EPA issues proposed and final rules to further cut down HFC use

Regulatory background

• Hydrofluorocarbons (HFCs) are a group of synthetic fluorinated chemicals that are used in a wide range of applications, from refrigeration and air conditioning to fire suppression and aerosols. HFCs are potent greenhouse gases (GHGs), with some HFCs having hundreds or thousands of times the relative climate impact as carbon dioxide. HFC use is currently increasing, based on the phase-out of ozone-depleting substances (ODS) under the Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal Protocol).
• The Montreal Protocol is a major international environmental agreement that regulates the production and consumption of a group of about 100 ODS (hydrochlorofluorocarbons (HCFCs) and chlorofluorocarbons (CFCs)). The Montreal Protocol was adopted on September 16, 1987, and phases down the consumption and production of ODS through a step-down pattern. HFCs were introduced as an alternative to ODS to support the phase-out of ODS, as although the chemicals do not deplete the ozone, HFCs still contribute a significant amount to global GHG emissions. HFC emissions are expected to rise to between 7-19% of global carbon dioxide emissions by 2050.
• The Kigali Amendment to the Montreal Protocol was signed on October 15, 2016, at a Protocol meeting called to significantly reduce the use of HFCs. President Biden ratified the Kigali Amendment on September 1, 2022. The Kigali Amendment created a timeline to reduce overall HFC use and consumption by 80-85% by the late 2040s, as well as HFC consumption level freezes in 2024 and 2028 for certain countries.
• Prior to President Biden ratifying the Kigali Amendment, Congress passed the American Innovation and Manufacturing (AIM) Act of 2020 on December 27, 2020. The AIM Act covers three discrete areas for the Environmental Protection Agency (EPA) to address: (1) phasing down the production and consumption of HFCs listed in the act; (2) managing listed HFCs and substitutes; and (3) facilitating the transition to next-generation technologies on a sector-by-sector basis. The AIM Act will phase down the production and consumption of HFCs in the U.S. by 85% in 2036. The phasedown follows a “step-down” schedule, which will gradually phase out the use of HFCs in the U.S., with the agency determining allowances of HFCs for specific industries.

Proposed rules to reduce HFC emissions

• On October 6, 2023, the EPA published a press release announcing the latest rules covering a suite of actions phasing down the use of HFCs around the country. The crux of the rule focuses on the plan to phase down HFCs by 40% in 2024 to put the country on the road to an on-time 85% reduction of HFCs consumption and production by 2036. The first rule focuses on transitioning technologies to new refrigeration, heating, and cooling systems that restrict the use of HFCs when alternatives are available. The second rule focuses on regulations to better manage and reuse HFCs through a variety of technologies, including leak reduction.

Technology transitions rule

• The first rule focuses on section (i) of the AIM Act, Technology Transitions (Technology Transitions Rule). Section (i) authorizes the EPA to restrict HFC use via technology transitions as well as allowing for a public petition system for members of the public to petition the agency to initiate rulemakings.
• The Technology Transitions rule further expands and addresses the EPA’s framework for public petitions, and further restricts the use of certain HFCs in the refrigeration, air conditioning, and heat pump (RACHP), foam, and aerosol sectors. This includes the restriction of HFCs with high global warming potentials (GWPs) when used in neat or in a blend in these applications. The agency is similarly prohibiting the manufacture, import, and installation of a range of equipment across a wide array of industry sectors, targeting either GWP limits or restrictions on the use of specific HFCs in specific applications.
• The agency chose to use both the GWP and the specific HFC restrictions but did leave the door open for considering other reduction and restriction approaches in the future. The agency stated that unlike its proposed rule, the EPA is not wholesale prohibiting the use of all regulated HFCs in new products in certain sectors but did maintain that the agency had the authority to do so in a subsequent rulemaking if it chose to do so. The agency also explained that it interpreted the AIM Act’s statutes to give it the power to restrict particular uses of HFCs with heterogenous requirements across sectors or subsectors, potentially opening up additionally fractured applications of HFC restrictions and technology across industrial sectors.
• The GWP-based restrictions would allow industry to use only HFCs with GWPs below the limit or blends with combined GWPs under the limit. The agency explained that if these HFCs are used neat, HFCs with GWPs above the specific limit would be prohibited in that sector or subsector. For blends, the agency would base the restriction on the GWP limit based on the specific blend. The agency explained that it hopes that this approach will lead to a more streamlined process for companies that need to switch to lower GWP substitutes, covering both substance and blend restrictions so that companies can understand what blends will be allowable in the future.

Management rule

• The major focus of the second rule (the Management Rule) is to establish a program to manage HFCs across the board, aiming to increase the update of automatic leak detection systems as well as utilizing reclaimed HFCs in RACHP sectors. The rule also comes with proposed amendments for Resource Conservation and Recovery Act (RCRA) hazardous waste regulations, specifying alternative standards for spent ignitable refrigerants when recycled for reuse.
• The management program will cover a wide range of applications across industries. This will include new regulations that involve leak repairs for appliances that contain HFCs (or certain HFC substitutes), covering devices that contain more than 15 pounds HFC refrigerants (or HFC substitutes with GWPs above 53). The rules will also mandate the use of automatic leak detections systems for certain new and existing larger-scale appliances that contain more than 1,500 pounds of an HFC refrigerant (or HFC alternative with a GWP above 53).
• Additional sectors of the management program will focus on the reclamation and disposal of HFCs. This will include regulations on the use of reclaimed HFCs in certain RACHP and fire suppression sectors for the initial charge or installation of equipment containing HFCs. The rule also proposes additional regulations on the servicing, repair, disposal, or installation of fire suppression equipment that contains HFCs.
• The proposed rule would add a new section to RCRA regulations 40 C.F.R. part 266, subpart Q. The three sections under this subpart would apply to ignitable spent refrigerants that are recycled for reuse. The agency explained that the purpose of the new regulations was to reduce emissions of ignitable spent refrigerants to the lowest achievable level by maximizing the recovery and reuse of the refrigerants. These regulations would apply to HFCs and HFC alternatives that have lower flammability ratings and overall greater market value.

Impact of the rule

• The two rules will add a significant push to the agency’s abilities effectively phase down HFC use in the U.S. Although the overall push to reduce HFC consumption and manufacturing is already statutorily required, the implementing regulations by the agency, and how it chooses to use its discretion and allowances provide a much clearer view of what that phasedown will actually look like.
• In this case, the focus is clearly on reducing the overall prevalence of higher GWP HFCs in RACHP and other industries. By pushing to use lower GWP refrigerants (as well as other applications), the agency will most likely provide an overall easier step-down process for affected companies. These limits will likely continue to go down as the agency targets both new and existing infrastructures in its quest for an 85% reduction by 2036, and these two rules mark what is likely the least restrictive set of rules in the future.

To contact the author of this analysis, please email Walker Livingston.
To contact the editor of this analysis, please email Patricia Iscaro.

Key Documents and Dates

• Technology Transitions Rule (October 6, 2023)
• Management Rule (October 6, 2023)
• American Innovation and Manufacturing (AIM) Act of 2020