, 2014. Any party requesting a public hearing must notify the contact 
listed below under FOR FURTHER INFORMATION CONTACT by 5 p.m. Eastern 
Daylight Time on January 8, 2014. If a public hearing is requested, the 
hearing will be held on January 23, 2014. If a hearing is held, it will 
take place at EPA headquarters in Washington, DC. EPA will post a 
notice on our Web site, www.epa.gov/ozone/strathome.html, announcing 
further information should a hearing take place.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2013-0263, by one of the following methods:
     www.regulations.gov: Follow the online instructions for 
submitting comments.
     Email: a-and-r-docket@epa.gov
     Mail: Docket  EPA-HQ-OAR-2013-0263, Air and 
Radiation Docket and Information Center, United States Environmental 
Protection Agency, Mail code: 6102T, 1200 Pennsylvania Avenue NW., 
Washington, DC 20460
     Hand Delivery: Docket EPA-HQ-OAR-2013-0263 Air 
and Radiation Docket at EPA West, 1301 Constitution Avenue NW., Room 
B108, Mail Code 6102T, Washington, DC 20004. Such deliveries are only 
accepted during the Docket's normal hours of operation, and special 
arrangements should be made for deliveries of boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2013-0263. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
www.regulations.gov, including any personal information provided, 
unless the comment includes information claimed to be Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statue. Do not submit information that you consider to be 
CBI or otherwise protected through www.regulations.gov or email. If you 
want to submit confidential comments, please send them to the 
individual listed in the FOR FURTHER INFORMATION CONTACT section. The 
www.regulations.gov Web site is an ``anonymous access'' system, which 
means EPA will not know your identity or contact information unless you 
provide it in the body of your comment. If you send an email comment 
directly to EPA without going through www.regulations.gov, your email 
address will be automatically captured and included as part of the 
comment that is placed in the public docket and made available on the 
Internet. If you submit an electronic comment, EPA recommends that you 
include your name and other contact information in the body of your 
comment and with any disk or CD-ROM you submit. If EPA cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, EPA may not be able to consider your comment. Electronic 
files should avoid the use of special characters, any form of 
encryption, and be free of any defects or viruses. For additional 
information about EPA's public docket, visit the EPA Docket Center 
homepage at www.epa.gov/epahome/dockets.htm.

FOR FURTHER INFORMATION CONTACT: Elizabeth Whiteley by telephone at 
(202) 343-9310 or by email at whiteley.elizabeth@epa.gov, or by mail at 
United States Environmental Protection Agency, Stratospheric Protection 
Division, Stratospheric Program Implementation Branch (6205J), 1200 
Pennsylvania Ave. NW., Washington DC, 20460. You may also visit the 
Ozone Protection Web site of EPA's Stratospheric Protection Division at 
www.epa.gov/ozone/strathome.html for further information about EPA's 
Stratospheric Ozone Protection regulations, the science of ozone layer 
depletion, and related topics.

SUPPLEMENTARY INFORMATION: Acronyms and Abbreviations. The following 
acronyms and abbreviations are used in this document.

ANPRM Advance Notice of Proposed Rulemaking
CAA Clean Air Act
CAAA Clean Air Act Amendments of 1990
CFC Chlorofluorocarbon
CFR Code of Federal Regulations
EPA Environmental Protection Agency
FR Federal Register
HCFC Hydrochlorofluorocarbon
HVACR Heating, Ventilating, Air Conditioning and Refrigeration
Montreal Protocol Montreal Protocol on Substances That Deplete the 
Ozone Layer
MOP Meeting of the Parties
MT Metric Ton
ODP Ozone Depletion Potential
ODS Ozone-Depleting Substance(s)
Party States and regional economic integration organizations that 
have consented to be bound by the Montreal Protocol on Substances 
That Deplete the Ozone Layer
RACA Request for Additional Consumption Allowances


[[Page 78073]]


    Organization of This Document. The following outline is provided to 
aid in locating information in this preamble.

I. General Information
    A. Does this action apply to me?
    B. What should I consider as I prepare my comments for EPA?
    1. Confidential Business Information (CBI)
    2. Tips for Preparing Your Comments
II. Background
    A. How does the Montreal Protocol Phase Out HCFCs?
    B. How do the Clean Air Act and EPA Regulations Phase Out HCFCs?
    C. What sections of the Clean Air Act apply to this rulemaking?
III. Clean Air Act Requirements That Begin in 2015
    A. Labeling Requirements in Section 611(c) and (d)
    B. Use and Sales Restriction in Section 605(a)
    1. What is EPA proposing for existing inventory of HCFC-225ca 
and HCFC-225cb?
    2. How is EPA planning to update regulations to account for 
recent changes to Section 605(a)?
    C. Step Down to 10 Percent of Montreal Protocol Baseline
IV. How Will EPA Determine Baselines for 2015-2019?
    A. Using Existing Baselines
    B. Consideration of Establishing Revised Baselines Using More 
Recent Production and Import Data
V. How is EPA developing allocation levels for each HCFC?
    A. How will EPA determine the HCFC-22 consumption allocation?
    1. Using a Linear Drawdown From 2014 Allocation Levels
    2. Determining the Allocation by Estimating Servicing Need and 
Then Accounting for Need That Can Be Met by Sources Other Than New 
Production
    3. Accounting for Existing HCFC-22 Inventory
    B. How will EPA determine the HCFC-22 production allocation?
    1. Allocate the Maximum Production Allocation Allowed Under the 
Cap
    2. Allocate Approximately the Same Number of Production 
Allowances as Consumption Allowances
    C. How will EPA determine the HCFC-142b allocation?
    D. How will EPA determine the HCFC-123 allocation?
    1. Allocate 100 Percent of HCFC-123 Consumption Baseline Through 
2019
    2. Allocate Less Than 100 Percent of HCFC-123 Consumption 
Baseline
    E. How will EPA determine the HCFC-124 allocation?
    F. How will EPA determine the HCFC-225ca/cb allocation?
    G. What is EPA proposing to do with the HCFC-141b exemption 
program?
    H. Other HCFCs That are Class II Controlled Substances
VI. What other adjustments to the HCFC allowance system is EPA 
considering?
    A. Will EPA consider banning dry-shipped HCFC-22 condensing 
units?
    B. How will EPA respond to requests for additional consumption 
allowances in 2020 and beyond?
    C. How might EPA maximize compliance with HCFC regulations?
VII. What modifications to Section 608 Regulations is EPA proposing?
    A. Overview of Current Reclamation Standards
    B. Benefits of Reclamation
    C. Regulatory Changes That EPA is Proposing Under Section 608 
Authority
    1. Adoption of AHRI 700-2012 Standards
    2. Notification to EPA if Change in Business, Management, 
Location or Contact Information
    3. Reporting and Recordkeeping Requirements
    4. Technical and Process Information Required in Reclaimer 
Certification Application
    5. Expanded End Product Testing Requirements
VIII. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and 
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act (RFA)
    D. Unfunded Mandates Reform Act
    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
    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations

I. General Information

 A. Does this action apply to me?

    This rule will affect the following categories:

--Industrial Gas Manufacturing entities (NAICS code 325120), including 
fluorinated hydrocarbon gas manufacturers and reclaimers;
--Other Chemical and Allied Products Merchant Wholesalers (NAICS code 
424690), including chemical gases and compressed gases merchant 
wholesalers;
--Air-Conditioning and Warm Air Heating Equipment and Commercial and 
Industrial Refrigeration Equipment Manufacturing entities (NAICS code 
333415), including air-conditioning equipment and commercial and 
industrial refrigeration equipment manufacturers;
--Air-Conditioning Equipment and Supplies Merchant Wholesalers (NAICS 
code 423730), including air-conditioning (condensing unit, compressors) 
merchant wholesalers;
--Electrical and Electronic Appliance, Television, and Radio Set 
Merchant Wholesalers (NAICS code 423620), including air-conditioning 
(room units) merchant wholesalers;
--Plumbing, Heating, and Air-Conditioning Contractors (NAICS code 
238220), including Central air-conditioning system and commercial 
refrigeration installation, HVACR contractors; and
--Refrigerant reclaimers, manufacturers of recovery/recycling equipment 
and refrigerant recovery/recycling equipment testing organizations.

This list is not intended to be exhaustive, but rather provides a guide 
for readers regarding the types of entities that could potentially be 
regulated by this action. Other types of entities not listed in this 
table could also be affected. To determine whether your facility, 
company, business organization, or other entity is regulated by this 
action, you should carefully examine these regulations. If you have 
questions regarding the applicability of this action to a particular 
entity, consult the person listed in the FOR FURTHER INFORMATION 
CONTACT section.

B. What should I consider as I prepare my comments for EPA?

1. Confidential Business Information (CBI)
    Do not submit CBI information to EPA through www.regulations.gov or 
a-and-r-docket@epa.gov. Submit CBI directly to the person listed in the 
FOR FURTHER INFORMATION CONTACT section. Clearly mark the part or all 
of the information that you claim to be CBI. For CBI information in a 
disk or CD ROM that you mail to EPA, mark the outside of the disk or CD 
ROM as CBI and then identify electronically within the disk or CD ROM 
the specific information that is claimed as CBI. In addition to one 
complete version of the comment that includes information claimed as 
CBI, a copy of the comment that does not contain the information 
claimed as CBI must be submitted for inclusion in the public docket. 
Information so marked will not be disclosed except in accordance with 
procedures set forth in 40 CFR part 2.
2. Tips for Preparing Your Comments
    When submitting comments, remember to:
     Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).

[[Page 78074]]

     Follow directions--The agency may ask you to respond to 
specific questions or organize comments by referencing a Code of 
Federal Regulations (CFR) part or section number.
     Explain why you agree or disagree, suggest alternatives 
and substitute language for your requested changes.
     Describe any assumptions and provide any technical 
information and/or data that you used.
     If you estimate potential costs or burdens, explain how 
you arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
     Provide specific examples to illustrate your concerns, and 
suggest alternatives.
     Explain your views as clearly as possible, avoiding the 
use of profanity or personal threats.
     Make sure to submit your comments by the comment period 
deadline identified.

II. Background

A. How does the Montreal Protocol phase out HCFCs?

    The Montreal Protocol on Substances that Deplete the Ozone Layer is 
the international agreement aimed at reducing and eventually 
eliminating the production and consumption of ozone-depleting 
substances (ODS). The United States was one of the original signatories 
to the 1987 Montreal Protocol, and ratified the Protocol on April 12, 
1988. Congress then enacted, and President George H.W. Bush signed into 
law, the Clean Air Act Amendments of 1990 (CAAA) to ensure that the 
United States could satisfy its obligations under the Montreal 
Protocol. Title VI of the Act (codified as 42 U.S.C. Chapter 85, 
Subchapter VI) is titled Stratospheric Ozone Protection; it includes 
restrictions on production, consumption, and use of ODS that are 
subject to acceleration if ``the Montreal Protocol is modified to 
include a schedule to control or reduce production, consumption, or use 
. . . more rapidly than the applicable schedule'' prescribed by the 
statute. Both the Montreal Protocol and the Clean Air Act (CAA) define 
consumption as production plus imports minus exports.
    In 1990, as part of the London Amendment to the Montreal Protocol, 
the Parties identified HCFCs as ``transitional substances'' to serve as 
temporary, lower ozone depletion potential (ODP) substitutes for 
chlorofluorocarbons (CFCs) and other ODS. EPA similarly viewed HCFCs as 
``important interim substitutes that will allow for the earliest 
possible phaseout of CFCs and other class I substances \1\'' (58 FR 
65026, December 10, 1993). In 1992, through the Copenhagen Amendment to 
the Montreal Protocol, the Parties created a detailed phaseout schedule 
for HCFCs, beginning with a cap on consumption for developed countries 
not operating under Article 5 of the Montreal Protocol (non-Article 5 
Parties), a schedule to which the United States adheres. The 
consumption cap for each non-Article 5 Party was set at 3.1 percent 
(later tightened to 2.8 percent) of a Party's CFC consumption in 1989, 
plus a Party's consumption of HCFCs in 1989 (weighted on an ODP basis). 
Based on this formula, the HCFC consumption cap for the United States 
was set at 15,240 ODP-weighted metric tons, effective January 1, 1996. 
This cap is the United States HCFC consumption baseline.
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    \1\ Class I refers to the controlled substances listed in 
appendix A to 40 CFR part 82 subpart A. Class II refers to the 
controlled substances listed in appendix B to 40 CFR part 82 subpart 
A; HCFCs are class II substances.
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    The 1992 Copenhagen Amendment created a schedule with graduated 
reductions and eventual phaseout of HCFC consumption (Copenhagen, 23-25 
November, 1992, Decision IV/4). The schedule for non-Article 5 Parties 
initially called for tighter consumption caps based on a Party's 
baseline, as follows: An annual consumption cap equal to 65 percent of 
baseline in 2004, 35 percent of baseline in 2010, 10 percent of 
baseline in 2015, and 0.5 percent of baseline in 2020, with a complete 
HCFC phaseout by 2030.
    The Copenhagen Amendment did not cap HCFC production. In 1999, the 
Parties created a cap on production for non-Article 5 Parties through 
an amendment to the Montreal Protocol agreed to at the Eleventh Meeting 
of the Parties (Beijing, 29 November-3 December 1999, Decision XI/5). 
The cap on production was set at the average of: (a) 1989 HCFC 
production plus 2.8 percent of 1989 CFC production, and (b) 1989 HCFC 
consumption plus 2.8 percent of 1989 CFC consumption. Based on this 
formula, the HCFC production cap for the United States was set at 
15,537 ODP-MT, effective January 1, 2004. This cap is the United States 
HCFC production baseline.
    To further protect human health and the environment, the Parties to 
the Montreal Protocol adjusted the Montreal Protocol's phaseout 
schedule for HCFCs at the 19th Meeting of the Parties in September 
2007. As a result of the 2007 Montreal Adjustment (reflected in 
Decision XIX/6),\2\ the United States and other non-Article 5 parties 
were obligated to reduce HCFC production and consumption to 25 percent 
of baseline by 2010, rather than 35 percent as previously required. The 
other milestones remain the same. The adjustment also resulted in a 
phaseout schedule for HCFC production that parallels the consumption 
phaseout schedule. All production and consumption for non-Article 5 
Parties must be phased out by 2030.
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    \2\ The adjustment entered into force and became binding for all 
Parties on May 14, 2008.
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    Decision XIX/6 also adjusted the provisions for Parties operating 
under paragraph 1 of Article 5, considered as developing countries 
under the Protocol: (1) To set HCFC production and consumption 
baselines based on the average 2009-2010 production and consumption, 
respectively; (2) to freeze HCFC production and consumption at those 
baselines in 2013; and (3) to add stepwise reductions to 90 percent of 
baseline by 2015, 65 percent by 2020, 32.5 percent by 2025, and an 
average of 2.5 percent for 2030-2039. All production and consumption 
for Article 5 Parties must be phased out by 2040.
    In addition, Decision XIX/6 adjusted Article 2F to allow non-
Article 5 Parties to produce ``up to 10 percent of baseline levels'' 
for export to Article 5 countries ``in order to satisfy basic domestic 
needs'' until 2020.\3\ Paragraph 14 of

[[Page 78075]]

Decision XIX/6 notes that no later than 2015, the Parties would 
consider ``further reduction of production for basic domestic needs'' 
in 2020 and beyond. Paragraph 3 of Decision XIX/6 contains the 
accelerated phaseout schedule, allowing consumption and production up 
to 0.5 percent of baseline from 2020-2030 for servicing needs only. 
Under paragraph 13 of Decision XIX/6, the Parties will review in 2015 
and 2025, respectively, the need for the ``servicing tails'' for 
Article 5 and non-Article 5 countries. The term ``servicing tail'' 
refers to an amount of HCFCs used to service existing equipment, such 
as certain types of air-conditioning and refrigeration appliances.
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    \3\ Paragraphs 4-6 of adjusted Article 2F read as follows:
     ``4. Each Party shall ensure that for the twelve-month period 
commencing on 1 January 2010, and in each twelve-month period 
thereafter, its calculated level of consumption of the controlled 
substances in Group I of Annex C does not exceed, annually, twenty-
five per cent of the sum referred to in paragraph 1 of this Article. 
Each Party producing one or more of these substances shall, for the 
same periods, ensure that its calculated level of production of the 
controlled substances in Group I of Annex C does not exceed, 
annually, twenty-five per cent of the calculated level referred to 
in paragraph 2 of this Article. However, in order to satisfy the 
basic domestic needs of the Parties operating under paragraph 1 of 
Article 5, its calculated level of production may exceed that limit 
by up to ten per cent of its calculated level of production of the 
controlled substances in Group I of Annex C as referred to in 
paragraph 2.
    5. Each Party shall ensure that for the twelve-month period 
commencing on 1 January 2015, and in each twelve-month period 
thereafter, its calculated level of consumption of the controlled 
substances in Group I of Annex C does not exceed, annually, ten per 
cent of the sum referred to in paragraph 1 of this Article. Each 
Party producing one or more of these substances shall, for the same 
periods, ensure that its calculated level of production of the 
controlled substances in Group I of Annex C does not exceed, 
annually, ten per cent of the calculated level referred to in 
paragraph 2 of this Article. However, in order to satisfy the basic 
domestic needs of the Parties operating under paragraph 1 of Article 
5, its calculated level of production may exceed that limit by up to 
ten per cent of its calculated level of production of the controlled 
substances in Group I of Annex C as referred to in paragraph 2.
    6. Each Party shall ensure that for the twelve-month period 
commencing on 1 January 2020, and in each twelve-month period 
thereafter, its calculated level of consumption of the controlled 
substances in Group I of Annex C does not exceed zero. Each Party 
producing one or more of these substances shall, for the same 
periods, ensure that its calculated level of production of the 
controlled substances in Group I of Annex C does not exceed zero. 
However:
     a. each Party may exceed that limit on consumption by up to 
zero point five per cent of the sum referred to in paragraph 1 of 
this Article in any such twelve-month period ending before 1 January 
2030, provided that such consumption shall be restricted to the 
servicing of refrigeration and air conditioning equipment existing 
on 1 January 2020;
    b. each Party may exceed that limit on production by up to zero 
point five per cent of the average referred to in paragraph 2 of 
this Article in any such twelve-month period ending before 1 January 
2030, provided that such production shall be restricted to the 
servicing of refrigeration and air conditioning equipment existing 
on 1 January 2020.''
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B. How do the Clean Air Act and EPA regulations phase out HCFCs?

    The Clean Air Act schedules for the phase out of HCFC production 
and consumption, and for the restriction of HCFC use, appear in Section 
605. The EPA has used its authority under Section 606 to accelerate 
those schedules. EPA regulations that apply to production and 
consumption of HCFCs are designed to enable the United States to meet 
the phaseout schedule under the Montreal Protocol.
    The United States has chosen to implement the Montreal Protocol 
phaseout schedule on a chemical-by-chemical basis. In 1992, 
environmental and industry groups petitioned EPA to implement the 
required phaseout by eliminating the most ozone-depleting HCFCs first. 
Based on data available at that time, EPA believed the United States 
could meet, and possibly exceed, the required Montreal Protocol 
reductions through a chemical-by-chemical phaseout that employed a 
``worst-first'' approach. In 1993, as authorized by section 606 of the 
CAA, EPA established a phaseout schedule that eliminated HCFC-141b 
first and would greatly restrict HCFC-142b and HCFC-22 next, followed 
by restrictions on all other HCFCs and ultimately a complete phaseout 
(58 FR 15014, March 18, 1993 and 58 FR 65018, December 10, 1993).
    On January 21, 2003, EPA promulgated regulations (68 FR 2820, 
January 21, 2003, subsequently referred to in this document as the 2003 
Final Rule) to ensure compliance with the first reduction milestone in 
the HCFC phaseout: the requirement that by January 1, 2004, the United 
States reduce HCFC consumption to 65 percent of baseline and freeze 
HCFC production. In the 2003 Final Rule, EPA established chemical-
specific consumption and production baselines for HCFC-141b, HCFC-22, 
and HCFC-142b for the initial regulatory period ending December 31, 
2009. Section 601(2) states that EPA may select ``a representative 
calendar year'' to serve as the company baseline for HCFCs. In the 2003 
Final Rule, EPA concluded that because the entities eligible for 
allowances had differing production and import histories, no single 
year was representative for all companies. Therefore, EPA assigned an 
individual consumption baseline year to each company by selecting its 
highest ODP-weighted consumption year from 1994 through 1997. EPA 
assigned individual production baseline years in the same manner. EPA 
also provided for new entrants that began importing after the end of 
1997 but before April 5, 1999, the date the advanced notice of proposed 
rulemaking was published. EPA took this action to ensure that small 
businesses that might not have been aware of the impending rulemaking 
would be able to continue in the HCFC market.
    In the United States, an allowance is the unit of measure that 
controls production and consumption of ODS. EPA allocates calendar-year 
allowances equal to a percentage of the baseline--they are valid from 
January 1 to December 31 of that control period. A calendar-year 
allowance represents the privilege granted to a company to produce or 
import one kilogram (not ODP-weighted) of the specific substance. 
``Production allowance'' and ``consumption allowance'' are defined at 
section 82.3. To produce an HCFC for which allowances have been 
allocated, an allowance holder must expend both production and 
consumption allowances. To import an HCFC for which allowances have 
been allocated, an allowance holder must expend consumption allowances. 
An allowance holder exporting HCFCs for which it has expended 
consumption allowances may request a refund of those consumption 
allowances by submitting proper documentation and receiving approval 
from EPA.
    The 2003 Final Rule set production and consumption baselines for 
the 2003-2009 regulatory period, using each company's highest 
``production year'' or ``consumption year''. It completely phased out 
the production and import of HCFC-141b by granting zero percent of 
baseline for production and consumption in the table at 40 CFR 82.16. 
EPA did, however, create a petition process to allow applicants to 
request small amounts of HCFC-141b beyond the phaseout. The 2003 Final 
Rule allocated allowances for production and consumption of HCFC-22 and 
HCFC-142b for each of the years 2003 through 2009. EPA was able to 
allocate allowances for HCFC-22 and HCFC-142b at 100 percent of 
baseline because, in light of the concurrent complete phaseout of HCFC-
141b, the allocations for HCFC-22 and HCFC-142b, combined with 
projections for consumption of all other HCFCs, remained below the 2004 
cap of 65 percent of the United States baseline.
    Since EPA is implementing the phaseout on a chemical-by-chemical 
basis, it allocates and tracks production and consumption allowances on 
an absolute kilogram basis for each chemical. Upon EPA approval, an 
allowance holder may transfer calendar-year allowances of one type of 
HCFC for calendar-year allowances of another type of HCFC, with 
transactions weighted according to the ODP of the chemicals involved. 
Pursuant to section 607 of the CAA, EPA applies an offset to each HCFC 
transfer by deducting 0.1 percent from the transferor's allowance 
balance. The offset benefits the ozone layer since it ``results in 
greater total reductions in the production in each year of . . . class 
II substances than would occur in that year in the absence of such 
transactions'' (42 U.S.C. 7671f).
    The United States remained comfortably below the aggregate HCFC cap 
through 2009. The 2003 Final Rule announced that EPA would allocate 
allowances for 2010-2014 in a subsequent action and that those 
allowances would be lower in aggregate than for 2003-2009, consistent 
with the next stepwise reduction for HCFCs under the Montreal Protocol. 
EPA subsequently monitored the market to estimate servicing needs and 
market adjustments in the use of HCFCs, including HCFCs for which EPA 
did not establish baselines in the 2003 Final Rule. In the 2009 Final 
Rule (74 FR 66412, December 15, 2009), EPA issued production and import 
allowances for

[[Page 78076]]

HCFC-22, HCFC-142b and other HCFCs not previously included in the 
allowance system, for the 2010-2014 control periods.
    In the 2009 Final Rule, EPA determined both the estimated need for 
HCFC-22 during the 2010-2014 regulatory period and the percentage of 
that estimated need for which it was appropriate to allocate 
allowances. EPA decided that the percentage of the estimated need 
allocated in the form of allowances should not remain constant from 
year to year, but rather should decline on an annual basis. For 2010, 
EPA allocated HCFC-22 allowances equal to 80 percent of the estimated 
need, concluding that reused, recycled, and reclaimed material could 
meet the remaining 20 percent. The percentage of estimated need for 
which there was no allocation, and that would therefore need to be met 
through recycling and reclamation, rose from 20 percent in 2010 to 29 
percent in 2014. The intent of this approach was to foster reclamation, 
and to ensure that the United States could meet the 2015 stepdown under 
the Montreal Protocol.
    However, part of the 2009 Final Rule was vacated in an August 27, 
2010 decision issued by the United States Court of Appeals for the 
District of Columbia Circuit (Court) in Arkema v. EPA (618 F.3d 1, D.C. 
Cir. 2010). Certain allowance holders affected by the 2009 Final Rule 
filed petitions for judicial review of the rule under section 307(b) of 
the Clean Air Act. Among other arguments, the petitioners contended 
that the rule was impermissibly retroactive because in setting the 
baselines for the new regulatory period, EPA did not take into account 
certain inter-pollutant baseline transfers that petitioners had 
performed during the prior regulatory period. Accounting for these 
transfers in the 2009 Final Rule and applying the same methodology 
would have resulted in different baselines and calendar-year allowances 
for HCFC-22 and HCFC-142b.
    The Court agreed with petitioners that ``the [2009] Final Rule 
unacceptably alters transactions the EPA approved under the 2003 
Rule,'' (Arkema v. EPA, 618 F.3d at 3). The Court vacated the rule in 
part, ``insofar as it operates retroactively,'' and remanded to EPA 
``for prompt resolution,'' (618 F.3d at 10). EPA's petition for 
rehearing was denied on January 21, 2011. EPA addressed the Court's 
partial vacatur as it related to 2011 in an August 5, 2011 interim 
final rule, ``Protection of Stratospheric Ozone: Adjustments to the 
Allowance System for Controlling HCFC Production, Import, and Export,'' 
(76 FR 47451, August 5, 2011, 2011 Interim Final Rule). In that rule, 
EPA established new baselines that (1) credited the 2008 inter-
pollutant trades at issue in Arkema v. EPA based on the Court's 
decision, (2) reflected inter-company, single-pollutant baseline 
transfers that occurred since the 2009 Final Rule was signed, (3) 
allocated HCFC-22 and HCFC-142b allowances for 2011, (4) clarified 
EPA's policy on all future inter-pollutant transfers and (5) updated 
company names. The HCFC-22 and HCFC-142b use restrictions and the 
allocation for other controlled HCFCs were not affected by the partial 
vacatur.
    To complete its response to the court's decision, EPA published a 
final rule with the same name on April 3, 2013, allocating HCFC-142b 
and HCFC-22 allowances for 2012-2014 (78 FR 20004, 2013 Final Rule). In 
that rule, EPA reduced HCFC-22 allowances in 2012-2014 by almost 30 
percent relative to the 2009 Final Rule in order to incentivize proper 
handling and recovery of HCFC-22 and encourage transition to non-ODS 
alternatives.
    EPA has not yet allocated any HCFC allowances for year 2015 or 
beyond. The regulations at 40 CFR 82.15(a) and (b) prohibit the 
production and import of HCFCs for which EPA has apportioned baseline 
allowances without calendar-year (or ``annual'') allowances. As a 
result, production and import of HCFC-22 and HCFC-142b, as well as 
HCFC-123, HCFC-124 and HCFC-225ca/cb is prohibited in 2015 and beyond 
under current regulations, pending the allocation of allowances. This 
proposed rule initiates the rulemaking process for setting the 2015-
2019 HCFC allocations.
    For more information on the history of the HCFC phaseout and 
applicable rulemakings, see: http://www.epa.gov/ozone/title6/phaseout/classtwo.html.

C. What sections of the Clean Air Act apply to this rulemaking?

    Several sections of the CAA apply to this rulemaking. Section 602 
states that EPA shall publish an initial list of class II substances, 
which is to include the HCFCs specified in the statute as well as their 
isomers. EPA's listing of class II substances appears at appendix B to 
40 CFR part 82, subpart A.
    Section 605 of the CAA phases out production and consumption and 
restricts the use of HCFCs in accordance with the schedule set forth in 
that section. As discussed in the 2009 Final Rule (74 FR 66416), 
section 606 provides EPA authority to set a more stringent phaseout 
schedule than the schedule in section 605 based on an EPA determination 
regarding current scientific information or the availability of 
substitutes, or to conform to any acceleration under the Montreal 
Protocol. EPA previously set a more stringent schedule than the section 
605 schedule through a rule published December 10, 1993 (58 FR 65018). 
Through the 2009 Final Rule, EPA made a further adjustment to the 
section 605 schedule based on the acceleration under the Montreal 
Protocol as agreed to at the Meeting of the Parties in September 2007. 
The more stringent schedule established in that rule is still in 
effect.
    Section 606 provides authority for EPA to promulgate regulations 
that establish a schedule for production and consumption that is more 
stringent than what is set forth in section 605 if: ``(1) based on an 
assessment of credible current scientific information (including any 
assessment under the Montreal Protocol) regarding harmful effects on 
the stratospheric ozone layer associated with a class I or class II 
substance, the Administrator determines that such more stringent 
schedule may be necessary to protect human health and the environment 
against such effects, (2) based on the availability of substitutes for 
listed substances, the Administrator determines that such more 
stringent schedule is practicable, taking into account technological 
achievability, safety, and other relevant factors, or (3) the Montreal 
Protocol is modified to include a schedule to control or reduce 
production, consumption, or use of any substance more rapidly than the 
applicable schedule under this title.'' It is only necessary to meet 
one of the three criteria. In the 2009 Final Rule, EPA determined that 
all three criteria had been met with respect to the schedule for 
phasing out production and consumption of HCFC-22 and HCFC-142b.\4\
---------------------------------------------------------------------------

    \4\ The phaseout schedule for HCFC-22 and HCFC-142b was 
unaffected by the decision in Arkema v. EPA.
---------------------------------------------------------------------------

    Section 608 of the CAA, titled National Recycling and Emission 
Reduction Program, requires EPA to establish standards and requirements 
for the use and disposal of class I and II substances. Those 
requirements must reduce the use and emissions of controlled substances 
to the lowest achievable level, as well as maximize their recapture and 
recycling. Additionally, section 608(c) prohibits any person 
maintaining, servicing, repairing or disposing of an appliance that 
contains refrigerant from knowingly venting, releasing, or disposing of 
that substance to the environment, regardless of whether the 
refrigerant is an ODS or a substitute. Substitutes are

[[Page 78077]]

exempted from this prohibition only if EPA has determined that venting, 
releasing, or disposing of the substitute does not pose a threat to the 
environment.
    Section 611 of the CAA requires EPA to establish and implement 
labeling requirements for containers of, and products containing or 
manufactured with class I or class II ODS. While containers of class II 
substances (i.e. HCFCs) already are subject to labeling requirements, 
products containing or manufactured with class II substances must be 
labeled beginning January 1, 2015. The specific requirements and 
existing regulation implementing those requirements are discussed in 
the following section.
    Finally, Section 614 of the CAA describes the relationship of Title 
VI to the Montreal Protocol. Section 614(b) states: ``In the case of 
conflict between any provision of this title and any provision of the 
Montreal Protocol, the more stringent provision shall govern.'' Section 
614 ensures that EPA regulations are in accordance with United States 
obligations under the Montreal Protocol.

III. Clean Air Act Requirements That Begin in 2015

A. Labeling Requirements in Section 611(c) and (d)

    Section 611 of the CAA requires EPA to establish and implement 
labeling requirements for containers of, and products containing or 
manufactured with class I or class II ODS. In 1993, EPA published 
regulations on these labeling requirements (58 FR 8136, February 11, 
1993), codified at 40 CFR part 82 subpart E. Currently, these 
requirements only apply to containers containing class I or II ODS and 
products containing or manufactured with class I ODS. Products 
containing or manufactured with class II substances will be subject to 
these requirements beginning on January 1, 2015. As a result, in 2015, 
containers containing, products containing, and products manufactured 
with a class I or class II substance must bear a product label stating: 
``Warning: Contains [or Manufactured with, if applicable] [insert name 
of class I or II substance], a substance which harms public health and 
environment by destroying ozone in the upper atmosphere'' (40 CFR 
82.106).
    EPA defines a ``product containing'' a class II substance as a 
``product including, but not limited to, containers, vessels, or pieces 
of equipment, that physically holds a controlled substance at the point 
of sale to the ultimate consumer which remains within the product,'' 
(40 CFR 82.104). Two examples of a ``product containing'' a class II 
substance that would require a label are (1) portable fire 
extinguishers containing an HCFC and (2) appliances that incorporate 
closed-cell foam blown with an HCFC. Foams are plastics (such as 
polyurethane or polystyrene) that are manufactured using blowing agents 
to create bubbles or cells in the material's structure. Closed-cell 
foam physically holds blowing agent within the cells. While HCFCs are 
no longer used as blowing agents in the United States, they are used in 
other countries from which the United States may import products. In 
the case of portable fire extinguishers, the fire suppression agent is 
contained in a reservoir within the extinguisher and released by the 
user when needed.
    On the other hand, the definition of a product ``manufactured 
with'' a class II substance is a product for which the manufacturer 
used a class II substance directly in that product's manufacturing, but 
where the product itself does not contain more than trace quantities of 
the ODS at the point of introduction into interstate commerce. A 
product ``manufactured with'' a class II substance would include 
electronics cleaned with HCFC solvent and open cell foam blown with an 
HCFC. Open cell foam is different from closed cell foam in that it was 
manufactured with a blowing agent, but no longer contains the blowing 
agent because the cells or bubbles in open cell foam are open to the 
surrounding environment. Since HCFCs are no longer used as foam blowing 
agents in the United States, and the Nonessential Products Ban 
prohibits the sale or distribution of open cell plastic foam products 
made with HCFCs (40 CFR 82.70(c)), EPA expects the requirement for a 
``manufactured with'' label should not be relevant to most open cell 
foam products. The agency welcomes comment on which open or closed cell 
foam products are currently being imported, and whether those products 
are likely blown with an HCFC. EPA would like this information so it 
can communicate with and offer guidance to companies that must 
determine whether the HCFC labeling requirements apply to their 
products. Final products that incorporate another product that was 
``manufactured with'' a class I or class II ODS do not have to bear a 
label so long as the manufacturer of the final product is distinct from 
the manufacturer of the product ``manufactured with'' the ODS (40 CFR 
82.116). By contrast, final products that incorporate ``products 
containing'' a class I or II ODS will require a warning label, even if 
the final product manufacturer purchases the ``product containing'' the 
ODS from another manufacturer or supplier (40 CFR 82.114). For a 
discussion of the labeling pass-through requirements, see the February 
11, 1993 final rule that implemented the statutory labeling 
requirements (58 FR 8136).
    EPA has created a preliminary list of products that might be 
affected by these requirements beginning in 2015. This list, along with 
guidance for manufacturers and importers of potentially affected 
products, is titled Summary of HCFC Product Labeling Requirements & 
Potentially Affected Products (Labeling Memo) and can be found in the 
docket for this rulemaking. EPA is seeking comment on whether this list 
is accurate and complete, and would like to know where products made 
with or containing HCFCs are manufactured. This information will help 
the agency better inform manufacturers in the United States and abroad 
about the labeling requirement taking effect in 2015.
    The agency is also interested in comments on which products have 
mainly switched to non-ODS alternatives so it can assist companies in 
determining whether the labeling requirements are likely to apply to 
their products. For products that no longer are manufactured with or 
contain HCFCs, the agency would like to know if that change applies 
globally, or only to manufacture in the United States. The agency also 
welcomes comment on whether any clarification to the regulations at 40 
CFR subpart E (82.100-82.124) is needed in order to implement the 
existing labeling requirement for products containing or manufactured 
with class II substances. More background on the labeling requirements 
can be found in the 1993 Final Rule (58 FR 8136), which is also 
included in the docket to this rulemaking.
    EPA is not proposing any substantive changes to the regulations at 
40 CFR subpart E; however, the agency is proposing three very minor 
modifications to clarify the intent of the regulatory language with 
respect to class II substances. The first two proposed clarifications 
are to replace ``class I substance'' with ``controlled substance.'' 
While the emphasis in 1993 was on class I substances, EPA is now 
proposing to remove any ambiguity with respect to class II substances 
by reconciling inconsistent terminology, specifically at 82.110(c) and 
82.112(d). The Combined statement for multiple class I substances at 
82.110(c) states, ``If a container containing or a product

[[Page 78078]]

contains or is manufactured with, more than one class I or class II 
substance, the warning statement may include the names of all of the 
substances in a single warning statement, provided that the combined 
statement clearly distinguishes which substances the container or 
product contains and which were used in the manufacturing process.'' 
This paragraph clearly applies to both class I and class II products, 
as stated in the operative text. EPA is proposing to modify the title 
of this paragraph to be Combined statement for multiple controlled 
substances, consistent with the operative text. Similarly, 82.112(d), 
which is titled: Manufacturers, distributors, wholesalers, retailers 
that sell spare parts manufactured with controlled substances solely 
for repair, includes the more general term ``controlled substances'' in 
the title, but not the operative text. The operative text that follows 
the title reads: ``Manufacturers, distributors, wholesalers, and 
retailers that purchase spare parts manufactured with a class I 
substance from another manufacturer or supplier, and sell such spare 
parts for the sole purpose of repair, are not required to pass through 
an applicable warning label if such products are removed from the 
original packaging provided by the manufacturer from whom the products 
are purchased . . .'' EPA is proposing to replace ``class I substance'' 
with ``controlled substance'' in order to clarify that this narrow 
exemption to the labeling requirements also applies to class II 
products in the same way it applied to class I products.
    The final minor change that EPA is proposing is at 82.122, 
Certification, recordkeeping, and notice requirements. The first 
sentence at (a)(1) refers to persons claiming the exemption for certain 
methyl chloroform users provided for in 82.106(b)(2); however, this 
exemption is actually provided for in 82.106(b)(4). EPA is proposing to 
revise the current text to reference the correct paragraph, which is 
82.106(b)(4) not (b)(2). EPA also notes that this exemption ended May 
15, 1994 and that the agency is proposing this minor change solely to 
avoid confusion.

B. Use and Sales Restriction in Section 605(a)

    Starting January 1, 2015, section 605(a) of the Clean Air Act 
prohibits the use or introduction into interstate commerce of any class 
II substance that does not meet one of four exceptions. Specifically, 
use or introduction into interstate commerce is allowed only if (1) the 
substance has been used, recovered and recycled; (2) it is entirely 
transformed, except for trace quantities, in the production of other 
chemicals; (3) it is used as a refrigerant in appliances manufactured 
prior to 2020; or (4) it is listed as acceptable for use as a 
nonresidential fire suppression agent in accordance with CAA section 
612(c).\5\ Section 612 is the statutory authority for EPA's Significant 
New Alternatives Policy program, under which the agency reviews 
potential substitutes for class I and class II substances in certain 
end uses and lists those potential substitutes as acceptable, 
acceptable subject to use conditions, acceptable subject to narrowed 
use limits, or unacceptable (see 40 CFR subpart G).
---------------------------------------------------------------------------

    \5\ The fourth exception in this list is a recent change to the 
Clean Air Act, which was included in the National Defense 
Authorization Act for Fiscal Year 2012 [112th Congress, H.R. 1540, 
Title III, Section 320, Fire Suppression Agents]. EPA is proposing 
to incorporate this change into the regulations at 40 CFR 
82.15(g)(4) and 82.16(d). See Section III.B.2. of this preamble for 
further discussion.
---------------------------------------------------------------------------

    In the 2009 Final Rule (74 FR 66412), EPA used its authority under 
section 606 to accelerate the section 605(a) restrictions on use and 
introduction into interstate commerce for HCFC-22 and HCFC-142b, 
applying them to HCFC-22 and HCFC-142b \6\ as of January 1, 2010, five 
years earlier than the date specified in section 605(a). Effective 
January 1, 2010, EPA prohibited the use of virgin HCFC-22 and HCFC-142b 
to manufacture or service new air-conditioning and refrigeration 
appliances. In a separate rule, under the authority provided in section 
615 of the CAA, EPA also prohibited the sale and distribution of 
appliances and appliance components pre-charged with virgin or used, 
recovered and recycled HCFC-22 and HCFC-142b (74 FR 66450). For all 
other HCFCs, including those for which EPA has not historically issued 
allowances, the section 605(a) prohibitions and exceptions apply as of 
January 1, 2015. All HCFCs other than HCFC-22 and HCFC-142b may 
continue to be used and sold as refrigerants, but only for use in 
appliances manufactured before 2020.
---------------------------------------------------------------------------

    \6\ EPA also accelerated the restrictions on use and 
introduction into interstate commerce for HCFC-141b in the same 
rulemaking; however, HCFC-141b is not discussed further in this 
section because it is not used for refrigeration purposes.
---------------------------------------------------------------------------

    EPA believes the term ``use'' is ambiguous in the context of 
section 605(a) with respect to potential categories of use that 
Congress did not directly address. Historically, in the context of 
section 605, EPA has focused on use of refrigerants to manufacture and 
service appliances and the section 605(a)(3) exception for servicing 
existing equipment. In 1993, EPA took the section 605(a) use 
restrictions into account in establishing the HCFC chemical-by-chemical 
phaseout. The 1993 Notice of Proposed Rulemaking (58 FR 15014) 
discusses the acceleration of the use restriction for HCFC-22 and HCFC-
142b from the standpoint of when it would be technologically feasible 
to cease using these two chemicals in new refrigeration and air-
conditioning equipment. In that rulemaking, EPA did not explore how to 
interpret or apply the term ``use'' in other circumstances. EPA 
considered various interpretations of that term in developing the 2009 
Final Rule but again focused on refrigerants. In the 2008 Notice of 
Proposed Rulemaking (73 FR 78680, December 23, 2008), EPA noted that 
the three statutory exceptions that existed at that time ``inform EPA's 
understanding of the term `use''' (73 FR 78698). The preamble to the 
2009 Final Rule states: ``With regard to HCFCs used as refrigerants, 
EPA interprets the term `use' to mean initially charging as well as 
maintaining and servicing refrigeration equipment'' (74 FR 66437). In 
regard to non-refrigerant uses, EPA addressed two manufacturing uses of 
HCFC-22 (manufacture of sterilant blends for medical equipment and 
manufacture of thermostatic expansion valves); EPA also concluded that 
section 605(a) would ban the primary pre-2010 use of HCFC-142b (foam-
blowing). At that time, however, EPA was not yet implementing section 
605(a) with respect to other HCFCs and did not fully explore what 
``use'' might mean in the context of non-refrigerants.
    In the development of the 2009 Final Rule, EPA did consider whether 
section 605(a) applies to the operation of products containing HCFCs. 
With regard to refrigeration equipment, EPA concluded: ``the section 
605(a) `use' ban does not apply to a consumer's operation of equipment 
containing HCFCs'' (74 FR 66438). The agency's conclusion was partially 
based on the third exemption to 605(a), for class II substances that 
are used as refrigerants in appliances manufactured before a specified 
date. This exemption indicated ``that Congress intended to permit the 
continued use of previously manufactured appliances.'' EPA also stated 
that for ``products containing HCFCs for non-refrigerant uses. . . . 
EPA interprets the term `use' as relating to the manufacture (and where 
applicable, the service) of those products, not the utilization of 
those products in the hands of the end user'' (74 FR 66437).
    EPA is not revisiting its interpretation of section 605(a) with 
respect to how it interprets ``use'' for products containing

[[Page 78079]]

HCFCs. For purposes of implementing the 2015 use restriction in section 
605(a), ``use'' of a controlled substance would include manufacture of 
products that contain or are made with HCFCs; however, it would not 
include use of existing products containing HCFCs (i.e., for substances 
other than HCFC-22 and HCFC-142b, products manufactured before January 
1, 2015). The reasons for this conclusion are explained in the preamble 
to the 2009 Final Rule. As made clear in that notice, EPA interprets 
section 605(a) as prohibiting the use of substances, not the use of 
products. The statutory language does not directly address whether use 
of a product containing controlled substances might constitute a 
prohibited use of the substance. However, consistent with its earlier 
statements, EPA does not intend to treat use of a product containing 
HCFCs as use of the HCFC. The agency has a long history of 
distinguishing between products and substances in its ODS phaseout 
regulations. Controlled substances are defined in 40 CFR part 82 
subpart A as listed substances ``whether existing alone or in a 
mixture, but excluding any such substance or mixture that is in a 
manufactured product other than a container used for the transportation 
or storage of the substance or mixture.'' EPA distinguishes between 
bulk containers of HCFCs and products containing HCFCs. The subpart A 
definition of controlled substance clarifies that if a substance needs 
to be transferred from a bulk container to a piece of equipment or 
another container to realize its intended use, it will be treated as a 
``substance.'' Examples of bulk containers include jugs, drums, and 
cylinders.
    EPA refers readers to the preamble of the 2009 Final Rule for two 
other clarifications on how EPA interprets the term ``use'' in the 
context of section 605(a). First, the agency provided the following 
clarification on how the Nonessential Products Ban (CAA section 610) 
and the HCFC use restriction (CAA section 605(a)) should be interpreted 
together: ``By prohibiting use and introduction into interstate 
commerce of HCFCs as bulk substances, section 605(a) effectively 
prohibits the continued manufacture of any products containing HCFCs 
(which qualifies as a type of `use') unless specifically exempted in 
that section.'' EPA explained that while the section 610(a) 
Nonessential Products Ban exempts certain products, these exempted 
products may not be manufactured after 2014 due to the HCFC use 
restrictions in section 605(a). EPA clarified that ``such products are 
prohibited from continued manufacture, unless manufactured with 
recovered HCFCs'' (74 FR 66439). Second, in the preamble to the 2009 
Final Rule the agency clarified that ``EPA does not interpret `use' [in 
the context of section 605] to include destruction, recovery for 
disposal, discharge consistent with all other regulatory requirements, 
or other similar actions where the substance is part of a disposal 
chain'' (74 FR 66439).
    Because the use prohibition will apply to a variety of sectors and 
circumstances beginning in 2015, EPA believes it may be helpful to 
define ``use'' in the phaseout regulations (40 CFR part 82 subpart A). 
There is currently a definition of ``use'' in the regulations for the 
Significant New Alternatives Policy (SNAP) Program (40 CFR part 82 
subpart G), which reads as follows: ``Use means any use of a substitute 
for a Class I or Class II ozone-depleting compound, including but not 
limited to use in a manufacturing process or product, in consumption by 
the end user, or in intermediate uses, such as formulation or packaging 
for other subsequent uses'' (40 CFR 82.172). In this rulemaking, the 
agency is proposing a related, but somewhat different definition for 
purposes of the section 605(a) use prohibition, which is implemented at 
40 CFR 82.15: ``Use of a class II controlled substance, for the 
purposes of section 82.15 of this subpart, includes but is not limited 
to use in a manufacturing process, use in manufacturing a product, 
intermediate uses such as formulation or packaging for other subsequent 
uses, and use in maintaining, servicing, or repairing an appliance or 
other piece of equipment. Use of a class II controlled substance also 
includes use of that controlled substance when it is removed from a 
container used for the transportation or storage of the substance but 
does not include use of a manufactured product containing a controlled 
substance.'' The primary difference between this proposed definition 
under section 605(a) and the SNAP definition is that the SNAP 
definition includes use by the consumer of a product containing ODS. 
This difference reflects EPA's interpretation of the section 605(a) use 
restriction as set forth in the preamble to the 2009 Final Rule.
    EPA welcomes comment on its proposed section 605(a) definition of 
``use'' of a class II controlled substance, particularly with regard to 
how such a definition can help clarify the distinction between use of a 
controlled substance and use of a product. Please note that the 
language regarding that distinction in the last line of the proposed 
definition is based on the existing definition of controlled substance 
in 40 CFR 82.3. If finalized, the definition of use of a class II 
controlled substance would appear at 40 CFR 82.3, which is the 
Definitions section of subpart A.
    The section 605(a) restrictions on use and introduction into 
interstate commerce apply to all class II controlled substances. As 
explained in section V.H. of this preamble, the agency is proposing to 
revise the list of class II controlled substances in 40 CFR part 82 
subpart A, appendix B to include all isomers of listed substances, 
consistent with section 602 of the CAA and the Montreal Protocol 
listing of HCFCs (found in Group I to Annex C of the Protocol).
1. What is EPA proposing for existing inventory of HCFC-225ca and HCFC-
225cb?
    Numerous stakeholders have asked what they will be able to do with 
inventory of HCFC-225ca/cb that exists as of January 1, 2015. To EPA's 
knowledge, HCFC-225ca, HCFC-225cb and mixtures thereof are only used as 
solvents, primarily for precision cleaning in the aerospace and 
electronics industries. As explained above, the section 605(a) use ban 
does not apply to the use of products that contain class II controlled 
substances. However, some substances, including HCFC-225ca/cb, may be 
used directly in cleaning equipment or in manufacturing a product 
without first being put into a manufactured product themselves. For 
example, a person may take HCFC-225ca/cb from a bulk container and 
either add it to a vapor degreaser or pour it on a hand wipe to clean a 
piece of equipment or component. In those circumstances, the substance 
itself--not a product containing the substance--is being used. (This 
differs from use of products that contain HCFC-225ca/cb, such as 
aerosol cans or pre-soaked wipes). In general, EPA is proposing to 
interpret the section 605(a) use ban to apply to use when the substance 
is removed from a container used for transportation or storage.
    However, EPA believes the use of HCFC-225ca/cb entered into 
inventory prior to January 1, 2015 by persons that use these substances 
as solvents may fairly be considered to be de minimis. Thus, for 
reasons discussed below, the agency is proposing a de minimis exemption 
to the use prohibition in 605(a), which would allow any person with 
HCFC-225ca/cb in inventory prior to January 1, 2015 to use that 
material

[[Page 78080]]

as a solvent for as long as needed.\7\ ``Person'' is defined in 40 CFR 
82.3 to include corporations and federal agencies, among other 
entities. EPA is not proposing an exemption to the prohibition on 
introduction into interstate commerce, nor is it proposing to change 
the existing regulatory phaseout date for production and import of 
HCFC-225ca/cb. The person holding the HCFC-225ca/cb in inventory would 
not be able to transfer or sell it to another person, nor would EPA 
issue any allowances to produce or import new HCFC-225ca/cb. 
Additionally, neither companies that manufacture products for their own 
use, nor companies that manufacture products for sale to others would 
be allowed to manufacture products containing virgin HCFC-225ca/cb, as 
that would constitute a prohibited use of the substance; however, a 
person would be able to sell any products containing HCFC-225ca/cb that 
had been manufactured and entered into initial inventory prior to 
January 1, 2015, since at that point they would be ``products'' and not 
``class II controlled substances.'' A product is considered to be a 
part of ``initial inventory'' at the point where the original product 
has completed its manufacturing process and is ready for sale by the 
product manufacturer. For more discussion of EPA's interpretation of 
the term ``initial inventory,'' see the 1993 Nonessential Products Ban 
at 58 FR 69661. Also, for purposes of section 605(a), manufacturers may 
continue to use HCFC-225ca/cb to make both products ``manufactured 
with'' and products ``containing'' HCFC-225ca/cb as of January 1, 2015, 
so long as the HCFC-225ca/cb has been used, recovered and recycled. 
Labeling requirements for these products manufactured with either 
virgin or used, recovered and recycled HCFC-225ca/cb would apply 
beginning January 1, 2015 (see section III.A. of this preamble). 
Manufacturers should also ensure that they are in compliance with the 
Nonessential Products Ban and with SNAP regulations.
---------------------------------------------------------------------------

    \7\ Since the section 605(a) Clean Air Act prohibition only 
limits the use of virgin or unused HCFC-225ca/cb solvent, used, 
recovered and recycled solvent can still be used for precision 
cleaning and manufacturing products after January 1, 2015 regardless 
of EPA's decision on the proposed exemption.
---------------------------------------------------------------------------

    EPA believes it has implied authority to propose a de minimis 
exemption from the section 605(a) use restriction. The United States 
Court of Appeals for the District of Columbia Circuit has recognized 
that ``[u]nless Congress has been extraordinarily rigid, there is 
likely a basis for an implication of de minimis authority to provide 
exemption when the burdens of regulation yield a gain of trivial or no 
value.'' Alabama Power Co. v. Costle, 636 F.2d 323, 360-61 (D.C. Cir. 
1980). In Alabama Power, the Court held that ``[c]ategorical exemptions 
from statutory commands may . . . be permissible as an exercise of 
agency power, inherent in most statutory schemes, to overlook 
circumstances that in context may fairly be considered de minimis. It 
is commonplace, of course, that the law does not concern itself with 
trifling matters, and this principle has often found application in the 
administrative context. Courts should be reluctant to apply the literal 
terms of a statute to mandate pointless expenditures of effort.'' Id. 
(internal citations omitted).
    In an earlier case cited by the court in Alabama Power, the court 
described the doctrine as follows: ``The `de minimis' doctrine that was 
developed to prevent trivial items from draining the time of the courts 
has room for sound application to administration by the Government of 
its regulatory programs. . . The ability, which we describe here, to 
exempt de minimis situations from a statutory command is not an ability 
to depart from the statute, but rather a tool to be used in 
implementing the legislative design.'' District of Columbia v. Orleans, 
406 F.2d 957, 959 (1968).
    In this respect, the Alabama Power opinion observed in a footnote 
that the de minimis principle ``is a cousin of the doctrine that, 
notwithstanding the `plain meaning' of a statute, a court must look 
beyond the words to the purpose of the act where its literal terms lead 
to `absurd or futile results.' '' Id. at 360 n. 89 (citations omitted). 
To apply an exclusion based on the de minimis doctrine, ``the agency 
will bear the burden of making the required showing'' that a matter is 
truly de minimis which naturally will turn on the assessment of 
particular circumstances. Id. The Alabama Power opinion concluded that 
``most regulatory statutes, including the CAA, permit such agency 
showings in appropriate cases.'' Id.
    A notable limitation on the de minimis doctrine is that it does not 
authorize the agency to exclude something on the basis of a cost-
benefit analysis. As the court explained, this ``implied authority is 
not available for a situation where the regulatory function does 
provide benefits, in the sense of furthering the regulatory objectives, 
but the agency concludes that the acknowledged benefits are exceeded by 
the costs.'' Id. The court held that any ``implied authority to make 
cost-benefit decisions must be based not on a general doctrine but on a 
fair reading of the specific statute, its aims and legislative 
history.'' Id.
    Since Chevron, several courts have recognized de minimis exceptions 
(1) so long as they are not contrary to the express terms of the 
statute \8\ and (2) the agency's interpretation of the exception is a 
permissible reading of the statute. See e.g., Ober v. Whitman, 243 F.3d 
1190 (9th Cir. 2001); see also Ohio v. EPA, 997 F.2d 1520 (D.C. Cir. 
1993).
---------------------------------------------------------------------------

    \8\ In Sierra Club v. EPA, 705 F.3d 458 (D.C. Cir. 2013), the DC 
Circuit held that EPA had no de minimis authority to create an 
exemption from the preconstruction monitoring requirement in Sec.  
165(e)(2) of the CAA. ``Whether we call preconstruction monitoring a 
`plain requirement' or a requirement mandated by an `extraordinarily 
rigid' statute, the result is the same: The EPA has no de minimis 
authority to exempt the requirement.'' Id. at 468.
---------------------------------------------------------------------------

    EPA believes a de minimis exemption is permissible in this 
situation for several reasons. First, section 605(a) is not 
extraordinarily rigid. Second, the use prohibition in section 605(a) is 
ambiguous with respect to potential categories of use that Congress did 
not directly address. Third, banning the use of HCFC solvent inventory 
held by the end user would not advance the statutory purpose. These 
arguments are discussed in more detail in the following paragraphs.
    The purpose of Title VI of the Clean Air Act is, as its title 
suggests, ``Stratospheric Ozone Protection.'' Title VI can be 
summarized into three principal areas: the phaseout of production and 
import of ozone depleting substances (section 602-607); reduction in 
emissions of these substances via various means such as required 
servicing practices, restrictions on sale and distribution of products, 
and consumer education (section 608-611); and the transition to 
alternatives that do not harm the stratospheric ozone layer and that 
reduce overall risk to human health and the environment (section 612). 
Section 605 specifically addresses the ``Phase-out of production and 
consumption of class II controlled substances.'' Section 604 applies to 
the ``Phase-out of production and consumption of class I substances.'' 
There are notable differences between the two phaseouts. The phaseout 
under section 604 operates much quicker than the phaseout under section 
605. In addition, the section 604 phaseout operates much earlier than 
the section 605 phaseout. Section 604 required the first reductions in 
class I substances in 1992, followed by a series of stepdowns 
culminating in the complete phaseout of nearly all class I substances 
by 2000. For

[[Page 78081]]

class II substances, section 605 freezes production and consumption in 
2015, with the complete phaseout not occurring until 2030.\9\ Two 
principal factors drive the distinction in phaseout schedules; class I 
substances have much higher ODPs relative to class II substances,\10\ 
and class II substances were recognized as important transitional 
chemicals, beneficial in phasing out class I substances as quickly as 
possible. During the development of the 1990 Clean Air Act Amendments, 
Congress heard testimony on the need to phase out HCFCs as well as 
class I substances. Senator Chaffee acknowledged that ``one difficulty, 
however, is the fact that achieving the goal of eliminating the potent 
long-lived CFCs as rapidly as possible is, to some extent, dependent on 
the continued availability of HCFCs as intermediate substitutes pending 
development of other, safe, non-ozone depleting substances or 
processes.'' (A Legislative History of the Clean Air Act Amendments of 
1990, volume 1, p. 5210 (Senate debate)).
---------------------------------------------------------------------------

    \9\ Through rulemakings, EPA accelerated the statutory deadlines 
in section 604 and 605, in accordance with the requirements in 
section 606. See 57 FR 3354 and 58 FR 65013.
    \10\ For example, all CFCs have an ODP of 0.6 or greater, with 
most having an ODP of1.0, whereas the HCFC with the highest ODP is 
HCFC-141b, which has an ODP of 0.11.
---------------------------------------------------------------------------

    It is clear that Congress' intent was to phase out production and 
import of class I substances ``as rapidly as possible,'' and certainly 
more rapidly than class II substances given the difference in the start 
and duration of the two phaseout schedules; however, nowhere in section 
604 does Congress restrict the use of class I substances. Instead, 
Congress phases out the production and import for domestic use, and 
allows for certain exemptions to the phaseout for specific uses (see, 
e.g., section 604 (f) and (g).) Given the comparable titles of sections 
604 and 605 and the overarching goal of phasing out both class I and 
class II ODS \11\, Congress likely intended that the ``use'' 
restriction, which is unique to section 605, should be interpreted in a 
manner that furthers the phaseout of production and import of HCFCs 
while recognizing the role of HCFCs as transitional substances.
---------------------------------------------------------------------------

    \11\ ``The centerpiece of the stratospheric ozone protection 
program established by this title is the phaseout of production and 
consumption of all ozone depleting substances.'' Clean Air Act 
Amendments--Conference Report (Senate--October 27, 1990) (136 Cong. 
Rec. S16946).
---------------------------------------------------------------------------

    Congress' overall approach to the class II phaseout is generally 
less rigid than its approach to the class I phaseout, given the longer 
timeframes and the presence of only one intermediate reduction step 
(see section 605(b)). Given this context, EPA is not inclined to view 
section 605(a) as ``extraordinarily rigid.'' In addition, section 
605(a) provides an explicit exception for class II substances that have 
been ``used, recovered, and recycled.'' Thus, Congress clearly did not 
envision that all HCFC use in applications not specifically exempted 
come to a halt by 2015. Indeed, end users of HCFC-225ca/cb could avail 
themselves of this exception by putting their entire existing inventory 
of HCFC-225ca/cb into their equipment before January 1, 2015. For 
example, an end user could use its entire inventory of virgin HCFC-
225ca/cb in its vapor degreaser, recover the HCFC-225ca/cb from the 
degreaser, and then recycle it for reuse in 2015 and beyond. In other 
instances, an end user could take virgin HCFC-225ca/cb, apply it to a 
surface via the typical application method such that the surface is 
cleaned as intended, at which point any recovered HCFC-225ca/cb would 
be rendered ``used''. EPA does not wish to encourage this approach to 
meeting Sec.  605(a) requirements, which would do nothing to advance 
the statutory purpose. Rather than insist on an inflexible reading of 
the statute that may create ``absurd or futile results,'' EPA believes 
the better option is to allow end users to continue to use virgin 
inventory that they hold prior to 2015.
    EPA views Section 605(a) as ambiguous with respect to potential 
categories of use that Congress did not explicitly address. Section 
605(a) explicitly addresses refrigerant uses of HCFCs but is silent 
with respect to solvents. At the time the 1990 Clean Air Act Amendments 
were written, HCFCs were used predominantly as refrigerants and much 
consideration was given to this use in the legislative history. HCFC 
solvent uses, on the other hand, were not considered by Congress in the 
context of the class II phaseout, because they did not exist. At that 
time, two class I substances, CFC-113 and methyl chloroform, were used 
as solvents. Far from expecting an early transition, Congress allowed 
production and import of methyl chloroform until 2002, two years after 
the phaseout date for most class I substances. In addition, in 
604(d)(1), Congress specifically allowed for limited exemptions to the 
production and import phaseout for methyl chloroform for ``use in 
essential applications.'' It was not until 1995 that HCFC-225ca/cb was 
listed under SNAP as acceptable subject to use conditions in 
electronics cleaning and precision cleaning (see 60 FR 31092, June 13, 
1995). HCFC-225ca/cb was listed as acceptable in metals cleaning as 
recently as 2002 (see 67 FR 77927, December 20, 2002). In all three of 
these end uses, HCFC-225ca/cb, which has an ODP of 0.025/0.033, is a 
substitute for CFC-113 and methyl chloroform, which have ODPs of 0.8 
and 0.1, respectively. While HCFC-225ca/cb solvents have acted since 
1995 as transitional substances between class I ODS and non-ODS 
substitutes for certain niche needs, there is no evidence that Congress 
anticipated in 1990 that any HCFCs would be used as solvents. Thus, 
Congress did not have the opportunity to consider whether to apply the 
section 605(a) use restriction to HCFC-225ca/cb solvents.
    EPA does not believe that prohibiting persons that use HCFC-225ca/
cb as a solvent to clean their equipment or to clean components of 
products they manufacture-resulting in products ``manufactured with'' 
these HCFCs-from using their existing inventory of HCFC-225ca/cb would 
advance the goals of Title VI. As discussed above, any person could 
avoid such a prohibition by rendering all their inventory ``used'' in 
advance of the effective date. From the perspective of potential ozone 
destruction, there is little or no difference in this instance whether 
the person uses such de minimis quantities already on site at the end 
of 2014 or after January 1, 2015.
    EPA believes a de minimis exemption is appropriate for the reasons 
provided, and also because the quantities involved are extremely 
limited. This is a small niche use and EPA is only proposing to exempt 
HCFC-225ca/cb held in inventory by persons that use these substances as 
a solvent. The quantities produced or imported using allowances act as 
a ceiling on the quantities that can comprise pre-2015 inventory, and 
the annual allocation of allowances for HCFC-225ca/cb from 2010-2014 is 
only 20.7 ODP-weighted MT. Recent HCFC-225ca/cb consumption has been 
substantially less than the allocation, further decreasing the absolute 
maximum amount that could remain in inventories as of 2015.
    EPA also considered its past use of de minimis authority under 
Title VI of the Clean Air Act; in fact, the agency is modeling this 
proposed exemption to 605(a) on the de minimis exemption to the 
nonessential products ban for class II substances (CAA section 610(c) 
and (d)). In the 1993 Nonessential Products Rule, EPA proposed and 
finalized an exemption to the ban on sale and distribution in 
interstate commerce of products manufactured with or

[[Page 78082]]

containing HCFCs. The ban applied to products that were placed in 
initial inventory by December 27, 1993--90 days after the proposed rule 
published and four days prior to the statutory ban on sale and 
distribution (58 FR 50464, September 27, 1993 and 58 FR 69638, December 
30, 1993). EPA finalized this narrow ``grandfather'' exception for 
existing inventories based on the de minimis rationale: ``The crux of 
EPA's reasoning for providing any exemption for existing inventories 
was that emissions from products already in existence were de minimis'' 
(58 FR 69660). EPA believes that emissions from existing inventories of 
HCFC-225ca/cb would also be de minimis.
    As discussed, EPA believes it has sufficient authority to propose a 
de minimis exemption to the section 605(a) use prohibition for use of 
HCFC-225ca/cb held in inventory by persons using these substances as 
solvents. In addition to evaluating its legal authority, EPA has also 
considered policy aspects of proposing an exemption. In the 1993 
Nonessential Products Rule, EPA identified various policy reasons for 
exempting existing inventory. One policy goal was to relieve a 
potentially onerous burden on small businesses because, absent a sell 
through provision, existing inventories would otherwise have to be 
liquidated (or in the case of the section 605(a) use restriction, 
intentionally used, recovered and recycled prior to the effective date 
of the prohibition). EPA recognizes the potential inefficiency of a 
company rendering all of their HCFC-225ca/cb inventory used in advance 
of 2015. The agency welcomes comment from end users of HCFC-225ca/cb, 
with specifics on their continued HCFC-225ca/cb needs, whether they are 
planning to transition to an alternative solvent prior to 2015, the 
time required to transition to alternatives for specific uses of HCFC-
225ca/cb, and what hardships they would face with or without an 
exemption to the 605(a) use prohibition.
    If EPA does not finalize an exemption for inventories of virgin 
HCFC-225ca/cb, use of all virgin HCFC-225ca/cb would be prohibited as 
of January 1, 2015 under the current regulations. EPA urges destruction 
of virgin ODS for which use is prohibited as the appropriate method for 
disposal. There are seven EPA-approved destruction technologies for ODS 
(see 40 CFR 82.3). EPA recognizes, however, that use of these 
technologies does have a cost. Further, the agency is concerned that 
some persons might dispose of their supplies of HCFC-225ca/cb in a 
manner allowing release into the environment if they are not allowed to 
use the substance for its intended purpose of cleaning. This could 
result in as much or more harm to the environment as the use of 
existing inventory as a solvent.
    An important policy consideration is that the nature of precision 
cleaning is such that the group of affected entities is small, but 
their needs are very specific. Those needs often include minimal to 
zero flammability as well as excellent solvency properties, and if 
those needs are not met, human safety can be jeopardized (for example, 
in the case of future space vehicle launches). The agency believes that 
manufacturers of products containing HCFC-225ca/cb have sufficient lead 
time to use their remaining HCFC-225ca/cb inventory to manufacture 
products and place them into initial inventory, or alternatively, to 
sell virgin bulk HCFC-225ca/cb to users of these solvents prior to 
2015. However, EPA has heard from several entities that use HCFC-225ca/
cb directly as solvents for cleaning existing equipment or for cleaning 
surfaces that are part of a newly-produced product who still have not 
found a suitable alternative to HCFC-225ca/cb. In some instances, 
entities need more time to test alternatives in order to ensure that 
the chosen replacement has acceptable solvency, flammability and 
usability characteristics. Also, in some areas of the United States, a 
number of federal, state and local regulations affect the choice of 
solvents. In particular, areas that are not meeting the national 
ambient air quality standard for ground-level ozone may regulate 
solvents that are volatile organic compounds (VOC) to reduce emissions 
that contribute to the formation of smog. HCFC-225ca and HCFC-225cb are 
exempt from the definition of VOC under CAA regulations (see 40 CFR 
51.100(s)) addressing the development of State Implementation Plans 
(SIPs) to attain and maintain the national ambient air quality 
standards. This exemption allows greater flexibility in the use of 
HCFC-225ca/cb than is allowed for cleaning solvents that are regulated 
as VOCs. Only some SNAP-listed alternatives to HCFC-225ca/cb are exempt 
from the definition of VOC (e.g., trans-1-chloro-3,3,3-trifluoroprop-1-
ene).
    Given these legal and policy considerations, EPA is proposing a de 
minimis exemption to the use restriction in CAA section 605(a) for 
entities that use HCFC-225ca/cb as solvents and that have HCFC-225ca/cb 
in their inventory prior to January 1, 2015. The exemption would appear 
at 40 CFR 82.15(g). This exemption would not pertain to manufacturers 
of products containing HCFC-225ca/cb, such as technical aerosol 
solvents, or to producers and importers of HCFC-225ca/cb. Any aerosol 
solvent product manufactured prior to January 1, 2015, could be sold 
and used after that date, since an aerosol can is a product, not a 
controlled substance; however, manufacture of the product or HCFC 
blends used in those products would be considered use of a controlled 
substance, and would be prohibited after January 1, 2015, unless the 
HCFC were used, recovered and recycled. The agency invites comment on 
the proposed exemption, particularly on the need for continued use of 
HCFC-225ca/cb after 2014. The agency is also seeking comment on whether 
there are other small niche uses of HCFCs that Congress may not have 
contemplated in the 1990 CAA Amendments for which a prohibition on use 
of inventory would yield trivial or no benefits in light of the 
statutory purpose. The agency may consider extending the proposed 
exemption to other such niche uses in the final rule.
2. How is EPA planning to update regulations to account for recent 
changes to section 605(a)?
    In the National Defense Authorization Act for fiscal year 2012, 
Congress amended section 605(a) of the Clean Air Act to allow for 
continued use and introduction into interstate commerce of a class II 
substance that ``is listed as acceptable for use as a fire suppression 
agent for nonresidential applications in accordance with section 
612(c).'' Section 612 of the Clean Air Act requires EPA to develop a 
program for evaluating alternatives to ozone-depleting substances. EPA 
refers to this program as the Significant New Alternatives Policy 
(SNAP) program. Section 612(c) requires EPA to publish a list of the 
substitutes unacceptable for specific uses and to publish a 
corresponding list of acceptable alternatives for specific uses. The 
list of acceptable substitutes is found at www.epa.gov/ozone/snap/lists/index.html, and the lists of ``unacceptable,'' ``acceptable 
subject to use conditions,'' and ``acceptable subject to narrowed use 
limits'' substitutes are found in the appendices to subpart G of 40 CFR 
part 82. HCFC-123, HCFC-124, and several blends containing an HCFC are 
currently listed as acceptable and acceptable subject to narrowed use 
limits, where the only use limit restricts use to nonresidential fire 
suppression. EPA assumes that Congress intended the statutory phrase 
``listed as acceptable for use'' to include HCFCs listed as acceptable 
and acceptable subject to narrowed use limits. In light

[[Page 78083]]

of this statutory revision, EPA is proposing to update its regulations 
for use and introduction into interstate commerce of HCFCs (82.15(g)), 
as well as the regulations governing production and import (82.16). 
Specifically, the agency intends to add the following language to 
82.15(g)(4) allowing for use and introduction into interstate commerce 
of any class II controlled substance not governed by the acceleration 
of the use prohibition to 2010, when used ``as a fire suppression 
streaming agent listed as acceptable for use or acceptable subject to 
narrowed use limits for nonresidential applications in accordance with 
the regulations at subpart G of [part 82].'' EPA believes this addition 
is necessary and appropriate, given Congress' addition to section 
605(a).
    Though section (a) pertains only to use and introduction into 
interstate commerce, EPA believes that allowing for continued HCFC 
production and import for nonresidential fire suppression uses is a 
natural follow-on, and is in accordance with Congressional intent. 
Section 605 does not establish a production phaseout date for any 
specific HCFC. EPA has used its discretion to establish a regulatory 
phaseout date, which the agency is proposing to modify in this action. 
This change has minimal impact on the overall allocation since the 
primary HCFC used for fire suppression, HCFC-123, has a low ODP, and 
the quantities used for fire suppression are small relative to the 
other uses of HCFCs.
    In large part, the regulatory phaseout date for HCFCs used in fire 
suppression was driven by the section 605(a) limitations on use and 
introduction into interstate commerce of class II controlled 
substances, to which Congress has now created an exception. Therefore, 
EPA is also proposing to amend 82.16(d), by allowing for HCFC 
production and import in the 2015-2019 regulatory period for use in 
nonresidential streaming fire suppression applications. Accordingly, 
EPA is proposing to add the following text to 82.16(d), allowing for 
both production and import of class II controlled substances ``for use 
as a fire suppression streaming agent listed as acceptable for use or 
acceptable subject to narrowed use limits for nonresidential 
applications in accordance with the regulations at subpart G of [part 
82].'' To give practical effect to this proposed change, EPA is 
proposing to allocate consumption allowances for HCFC-123, not just for 
use as a refrigerant, but for use as a fire suppression agent as well. 
As discussed in section V.D.1., EPA is proposing to allocate the 
maximum allowed amount of HCFC-123 consumption allowances under section 
605(b) (i.e., 100 percent of HCFC-123 baseline), which is still less 
than three percent of United States consumption allowed under the 
Montreal Protocol cap for 2015-2019. EPA is proposing to allow 
production and import for fire suppression purposes for the 2015-2019 
regulatory period only. Beginning January 1, 2020, Article 2F of the 
Montreal Protocol limits United States production and import of HCFCs 
to use in servicing and repair of existing refrigeration equipment. 
Under section 614(b), where either the Montreal Protocol or Title VI is 
more stringent, the more stringent provision governs. To reflect this 
Montreal Protocol time limitation, EPA is proposing to add language to 
82.16(e) indicating the purposes for which production and import may 
continue in 2020 and beyond: The proposed list does not include fire 
suppression purposes. The agency welcomes comment on any aspect of 
these proposed regulatory additions.

C. Step Down to 10 Percent of Montreal Protocol Baseline

    As discussed in section II.A. of this preamble, the United States 
has agreed under the Montreal Protocol to limit consumption and 
production of HCFCs by January 1, 2015 to no more than 10 percent of 
its Montreal Protocol baseline. Starting in 2015, the United States cap 
on consumption will be 1,524 ODP-weighted MT and the cap on production 
will be 1,553.7 ODP-weighted MT. By January 1, 2020, the United States 
is required to limit consumption and production of HCFCs to 0.5 percent 
of baseline. As required under sections 606(a) and 614(b) of the Clean 
Air Act, the EPA phaseout regulations reflect the Montreal Protocol 
schedule for phasing out HCFCs, including the 2015 and 2020 stepdowns. 
In developing the proposed HCFC allocation schedule for 2015-2019, the 
agency bore in mind that as of January 1, 2020, the consumption and 
production caps will be approximately 76 and 77.5 ODP-weighted MT, 
respectively. Also, as of January 1, 2020, Article 2F of the Protocol 
limits United States production and consumption of HCFCs to servicing 
needs for refrigeration and air conditioning equipment. In addition, 
CAA section 605(a) limits the use of virgin HCFCs as of January 1, 
2015, to use as a refrigerant in equipment manufactured prior to 2020, 
and use as a nonresidential fire suppressant. EPA regulations also 
prohibit the production and import of virgin HCFC-22 or HCFC-142b for 
refrigeration uses as of January 1, 2020 (see 40 CFR 82.16(e)). In 
determining the proposed allocation options in this rule, EPA took into 
account the 2015 and 2020 milestones in the Montreal Protocol and the 
Clean Air Act.

IV. How will EPA determine baselines for 2015-2019?

    The current structure of the HCFC allowance program was first 
established in the 2003 Final Rule (68 FR 2820), in which EPA decided 
to allocate HCFC allowances using a baseline system for the 2003-2009 
regulatory period. Specifically, calendar-year allowances for 
production and consumption of HCFCs would be issued as a percentage of 
each company's baseline. A company's baseline would be calculated from 
historic levels of production and import. Since 2003, the program has 
changed very little, using the same baseline system to issue 
consumption and production allowances on an annual basis.
    In the 2003 Final Rule, EPA prohibited production and consumption 
of HCFCs subject to the allowance system without the appropriate 
allowances (40 CFR 82.15(a),(b)). The agency sets the maximum 
production and consumption of each HCFC by issuing allowances that are 
valid for a single calendar year, equal to a certain percentage of each 
company's baseline.\12\ The agency determines the percentage of 
baseline for each year by taking into account limits set under the 
Montreal Protocol, estimated need for a particular HCFC, and 
restrictions under the Clean Air Act. 2015 is a significant milestone 
in the domestic phaseout of HCFCs, since United States production and 
consumption of all HCFCs must be at or below 10 percent of baseline 
levels by January 1, 2015, and use of those HCFCs must comply with 
restrictions in section 605 of the Clean Air Act.
---------------------------------------------------------------------------

    \12\ The process works as follows for each HCFC: First, all the 
company-specific consumption baselines (listed in the table at 40 
CFR 82.19) are added to determine the aggregate amount of 
consumption baseline. Second, EPA determines how many allowances to 
allocate in a given year and divides that amount by the aggregate 
amount of baseline allowances. The resulting percentage listed in 
the table at section 82.16 becomes what each company is allowed to 
consume in a given control period. For example, a company with 
100,000 kg of HCFC-22 baseline consumption allowances would multiply 
that number by the percentage allowed (for example, 14.2 percent in 
2014) to determine its calendar-year consumption allocation of 
14,200 kg. Until the 2013 Final Rule, the percentage listed in 82.16 
applied to production allocations as well. However, now that EPA has 
decoupled baseline percentages, there are two tables at 82.16 and 
the process of calculating baseline percentages applies to 
production as well.

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[[Page 78084]]

A. Using Existing Baselines

    In the 2003 Final Rule, EPA decided that each company producing or 
importing HCFC-22 or HCFC-142b between 1994 and 1997 would receive 
baseline allowances equal to its highest annual production and import 
level from those four years, with a limited extension for small 
businesses that began importing before April 5, 1999--the date EPA 
published the HCFC Allocation System ANPRM for the 2003-2009 regulatory 
period. In the 2009 Final Rule (74 FR 66412), EPA continued this 
approach for HCFC-22 and HCFC-142b. EPA also applied the same general 
approach to allocating allowances for HCFC-123, HCFC-124 and HCFC-
225ca/cb, using 2005-2007 as the baseline years for those substances. 
The portion of the 2009 Final Rule governing baselines and allocations 
of HCFC-22 and HCFC-142b allowances was vacated by the Court in Arkema 
v. EPA. However, the rest of the rule, including the baselines for four 
other HCFCs and the use restrictions on HCFC-22 and HCFC-142b, remains 
in effect. HCFC-22 and HCFC-142b baselines and allowances were re-
established for 2011 in the 2011 Interim Final Rule (76 FR 47451) and 
for 2012-2014 in the 2013 Final Rule (78 FR 20004).
    In this rulemaking, EPA is proposing to keep the post-Arkema 
historical baselines as reflected in the 2013 Final Rule (as adjusted 
to reflect subsequent name changes and inter-company baseline allowance 
transfers) for the 2015-2019 regulatory period. The baselines for 
production and consumption of the seven HCFCs for which EPA has 
allocated allowances can be found at 40 CFR 82.17 and 82.19, 
respectively. The agency believes there is benefit to the regulated 
community in continuing with the established system, with updates to 
reflect name changes and inter-company baseline allowance transfers. In 
the past, some stakeholders have acknowledged the certainty and 
stability of continuing with established baselines. Others have pointed 
out that the established baselines do not reflect current market 
conditions. Because of this concern, the agency considered an option to 
update baselines, which in the case of HCFC-22 and HCFC-142b were 
derived from 1994-1997 data. However, EPA's preferred approach is to 
keep the current baselines in place. EPA has several reasons for 
maintaining historic baselines. EPA determines the total amount of 
allowances to be allocated independent from the baseline amounts. Re-
establishing each company's baseline would alter the distribution of 
allowances, but would not affect the total allocation. EPA sets the 
baseline percentage such that once every company receives its 
allowances, the number of allowances issued equals the total allocation 
for that year. Therefore, EPA does not see an environmental rationale 
to updating baselines, since changing individual company baselines 
would not affect the total amount of HCFC-22 that could be produced or 
imported in a given year. Further, choosing and implementing changed 
baseline years would change existing market expectations, and thus 
potentially may detract from the certainty that allows stakeholders, 
all of whom are already familiar with the existing system (in place 
since 2003), to plan for an orderly transition to alternatives. Such a 
change may not be justified given that there are only five remaining 
years for HCFC allocation (excluding the 0.5 percent of baseline for 
servicing needs). Under EPA's preferred approach of maintaining current 
baselines, baseline allocations would be the same as those shown in the 
proposed regulatory text at 40 CFR 82.17 and 82.19.
    EPA invites comment on the advantages and disadvantages of 
maintaining the established baseline system.

B. Consideration of Establishing Revised Baselines Using More Recent 
Production and Import Data

    Current production and consumption baselines were established using 
data from 1994-1997 and 2005-2007. EPA's preferred option is to keep 
the current baselines. However, EPA considered a second option: Re-
establishing baselines using more recent production and import data. 
Updating baselines would result in fewer allowances for companies that 
have fully or partially left the HCFC market and a greater number of 
allowances for companies that have more recently used calendar-year 
allowances.
    In the 2012 Proposed Rule (77 FR 237, January 4, 2012), the agency 
provided advance notice that for the 2015-2019 regulatory period, it 
would consider using more recent production and import data than the 
1994-1997 data used to set baselines for the first time in the 2003 
Final Rule. EPA was particularly interested in stakeholders' views on 
whether there would be an environmental benefit to updating baselines. 
In response to the proposed rule, the agency received several comments, 
both for and against updating baselines, but did not receive any 
comments indicating there was an environmental benefit to changing 
baselines. In the 2013 Final Rule, EPA stated that it would continue to 
assess the merits of using a more recent set of years to determine 
HCFC-22 and HCFC-142b baselines, but pointed out that it still had not 
heard an environmental rationale for making such a change.
    Further, the program's market-based orientation encouraged EPA to 
consider ways to promote an orderly phaseout--one in which stakeholders 
are offered advance planning certainty in their efforts to replace 
controlled chemicals. Thus, in completing the 2013 Final Rule we 
concluded that the certainty that facilitates orderly market transition 
to new, safer alternatives could be best promoted by maintaining 
expectations. Given the current state of the phaseout--within 5 years 
of virtual completion--the market may be best served by predictability 
and by the confirmation of long-established policy approaches.
    In developing this proposed rule, the agency evaluated whether to 
update baselines for the 2015-2019 regulatory period. First, consistent 
with its earlier statements, EPA considered whether there would be an 
environmental benefit to doing so. Second, EPA considered how it would 
pick ``a representative calendar year'' or years to serve as the 
baseline, as required by CAA section 601. Third, EPA also considered 
whether the agency would credit only actual production and import, or 
if a company would receive credit for allowances held as the result of 
a transfer. Fourth, EPA considered the length of time the baselines 
have already been used, as well as the length of time remaining before 
the HCFC-22 and HCFC-142b phaseout.
    Based on these considerations, EPA has decided not to propose to 
use a more recent set of years to establish company baselines. First, 
the agency does not see an environment benefit to using a more recent 
set of years: It is the percentage of baseline issued--not the 
aggregate baseline itself--that determines the allowed amount of 
production and import in a given year. A shift to different baselines 
would simply rearrange companies' shares of allowances. EPA has not 
made a practice of updating company baselines to reflect changes in the 
market. Rather, private entities may use the allowance transfer 
provisions in Part 82 to sell or acquire baseline allowances as 
appropriate. Second, it is unlikely that there is a more recent year or 
range of years that the majority of stakeholders could accept as 
representative. Third, while it would be important for the agency to 
consider whether to credit

[[Page 78085]]

only actual production and import, or also allowances held as the 
result of a transfer, such consideration would introduce uncertainty 
into the process. Fourth, the use of production and import data from 
1994-97 for HCFC-22 and HCFC-142b baselines began in the 2003 Final 
Rule and has continued through the present. These substances will be 
phased out in 2020. The current baselines are well understood by all 
affected entities and a change that would apply only to the last few 
years before the phaseout might simply cause confusion, in addition to 
affecting any longer-term business plans that companies may have based 
on the current baselines. Confusion resulting from resetting existing 
baselines would be counter to the Agency's goal of promoting a smooth 
transition to alternatives. For these reasons, the agency is not 
proposing to update the baselines for the 2015-2019 regulatory period.

V. How is EPA developing allocation levels for each HCFC?

    In developing proposed allocation levels, EPA considered what uses 
of HCFCs will be permitted in 2015 through 2019. Section 605(a) of the 
Clean Air Act limits the use of newly-produced (i.e. virgin) HCFCs 
beginning January 1, 2015. Under the statute, virgin HCFCs may be used 
as a refrigerant in appliances \13\ manufactured prior to 2020 (EPA 
accelerated this manufacturing date to 2010 for HCFC-22 and HCFC-142b) 
\14\ and also as a nonresidential fire suppressant, if listed as 
acceptable under SNAP for this end use. HCFC-22 and HCFC-123 are both 
used as refrigerants, and thus EPA is proposing to issue allowances for 
these chemicals. HCFC-22 has many refrigeration applications, and 
accounts for over 90 percent of all HCFC use; HCFC-123, on the other 
hand, accounts for a much smaller portion of refrigerant use, 
predominantly in large chillers. HCFC-123 and HCFC-123 blends are also 
listed as acceptable or acceptable subject to narrowed use limits for 
nonresidential fire suppression uses. EPA is proposing to issue 
allowances for both HCFC-22 and HCFC-123; however, since refrigeration 
represents a larger market than fire suppression, nearly all 
consumption and production allowances proposed for 2015-2019 will be 
for HCFC-22. EPA is also proposing to issue consumption and production 
allowances for HCFC-142b and HCFC-124, since both are listed as 
acceptable for certain refrigerant end uses and there continues to be 
small, albeit decreasing, demand for refrigerant blends containing 
these HCFCs. In addition, HCFC-124 is listed as acceptable in certain 
fire suppression blends. The proposed allocation options for HCFC-142b 
and HCFC-124 are presented in section V.C. and V.E., respectively. EPA 
is not proposing to issue allowances for HCFC-225ca or HCFC-225cb 
because neither is used as a refrigerant nor as a fire suppressant. Use 
of HCFC-141b was banned effective January 1, 2010 under existing 
regulations (see 82.15(g)(1),(3)), with limited exceptions. In 
addition, the exemption from the production and import phaseout that 
allows for HCFC-141b exemption allowances does not continue beyond 2014 
(see 40 CFR 82.16(b),(d)). Since the exemption does not exist beyond 
2014, EPA is proposing, effective January 1, 2015, to remove 40 CFR 
82.16(h), which describes the petition requirements for receiving HCFC-
141b exemption allowances. However, in accordance with 40 CFR 
82.18(a)(2) and (3), each company with an HCFC production baseline will 
receive Article 5 allowances \15\ in 2015 through 2019 equal to 10 
percent of its baseline for that HCFC, even if EPA does not issue 
consumption, production or exemption allowances for that substance.
---------------------------------------------------------------------------

    \13\ The Clean Air Act defines appliance as ``any device which 
contains and uses a class I or class II substance as a refrigerant 
and which is used for household or commercial purposes, including 
any air conditioner, refrigerator, chiller or freezer.''
    \14\ EPA accelerated the 605(a) use restrictions for HCFC-22 and 
HCFC-142b in the 2009 Final Rule. Consequently, HCFC-22, HCFC-142b 
and blends containing either can only be used as a refrigerant in 
appliances manufactured before January 1, 2010, not 2020. 
Additionally, the Clean Air Act allows use and introduction into 
interstate commerce of virgin HCFCs for use in transformation, but 
since this use does not require consumption or production 
allowances, it will not be discussed in this section.
    \15\ Article 5 allowances allow a company with an HCFC baseline 
to produce that HCFC only for export to Article 5 Parties under the 
Montreal Protocol. See 40 CFR 82.18(a).
---------------------------------------------------------------------------

    The proposed allocations in the following sections are based on 
EPA's Vintaging Model demand projections, recent market research on 
current HCFC uses and trends, and the expected availability of 
recovered and reused material. In the case of HCFC-22 and HCFC-142b, 
EPA also considered the fact that under longstanding regulations, these 
two HCFCs will be phased out as of January 1, 2020. Thus, EPA will 
cease issuing HCFC-22 and HCFC-142b consumption and production 
allowances by 2020 at the latest. The agency has compiled Vintaging 
Model projections and other data supporting its proposed allocations 
for 2015-2019 in the 2013 Servicing Tail Report on HCFC market needs, 
found in the docket to this rulemaking. EPA welcomes comment on all 
aspects of the report, including but not limited to the underlying 
assumptions and sensitivity analyses. Since the data in the report will 
be used to support the final allocations for 2015-2019, EPA requests 
any relevant data and market information that would improve the 
accuracy of the agency's projections. If commenters wish to submit 
confidential business information to support their comments on this 
proposal, please contact the person identified in the FOR FURTHER 
INFORMATION CONTACT section and review section I.B.1. of this notice.

A. How will EPA determine the HCFC-22 consumption allocation?

    EPA is considering three options for determining the HCFC-22 
consumption allocation. Each would involve a declining allocation from 
year to year. Under the linear drawdown (Option 1), which is EPA's 
preferred approach, the agency is proposing to decrease the allocation 
by the same amount each year, such that there is a linear decrease in 
allowances from 2015 through 2019, ending at zero in 2020. Under Option 
2, EPA is proposing a three year version of the linear drawdown, where 
consumption is phased out in 2018 instead of 2020. Under the estimation 
approach (Option 3), EPA is proposing to estimate servicing need using 
the Vintaging Model, and then make adjustments to account for estimated 
recovery and reuse, and inventory, much like it did in the 2009 and 
2013 Final Rules. Regardless of the option chosen, once the final rule 
is issued EPA does not intend to revise the 2015-2019 allocation. 
Leaving the possibility of additional EPA action to increase or 
decrease the allocation could create unnecessary uncertainty and 
undermine business planning and a smooth phaseout.
    In 2009, EPA published the 2009 Servicing Tail Report (available in 
the docket), which estimated HCFC-22 servicing need through 2020 using 
the Vintaging Model and several rounds of industry feedback. Through 
2011 and early 2012, market factors and feedback from industry 
indicated there was an over-supply of HCFC-22, which was discouraging 
use of recycled refrigerant and slowing transition to ozone-safe 
alternatives. EPA developed Analysis of HCFC-22 Servicing Needs in the 
U.S. Air Conditioning and Refrigeration Sector: Additional 
Considerations for Estimating Virgin Demand (Adjustment Memo, available 
in the docket) to accompany the proposed rule for 2012-2014, which 
contained new proposed

[[Page 78086]]

allocations in the wake of the Court's decision in Arkema. The 
Adjustment Memo examined updated projections from EPA's Vintaging 
Model, and then took into account recent market conditions. The 
Adjustment Memo considered reductions in the allocation based on 
increased reclaimer capacity, existing HCFC-22 inventory, and recovery 
and reuse by supermarkets. After reviewing public comment and 
stakeholder feedback, EPA finalized HCFC-22 allowances for 2012, 2013 
and 2014 in the 2013 Final Rule (78 FR 20004).
    As presented in the revised 2013 Servicing Tail Report included in 
the docket, EPA's Vintaging Model estimates that HCFC-22 servicing need 
in 2015 will be 46,165 MT, or 2,539 ODP-weighted MT. In 2015, the 
Montreal Protocol cap for all HCFC consumption is 1,524 ODP-weighted 
MT, which means that even if EPA allocated only HCFC-22 allowances, it 
still could not provide enough allowances to account for all projected 
HCFC-22 need. The gap in 2015 between projected servicing need and the 
Montreal Protocol cap is why EPA has continually emphasized the need 
for recovery, reuse and reclamation of HCFC-22, in addition to 
transition to non-ODS alternatives. Recovery, reuse and reclamation 
will become even more important in 2020, when HCFC-22 may no longer be 
produced or imported, but the projected servicing need is 22,572 MT.
    EPA also uses the Vintaging Model to project the amount of 
recoverable HCFC-22 each year. This projection is based on the modeled 
retirement of HCFC-22 equipment and modeled recovery rates specific to 
each equipment type. For example, for residential air conditioning, the 
Vintaging Model assumes each system being retired in a given year has a 
full charge at decommissioning, and that an average of 35 percent of 
the refrigerant in each retiring system is recovered. For other end 
uses, particularly those with very large charge sizes, the modeled 
recovery rate is much higher. In the Vintaging Model, the overall, 
industry-wide recovery rate is approximately 50 percent, though the 
exact number fluctuates each year based on the amount of equipment 
modeled as retiring in each end use. See Appendix A of the 2013 
Servicing Tail Report for modeled recovery rates specific to each 
equipment type.
    In the 2013 Servicing Tail Report, EPA has also included several 
sensitivity analyses to gauge how changes in several key assumptions 
affect estimated servicing need in 2015-2019. The assumptions EPA 
looked at include system charge size, average annual equipment leak 
rates (i.e., loss rates), and the expected length of time a system is 
in operation (i.e., equipment lifetime). All of these factors were 
examined as a result of information provided by industry 
representatives concerned that the agency's assessment of servicing 
need in the Vintaging Model could be too high. In addition to the 
sensitivity analyses, EPA has also updated its assessment of HCFC-22 
inventory and is providing more discussion of other factors affecting 
the HCFC-22 phaseout. The agency welcomes comment on all aspects of the 
2013 Servicing Tail Report. This information will support the 
allocation option chosen in the final rule.
1. Using a Linear Drawdown From 2014 Allocation Levels
    In 2020, the United States must be at 0.5 percent of its HCFC 
baseline, and under EPA regulations none of the HCFC production or 
import at that time may be for HCFC-22 or HCFC-142b. Given the agency's 
goal of ensuring a smooth transition away from HCFC-22 and into non-ODS 
alternatives, EPA is proposing a linear decrease in HCFC-22 allowances 
from 2015-2019. That is, allowances would decrease by the same amount 
each year, such that a decrease by that same amount from 2019 to 2020 
would bring the HCFC-22 allocation to zero. Under the linear drawdown 
approach, EPA is proposing to use the lowest proposed 2014 allocation 
level as its starting point (approximately 16,500 MT). Under this 
approach, the 2015 allocation would be approximately 13,700 MT with an 
annual decrease of approximately 2,700 MT. In 2019 the allocation would 
be 2,700 MT and in 2020 the allocation would be zero, with a total 
allocation of approximately 41,100 MT over the five year period. This 
linear drawdown--from the lowest proposed allocation in 2014 to zero in 
2020--is EPA's preferred approach. Since the market for virgin HCFC-22 
is solely for servicing air-conditioning and refrigeration equipment 
that was installed prior to 2010 (with limited exceptions through the 
end of 2011), EPA believes that decreasing the allocation by the same 
amount each year will drive the necessary changes in the service market 
to prepare for the 2020 phaseout, without unnecessarily forcing 
transition or retrofits out of HCFC-22 for equipment that is still 
within its expected lifetime. Several industry representatives have 
also suggested a 2015 allocation very close to EPA's preferred 2015 
allocation of approximately 13,700 MT; their support for such an 
allocation stems from the belief that the allocation for 2013 and 2014 
was higher than needed, resulting in an over-supply of HCFC-22 and an 
increase in inventory levels.
    EPA believes its preferred 2015 allocation is sufficient based on 
how the market responded in 2012 and early 2013 to the allowed amount 
of consumption under the No Action Assurance (i.e., non-enforcement) 
letters. The 2015 proposed allocation is only about 20 percent lower 
than the allowed consumption at the start of 2013 (17,902 MT). At that 
time, there was minimal concern that allowed consumption levels were 
too low; certain industry practices were changing and significant 
inventory was available to meet servicing need (summarized below). EPA 
obtained this information through numerous conversations with 
stakeholders, all of which are noted in the memo in the docket titled 
Relevant Meetings With External Stakeholders.
    First, channel inventory (i.e., existing material available for 
sale and distribution) likely helped meet servicing needs. Some 
industry feedback indicates a significant amount of inventory was 
consumed in 2012 to meet servicing needs. Industry feedback continues 
to indicate that despite this drawdown there remains a significant 
amount of inventory that can help meet servicing need in 2015 and later 
years.
    Second, servicing practices likely changed with the lower 
allocation to help meet servicing needs. With the price of HCFC-22 
increasing, industry feedback indicates service technicians may have 
been more careful with the refrigerant, resulting in lower loss rates 
and higher recovery rates than those estimated in the Vintaging Model.
    Third, industry feedback indicates the demand for dry-shipped HCFC-
22 condensing units continued to decrease. This suggests that the 
service contractor or the consumer's repair/replace decision may be 
affected by the price and availability of HCFC-22.
    Fourth, as the price of HCFC-22 increased and as equipment reached 
the end of its useful life, retrofits and system replacements occurred 
more rapidly than modeled. This is particularly apparent in the retail 
food segment. For example, feedback from numerous contacts in the 
supply chain indicate supermarkets used the seven- to 10-year remodel 
cycle to not only update display cases, but to also switch to new 
refrigerants (either through retrofits or system replacements). These 
retrofits result in significant amounts of used refrigerant that can be 
reclaimed, or recovered and reused. Feedback from several sources 
indicates HCFC-22 sales

[[Page 78087]]

to supermarkets dropped off significantly in the past few years, 
especially in 2012 and early 2013, with the reduction in allocation. 
Information from recovery companies also shows that supermarkets were 
holding onto their recovered HCFC-22 from decommissioned or retrofitted 
stores for use in other equipment under the same ownership. This 
practice will likely accelerate as the phaseout progresses.
    Other evidence indicates that service technicians also became more 
aware of and comfortable using non-ODS retrofit refrigerants. Feedback 
from numerous points in the supply chain indicates sales of HCFC-22 
retrofit refrigerants (e.g., R-407C, R-421A, R-422B, R-422D, R-438A, 
and numerous other non-ODS alternatives) have increased dramatically 
since 2011. This is also supported by data received recently from 
producers and distributors of HCFCs. As the phaseout progresses, the 
percentage of HCFC-22 demand met by retrofit refrigerants is expected 
to rise, thereby further reducing the need for HCFC-22 and adding to 
the potential inventory of reclaimed refrigerant.
    While EPA encourages equipment owners to retrofit when it makes 
sense, the agency also encourages equipment owners to look at the 
lowest GWP refrigerant that meets their needs and to consider the 
capacity and efficiency tradeoffs associated with a retrofit out of 
HCFC-22. HCFC-22 is typically the most efficient refrigerant to use in 
a piece of equipment designed to use HCFC-22--an important 
consideration when servicing an existing system. When changing the type 
of refrigerant used in a system, technicians and contractors may only 
use substitutes listed as an acceptable retrofit refrigerant for that 
end use under the SNAP program. If replacing the equipment, new systems 
may only use refrigerants listed under the SNAP program as acceptable 
for new equipment for that end use. A complete list of acceptable 
substitutes by end use is available at www.epa.gov/ozone/snap/refrigerants/. In addition to being illegal, failure to use an 
acceptable substitute may be unsafe. For example, equipment that is not 
designed for flammable refrigerants should not be retrofitted for use 
with hydrocarbons or other flammable substitutes.
    Fifth, as HCFC-22's price increased and its perceived availability 
decreased, reclamation increased by about 13 percent in 2012 from 8.3 
million lbs to 9.4 million lbs. While the increase between 2011 and 
2012 is only one year of data, the higher price of HCFC-22 was likely a 
factor since reclaimers started offering a higher buyback price for 
used material. Since the higher price of virgin refrigerant also 
encouraged retrofits, HCFC-22 from retiring systems was available for 
recovery and reclamation.
    EPA has attempted to quantify the possible effects on servicing 
need from many of these trends in the 2013 Servicing Tail Report. 
Coupled with the fact that an additional two years of retrofits and 
system retirements will have occurred by 2015, the agency's analysis 
and feedback from industry affirm that the preferred allocation option 
can meet servicing needs without causing shortages. EPA seeks comment 
on its assessment of market trends and the agency's preferred 
allocation of 13,700 MT of HCFC consumption allowances in 2015, with an 
annual decrease in allocation of 2,700 MT.
    EPA also notes that there appears to be a significant amount of 
HCFC-22 in inventory. As discussed in EPA's 2013 Servicing Tail Report, 
EPA has revised its estimate of HCFC-22 inventory. In the last 
rulemaking, EPA estimated HCFC-22 inventory at 22,700-45,400 MT. Based 
on information received recently, inventory is above that range.\16\ 
While excess HCFC-22 may provide the market more flexibility in its 
transition timeline, it may also discourage recovery and recycling of 
existing HCFCs. Since EPA has attempted to encourage recovery and 
reclamation throughout the HCFC phaseout, as well as a smooth 
transition, the agency is also seeking comment on whether a lower 2015 
allocation is preferable. Specifically, EPA is proposing as an 
alternative a lower linear drawdown starting at 10,000 MT in 2015 and 
dropping by 2,000 MT per year before reaching zero in 2020. Over the 
five year period, it would result in approximately 11,000 MT fewer 
HCFC-22 allowances than under the agency's preferred approach and could 
encourage better refrigerant management practices and more recycling 
and reclamation.
---------------------------------------------------------------------------

    \16\ This revised assessment is based on inventory data from a 
limited number of companies as of December 31, 2012, as well as 
other information received by the agency during the development of 
this proposed rule.
---------------------------------------------------------------------------

    Though all evidence received to date suggests that a 2015 
allocation of 13,700 MT is sufficient to meet market needs, EPA is also 
proposing as an alternative a linear drawdown starting from the 2014 
pre-recoupment \17\ allocation of 20,100 MT and ending at zero in 2020. 
Under this alternative linear drawdown, the allocation would start at 
about 16,700 MT in 2015 and would decrease by about 3,350 MT each year 
over the five year period; over five years EPA would allocate 9,200 MT 
more than under the preferred linear drawdown approach.
---------------------------------------------------------------------------

    \17\ Recoupment allowances refer to the additional HCFC-22 and 
HCFC-142b allowances that EPA allocated for 2013 and 2014, which 
were in addition to the aggregate allocations determined by the 
established percentage of baseline. EPA issued recoupment allowances 
to address the Court's decision in Arkema with respect to allowances 
for 2010. For a discussion of the agency's decision to provide 
recoupment, see the 2013 Final Rule at 78 FR 20015.
---------------------------------------------------------------------------

    As discussed in the preceding paragraphs, EPA is proposing higher 
and lower alternatives to its preferred approach for the linear 
drawdown. However, some stakeholders have encouraged EPA to go to zero 
and cease allocating allowances for HCFC-22 in 2015 instead of in 2020. 
They base this recommendation on the availability of alternatives, the 
capacity for reclamation, and the presence of a significant amount of 
inventory. While this approach could offer environmental benefits, the 
agency believes going to zero too quickly could have unintended 
consequences for end users that have been making equipment retrofit and 
replacement plans based on EPA's long-standing 2020 deadline for 
phasing out HCFC-22.
    EPA believes the linear drawdown approaches discussed in this 
section have several advantages. First, a linear drawdown provides the 
market with a clear signal that features consistent annual decreases 
that will drive transition to alternatives in advance of the 2020 
phaseout. The agency believes, and past commenters agree, that 
gradually decreasing the allocation provides the appropriate and 
necessary signal to encourage equipment owners and service technicians 
to transition when it makes sense for their individual circumstances. 
The linear drawdown allows the industry to establish plans in advance 
and develop the infrastructure to transition without significant market 
disruptions. Without a gradual transition, large quantities of system 
owners could wait until the last possible moment to transition, which 
could pose significant financial hardship and lead to widespread market 
disruptions in the 2019 to 2020 timeframe as end users scramble to find 
solutions to the HCFC-22 phaseout. While the estimation approach 
(Option 3) also decreases year-by-year, the 2015 allocation is 
significantly higher than under the preferred linear drawdown approach.
    Additionally, the change from 2019 to 2020 is substantially higher 
under the estimation approach than under any of the linear drawdown 
options, which could prompt system owners to stay in old HCFC-22 
equipment longer,

[[Page 78088]]

potentially contributing to market disruption. Regardless of the option 
chosen, a lower allocation could result in economic advantages for 
companies investing in reclamation and alternative refrigerants and 
equipment if it encourages consumers to use reclaimed refrigerant or an 
alternative sooner.
    The linear drawdown is also simple and easy to explain. This aspect 
is important for service technicians, since they are the ones directly 
interacting with home and business owners. It is often their job to 
explain what the HCFC phaseout means and how it works. Providing 
technicians with an easier-to-explain transition should improve 
consumers' understanding of the phaseout and the options available to 
them.
    Finally, this linear drawdown approach is preferred because it does 
not primarily rely on EPA's ability to predict annual servicing need, 
which becomes increasingly difficult as HCFC-22 is phased out. While 
the Vintaging Model is updated frequently to reflect changes in the 
marketplace, it doesn't model how the allocation in recent years 
affects servicing need in future years. For example, the final 2013-
2014 allocations will affect how HCFC-22 is bought, sold and stockpiled 
in each year. While there are limitations of the model, the sensitivity 
analyses in the 2013 Servicing Tail Report indicate the proposed linear 
drawdown approach is reasonable and can meet servicing need without 
shortages if servicing practices improve, and recycling and transition 
occur. The linear drawdown approach also takes into account how the 
market responded in 2012 and 2013 under the agency's No Action 
Assurance, which indicates the linear allocation approach may even more 
accurately reflect servicing need.
    The agency is also proposing a linear drawdown option that would 
use fewer steps and less time to arrive at an HCFC-22 allocation of 
zero. Option 2 in Table 1 shows a linear drawdown over three years 
instead of five, resulting in a consumption allocation of zero in 2018 
instead of 2020. One possible benefit of decreasing the HCFC-22 
allocation to zero sooner would be increased incentive to recover and 
recycle HCFC-22, and increased incentive to transition to alternatives 
and replace older, less energy efficient equipment. The three year 
linear drawdown provides environmental benefits as compared to the five 
year linear drawdown because it issues fewer HCFC-22 consumption 
allowances over the five year period. As under the five year linear 
drawdown (Option 1), EPA is proposing to use the lowest proposed 
allocation in 2014 as a starting point. The 2015 allocation would 
therefore be approximately 12,400 MT, with an annual decrease of about 
4,100 MT such that 2017 would be the final year of HCFC-22 consumption 
allowances (Option 2 in Table 1). In total, Option 2 would result in 
approximately 24,800 MT of allowances, which is 16,200 MT fewer than 
under EPA's preferred five year linear drawdown approach. EPA is also 
proposing a variant to this three year linear drawdown under which the 
agency would start from the pre-recoupment 2014 allocation of 20,100 
MT. EPA seeks comment on its alternative proposal to base the 
allocation on a three year linear drawdown instead of five years, and 
on whether, in this case, the 2015 allocation should be determined from 
the lowest proposed amount in 2014 or the actual 2014 allocation prior 
to the addition of recoupment allowances. Regardless of which variant 
of the three year linear drawdown is chosen, it would provide the 
largest environmental benefit of the options presented in this rule, 
since it results in the fewest allowances overall.
    In summary, EPA believes a linear drawdown helps ensure a smooth, 
simpler transition out of HCFC-22. This method of decreasing allowances 
does not rely directly on EPA's estimate of HCFC-22 servicing needs or 
changes in demand for refrigerant, though the 2013 Servicing Tail 
Report does confirm that a linear drawdown of allowances would still 
enable projected servicing need to be met under plausible recovery and 
reuse scenarios and changes in servicing practices. As a result, the 
agency believes making simple and consistent reductions in allowances 
each year could provide the certainty the market needs to transition 
smoothly from HCFC-22 to non-ODS alternatives.
    The agency welcomes comment on the benefits or drawbacks to a 
linear allocation schedule, as well as comments on both linear drawdown 
options (Options 1 and 2 in Table 1) and the proposed variants of 
Option 1 and Option 2, which are discussed in this section but not 
shown in Table 1.
2. Determining the Allocation by Estimating Servicing Need and Then 
Accounting for Need That Can Be Met by Sources Other Than New 
Production
    While not its preferred approach, EPA is also proposing to take the 
modeled servicing need for 2015-2019 as estimated in the 2013 Servicing 
Tail Report, subtract the amount of expected recovery and reuse, and 
then issue consumption allowances to account for the remaining HCFC-22 
need. This is the estimation approach, shown as Option 3 in Table 1. In 
the 2009 Final Rule covering 2010-2014, comments on the 2009 Servicing 
Tail Report prompted EPA to account for 12,500 MT of recovery and reuse 
in each year. That is, the allowances issued each year were 12,500 MT 
lower than the modeled servicing need for HCFC-22. This same 
methodology was used in the 2013 Final Rule covering 2012-2014, except 
the 2013 Final Rule also accounted for existing inventory, which could 
be used to meet servicing need as well. When EPA addressed existing 
inventory in the 2013 Final Rule, it did not necessarily intend to 
address inventory in subsequent rules or make it part of the ongoing 
allocation methodology. However, recent data received by EPA indicates 
there still is a significant inventory of HCFC-22. The proposal to 
account for existing inventory when setting the final HCFC-22 
allocation under this option is discussed in section V.A.3.
    In 2015, the amount of projected servicing need, minus the amount 
of expected recovery \18\ and reuse, is actually higher than the 2014 
allocation of 23,100 MT. The agency does not see any reason to increase 
the allocation from 2014 to 2015 because allowing the allocation to 
increase from 2014 to 2015 could reduce incentives for recovery and 
transition. In addition, EPA has received feedback from stakeholders 
that the final allocations for 2013 and 2014 were higher than the 
market was expecting. Thus, under this approach, the agency is 
proposing to issue the same amount of allowances in 2015 as in 2014, 
instead of allowing the allocation to increase in 2015. EPA would then 
apply the methodology presented earlier in this section to years 2016 
through 2019. EPA is proposing to use the currently modeled average 
recovery and reuse rate of approximately 50 percent. The resulting 
allocation schedule would start at 23,100 MT in 2015 and end at 6,200 
MT in 2019 before going to zero in 2020, shown as Option 3 in Table 1 
of this section. EPA welcomes comment on using the estimation approach 
to allocate allowances, in addition to comments on model parameters, 
such as the recovery rates used in the model for each end use and the 
installed equipment base (see 2013 Servicing Tail Report and 
appendices). The agency is especially interested in comment on modeled 
equipment characteristics, like

[[Page 78089]]

expected lifetime, charge size and leak rate, since assumptions about 
equipment characteristics affect the projected servicing needs for each 
end use.
---------------------------------------------------------------------------

    \18\ The expected recovery rate is approximately 50 percent 
industry-wide and is listed as the baseline recovery rate in the 
2013 Servicing Tail Report available in the docket.

                                        Table 1--Proposed Options for HCFC-22 Consumption Allocation in 2015-2019
                                                                      [Metric tons]
--------------------------------------------------------------------------------------------------------------------------------------------------------
    HCFC-22 Proposed consumption  allocation options           2015            2016            2017            2018            2019            2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option 1: Linear drawdown over 5 years..................          13,700          10,900           8,200           5,500           2,700               0
Option 2: Linear drawdown over 3 years..................          12,400           8,300           4,100               0               0               0
Option 3: Estimation Approach...........................          23,100          20,900          15,100          11,500           6,200               0
--------------------------------------------------------------------------------------------------------------------------------------------------------

3. Accounting for Existing HCFC-22 Inventory
    As stated earlier in this section, EPA did not commit itself to 
account for existing HCFC-22 inventory when setting the allocations for 
2015-2019; however, EPA is proposing to account for existing inventory 
for two primary reasons. The first is that EPA has heard from 
stakeholders that industry-wide inventory is still very large. In 
addition, many feel that the final 2013 and 2014 allocations were 
higher than the market needs, and will therefore lead to a buildup of 
additional HCFC-22 stocks going in to 2015. The second reason EPA is 
proposing to account for existing inventory is based on the agency's 
fall 2011 market analysis supporting its proposal to reduce allowances, 
as compared to the 2009 Final Rule (see Adjustment Memo, included in 
the docket to this rulemaking). That analysis assumed there was a 
surplus inventory between 22,700 and 45,400 MT at the beginning of 
2012. Given expectations about the transition away from HCFCs, as well 
as the 2015 and 2020 HCFC phaseout milestones, EPA estimated that the 
complete drawdown could take somewhere between four to eight years. 
Based on its estimates of existing inventory, EPA proposed and 
finalized a 6,000 MT reduction in allowances for 2012-2014. Given that 
a 6,000 MT reduction over 2012-2014 is only 18,000 MT total, the agency 
believes there still is ample existing supply of HCFC-22. Recent data 
from stakeholders confirms that the inventory level is above the high 
end or above EPA's previous estimate. As such, EPA is proposing to 
account for up to 10,000 MT of inventory each year in 2015-2019 under 
the estimation approach. EPA is also proposing to make larger annual 
reductions in the earlier years and smaller annual reductions in the 
later years under this approach. Such a tapered approach to accounting 
for existing inventory would be consistent with the recent feedback and 
comments that EPA has received. Many stakeholders have noted that 
sending strong market signals early in the control period is 
fundamental to preparing the market for the complete phaseout of virgin 
HCFC-22 production and import by 2020.
    For this modified estimation approach, as well as the linear 
drawdown approaches, the agency will consider inventory data in 
choosing its final allocation methodology and welcomes comment on its 
approach.

B. How will EPA determine the HCFC-22 production allocation?

    Since the start of the HCFC phaseout program in 2003, the agency 
has determined the HCFC-22 production allocation in one of two ways. 
Under either method, EPA first determines the aggregate consumption 
allocation needed and assigns the consumption baseline percentage 
accordingly. The process for assigning consumption baseline percentages 
works as follows: First, all the company-specific baselines listed in 
the tables at 40 CFR 82.19 are added to determine the aggregate 
consumption baseline. Second, EPA determines how many consumption 
allowances to allocate for a given year and divides that amount by the 
aggregate baseline. The resulting percentage listed in the table at 
section 82.16 becomes what each company is allowed to consume in a 
given control period. For example, a company with 100,000 kg of HCFC-22 
consumption baseline allowances would multiply that number by the 
percentage allowed in a given year (for example, 25 percent) to 
determine its calendar-year consumption allowance is 25,000 kg.
    In the 2003 Final Rule covering 2003-2009, and again in the 2009 
Final Rule covering 2010-2014, EPA allocated the same percentage of 
baseline allowances for production as it did for consumption. A company 
with a production baseline at 40 CFR 82.17 would simply multiply its 
baseline by the percentage listed at 82.16 to determine its calendar-
year production allocation. However, in the 2013 Final Rule covering 
2012-2014, EPA provided a larger percentage of baseline and more HCFC-
22 production allowances than it did for consumption. That is, section 
82.16 was amended to include two tables, one listing the baseline 
percentage for consumption and the other listing the percentage for 
production. As discussed in the 2013 Final Rule, the reason for this 
change was to allow United States manufacturers to produce at the same 
level as under the 2009 Final Rule and continue to compete globally, 
and to potentially reduce the need for less efficient production abroad 
(see 78 FR 20020).
    For the 2015-2019 regulatory period, EPA is considering two options 
for the HCFC-22 production allocation: (1) Issue production allowances 
at the highest allowable level under the Montreal Protocol to continue 
to allow United States producers to compete globally much like it did 
in the 2013 Final Rule covering 2012-2014, which is the agency's 
preferred approach or (2) provide approximately the same number of 
production allowances as consumption allowances.
1. Allocate the Maximum Production Allocation Allowed Under the Cap
    In the 2013 Final Rule, EPA determined that it has the authority to 
issue calendar-year consumption and production allowances using 
different percentages of baseline, as long as the agency complies with 
the overall schedule set by the Montreal Protocol and Congress, as 
accelerated under section 606. Therefore, the agency has the ability to 
set baseline percentages such that the aggregate production allocation 
is larger than the consumption allocation. See the 2013 Final Rule (78 
FR 20018) for a discussion of EPA's ability to decouple production and 
consumption baselines.
    As stated in the 2013 Final Rule, EPA believes that allocating more 
production allowances than consumption allowances cannot lead to an 
increase in United States consumption, would not

[[Page 78090]]

result in a global increase in production or consumption of HCFC-22, 
but could result in more United States production for export relative 
to the scenario in which production allowances are at approximately the 
same level as consumption allowances. This may have economic benefits 
for the United States and potentially environmental benefits to the 
extent that production might otherwise occur in plants that lack HFC-23 
byproduct destruction technologies. EPA's preferred approach is to 
allocate more production allowances than consumption allowances, up to 
the maximum allowed under the Montreal Protocol cap.
    Allocating more production allowances than consumption allowances 
would not provide United States producers the opportunity to produce 
more HCFCs for domestic consumption than the amount allowed by the 
consumption allocation. Production of one kilogram of an HCFC still 
requires both a production allowance and a consumption allowance 
(82.15(a)(1), (2)). Allocating more production than consumption would 
provide United States producers the opportunity to continue production 
for export subject to existing regulatory constraints. A company must 
submit documentation to verify the export of an HCFC for which 
consumption allowances were expended in order to request a 
reimbursement of spent consumption allowances. The agency reviews the 
documentation and issues a notice to either deny or grant the request. 
Therefore, a company would not be able to produce more HCFC-22 unless 
it had exported an equal amount of material and been granted a refund 
of spent consumption allowances.
    As mentioned previously, EPA also believes that allocating more 
production allowances than consumption allowances could have 
environmental benefits if United States production displaces production 
at facilities that do not control byproduct emissions of 
hydrofluorocarbon (HFC)-23, which has a global warming potential of 
14,800.\19\ In the 2013 Final Rule, EPA responded to comments that 
cited the growth of HFC-23 emissions globally and indicated that 
facilities in Article 5 countries do not control HFC-23 emissions to 
the same degree as companies operating in the United States. EPA has 
worked with industry through its HFC-23 Emission Reduction Partnership 
to encourage companies to reduce HFC-23 byproduct emissions from the 
manufacture of HCFC-22. Production of HCFC-22 in the United States may 
provide environmental benefits in reduced HFC-23 emissions to the 
extent United States production supplants the Article 5 production in 
those specific plants that do not have HFC-23 byproduct destruction 
technologies installed. For further discussion of HFC-23 byproduct 
emissions in Article 5 countries, see the 2013 Final Rule at 78 FR 
20021.
---------------------------------------------------------------------------

    \19\ GWP of HFC-23 presented in the Intergovernmental Panel on 
Climate Change (IPCC) Fourth Assessment Report: Climate Change 2007 
(AR4).
---------------------------------------------------------------------------

    EPA also determined in the 2013 Final Rule that allowing United 
States production to remain at the levels finalized in the 2009 Final 
Rule would not result in increased global consumption. Providing more 
production than consumption allowances could allow companies to 
continue exporting to non-Article 5 countries, which have the same 
overall Montreal Protocol phaseout schedule as the United States but 
may not use the United States' chemical-by-chemical approach to phasing 
out HCFCs. Also, consumption of HCFCs in Article 5 countries was capped 
starting in 2013, which further limits global HCFC-22 demand (see 
Montreal Protocol Art. 5, para. 8 ter.). And finally, at least one 
company holding production allowances does not produce HCFC-22 in the 
United States, so it is unlikely that every production allowance issued 
will be used. EPA is concerned that the alternative approach--issuing 
production allowances at the same level as consumption, instead of at 
the maximum level allowed under the cap--could deprive United States 
manufacturers of existing global business.
    Therefore, EPA is proposing to issue the maximum number of HCFC-22 
production allowances allowed under the Montreal Protocol cap, after 
accounting for production allocations of any other HCFCs. Starting in 
2015, the United States production cap under the Montreal Protocol is 
1,553.7 ODP-weighted MT; when converted entirely to HCFC-22, the 
production cap is 28,249 MT of HCFC-22. To put the 2015 cap in 
perspective, EPA issued 41,200 MT of HCFC-22 production allowances in 
2013 and 36,000 MT in 2014. Allocating the maximum allowed under the 
cap would still be a significant decrease from 2013 and 2014 production 
allocations. EPA is proposing to take the cap of 1,553.7 ODP-weighted 
MT, subtract the final production allocation for any other HCFCs, and 
then issue the remaining amount for HCFC-22 production. Under the 
agency's preferred options for all other production allocations, the 
resulting HCFC-22 allocation in 2015-2019 would be approximately 28,000 
MT, or 21.7% percent of baseline. EPA welcomes comment on this 
approach.
2. Allocate Approximately the Same Number of Production Allowances as 
Consumption Allowances
    A second option for determining the HCFC-22 production allocation 
is to issue approximately the same number of production allowances as 
consumption allowances. Under this approach, the production allocation 
would be significantly lower than in 2013 and 2014. The highest 
proposed consumption allocation in this rulemaking is 23,100 MT in 
2015, which is close to half as much as the 2013 production allocation 
and about two-thirds as much as the 2014 production allocation. This 
approach could result in less United States production for export, with 
economic disadvantages for the United States and potentially 
environmental disbenefits to the extent that more production might 
occur in plants that lack HFC-23 byproduct destruction technologies.
    Under this approach, EPA would determine the desired aggregate 
consumption allocation in each year and set the percentage of 
consumption baseline accordingly. The percentage of production baseline 
issued would be whatever percentage results in an aggregate production 
allocation that is approximately equal to the aggregate consumption 
allocation. EPA welcomes comment on the merits of this option.

C. How will EPA determine the HCFC-142b allocation?

    In the 2009 Final Rule for 2010-2014, EPA allocated 100 MT of HCFC-
142b consumption allowances for each of those years (74 FR 66412). When 
EPA re-established HCFC-22 and HCFC-142b baselines in the 2011 Interim 
Final Rule and 2013 Final Rule, the HCFC-142b consumption allocation 
remained at 100 MT. However, since the HCFC-142b production baseline 
was significantly higher than the consumption baseline, and the same 
percentage of baseline was used for both consumption and production, 
the production allocation became 463 MT (not including recoupment) in 
2011-2014.
    As discussed briefly in the 2013 Servicing Tail Report, the 
Vintaging Model does not model demand for HCFC-142b uses after 2014. 
However, several HCFC manufacturers anticipate continued, albeit 
decreasing, sales of refrigerant blends containing HCFC-142b in 2015 
and later. HCFC-142b is predominantly used in refrigerant

[[Page 78091]]

blends that have historically served as replacements for CFC-12 and R-
500 in medium- and large-sized refrigeration equipment. It is important 
to note that some of these blends containing HCFC-142b, namely R-409A, 
are in use today but are not modeled in the Vintaging Model; thus, the 
model is not an accurate reflection of the niche refrigeration needs 
for HCFC-142b. Given that the agency knows there is some R-409A 
equipment in use based on refrigerant sales data collected by the 
California Air Resources Board (see Preliminary 2011 and 2012 Sales and 
Distribution Data from the California Air Resources Board's Refrigerant 
Management Program in the docket) and industry feedback, the agency is 
proposing to allocate 35 MT in 2015 with a decrease of 5 MT each year. 
EPA believes an allocation of 35 MT in 2015 is an appropriate balance 
between the 2010-2014 allocation of 100 MT, the actual consumption of 
HCFC-142b in recent years, and the fact that while R-409A is still 
needed, it is used mainly in CFC retrofitted equipment (i.e., equipment 
that is at or is nearing its expected retirement). With an annual 
decrease of 5 MT, the HCFC-142b allocation would be 15 MT in 2019. The 
agency thinks that a decreasing allocation sends a stronger market 
signal that production and import of HCFC-142b are ending, as compared 
to a constant allocation in all five years. Such a signal should help 
encourage equipment owners to transition to more energy efficient 
equipment that uses non-ODS refrigerants. EPA will consider issuing up 
to 100 MT of HCFC-142b consumption allowances, but would need 
substantial data supporting such an allocation. Specifically, EPA would 
need to know for which blends, in what quantity and for what end use(s) 
the HCFC-142b is needed.
    EPA is proposing to issue HCFC-142b production allowances at the 
same level as consumption, not the same percentage of baseline. Given 
historic exports of HCFC-142b, EPA does not believe the same rationale 
for allowing production to be higher than consumption applies to HCFC-
142b as it applies to HCFC-22. In the 2013 Final Rule, HCFC-142b 
production was higher than consumption due to the different changes in 
production and consumption baselines, not due to any concerns about 
HCFC-142b export (as was the case for HCFC-22 production). The agency 
would consider issuing up to 100 MT of production, even if the final 
consumption allocation is lower, if there is documented need for United 
States-produced HCFC-142b in other non-Article 5 countries. The agency 
is not proposing to issue any more than 100 MT of HCFC-142b production 
allowances. EPA requests comments on its proposal, as well as data on 
current and future needs of HCFC-142b.

D. How will EPA determine the HCFC-123 allocation?

    HCFC-123 is currently used as a refrigerant and as a fire 
suppression agent, which are the two consumptive uses of virgin HCFCs 
permitted by section 605(a) of the CAA as of January 1, 2015. The 
agency is proposing to issue consumption allowances to allow import for 
these two uses. For the 2010-2014 regulatory period, EPA issued 
approximately 2,500 MT of HCFC-123 consumption allowances each year, 
which is 125% of the HCFC-123 consumption baseline. EPA has never 
established a production baseline for HCFC-123, and the agency has no 
record of domestic production of HCFC-123 for consumptive uses during 
the baseline years (2005-2007). Section 605(b) of the Clean Air Act 
restricts production of any class II substance to 100% of baseline 
levels or less beginning on January 1, 2015. Section 605(c) requires 
that consumption of class II substances be phased out on the same 
schedule as production. The agency's reading of 605(b) and 605(c) 
together is that as of January 1, 2015, EPA may allocate no more than 
100 percent of baseline for production or consumption of each class II 
substance. This milestone is part of the phaseout schedule contained in 
the CAA. EPA has accelerated the section 605 phaseout schedule under 
the authority of section 606. Nevertheless, the 2015 milestone in 
section 605(b) is still relevant because it applies to each class II 
substance individually. This is in contrast to the basket approach 
contained in the Montreal Protocol. Under section 614(b), where there 
is a conflict between Title VI of the CAA and the Montreal Protocol, 
``the more stringent provision shall govern.'' With respect to 
individual substances, section 605 is more stringent. Thus, for the 
2015 control period and beyond, EPA may not allocate more than 100 
percent of baseline for any class II substance. EPA did determine in 
the 2013 Final Rule that the percent of production and consumption 
baseline allocated as calendar-year allowances may be different, but 
only so long as the phaseout of a substance continues on the same 
overall schedule presented in the CAA and the Protocol (78 FR 20004). 
See the 2013 Final Rule and the accompanying Response to Comments for a 
complete discussion of the agency's authority to decouple production 
and consumption percentages.
    In considering allocation options, EPA has looked at the projected 
need for virgin HCFC-123 for refrigeration and nonresidential fire 
suppression uses. EPA's modeled need for each of these uses is 
presented in the 2013 Servicing Tail Report, included in the docket to 
this rulemaking. EPA is taking comment on the remaining refrigerant and 
fire suppression uses of HCFC-123, how much is needed, and why non-ODS 
alternatives could not meet this need. Commenters should clarify the 
quantity of their specific needs, in addition to any broader comments 
on industry demand for HCFC-123.
    Under the current phaseout regulations, beginning in 2015, 
production and import of HCFC-123 is limited to servicing of existing 
refrigeration and air conditioning equipment only. EPA is proposing to 
revise section 82.16(d) to allow production and import of HCFC-123 for 
fire suppression purposes to complement section 605(a)(4) of the CAA. 
This exemption would sunset on December 31, 2019 because, as discussed 
in more detail in Section II.A. of this preamble, beginning in 2020, 
Article 2F of the Montreal Protocol restricts production and import of 
HCFCs to servicing of existing refrigeration and air conditioning 
equipment.\20\ Under section 614 of the CAA, where either the Montreal 
Protocol or the CAA is more stringent, the more stringent provision 
governs. While virgin HCFCs could continue to be used in fire 
suppression applications, EPA does not intend to issue consumption 
allowances for fire suppression after 2019. In addition, beginning in 
2020, section 605(a) of the CAA prohibits the use of virgin class II 
substances in the installation and/or manufacture of new AC and 
refrigeration systems. Any HCFC-123 consumption allowances issued after 
2019 would only allow HCFC-123 import for use as a refrigerant for 
servicing existing HCFC-123 systems.
---------------------------------------------------------------------------

    \20\ Use of HCFC-123 that was imported prior to 2020, or that is 
used, recovered and recycled, is still allowed beyond January 1, 
2020.
---------------------------------------------------------------------------

    EPA's understanding is that much of the HCFC-123 refrigerant in use 
today is to service and manufacture low pressure chillers, which have 
relatively long expected lifetimes; the Vintaging Model assumes a 27-
year average lifetime, and the United States tax code uses a 39-year 
depreciation schedule for a category of equipment that includes HCFC-
123 chillers (26 U.S.C. 168).

[[Page 78092]]

Given the expectation that these chillers will last for well over 20 
years, EPA seeks comment on whether it should provide a static amount 
of HCFC-123 allowances through 2019, or whether it should begin to 
gradually reduce HCFC-123 allowances now to foster transition. The two 
proposed options for issuing HCFC-123 consumption allowances are 
outlined below, though EPA's preferred option is to issue 100 percent 
of the HCFC-123 baseline. Commenters should explain why they prefer 
either option in as much detail, and with as much quantitative 
reasoning, as possible.
1. Allocate 100 Percent of HCFC-123 Consumption Baseline Through 2019
    EPA is proposing to issue approximately 2,000 MT of HCFC-123 
consumption allowances for each year from 2015-2019, which is the 
maximum allocation allowed under the CAA because it is equal to 100 
percent of the consumption baseline. The agency believes this amount 
would be sufficient to meet the refrigeration and nonresidential fire 
suppression needs, even though projected need is 2,200 MT in 2015-2018 
and 2,300 MT in 2019. EPA expects 2,000 MT of HCFC-123 allowances will 
be sufficient to meet modeled need because the Vintaging Model projects 
that at least 330 MT of HCFC-123 will be available for recovery and 
reuse in 2015, and even more should be available in later years, mainly 
because HCFC-123 chillers have high (90 percent) expected recovery 
rates due to their large charge size. So while this proposed option 
does not incorporate specific reductions for recovery and reuse, it 
does assume that some demand for HCFC-123 can be met with recovered 
material. EPA prefers this approach because (1) the allocation is still 
below modeled need; (2) HCFC-123 may be produced and imported for use 
as a refrigerant until 2030; and (3) there are no commercially 
available alternatives to HCFC-123 in low-pressure chillers as of mid-
2013. EPA welcomes comment on its preferred proposal to issue 2,000 MT 
in each year, and again notes that it cannot issue more than 100 
percent of the HCFC-123 baseline.
2. Allocate Less Than 100 Percent of HCFC-123 Consumption Baseline
    EPA is proposing in the alternative to issue only enough HCFC-123 
allowances to meet anticipated need, after specifically accounting for 
recovery and reuse. Under this option, EPA would allocate 1,900 MT of 
consumption allowances in 2015-2017, and 1,400 MT of allowances in 2018 
and 2019. The objective of this approach is to foster recovery and 
reuse, and to recognize that while virgin production of HCFC-123 could 
occur through 2029, HCFC-123 equipment can only be manufactured through 
2019. As shown in Table 4-12 of the 2013 Servicing Tail Report, the 
total servicing demand plus the demand for charging new refrigeration 
and fire suppression equipment is 2,200 MT in 2015-2018 and 2,300 MT in 
2019. After subtracting the amount of that total demand that EPA 
estimates can be met by recovered and reused material, the remaining 
need that would be met by virgin production is equal to the proposed 
allocation in each year. For 2015-2017 the proposed allocation is 1,900 
MT, dropping to 1,400 MT in 2018 and 2019, as discussed in the 2013 
Servicing Tail Report. The agency is seeking comment on this approach, 
especially the HCFC-123 need estimates presented in the 2013 Servicing 
Tail Report, to what extent need could reasonably be met with recovered 
material and to what extent commenters believe the HCFC-123 allocation 
will affect transition to alternatives.

E. How will EPA determine the HCFC-124 allocation?

    Though HCFC-124 has both refrigeration and fire suppression 
applications that are listed as acceptable under the Significant New 
Alternatives Policy (SNAP) program, its primary use today is in 
sterilant blends. Beginning January 1, 2015, CAA section 605(a) 
prohibits the use of virgin HCFCs as sterilants, since sterilant use is 
not one of the four statutory exceptions. As discussed earlier in 
section III.B. of this preamble, 605(a) restricts the use of bulk class 
II substances, not products containing class II substances. However, 
manufacture of a product is considered ``use'' of a bulk substance and 
therefore is prohibited beginning January 1, 2015, unless the 
manufacturer is using recovered and recycled HCFC-124. EPA's 
understanding is that most of the sterilant industry is on target to 
transition to non-ODS alternatives prior to January 1, 2015, but 
welcomes comment on the transition out of HCFC-124 sterilants, 
particularly the status of sterilant users' transition to alternatives.
    While most HCFC-124 use is as a sterilant, there are, in fact, 
several refrigerant blends with HCFC-124 that are listed as acceptable 
by the SNAP program. These blends include: R-401A, R-401B, R-409A, R-
414A, R-414B and R-416A. Similarly, EPA has also listed as acceptable 
certain fire suppression alternatives that contain HCFC-124. For total 
flooding applications, EPA has listed neat HCFC-124 and HCFC Blend A 
(NAFS-III) as acceptable alternatives to Halon 1301. For streaming 
applications, the agency has listed neat HCFC-124 and HCFC Blend C (NAF 
P-III) as acceptable alternatives to Halon 1211. However, the agency is 
not aware of any HCFC-124 fire suppression uses in the United States.
    Given the small projected need for HCFC-124 beyond 2014 and the 
continued use of certain refrigerant blends containing HCFC-124, the 
agency is proposing to issue some HCFC-124 allowances in 2015-2019, 
consistent with the most recent Vintaging Model projections of HCFC-124 
servicing need and recent feedback from industry stakeholders. Due to 
the very small projected need, HCFC-124 is only discussed briefly in 
the 2013 Servicing Tail Report; the remainder of the HCFC-124 
discussion is included here. The estimated need in the Vintaging Model 
decreases from 4.5 MT in 2015 to 3.1 MT in 2019, with just over half of 
the need modeled for use in Industrial Process Refrigeration and the 
other half for Medium Retail Food. EPA could propose to allocate just 4 
MT in each year, but the agency recognizes that the Vintaging Model may 
not capture all current uses of HCFC-124 refrigeration equipment, as is 
the case with HCFC-142b equipment. Based on Vintaging Model estimates, 
along with industry feedback on the needs and uses of HCFC-124, and the 
use of HCFC-124 allowances in recent years, EPA is proposing to 
allocate 200 MT of HCFC-124. For reference, the 2010-2014 consumption 
and production allocations are roughly 3,000 MT and 5,000 MT, 
respectively, though reported consumption and production has been 
substantially less in recent years. EPA's goal is to ensure that 
servicing needs can be met, while also encouraging recovery and reuse 
or transition to non-ODS refrigerant blends. An allocation of 200 MT 
supports this goal because it accounts for allowed end uses of HCFC-124 
that may not be captured by the Vintaging Model (e.g. use of niche 
refrigerant blends containing HCFC-124), but also recognizes that the 
primary use of HCFC-124 will no longer be allowed as of January 1, 
2015.
    Unlike HCFC-123, companies do have HCFC-124 production baselines 
and so EPA is proposing to allocate consumption and production at the 
same level. EPA's preferred approach is to allocate 200 MT of 
production and consumption allowances to allow for limited manufacture 
of niche refrigerant blends; however, the agency is proposing in the 
alternative to issue as

[[Page 78093]]

few as 4 MT of HCFC-124 consumption and/or production allowances, 
consistent with the Vintaging Model projections. This is not EPA's 
preferred allocation, but the agency is open to comments in support of 
this lower proposed option if commenters can provide evidence 
suggesting that the allocation should be as low as 4 MT. Similarly, EPA 
is also requesting data from commenters in support of allocating up to 
400 MT of HCFC-124 allowances and is proposing to issue up to 400 MT if 
comments and data warrant an increase. The agency seeks comment on the 
transition or retrofit plans of equipment owners, and for how long they 
expect to need virgin HCFC-124.

F. How will EPA determine the HCFC-225ca/cb allocation?

    According to the 2009 Servicing Tail Report, more recent updates to 
EPA's Vintaging Model and conversations with stakeholders, HCFC-225ca 
and HCFC-225cb are used only as solvents, usually in precision cleaning 
of electronics, optical equipment or liquid oxygen systems. In the 2009 
Final Rule, the agency used HCFC-225ca/cb as an example of the future 
effects of the section 605(a) use restriction, stating that ``HCFC-
225ca and HCFC-225cb are generally used as solvents, but as of January 
1, 2015, under section 605(a), HCFCs may not be used as solvents'' (74 
FR 66433). This restriction is reflected in the regulations at section 
82.15(g). However, as discussed in section III.B, EPA is proposing a 
limited exemption to allow entities that have HCFC-225ca/cb in their 
inventory prior to January 1, 2015 to continue to use their HCFC-225ca/
cb as a solvent beyond that date.
    The proposed exemption would apply only to use of HCFC-225ca/cb as 
a solvent by persons who hold that HCFC-225ca/cb in their inventory as 
of January 1, 2015; EPA is not proposing an exemption from the 
restriction on introduction into interstate commerce of HCFCs for 
solvent purposes. Accordingly, the agency is not proposing to issue any 
allowances for the production or consumption of HCFC-225ca/cb. Combined 
with the continued use of products containing HCFC-225ca/cb, EPA's 
understanding from stakeholders is that an exemption to the use 
prohibition to allow for continued use of virgin HCFC-225ca/cb as a 
solvent by persons with HCFC-225ca/cb in their inventory would be 
sufficient to meet the anticipated solvent needs for specialized, niche 
applications that are not able to transition to alternatives prior to 
2015. EPA is proposing such an exemption in section III.B.1. of this 
preamble.

G. What is EPA proposing to do with the HCFC-141b exemption program?

    The HCFC-141b exemption program has been in place since the start 
of the HCFC allowance program in 2003. In the preamble to the 2009 
Final Rule, EPA stated that the petition process for HCFC-141b 
exemption allowances at section 82.16(h) would end in 2015, since HCFC-
141b is not used as a refrigerant and thus does not meet the criteria 
established by section 605(a) for continued use. HCFC-141b similarly is 
not used as a fire suppression agent. EPA is proposing to revise 40 CFR 
82.16, which is the section of subpart A that addresses the phaseout 
schedule of class II controlled substances. The date limitation on the 
HCFC-141b petition process can already be seen by comparing section 
82.16(b), which lists ``HCFC-141b exemption needs'' as one of the 
exceptions to the HCFC-141b phaseout, with section 82.16(d), which does 
not include HCFC-141b exemption needs in the list of exceptions that 
continue beyond January 1, 2015. However, the HCFC-141b petition 
process in 82.16(h) does not specify an end date. EPA is proposing to 
remove the HCFC-141b petition process from the regulations effective 
January 1, 2015. Removing the text will clarify that EPA will not grant 
petitions, whether new or existing, for HCFC-141b exemption allowances 
in 2015 or beyond.
    In recent years the amount of HCFC-141b imported or produced has 
been decreasing significantly. The agency does not anticipate there 
will be any remaining need for HCFC-141b import or production starting 
in 2015. Excluding transhipments, heels or used material, the 
regulations at 40 CFR 82.15(g)(3) limit the use or introduction into 
interstate commerce of HCFC-141b to export to Article 5 countries and 
use in transformation or destruction processes, beginning January 1, 
2015. Despite the strict limits on HCFC-141b use in 82.15(g)(3), EPA 
appreciates that some current users of HCFC-141b may face a similar 
situation as users of HCFC-225ca/cb. That is, there may be users with 
HCFC-141b inventory that will not be allowed to use any remaining HCFC-
141b after 2014. The agency has not heard from any HCFC-141b users, and 
thus does not anticipate the need for any exemption to the use 
restrictions for HCFC-141b; however, EPA welcomes comment on whether 
there are remaining niche uses of HCFC-141b. Commenters should explain 
the use and the quantity of HCFC-141b needed, why alternatives or used 
HCFC-141b cannot meet this need and the plan for transitioning to 
alternatives.

H. Other HCFCs That Are Class II Controlled Substances

    To date, EPA has not established baselines or issued allowances for 
the production or import of HCFCs that are not included in the tables 
at 40 CFR 82.16(a). The prohibitions in 40 CFR 82.15(a) and (b) on 
production and import without allowances do not apply to such HCFCs. 
However, the phaseout schedule in 40 CFR 82.16 applies to all class II 
substances, whether or not they are governed by the allowance system. 
Similarly, all class II substances are subject to the restrictions on 
introduction into interstate commerce and use contained in 40 CFR 
82.15(g). HCFCs that EPA has listed as class II controlled substances 
are identified in appendix B to subpart A.
    Beginning January 1, 2015, the use of all class II substances is 
banned, unless specifically exempted (see section III.B. of this 
preamble for more details). EPA is seeking comment on whether any of 
the HCFCs not governed by the allowance system qualify for the 
nonresidential fire suppression and/or refrigeration servicing 
exemptions and what quantity the market will need going forward for 
these purposes. Should the need for any of these chemicals grow or 
potentially put the United States in danger of not meeting its 
commitments under the Montreal Protocol, EPA would consider 
establishing baselines and allocating calendar-year allowances via a 
separate rulemaking.
    As mentioned earlier in section III.B. of this preamble, EPA is 
proposing to amend the list of class II controlled substances in 
appendix B of subpart A to better match the Clean Air Act section 602 
and the Montreal Protocol HCFC lists (found in Group I to Annex C of 
the Protocol). Currently, both the Protocol and CAA section 602 include 
all isomers of listed substances, but 40 CFR part 82 subpart A, 
appendix B does not include all isomers, only those that are 
specifically named (e.g., HCFC-141b is listed as such, but there are 
other isomers of HCFC-141 that are not included in appendix B). CAA 
section 602 states that EPA ``shall publish'' a list of class II 
substances that shall include the specified HCFCs and ``shall also 
include the isomers'' of those substances. EPA's intent was to list all 
isomers in appendix B, as indicated by the footnote explaining that 
when a range of ODPs is listed for a chemical, the range applies to an 
isomeric group. The proposed change would correct this

[[Page 78094]]

omission. Specifically, EPA is proposing to reconcile the statutory and 
Montreal Protocol lists with the list in the regulations, and to add a 
statement that appendix B of the regulations includes all isomers of a 
listed chemical, even if the isomer itself is not listed on its own.

VI. What other adjustments to the HCFC allocation system is EPA 
considering?

A. Will EPA consider banning dry-shipped HCFC-22 condensing units?

    Condensing units are a type of component in split system air 
conditioners. Under current regulations, the sale or distribution of a 
condensing unit pre-charged with HCFC-22 is prohibited (40 CFR 82 
subpart I); however, a dry-shipped unit may be sold and used to repair 
an existing system that uses HCFC-22 as the refrigerant. In February 
2011, the Carrier Corporation sent a letter to EPA, asking the agency 
to ban this particular type of repair. In the proposed rule providing 
2012-2014 HCFC-22 allocations (77 FR 237), EPA took comment on whether 
repairs using dry-shipped condensing units affect the phaseout of HCFC-
22. The agency received numerous comments, and responded to them in the 
2013 Final Rule (78 FR 20004). While many comments discussed dry-
shipped condensing units, very few provided EPA any additional data or 
information to indicate that repairs using condensing units affect the 
HCFC phaseout. The agency is again seeking quantifiable information on 
the number of dry-shipped condensing units being shipped, whether they 
are being used as a repair in lieu of a compressor or motor 
replacement, and whether and to what extent condensing unit 
replacements extend the life of an existing system. The agency 
continues to assess whether or not dry-shipped units jeopardize the 
agency's ability to phase out and ensure a smooth transition from HCFC-
22. If the agency believes its ability to phase out HCFC-22 smoothly is 
jeopardized, EPA would consider proposing a ban via a separate 
rulemaking process.

B. How will EPA respond to requests for additional consumption 
allowances in 2020 and beyond?

    Currently, the regulations at 82.20(a) allow a person to obtain 
consumption allowances equivalent to the quantity of class II 
controlled substances that the person exported during the control 
period, provided that the substances were originally produced or 
imported with consumption allowances. The exporter must submit certain 
information to EPA which the agency reviews before issuing a notice 
either denying the request, or granting the additional consumption 
allowances. A person may submit this request (known as a Request for 
Additional Consumption Allowances, or RACA) upon export of any HCFC for 
which consumption allowances were originally expended, regardless of 
what control period the production or import took place. As the 
phaseout deadline approaches for certain HCFCs, the agency believes it 
makes sense to restrict RACAs accordingly. For example, 1,000 kg of 
HCFC-22 could be produced in 2019 using consumption and production 
allowances. In 2020, or some later year, that material could be 
exported--and under the current regulations the exporter would be 
eligible to request 1,000 additional HCFC-22 consumption allowances; 
however, there will not be any consumption allowances for HCFC-22 in 
2020 or subsequent years.
    The agency believes that issuing additional consumption allowances 
past the phaseout date for an HCFC--thereby allowing for continued 
import--would be contrary to the goals of a program that has 
purposefully set phaseout dates based on a worst-first approach. 
Continuing to issue RACAs beyond the phaseout date for a substance 
would also be contrary to past EPA actions for class I substances. For 
class I substances, the option to obtain consumption allowances 
equivalent to the level of class I controlled substances that the 
person exported was available for most class I substances only until 
January 1, 1996, which was the phaseout date for CFCs and most other 
class I substances, and until January 1, 2005 for class I group VI 
substances (i.e. methyl bromide), which was the phaseout date for that 
substance. Therefore, EPA is proposing to add the following sentence to 
paragraph 82.20(a): ``Both the export of the class II controlled 
substance and the request for additional consumption allowances must 
occur during a calendar year in which consumption allowances were 
issued for that class II controlled substance.'' EPA welcomes comment 
on its proposed addition to 82.20, and on its proposal to treat class 
II RACAs the same as it treated the request for additional consumption 
allowances for class I substances.

C. How might EPA maximize compliance with HCFC regulations?

    EPA is interested in comments and suggestions for ensuring 
compliance with HCFC regulations. EPA recognizes that the 2015 stepdown 
and the approaching complete phaseout of HCFC-22 may affect prices, 
which could have the effect of increasing the incentives for illegal 
activity, particularly illegal imports of HCFCs or HCFC blends. On the 
other hand, the agency believes that reduced allocations and market 
changes increasing the value of the material will encourage proper 
recovery and decrease motivation to vent HCFCs, especially HCFC-22. EPA 
seeks comment on how it could alter existing regulations to encourage 
compliance with the HCFC phaseout requirements and section 608 
refrigerant regulations. In addition, the agency is interested in ways 
it could increase awareness and ensure compliance with the section 
605(a) use restrictions and the section 611 labeling requirements that 
will begin in 2015.

VII. What modifications to Section 608 regulations is EPA proposing?

    The portion of the stratospheric ozone regulations titled Recycling 
and Emissions Reduction (40 CFR 82 subpart F) contains requirements 
promulgated under CAA section 608. The section 608 requirements are 
intended to: ``Reduce emissions of class I and class II refrigerants 
and their substitutes to the lowest achievable level,'' by designing 
standards for the use of ``refrigerants during the service, 
maintenance, repair, and disposal of appliances'' (40 CFR 82.150). To 
support this goal, EPA is proposing to update its reclamation 
standards.

A. Overview of Current Reclamation Standards

    Recovered refrigerant often contains contaminants, including air, 
water, particulates, acids, chlorides, high boiling residues, and other 
impurities. Reclamation is the re-processing and upgrading of a 
recovered controlled substance through such mechanisms as filtering, 
drying, distillation, and chemical treatment in order to restore the 
substance to a specified standard of performance. EPA regulations at 40 
CFR 82.152 define reclaim as ``. . . to reprocess refrigerant to all of 
the specifications in appendix A to 40 CFR part 82, subpart F (based on 
ARI Standard 700-1995, Specification for Fluorocarbons and Other 
Refrigerants) that are applicable to that refrigerant and to verify 
that the refrigerant meets these specifications using the analytical 
methodology prescribed in Section 5 of appendix A of 40 CFR part 82, 
subpart F.'' Before a used refrigerant may re-enter the market place, 
it must be reclaimed to the purity level specified by the regulations, 
and its purity must be verified (40 CFR 82.154(g)).

[[Page 78095]]

B. Benefits of Reclamation

    EPA believes that proper recovery, recycling or reclamation, and 
reuse of HCFC-22 and other ODS refrigerants is an essential component 
of stratospheric protection. Refrigerant reuse is preferable to venting 
or destruction. Recovery and reuse reduces emissions of HCFCs to the 
atmosphere. Reuse also reduces the amount of virgin material that needs 
to be produced. Section 608 of the CAA prohibits knowingly venting 
HCFCs due to the adverse effects on stratospheric ozone, and EPA 
regulations require that HCFCs be recovered during service or disposal 
of appliances and then be either recycled, reclaimed, or destroyed.
    Recovery and reuse is becoming increasingly important as the United 
States continues its progress in the phaseout of ODS. As discussed 
earlier in this preamble, in 2015 the United States consumption cap for 
HCFCs will decrease from 3,810 ODP-weighted metric tons to 1,524 ODP-
weighted metric tons (i.e. 10 percent of baseline).

C. Regulatory Changes That EPA Is Proposing Under Section 608 Authority

 1. Adoption of AHRI 700-2012 Standards
    On July 24, 2003 (68 FR 43786), EPA adopted the requirements of ARI 
Standard 700-1995 into its regulation as appendix A of 40 CFR part 82 
subpart F. EPA has not updated its use of this standard since then. The 
current version of the ARI (now AHRI) Standard 700 is 700-2012, 
including addenda added in August 2008 and August 2012 (AHRI 700C-2008: 
Appendix C to AHRI Standard 700-Analytical Procedures for AHRI Standard 
700-06 and AHRI 700D-2012: Appendix D Gas Chromatograms for AHRI 
Standard 700-2012-Informative, all three of which are included in the 
docket). Appendix A to subpart F has not kept pace with these 
revisions. It lacks the most up-to-date listing of refrigerants, purity 
requirements and changes to analytical methodologies. EPA's intent is 
for reclaimers to use the most recent AHRI standards as reclamation 
technology changes, and the agency would like its regulations to 
reflect the best technical information and industry practices. For that 
reason EPA is proposing to revise appendix A to reflect the most recent 
set of AHRI standards, thereby keeping abreast of advances in the 
reclamation industry. Under this option, EPA would replace Appendix A's 
current text with the text in AHRI 700-2012 and its appendices. EPA 
also intends to revise the definition of ``reclaim'' to reflect this 
update to appendix A.
    Alternatively, rather than continue its practice of modifying the 
language of appendix A to accommodate revisions to AHRI Standard 700 
(in this case, to AHRI Standard 700-2012), EPA is proposing to cross-
reference AHRI Standard 700-2012 directly, eliminating the need for 
reproducing the entire standard in appendix A. Such an approach, known 
as incorporation by reference, allows a Federal agency to comply with 
the requirement to publish rules in the Federal Register by referring 
to materials already published elsewhere. The legal effect of 
incorporation by reference is that the material is treated as if it 
were published in the Federal Register. When EPA incorporates material 
by reference, it references a specific version of the material instead 
of providing a ``generic'' reference. Here, EPA is proposing to refer 
specifically to AHRI Standard 700-2012 Specification for Fluorocarbon 
Refrigerants and not to ``AHRI Standard 700'' or ``the most recent 
version of AHRI Standard 700.'' The proposed regulatory text 
incorporates by reference AHRI Standard 700-2012 at appendix A to 
subpart F, and changes the definition of reclaim to the updated 
standard incorporated by reference at appendix A.
    EPA believes incorporating AHRI Standard 700-2012 by reference, and 
deleting the text in appendix A, has several advantages. AHRI standards 
are published standards, they are widely known to and used by the 
persons affected by this regulation, and they are available free of 
charge at www.ahrinet.org/standards.aspx. Referencing the AHRI 
standard, in lieu of duplicating it in appendix A, would reduce any 
potential confusion about the relationship between the two sets of 
requirements. It would also substantially reduce the amount of material 
published in the Federal Register and Code of Federal Regulations. On 
the other hand, EPA recognizes that there is an advantage to including 
the requirements of the standard in an appendix to its own regulation, 
avoiding the need to search for the 2012 version of the technical 
standard and providing certainty that compliance with appendix A 
(although possibly outdated) constitutes compliance with EPA 
regulations. EPA seeks comment on incorporation by reference of a 
specific version of the AHRI 700 standard, as compared to revising 
appendix A to reflect a specific version. EPA also seeks comment on 
whether the definition of ``reclaim'' should contain other aspects that 
are not reflected in the AHRI standard, or conversely, whether there 
are aspects of the AHRI standard that are not appropriate to include in 
the regulatory definition.
2. Notification to EPA if Change in Business, Management, Location or 
Contact Information
    Reclaimer certification does not transfer when there is a change in 
ownership. Section 40 CFR 82.164(f) requires the new owner of the 
reclamation company to certify with EPA within thirty days of the 
change of ownership; however, there are no provisions that a 
reclamation company must notify EPA of changes in business management, 
location or contact information. EPA believes that notification of 
changes in business information would improve accountability and 
benefit reclaimers in the long run. Without accurate information, EPA 
may not be able to communicate with a reclaimer in a timely manner, 
potentially causing unnecessary burden to the reclaimer. For example, 
if EPA does not receive an annual report from a reclaimer, the agency 
wants to be able to contact the reclaimer by phone or mail to follow 
up. If there is no response from the company, EPA sends a certification 
revocation letter. Prior to revoking a reclaimer certification, EPA 
would prefer to contact the company to find out what happened to their 
annual reclaim report. Additionally, as a benefit to the public, the 
agency wants to ensure that the Web site listing certified reclaimers 
and their contact information is up-to-date. EPA is seeking comment on 
its proposal to require notification from the reclaimer when there is a 
change in business management, location or contact information (i.e., 
for the refrigerant manager who communicates with EPA).
3. Reporting and Recordkeeping Requirements
    EPA's ability to verify whether reclaimers are complying with 
section 608 regulations is limited. Currently, 40 CFR 82.166(h) 
requires that reclaimers, on an annual basis, report how much material 
was received, how much they reclaimed, and the amount of waste product 
generated as a result of reclamation activities. Under paragraph 
82.166(g) refrigerant reclaimers must also maintain records of the 
names and addresses of persons sending them material for reclamation 
and the quantity of material (combined mass of refrigerant and 
contaminant) sent to them for reclamation on a transactional basis. 
However, the regulations do not

[[Page 78096]]

clearly state that information must be broken down by refrigerant type. 
Some reclaimers do submit information broken down by refrigerant, and 
EPA typically asks for refrigerant-specific information when it is not 
provided. This information is used as part of an overall review of 
refrigerant supply to help ensure the continued smooth transition out 
of ODS refrigerants. The agency believes it is essential for EPA and 
the public to have accurate information concerning the amounts of 
specific types of refrigerants that are available from reclaimers for 
reuse, and is therefore proposing to clarify the regulations to require 
disaggregated information for all reclaimed refrigerants as part of the 
annual reporting. The agency is proposing to revise paragraph 82.166(h) 
to read: ``Reclaimers must maintain records of the quantity of material 
(the combined mass of refrigerant and contaminants) sent to them for 
reclamation, the mass of each refrigerant reclaimed, and the mass of 
waste products. Reclaimers must report this information to the 
Administrator annually within 30 days of the end of the calendar 
year.'' This information is typically maintained by reclaimers and in 
current practice is either included in the initial report to EPA or 
transmitted in response to a specific request; therefore the agency 
does not believe this proposed option increases reporting burden. The 
agency hopes that this proposed change will clarify what information it 
needs from reclaimers up front, and will alleviate the need for 
additional back-and-forth between EPA and reclamation companies that in 
the past were not submitting refrigerant-specific data, thereby 
potentially reducing reporting burden.
    EPA also believes that in the future it may be beneficial to have 
an accountability system that tracks refrigerant material at reclaimer 
facilities on a longer time scale. 40 CFR 82.164(c) mandates that no 
more than 1.5 percent of total refrigerant reclaimed shall be released 
during the reclamation process. However, emissions can occur from leaks 
in tubing, valves and other loss pathways and may not be recorded or 
tracked. To increase accountability and awareness of any leaks or 
losses, in the future EPA could require reclaimers to regularly report, 
by refrigerant type, how much is in inventory, including storage, 
regardless of when material was received. Based on information 
available to the agency (Stratus, 2010), EPA believes that reclaimers 
generally could support these modest changes. EPA believes that 
inventory information is routinely maintained by reclaimers in the 
course of normal business activity, and that the burden of reporting it 
to EPA would be minimal.
    EPA is seeking input on future possible reporting and recordkeeping 
changes that would help minimize emissions and facilitate a smooth 
transition away from ODS. Commenters should consider what evidence, if 
any, reclaimers should submit to verify their product is meeting AHRI-
700 standards, what format results should be reported in, and whether 
summary results would be acceptable. EPA is taking comment on the 
benefits of requiring reporting of testing sample results, and the 
mechanisms that exist for EPA to validate that samples are 
representative samples of reclaimer product. Additionally, the agency 
is seeking information on the various mechanisms for material loss 
during the reclamation process, and whether the losses can be 
quantified.
4. Technical and Process Information Required in Reclaimer 
Certification Application
    The reclamation regulations at 40 CFR 82.164(e)(2) include a 
general requirement to submit ``a list of equipment used to reprocess 
and analyze the refrigerant.'' This requirement, dating to the May 14, 
1993 final rule, titled ``Protection of Stratospheric Ozone; 
Refrigerant Recyling,'' (58 FR 28660), was included to help EPA ensure 
that an applicant would own and use equipment that achieves AHRI 700 
standards. Given the general language of this requirement, submissions 
are often incomplete or vague, forcing EPA to request additional 
information from the applicant. As the reclamation industry has 
matured, EPA has developed a more precise understanding of technical 
information, which, if submitted with a certification, would enable the 
agency to more reliably assess a reclaimer's ability to achieve AHRI 
standards and minimize emissions.
    While EPA is not proposing changes to this requirement in this 
rulemaking, EPA seeks comment on whether developing a more robust 
reclaimer certification process that requires more specific information 
would clarify EPA's expectations for submitted certification 
information and minimize refrigerant leaks. The agency believes that 
reclaimers maintain this information as part of good business practice, 
and that the burden of providing it to EPA as part of a certification 
application would be small. Specifically, the agency is seeking comment 
on the importance for EPA to collect the following information and the 
burden that would be imposed by requiring it to be submitted: (1) 
Detailed description of technology applied to achieve the applicable 
AHRI Standard 700 requirements. If home-engineered, the certification 
would include a schematic. If off-the-shelf, the applicant would 
provide (1) the make, manufacturer, and serial number; (2) Batch 
capacity; (3) Types of refrigerant to be reclaimed by reclaimer and 
standard operating procedures for reclaiming those refrigerants; (4) 
Information on the instrumentation and methodology that meets AHRI 700 
requirements for determination of acidity, determination of moisture, 
determination of chloride, determination of non-condensable, 
determination of impurities, including other refrigerants, or, for 
reclaimers that send refrigerant to an outside lab for analysis, a 
certified letter from the outside lab identifying the methodology that 
meets the AHRI 700 standards. In addition, the agency is considering 
adding a provision to the regulations that clarifies what information 
is necessary in order for EPA to approve certification. The agency is 
also considering a new requirement that reclaimers submit a partial 
recertification if they plan to accept refrigerants that are not 
addressed in its current certification or if the reclaimer decides to 
use a different type of reclamation equipment, thereby ensuring the 
agency can assess whether they have the capability to properly process 
all refrigerants they receive. EPA welcomes comment on other triggers 
for requiring recertification, for example, a significant change in the 
type of reclamation equipment.
5. Expanded End Product Testing Requirements
    EPA is interested in potentially expanding the requirements for 
sampling and testing of reclaimed refrigerant in a future agency 
rulemaking. Currently, the definition of ``reclaim'' says that 
reclaimers are required to verify that reclaimed refrigerant meets the 
AHRI Standard specifications using the analytical methodology in 
Section 5 of appendix A of subpart F. Section 5 contains requirements 
for sampling, test methods, and maximum permissible contaminant levels 
of reclaimed refrigerant. However, the regulations do not specify how 
often, or on what basis, reclaimers must use the Section 5 methodology. 
EPA's concern is that it does not have current knowledge on the quality 
of reclaimer product, and the agency is therefore interested in ways to

[[Page 78097]]

verify that reclaimed refrigerant is of acceptable quality. It is 
possible that some reclaimed refrigerant entering the market does not 
meet the AHRI standard and is being illegally vented due to the high 
cost associated with disposition or destruction of the material.
    Section 5 of appendix A, as well as AHRI 700-2012, contains test 
methods but does not specify testing frequency or requirements for 
reporting test results. EPA is seeking information on what specific 
criteria end product testing and reporting could be based on in order 
to help validate that reclaimed product is meeting AHRI 700 standards. 
Specifically, the agency is interested in: Sampling procedures and 
specific testing protocols beyond what is currently in section 5; how 
frequently testing should be required; how a batch of refrigerant would 
be defined and whether testing should be on a per batch basis, or if 
multiple tests should be required and on what time frame. Additionally, 
EPA is interested in how it could ensure product quality, for example, 
by requiring third party certification for all reclaimers, and the 
advantages and disadvantages to such an approach. The agency notes that 
technicians must be certified by a third party in order to service 
equipment containing ODS, and is interested in how a third party 
certification for reclaimers could be similar or different.

VIII. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 13563: Improving Regulation and Regulatory Review

    Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993), 
this action is a ``significant regulatory action'' since it raises 
``novel legal or policy issues.'' Accordingly, EPA submitted this 
action to the Office of Management and Budget (OMB) for review under 
Executive Orders 12866 and 13563 (76 FR 3821, January 21, 2011) and any 
changes made in response to OMB recommendations have been documented in 
the docket for this action.
    EPA did not conduct a specific analysis of the benefits and costs 
associated with this action. Many previous analyses provide a wealth of 
information on the costs and benefits of the United States HCFC 
phaseout including:
     The 1993 Addendum to the 1992 Phaseout Regulatory Impact 
Analysis: Accelerating the Phaseout of CFCs, Halons, Methyl Chloroform, 
Carbon Tetrachloride, and HCFCs.
     The 1999 Report Costs and Benefits of the HCFC Allowance 
Allocation System.
     The 2000 Memorandum Cost/Benefit Comparison of the HCFC 
Allowance Allocation System.
     The 2005 Memorandum Recommended Scenarios for HCFC 
Phaseout Costs Estimation.
     The 2006 ICR Reporting and Recordkeeping Requirements of 
the HCFC Allowance System.
     The 2007 Memorandum Preliminary Estimates of the 
Incremental Cost of the HCFC Phaseout in Article 5 Countries.
     The 2007 Memorandum Revised Ozone and Climate Benefits 
Associated with the 2010 HCFC Production and Consumption Stepwise 
Reductions and a Ban on HCFC Pre-charged Imports.
    A memorandum summarizing these analyses is available in the docket.

B. Paperwork Reduction Act

    The Office of Management and Budget (OMB) has previously approved 
the information collection requirements contained in the existing 
regulations at 40 CFR part 82, subpart A under the provisions of the 
Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and has assigned OMB 
control number 2060-0498. The OMB control numbers for EPA's regulations 
in 40 CFR are listed in 40 CFR part 9.
    However, EPA is proposing modifying the regulations covering 
recordkeeping and reporting contained in the existing regulations at 40 
CFR part 82, subpart F, which were approved by OMB under the provisions 
of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. under OMB 
control number 2060-0256. The two modifications, (1) requiring 
reclaimers to provide updated contact information and (2) requiring 
reclaimers to provide the amount of each refrigerant reclaimed in their 
annual reporting, are already customary business practices and 
therefore do not affect information collection burden. In both of these 
cases, EPA is modifying the regulations so they align with current 
practices.

C. Regulatory Flexibility Act (RFA)

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute, unless the agency certifies that 
the rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions. For purposes 
of assessing the impacts of this rulemaking on small entities, a small 
entity is defined as: (1) A small business as defined by the Small 
Business Administration's (SBA) regulations at 13 CFR 121.201; (2) a 
small governmental jurisdiction that is a government of a city, county, 
town, school district or special district with a population of less 
than 50,000; and (3) a small organization that is any not-for-profit 
enterprise which is independently owned and operated and is not 
dominant in its field.
    This action will affect the following categories:

--Industrial Gas Manufacturing entities (NAICS code 325120), including 
fluorinated hydrocarbon gas manufacturers and reclaimers;
--Other Chemical and Allied Products Merchant Wholesalers (NAICS code 
424690), including chemical gases and compressed gases merchant 
wholesalers;
--Air-Conditioning and Warm Air Heating Equipment and Commercial and 
Industrial Refrigeration Equipment Manufacturing entities (NAICS code 
333415), including air-conditioning equipment and commercial and 
industrial refrigeration equipment manufacturers;
--Air-Conditioning Equipment and Supplies Merchant Wholesalers (NAICS 
code 423730), including air-conditioning (condensing unit, compressors) 
merchant wholesalers;
--Electrical and Electronic Appliance, Television, and Radio Set 
Merchant Wholesalers (NAICS code 423620), including air-conditioning 
(room units) merchant wholesalers;
--Plumbing, Heating, and Air-Conditioning Contractors (NAICS code 
238220), including Central air-conditioning system and commercial 
refrigeration installation, HVACR contractors; and
--Refrigerant reclaimers, manufacturers of recovery/recycling 
equipment, and refrigerant recovery/recycling equipment testing 
organizations.

    After considering the economic impacts of this proposed rule on 
small entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities. In 
determining whether a rule has a significant economic impact on a 
substantial number of small entities, the impact of concern is any 
significant adverse economic impact on small entities, since the 
primary purpose of the regulatory flexibility analyses is to identify 
and address regulatory alternatives ``which minimize any

[[Page 78098]]

significant economic impact of the rule on small entities.'' 5 U.S.C. 
603 and 604. Thus, an agency may certify that a rule will not have a 
significant economic impact on a substantial number of small entities 
if the rule relieves regulatory burden, or otherwise has a positive 
economic effect on all of the small entities subject to the rule.
    Without allowances for the 2015-2019 regulatory period, existing 
regulations would prohibit production and import of HCFCs, thus the 
proposal to issue allowances is not a potential burden to small 
business. EPA's HCFC Phaseout Benefits and Costs Memo, included in the 
docket for this rulemaking, provides a summary of previous small 
business analyses. Also, under section 608 of the CAA and 40 CFR 
subpart F, EPA is proposing some minor modifications to recordkeeping 
and reporting provisions; however, these proposed changes are to lessen 
burden on small reclamation businesses by ensuring that businesses that 
have already reported do not have to spend additional time responding 
to follow-up requests from EPA, and so that EPA can reach businesses in 
a timely manner with any necessary information. We have therefore 
concluded that this proposed rule will relieve regulatory burden for 
all affected small entities. We continue to be interested in the 
potential impacts of the proposed rule on small entities and welcome 
comments on issues related to such impacts.

D. Unfunded Mandates Reform Act

    This action contains no Federal mandates under the provisions of 
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 
1531-1538 for State, local, or tribal governments or the private 
sector. UMRA does not apply to rules that are necessary for the 
national security or the ratification or implementation of 
international treaty obligations. This proposed rule would implement 
the 2015 milestone for the phase-out of HCFCs under the Montreal 
Protocol. Therefore, this action is not subject to the requirements of 
sections 202 or 205 of the UMRA.
    This action is also not subject to the requirements of section 203 
of UMRA because it contains no regulatory requirements that might 
significantly or uniquely affect small governments. This action 
apportions production and consumption allowances and establishes 
baselines for private entities, not small governments.

E. Executive Order 13132: Federalism

    This action does not have federalism implications. It does not have 
substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government, as 
specified in Executive Order 13132. This action is expected to 
primarily affect producers, importers, and exporters of HCFCs. Thus, 
Executive Order 13132 does not apply to this action.
    In the spirit of Executive Order 13132, and consistent with EPA 
policy to promote communications between EPA and State and local 
governments, EPA specifically solicits comment on this proposed action 
from State and local officials.

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

    This action does not have tribal implications, as specified in 
Executive Order 13175 (65 FR 67249, November 9, 2000). This action does 
not significantly or uniquely affect the communities of Indian tribal 
governments. It does not impose any enforceable duties on communities 
of Indian tribal governments. Thus, Executive Order 13175 does not 
apply to this action. EPA specifically solicits additional comment on 
this proposed action from tribal officials.

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

    This action is not subject to EO 13045 (62 FR 19885, April 23, 
1997) because it is not economically significant as defined in EO 
12866. The Agency nonetheless has reason to believe that the 
environmental health or safety risk addressed by this action may have a 
disproportionate effect on children. Depletion of stratospheric ozone 
results in greater transmission of the sun's ultraviolet (UV) radiation 
to the earth's surface. The following studies describe the effects of 
excessive exposure to UV radiation on children: (1) Westerdahl J, 
Olsson H, Ingvar C. ``At what age do sunburn episodes play a crucial 
role for the development of malignant melanoma,'' Eur J Cancer 1994: 
30A: 1647-54; (2) Elwood JM Japson J. ``Melanoma and sun exposure: an 
overview of published studies,'' Int J Cancer 1997; 73:198-203; (3) 
Armstrong BK, ``Melanoma: childhood or lifelong sun exposure,'' In: 
Grobb JJ, Stern RS Mackie RM, Weinstock WA, eds. ``Epidemiology, causes 
and prevention of skin diseases,'' 1st ed. London, England: Blackwell 
Science, 1997: 63-6; (4) Whiteman D., Green A. ``Melanoma and 
Sunburn,'' Cancer Causes Control, 1994: 5:564-72; (5) Heenan, PJ. 
``Does intermittent sun exposure cause basal cell carcinoma? A case 
control study in Western Australia,'' Int J Cancer 1995; 60: 489-94; 
(6) Gallagher, RP, Hill, GB, Bajdik, CD, et. al. ``Sunlight exposure, 
pigmentary factors, and risk of nonmelanocytic skin cancer I, Basal 
cell carcinoma,'' Arch Dermatol 1995; 131: 157-63; (7) Armstrong, DK. 
``How sun exposure causes skin cancer: an epidemiological 
perspective,'' Prevention of Skin Cancer. 2004. 89-116.
    This action implements the United States' commitment to reduce the 
total basket of HCFCs produced and imported to a level that is 90 
percent below the respective baselines. While on an ODP-weighted basis, 
this is not as large a step as previous actions, such as the 1996 class 
I phaseout, it is one of the most significant remaining actions the 
United States can take to complete the overall phaseout of ODS and 
further decrease impacts on children's health from stratospheric ozone 
depletion.

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

    This action is not a ``significant energy action'' as defined in 
Executive Order 13211 (66 FR 28355, May 22, 2001), because it is not 
likely to have a significant adverse effect on the supply, 
distribution, or use of energy. This proposed rule would issue 
allowances for the production and consumption of HCFCs.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Public Law 104-113, 12(d) (15 U.S.C. 272 note) 
directs EPA to use voluntary consensus standards in its regulatory 
activities unless to do so would be inconsistent with applicable law or 
otherwise impractical. Voluntary consensus standards are technical 
standards (e.g., materials specifications, test methods, sampling 
procedures, and business practices) that are developed or adopted by 
voluntary consensus standards bodies. The NTTAA directs EPA to provide 
Congress, through OMB, explanations when the Agency decides not to use 
available and applicable voluntary consensus standards. This proposed 
rule involves technical standards. Through this action, EPA is 
proposing to incorporate by reference

[[Page 78099]]

AHRI Standard 700-2012 Specification for Fluorocarbons and Other 
Refrigerants and its appendices, which is available in the docket for 
this rulemaking and online at http://www.ahrinet.org/search+standards.aspx. This industry standard for refrigerant 
reclamation is an updated version of the standard contained in the 
current regulations.
    EPA welcomes comments on this aspect of the proposed rulemaking 
and, specifically, invites the public to identify potentially-
applicable voluntary consensus standards and to explain why such 
standards should be used in this regulation.

J. Executive Order 12898: Federal Actions to Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order (EO) 12898 (59 FR 7629, Feb. 16, 1994) establishes 
federal executive policy on environmental justice. Its main provision 
directs federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States.
    EPA has determined that this action will not have 
disproportionately high and adverse human health or environmental 
effects on minority or low-income populations because the 2015 phaseout 
step increases the level of environmental protection for all affected 
populations without having any disproportionately high and adverse 
human health or environmental effects on any population, including any 
minority or low-income population. This action continues the 
implementation of the United States commitment to reduce the total 
basket of HCFCs produced and imported to a level that is 90 percent 
below the respective baselines. While on an ODP-weighted basis, this is 
not as large a step as previous actions, such as the 1996 class I 
phaseout, it is one of the most significant remaining actions the 
United States can take to complete the overall phaseout of ODS and 
further lessen the adverse human health effects for the entire 
population.

List of Subjects in 40 CFR Part 82

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Chemicals, Exports, Hydrochlorofluorocarbons, 
Imports, Incorporation by reference.

    Dated: December 5, 2013.
Gina McCarthy,
Administrator.
    40 CFR part 82 is proposed to be amended to read as follows:

PART 82--PROTECTION OF STRATOSPHERIC OZONE

0
1. The authority citation for part 82 continues to read as follows:

    Authority:  42 U.S.C. 7414, 7601, 7671-7671q.

Subpart A--Production and Consumption Controls

0
2. Amend Sec.  82.3 by adding the definition of ``Use of a class II 
controlled substance'' to read as follows:


Sec.  82.3  Definitions for class I and class II controlled substances.

* * * * *
    Use of a class II controlled substance, for the purposes of 82.15 
of this subpart, includes but is not limited to use in a manufacturing 
process, use in manufacturing a product, intermediate uses such as 
formulation or packaging for other subsequent uses, and use in 
maintaining, servicing, or repairing an appliance or other piece of 
equipment. Use of a class II controlled substance also includes use of 
that controlled substance when it is removed from a container used for 
the transportation or storage of the substance but does not include use 
of a manufactured product containing a controlled substance.
* * * * *
0
3. Amend Sec.  82.15 by revising paragraph (g)(4) to read as follows:


Sec.  82.15  Prohibitions for class II controlled substances.

* * * * *
    (g) * * *
    (4)(i) Effective January 1, 2015, no person may introduce into 
interstate commerce or use any class II controlled substance not 
governed by paragraphs (g)(1) through (3) of this section (unless used, 
recovered and recycled) for any purpose other than for use in a process 
resulting in its transformation or its destruction; for use as a 
refrigerant in equipment manufactured before January 1, 2020; for use 
as a fire suppression streaming agent listed as acceptable for use or 
acceptable subject to narrowed use limits for nonresidential 
applications in accordance with the regulations at subpart G of this 
part; for export to Article 5 Parties under Sec.  82.18(a); as a 
transshipment or heel; for exemptions permitted under paragraph (f) of 
this section; or for exemptions permitted under paragraph (g)(4)(ii) of 
this section.
    (ii) Effective January 1, 2015, use of HCFC-225ca or HCFC-225cb as 
a solvent (excluding use in manufacturing a product containing HCFC-
225ca or HCFC-225cb) is not subject to the use prohibition in paragraph 
(g)(4)(i) of this section if the person using the HCFC-225ca or HCFC-
225cb placed the controlled substance into inventory before January 1, 
2015. This paragraph does not create an exemption to the prohibition on 
introduction into interstate commerce in paragraph (g)(4)(i) of this 
section.
* * * * *
0
4. Amend Sec.  82.16 by revising paragraphs (a), (d) and (e) and 
removing and reserving paragraph (h) to read as follows:


Sec.  82.16  Phaseout schedule of class II controlled substances.

    (a) Calendar-year Allowances. (1) In each control period as 
indicated in the following tables, each person is granted the specified 
percentage of baseline production allowances and baseline consumption 
allowances for the specified class II controlled substances apportioned 
under Sec. Sec.  82.17 and 82.19:

                                                        Calendar-Year HCFC Production Allowances
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                          Percent of    Percent of HCFC-   Percent of      Percent of    Percent of HCFC-   Percent of      Percent of
            Control period                 HCFC-141b           22           HCFC-142b       HCFC-123           124          HCFC-225ca      HCFC-225cb
--------------------------------------------------------------------------------------------------------------------------------------------------------
2003..................................               0            100            100     ..............  ...............  ..............  ..............
2004..................................               0            100            100     ..............  ...............  ..............  ..............
2005..................................               0            100            100     ..............  ...............  ..............  ..............
2006..................................               0            100            100     ..............  ...............  ..............  ..............
2007..................................               0            100            100     ..............  ...............  ..............  ..............
2008..................................               0            100            100     ..............  ...............  ..............  ..............
2009..................................               0            100            100     ..............  ...............  ..............  ..............

[[Page 78100]]

 
2010..................................               0             41.9            0.47               0            125               125             125
2011..................................               0             32.0            4.9                0            125               125             125
2012..................................               0             17.7            4.9                0            125               125             125
2013..................................               0             30.1            4.9                0            125               125             125
2014..................................               0             26.1            4.9                0            125               125             125
2015..................................               0             21.7            0.37               0              5.0               0               0
2016..................................               0             21.7            0.32               0              5.0               0               0
2017..................................               0             21.7            0.26               0              5.0               0               0
2018..................................               0             21.7            0.21               0              5.0               0               0
2019..................................               0             21.7            0.16               0              5.0               0               0
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        Calendar-Year HCFC Consumption Allowances
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                          Percent of    Percent of HCFC-   Percent of      Percent of    Percent of HCFC-   Percent of      Percent of
            Control period                 HCFC-141b           22           HCFC-142b       HCFC-123           124          HCFC-225ca      HCFC-225cb
--------------------------------------------------------------------------------------------------------------------------------------------------------
2003..................................               0            100            100     ..............  ...............  ..............  ..............
2004..................................               0            100            100     ..............  ...............  ..............  ..............
2005..................................               0            100            100     ..............  ...............  ..............  ..............
2006..................................               0            100            100     ..............  ...............  ..............  ..............
2007..................................               0            100            100     ..............  ...............  ..............  ..............
2008..................................               0            100            100     ..............  ...............  ..............  ..............
2009..................................               0            100            100     ..............  ...............  ..............  ..............
2010..................................               0             41.9            0.47             125            125               125             125
2011..................................               0             32.0            4.9              125            125               125             125
2012..................................               0             17.7            4.9              125            125               125             125
2013..................................               0             18.0            4.9              125            125               125             125
2014..................................               0             14.2            4.9              125            125               125             125
2015..................................               0              9.6            1.7              100              8.3               0               0
2016..................................               0              7.7            1.5              100              8.3               0               0
2017..................................               0              5.8            1.2              100              8.3               0               0
2018..................................               0              3.9            1.0              100              8.3               0               0
2019..................................               0              1.9            0.7              100              8.3               0               0
--------------------------------------------------------------------------------------------------------------------------------------------------------

* * * * *
    (d) Effective January 1, 2015, no person may produce class II 
controlled substances not previously controlled for any purpose other 
than for use in a process resulting in their transformation or their 
destruction, for use as a refrigerant in equipment manufactured before 
January 1, 2020, for use as a fire suppression streaming agent listed 
as acceptable for use or acceptable subject to narrowed use limits for 
nonresidential applications in accordance with the regulations at 
subpart G of this part;, for export under Sec.  82.18(b) using 
unexpended Article 5 allowances, or for export under Sec.  82.18(a) 
using unexpended export production allowances, or for exemption 
permitted in Sec.  82.15(f). Effective January 1, 2015, no person may 
import class II controlled substances not subject to the requirements 
of paragraph (b) or (c) of this section (other than transhipments, 
heels or used class II controlled substances) for any purpose other 
than for use in a process resulting in their transformation or their 
destruction, for exemption permitted in Sec.  82.15(f), for use as a 
refrigerant in equipment manufactured prior to January 1, 2020, or for 
use as a fire suppression streaming agent for nonresidential 
applications in accordance with the regulations at subpart G of this 
part.
* * * * *
    (e)(1) Effective January 1, 2020, no person may produce HCFC-22 or 
HCFC-142b for any purpose other than for use in a process resulting in 
their transformation or their destruction, for export under Sec.  
82.18(a) using unexpended Article 5 allowances, or for export under 
Sec.  82.18(b) using unexpended export production allowances, or for 
exemptions permitted in Sec.  82.15(f). Effective January 1, 2020, no 
person may import HCFC-22 or HCFC-142b for any purpose other than for 
use in a process resulting in their transformation or their 
destruction, or for exemptions permitted in Sec.  82.15(f).
    (2) Effective January 1, 2020, no person may produce HCFC-123 for 
any purpose other than for use in a process resulting in its 
transformation or its destruction, for use as a refrigerant in 
equipment manufactured before January 1, 2020, for export under Sec.  
82.18(a) using unexpended Article 5 allowances, or for export under 
Sec.  82.18(b) using unexpended export production allowances, or for 
exemptions permitted in Sec.  82.15(f). Effective January 1, 2020, no 
person may import HCFC-123 for any purpose other than for use in a 
process resulting in its transformation or its destruction, for use as 
a refrigerant in equipment manufactured before January 1, 2020 or for 
exemptions permitted in Sec.  82.15(f).
* * * * *
    (h) [Reserved].
0
5. Amend Sec.  82.17 by revising the table to read as follows:


Sec.  82.17  Apportionment of baseline production allowances for class 
II controlled substances.

    The following persons are apportioned baseline production 
allowances for HCFC-22, HCFC-141b, HCFC-142b, HCFC-123, HCFC-124, HCFC-
225ca and HCFC-225cb, as set forth in the following table:

[[Page 78101]]



----------------------------------------------------------------------------------------------------------------
                     Person                                  Controlled substance               Allowances  (kg)
----------------------------------------------------------------------------------------------------------------
AGC Chemicals Americas.........................  HCFC-225ca..................................            266,608
                                                 HCFC-225cb..................................            373,952
Arkema.........................................  HCFC-22.....................................         46,692,336
                                                 HCFC-141b...................................         24,647,925
                                                 HCFC-142b...................................            484,369
DuPont.........................................  HCFC-22.....................................         42,638,049
                                                 HCFC-124....................................          2,269,210
Honeywell......................................  HCFC-22.....................................         37,378,252
                                                 HCFC-141b...................................         28,705,200
                                                 HCFC-142b...................................          2,417,534
                                                 HCFC-124....................................          1,759,681
MDA Manufacturing..............................  HCFC-22.....................................          2,383,835
Solvay Specialty Polymers USA, LLC.............  HCFC-142b...................................          6,541,764
----------------------------------------------------------------------------------------------------------------

0
6. Amend Sec.  82.19 by revising the table to read as follows:


Sec.  82.19  Apportionment of baseline consumption allowances for class 
II controlled substances.

    The following persons are apportioned baseline consumption 
allowances for HCFC-22, HCFC-142b, HCFC-123, HCFC-124, HCFC-225ca and 
HCFC-225cb, as set forth in the following table:

----------------------------------------------------------------------------------------------------------------
                     Person                                  Controlled substance               Allowances  (kg)
----------------------------------------------------------------------------------------------------------------
ABCO Refrigeration Supply......................  HCFC-22.....................................            279,366
AGC Chemicals Americas.........................  HCFC-225ca..................................            285,328
                                                 HCFC-225cb..................................            286,832
Altair Partners................................  HCFC-22.....................................            302,011
Arkema.........................................  HCFC-22.....................................         48,637,642
                                                 HCFC-141b...................................         25,405,570
                                                 HCFC-142b...................................            483,827
                                                 HCFC-124....................................              3,719
Carrier........................................  HCFC-22.....................................             54,088
Continental Industrial Group...................  HCFC-141b...................................             20,315
Coolgas, Inc...................................  HCFC-141b...................................         16,097,869
Combes Investment Property.....................  HCFC-22.....................................          1,040,458
                                                 HCFC-123....................................             19,980
                                                 HCFC-124....................................              3,742
Discount Refrigerants..........................  HCFC-141b...................................                994
DuPont.........................................  HCFC-22.....................................         38,814,862
                                                 HCFC-141b...................................              9,049
                                                 HCFC-142b...................................             52,797
                                                 HCFC-123....................................          1,877,042
                                                 HCFC-124....................................            743,312
H.G. Refrigeration Supply......................  HCFC-22.....................................             40,068
Honeywell......................................  HCFC-22.....................................         35,392,492
                                                 HCFC-141b...................................         20,749,489
                                                 HCFC-142b...................................          1,315,819
                                                 HCFC-124....................................          1,284,265
ICC Chemical Corp..............................  HCFC-141b...................................             81,225
ICOR...........................................  HCFC-124....................................             81,220
Mexichem Fluor Inc.............................  HCFC-22.....................................          2,546,305
Kivlan & Company...............................  HCFC-22.....................................          2,081,018
MDA Manufacturing..............................  HCFC-22.....................................          2,541,545
Mondy Global...................................  HCFC-22.....................................            281,824
National Refrigerants..........................  HCFC-22.....................................          5,528,316
                                                 HCFC-123....................................             72,600
                                                 HCFC-124....................................             50,380
Perfect Technology Center, LP..................  HCFC-123....................................              9,100
Refricenter of Miami...........................  HCFC-22.....................................            381,293
Refricentro....................................  HCFC-22.....................................             45,979
R-Lines........................................  HCFC-22.....................................             63,172
Saez Distributors..............................  HCFC-22.....................................             37,936
Solvay Fluorides, LLC..........................  HCFC-22.....................................          3,781,691
                                                 HCFC-141b...................................          3,940,115
Solvay Specialty Polymers USA, LLC.............  HCFC-142b...................................            194,536
Tulstar Products...............................  HCFC-141b...................................             89,913
                                                 HCFC-123....................................             34,800
                                                 HCFC-124....................................            229,582
USA Refrigerants...............................  HCFC-22.....................................             14,865
----------------------------------------------------------------------------------------------------------------


[[Page 78102]]

0
7. Amend Sec.  82.20 by revising paragraph (a) introductory text to 
read as follows:


Sec.  82.20  Availability of consumption allowances in addition to 
baseline consumption allowances for class II controlled substances.

    (a) A person may obtain at any time during the control period, in 
accordance with the provisions of this section, consumption allowances 
equivalent to the quantity of class II controlled substances that the 
person exported from the United States and its territories to a foreign 
state in accordance with this section, when that quantity of class II 
controlled substance was produced in the U.S. or imported into the 
United States with expended consumption allowances. Both the export of 
the class II controlled substance and the request for additional 
consumption allowances must occur during a calendar year in which 
consumption allowances were issued for that class II controlled 
substance.
* * * * *
0
8. Amend appendix B to subpart A by inserting footnote B following 
footnote A, to read as follows:

 Appendix B to Subpart A of Part 82--Class II Controlled Substances A B
------------------------------------------------------------------------
                 Controlled Substance                          ODP
------------------------------------------------------------------------
1. HCFC-21 (CHFCl2) Dichlorofluoromethane.............              0.04
2. HCFC-22 (CHF2Cl) Monochlorodifluoromethane.........             0.055
3. HCFC-31 (CH2FCl) Monochlorofluoromethane...........              0.02
4. HCFC-121 (C2HFCl4) Tetrachlorofluoroethane.........         0.01-0.04
5. HCFC-122 (C2HF2Cl3) Trichlorodifluoroethane........         0.02-0.08
6. HCFC-123 (C2HF3Cl2) Dichlorotrifluoroethane........              0.02
7. HCFC-124 (C2HF4Cl) Monochlorotetrafluoroethane.....             0.022
8. HCFC-131 (C2H2FCl3) Trichlorofluoroethane..........        0.007-0.05
9. HCFC-132 (C2H2F2Cl2) Dichlorodifluoroethane........        0.008-0.05
10. HCFC-133 (C2H2F3Cl) Monochlorotrifluoroethane.....         0.02-0.06
11. HCFC-141 (C2H3FCl2) Dichlorofluoroethane..........        0.005-0.07
12. HCFC-141b (CH3CFCl2) Dichlorofluoroethane.........              0.11
13. HCFC-142 (C2H3F2Cl) chlorodifluoroethane..........        0.008-0.07
14. HCFC-142b (CH3CF2Cl) Monochlorodifluoroethane.....             0.065
15. HCFC-151 (C2H4FCl) Chlorofluoroethane.............       0.003-0.005
16. HCFC-221 (C3HFCl6) Hexachlorofluoropropane........        0.015-0.07
17. HCFC-222 (C3HF2Cl5) Pentachlorodifluoropropane....         0.01-0.09
18. HCFC-223 (C3HF3Cl4) Tetrachlorotrifluoropropane...         0.01-0.08
19. HCFC-224 (C3HF4Cl3) Trichlorotetrafluoropropane...         0.01-0.09
20. HCFC-225 (C3HF5Cl2) Dichloropentafluoropropane....         0.02-0.07
21. HCFC-225ca (CF3CF2CHCl2)                                       0.025
 Dichloropentafluoropropane...........................
22. HCFC-225cb (CF2ClCF2CHClF)                                     0.033
 Dichloropentafluoropropane...........................
23. HCFC-226 (C3HF6Cl) Monochlorohexafluoropropane....          0.02-0.1
24. HCFC-231 (C3H2FCl5) Pentachlorofluoropropane......         0.05-0.09
25. HCFC-232 (C3H2F2Cl4) Tetrachlorodifluoropropane...         0.008-0.1
26. HCFC-233 (C3H2F3Cl3) Trichlorotrifluoropropane....        0.007-0.23
27. HCFC-234 (C3H2F4Cl2) Dichlorotetrafluoropropane...         0.01-0.28
28. HCFC-235 (C3H2F5Cl) Monochloropentafluoropropane..         0.03-0.52
29. HCFC-241 (C3H3FCl4) Tetrachlorofluoropropane......        0.004-0.09
30. HCFC-242 (C3H3F2Cl3) Trichlorodifluoropropane.....        0.005-0.13
31. HCFC-243 (C3H3F3Cl2) Dichlorotrifluoropropane.....        0.007-0.12
31. HCFC-244 (C3H3F4Cl) Monochlorotetrafluoropropane..        0.009-0.14
33. HCFC-251 (C3H4FCl3) Monochlorotetrafluoropropane..        0.001-0.01
34. HCFC-252 (C3H4F2Cl2) Dichlorodifluoropropane......        0.005-0.04
35. HCFC-253 (C3H4F3Cl) Monochlorotrifluoropropane....        0.003-0.03
36. HCFC-261 (C3H5FCl2) Dichlorofluoropropane.........        0.002-0.02
37. HCFC-262 (C3H5F2Cl) Monochlorodifluoropropane.....        0.002-0.02
38. HCFC-271 (C3H6FCl) Monochlorofluoropropane........        0.001-0.03
------------------------------------------------------------------------
\a\ * * *
\b\ This table includes all isomers of the substances above, regardless
  of whether the isomer is explicitly listed on its own.

Subpart E--The Labeling of Products Using Ozone-Depleting 
Substances

0
9. Amend Sec.  82.110 by revising paragraph (c) title to read as 
follows:


Sec.  82.110  Form of label bearing warning statement.

* * * * *
    (c) Combined statement for multiple controlled substances * * *
* * * * *
0
10. Amend Sec.  82.112 by revising paragraph (d) to read as follows:


Sec.  82.112  Removal of label bearing warning statement.

* * * * *
    (d) Manufacturers, distributors, wholesalers, retailers that sell 
spare parts manufactured with controlled substances solely for repair 
Manufacturers, distributors, wholesalers, and retailers that purchase 
spare parts manufactured with a class I or class II substance from 
another manufacturer or supplier, and sell such spare parts for the 
sole purpose of repair, are not required to pass through an applicable 
warning label if such products are removed from the original packaging 
provided by the manufacturer from whom the products are purchased. * * 
*
* * * * *
0
11. Amend Sec.  82.122 by revising paragraph (a)(1) to read as follows:


Sec.  82.122  Certification, recordkeeping, and notice requirements.

    (a) * * * (1) Persons claiming the exemption provided in Sec.  
82.106(b)(4) must submit a written certification to the following 
address: Labeling Program Manager, Stratospheric Protection

[[Page 78103]]

Division, Office of Atmospheric Programs, 6205-J, 1200 Pennsylvania 
Ave. NW., Washington, DC 20460.
* * * * *

Subpart F--Recycling and Emissions Reductions

0
12. Amend Sec.  82.152 by revising the definition ``Reclaim'' to read 
as follows:


Sec.  82.152  Definitions.

* * * * *
    Reclaim refrigerant means to reprocess refrigerant to all of the 
specifications in AHRI Standard 700-2012 Specification for Fluorocarbon 
Refrigerants (incorporated by reference at appendix A to 40 CFR part 82 
subpart F) that are applicable to that refrigerant and to verify that 
the refrigerant meet these specifications using the analytical 
methodology prescribed therein.
* * * * *
0
13. Amend Sec.  82.164 by revising paragraph (f) to read as follows:


Sec.  82.164  Reclaimer certification.

* * * * *
    (f) Certificates are not transferrable. In the event of a change in 
ownership of an entity which reclaims refrigerant, the new owner of the 
entity shall certify within 30 days of the change of ownership pursuant 
to this section. In the event of a change in business management, 
location or contact information, the owner of an entity shall notify 
EPA within 30 days of the change.
* * * * *
0
14. Amend Sec.  82.166 by revising paragraph (h) to read as follows:


Sec.  82.166  Reporting and recordkeeping requirements.

* * * * *
    (h) Reclaimers must maintain records of the quantity of material 
(the combined mass of refrigerant and contaminants) sent to them for 
reclamation, the mass of each refrigerant reclaimed, and the mass of 
waste products. Reclaimers must report this information to the 
Administrator annually within 30 days of the end of the calendar year.
* * * * *
0
15. Revise all text in appendix A to subpart F of Part 82-
Specifications for Fluorocarbon and Other Refrigerants to read as 
follows:

Appendix A to Subpart F of Part 82--Specifications for Fluorocarbon and 
Other Refrigerants

    AHRI Standard 700-2012: Specifications for Fluorocarbon 
Refrigerants specifies acceptable levels of contaminants (purity 
requirements) for fluorocarbon refrigerants and lists acceptable 
test methods. This appendix incorporates by reference AHRI Standard 
700-2012: Specifications for Fluorocarbon Refrigerants (2012 
edition, Air-Conditioning, Heating, and Refrigeration Institute). 
The entire standard, including Appendices A and B, are made part of 
the regulations in part 82 subpart F. Accordance with the 
specifications in AHRI Standard 700-2012 is required by the relevant 
regulations of this subpart.
    The Director of the Federal Register approves this incorporation 
by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. 
You may obtain a copy from AHRI online at: http://www.ahrinet.org or 
by contacting AHRI by phone: (+1) 703-524-8800 or by fax: (+1) 703-
562-1942. You may also obtain a copy in person or by mail at Air-
Conditioning, Heating, and Refrigeration Institute (AHRI) 2111 
Wilson Blvd., Suite 500 Arlington, VA 22201, USA.
    AHRI Standard 700-2012 is also available online at http://www.regulations.gov/ by searching for docket number: EPA-HQ-OAR-
2013-0263. You may also inspect a copy at the United States EPA's 
Air Docket; EPA West Building, Room 3334; 1301 Constitution Ave. 
NW., Washington, DC or at the National Archives and Records 
Administration (NARA). For questions regarding access to these 
standards, the telephone number of EPA's Air Docket is 202-566-1742. 
For information on the availability of this material at NARA, call 
202-741-6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
* * * * *
[FR Doc. 2013-29817 Filed 12-23-13; 8:45 am]
BILLING CODE 6560-50-P