EPA Finalizes First Rule on HFC Phasedown, Non-Refillable Cylinder Ban

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October 21, 2021

The American Innovation and Manufacturing (AIM) Act of 2020, which was signed into law by President Trump last December, mandates the Environmental Protection Agency (EPA) reduce production and consumption of hydrofluorocarbons (HFCs) by 85 percent over the next 15 years. The intended goal of the law is to mitigate the effects of climate change. The phasedown includes a reduction in production and consumption of commonly used HFC refrigerants like R-410A and R-32, which have a high Global Warming Potential or GWP. On September 23, 2021, EPA published the first finalized rule under the AIM Act, which sets forth baseline allowance allocations for companies that produce and import HFCs. These figures will serve as the initial reference point for periodic reductions that will occur between now and 2036. In addition, the rule establishes a framework for companies to trade allowances, implements tracking and enforcement methodologies, and cements a ban on non-refillable cylinders for HFCs which will be enforced in two phases (between January 1, 2025, and January 1, 2027).

What the impending phasedown of HFCs means for contractors is that some of the most used refrigerants (like those listed above) will become less available over the next 15 years. The phasedown schedule is set to reduce HFC levels to 90 percent of the current baseline in 2022, 60 percent in 2024, 30 percent in 2029, 20 percent in 2034, and a final reduction to 15 percent in 2036. EPA has stated that it plans to maximize refrigerant reclamation to help satisfy market demand but given the industry’s current cities in respect to reclaiming and processing used refrigerant back to a usable state, it is unclear how effective this approach will be. What is certain, however, is that contractors will increasingly encounter newer generations of refrigerants (like A2Ls) in the marketplace. A2Ls are being introduced as an alternative because they have lower GWP than HFC refrigerants. While A2Ls may be better for the environment, they pose a potential hazard to contractors, technicians, and consumers that HFCs do not: they are mildly flammable. Therefore, it is important for contractors to prepare themselves and their teams to safely handle these substances. If you haven’t already, please take a minute to look at and consider ACCA’s A2L refrigerant training for contractors and technicians. It is designed to help HVAC professionals prevent ignition while working with A2L refrigerants and educate staff on the best safety practices to keep staff and clients safe.

As mentioned, this rule lays the groundwork for the enforcement of the AIM Act. This includes an electronic tracking system for the movement of HFCs through commerce, container labeling requirements, third-party auditing of company records, inter-agency enforcement cooperation, and increased enforcement of existing rules and regulations regarding the illegal sale or handling of HFCs. In ACCA’s discussions with the EPA, they signaled that most of the tracking and recordkeeping requirements would be enforced beginning with the manufacturer or importer and ending with the distributor. Individual contractors are to be treated as “final customers” under the law—and therefore will not have to keep as stringent records regarding the handling and placement of their HFCs. With that said, given that HFCs will essentially be treated as controlled substances, contractors should prepare for the possibility of additional regulations and increased bureaucratic scrutiny.

A particular point of concern for contractors under this rule is the ban on disposable or non-refillable cylinders. EPA put the ban forward with the intent of curbing illegal HFC trafficking and imports. Their logic is that refillable cylinders are easier to track. ACCA opposed the ban outright based on the financial and logistical difficulties it would impose on contractors as well as the industry more broadly. Replacing the entire fleet of cylinders will not be an easy or cheap task. Originally, the EPA proposed the date of January 1, 2023, for the termination of imports and placement of HFCs into new disposable cylinders and January 1, 2025, for an outright ban on their sale. Based on feedback from ACCA and other stakeholders, EPA has pushed those dates to January 1, 2025, and January 1, 2027, respectively. While it is not what we had asked or hoped for, an additional two years does buy the industry more time to prepare and will hopefully ward off some of the negative impacts of the ban.

As EPA moves forward with implementing and enforcing the AIM Act, more rules and regulations on HFCs are sure to follow. While we do not know exactly what the entire process will look like, it will unquestionably impact contractors and their businesses. ACCA will provide more information to members as it becomes available. If you have any questions on the AIM Act or would like to get involved with ACCA’s advocacy efforts, please feel free to reach out to me by email at chris.czarnecki@acca.org.