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Rule2023-22529

Phasedown of Hydrofluorocarbons: Restrictions on the Use of Certain Hydrofluorocarbons Under the American Innovation and Manufacturing Act of 2020

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Published

October 24, 2023

Effective

December 26, 2023

Issuing agencies

Environmental Protection Agency

Abstract

The U.S. Environmental Protection Agency is issuing regulations to implement certain provisions of the American Innovation and Manufacturing Act, as enacted on December 27, 2020. This rulemaking restricts the use of hydrofluorocarbons in specific sectors or subsectors in which they are used; establishes a process for submitting technology transitions petitions; establishes recordkeeping and reporting requirements; and addresses certain other elements related to the effective implementation of the American Innovation and Manufacturing Act. These restrictions on the use of hydrofluorocarbons address petitions granted on October 7, 2021, and September 19, 2022.

Full Text

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[Federal Register Volume 88, Number 204 (Tuesday, October 24, 2023)]
[Rules and Regulations]
[Pages 73098-73212]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-22529]

[[Page 73097]]

Vol. 88

Tuesday,

No. 204

October 24, 2023

Part II

Environmental Protection Agency

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40 CFR Part 84

Phasedown of Hydrofluorocarbons: Restrictions on the Use of Certain
Hydrofluorocarbons Under the American Innovation and Manufacturing Act
of 2020; Final Rule

Federal Register / Vol. 88 , No. 204 / Tuesday, October 24, 2023 /
Rules and Regulations

[[Page 73098]]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 84

[EPA-HQ-OAR-2021-0643; FRL-8831-02-OAR]

Phasedown of Hydrofluorocarbons: Restrictions on the Use of
Certain Hydrofluorocarbons Under the American Innovation and
Manufacturing Act of 2020

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The U.S. Environmental Protection Agency is issuing
regulations to implement certain provisions of the American Innovation
and Manufacturing Act, as enacted on December 27, 2020. This rulemaking
restricts the use of hydrofluorocarbons in specific sectors or
subsectors in which they are used; establishes a process for submitting
technology transitions petitions; establishes recordkeeping and
reporting requirements; and addresses certain other elements related to
the effective implementation of the American Innovation and
Manufacturing Act. These restrictions on the use of hydrofluorocarbons
address petitions granted on October 7, 2021, and September 19, 2022.

DATES: This rule is effective December 26, 2023.

FOR FURTHER INFORMATION CONTACT: Allison Cain, Stratospheric Protection
Division, Office of Atmospheric Protection (Mail Code 6205A),
Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington,
DC 20460; telephone number: 202-564-1566; email address:
<a href="/cdn-cgi/l/email-protection#7714161e1959161b1b1e0418193712071659101801">[email&#160;protected]</a>. You may also visit EPA's website at <a href="https://www.epa.gov/climate-hfcs-reduction">https://www.epa.gov/climate-hfcs-reduction</a> for further information.

SUPPLEMENTARY INFORMATION: Throughout this document, whenever ``we,''
``us,'' ``the Agency,'' or ``our'' is used, we mean EPA. Acronyms and
abbreviations that are used in this rulemaking that may be helpful
include:

AC--Air Conditioning
ACIM--Automatic Commercial Ice Machine
AHAM--Association of Home Appliance Manufacturers
AHRI--Air-Conditioning, Heating, and Refrigeration Institute
AIM Act--American Innovation and Manufacturing Act of 2020
ANSI--American National Standards Institute
AR4--Fourth Assessment Report of the Intergovernmental Panel on
Climate Change
ASHRAE--American Society of Heating, Refrigerating and Air-
Conditioning Engineers
CAA--Clean Air Act
CARB--California Air Resources Board
CBI--Confidential Business Information
CBP--U.S. Customs and Border Protection
CDR--Chemical Data Reporting
CFC--Chlorofluorocarbon
CH<INF>4</INF>--Methane
CO<INF>2</INF>--Carbon Dioxide
DOE--U.S. Department of Energy
DX--Direct Expansion
EAV--Equivalent Annualized Value
e-GGRT--Electronic Greenhouse Gas Reporting Tool
EEAP--Environmental Effects Assessment Panel
EIA--Environmental Investigation Agency
EPA--U.S. Environmental Protection Agency
EU--European Union
FDA--U.S. Food and Drug Administration
FR--Federal Register
GDP--Gross Domestic Product
GHG--Greenhouse Gas
GHGRP--Greenhouse Gas Reporting Program
GWP--Global Warming Potential
HCFC--Hydrochlorofluorocarbon
HCFO--Hydrochlorofluoroolefin
HCPA--Household and Commercial Products Association
HD--Heavy-duty
HFC--Hydrofluorocarbon
HFO--Hydrofluoroolefin
IAM--Integrated Assessment Model
IAPMO--International Association of Plumbing and Mechanical
Officials
ICC--International Code Council
ICR--Information Collection Request
IIAR--International Institute of Ammonia Refrigeration
IPR--Industrial Process Refrigeration
IPCC--Intergovernmental Panel on Climate Change
IT--Information Technology
ITEF--Information Technology Equipment Facilities
IWG--Interagency Working Group on the Social Cost of Greenhouse
Gases
LD--Light-duty
LFL--Lower Flammability Limit
MAC--Marginal Abatement Cost
MDPV--Medium-duty Passenger Vehicle
MMTCO<INF>2</INF>e--Million Metric Tons of Carbon Dioxide Equivalent
MMTEVe--Million Metric Tons of Exchange Value Equivalent
MVAC--Motor Vehicle Air Conditioning
MY--Model Year
N<INF>2</INF>O--Nitrous oxide
NAICS--North American Industry Classification System
NAMA--National Automatic Merchandising Association
NATA--National Air Toxics Assessment
NFPA--National Fire Protection Association
NRDC--Natural Resources Defense Council
NRTL--Nationally Recognized Testing Laboratory
OEM--Original Equipment Manufacturer
ODS--Ozone-depleting Substance
OMB--U.S. Office of Management and Budget
OSHA--Occupational Safety and Health Administration
PFAS--Per- and Polyfluoroalkyl Substances
PFC--Perfluorocarbon
PRA--Paperwork Reduction Act
PTAC--Packaged Terminal Air Conditioner
PTHP--Packaged Terminal Heat Pump
PV--Present Value
RACHP--Refrigeration, Air Conditioning, and Heat Pumps
RFA--Regulatory Flexibility Act
RIA--Regulatory Impact Analysis
RTOC--Refrigeration, Air Conditioning and Heat Pumps Technical
Options Committee
SBREFA--Small Business Regulatory Enforcement Fairness Act
SC-GHG--Social Cost of GHGs
SC-HFCs--Social Costs of Hydrofluorocarbons
SF<INF>6</INF>--Sulfur Hexafluoride
SMRE--Semiconductor Manufacturing and Related Equipment
SNAP--Significant New Alternatives Policy
TEAP--Technology and Economic Assessment Panel
TFA--Trifluoroacetic Acid
TLV-TWA--Threshold Limit Value-Time-Weighted Average
TOC--Technical Options Committee
TRI--Toxics Release Inventory
TSD--Technical Support Document
UL--Underwriters Laboratories Inc
VOCs--Volatile Organic Compounds
VRF--Variable Refrigerant Flow
WMO--World Meteorological Organization

Table of Contents

I. Executive Summary
A. What is the purpose of this regulatory action?
B. What is the summary of this regulatory action?
C. What is the summary of the costs and benefits of this action?
II. General Information
A. Does this action apply to me?
B. What is EPA's authority for taking this action?
III. Background
A. What are HFCs?
B. How do HFCs affect public health and welfare?
IV. What is the petition process under the technology transitions
program?
A. What must be included in a technology transitions petition?
B. What happens after a petition is submitted?
C. Can I revise or resubmit my petition?
V. How is EPA considering negotiated rulemaking?
A. Summary of the AIM Act's Directive on Negotiated Rulemaking
B. How does EPA intend to consider negotiating with stakeholders
under the AIM Act?
VI. How is EPA restricting the use of HFCs?
A. What definitions is EPA establishing in subsection (i)?
B. How is EPA restricting the use of HFCs in the sector or
subsector in which they are used?
C. Applicability
1. What is EPA's statutory authority for this action?
2. What uses is EPA restricting in this rule?
3. What uses are not covered in the final rule?

[[Page 73099]]

D. How is EPA addressing restrictions on the use of HFCs
requested in petitions granted?
1. Petitions Granted on October 7, 2021
2. How is EPA addressing additional petitions that cover similar
sectors and subsectors?
3. Petitions Granted on September 19, 2022
E. Subsection (i)(4) Factors for Determination
1. How is EPA considering best available data?
2. How is EPA considering the availability of substitutes?
3. How is EPA considering overall economic costs and
environmental impacts, as compared to historical trends?
4. How is EPA considering the remaining phasedown period for
regulated substances?
5. How did EPA determine the degree of the restrictions for each
sector and subsector?
F. For which sectors and subsectors is EPA establishing
restrictions on the use of HFCs?
1. Refrigeration, Air Conditioning, and Heat Pumps
2. Foams
3. Aerosols
VII. What are the labeling requirements?
VIII. What are the reporting and recordkeeping requirements?
A. What reporting is EPA requiring?
1. What is the frequency and timing of reporting?
2. When do reporters need to begin reporting?
B. What recordkeeping is EPA requiring?
IX. What are the costs and benefits of this action?
A. Assessment of Costs and Additional Benefits Utilizing
Transition Options
B. Scoping Analysis of Imports of Products
X. How is EPA evaluating environmental justice?
XI. Judicial Review
XII. Severability
XIII. Statutory and Executive Order Review
A. Executive Order 12866: Regulatory Planning and Review and
Executive Order 14094: Modernizing Regulatory Review
B. Paperwork Reduction Act (PRA)
C. Regulatory Flexibility Act (RFA)
D. Unfunded Mandates Reform Act (UMRA)
E. Executive Order 13132: Federalism
F. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
G. Executive Order 13045: Protection of Children From
Environmental Health Risks and Safety Risks
H. Executive Order 13211: Actions That Significantly Affect
Energy Supply, Distribution, or Use
I. National Technology Transfer and Advancement Act (NTTAA) and
Incorporation by Reference
J. Executive Order 12898: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations and Executive Order 14096: Revitalizing our Nation's
Commitment to Environmental Justice for All
K. Congressional Review Act (CRA)

I. Executive Summary

A. What is the purpose of this regulatory action?

The U.S. Environmental Protection Agency (EPA) is issuing
regulations to implement certain provisions of the American Innovation
and Manufacturing Act of 2020, codified at 42 U.S.C. 7675 (AIM Act or
the Act). The AIM Act authorizes EPA to address hydrofluorocarbons
(HFCs) in three main ways: phasing down HFC production and consumption
through an allowance allocation program; \1\ promulgating certain
regulations for purposes of maximizing reclamation and minimizing
releases of HFCs from equipment; and facilitating sector-based
transitions to next-generation technologies. This rulemaking focuses on
the third area--facilitating the transition to next-generation
technologies by restricting use of HFCs in the sectors or subsectors in
which they are used.
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\1\ EPA has issued regulations establishing and codifying a
framework for phasing down HFC production and consumption through an
allowance allocation program, ``Phasedown of Hydrofluorocarbons:
Establishing the Allowance Allocation and Trading Program Under the
American Innovation and Manufacturing Act'' (86 FR 55116, October 5,
2021). That rule is referred to as the ``Allocation Framework Rule''
throughout this document. EPA finalized a separate rulemaking to
update certain aspects of that regulatory framework (see final rule
at 88 FR 46836, July 20, 2023).
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Subsection (i) of the Act, entitled ``Technology Transitions,''
authorizes EPA, by rulemaking, to restrict the use of regulated
substances (used interchangeably with ``HFCs'' in this document) in
sectors or subsectors where the regulated substances are used.\2\ The
Act also includes provisions for the public to petition EPA to initiate
such a rulemaking. On October 7, 2021, and September 19, 2022, EPA
granted 12 petitions and partially granted one petition (hereby
referred to as ``granted petitions'') requesting restrictions on the
use of HFCs in various sectors and subsectors (86 FR 57141, October 14,
2021). The Act directs EPA to promulgate a final rule within two years
after the date on which the Agency grants a petition. This rulemaking,
in part, addresses the granted petitions.
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\2\ The Act lists 18 saturated HFCs, and by reference any of
their isomers not so listed, that are covered by the statute's
provisions, referred to as ``regulated substances'' under the Act.
---------------------------------------------------------------------------

This rulemaking further addresses the framework for how EPA intends
to implement its authority to restrict the use of HFCs in sectors and
subsectors where they are used. It includes provisions to support
implementation of, compliance with, and enforcement of statutory and
regulatory requirements under subsection (i) of the Act. To provide the
public with additional information about this new program, this
document also includes a description of how EPA intends to implement
certain aspects of the program, such as the processing of petitions to
restrict the use of HFCs in sectors and subsectors in which they are
used under subsection (i) of the Act.

B. What is the summary of this regulatory action?

EPA is establishing the process and information requirements for
submitting petitions under subsection (i) of the AIM Act and describing
how the Agency intends to evaluate those petitions. Upon receiving a
petition, the Agency will consider, to the extent practicable, the
factors listed in subsection (i)(4) of the AIM Act in making a
determination to grant or deny the petition. Consistent with the Act,
EPA considered these factors to the extent practicable in establishing
the restrictions on the use of HFCs in this rulemaking.
EPA is restricting the use of HFCs, whether neat or used in a
blend, with high global warming potentials (GWPs) within the
refrigeration, air conditioning, and heat pump (RACHP), foam, and
aerosol sectors. EPA is prohibiting the manufacture, import, or
installation of certain equipment across approximately 40 subsectors,
either based on overall GWP limits or restrictions on use of specific
HFCs. The compliance dates for these restrictions vary depending on the
subsector ranging from January 1, 2025, to January 1, 2028. The final
rule prohibits the sale, distribution, and export of factory completed
products that do not comply with the relevant restrictions three years
after the prohibition on manufacture and import. EPA is not regulating
at this time actions with respect to components needed to service or
repair existing systems. EPA is finalizing labeling, annual reporting,
and recordkeeping requirements for products and specified components
that are imported or domestically manufactured that use or are intended
to use an HFC.

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

EPA is providing a summary of the costs and benefits of restricting
use of HFCs consistent with this rule. The full analyses, presented in
the American Innovation and Manufacturing Act of 2020--Subsection
(i)(4) Factors for Determination: Costs and Environmental Impacts,
referred to in

[[Page 73100]]

this preamble as the Costs and Environmental Impacts technical support
document (TSD) and in a regulatory impact analysis (RIA) addendum to
the Allocation Framework RIA, are contained in the docket to this rule.
These analyses--as summarized below--highlight economic costs and
benefits, including benefits from HFC consumption and emission
reductions.
EPA relied on previous analyses conducted for the Allocation
Framework Rule (86 FR 55116, October 5, 2021) and the 2024 Allocation
Rule, ``Phasedown of Hydrofluorocarbons: Allowance Allocation
Methodology for 2024 and Later Years'' (88 FR 46836, July 20, 2023), as
a starting point for the assessment of costs and benefits of this rule.
In this way, EPA analyzed the incremental impacts of this rule,
attributing benefits only insofar as they are additional to those
already assessed in the Allocation Framework RIA and 2024 Allocation
Rule RIA addendum (collectively referred to as ``Allocation Rules'' in
this discussion.\3\
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\3\ In a separate action, EPA has also issued a rule to amend
the production baseline downwards by 0.005% to reflect corrected
data (88 FR 44220, July 12, 2023).
---------------------------------------------------------------------------

The additional benefits of this rule relative to the Allocation
Rules may vary depending on the mix and timing of industry transitions
made to achieve compliance in affected subsectors. In its analysis of
the Allocation Rules, EPA estimated that regulated entities would adopt
specific technology transition options to achieve compliance with the
statutory allowance cap step-downs. Industry is already making many of
these transitions, and we expect that achieving the allowance cap step-
downs will require many of the same subsector-specific technology
transitions that are also required by this rule. However, this rule may
in some cases require regulated entities to further accelerate
transitions in specific subsectors, relative to what EPA previously
assumed in its analysis of the Allocation Rules. Conversely, entities
in a discrete set of subsectors not covered by this rule could
conceivably forgo or delay adopting abatement options that were assumed
to be undertaken to comply with the Allocation Rules.
Given this uncertainty, EPA analyzed two scenarios to represent the
range of potential incremental impacts resulting from this rule: a
``base case'' and ``high additionality case.'' Both scenarios use the
results from the Allocation Framework Rule as a starting point and
count benefits in terms of reductions of consumption and emissions only
in cases where this rule results in additional reductions in HFC
consumption. The ``base case'' represents a conservative assessment of
benefits and assumes that any industry activity not necessary for
compliance is excluded. In other words, the scenario excludes
consumption reductions not covered by a GWP restriction in this rule.
By contrast, the ``high additionality case'' is a less conservative
scenario and assumes that HFC consumption reduction activities not
covered by this rule would remain consistent with the Allocation
Framework Rule reference scenario (i.e., neither increase nor decrease
in response to this rule). Based on the results of these two scenarios,
which are detailed further in the Costs and Environmental Impacts TSD
and the RIA addendum, EPA estimates that additional emission reductions
through 2050 would range from an annual average of 3 to 34 million
metric tons of carbon dioxide equivalent (MMTCO<INF>2</INF>e) \4\ in
the base case and high additionality case, respectively. These emission
reductions generally lag the anticipated incremental consumption
reductions, which range from an annual average of 28 to 43
MMTCO<INF>2</INF>e.
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\4\ The exchange values provided in the AIM Act are numerically
equivalent to the 100-year integrated global warming potentials
provided in IPCC (2007). EPA provides values in CO<INF>2</INF>e and
notes that the same values would be used if expressed in exchange
value equivalents.
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Table 1 summarizes the reductions in both consumption and emissions
as described in the Costs and Environmental Impacts TSD and the RIA
addendum for this final rule. The table shows the cumulative
incremental reductions--that is, the difference in reductions compared
with the Allocation Framework Rule reference scenario--from the final
rule over the time period 2025 through 2050. Both the base case and
high additionality case results show a net reduction in consumption and
emissions on a cumulative basis through 2050.

Table 1--Incremental Consumption and Emission Reductions in the Technology Transitions Rule Base Case and High
Additionality Case Compared to the Allocation Rule Reference Case
----------------------------------------------------------------------------------------------------------------
Cumulative incremental consumption reductions (MMTCO2e)-- Cumulative incremental emission reductions (MMTCO2e)--
2025-2050 2025-2050
----------------------------------------------------------------------------------------------------------------
Technology transitions rule Technology transitions high Technology transitions Technology transitions
base case additionality case rule base case high additionality case
----------------------------------------------------------------------------------------------------------------
720 1,113 83 876
----------------------------------------------------------------------------------------------------------------

Although the base case is a reasonable projection of the potential
impacts of this rule, there is reason to believe that it is a
conservative one, and that the incremental emission reductions
associated with this final rule could be far greater than reflected in
the base case scenario. Previous regulatory programs to reduce chemical
use in the affected industries show that regulated entities do not
limit their response to the required compliance level; rather,
regulated entities may take additional actions that transform industry
practices for various reasons, including the anticipation of future
restrictions, strengthening their competitive position, and supporting
overall environmental goals. For example, U.S. production and
consumption of ozone-depleting substances (ODS) during their phaseout
was consistently below the limits established under the Montreal
Protocol. For this reason, the high additionality case assumes certain
abatement options not covered by the final rule--but which were assumed
in the prior accounting of benefits for the Allocation Rules--continue
to be undertaken. Based on the two scenarios, on a cumulative basis
this rule is expected to yield incremental emission reductions ranging
from 83 to 876 MMTCO<INF>2</INF>e through 2050 (respectively, about 2
percent and 20 percent of the total emission reductions over that same
time period in the Allocation Rules analyses). In the RIA addendum, we
estimate the present value of these

[[Page 73101]]

incremental benefits to be between $3.01 billion and $50.4 billion in
2020 dollars.
EPA also estimates that this rule will result in potentially lower
compliance costs relative to those previously assessed for the
Allocation Rules. These additional savings stem largely from assumed
energy efficiency gains and lower cost refrigerants associated with the
technological transitions necessary to meet the requirements.\5\ The
present value of cumulative incremental costs or savings from 2025-2050
is estimated to be between $1 million in costs and $2.1 billion in
savings, when using a 7 percent discount rate, or between $1.6 billion
and $4.5 billion in savings, when using a 3 percent discount rate (in
2020 dollars). As with EPA's estimates of benefits for this rule, these
estimated costs or savings reflect only what is incremental to EPA's
previously estimated compliance pathway for the Allocation Rules.\6\
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\5\ As discussed in the RIA Addendum, incremental savings
estimated for this rule stem largely from more rapid and more
comprehensive transitions to cost-saving, lower-GWP technologies in
certain subsectors than was previously estimated for the HFC
Allocation Framework Rule. Similarly comprehensive transitions were
not assumed in the Allocation Rules analysis, since it assumed
that--absent regulatory requirements--newer technologies may still
face some industry inertia and shift less rapidly regardless of
potential energy savings or other benefits over time.
\6\ In the 2024 Allocation Rule RIA Addendum, EPA estimated
present value net savings for the period of 2022-2050 of $9 billion
discounted at 3 percent and $4.8 billion at 7 percent, in 2020
dollars, discounted to 2022. Estimated net savings for the TT Rule
are incremental to these prior estimates.
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Table 2 summarizes key findings from the RIA addendum, including
the present value (PV) and equivalent annualized value (EAV) of
cumulative incremental climate benefits, costs, and net benefits of
this rule over the 2025-2050 time period. Climate benefits are
discounted at 3 percent, and costs are presented using both a 3 percent
and 7 percent discount rate. The climate benefits and net benefits
findings were not used for decisional purposes and are provided for
informational and illustrative purposes only.

Table 2--PV and EAV of Cumulative Incremental Climate Benefits, Costs, and Net Benefits for 2025 Through 2050
[Millions of 2020$, discounted to 2022] a b c d
--------------------------------------------------------------------------------------------------------------------------------------------------------
Base case High additionality case
-----------------------------------------------------------------------------------------------------------------
Incremental Annual costs Net benefits (3% Incremental Annual costs Net benefits (3%
climate (negative values are benefits, 3% or 7% climate (negative values are benefits, 3% or 7%
Discount rate benefits savings) costs) \e\ benefits savings) costs) \e\
(3%) -------------------------------------------- (3%) -------------------------------------------
------------- -------------
3% 3% 7% 3% 7% 3% 3% 7% 3% 7%
--------------------------------------------------------------------------------------------------------------------------------------------------------
PV.................................... $3,013 ($4,549) ($2,073) $7,561 $5,086 $50,406 ($1,601) $1 $52,007 $50,405
EAV................................... 184 (278) (215) 462 399 3,081 (98) 0 3,179 3,081
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Benefits include only those related to climate. Climate benefits are based on changes in HFC emissions and are calculated using four different
estimates of the SC-HFCs (model average at 2.5 percent, 3 percent, and 5 percent discount rates; 95th percentile at 3 percent discount rate). For
purposes of this table, we show the effects associated with the model average at a 3 percent discount rate, but the Agency does not have a single
central SC-HFC point estimate. We emphasize the importance and value of considering the benefits calculated using all four SC-HFC estimates. As
discussed in Chapter 5 of the RIA addendum a consideration of climate effects calculated using discount rates below 3 percent, including 2 percent and
lower, is also warranted when discounting intergenerational impacts.
\b\ Rows may not appear to add correctly due to rounding.
\c\ The annualized present value of costs and benefits are calculated as if they occur over a 26-year period from 2025 to 2050.
\d\ The PV for the 7% net benefits column is found by taking the difference between the PV of climate benefits at 3% and the PV of costs discounted at
7%. Due to the intergenerational nature of climate impacts the social rate of return to capital, estimated to be 7 percent in Office of Management and
Budget's Circular A-4, is not appropriate for use in calculating PV of climate benefits.

Some of the information regarding projected impacts of this rule,
including cost estimates and anticipated environmental impacts, was
considered by EPA in its assessment of certain factors listed in
subsection (i)(4) of the AIM Act.\7\ The cost and benefit information
relied upon by EPA in its consideration of the subsection (i)(4)
factors is compiled in the Costs and Environmental Impacts TSD. As
discussed in section VI.E, EPA chose to use certain cost and
environmental benefit information that it had generated in conducting
its RIA addendum in considering certain factors under subsection
(i)(4), but we expect that in future rulemakings we may consider
different types of information to address the (i)(4) factors. In
assessing the (i)(4) factors for this rule, as summarized in the Costs
and Environmental Impacts TSD, EPA considered estimates of costs of the
action, without incorporating the social costs of HFCs (SC-HFCs), and
estimates of cumulative consumption and emission reductions for 2025-
2050 of 720 to 1,113 MMTCO<INF>2</INF>e and 83 to 876
MMTCO<INF>2</INF>e, respectively. The analysis demonstrates net
positive incremental environmental impacts (i.e., HFC consumption and
emission reductions) and cost savings relative to the compliance
pathway evaluated for the Allocation Rules. However, there was no
specific quantitative threshold for positive incremental impacts used
to evaluate the subsection (i)(4) factors. Rather, in its review, to
the extent practicable, of the overall economic costs and environmental
impacts, as compared to historical trends, the Agency issued the final
restrictions after considering the general findings that: a) there are
in fact positive incremental impacts expected from this rule, and b)
that the overall impact of the regulations implemented under the AIM
Act to date (including both the Allocation Rules and this rule) remains
net positive in terms of overall costs and environmental impacts.\8\
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\7\ Subsection (i)(4) of the AIM Act contains a list of factors
that the statute directs EPA to consider, to the extent practicable,
when carrying out a rulemaking or making a determination to grant or
deny a petition.
\8\ We note, however, that subsection (i)(4)(C) plainly does not
require a finding that the environmental impacts of a rule exceed
the economic costs.
---------------------------------------------------------------------------

Although EPA is using SC-HFCs for purposes of some of the analysis
in the RIA addendum, this action does not rely on those estimates of
these costs as a record basis for the Agency action, and EPA would
reach this rule's conclusions even in the absence of the social costs
of HFCs.
Additional information on this analysis can be found in section IX
of this preamble and in the Costs and Environmental Impacts TSD and RIA
addendum contained in the docket.

[[Page 73102]]

II. General Information

A. Does this action apply to me?

You may be potentially affected by this rule if you manufacture,
import, export, sell, distribute, or install equipment that uses or is
intended to use HFCs, such as refrigeration and air-conditioning
systems, foams, and aerosols. Potentially affected categories, by North
American Industry Classification System (NAICS) code, are included in
Table 3.

Table 3--NAICS Classification of Potentially Affected Entities
------------------------------------------------------------------------
NAICS code NAICS industry description
------------------------------------------------------------------------
238220................... Plumbing, Heating, and Air Conditioning
Contractors.
311812................... Commercial Bakeries.
321999................... All Other Miscellaneous Wood Product
Manufacturing.
322299................... All Other Converted Paper Product
Manufacturing.
324191................... Petroleum Lubricating Oil and Grease
Manufacturing.
324199................... All Other Petroleum and Coal Products
Manufacturing.
325199................... All Other Basic Organic Chemical
Manufacturing.
325211................... Plastics Material and Resin Manufacturing.
325412................... Pharmaceutical Preparation Manufacturing.
325414................... Biological Product (except Diagnostic)
Manufacturing.
325998................... All Other Miscellaneous Chemical Product and
Preparation Manufacturing.
326150................... Urethane and Other Foam Product.
326299................... All Other Rubber Product Manufacturing.
327999................... All Other Miscellaneous Nonmetallic Mineral
Product Manufacturing.
332812................... Metal Coating, Engraving (except Jewelry and
Silverware), and Allied Services to
Manufacturers.
332999................... All Other Miscellaneous Fabricated Metal
Product Manufacturing.
333415................... Air[dash]Conditioning and Warm Air Heating
Equipment and Commercial and Industrial
Refrigeration Equipment Manufacturing.
333511................... Industrial Mold Manufacturing.
333912................... Air and Gas Compressor Manufacturing.
333999................... All Other Miscellaneous General Purpose
Machinery Manufacturing.
334419................... Other Electronic Component Manufacturing.
335220................... Major Household Appliance Manufacturing.
336120................... Heavy Duty Truck Manufacturing.
336212................... Truck Trailer Manufacturing.
336214................... Travel Trailer and Camper Manufacturing.
3363..................... Motor Vehicle Parts Manufacturing.
3364..................... Aerospace Product and Parts Manufacturing.
336411................... Aircraft Manufacturing.
336611................... Ship Building and Repairing.
336612................... Boat Building.
336992................... Military Armored Vehicle, Tank, and Tank
Component Manufacturing.
337214................... Office Furniture (Except Wood) Manufacturing.
339112................... Surgical and Medical Instrument
Manufacturing.
339113................... Surgical Appliance and Supplies
Manufacturing.
339999................... All Other Miscellaneous Manufacturing.
423120................... Motor Vehicle Supplies and New Parts Merchant
Wholesalers.
423450................... Medical, Dental, and Hospital Equipment and
Supplies Merchant Wholesalers.
423610................... Electrical Apparatus and Equipment, Wiring
Supplies, and Related Equipment Merchant
Wholesalers.
423620................... Household Appliances, Electric Housewares,
and Consumer Electronics Merchant
Wholesalers.
423690................... Other Electronic Parts and Equipment Merchant
Wholesalers.
423720................... Plumbing and Heating Equipment and Supplies
(Hydronics) Merchant Wholesalers.
423730................... Warm Air Heating and Air[dash]Conditioning
Equipment and Supplies Merchant Wholesalers.
423740................... Refrigeration Equipment and Supplies Merchant
Wholesalers.
423830................... Industrial Machinery and Equipment Merchant
Wholesalers.
423840................... Industrial Supplies Merchant Wholesalers.
423850................... Service Establishment Equipment and Supplies
Merchant Wholesalers.
423860................... Transportation Equipment and Supplies (except
Motor Vehicle) Merchant Wholesalers.
423990................... Other Miscellaneous Durable Goods Merchant
Wholesalers.
424690................... Other Chemical and Allied Products Merchant
Wholesalers.
424820................... Wine and Distilled Alcoholic Beverage
Merchant Wholesalers.
443142................... Electronics Stores.
444190................... Other Building Material Dealers.
445110................... Supermarkets and Other Grocery (except
Convenience) Stores.
445131................... Convenience Retailers.
445298................... All Other Specialty Food Retailers.
449210................... Appliance Stores, Household-Type.
453998................... All Other Miscellaneous Store Retailers
(except Tobacco Stores).
45711.................... Gasoline Stations With Convenience Stores.
481111................... Scheduled Passenger Air Transportation.
531120................... Lessors of Nonresidential Buildings (except
Miniwarehouses).
541330................... Engineering Services.
541380................... Testing Laboratories.
541512................... Computer Systems Design Services.
541519................... Other Computer Related Services.
541620................... Environmental Consulting Services.
562111................... Solid Waste Collection.

[[Page 73103]]

562211................... Hazardous Waste Treatment and Disposal.
562920................... Materials Recovery Facilities.
621498................... All Other Outpatient Care Centers.
621999................... All Other Miscellaneous Ambulatory Health
Care Services.
72111.................... Hotels (Except Casino Hotels) and Motels.
72112.................... Casino Hotels.
72241.................... Drinking Places (Alcoholic Beverages).
722513................... Limited-Service Restaurants.
722514................... Cafeterias, Grill Buffets, and Buffets.
722515................... Snack and Nonalcoholic Beverage Bars.
81119.................... Other Automotive Repair and Maintenance.
811219................... Other Electronic and Precision Equipment
Repair and Maintenance.
811412................... Appliance Repair and Maintenance.
922160................... Fire Protection.
------------------------------------------------------------------------

Table 3 is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists the types of entities that EPA expects could
potentially be regulated by this action. Other types of entities not
listed in the table could also be regulated. To determine whether your
entity may be regulated by this action, you should carefully examine
the regulatory text at the end of this document. 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 is EPA's authority for taking this action?

On December 27, 2020, the AIM Act was enacted as section 103 in
Division S, Innovation for the Environment, of the Consolidated
Appropriations Act, 2021 (codified at 42 U.S.C. 7675). Subsection
(k)(1)(C) of the Act provides that Clean Air Act (CAA) sections 113,
114, 304, and 307 apply to the AIM Act and any regulations EPA
promulgates under the AIM Act as though the AIM Act were part of title
VI of the CAA. Accordingly, this rulemaking is subject to CAA section
307(d) (see 42 U.S.C. 7607(d)(1)(I)) (CAA section 307(d) applies to
``promulgation or revision of regulations under subchapter VI of this
chapter (relating to stratosphere and ozone protection)'').
The AIM Act authorizes EPA to address HFCs by providing new
authorities in three main areas: phasing down the production and
consumption of listed HFCs; managing these HFCs and their substitutes;
and facilitating the transition to next-generation technologies by
restricting use of these HFCs in the sector or subsectors in which they
are used. This rulemaking focuses on the third area: the transition to
next-generation technologies by restricting use of these HFCs in the
sector or subsectors in which they are used.
In subsection (k)(1)(A), the AIM Act provides EPA with the
authority to promulgate necessary regulations to carry out EPA's
functions under the Act, including its obligations to ensure that the
Act's requirements are satisfied. Subsection (i) of the AIM Act,
``Technology Transitions,'' provides that ``the Administrator may by
rule restrict, fully, partially, or on a graduated schedule, the use of
a regulated substance in the sector or subsector in which the regulated
substance is used.'' 42 U.S.C. 7675(i)(1). The Act lists 18 saturated
HFCs, and by reference any of their isomers not so listed, that are
covered by the statute's provisions, referred to as ``regulated
substances'' under the Act.\9\ (42 U.S.C. 7675(c)(1)). EPA is also
authorized to designate additional substances that meet certain
criteria as regulated substances (42 U.S.C. 7675(c)(3)). EPA has not so
designated any additional substances, and the list of 18 regulated
substances can also be found in appendix A of 40 CFR part 84. Through
this rule, EPA is restricting the use of certain HFCs, whether neat or
used in a blend, in specific sectors or subsectors, based on EPA's
consideration of the factors listed in subsection (i)(4) of the AIM
Act.
---------------------------------------------------------------------------

\9\ As noted previously in this document, ``regulated
substance'' and ``HFC'' are used interchangeably in this document.
---------------------------------------------------------------------------

A rulemaking restricting the use of regulated substances in sectors
or subsectors can be initiated by EPA on its own accord, or a person
may petition EPA to promulgate such a rule. Specifically, subsection
(i)(3)(A) states, ``A person may petition the Administrator to
promulgate a rule under [subsection (i)(1)] for the restriction on use
of a regulated substance in a sector or subsector.'' Where the Agency
grants such a petition submitted under subsection (i), the statute
requires that ``the Administrator shall promulgate a final rule not
later than 2 years after the date on which the Administrator grants the
petition.'' (42 U.S.C. 7675(i)(3)(C)(ii)). This rule addresses the
granted petitions under subsection (i).
Furthermore, prior to proposing a rule, subsection (i)(2)(A)
directs EPA to consider negotiating with stakeholders in the sector or
subsector subject to the potential rule in accordance with negotiated
rulemaking procedures established under subchapter III of chapter 5 of
title 5, United States Code (5 U.S.C. 563, commonly known as the
``Negotiated Rulemaking Act of 1990''). A brief discussion on EPA's
consideration of using negotiated rulemaking procedures and its
decision not to use such procedures prior to proposal can be found in
section VI.B of the proposed rule (87 FR 76775; December 15, 2022,
hereafter ``proposed rule'').
EPA is also finalizing measures designed to assist with enforcement
and to help ensure compliance with the HFC use restrictions, including
recordkeeping, reporting, and labeling requirements. Reporting is also
necessary to inform EPA of the transitions that are occurring in those
sectors and subsectors addressed by this rule. EPA notes that
subsection (k)(1)(C) of the AIM Act states that section 114 of the CAA
applies to the AIM Act and rules promulgated under it as if the AIM Act
were included in title VI of the CAA. Thus, section 114 of the CAA,
which provides authority to the EPA Administrator to require
recordkeeping and reporting in carrying out provisions of the CAA, also
applies to and supports this rulemaking.
Subsection (i)(6) of the AIM Act states that ``[n]o rule under this
subsection may take effect before the date that is 1 year after the
date on which the

[[Page 73104]]

Administrator promulgates the applicable rule under this subsection.''
EPA interprets this provision as applying to the establishment of
restrictions on use of HFCs under subsection (i)(1) of the Act.
Therefore, EPA is establishing compliance dates for the restrictions on
the manufacture and import of products and installation of systems that
are at least one year from the date this rule is promulgated, in
accordance with this statutory provision.
The provisions pertaining to program administration and petitions
processing (i.e., Sec. 84.62) do not include a delayed compliance
date, and those provisions will come into effect 60 days after
publication of the final rule in the Federal Register. This approach is
based on an interpretation that subsection (i)(6) does not apply to
those administrative provisions because ``applicable rules'' in (i)(6)
are limited to rules that apply use restrictions under (i)(1). As a
practical matter, the regulated industry to which a use restriction
rule is being applied may need a full year to come into compliance with
that restriction. While a petitioner may need some amount of time to
collect the information needed in a petition, 60 days is a reasonable
timeframe in which to do so. EPA did not receive comments on this
approach.

III. Background

A. What are HFCs?

HFCs are anthropogenic \10\ fluorinated chemicals that have no
known natural sources. HFCs are used in a variety of applications such
as refrigeration and air conditioning, foam blowing agents, solvents,
aerosols, and fire suppression. HFCs are potent greenhouse gases (GHGs)
with 100-year GWPs (a measure of the relative climatic impact of a GHG)
that can be hundreds to thousands of times that of carbon dioxide
(CO<INF>2</INF>).
---------------------------------------------------------------------------

\10\ While the overwhelming majority of HFC production is
intentional, EPA is aware that HFC-23 can be a byproduct associated
with the production of other chemicals, including but not limited to
hydrochlorofluorocarbon (HCFC)-22 and other fluorinated gases.
---------------------------------------------------------------------------

HFC use and emissions have been growing worldwide due to the global
phaseout of ODS under the Montreal Protocol and the increasing use of
refrigeration and air-conditioning equipment globally.\11\ HFC
emissions had previously been projected to increase substantially over
the next several decades. In 2016, in Kigali, Rwanda, countries agreed
to adopt an amendment to the Montreal Protocol, known as the Kigali
Amendment, which provides for a global phasedown of the production and
consumption of HFCs. The United States ratified the Kigali Amendment on
October 31, 2022. Global adherence to the Kigali Amendment would
substantially reduce future emissions, leading to a peaking of HFC
emissions before 2040.12 13
---------------------------------------------------------------------------

\11\ World Meteorological Organization (WMO), Scientific
Assessment of Ozone Depletion: 2022, GAW Report No. 278, 509 pp.,
WMO, Geneva, Switzerland, 2022. Available at: <a href="https://ozone.unep.org/system/files/documents/Scientific-Assessment-of-Ozone-Depletion-2022.pdf">https://ozone.unep.org/system/files/documents/Scientific-Assessment-of-Ozone-Depletion-2022.pdf</a>.
\12\ Ibid.
\13\ A recent study estimated that global compliance with the
Kigali Amendment is expected to lower 2050 annual emissions by 3.0-
4.4 million metric tons of carbon dioxide equivalent
(MMTCO<INF>2</INF>e). Guus J.M. Velders et al. Projections of
hydrofluorocarbon (HFC) emissions and the resulting global warming
based on recent trends in observed abundances and current policies.
Atmos. Chem. Phys., 22, 6087-6101, 2022. Available at: <a href="https://doi.org/10.5194/acp-22-6087-2022">https://doi.org/10.5194/acp-22-6087-2022</a>.
---------------------------------------------------------------------------

Atmospheric observations of most currently measured HFCs confirm
their abundances are increasing at accelerating rates. Total emissions
of HFCs increased by 23 percent from 2012 to 2016 \14\ and a further 19
percent from 2016 to 2020.\15\ The four most abundant HFCs in the
atmosphere, in GWP-weighted terms, are HFC-134a, HFC-125, HFC-23, and
HFC-143a.\16\
---------------------------------------------------------------------------

\14\ World Meteorological Organization (WMO), Scientific
Assessment of Ozone Depletion: 2018, World Meteorological
Organization, Global Ozone Research and Monitoring Project--Report
No. 58, 588 pp., Geneva, Switzerland, 2018. Available at: <a href="https://ozone.unep.org/sites/default/files/2019-05/SAP-2018-Assessment-report.pdf">https://ozone.unep.org/sites/default/files/2019-05/SAP-2018-Assessment-report.pdf</a>.
\15\ WMO, 2022.
\16\ Ibid.
---------------------------------------------------------------------------

HFCs excluding HFC-23 accounted for a radiative forcing of 0.025 W/
m\2\ in 2016 rising to 0.037 W/m\2\ in 2020. This radiative forcing was
projected to increase by an order of magnitude to 0.25 W/m\2\ by 2050.
If the Kigali Amendment were to be fully implemented, it would be
expected to reduce the future radiative forcing due to HFCs (excluding
HFC-23) to 0.13 W/m\2\ in 2050 which is a reduction of about 50 percent
compared with the radiative forcing projected in the business-as-usual
scenario of uncontrolled HFCs.\17\
---------------------------------------------------------------------------

\17\ Velders, 2022.
---------------------------------------------------------------------------

There are hundreds of possible HFC compounds. The 18 HFCs listed as
regulated substances by the AIM Act are some of the most commonly used
HFCs (neat and in blends) and have high impacts as measured by the
quantity of each substance emitted multiplied by their respective
GWPs.\18\ These 18 HFCs are all saturated, meaning they have only
single bonds between their atoms and therefore have longer atmospheric
lifetimes.
---------------------------------------------------------------------------

\18\ The AIM Act uses exchange values which are numerically
equivalent to the 100-year GWP of the chemical as given in the
Errata to Table 2.14 of the IPCC's 2007 Fourth Assessment Report
(AR4).
---------------------------------------------------------------------------

In the United States, HFCs are used primarily in refrigeration and
air-conditioning equipment in homes, commercial buildings, and
industrial operations (~75 percent of total HFC use in 2018) and in air
conditioning in vehicles and refrigerated transport (~8 percent).
Smaller amounts are used in foam products (~11 percent), aerosols (~4
percent), fire protection systems (~1 percent), and solvents (~1
percent).\19\
---------------------------------------------------------------------------

\19\ Calculations based on EPA's Vintaging Model, which
estimates the annual chemical emissions from industry sectors that
historically used ODS, including refrigeration and air conditioning,
foam blowing agents, solvents, aerosols, and fire suppression. The
model uses information on the market size and growth for each end
use, as well as a history and projections of the market transition
from ODS to substitutes. The model tracks emissions of annual
``vintages'' of new equipment that enter into operation by
incorporating information on estimates of the quantity of equipment
or products sold, serviced, and retired or converted each year, and
the quantity of the compound required to manufacture, charge, and/or
maintain the equipment. Additional information on these estimates is
available in U.S. EPA, April 2016. EPA Report EPA-430-R-16-002.
Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2014.
Available at: <a href="https://www.epa.gov/ghgemissions/inventory-us-greenhouse-gas-emissions-and-sinks-1990-2014">https://www.epa.gov/ghgemissions/inventory-us-greenhouse-gas-emissions-and-sinks-1990-2014</a>.
---------------------------------------------------------------------------

EPA estimated in the Allocation Rules that phasing down HFC
production and consumption according to the schedule provided in the
AIM Act will avoid cumulative consumption of 3,156 million metric tons
of exchange value equivalent (MMTEVe) of HFCs in the United States for
the years 2022 through 2036 (86 FR 55116, October 5, 2021). Annual
avoided consumption was estimated at 42 MMTCO<INF>2</INF>e in 2022 and
282 MMTCO<INF>2</INF>e in 2036. To calculate the climate benefits
associated with consumption abatement, the consumption changes were
expressed in terms of emission reductions. EPA estimated that for the
years 2022-2050 that action will avoid emissions of 4,560
MMTCO<INF>2</INF>e of HFCs in the United States. The annual avoided
emissions are estimated at 22 MMTCO<INF>2</INF>e in the year 2022 and
171 MMTCO<INF>2</INF>e in 2036. More information regarding these
estimates is provided in the Allocation Framework RIA in the docket.

B. How do HFCs affect public health and welfare?

Elevated concentrations of GHGs including HFCs are and have been
warming the planet, leading to changes in the Earth's climate including
changes in the frequency and intensity of heat waves, precipitation,
and extreme weather events; rising seas; and retreating snow and ice.
The changes taking place in the atmosphere as a

[[Page 73105]]

result of the well-documented buildup of GHGs due to human activities
are changing the climate at a pace and scale that threatens human
health, society, and the natural environment. This section provides
some scientific background on climate change to offer additional
context for this rulemaking and to help the public understand the
environmental impacts of GHGs such as HFCs.
Extensive additional information on climate change is available in
the scientific assessments and the EPA documents that are briefly
described in this section, as well as in the technical and scientific
information supporting them. One of those documents is EPA's 2009
Endangerment and Cause or Contribute Findings for Greenhouse Gases
Under Section 202(a) of the Clean Air Act (74 FR 66496, December 15,
2009).\20\ In the 2009 Endangerment Finding, the Administrator found
under section 202(a) of the CAA that elevated atmospheric
concentrations of six key well-mixed GHGs--CO<INF>2</INF>, methane
(CH<INF>4</INF>), nitrous oxide (N<INF>2</INF>O), HFCs,
perfluorocarbons (PFCs), and sulfur hexafluoride (SF<INF>6</INF>)--
``may reasonably be anticipated to endanger the public health and
welfare of current and future generations'' (74 FR 66523, December 15,
2009), and the science and observed changes have confirmed and
strengthened the understanding and concerns regarding the climate risks
considered in the Finding. The 2009 Endangerment Finding, together with
the extensive scientific and technical evidence in the supporting
record, documented that climate change caused by human emissions of
GHGs (including HFCs) threatens the public health of the U.S.
population. It explained that by raising average temperatures, climate
change increases the likelihood of heat waves, which are associated
with increased deaths and illnesses (74 FR 66497, December 15, 2009).
While climate change also increases the likelihood of reductions in
cold-related mortality, evidence indicates that the increases in heat
mortality will be larger than the decreases in cold mortality in the
U.S. (74 FR 66525, December 15, 2009). The 2009 Endangerment Finding
further explained that compared with a future without climate change,
climate change is expected to increase tropospheric ozone pollution
over broad areas of the U.S., including in the largest metropolitan
areas with the worst tropospheric ozone problems, and thereby increase
the risk of adverse effects on public health (74 FR 66525, December 15,
2009). Climate change is also expected to cause more intense hurricanes
and more frequent and intense storms of other types and heavy
precipitation, with impacts on other areas of public health, such as
the potential for increased deaths, injuries, infectious and waterborne
diseases, and stress-related disorders (74 FR 66525, December 15,
2009). Children, the elderly, and the poor are among the most
vulnerable to these climate-related health effects (74 FR 66498,
December 15, 2009).
---------------------------------------------------------------------------

\20\ In describing these 2009 Findings in this notice, EPA is
neither reopening nor revisiting them.
---------------------------------------------------------------------------

The 2009 Endangerment Finding also documented, together with the
extensive scientific and technical evidence in the supporting record,
that climate change touches nearly every aspect of public welfare \21\
in the U.S. including: changes in water supply and quality due to
increased frequency of drought and extreme rainfall events; increased
risk of storm surge and flooding in coastal areas and land loss due to
inundation; increases in peak electricity demand and risks to
electricity infrastructure; predominantly negative consequences for
biodiversity and the provisioning of ecosystem goods and services; and
the potential for significant agricultural disruptions and crop
failures (though offset to some extent by carbon fertilization). These
impacts are also global and may exacerbate problems outside the U.S.
that raise humanitarian, trade, and national security issues for the
United States (74 FR 66530, December 15, 2009).
---------------------------------------------------------------------------

\21\ The CAA states in section 302(h) that ``[a]ll language
referring to effects on welfare includes, but is not limited to,
effects on soils, water, crops, vegetation, manmade materials,
animals, wildlife, weather, visibility, and climate, damage to and
deterioration of property, and hazards to transportation, as well as
effects on economic values and on personal comfort and well-being,
whether caused by transformation, conversion, or combination with
other air pollutants.'' 42 U.S.C. 7602(h).
---------------------------------------------------------------------------

In 2016, the Administrator similarly issued Endangerment and Cause
or Contribute Findings for GHG emissions from aircraft under section
231(a)(2)(A) of the CAA (81 FR 54422, August 15, 2016).\22\ In the 2016
Endangerment Finding, the Administrator found that the body of
scientific evidence amassed in the record for the 2009 Endangerment
Finding compellingly supported a similar endangerment finding under CAA
section 231(a)(2)(A) and also found that the science assessments
released between the 2009 and the 2016 Findings ``strengthen and
further support the judgment that GHGs in the atmosphere may reasonably
be anticipated to endanger the public health and welfare of current and
future generations'' (81 FR 54424, August 15, 2016).
---------------------------------------------------------------------------

\22\ In describing these 2016 Findings in this notice, EPA is
neither reopening nor revisiting them.
---------------------------------------------------------------------------

Since the 2016 Endangerment Finding, the climate has continued to
change, with new records being set for several climate indicators such
as global average surface temperatures, GHG concentrations, and sea
level rise. Moreover, heavy precipitation events have increased in the
Eastern United States, while agricultural and ecological drought has
increased in the Western United States along with more intense and
larger wildfires.\23\ These and other trends are examples of the risks
discussed in the 2009 and 2016 Endangerment Findings that have already
been experienced. Additionally, major scientific assessments continue
to demonstrate advances in our understanding of the climate system and
the impacts that GHGs have on public health and welfare both for
current and future generations. According to the Intergovernmental
Panel on Climate Change's (IPCC) Sixth Assessment Report, ``it is
unequivocal that human influence has warmed the atmosphere, ocean and
land. Widespread and rapid changes in the atmosphere, ocean, cryosphere
and biosphere have occurred.'' \24\ These updated observations and
projections document the rapid rate of current and future climate
change both globally and in the United States.25 26 27 28
---------------------------------------------------------------------------

\23\ An additional resource for indicators can be found at
<a href="https://www.epa.gov/climate-indicators">https://www.epa.gov/climate-indicators</a>.
\24\ IPCC, 2021: Summary for Policymakers. In: Climate Change
2021: The Physical Science Basis. Contribution of Working Group I to
the Sixth Assessment Report of the Intergovernmental Panel on
Climate Change [Masson-Delmotte, V., P. Zhai, A. Pirani, S.L.
Connors, C. Pe[aacute]an, S. Berger, N. Caud, Y. Chen, L. Goldfarb,
M.I. Gomis, M. Huang, K. Leitzell, E. Lonnoy, J.B.R. Matthews, T.K.
Maycock, T. Waterfield, O. Yelek[ccedil]i, R. Yu and B. Zhou
(eds.)]. Cambridge University Press. In Press: 4.
\25\ USGCRP, 2018: Impacts, Risks, and Adaptation in the United
States: Fourth National Climate Assessment, Volume II [Reidmiller,
D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K.
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research
Program, Washington, DC, USA, 1515 pp. doi: 10.7930/NCA4.2018.
Available at: <a href="https://nca2018.globalchange.gov">https://nca2018.globalchange.gov</a>.
\26\ IPCC, 2021.
\27\ National Academies of Sciences, Engineering, and Medicine,
2019. Climate Change and Ecosystems. Washington, DC: The National
Academies Press. Available at: <a href="https://doi.org/10.17226/25504">https://doi.org/10.17226/25504</a>.
\28\ NOAA National Centers for Environmental Information, State
of the Climate: Global Climate Report for Annual 2020, published
online January 2021. Available at: <a href="https://www.ncdc.noaa.gov/sotc/global/202013">https://www.ncdc.noaa.gov/sotc/global/202013</a>.

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[[Page 73106]]

IV. What is the petition process under the technology transitions
program?

Subsection (i)(3) of the AIM Act states that a person may petition
EPA to promulgate a rule to restrict the use of a regulated substance
in a sector or subsector in accordance with the Agency's authority to
issue such a rule under subsection (i)(1) of the AIM Act. If EPA
receives a petition under subsection (i)(3), the AIM Act states that
``[t]he Administrator shall grant or deny a petition . . . not later
than 180 days after the date of receipt of the petition'' (42 U.S.C.
7675(i)(3)(B)) and make the petition available to the public no later
than 30 days after receiving the petition (42 U.S.C.
7675(i)(3)(C)(iii)). For petitions that are denied, EPA must publish in
the Federal Register an explanation of the denial (42 U.S.C.
7675(i)(3)(C)(i)). If EPA grants a petition, the statute requires EPA
to promulgate a final rule not later than two years from the date the
Agency grants the petition (42 U.S.C. 7675(i)(3)(C)(ii)).
This section describes the process for submitting a petition under
subsection (i) to the Agency, which includes direction on how
technology transition provisions should be submitted to EPA; the
necessary content of petitions; and how EPA will respond once petitions
are received. EPA received comments in support of the Agency's
interpretation of the petition process under the AIM Act. Commenters
did not suggest any changes to the proposed petition process. EPA is
finalizing the petition process as proposed.
Subsection (i)(3)(A) of the AIM Act states that ``a person may
petition the Administrator to promulgate a rule under [subsection
(i)(1) of the AIM Act] for the restriction on use of a regulated
substance in a sector or subsector, which shall include a request that
the Administrator negotiate with stakeholders . . .'' EPA views
``person'' for the purpose of a technology transitions petition
submittal as having the same meaning as how the term is defined in 40
CFR 84.3 (the definition established in the Allocation Framework Rule);
that is, to mean ``any individual or legal entity, including an
individual, corporation, partnership, association, state, municipality,
political subdivision of a State, Indian Tribe; any agency, department,
or instrumentality of the United States; and any officer, agent, or
employee thereof.'' Using this definition in 40 CFR 84.3 for purposes
of petition submittal under subsection (i) ensures consistency of how
this term is used across these two regulatory programs developed under
the AIM Act. This definition of ``person'' also captures the Agency's
intended meaning of this term for purposes of the Technology
Transitions program. Therefore, any person who fits the Allocation
Framework Rule definition may submit a technology transitions petition
to EPA. We further note that the plain text of subsection (i)(3)(A)
also limits this provision to requests for restrictions on the use of a
regulated substance in a sector or subsector. Other types of requests--
such as exemptions from existing or anticipated restrictions--are
therefore not properly presented under the (i)(3)(A) petition process,
although parties are always welcome to communicate to the Agency
informally, to provide comments on a proposed rule that considers such
restrictions on use, or to generally petition for rulemaking under the
Administrative Procedures Act.
All the petitions considered in this rulemaking were submitted to
EPA via email. EPA is requiring that future petitions also be submitted
electronically. The Agency's preferred method is for petitioners to use
the email address that is available on EPA's web page at: <a href="https://www.epa.gov/climate-hfcs-reduction/technology-transition-petitions-under-aim-act">https://www.epa.gov/climate-hfcs-reduction/technology-transition-petitions-under-aim-act</a>.

A. What must be included in a technology transitions petition?

EPA is requiring standard content that must be included in a
technology transitions petition. Standardizing the information
requirements will assist petitioners in preparing their petitions and
enhance EPA's ability to review and respond to them promptly. A
technology transitions petition must include the elements described in
the following paragraphs.
Petitions must indicate either a GWP limit or the specific name(s)
of the regulated substance(s) or blend(s) that use the regulated
substance(s) to be restricted and their GWPs. Petitioners specifying
specific regulated substances should use as the GWP the exchange values
for the regulated HFCs listed in subsection (c) of the AIM Act and
codified as appendix A to 40 CFR part 84.\29\ For blends containing
regulated substances, petitioners should identify all components of the
blend using the composition-identifying designation as listed in
American National Standards Institute/American Society of Heating,
Refrigerating and Air-Conditioning Engineers (ANSI/ASHRAE) Standard 34-
2022,\30\ Designation and Safety Classification of Refrigerants (e.g.,
HFC-134a, hydrofluoroolefin (HFO-1234ze(E)). If blends are not listed
in ASHRAE Standard 34, petitioners should provide the nominal
composition of the blend, specifying all components with the ASHRAE
Standard 34 designation for the components. If the components or
substances are not listed in ASHRAE Standard 34, petitioners should
provide the chemical name, the applicable CAS Registry Number, and the
chemical formula and structure (e.g., CHF=C=CF<INF>2</INF> rather than
C<INF>3</INF>F<INF>3</INF>H).
---------------------------------------------------------------------------

\29\ EPA noted in section III.A of this preamble that the
exchange values for the regulated HFCs listed in subsection (c) of
the AIM Act are numerically identical to the 100-year GWPs of each
substance, as given in the Errata to Table 2.14 of the IPCC's Fourth
Assessment Report (AR4) and Annexes A, C, and F of the Montreal
Protocol. Available at: <a href="https://www.ipcc.ch/site/assets/uploads/2018/05/ar4-wg1-errata.pdf">https://www.ipcc.ch/site/assets/uploads/2018/05/ar4-wg1-errata.pdf</a>.
\30\ Hereafter referred to as ASHRAE Standard 34.
---------------------------------------------------------------------------

EPA is providing a table at 40 CFR 84.64 listing the GWPs of
commonly used constituents to allow petitioners to determine the GWP of
blends containing regulated substances for purposes of this rulemaking.
EPA also intends to maintain a list of commonly used blends containing
HFCs and the GWPs of those blends at EPA's Technology Transitions web
page. EPA is using the following hierarchy to identify the GWPs of
these constituents. For the regulated substances used in the blend, and
as previously noted, EPA is using the exchange value provided in
subsection (c) of the AIM Act and codified as appendix A to 40 CFR part
84 as the GWP. For purposes of this rulemaking EPA is using the 100-
year GWP values from the IPCC's Fourth Assessment Report (AR4) for all
substances or components of blends. For hydrocarbons listed in Table 2-
15 of AR4, EPA is using the net GWP value. For substances for which no
GWP is provided in AR4, EPA is using the 100-year GWP listed in World
Meteorological Organization (WMO) 2022.\31\ EPA proposed using the 2018
edition but to use the best available data, EPA is finalizing the use
of the most up-to-date version of this report at the time of the
publication of this rule. For any substance not listed in these
sources, EPA is using the GWP of the substance in Table A-1 to subpart
A of 40 CFR part 98, as it exists on October 24, 2023, the date this
rule is published in the Federal Register as a final rule, if such
substance is specifically listed in that table. EPA proposed GWPs for
two substances that might be used as components of blends that are not
listed in those three sources: trans-dichloroethylene (HCO-1130(E)) and
hydrochlorofluoroolefin (HCFO-

[[Page 73107]]

1224yd(Z)) at five \32\ and one,\33\ respectively, for purposes of this
rulemaking. EPA is finalizing those GWPs as proposed. For any other
substance not listed in the above three source documents, EPA is using
the default GWPs as shown in Table A-1 to subpart A of 40 CFR part 98,
as it exists on the date this final rule is published in the Federal
Register. Lastly, if the substance is not listed in any of the other
sources, EPA is using the GWP of that constituent described in a
listing of an acceptable substitute under EPA's SNAP program. In any
case where a GWP value is preceded with a less than (<), very less than
(<<), greater than (>), approximately (~), or similar symbol in the
source document, which is used to determine the GWP, EPA is using the
value shown. The GWP of a blend would then be calculated as the sum of
the nominal composition (in mass proportions) of each component
multiplied by the GWP of each component.
---------------------------------------------------------------------------

\31\ WMO, 2022.
\32\ 81 FR 32244 (May 23, 2016).
\33\ 84 FR 64766 (November 25, 2019).
---------------------------------------------------------------------------

In the event that the hierarchy outlined in this section does not
provide a GWP (i.e., the substance in question is not listed in the
three documents, is not one of the two for which EPA is establishing
GWPs, is not listed in Table A-1 to subpart A of 40 CFR part 98 and
does not fit within any of the default GWPs provided in Table A-1 to
subpart A of 40 CFR part 98), EPA proposed that the petitioner should
use a GWP of zero. One commenter suggested that using a value of zero
would result in an artificially lower GWP value. Although EPA
anticipates this situation to be rare, and unlikely to materially
affect the status of a blend, the Agency is not assuming a value of
zero for as yet unknown constituents in this final rule. Rather, EPA
will take a more conservative approach and exclude that component, and
its mass proportion, from the calculation of GWP.
Petitioners must also indicate the sector or subsector for which
restrictions on use of the regulated substance would apply. EPA is not
limiting sectors or subsectors to a specific list, recognizing there
may be additional uses of HFCs today or that may be developed in the
future, and thus additional sectors or subsectors for which it could be
appropriate to restrict use.
Petitioners must specify a date that the requested restrictions
would go into effect and provide information explaining why the date is
appropriate. Petitioners should recognize that subsection (i)(6) of the
AIM Act restricts the effective date of rules promulgated under
subsection (i) to no earlier than one year after the date of the final
rule.
Before proposing a rule for the use of a regulated substance for a
sector or subsector under subsection (i)(1), subsection (i)(2)(A)
directs EPA to consider negotiating with stakeholders in accordance
with the Negotiated Rulemaking Act of 1990 (i.e., negotiated rulemaking
procedure). Subsection (i)(3)(A) requires petitioners to ``include a
request that the Administrator negotiate with stakeholders in
accordance with paragraph (2)(A)'' (42 U.S.C. 7675(i)(3)(A)). EPA
sought comment on whether it is reasonable for the Agency to interpret
subsection (i)(3) as requiring petitioners to address whether EPA use
the negotiated rulemaking procedure, rather than requiring them to
affirmatively request that the Agency pursue negotiated rulemaking.
Several commenters responded in support of EPA's interpretation that
petitioners must simply address whether EPA should consider negotiated
rulemaking in their petition and not that they must request a
negotiated rulemaking. Most petitions addressed in this rule complied
with the statute's requirement to request that EPA use negotiated
rulemaking; however, those petitioners unanimously expressed a
preference that EPA not use this procedure in promulgating its
restrictions. Allowing petitioners to express their views as to whether
EPA should engage in negotiated rulemaking for a subsection (i)
rulemaking, as opposed to requiring them to request something they may
disagree with, provides more value to EPA as we consider, per
subsection (i)(2)(A), whether to use the negotiated rulemaking
procedure before proposing a restriction under subsection (i).
Otherwise, EPA could be misled as to the petitioners' views and could
elect to use the negotiated rulemaking procedure when no stakeholder
sought that outcome. The unwarranted use of time and resources to
undergo that procedure could be counterproductive to meeting the
statutory deadlines to complete a final rule. Petitioners must provide
an explanation of their position on the use of the negotiated
rulemaking procedure and any considerations that would either support
or disfavor the use of that process. If a petition is granted, EPA
intends to consider the petitioner's statement on negotiated rulemaking
as it determines whether to use the procedure.
Petitioners must also submit, to the extent practicable,
information related to the ``Factors for Determination'' listed in
subsection (i)(4) of the AIM Act to facilitate EPA's review of the
petition. Given the relatively short 180-day statutory timeframe for
EPA to grant or deny a petition, this requirement will ensure that
information is available to EPA at the start of its review, to the
extent the petitioner has relevant available information. EPA may deny
a petition where no information has been provided that would allow the
Agency to act on the petition. Therefore, petitioners must, to the
extent practicable, provide best available data on substitutes that
could be used in lieu of the petitioned substance(s), addressing the
subfactors (e.g., technological achievability, safety, commercial
demands, etc.) that may affect the availability of those substitutes.
Other relevant information includes estimates of the economic costs and
environmental impacts of the petitioner's requested restriction on use
in the sector or subsector. In particular, providing EPA with a sense
of the scale of impacts (e.g., whether the suggested restriction would
have a significant environmental impact, or whether the suggested
restriction would be likely to impose costs or savings on regulated
entities or consumers) using best available, quantitative, accurate
data to support that assessment will be more likely to result in a
timely, well-reasoned response to the petitioner's request. One
commenter suggested that EPA require that petitions include information
on the expected outcome of requests made in the petition with respect
to the consumption and emissions of regulated substances. The commenter
indicated that this could be done by sharing assumptions regarding
equipment charge size, leak rate, lifespan, and national sales. While
EPA agrees that this information may be useful for assessing
petitioners' requests as they relate to environmental impacts and other
(i)(4) factors, the Agency disagrees that this information should be a
mandatory element of the petitions, as many petitioners may not know
the expected outcome of their petition requests as it relates to the
consumption and emissions of regulated substances.

B. What happens after a petition is submitted?

Subsection (i)(3)(C)(iii) instructs EPA to make petitions publicly
available within 30 days after receipt. EPA intends to continue to post
technology transitions petitions at <a href="http://www.regulations.gov">www.regulations.gov</a>, in Docket ID
No. EPA-HQ-OAR-2021-0289, as well as on the Agency's website at <a href="https://www.epa.gov/climate-hfcs-reduction/technology-transition-petitions-under-aim-act">https://www.epa.gov/climate-hfcs-reduction/technology-transition-petitions-under-aim-act</a>. Making the petitions available

[[Page 73108]]

allows the public to provide additional data and relevant material to
aid in EPA's evaluation of petitions, based on the factors specified in
subsection (i) of the AIM Act.
In accordance with the statutory directive, EPA intends to act on
petitions no later than 180 days after the date of receipt of the
petition. In making a determination to grant or deny a petition,
subsection (i)(4) of the AIM Act requires EPA to consider, to the
extent practicable:
1. The best available data;
2. The availability of substitutes for use of the regulated
substance that is the subject of the rulemaking or petition, as
applicable, in a sector or subsector, taking into account technological
achievability, commercial demands, affordability for residential and
small business consumers, safety, consumer costs, building codes,
appliance efficiency standards, contractor training costs, and other
relevant factors, including the quantities of regulated substances
available from reclaiming, prior production, or prior import;
3. Overall economic costs and environmental impacts, as compared to
historical trends; and
4. The remaining phase-down period for regulated substances under
the final rule issued under subsection (e)(3) of the AIM Act, if
applicable.
Subsection (i)(4) applies both to EPA's action on subsection (i)
petitions and to EPA's rulemakings under subsection (i). Requiring EPA
to grant or deny petitions within 180 days of receipt inherently limits
the scope and depth of any potential analysis. EPA's timeframe for
promulgating a rule subject to a granted petition is two years from the
date of a petition grant, and in undertaking a rulemaking the Agency
will undoubtedly be able to perform a more in-depth analysis of the
(i)(4) factors. Granting a petition under subsection (i) of the AIM Act
therefore does not necessarily mean the Agency will propose or finalize
requirements identical to a petitioner's request. Rather, granting a
petition means that the requested restriction warrants further
consideration through rulemaking. During this rulemaking process, EPA
will determine what restrictions on the use of HFCs to propose and
finalize based on multiple considerations, including its consideration
of the ``Factors for Determination'' listed in subsection (i)(4) to the
extent practicable. This approach provides interested stakeholders with
the opportunity to review and comment on a regulatory proposal
restricting the use of HFCs prior to restrictions going into effect.

C. Can I revise or resubmit my petition?

Receipt of a completed petition triggers two statutory deadlines:
the posting of the petition within 30 days and the granting or denying
of the petition within 180 days. Because there is little purpose in EPA
continuing to take action on the original petition when the petitioner
has revised (i.e., makes edits to an original request) or resubmitted
(i.e., makes edits to an original request and presents it as a new
petition) it, EPA's view is that a petition revision or resubmittal
made by petitioners is typically intended to supersede or replace the
original petition and would thus restart these timelines. However,
depending on the timing of the resubmission and the nature of the
revision and the request, EPA may be able to act more quickly on a
revised or resubmitted petition, for example, if the Agency had already
developed familiarity with the request through its consideration of the
original petition. Therefore, EPA intends to address petition revisions
and resubmittals on a case-by-case basis. If petitioners do not intend
for their submission to supersede or replace their original petition,
rather they are submitting information to revise or augment their
initial petition without significantly altering its scope, they should
be clear that they are submitting supplemental or clarifying
information regarding their petitions to the docket related to
petitions under consideration. On a case-by-case basis the Agency will
consider and act accordingly on supplemental or clarifying information
as part of its consideration of the initial petition. If EPA finds that
in fact what was submitted constitutes a new petition or revised
petition, new timelines will apply. In making a determination to grant
or deny petitions, EPA plans to consider relevant and timely
information provided in this docket, as the Agency did with the granted
petitions that led to this rulemaking, including information provided
by petitioners and from other stakeholders, for those petitions under
review. Once a petition is granted or denied, any revised or
resubmitted petitions will likely be treated as a new petition.

V. How is EPA considering negotiated rulemaking?

This section provides a summary of the AIM Act's directive to
consider negotiating with stakeholders prior to proposing a rule under
subsection (i) of the Act. This section also provides information
regarding how EPA intends to consider negotiating with stakeholders for
future rulemakings.

A. Summary of the AIM Act's Directive on Negotiated Rulemaking

Prior to proposing a rule, subsection (i)(2)(A) of the Act directs
EPA to consider negotiating with stakeholders in the sector or
subsector subject to the potential rule in accordance with negotiated
rulemaking procedures established under the ``Negotiated Rulemaking Act
of 1990.'' If EPA makes a determination to use the negotiated
rulemaking procedures, subsection (i)(2)(B) requires that EPA, to the
extent practicable, give priority to completing that rulemaking over
completing rulemakings under subsection (i) that are not using that
procedure. For additional information on negotiated rulemaking
procedures, see 5 U.S.C. 563. If EPA does not use the negotiated
rulemaking process, subsection (i)(2)(C) requires the Agency to publish
an explanation of the decision to not use that procedure before
commencement of the rulemaking process.

B. How does EPA intend to consider negotiating with stakeholders under
the AIM Act?

Prior to proposing this rulemaking, EPA issued a document informing
the public of the Agency's consideration of using the negotiated
rulemaking procedure and the Agency's decision to not use these
procedures for this rulemaking (86 FR 74080, December 29, 2021). The
Agency found that using negotiated rulemakings was not in the best
interest of the public and thus decided not to use negotiated
rulemaking. In making this decision, EPA considered information
provided by the petitions, including statements made by petitioners on
the use of negotiated rulemaking procedures, and information provided
by other stakeholders on the petitions. The Negotiated Rulemaking Act
of 1990, 5 U.S.C. 563, provides seven criteria that the head of an
agency should consider when determining whether a negotiated rulemaking
is in the public interest. These criteria are informative for purposes
of making a determination under AIM Act subsection (i) of whether to
use the procedures set out in the Negotiated Rulemaking Act for
proposed rulemakings and therefore, also considered these criteria in
its decision.
Going forward, EPA intends to use a similar process in making its
determination on whether to use negotiated rulemaking procedures for
any rulemaking being considered under subsection (i) in response to
granted

[[Page 73109]]

petitions. This includes reviewing the petitions themselves and
statements from petitioners on the use of negotiated rulemaking
procedures, considering information provided by stakeholders commenting
on petitions, and considering the seven criteria listed in the
Negotiated Rulemaking Act of 1990, 5 U.S.C. 563, that the head of an
agency should consider when determining whether a negotiated rulemaking
is in the public's interest. For rulemakings initiated by EPA (i.e.,
not in response to granted petitions), EPA anticipates that our review
would focus on just these seven criteria.
Furthermore, where appropriate, EPA will also consider recent
Agency actions and decisions related to restrictions on the use of HFCs
in sectors and subsectors for its consideration on using negotiated
rulemaking procedures. For example, EPA received four petitions that
were not included in the Agency's consideration of using negotiated
rulemaking procedures for petitions granted on October 7, 2021.\34\
However, these petitions requested restrictions on the use of HFCs in
the same sectors and subsectors covered by petitions granted on October
7, 2021, for which EPA made a determination not to use negotiated
rulemaking. Subsection (i)(2)(A) states that, ``[b]efore proposing a
rule for a sector or subsector under paragraph (1), the Administrator
shall consider negotiating with stakeholders in the sector or subsector
subject to the potential rule . . .'' EPA will not issue a separate
notice to consider using negotiated rulemaking for these four petitions
because these petitions were received well ahead of this final action,
and the requested restrictions are in the same sectors and subsectors
contained in petitions granted on October 7, 2021, for which the Agency
considered and decided not to use negotiated rulemaking procedures.
Nothing in these four petitions caused EPA to reconsider that decision.
Therefore, it is unnecessary for the Agency to reconsider whether to
use negotiated rulemaking procedures for this rulemaking. EPA
encourages future petitioners to consider petitions under review or
recently granted before submitting a new petition and to consider
submitting information to the docket for an existing petition in lieu
of submitting a new petition on the same uses of HFCs that are already
under consideration by the Agency.
---------------------------------------------------------------------------

\34\ These petitions were received from AHRI and IIAR and are
discussed in section VI.D of this preamble. Copies of these
petitions are located at <a href="http://www.regulations.gov">www.regulations.gov</a>, under Docket ID No.
EPA-HQ-OAR-2021-0289, or at <a href="https://www.epa.gov/climate-hfcs-reduction/technology-transition-petitions-under-aim-act">https://www.epa.gov/climate-hfcs-reduction/technology-transition-petitions-under-aim-act</a>.
---------------------------------------------------------------------------

One commenter requested that EPA conduct a negotiated rulemaking in
instances where the Agency grants a petition but then would seek to
propose more stringent aspects of the request, such as an earlier
compliance date or lower GWP limit. EPA disagrees with this comment. A
decision by the Agency to grant, or partially grant, a petition under
subsection (i) of the AIM Act does not mean the Agency must propose
requirements identical to a petitioner's request. Rather, granting a
petition means that the requested restriction warrants further
consideration through rulemaking. Furthermore, given the interests of
all stakeholders including potentially other petitioners, it would not
be appropriate to consider a negotiated rulemaking only when EPA is
considering a more stringent proposal. EPA therefore may consider
whether any deviation from a petition merits a negotiated rulemaking in
its analysis of the public's interest, but a deviation on its own is
insufficient to require the Agency to do so.

VI. How is EPA restricting the use of HFCs?

This section details the Agency's restrictions on the use of HFCs
in accordance with the granted petitions, including defining terms that
are new to 40 CFR part 84; describing the form and applicability of the
prohibitions; providing EPA's interpretation and application of the
``Factors for Determination'' contained in subsection (i)(4) of the AIM
Act; and listing the specific restrictions on the use of HFCs by sector
and subsector.

A. What definitions is EPA establishing in subsection (i)?

The Allocation Framework Rule established regulatory definitions at
40 CFR part 84, subpart A to implement the regulatory phasedown of HFCs
under the AIM Act. To maintain consistency, except as otherwise
explained in this rule, EPA intends to use terms in this rulemaking,
and in the new subpart B established by this rule, as they were defined
in the Allocation Framework Rule. Thus, for terms not defined in this
subpart but that are defined in 40 CFR 84.3, the definitions in 40 CFR
84.3 shall apply. EPA is also establishing definitions for new terms
that are applicable to 40 CFR part 84, subpart B and do not have a
counterpart in the definitions under 40 CFR part 84, subpart A.
1. Export, Exporter, Import, and Importer
A few terms (export, exporter, and importer) currently exist in 40
CFR 84.3 in the context of bulk regulated substances. EPA is
establishing definitions under subpart B for those terms to clarify how
they apply under subpart B to regulated substances that are used in
equipment subject to this rule.
Export. For purposes of subpart B, EPA is defining this term to
mean the transport of a product or specified component using a
regulated substance from inside the United States or its territories to
persons outside the United States or its territories, excluding United
States military bases and ships for onboard use.
Exporter. For purposes of subpart B, EPA is defining this term to
mean the person who contracts to sell any product or specified
component using a regulated substance for export or transfers a product
or specified component using a regulated substance to an affiliate in
another country.
Importer. For purposes of subpart B, EPA is defining this term to
mean any person who imports any product or specified component using or
intended for use with a regulated substance into the United States.
Importer includes the person primarily liable for the payment of any
duties on the merchandise or an authorized agent acting on his or her
behalf. The term also includes:
(1) The consignee;
(2) The importer of record;
(3) The actual owner; or
(4) The transferee, if the right to withdraw merchandise from a
bonded warehouse has been transferred.
This definition of importer, specifically paragraphs (3) and (4),
varies in non-substantive ways from that in subpart A of 40 CFR part 84
to align with the definition of ``importer'' at 19 CFR 101.1. No
difference in interpretation between subparts is intended. As EPA
explained in the Allocation Framework Rule, whether products using or
containing HFCs are admitted into or exiting from a foreign-trade zone
or other duty deferral program under U.S. Customs and Border Protection
(CBP) regulations does not affect whether they are being imported or
exported for purposes of part 84. See 86 FR 55133 (October 5, 2021)
(discussing definitions of export and import under 40 CFR 84.3).
Comment: Some commenters requested that EPA narrow the scope of the
term ``import'' to exclude a transportation vehicle in international
service, such as refrigerated containers

[[Page 73110]]

that are imported into the United States and intended for export.
Another commenter requested that the definition of import include
equipment that was intended to be imported by the date but was delayed
by weather or port delays.
Response: EPA disagrees with these suggestions. Congress defined
``import'' for purposes of the AIM Act in subsection (b)(6) as ``to
land on, bring into, or introduce into, or attempt to land on, bring
into, or introduce into, any place subject to the jurisdiction of the
United States, regardless of whether that landing, bringing, or
introduction constitutes an importation within the meaning of the
customs laws of the United States.'' The Agency did not propose to
redefine that term in this subpart. EPA addresses the concern raised by
the first commenter in Section VI.C.2.a. Furthermore, to be consistent
with subpart A of part 84, EPA considers the date of import to be the
time a ship berths for vessel arrivals, border crossings for land
arrivals, and first point of terminus in U.S. jurisdiction for arrivals
via air. Determining an importer's intent for their timing, which
frequently can change, would be challenging for the Agency to determine
and enforce.
2. Blend Containing a Regulated Substance, Sector, Subsector, and
Substitute
EPA is finalizing definitions for these four terms as proposed. The
Agency did not receive comment recommending changes.
Blend containing a regulated substance. EPA is establishing
restrictions on the use of HFCs, whether neat or used in a blend.
Blends containing a regulated substance are used in multiple sectors
and subsectors including refrigeration, air conditioning and heat
pumps, foams, and fire suppression. EPA is defining this term as ``any
mixture that contains one or more regulated substances.'' EPA considers
any quantity of a regulated substance within a mixture to qualify the
mixture as a ``blend containing a regulated substance.'' A blend that
uses one or more regulated substances is itself not a regulated
substance. Rather, the use restrictions apply to the regulated
substance(s) used in certain blends, such that the use restriction on
the regulated substance(s) also affects use of that blend. Most HFCs
used in the sectors and subsectors addressed by this rule are
components of blends that contain other HFCs, HFOs, and hydrocarbons.
As discussed in section IV.A, where the proportion of a regulated
substance multiplied by its GWP, along with the proportion of the other
components multiplied by their respective GWPs, causes the blend to
exceed the GWP limit, the use of that HFC in that blend is prohibited.
Sector. EPA is defining this term as ``a broad category of
applications including but not limited to: refrigeration, air
conditioning and heat pumps; foams; aerosols; chemical manufacturing;
cleaning solvents; fire suppression and explosion protection; and
semiconductor manufacturing.'' These categorizations and groupings are
similar to how the term ``sector'' is used in other contexts, such as
EPA's Significant New Alternatives Policy (SNAP) Program, the Montreal
Protocol Parties' Technology and Economic Assessment Panel (TEAP), and
EPA's Vintaging Model. Entities potentially subject to rulemakings
under subsection (i) of the AIM Act are often the same entities
affected by CAA title VI, including the CAA section 612 SNAP program,
and may be familiar with the way EPA traditionally categorizes and
groups sectors in that context. The TEAP is a globally recognized
advisory body to the Montreal Protocol Parties, which provides
technical information related to alternative technologies that use HFCs
in sectors and subsectors. Entities with a global market presence and
other stakeholders may be familiar with how the TEAP defines sectors,
and EPA's definition of sector is relatable to their understanding of
the term.
Subsector. EPA is defining this term as ``processes, classes of
applications, or specific uses that are related to one another within a
single sector or subsector.'' Where appropriate, each sector can be
subdivided into different subsectors that more narrowly highlight how
the HFC is used. Entities potentially subject to rulemakings under
subsection (i) of the AIM Act are often the same entities affected by
CAA title VI, including the CAA section 612 SNAP program, and may be
familiar with the way EPA categorizes and groups sectors and subsectors
in that context. The term ``subsectors'' includes the concepts of
``end-uses'' and ``applications'' under SNAP (40 CFR 82.172). An
example subsector is cold storage warehouses within the RACHP sector.
Another example is the integral skin polyurethane subsector within the
foams sector.
Substitute. EPA is defining this term as ``any substance, blend, or
alternative manufacturing process, whether existing or new, that may be
used, or is intended for use, in a sector or subsector with a
restriction on the use of regulated substances and that has a lower
global warming potential than the GWP limit or restricted list of
regulated substances and blends in that sector or subsector.'' Under
this definition, substitutes include regulated substances (e.g., HFC-32
used in lieu of R-410A in commercial unitary AC), blends containing
regulated substances (e.g., R-454B used in lieu of R-410A in
residential unitary AC), blends that do not use a regulated substance
(e.g., R-441A used in lieu of R-410A in window ACs), substances that
are not HFCs (e.g., HFOs, hydrocarbons, R-717, and R-744
(CO<INF>2</INF>)), and not-in-kind technologies (e.g., finger-pump
bottles in lieu of aerosol cans, or vacuum panels in lieu of foam
insulation).
3. Manufacture, Install, and System
Many commenters expressed concerns about the proposed definitions
for the terms ``manufacture'' and ``products.'' For the reasons
discussed in this section, EPA is distinguishing in this final rule
between factory-completed and field-assembled appliances by defining
and using the terms ``products'' and ``systems,'' respectively. EPA is
also distinguishing between the ``manufacture'' of products, which
occurs in a factory, and the ``installation'' of systems, which occurs
in the field. Together these changes more clearly represent the intent
of the restrictions using more familiar terminology.
EPA proposed to define ``manufacture'' as ``to complete a product's
manufacturing and assembly processes such that it is ready for initial
sale, distribution, or operation. For equipment that is assembled and
charged in the field, manufacture means to complete the circuit holding
the regulated substance, charge with a full charge, and otherwise make
functional for use for its intended purpose.'' This proposed definition
was intended to apply similarly to how EPA applied this term in certain
other use restrictions under title VI of the CAA and 40 CFR part 82.
EPA had previously established restrictions on products, including
appliances, foams, and aerosols under section 610 of the CAA
(Nonessential Products Bans). EPA also established use prohibitions
under section 605(a) of the CAA that addressed the use of certain ODS
as a refrigerant in the manufacture of new appliances, including field-
charged appliances. See e.g., 40 CFR 82.15(g)(4)(i), 40 CFR
82.15(g)(5)(i); see also 74 FR 66437 (December 15, 2009) and 85 FR
15267 (March 17, 2020) (describing the use restriction and when a
field-charged appliance is manufactured). Because those restrictions
bear certain similarities to the proposed restrictions under subsection
(i), EPA looked to its

[[Page 73111]]

past experience in implementing those provisions in defining
``manufacture.''
Comment: Commenters were generally supportive of the first sentence
of the proposed definition of ``manufacture'' as applied to factory-
completed products. Most of those who commented on the proposed
definition expressed concerns about the second sentence, which would
apply to field-assembled equipment. These included concerns that the
definition would effectively accelerate the timeline of the prohibition
and render the one-year sell-through moot. Commenters stated that the
Agency should be placing the prohibition on the manufacture of
components that would later be assembled and not the installation.
Commenters also suggested EPA use the approach taken by California in
defining ``date of manufacture.'' In California, the date of
manufacture for chillers and air-conditioning and refrigeration
equipment that is not assembled on site is ``the date that the
manufacturer affixed an equipment label indicating the equipment's date
of manufacture.'' For refrigeration and air-conditioning equipment
completed on site, the date of manufacture is ``the date that the
refrigerant circuit was completed and initially filled with
refrigerant.'' One equipment manufacturer urged harmonizing the Federal
and California definitions to simplify manufacturers' obligations and
reduce inadvertent noncompliance. The commenter noted that the
definition resulted from substantial regulated industry discussions
with and comments to the California Air Resources Board (CARB) during
the State rulemaking process. Commenters acknowledged the need to
address installation of field-charged equipment, but one commenter
asserted that using the term ``manufacture'' created confusion about
which entity would be considered the manufacturer of field-charged
equipment, who would be both affected by the prohibition and subject to
recordkeeping and reporting obligations.
Response: EPA is finalizing the term ``manufacture'' so as to only
include the first sentence, but is modifying the definition to include
specified components for reasons discussed in the next section.
Therefore, manufacture means: ``to complete the manufacturing and
assembly processes of a product or specified component such that it is
ready for initial sale, distribution, or operation.''
This final rule also establishes and defines a separate term for
``install'' to replace the term ``manufacture'' for systems assembled
in the field. EPA discussed in the proposed rule that a field-charged
system is ``manufactured at the point when installation of all the
components and other parts are completed'' (emphasis added). Providing
a separate term will reduce confusion, improve implementation, and
allow the Agency to better address the commenters' concerns.
Though a new term, the definition for ``install'' is substantively
similar to the second sentence of the proposed definition of
``manufacture.'' EPA is defining ``install'' as ``to complete a field-
assembled system's circuit, including charging with a full charge, such
that the system can function and is ready for use for its intended
purpose.'' As stated in the proposed rule, this definition is intended
to address field-charged equipment beyond appliances in the RACHP
sector to include fire suppression systems or other systems that are
assembled and charged on-site. EPA appreciates the commenter's desire
to harmonize State and Federal regulations where possible. However, EPA
is not establishing definitions for ``date of manufacture'' of various
systems in this final rule as they do not necessarily align with the
structure of this regulation. EPA also does not find it necessary to
specify the exact date of manufacture because compliance is determined
by the year of manufacture. EPA discusses the adoption of other aspects
of California's approach in section VI of this notice.
The definition of ``install'' includes references to ``systems'' to
distinguish equipment assembled in the field from those made in a
factory. One commenter recommended that the Agency include a definition
of ``appliance.'' EPA agrees with the need to distinguish field-
assembled and factory-made equipment but disagrees that using the term
appliance is the correct approach, as it can include both factory-
charged and field-charged equipment. To better support the distinction,
EPA is finalizing the term ``system'' and defining it as ``an
assemblage of separate components that typically are connected and
charged in the field with a regulated substance or substitute to
perform a function or task.'' This new definition pertains to the
system as a whole (e.g., supermarket or industrial process
refrigeration (IPR)) from the components assembled into a system (e.g.,
evaporator or reach-in cooler).
4. Product, Regulated Product, Specified Components
As with the term manufacture, EPA based the proposed definition of
``product'' on the regulations established under title VI of the CAA in
40 CFR part 82, subparts C and E. EPA stated in the proposed rule that
the Agency's view of what constitutes a product for purposes of use
restrictions under subsection (i) mirrors its meaning under those
provisions and that using the same definition would provide clarity for
the regulated community.
Comment: A few commenters stated that the proposed definition of
``product'' was too broad and would place all forms of regulated
categories into one definition from large refrigeration equipment to
aerosol cans containing a few ounces of propellant. Other commenters
expressed concern about including components and subcomponents as
examples within the definition of product. They noted that restricting
components in the same manner as a completed product would prevent the
manufacture or later sale of parts for normal service and warranty
purposes. One commenter noted that the term ``product'' does not
account for complex equipment that incorporates components using
regulated substances (e.g., process chillers) within much larger
equipment and requested clarification.
Response: EPA agrees that including components within the
definition of product, and thus the restrictions thereof, would hinder
the manufacture and import of replacement parts intended for repairs.
These restrictions could also unintentionally impact components that
are capable of being used with multiple refrigerants or across multiple
subsectors and thus are permissible in some new systems as well. EPA
did not intend to restrict the manufacture, import, and sale of
components in the same manner as completed products or the installation
of new systems. EPA is therefore removing the examples of ``components
and subcomponents'' from the final definition of ``product.'' EPA is
also removing ``equipment'' as an example because this rulemaking uses
that as a general term to broadly encompass items in addition to
products (e.g., systems, components, appliances) and not as a subset.
EPA is clarifying that the definition of ``product'' pertains to
equipment that is completed or otherwise functional upon leaving the
factory. This includes self-contained refrigeration and air
conditioning appliances; foam that is blown; a manufactured item
containing blown foam such as an appliance, car, or boat; a fully
formulated polyol; \35\ and

[[Page 73112]]

filled aerosols. When products are incorporated into larger equipment,
the new, larger equipment is subject to this rule. Thus, a manufactured
item such as a refrigerator that contains insulation foam or a car that
contains a motor vehicle air conditioner (MVAC) is subject to the
restrictions of this rule, as are process chillers, when incorporated
into larger equipment. The final definition of product also modifies
the examples of fire suppression systems and foam blowing systems to
avoid conflict with the new definition of ``system'' the Agency is
finalizing.
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\35\ The Foams Technical Options Committee advising the Parties
to the Montreal describes the term ``fully formulated polyol'' to
mean a blend of polyols with a variety of additives such as
catalysts, surfactants, water, flame retardants (not typically in
appliances), including the blowing agent. UNEP, 2010. Guidance on
the Process for Selecting Alternatives to HCFCs in Foams.
---------------------------------------------------------------------------

EPA is defining the term ``product'' as ``an item or category of
items manufactured from raw or recycled materials which performs a
function or task and is functional upon completion of manufacturing.
The term includes, but is not limited to: appliances, foams, fully
formulated polyols, self-contained fire suppression devices, aerosols,
pressurized dispensers, and wipes.''
In removing components from the term ``product,'' the Agency does
not intend to remove components from all provisions of this rule. For
example, remote condensing units used for retail food refrigeration is
one of the subsectors subject to a GWP limit in this rule. A single
component may also be a major element of the entire system, such as a
remote condensing unit for residential split system air conditioning.
One commenter requested that EPA add a definition for ``component'' and
clarify that it is any and all equipment required for the refrigeration
system to function properly. The commenter suggested this would include
but not be limited to display cases, condensing units, condensers,
compressors, compressor rack systems, evaporator units, evaporators,
piping, filter dryers, valves, etc.
To allow the Agency to better describe how the restrictions apply
to different equipment types, EPA is establishing the term ``specified
component.'' EPA declines to finalize the definition requested by the
commenter because it broadly describes how a component functions and
the concept merits public input depending on the policy goals. For
example, refrigerant piping or thermal expansion valves are components
needed for a system to function. However, thermal expansion valves
contain small amounts of refrigerant and operate differently from other
components on the circuit. Refrigerant piping may not be replaced
during a repair given it is not refrigerant specific and may be
inaccessible. Instead, EPA is specifying components that are the major
mechanical elements of all RACHP systems. These components tend to be
replaced over the life of a system, are often refrigerant-specific, and
can contain larger amounts of refrigerant when manufactured or
imported. EPA is defining ``specified component'' as ``for purposes of
equipment in the refrigeration, air conditioning, and heat pump sector,
means condensing units, condensers, compressors, evaporator units, and
evaporators.'' These components also align with those specified in
section VI.C regarding what level of modification of a system
effectively constitutes a ``new'' system subject to the GWP limits.
EPA also proposed to establish a defined term, ``regulated
product,'' that would broadly encompass all equipment that uses HFCs,
whether they are higher-GWP HFCs that are prohibited or lower-GWP HFCs
that are subject to labeling and reporting provisions. EPA is electing
not to finalize this definition.
5. Retrofit
The AIM Act defines ``retrofit'' in subsection (i)(7) as ``to
upgrade existing equipment where the regulated substance is changed,
which--(i) includes the conversion of equipment to achieve system
compatibility; and (ii) may include changes in lubricants, gaskets,
filters, driers, valves, o-rings, or equipment components for that
purpose.'' EPA is adopting the definition contained in subsection
(i)(7)(A) of the AIM Act with the addition of examples of equipment.
The definition in the AIM Act is similar to but broader than EPA's
definition of retrofit that was codified in 40 CFR part 82, subpart F.
The AIM Act definition refers to ``regulated substance'' and
``equipment,'' whereas the regulatory definition in 40 CFR part 82
refers to ``refrigerant'' and ``appliances.'' As such, in this context,
EPA finds it reasonable to interpret this term as applying not just to
refrigeration and air-conditioning appliances, but all equipment that
uses a regulated substance. EPA is adding a non-inclusive list of
examples--such as air conditioning and refrigeration, fire suppression,
and foam blowing equipment--recognizing that petitioners may seek, or
EPA may establish, restrictions on other types of equipment using HFCs
in the future.
One commenter recommended that the definition of ``retrofit'' not
be limited to just a refrigerant change as that will allow piece-meal
system replacements without moving from a high-GWP refrigerant. The
commenter suggested that a system be considered retrofitted after a
threshold number of components are replaced. EPA disagrees with the
comment that a retrofit be triggered without replacing the refrigerant
type. As noted, the statutory definition contained in subsection
(i)(7)(A) of the AIM Act is predicated on a change in refrigerant, and
it reasonable to maintain this condition when the equipment uses a
refrigerant.
6. Use
EPA proposed to define this term as ``for any person to take any
action with or to a regulated substance, regardless of whether the
regulated substance is in bulk, contained within a product, or
otherwise, except for the destruction of a regulated substance. Actions
include, but are not limited to, the utilization, deployment, sale,
distribution, offer for sale or distribution, discharge, incorporation,
transformation, or other manipulation.''
Comment: Many commenters stated that EPA's proposed definition of
the term ``use'' is overly broad and inappropriately allows the Agency
to regulate the sale or distribution of products. Another commenter was
concerned that the definition could extend liability to importers and
distributors of bulk HFCs when used in non-compliant products even
though that is outside of their control. One commenter stated that the
full definition of `use' is only clear in the context of the additional
discussion in the Applicability section and recommended that elements
of that discussion be added to the definition. Specifically, the
commenter stated it would be useful to distinguish actions that occur
at the market or industry level, as was intended, from the operation of
equipment by an owner. Another commenter noted that while ``use'' is
not synonymous with sale or distribution, ``use'' is closer to the
point in time when a product is sold and received by the ultimate
customer rather than the point in time when the product is manufactured
and that EPA's restriction on the manufacture of a product bears little
relationship to when products containing HFCs will actually be used by
their owners.
Response: EPA fully responds to these comments in section VI.C of
this notice.
7. Other
Many commenters requested EPA to establish definitions clarifying
when an appliance is newly manufactured and/or newly installed and thus
subject to the GWP-limits. Commenters explicitly or

[[Page 73113]]

indirectly referenced terminology used in California's regulations for
``new refrigeration equipment,'' ``new air conditioning equipment,''
and ``new facility,'' as well as ``date of manufacture of self-
contained equipment'' and ``date of manufacture of remote equipment.''
Another commenter requested EPA define ``new'' to match the methodology
used in New York State. EPA responds to these comments in section VI.C
of this notice.

B. How is EPA restricting the use of HFCs in the sector or subsector in
which they are used?

Subsection (i) authorizes EPA to by rule restrict, fully,
partially, or on a graduated schedule, the use of a regulated substance
in the sector or subsector in which the regulated substance is used.
The provision grants EPA authority to fashion restrictions on the use
of regulated substances in the sectors that use those substances and
does not specify a particular approach as to how restrictions must be
structured but lists considerations EPA is to factor in, to the extent
practicable, when promulgating restrictions. EPA is finalizing two
approaches to structuring those restrictions, a GWP-limit and a list of
prohibited regulated substances or blends, while recognizing that other
approaches could be considered in the future that would also fit within
the authority granted by this statutory provision. EPA also proposed to
prohibit the use of all regulated substances in new products within
particular subsectors, but some commenters noted that the Agency
generated confusion by imprecisely describing it as a GWP-limit of
zero. As discussed in Section VI.F.3, EPA is not finalizing an approach
that completely prohibits the use of regulated substances in new
products in any sector or subsector in this rulemaking and again
maintains that the Agency has the authority to do so in a subsequent
rulemaking.
In establishing the two approaches contained in this final rule,
EPA has taken into account the statutory text, feasibility, consistency
with similar programs being implemented in the States and
internationally, impacts on the regulated community and on innovation,
efficiency of implementation, and other factors. Subsection (i)(4)'s
``Factors for Determination'' provides factors that EPA is to consider
``[i]n carrying out a rulemaking'' under subsection (i)(1). As a
general matter, we interpret subsection (i)(1) to apply where EPA is
deciding whether to impose a restriction on the use of a regulated
substance in a sector or subsector and what that restriction should be
(e.g., a full restriction or a partial restriction and on what
timeframe). However, the factors listed in subsection (i)(4) are also
informative in our consideration of how to structure restrictions, as
some approaches may provide advantages with respect to some of the
factors over others.
Furthermore, while subsection (i)(1) identifies that EPA may
restrict the use of a regulated substance ``in the sector or subsector
in which the regulated substance is used,'' given EPA's authority to
issue partial restrictions, EPA interprets this provision as allowing
the Agency to establish restrictions for particular uses of HFCs, such
as products or applications, and that such restrictions need not apply
uniformly across entire sectors or subsectors. Interpreting EPA's
authority in this manner allows the Agency to tailor restrictions in
accordance with the best available data and to consider relevant
differences in, for example, the availability of substitutes with
respect to technological achievability or affordability. For example,
EPA is establishing restrictions for HFCs used in chillers for IPR.
However, EPA is excluding chillers for IPR with exiting fluid
temperatures less than -58 [deg]F because lower-GWP substitutes for
HFCs are not yet adequately technologically achievable and therefore
not available at this time.
The two approaches to structuring subsection (i) restrictions used
in this rule were identified in the petitions granted by the Agency to
date. They are either to set GWP limits for HFCs used within a sector
or one or more subsectors or to restrict specific HFCs, whether neat or
used in a blend, by sector or one or more subsectors.\36\ EPA is
primarily employing the GWP limit approach in this rulemaking, with
some exceptions where the specific-listing approach is more
appropriate.
---------------------------------------------------------------------------

\36\ The restrictions on the use of an HFC under subsection (i)
of the AIM Act established in this rulemaking are intended to
complement and not conflict with existing restrictions established
through other authorities. Other authorities still apply.
---------------------------------------------------------------------------

For most sectors and subsectors in this rule, EPA is establishing
GWP limits for HFCs, whether neat or used in a blend. Under this
approach only HFCs with GWPs below the limit or HFCs used in blends
with GWPs below the limit may be used in that sector or subsector. If
used neat, HFCs with GWPs at or above the GWP limit are prohibited from
use in that sector or subsector. For HFCs used in a blend in the sector
or subsector, compliance with the GWP limit is determined based on the
GWP of the blend. If a blend meets two criteria (it contains an HFC and
the GWP of the blend is at or above the GWP limit) the HFCs in the
blend are subject to the prohibition on use, and accordingly the blend
may not be used in that sector or subsector. References and
descriptions of how the restrictions apply to blends throughout this
notice incorporate this framework and have only been shortened for
readability. A blend or other substitute that does not contain a
regulated substance is not subject to the GWP limit.
In general, this approach also provides a more efficient and
streamlined process for companies to employ lower-GWP substitutes for
new uses, because the existing restrictions make clear what substitutes
are permissible. In contrast, promulgating restrictions under
subsection (i) using only a substance-specific listing approach could
create hesitancy to innovate because it would be less clear whether EPA
might restrict a particular blend containing an HFC after a company had
already invested resources in developing it for a particular use.
To determine the GWP of a blend that uses an HFC, all components of
the blend are incorporated, whether an HFC, HFO, hydrocarbon or other
constituent, using the 100-year integrated AR4 values.\37\ We note that
the 100-year integrated GWP values in Table 2.15 of AR4 for the HFCs
are equivalent to the exchange values listed in the AIM Act and thus
what we plan to use here without change. Further details about
determining the GWP of compounds that are not listed in AR4 are found
in section IV.A of this preamble.
---------------------------------------------------------------------------

\37\ This rule does not change in any way the calculation
established under 40 CFR part 84, subpart A for determining the
quantity of production and consumption allowances required for
regulated substances used in blends.
---------------------------------------------------------------------------

For refrigerants, the blend includes the components in amounts as a
weight percentage, consistent with the refrigerant designation in
ASHRAE Standard 34, ``Refrigerant Designations and Safety
Classifications'' or the SNAP listing. The refrigerant blend considered
in the GWP calculation does not include other additives such as
compressor oil or stabilizers. For foams, the blend includes components
that are part of the blowing agent as a weight percentage. The blowing
agent blend considered in the GWP calculation does not include other
parts of the foam formulation such as plastic resin, catalysts, flame
retardants, or stabilizers. In general, aerosols do not use blends as
propellants, but multiple HFCs may be used together in an aerosol
solvent

[[Page 73114]]

blend, in which case the blend would include the component solvents and
propellants in amounts as a weight percentage. Other parts of the
aerosol formulation are not considered in calculating the aerosol's
GWP, such as water, fragrances, emulsifiers, pigments, anti-bacterial
agents, pesticides, or polymers.
In most cases it is the specific HFC and the proportion of that HFC
within the blend that determines the GWP of the blend as a whole. EPA
is not restricting the use of any specific HFC when used in blends. For
instance, for sectors or subsectors with a GWP limit of 150, HFC-134a
neat, which has a GWP of 1,430, cannot be used, while R-451A, which is
a blend of HFC-134a and HFO-1234yf, has a GWP of 147 and may be used.
In other words, an HFC with a GWP above the limit may continue to be
used when it is used in a blend, such that the total GWP of the blend
is below the limit. There may be certain characteristics associated
with a higher-GWP HFC that make use of that substance in a blend
particularly advantageous, and in some cases increase the availability
of that substitute for use, such as improving safety by reducing
flammability. The GWP limit approach, which allows for the continued
use of certain higher-GWP substances in blends, rather than strictly
prohibiting the use of those higher-GWP substances in a sector or
subsector, can smooth the glide path to transition, support innovation,
and achieve beneficial environmental impacts sooner than waiting for
the development of a substitute that contains no amount of a higher-GWP
regulated substance.
Comment: Multiple commenters, including those representing users of
regulated substances across different sectors, agreed that establishing
GWP limits provides regulatory certainty and encourages the continued
development and implementation of HFC substitutes with lower GWPs. A
few commenters agreed that using a similar approach allows for
harmonization across jurisdictions. Commenters also noted that using
GWP limits is easy for downstream equipment users to understand, easier
for the Agency to implement, and provides flexibility. One commenter
supported GWP limits as it more clearly articulates EPA's intention to
reduce the warming impact of HFCs and that it provides a more
straightforward way for EPA to tighten restrictions by ratcheting down
the GWP limits in the future.
One commenter strongly favored the specific-listing approach over
the GWP limit approach. The commenter stated that the GWP limit
approach poses huge noncompliance issues and dangers to users of
products containing regulated substances by shifting the obligation to
assess the safety of a substitute to the end-user. The commenter noted
that the basis for their concern is that the Agency would no longer
update SNAP listings. The commenter also recognized the downsides of a
specific-listing approach but still found specific-listing to be
preferable if the GWP approach meant the Agency was not assessing the
risks associated with substitutes.
Response: EPA acknowledges the broad support for using GWP limits
as the method for restricting the use of certain HFCs by sector or
subsector and for the reasons discussed in the proposed rule is
primarily using that approach in this final rule. Additionally, the GWP
listing approach is not a replacement for SNAP listings or reviews of
environmental, health, and safety impacts. Congress provided separate
authority under subsection (i)(5) of the AIM Act for EPA to evaluate
substitutes for HFCs in a sector or subsector, taking into account
technological achievability, commercial demands, safety, overall
economic costs and environmental impacts, and to make the evaluation
public, including the factors associated with the safety of those
substitutes. EPA intends to continue providing information on its
evaluation of alternatives to HFCs.
Furthermore, contrary to commenter's suggestion, EPA continues to
promulgate rules under SNAP. Section 612(c) of the CAA requires EPA to
promulgate rules making it unlawful to replace ODS with any substitute
that it determines may present adverse effects to human health or the
environment where it has identified an alternative that (1) reduces the
overall risk to human health and the environment and (2) is currently
or potentially available. Section 612(c) further requires EPA to
``publish a list of (A) the substitutes prohibited under this
subsection for specific uses and (B) the safe alternatives identified
under this subsection for particular specific uses.'' Under SNAP, EPA
evaluates substances that can be used as alternatives based on multiple
criteria and accordingly lists them as acceptable, unacceptable,
acceptable subject to use conditions, acceptable subject to narrowed
use limits, or pending. See 40 CFR 82.180(a)(7) (listing criteria for
review) and 40 CFR 82.180(b) (describing types of listing decisions).
EPA has considered more than 500 alternatives for eight industry
sectors and more than 40 end uses since 1994.\38\ EPA will continue to
evaluate alternatives in the sectors and subsectors where ozone-
depleting substances have been and are being used.\39\ EPA recently
finalized SNAP Rule 25 listing lower-GWP alternatives as acceptable,
subject to use conditions, for chillers-comfort cooling, residential
dehumidifiers, residential and light commercial air conditioning and
heat pumps. SNAP Rule 25 also listed ethylene as acceptable, subject to
use conditions and narrowed use limits, in very low temperature
refrigeration. (88 FR 26382; April 28, 2023). EPA also recently
proposed SNAP Rule 26 which would list lower-GWP alternatives as
acceptable, subject to use conditions, for retail food refrigeration,
commercial ice machines, IPR, cold storage warehouses, and ice-skating
rinks. (88 FR 33722, May 24, 2023). As discussed in section VI.E.2 of
this preamble and the American Innovation and Manufacturing Act of
2020--Subsection (i)(4) Factors for Determination: Safety, referred to
in this preamble as the ``Safety TSD,'' assessments of safety and other
characteristics under SNAP are duly considered in our examination of
availability (as it relates to safety and other factors) under AIM Act
subsection (i)(4)(B).
---------------------------------------------------------------------------

\38\ As noted in section VI.A of this preamble, there is
significant overlap between the sectors and subsectors identified in
this proposal and how sectors and ``end-uses'' are categorized under
the SNAP program.
\39\ After a court challenge, the D.C. Circuit partially vacated
SNAP Rule 20 (80 FR 42870, July 20, 2015) ``to the extent it
requires manufacturers to replace HFCs with a substitute
substance,'' and remanded to EPA for further proceedings. Mexichem
Fluor, Inc. v. EPA, 866 F.3d 451, 464 (D.C. Cir. 2017) (``Mexichem
I''). However, the court upheld EPA's decisions in that rule to
change the listings for certain HFCs in certain SNAP end-uses from
acceptable to unacceptable as being reasonable and not arbitrary and
capricious. Id. at 462-64. The same court later issued a similar
partial vacatur for portions of the SNAP Rule 21 (81 FR 86778,
December 1, 2016). See Mexichem Fluor, Inc. v. EPA, 760 Fed. Appx. 6
(Mem) (per curiam) (D.C. Cir. 2019) (``Mexichem II'').
---------------------------------------------------------------------------

Therefore, EPA is primarily finalizing the use restrictions in this
action by employing a GWP limit approach because this approach supports
innovation, transition, and compliance. Furthermore, for the reasons
discussed in the proposed rule and based on the comments received, EPA
is in most instances not employing a specific listing approach in its
use restrictions, except in limited circumstances. For example, we find
the specific listing approach can be preferable where the subsector has
not yet identified favored lower-GWP substitutes to transition to, but
is in a position, per subsection (i)(4), to transition away from using
the highest-GWP regulated substances. It

[[Page 73115]]

allows additional time before establishing a GWP limit (which, to serve
regulatory certainty and innovation, the Agency would prefer not to
repeatedly revisit) while still restricting those substances that have
the highest environmental impact. This approach would allow for the
adoption of multiple transitional substitutes and allow for the
development of additional substitutes before issuing a GWP-limit-based
restriction. As such, EPA is using both approaches in combination, with
some subsectors having a GWP limit and others where specific substances
are restricted.

C. Applicability

HFCs are used in a wide variety of sectors, including refrigeration
and air conditioning, foams, aerosols, and fire suppression. In these
sectors, HFCs are used as a refrigerant, foam-blowing agent, solvent,
propellant, and fire suppression agent and may be contained within or
emitted from equipment such as a product or system. HFCs are also used
in processes such as semiconductor manufacturing and chemical
manufacturing. Subsection (i) of the AIM Act provides that the
Administrator may by rule restrict, fully, partially, or on a graduated
schedule, the use of a regulated substance in the sector or subsector
in which the regulated substance is used. EPA interprets its authority
under subsection (i) to cover a broad chain of sector and subsector
activities associated with equipment that uses regulated substances.
EPA designed the restrictions of this rule to apply at certain
points in this chain of activities, consistent with the Act's direction
that EPA ``may by rule restrict, fully, partially, or on a graduated
schedule.'' In light of the fact that the restrictions in this final
action are the first to be issued under subsection (i), EPA views
restrictions on the incorporation of higher-GWP HFCs into new products
and systems and on the introduction and circulation of those products
in the market as the most efficient and effective way to encourage a
subsector to transition from the use of those HFCs. This rule therefore
(1) restricts the use of HFCs in the manufacture and import of new
products; (2) restricts the subsequent sale or distribution, offer for
sale and distribution, purchase or receipt for sale or distribution, or
export of those products; and (3) restricts the installation of new
systems and the significant modification of existing systems.
In general, these restrictions apply primarily to original
equipment manufacturers (OEMs) and importers, as these are the entities
that introduce such products and components of such systems into the
U.S. market. The restrictions in this rule that apply to distributors
(including online platforms), retailers, and exporters are intended to
reinforce the manufacture and import restrictions, and to ensure that
incentives throughout the market chain are aligned toward transitioning
a subsector from regulated substances where available substitutes
exist. Entities that install new systems, including those that
assemble, contract for, or take possession of the system are also
subject to these restrictions.
EPA is cognizant of the continued need in the covered sectors and
subsectors for components to service and maintain existing systems that
use higher-GWP HFCs. This rule therefore allows for the continued
manufacture, import, sale, distribution, and export of components,
subject to labeling, reporting, and recordkeeping requirements. EPA is
generally not applying restrictions on the use of HFCs in existing
products or systems or used products, except, for example, in limited
circumstances such as the import of used products or modification of a
system to the point that it constitutes replacement (see section VI.C.3
of the preamble). To that end, this rule does not restrict the use of
HFCs in ordinary repair and servicing of products or systems, nor is
EPA applying the restrictions to the use of HFCs in retrofit
applications.
1. What is EPA's statutory authority for this action?
Summary of the Proposed Rule
Subsection (i) grants EPA authority to restrict the use of a
regulated substance in the sector or subsector in which the regulated
substance is used, and the Act does not define ``use.'' For several
reasons, summarized below, EPA proposed to define ``use'' in the
context of subsection (i) as including actions taken with respect to
regulated substances that occur at the market or industry level, such
as manufacture, distribution, sale, and offer for sale--i.e., to cover
the presence of HFCs in products and processes in the U.S. market--as a
way of addressing their use in sectors and subsectors. EPA's
interpretation of its authority under this section is grounded in the
statutory text and purposes.
First, sectors and subsectors are not defined in the AIM Act, but
those terms suggest groupings or categories of related activity at an
industry level. EPA is defining ``sectors'' and ``subsectors''
consistent with historical usage of those terms in other programs--
grouping together similar or related industrial or market uses into
distinct sectors; for example, refrigeration and air conditioning,
foams, or aerosols. The AIM Act language, ``use of a regulated
substance in the sector or subsector in which the regulated substance
is used,'' makes plain that the grant of authority under subsection (i)
was intended to cover a sector or subsector's use of a regulated
substance. The inclusion of a regulated substance in a product \40\ or
system to achieve a particular purpose--e.g., using an HFC as a
refrigerant in a refrigerator or in an air conditioner--is a
prototypical use for sectors in which regulated substances are used.
---------------------------------------------------------------------------

\40\ Similarly, subsection (i)'s authority extends to regulated
substances contained in a blend and the use of that regulated
substance within a blend by the sector or subsector in a product or
process to achieve a particular purpose. To address the regulated
substance within a blend, it is appropriate to establish
requirements that apply to use of the blend, although the blend
itself is not a regulated substance.
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Second, because subsection (i) and the subsection (i)(4) factors
are focused on broad, sector-level information, we proposed that it is
reasonable to interpret ``use'' broadly, in a way that would reach uses
on a sector-level basis. The subsection is titled ``Technology
Transitions,'' and in subsection (i)(4), the Act directs EPA to
consider certain factors, to the extent practicable, in issuing a
rulemaking or making a determination to grant or deny a petition
regarding use restrictions. The factors listed under subsection (i)(4)
task the Agency with examining information relevant to industry-level
sectors or subsectors that would inform consideration of the
feasibility and advisability of establishing requirements for a
transition away from the use of a regulated substance in that sector or
subsector, as well as consideration of whether that transition should
be full, partial, or on a graduated schedule. For example, subsection
(i)(4)(B) directs EPA to factor in ``the availability of substitutes
for use of the regulated substance that is the subject of the
rulemaking or petition, as applicable, in a sector or subsector, taking
into account technological achievability, commercial demands, safety,
consumer costs, building codes, appliance efficiency standards,
contractor training costs, and other relevant factors, including
quantities of regulated substances available from reclaiming, prior
production, or prior import.'' The various subfactors in (i)(4)(B) help
EPA to determine whether there are adequate available substitutes for a
regulated

[[Page 73116]]

substance that a sector or subsector could use, indicating feasibility,
readiness, advisability, and degree of a sector or subsector's
transition away from the regulated substances in use. Similarly, the
other factors in (i)(4)--to use best available data, to consider
overall economic costs and environmental impacts as compared to
historical trends, and to consider the remaining phasedown period for
regulated substances under the phasedown rule issued under subsection
(e), if applicable--also fit with this understanding of EPA's task: to
determine whether, when, and to what degree it is appropriate to
establish a use restriction to facilitate the transition of a sector or
subsector from the use of regulated substances.
Third, we explained in the proposed rule that Congress provided EPA
authority to issue restrictions that are full, partial, or on a
graduated schedule. Fully restricting the use of a regulated substance
in the sector or subsector in which it is used, by its terms, implies a
full transition away from the use of that regulated substance in the
given sector or subsector. We therefore understand EPA's ability to
restrict ``use of a regulated substance in the sector or subsector in
which it is used'' to be broad enough to achieve a full transition such
that the regulated substance would no longer be present in any portion
of the sector or subsector. To effectuate a full transition, we would
have to be able to address all the aspects where the regulated
substance is present in that sector or subsector of the market. There
may be situations where a restriction is best targeted at points in the
life cycle or market chain of the regulated substance that are
subsequent to the incorporation of the regulated substance in a product
or process, as well as points in the chain that are proximate to
ultimate use. Thus, we interpret the term ``use,'' and EPA's authority
under AIM Act subsection (i), as being broad enough to reach points
such as transport or offer for sale.
EPA therefore proposed to interpret use of a regulated substance in
the sector or subsector for purposes of subsection (i) as ``for any
person to take any action with or to a regulated substance, regardless
of whether the regulated substance is in bulk, contained within a
product, or otherwise, except for the destruction of a regulated
substance. Actions include, but are not limited to, the utilization,
deployment, sale, distribution, discharge, incorporation,
transformation, or other manipulation.'' EPA's proposed definition of
``use'' therefore covered all of the links on the chain representing
how regulated substances are introduced, incorporated into products or
processes, circulated, and made available in the U.S. market.
We explained in the proposed rule that even though the Act grants
EPA broad authority to achieve a full transition from regulated
substances in a sector or subsector, there are many actions not
included within the scope of the restrictions covered by this final
rule, including actions associated with steps in the disposal chain
such as recovery, recycling, and reclamation of a regulated substance;
the ordinary utilization or operation of a system or product by a
consumer; \41\ and the six specific applications with a current
qualification for application-specific allowances under 40 CFR 84.13.
As explained in the proposed rule, given that we are at the outset of
the phasedown of regulated substances, the restrictions in this action
are aimed at limiting the introduction of new products that use
regulated substances to the market and restricting the circulation of
those products (e.g., sale or distribution) before they reach the
consumer. In that vein, the final rule includes ``offer for
distribution'' in addition to offer for sale in the definition of use.
Similarly, we proposed to restrict the installation of new systems
using HFCs under the proposal by defining manufacture to include the
installation of new systems. EPA is finalizing its definition of
``use'' under subsection (i), with these clarifications, consistent
with the interpretation of ``use in the sector or subsector in which
the regulated substance is used'' articulated in the proposed rule and
described above.
---------------------------------------------------------------------------

\41\ Noting, however, that in some cases the consumer may have
purchased a product where the first incorporation of the regulated
substance occurs when the product is in the consumer's ownership,
and in those cases that incorporation would be covered by the
requirements.
---------------------------------------------------------------------------

Comment: Most of the comments the Agency received in response to
its proposed interpretation of EPA's scope of authority under
subsection (i) and of EPA's definition of ``use of the regulated
substance in the sector or subsector in which the regulated substance
is used'' related to the proposed prohibition on the sale,
distribution, and offer for sale or distribution of many regulated
products that would go into effect on January 1, 2026 (i.e., the sell-
through period). Many commenters objected based on their view of the
practical consequences of a one-year sell-through period, raising
concerns about the economic harm of stranded inventory, and in
particular, the high likelihood of stranded seasonal inventory such as
air conditioners. Others commented on the difficulties of implementing
any prohibition on the sale of parts of equipment that contain
regulated substances, where those parts would continue to be needed for
servicing and repair of existing equipment. Another commenter argued
that prohibiting the sale of any inventory that was not sold by the
sell-through prohibition date would constitute a ``taking'' without
just compensation under the U.S. Constitution. These comments are
summarized and addressed in section VI.C.2.c of this preamble.
A smaller subset of commenters alleged that EPA lacked statutory
authority to promulgate a sell-through limitation under the AIM Act.
One commenter claimed that the AIM Act only provides EPA with authority
to prohibit the ``manufacture'' of high-GWP equipment, and that had
Congress intended to allow EPA to have broader authority to regulate
under subsection (i), it would have employed the same language that is
used in subsection (h) of the AIM Act, which uses the terms ``any
practice, process, or activity.'' This commenter claimed that the
Agency had relied upon dictionary definitions of the word ``use'' and
that other dictionary definitions supported the commenter's preferred
interpretation of that word to be limited to acts or practices that
``employ, use, or put a regulated substance into service,'' and noted
that at least one dictionary definition indicated that ``use'' means
``long-continued possession and employment of a thing for the purpose
for which it is adapted.'' The commenter therefore asserted that the
Agency's regulatory definition should not include sale or distribution,
since in the commenter's view, neither action is the act or practice of
employing, using, or putting a regulated substance into service, nor is
sale or distribution ``the long-continued possession'' and ``employment
for the purpose for which it is adapted,'' which, the commenter stated
in the case of RACHP, is the transfer of heat.
Specifically, the commenter urged EPA to adopt the following
definition of ``use'' under subsection (i): ``Use means the act or
practice of employing a product containing or designed to contain a
regulated substance. Use does not include the destruction of a
regulated substance.'' The commenter argued that its proffered
definition would still allow EPA to phase out the manufacture of
products made of or containing regulated substances without going
beyond, in its view, the authority of the AIM Act. Further, the
commenter claimed that a sell-through limitation, rather than a
regulation based only on

[[Page 73117]]

a product's date of manufacture, would be ``unique'' in comparison to
numerous other regulations on durable goods, including those
promulgated by the U.S. Department of Energy (DOE).
Response: We disagree with commenters who allege that EPA does not
have authority under subsection (i) of the AIM Act to issue
restrictions on the sale or distribution of products that use regulated
substances. We do not agree with the commenter's reading of the
statute, and specifically, its views that subsection (i) the AIM Act
only provides EPA with authority to prohibit the ``manufacture'' of
higher-GWP equipment and that, in contrast to subsection (h), which
uses the language of ``any practice, process, or activity,'' EPA's
authority under subsection (i) is comparatively limited. In fact,
subsection (i) does not mention either manufacture or equipment, much
less contain any limitation that EPA may only address manufacture of
equipment under subsection (i). Subsection (i)(1) says, with respect to
EPA's authority, that ``[s]ubject to the provisions of this subsection,
the Administrator may by rule restrict, fully, partially, or on a
graduated schedule, the use of a regulated substance in the sector or
subsector in which the regulated substance is used.'' There is nothing
in this provision that suggests that EPA's statutory authority under
(i) is limited to issuing restrictions on manufacturing, nor does the
provision suggest that only higher-GWP equipment may be the target of
EPA's restrictions. To the contrary, this language broadly authorizes
EPA to restrict any use of a regulated substance in the sector or
subsector in which the regulated substance is used; there is no
limitation, express or implied, to certain types of use or users.\42\
These are assumptions that the commenter appears to have made without
any grounding in the text of the statute.
---------------------------------------------------------------------------

\42\ Congress included express limitations on the applicability
of the rules under AIM subsection (i) in a later part of the
subsection (see subsection (i)(7)), and neither of the limitations
in that provision mention a limitation to the manufacture of higher
GWP equipment. Had Congress intended the kind of restriction the
commenters suggest, it is reasonable to think they would have
included those restrictions in subsection (i)(7).
---------------------------------------------------------------------------

We also do not agree with the commenter's view that Congress'
decision to use different language than it did for subsection (h)
(i.e., its omission of the terms ``any practice, process, or
activity,'' which appear in subsection (h)) somehow narrows the scope
of subsection (i). The commenter appears to ignore the full context of
each provision. Subsection (h) and subsection (i) use different
language and are framed differently, but that does not mean that one is
narrower or the other broader. Rather, EPA interprets those differences
as conveying authority that is tailored to the respective area of focus
of these subsections so that EPA can establish regulatory regimes that
effectively achieve their respective purposes and complement one
another. Because EPA is establishing these provisions under subsection
(i), the critical question is whether they are within the authority
conveyed under subsection (i) as Congress drafted it, not whether they
would be authorized under some other language. When the statutory text
of subsection (i) is read in full context, it comfortably encompasses
restrictions on a range of entities that use regulated substances, not
just manufacturers of equipment. One authority EPA has under (i) can be
stated as follows: ``[t]he Administrator may . . . restrict fully . . .
the use of a regulated substance in the sector or subsector in which
the regulated substance is used.''
Subsection (i)'s grant of authority to issue a full restriction
across use in a sector or subsector was a key rationale underlying
EPA's interpretation. As EPA pointed out at proposal, EPA interprets
the statute in a way that could give meaning to subsection (i)'s grant
of authority to effectuate a full restriction, and thus transition, of
all uses of a regulated substance in any given sector or subsector. As
we explained in the proposed rule, a narrower interpretation of EPA's
authority to exclude sale or distribution could circumvent the intended
full transition of a sector or subsector away from use of HFCs.
Consistent with these concerns articulated in the proposed rule, EPA
received a comment from a State that has restricted the manufacture of
products containing HFCs without a sell-through limitation, and that
State observed that such an ``approach can create challenges as it
relies on regulated entities to provide documentation as to manufacture
date,'' and that ``[n]ot all entities in the market chain can provide
such information for all products,'' noting that ``[t]hese factors are
further complicated when applied to international manufacturers and
retailers.'' These concerns lend further support to EPA's view that
covering all points in the market chain of ``use in the sector or
subsector'' ensures that the use restrictions we establish achieve
their intended purpose, where the intention is to fully restrict the
use of a regulated substance in a sector or subsector, or, as in this
case, to partially restrict the use of regulated substances before
those substances reach consumers. As discussed in the proposed rule,
even though EPA's definition of ``use'' is broad in order to enable the
Agency to fully exercise the subsection (i) authority under that
provision and to facilitate a full transition to HFC substitutes where
appropriate, that does not mean that in every instance the restrictions
promulgated under subsection (i) will exercise that full authority. In
many cases, as in this action, EPA may issue partial restrictions that
target only certain uses.
The same commenter who asserted EPA has no authority to restrict
sale or distribution provided no rebuttal or engagement with the
reasoning EPA provided at proposal for its interpretation: namely, that
the express provision of subsection (i) is related to a sector or
subsector's use of a regulated substance, that the subsection (i)(4)
factors require EPA to analyze information related to a restriction's
feasibility and impact from a sector-level viewpoint, and that, as
stated previously, the authority to ``restrict fully'' means that EPA
has authority to restrict many activities in a sector- or subsector-
level chain where regulated substances are present, and therefore
``used'' in that sector or subsector. Instead, the commenter claimed
that EPA ``justified'' its interpretation by relying on dictionary
definitions of the word ``use.'' This is not accurate. We began the
proposed rule's preamble discussion with citations to the dictionary
definition of that word, but the reasoning for our proposed
interpretation and definition of the term did not rest solely on the
dictionary definitions.
Nor do we agree with the commenter that their proffered definition,
which relies on the commenter's ``dictionary definition'' understanding
of the term ``use,'' is workable. The commenter suggests that EPA
should define ``use'' as ``the act or practice of employing a product
containing or designed to contain a regulated substance. Use does not
include the destruction of a regulated substance.'' We do not agree
with commenter's assertion that this definition ``would still allow EPA
to phase out the production of products made of or containing regulated
substances.'' Putting aside the commenters' confusing use of the term
``phase out'' in the context of subsection (i), which addresses use
restrictions, under the commenter's definition, EPA would only be
allowed to restrict the act or practice of employing a product
containing or designed to contain a

[[Page 73118]]

regulated substance. We fail to see how this definition of use would
allow EPA to restrict the manufacture of products containing HFCs,
because the creation of a product is not the act or practice of
employing that product, nor would EPA be permitted to restrict the
import of such products, because import also does not ``employ'' the
product. In fact, under the commenter's suggested definition, it would
appear that the only potential regulated parties under AIM Act
subsection (i) would be the consumers of products, as these are likely
the only parties that would be ``employing'' the products, as the
commenters seem to be using that term, and for the sector the commenter
represents (RACHP), the consumers are almost certainly the only parties
that are ``employing'' the products for ``the purpose for which it is
adapted, i.e., the transfer of heat'' (to quote the commenter's
understanding of and application of the dictionary definition of
``use''). We disagree that this is a reasonable reading of the AIM Act,
given the textual considerations that subsection (i)(4) sets the Agency
to consider when determining whether or not to restrict the ``use of a
regulated substance in the sector or subsector in which the substance
is used.'' (emphasis added).
We also note that despite the commenter's observation that many
regulations on goods, including those promulgated by the U.S. DOE,
establish compliance based only on manufacture, that has little
relevance for EPA's interpretation of the term ``use'' in subsection
(i). EPA's action is governed by the authority grounded in the text of
the AIM Act, not the text of the statute providing DOE authority to
promulgate its regulations. In any case, designing a restriction that
regulates actions other than manufacture is not ``unique.'' In the
context of SNAP under CAA section 612, which evaluates alternatives to
ozone-depleting substances like chlorofluorocarbons (CFCs) (class I
substances) and HCFCs (class II substances), EPA has long defined
``use'' as ``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. The Agency's interpretation of the scope of its authority
and its definition of the term ``use'' in the subsection (i) context
similarly conceives of this authority as including the introduction of
products containing regulated substances into what we consider to be
sector or subsector activity, and the full market chain of activities,
or ``intermediate uses,'' that follow, through to the consumer or end-
user.
2. What uses is EPA restricting in this rule?
a. Manufacture and Import of Factory-Completed Products
This rule includes restrictions that apply to the manufacture of
certain factory-completed products by the dates specified in section
VI.F. As discussed in section VI.A on definitions, commenters were
generally supportive of EPA's proposal to establish use restrictions on
the manufacture of factory-completed products using regulated
substances. Many of the comments received on EPA's proposal to restrict
manufacturing related to EPA's proposed definition of ``manufacture''
to include the installation of field-assembled systems.
EPA proposed to apply its restrictions equally as to domestically
manufactured products using HFCs and products using HFCs that are
imported. The AIM Act defines ``import'' as ``to land on, bring into,
or introduce into, or attempt to land on, bring into, or introduce
into, any place subject to the jurisdiction of the United States,
regardless of whether that landing, bringing, or introduction
constitutes an importation within the meaning of the customs laws of
the United States,'' and this rule follows that definition. Commenters
were supportive of EPA's equal application of the proposed restriction
to the manufacture of products using HFCs and to the import of products
using HFCs, noting that restricting both manufacture and import would
garner environmental benefits, meet industry expectations, and treat
all equipment equally regardless of location of manufacture and
availability of HFCs under the global phasedown. EPA is finalizing the
restriction on the import of products as proposed.
While EPA is generally not regulating used equipment (see section
VI.C.b), the Agency proposed to restrict the import of all products
that do not meet the GWP limits, regardless of when the product was
manufactured and regardless of whether the product is used. The goal of
restricting the use of regulated substances (in this case, higher-GWP
HFCs) in the named sectors and subsectors would be undermined if those
sectors and subsectors could simply shift use to imported products
containing higher-GWP HFCs that were not subject to the Agency's
restrictions.
AIM Act subsection (i)(7)(B)(ii) states that subsection (i) rules
shall not apply ``except for a retrofit application, [to] equipment in
existence in a sector or subsector before December 27, 2020.'' EPA
interprets this limitation with respect to ``equipment in existence in
a sector or subsector'' not to apply to equipment manufactured abroad
prior to the Act's date of enactment, because EPA interprets ``sector
or subsector'' in that provision to mean a sector or subsector in the
United States. In general, where those terms appear in subsection (i)
of the AIM Act, EPA understands them to mean the domestic sector or
subsector, not the sector or subsector as it exists, operates, and
functions in another country. For example, in assessing the
availability of substitutes for use in a sector or subsector under
subsection (i)(4)(B), EPA is generally analyzing the various
subfactors--consumer costs, building codes, appliance efficiency
standards, contractor training costs--vis-[agrave]-vis the domestic
impacted sector or subsector.\43\ Therefore, equipment that was
manufactured in another country and existed prior to December 27, 2020,
but was not imported to the United States until after that date is not
subject to subsection (i)(7)(B)'s limitation, because until it is
imported into the United States, it is not ``in existence in the sector
or subsector.''
---------------------------------------------------------------------------

\43\ EPA is examining international information for some of the
analyses, such as research from international organizations about
technological achievability, because such information has relevance
for the sector or subsector in the United States.
---------------------------------------------------------------------------

EPA received a number of comments related to its application of
restrictions on imports, and we summarize and respond to these comments
below.
Comment: One commenter supported and one commenter opposed the
proposal to restrict the import of products not meeting the GWP limits,
regardless of when the product was manufactured and regardless of
whether the products are used. The commenter opposed to EPA's proposal
requested that EPA clarify that ``equipment in existence as of December
27, 2020'' applies to all equipment in existence up to the date of this
rule's proposal, wherever that equipment is located (i.e., whether in
the United States or elsewhere), at least for semiconductor
manufacturing equipment. The commenter asserted that semiconductor
manufacturers have been producing semiconductor manufacturing equipment
in the last two years that was designed well before the AIM Act was
enacted, and that such equipment was intended to operate for the next
10 to 25 years. The commenter argues that until EPA published its
proposed rule,

[[Page 73119]]

semiconductor manufacturers did not have ``actionable notice'' that
their products might be subject to the Agency's restrictions. The
commenter also states that complex semiconductor manufacturing
equipment may have been manufactured outside of the United States but
was intended for use in the U.S. semiconductor sector. The commenter
noted that the semiconductor industry has a global supply chain with
long production timelines and asserted that EPA's proposed distinctions
based on where equipment is located could impose significant
complications on the sector's supply chain management.
Response: The Act's exception from applicability in AIM Act
subsection (i)(7)(B)(ii) plainly does not apply to any equipment
manufactured after December 27, 2020. We therefore do not agree with
the commenter that the exception in that provision could be interpreted
to apply to equipment manufactured between the date of the AIM Act's
enactment and the publication of EPA's proposed rule. The statute is
clear on its face, whether or not regulated entities were aware of
being potentially subject to regulation under these provisions of the
AIM Act until EPA issued its proposed rule.
We also clarify that not all equipment that uses regulated
substances in the semiconductor manufacturing industry is subject to
these rules. The use of regulated substances in many semiconductor
manufacturing processes, such as etching and the use of HFCs as
solvents, is not restricted by this final action. EPA's restrictions
cover only the use of HFCs as they relate to semiconductor
manufacturing where those HFCs are used as a refrigerant in chillers
for IPR. As discussed in section VI.F.1.j, EPA is differentiating its
restrictions and the timing of those restrictions for this subsector
based on the temperature of the exiting fluid. To the extent that the
equipment cited by commenter has exiting fluid temperatures below -50
[deg]C (-58 [deg]F), the import of such new equipment is not restricted
by this rule. For equipment with exiting fluid temperatures above that
temperature, EPA has delayed the compliance date for installations of
new systems to either 2026 or 2028 (again differentiating based on the
temperature of the exiting fluid). Importing components of such systems
may continue after those compliance dates to allow servicing of
existing equipment in the U.S.
Comment: One commenter opposed to EPA's proposal to apply its
restrictions to all imported products using HFCs above the GWP limits
requested that used semiconductor manufacturing and related equipment
(SMRE) that was designed to contain HFCs receive an exemption. The
commenter stated that there is a robust and active market for used
SMRE, and preventing the import of this used equipment could have
inadvertent supply chain disruption effects.
Response: EPA understands the semiconductor manufacturing equipment
to fit within the IPR subsector, typically utilizing chillers, often
built into other non-refrigerant containing equipment, to cool
processes necessary to produce semiconductor chips and other
electronics. As such, we do not view such equipment differently from
other IPR systems, which likewise could conceivably integrate a chiller
into other equipment (e.g., a chiller integrated with a conveyor belt
intended to move food needing freezing along its production process).
As discussed in section VI.F.1.j, EPA is finalizing a compliance date
later than proposed based on our consideration of the subsection (i)(4)
factors. Specifically, EPA is establishing a compliance date of January
1, 2028, for IPR chillers where the fluid exiting the chiller is below
-22 [deg]F (-30 [deg]C), and a January 1, 2026, date for other such
equipment. And, consistent with the proposed rule, this final rule does
not restrict HFC use in such equipment where the fluid exiting the
chiller is below -50 [deg]C (-58 [deg]F). This additional time compared
to the proposal should assist in the commenter's ability to respond to
the restrictions in this rule; for example, by importing appropriate
equipment prior to the relevant compliance date and/or altering
manufacturing outside the United States to use refrigerants that meet
the restrictions for the United States (i.e., less than 700 GWP).
Comment: Other commenters asked that EPA clarify how the import
restriction applies to existing intermodal containers that are engaged
in trade, refrigeration equipment in operation on ocean-going vessels,
and non-road motor vehicles temporarily deployed overseas. Commenters
stated that applying the GWP limit to all refrigerated containers is
infeasible and would be highly disruptive to trade. Commenters also
stated that such equipment should be allowed to be serviced in the
United States and not be subject to the recordkeeping and reporting
requirements.
Response: EPA agrees that applying the restrictions to products
that are actively in use when travelling into U.S. jurisdiction could
be problematic. For example, a strict reading of the proposed
restrictions on import could have prevented a traveler from reentering
the United States from Canada or Mexico with their car if the MVAC uses
HFC-134a. As noted in the proposed rule, the Agency's intention is to
cover the activities of entities bringing large shipments of products
into the country, as well as activities of entities bringing smaller
volumes of products into the country (e.g., driving a truckload of air
conditioning units across the Canadian or Mexican border for sale in
the United States.). EPA therefore is distinguishing in this final rule
those products or systems that are actively in use when travelling into
U.S. jurisdiction from shipments of used products destined for resale
or further distribution. EPA is not intending that this aspect of this
rule restrict RACHP equipment in operation aboard marine vessels,
planes, motor vehicles, refrigerated transport trailers, or intermodal
containers. Likewise, foam or aerosol products that are in use (e.g.,
trailers) or in possession of a consumer when crossing the border are
likewise exempt from the import prohibition. However, EPA's intent is
to apply the use restrictions consistently for domestic manufacturers
and importers of products. As such, no person may sell new refrigerated
transport trailers or refrigerated intermodal containers in the United
States, whether manufactured domestically or abroad after the
manufacture/import compliance date, unless it complies with the HFC use
restrictions.
Comment: One commenter expressed concern that prohibiting the
import of used, non-compliant products would also prevent the import of
products intended for recycling. The commenter contended that such a
regulated product is not `in the sector or subsector in which the
regulated substance is used' either outside or inside the United
States, and thus prohibiting the import is contrary to subsection
(i)(1) of the AIM Act.
Response: EPA considers the disposal chain, which includes the
recycling of equipment, and not the use or reuse of the equipment in
the relevant sector or subsector in the United States, to be outside
the scope of the restrictions on distribution. This includes equipment
bound for disposal that was never used by a consumer, such as defective
components or products that were manufactured or imported illegally.
Allowing for disposal furthers the intent of removing equipment from
the market before it is used by the consumer.
b. Installation of Systems
EPA is defining the term install/installation as ``to complete a
field-

[[Page 73120]]

assembled system's circuit, including charging with a full charge, such
that the system can function and is ready for use for its intended
purpose.'' As discussed in section VI.A (Definitions), many commenters
expressed concerns about EPA's proposed definition of ``manufacture,''
which would have included the installation and first charge of field-
assembled equipment. These included concerns that defining
``manufacture'' to include ``install'' of field-assembled systems
effectively accelerates the timeline of the prohibition and renders the
one-year sell-through moot. Commenters suggested different ways to
regulate the use of HFCs in field-assembled equipment, including
restricting the manufacture of components that would later be field-
assembled. In this final rule, EPA is restricting the installation of
field-assembled systems with additional clarifications. The definition
of install is virtually identical to the proposed definition of
manufacture for field-assembled systems. As with the term manufacture,
the definition of ``install'' serves as a distinct point in time by
which listed activities must be completed for purposes of meeting the
compliance date. By proposing in its prohibitions that ``no person''
may manufacture a product, EPA's intent was to capture any person who
is responsible for the manufacture (which, at proposal, included
installation of field-assembled equipment). EPA therefore does not
think that limiting the responsibility to only the technician who first
charges the system (and thus makes it ready for use for its intended
purpose) is an appropriate application of the restriction on
installation. Doing so would be equivalent to making the final
individual on a factory assembly line the ``manufacturer'' of a
refrigerator and not the OEM. Responsibility for installing a system
that improperly uses a higher-GWP HFC refrigerant after the compliance
date lies with multiple entities, including the designer, builder, and
owner/operator of that system, in addition to the entities that
assembled the components and got them into operating order on site.
Therefore, any person who assembles, contracts for, takes ownership
of, or operates a system that is installed after the applicable
compliance date using regulated substances prohibited for that
subsector is in violation of this rule.
Comment: Some commenters requested that EPA allow for installation
of a system if building permits have already been received to avoid the
re-design and permitting of buildings. Another commenter sought
flexibility in case there is a delay in receiving all the necessary
components or a delay in assembling and charging the system. The
commenter requested EPA allow appliances purchased under contract
before the compliance date to receive their field charge after that
date.
Response: EPA recognizes that some facilities may have been
designed and permitted to specifically use systems with HFCs that will
be restricted by this final rule. We anticipate that such instances are
rare, especially because the final rule delays the compliance dates for
the installation of most field-assembled systems by at least one year
and sometimes longer depending on the subsector. However, systems using
HFCs within facilities needing such long lead-times that they have
approved building permits in place by the date of signature for this
final rule are likely to be highly complex and costly to redesign. EPA
previously granted additional time to install systems that have been
permitted under the HCFC use restrictions under section 605(a) of the
CAA. In those instances, EPA agreed to provide time if, among other
conditions, those appliances were specified in a building permit dated
before the compliance date (see 74 FR 66441, December 15, 2009) and in
a more recent action the date of signature of the relevant proposed
rule (see 85 FR 15267, March 17, 2020).
Based on the comments received, similar flexibility may be needed
in this rule. Therefore, EPA is allowing one additional year for the
installation of systems in four subsectors if an approved building
permit issued before the date of signature of this final rule specified
the use of a system containing refrigerants with GWPs above the
relevant GWP threshold for the specified subsector. These subsectors
are: IPR systems with a January 1, 2026, compliance date; retail food
refrigeration--supermarkets; cold storage warehouses; and ice rinks.
This flexibility will prevent the need to redesign these systems, and
potentially the facility that houses these systems. EPA is not
including other subsectors in this provision as those systems are not
typically designed specifically for an individual facility and/or those
systems have a later compliance date and thus can make any necessary
changes with the GWP restrictions in mind.
EPA disagrees with the suggestion to allow systems purchased under
contract prior to the compliance date to be field charged after that
date. Doing so would undermine the intent of the regulation and the
statute by incentivizing the finalization of numerous contracts in the
days preceding the compliance date, which could then potentially allow
for years of further installations using higher-GWP HFCs in sectors and
subsectors that EPA has already determined under subsection (i)(4) are
ready to transition to lower-GWP substitutes.
Comment: Some commenters disagreed with the installation being the
point of compliance. One commenter stated that this broadens
responsibility for compliance from a relatively small number of
knowledgeable OEMs to a much broader group of distribution and
installation stakeholders who do not have the same level of awareness
of the regulatory requirements. Another commenter recommended that EPA
exclude ``purchaser and/or user'' and ``third party companies'' from
the definition of a ``manufacturer,'' (under the definition as
proposed) whether or not they are involved or provide support for
activities associated with field assembly or charging. The commenter
argued that the purchaser and/or user rarely, if ever, takes
``ownership'' of IPR equipment until it is fully charged and has been
demonstrated to run safely for the use for which it was designed and/or
intended, which is the responsibility of the manufacturer who designed
and fabricated the parts.
Response: EPA disagrees with the comments that the Agency should
only restrict OEMs and not regulate installation of a field-assembled
system. Many commenters representing OEMs of components stated that
they do not control how their components are used after they are sold
to a distributor, and EPA agrees that with respect to restricting the
use of HFCs in installation of field-assembled systems, OEMs of
components used in those systems are not the appropriate entity to
regulate (unless the OEM is involved in the design or construction of
the system). While applying the restrictions on installations to the
parties other than OEMs results in more potentially regulated entities,
it appropriately places the restriction on the entities that can
control the use of HFCs in that system. While a broader group of
installation stakeholders may not be as accustomed to compliance issues
as the relatively smaller group of component OEMs that commenters
requested be subject to the restrictions, applying the restrictions for
installation of systems to the designer, builder, and owner/operator of
that system will help to ensure that there is a knowledgeable party
driving compliance.
Comment: Many commenters requested that EPA provide a precise and
clear definition for when a field-erected and field-charged system
modified as part of a remodel or regular

[[Page 73121]]

maintenance is covered by the new GWP limit. They requested that EPA
allow for replacement of appliance components, including but not
limited to cases, compressors, valves, condensers, evaporator units,
piping and other components to keep that existing system running. They
also requested that EPA allow for remodels or retrofits to update the
look, improve the efficiency, or reduce leaks in a system. Other
commenters requested that EPA use California's definitions of new
refrigeration equipment, new air-conditioning equipment, and new
facility to demarcate which modifications to a system trigger the
requirements applicable to new systems. A State commenter noted that a
single, unified definition of `new' would be useful for States that
wish to establish controls that are aligned with EPA and in cases where
stakeholders require clarity on State versus national controls.
Several commenters summarized California's regulations as an
example of how a previously installed refrigeration system could
trigger the use restriction through either of two methods. The first
method is when the compressor capacity of the refrigeration system is
increased or the cost of replacing components over a three-year period
exceeds 50 percent of the capital cost of replacing the entire system
(excluding display cases).\44\ The second method is when an existing
facility changes to a different end-use or when 75 percent of the
refrigeration system's evaporators (by number) and 100 percent of its
compressor racks, condensers, and connected evaporator loads have been
replaced. A previously installed air-conditioning system triggers the
use restriction depending on the size of the system. For systems with a
single condenser and single evaporator, the use restrictions are
triggered when replacing the exterior condenser, condensing unit, or
remote condensing unit. For systems having more than one condenser and/
or more than one evaporator, the use restrictions are triggered when 75
percent of the indoor evaporator units (by number) and 100 percent of
the air source or water source condensing units are replaced over a
three-year period.
---------------------------------------------------------------------------

\44\ This is similar to the definition of ``new'' in New York
State. Specifically, new is defined as ``Products or equipment that
are manufactured after the effective date of this Part or installed
with new or used components, expanded by the addition of components
to increase system capacity after the effective date of this Part,
or replaced or cumulatively replaced after the effective date of
this Part such that the cumulative capital cost of replacement
exceeds 50% of the capital cost of replacing the whole system.'' 6
NYCRR 494.3(s).
---------------------------------------------------------------------------

A commenter recommended EPA use the first method to avoid the
continuous replacement of parts indefinitely without ever triggering
any restriction on the use of controlled substances. An industry
commenter recommended the second method. A few commenters also
requested that EPA define the term ``new facility'' which is
substantively the same as the second method in the definition for new
refrigeration equipment. One such commenter that favored this approach
said it is clearer that components may be replaced and that restricting
``new refrigeration equipment'' would require establishing exceptions
for remodels and replacement for maintenance.
Response: EPA's intention is to allow the ordinary servicing and
repair of equipment and not to apply restrictions in a way that would
prevent such maintenance. However, we are cognizant of the concern that
systems could be significantly modified or upgraded to the point that
such modification or upgrade should be considered a new installation
subject to the subsector GWP limits.
The Agency has encountered the question of what modifications
constitute the installation of a new system during the phaseout of
HCFCs. Under section 605(a) of the CAA, EPA prohibited the use of
virgin HCFC-22 and HCFC-142b to charge new appliances assembled onsite
on or after January 1, 2010. (December 15, 2009; 74 FR 66437). In that
context, the Agency's interpretation was that there were two different
situations that could be equivalent to the manufacture (i.e.,
installation) of a new system. These are modifications to a system that
increase the total cooling capacity in BTU of the system or the
complete replacement of all components within a system at once or over
time. Based on commenters' requests for clarification on the issue, EPA
is adopting these two situations in the regulatory text. In addition,
after consideration of the public comments and its past experience
implementing similar restrictions, the Agency is providing more
specificity about which components must be replaced in order for a
replacement to qualify as ``new installation.''
EPA noted in the proposed rule, in the context of what qualifies as
``equipment in existence,'' that ``in limited cases where every part of
a piece of equipment had been altered or replaced,'' such equipment
would fall outside the statutory and regulatory exemption in subsection
(i)(7)(B), and the alteration or replacement would be considered a new
installation subject to the restrictions under this section. In so
doing, we did not intend that ``every'' piece would include refrigerant
tubing, which is often very difficult to replace because the tubing may
be inaccessible. Even in major overhauls of systems, this tubing is
rarely replaced, and we therefore think replacements where this tubing
remains installed should still be considered new installations for
purposes of triggering these restrictions. Therefore, we are clarifying
in this final rulemaking and in the regulatory text which components
must be replaced, and at what percentages, to provide a precise, clear
standard that will ensure that major replacements and alterations are
properly subject to the restrictions and transition to lower-GWP
refrigerants. Specifically, when 75 percent of the refrigeration
system's evaporators (by number) and 100 percent of its compressor
racks, condensers, and connected evaporator loads have been replaced,
such replacement constitutes a new installation and is subject to the
restrictions on installation. EPA's approach in this final rulemaking
is also used by States that have adopted a definition of ``new
refrigeration equipment.''
EPA disagrees with commenters' suggestion that the Agency adopt
other methods used in California for determining when an existing
refrigeration system is considered ``new.'' Those other methods, such
as including specific timeframes or assessing capital costs, deviate
from EPA's historical interpretations under title VI of the CAA and
raise additional questions about implementation. Nor is EPA adopting
the method for determining when an existing air-conditioning system
with a single condenser and single evaporator is considered ``new.'' In
implementing the use restriction on HCFC-22 under title VI of the CAA,
EPA has considered the replacement of the condensing unit to be a
repair and not the installation of a new system. EPA finds that it is
also reasonable to continue that interpretation under the use
restrictions in subsection (i) as it is the same type of equipment and
because the AIM Act is implementing a phasedown rather than a phaseout,
meaning there is no end date for the production and import of bulk
HFCs.
c. Sale or Distribution of Factory-Completed Products
As discussed above, EPA interprets ``use'' to include activities in
the market chain that occur after the manufacture or import of a
product. As such, EPA is applying use restrictions to any person who
sells, distributes, offers for sale or

[[Page 73122]]

distribution, makes available for sale or distribution, purchases or
receives for sale or distribution, or attempts to purchase or receive
for sale or distribution, or exports any product using a regulated
substance in the sectors or subsectors controlled under subsection (i).
Applying the restrictions in this way ensures that the goal of
restricting the use of regulated substances in the sectors or
subsectors in which the regulated substances are used can be achieved,
because the sector and subsector's use of the regulated substance is
present in all these aspects of the market chain, and it is EPA's
intention to restrict use across that chain. Therefore, if a
manufacturer or importer improperly introduces into the U.S. market a
non-compliant product, distributors and retailers (including online
retailers) offering that product for sale are also restricted from
covered activities related to that product. Providing the means by
which individuals are able to list and sell prohibited products, or
exerting control over these sales, including operating platforms for
eCommerce transactions, will be considered use under this rule. EPA is
also applying the use restrictions to those entities who purchase or
receive for the purpose of further sale or distribution with the intent
to cover both sides of the transaction between distributors but not the
purchase by a consumer. The intent of this restriction is to ensure
that products that do not meet the limits do not enter the market and
are not circulated in the market, prior to sale to the consumer.
EPA proposed to prohibit sale, distribution, offer for sale and
distribution, and export of products using regulated substances not
meeting the GWP limits one year after the proposed prohibition date for
manufacture and import of products using regulated substances over the
GWP limits in each subsector. EPA explained at proposal that limiting
the period of time when products that do not meet the GWP limits can
continue to be sold has advantages over indefinitely exempting the sale
of inventory that does not meet the established use restrictions. In
particular, we noted the advantage of having a date certain by which
all parties--e.g., the public, enforcement officials, and regulated
entities--know that there can legally be no new products on the market
that do not meet the GWP limits. This additional prohibition on the
activities subsequent to manufacture and import but prior to sale to
the consumer reinforces the sector or subsector's transition away from
use of HFCs in new products and, to the extent that it is a
possibility, prevents the stockpiling and continued sale of products
that do not meet the sector or subsector use restrictions from
continuing indefinitely into the future.
EPA received many comments on this proposed prohibition on the sale
or distribution of products. Comments received on this aspect of this
rule and EPA's responses to those comments are summarized and discussed
in further detail below and in the response to comments document,
available in the docket.
This final action retains a limited sell-through period on products
using a regulated substance that do not meet the sector and subsector
restrictions with key changes in response to concerns raised by the
commenters. First, EPA is limiting the prohibition on sale,
distribution, offer for sale and distribution, and export to factory-
completed products that use prohibited higher-GWP regulated substances.
As discussed in greater detail later in this section, EPA is excluding
components and allowing for their continued manufacture, import, sale,
distribution, offer for sale and distribution, and export, subject to
certain restrictions, including that these uses are for the purpose of
servicing existing equipment. Second, EPA is extending the compliance
date for the sales prohibition on factory-completed products from the
proposed one year to three years after the manufacture and import
compliance date. EPA provided the two additional years to address
commenters' concerns that a one year sell-through was potentially
insufficient to clear inventory, and in particular, seasonal products
such as window-unit air conditioners, which can experience variable
demand from year-to-year. This final approach ensures that sectors and
subsectors that use regulated substances will transition from the use
of those substances where such transition is appropriate and alleviates
the concerns raised by commenters.
Comment: Several commenters voiced concern that the one-year
compliance deadline would create the risk of stranded inventory that
would not be able to be sold, which would cause economic harm to
manufacturers, distributors, retailers, and ultimately consumers.
Commenters representing distributors highlighted the many
considerations they must account for in determining the amount of
inventory to stock, citing the desire to carry amounts of inventory
large enough to maintain competitive pricing, against costs incurred
via storage space leasing, warehouse mortgages, building utilities, and
insurance on products stored in the warehouse. Other commenters,
particularly those in the heating and cooling sector, noted that many
factors, including the economy, weather, and demand for construction
impact sales and that in this sector particularly, it is already
difficult to forecast what amount of inventory will need to be carried
over year to year. Many commenters noted that the sell-through
limitation would exacerbate existing supply chain challenges,
particularly for small businesses. Commenters stated that the one-year
sell-through period would require distributors to either stock less
inventory, and therefore potentially fail to meet customer demand, or
to throw away inventory that would be prohibited by the sell-through
limitation, and that either of these outcomes would cause economic
harm. Commenters noted that the economic harm caused by the proposed
one-year sell-through period might cause them to reduce their labor
forces, and would require increased monitoring for compliance
throughout the supply chain.
Many of these commenters also cited concerns about potential
adverse environmental impacts of stranding inventory. Others noted that
the environmental benefit of the AIM Act is from the phasedown of the
supply of HFCs, and that the HFC price increases and lack of
availability of regulated substances that will flow from the phase-down
will provide a market force to transition to lower-GWP substitutes,
making the sell-through limitation unnecessary as a backstop. Many
commenters requested that EPA eliminate the sell-through limitation
altogether, and instead permit unlimited sell-through of any product
labeled with a ``date of manufacture'' meeting the compliance date for
manufacture. Others requested that the Agency at least extend the
permissible limitation to multiple years, with some commenters
suggesting that two or three years would minimize the risk of stranded
inventory.
EPA also received comments in support of its proposed prohibition
on sale, distribution, offer for sale and distribution, and export.
Some commenters stated that the compliance dates in the proposed rule
already provide sufficient time for manufacturers and distributors to
plan for the transition to lower-GWP substitutes and to sell existing
inventories, and that the compliance date for the sell-through
limitation should be one year at most. These commenters asserted that
allowing an indefinite period for sell-through of

[[Page 73123]]

equipment manufactured by the manufacture compliance date would
complicate enforcement and could provide an incentive for companies to
increase near term production of systems using HFCs before restrictions
come into effect. The Agency also received supportive comments on the
proposed sell-through limitation from States, including one that has
promulgated under State law a prohibition on manufacture but allows
unlimited sell-through of products manufactured prior to that
prohibition date. That State commenter noted that the unlimited sell-
through approach can create challenges because it relies on regulated
entities to provide documentation as to the manufacture date, and that
not all entities in the market chain can provide that information.
Response: EPA acknowledges the input provided by commenters both in
support of and raising concerns with the limitation on sale,
distribution, and export of products regulated under these
restrictions. We recognize that the production and purchase of products
or components that are unable to be sold to consumers is an economic
and environmental outcome no parties desire, and the proposed rule's
forward-looking compliance dates were intended to allow all parties in
the market supply chain sufficient time to avoid that outcome. To that
end, after considering the concerns raised by various commenters, EPA
is extending the proposed one-year compliance date for the sell-through
limitation on products to three years after the manufacture and import
compliance date. The longer timeframe for a sell-through allows
regulated entities more time to manage inventory to avoid purchasing
products they will not be able to

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