AIM Act Allocation Rule FAQs
This article originally appeared here.
The American Innovation and Manufacturing (AIM) Act was enacted in December 2020. It gives the U.S. Environmental Protection Agency (EPA) three new ways to reduce emissions of hydrofluorocarbons (HFCs): (1) phasing down HFCs by allocating allowances authorizing production and consumption, (2) facilitating the transition to next-generation technologies through sector-based restrictions and (3) maximizing reclamation and minimizing releases from equipment. In October 2021, the EPA issued a final rule (the Allowance Allocation Rule) that focuses on the first area – the phasedown of HFC production and consumption.1 Later in October, the Agency also granted several petitions that likely will lead to HFC controls in particular sectors.
As part of our commitment to sustainability, Arkema supports the AIM Act and offers the brief answers below to address common questions.
- Who is affected by this Final Rule?
Companies that produce, import, export, destroy, use as a feedstock, reclaim, package, or otherwise distribute HFCs are among those that may be affected by the Allowance Allocation Rule. Others who may be impacted include companies that use HFCs, especially in refrigeration and air-conditioning equipment, foams, aerosols, fire suppressants, or the six applications designated in the AIM Act as eligible for allowances.2
- Will Forane® 410A Refrigerant still be available?
In October 2021, EPA granted several petitions asking for a GWP limit of 750 on refrigerants used in new residential and light commercial air conditioners as of 01/01/2025. Under the AIM Act, the Agency has up to two years to issue a final regulation in those sectors. While the petitions as drafted would preclude use of R-410A, we expect that the refrigerant will continue to be available to service existing units for some time.
- What are allocation allowances?
The EPA is issuing allowances to companies that produced and/or imported HFCs in 2020, based on the three highest years (consecutive or not) of production or import from 2011-2019. The Allowance Allocation Rule distributed allowances only for 2022, but the EPA is expected to apply the same framework for 2023. The EPA is also issuing “application-specific allowances” directly to domestic entities, including the U.S. Department of Defense, that operate within the six specific sectors listed in the AIM Act. Those entities will be able to confer their allowances to producers or importers to acquire needed HFCs, or to import themselves.3
For more detailed information regarding allocation, visit: https://www.epa.gov/system/files/documents/2021-09/hfc-allocation-final-rule-faq-sept2021.pdf and https://www.epa.gov/climate-hfcs-reduction/phasedown-hydrofluorocarbons-hfcs-issuing-allowance-allocations
- Will disposable cylinders be discontinued?
Under the Allowance Allocation Rule, disposable cylinders containing HFCs or HFC/HFO blends will be prohibited from being refilled or imported as of 7/1/2025 and prohibited from U.S. commerce in 2027 (note that this does not apply to pure HFOs or HCFCs). Only refillable cylinders will then be allowed for HFCs.
- Will there be penalties for non-compliance?
Yes. For non-compliance, the EPA can draw upon the enforcement mechanisms of the Clean Air Act, which include imprisonment, criminal fines, administrative orders, court injunctions, and civil fines that may exceed $100,000 per day for each violation.4 And every kilogram distributed in violation of the AIM Act would constitute a separate violation. In addition, the Allowance Allocation Rule contains various administrative consequences such as a ban on receiving future allowances.
- Are there any exclusions from the AIM Act for imported HFCs?
The Allowance Allocation Rule applies only to bulk HFC imports, which are when the HFCs are in a container for their transportation or storage and must be transferred to another container, vessel, or piece of equipment in order to realize their intended use. Therefore, cylinders, drums and small cans of HFCs require expending allowances for import, but appliances, aerosol cans and foams containing HFCs are not subject to the allowance requirements.
- What else should the suppliers and users be aware of?
The EPA is setting up a task force with Customs and Border Protection (CBP) and other agencies to prevent illegal imports of HFCs, which has been a serious problem in Europe. Further, the Rule establishes a comprehensive certification ID tracking system using QR codes to track the movement of HFCs, including requiring anyone that imports, sells or distributes HFCs, or offers to sell or distribute them, to be registered in the system.
There are also new recordkeeping and auditing requirements. But the Allowance Allocation Rule is detailed and we encourage you to review its terms in full.
- What does the Rule say about reclaim?
Reclaim is an integral part of the HFC phasedown and will be addressed by a separate EPA Rule in the future. It is the Agency’s intention to encourage reclaim.
- Will AIM allow additional suppliers into the market?
There is a “set aside” pool for several categories, including new business entries. The EPA is making it possible for new entries to receive some consumption allowances that can be used for importing HFCs.
- Are the AIM Act Rules applicable in every state?
Yes, however a number of U.S. states have developed their own HFC phase down programs that may go beyond the requirements of the AIM Act.
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Posted In: Government
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