Rule2024-29243
Phasedown of Hydrofluorocarbons: Restrictions on the Use of HFCs Under the AIM Act in Variable Refrigerant Flow Air Conditioning Subsector
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 12, 2024
Effective
January 13, 2025
Issuing agencies
Environmental Protection Agency
Abstract
The U.S. Environmental Protection Agency is amending a provision of the 2023 Technology Transitions regulations promulgated under the American Innovation and Manufacturing Act of 2020. This action provides until January 1, 2027, for the installation of certain new variable refrigerant flow air conditioning and heat pump systems which use components manufactured in the United States or imported into the United States prior to January 1, 2026. This action also provides until January 1, 2028, for the installation of certain new variable refrigerant flow air conditioning and heat pump systems if a building permit that approves the use of a hydrofluorocarbon or blend containing a hydrofluorocarbon in such a system was issued prior to October 5, 2023, provided that the system uses components manufactured in the United States or imported into the United States prior to January 1, 2026. This action will mitigate the potential for stranded inventory of variable refrigerant flow systems.
Full Text
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<title>Federal Register, Volume 89 Issue 239 (Thursday, December 12, 2024)</title>
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[Federal Register Volume 89, Number 239 (Thursday, December 12, 2024)]
[Rules and Regulations]
[Pages 100381-100392]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-29243]
[[Page 100381]]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 84
[EPA-HQ-OAR-2021-0643; FRL-11739-02-OAR]
RIN 2060-AW20
Phasedown of Hydrofluorocarbons: Restrictions on the Use of HFCs
Under the AIM Act in Variable Refrigerant Flow Air Conditioning
Subsector
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
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SUMMARY: The U.S. Environmental Protection Agency is amending a
provision of the 2023 Technology Transitions regulations promulgated
under the American Innovation and Manufacturing Act of 2020. This
action provides until January 1, 2027, for the installation of certain
new variable refrigerant flow air conditioning and heat pump systems
which use components manufactured in the United States or imported into
the United States prior to January 1, 2026. This action also provides
until January 1, 2028, for the installation of certain new variable
refrigerant flow air conditioning and heat pump systems if a building
permit that approves the use of a hydrofluorocarbon or blend containing
a hydrofluorocarbon in such a system was issued prior to October 5,
2023, provided that the system uses components manufactured in the
United States or imported into the United States prior to January 1,
2026. This action will mitigate the potential for stranded inventory of
variable refrigerant flow systems.
DATES: This final rule is effective on January 13, 2025.
ADDRESSES: The EPA has established a docket for this action under
Docket ID No. EPA-HQ-OAR-2021-0643. All documents in the docket are
listed on the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website. Although listed in
the index, some information is not publicly available, e.g.,
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Certain other material, such as
copyrighted material, is not placed on the internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available electronically through <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
FOR FURTHER INFORMATION CONTACT: Joshua Silver, Stratospheric
Protection Division, Office of Atmospheric Protection (Mail code
6205A), Environmental Protection Agency, 1200 Pennsylvania Ave. NW,
Washington, DC 20460; telephone number: (202) 564-2473; email address:
<a href="/cdn-cgi/l/email-protection#f88b91948e9d8ad692978b908d99b89d8899d69f978e"><span class="__cf_email__" data-cfemail="b8cbd1d4ceddca96d2d7cbd0cdd9f8ddc8d996dfd7ce">[email protected]</span></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 that
are used in this rulemaking that may be helpful include:
AC--Air Conditioning
AHRI--Air-Conditioning, Heating, and Refrigeration Institute
AIM Act--American Innovation and Manufacturing Act of 2020
The Alliance--Alliance for Responsible Atmospheric Policy
BTU/h--British thermal units per hour
CAA--Clean Air Act
CRA--Congressional Review Act
EPA--U.S. Environmental Protection Agency
FR--Federal Register
GWP--Global Warming Potential
HARDI--Heating, Air-conditioning & Refrigeration Distributors
International
HFC--Hydrofluorocarbon
HVAC--Heating, Ventilation, and Air Conditioning
kW--Kilowatt
NAICS--North American Industry Classification System
NTTAA--National Technology Transfer and Advancement Act
OEM--Original Equipment Manufacturer
PRA--Paperwork Reduction Act
RACHP--Refrigeration, Air Conditioning, and Heat Pumps
RFA--Regulatory Flexibility Act
UMRA--Unfunded Mandates Reform Act
VRF--Variable Refrigerant Flow
Table of Contents
I. General Information
A. Does this action apply to me?
B. What action is the Agency taking?
C. What is the Agency's authority for taking this action?
D. What are the incremental costs and benefits of this action?
II. Background
A. Previous Technology Transitions Rules
B. EPA's Proposal Regarding Variable Refrigerant Flow Systems
III. EPA's Final Action
A. Final Action
B. Avoiding Stranded Inventory
C. Comments and Responses
D. Limiting the Environmental Impact of This Action
E. How do the labeling, recordkeeping, and reporting provisions
apply?
F. Evaluation of the Subsection (i)(4) Factors
G. Negotiated Rulemaking
IV. Judicial Review
V. Statutory and Executive Order Reviews
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 and Safety Risks
H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
I. National Technology Transfer and Advancement Act (NTTAA)
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. General Information
A. Does this action apply to me?
You may be affected by this rule if you manufacture, import,
export, sell, distribute, or install residential and light commercial
air conditioning and heat pump equipment. Potentially affected
categories, by North American Industry Classification System (NAICS)
code, include:
<bullet> New Multifamily Housing Construction (except For-Sale
Builders) (236116).
<bullet> New Housing For-Sale Builders (236117).
<bullet> Residential Remodelers (236118).
<bullet> Industrial Building Construction (236210).
<bullet> Commercial and Institutional Building Construction
(236220).
<bullet> Plumbing, Heating, and Air Conditioning Contractors
(238220).
<bullet> Air Conditioning and Warm Air Heating Equipment and
Commercial and Industrial Refrigeration Equipment Manufacturing
(333415).
<bullet> Plumbing and Heating Equipment and Supplies (Hydronics)
Merchant Wholesalers (423720).
<bullet> Warm Air Heating and Air Conditioning Equipment and
Supplies Merchant Wholesalers (423730).
This list is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This list includes the types of entities that the EPA is aware
could potentially be regulated by this action. Other types of entities
not included could also be regulated. To determine whether your entity
is 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
[[Page 100382]]
listed in the FOR FURTHER INFORMATION CONTACT section.
B. What action is the Agency taking?
This rule provides one additional year, until January 1, 2027, for
the installation of new variable refrigerant flow (VRF) systems used
for residential and light-commercial air-conditioning and heat pumps
when using components that are manufactured in the United States or
imported into the United States before January 1, 2026. Specifically,
this rule allows for pre-2026 condensing units, evaporators, and air
handlers using hydrofluorocarbons (HFCs) and blends containing HFCs,
such as R-410A, not meeting the October 2023 Technology Transitions
Rule's (88 FR 73098) restrictions, to be assembled into new VRF systems
(i.e., installed), so long as those systems are assembled prior to
January 1, 2027. For projects that were issued a building permit which
approved the use of an HFC or blend containing an HFC in a VRF system
prior to October 5, 2023, this rule provides for installation of such
systems until January 1, 2028, provided that they use components that
are manufactured in the United States or imported into the United
States prior to January 1, 2026.
C. What is the Agency's authority for taking this action?
On December 27, 2020, the American Innovation and Manufacturing Act
of 2020 (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)(A) of 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 (k)(1)(C)
of the AIM Act also provides that the 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)(l)) (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 authorities
in three main areas: phasing down the production and consumption of
listed HFCs; promulgating certain regulations for purposes of
maximizing reclamation and minimizing releases of these HFCs from
equipment and ensuring the safety of technicians and consumers; and
facilitating the transition to next-generation technologies by
restricting use of these HFCs in sectors or subsectors in which they
are used. 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 AIM Act lists 18 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.\1\
(42 U.S.C. 7675(c)(1)). This rule amends restrictions on the use of
regulated substances, or blends containing regulated substances, with a
global warming potential (GWP) above 700 for VRF systems. EPA's
regulations at 40 CFR 84.64 describe how to determine the GWP of a
regulated substance or blend containing a regulated substance for
purposes of complying with regulations under the Technology Transitions
program.
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\1\ ``Regulated substance'' and ``HFC'' are used interchangeably
in this document.
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D. What are the incremental costs and benefits of this action?
This rule will reduce regulatory burden associated with the
Technology Transitions restrictions on VRF systems used for residential
and light commercial air-conditioning and heat pumps while having a
negligible environmental impact. Original equipment manufacturers
(OEMs) and distributors have indicated that manufactured inventory of
VRF equipment could go unsold without an extension of the installation
compliance date. Commenters representing builders and owners of large
residential buildings have also described how they may be unable to
install already-purchased VRF equipment in projects that are currently
under development within the existing timeframes. Stranding equipment
that does not meet the new GWP limits is counter to the overall
approach EPA took in the October 2023 Technology Transitions Rule.
Providing additional time for the installation of these systems will
not affect the environmental benefits modeled under that rule given EPA
is limiting the extension of the installation compliance date to
equipment manufactured in the United States or imported into the United
States before the existing compliance date of January 1, 2026 (88 FR
73098). Therefore, we do not anticipate an increase in the amount of
VRF equipment manufactured or imported as a result of this rule.
II. Background
A. Previous Technology Transitions Rules
On October 24, 2023, EPA published the final rule establishing the
Technology Transitions program (88 FR 73098; hereafter ``October 2023
Technology Transitions Rule''). That rule restricted the use of certain
HFCs in many sectors and subsectors in which they are used by
establishing limits for those uses based on GWP. Among other things,
that rule prohibited the manufacture and import of factory-completed
products and the installation of certain refrigeration, air
conditioning, and heat pump systems that use HFCs or blends containing
HFCs above specified GWP limits. The compliance dates for these
restrictions vary by subsector and range generally from January 1,
2025, to January 1, 2028. The rule also included a prohibition on the
sale, distribution, and export of factory-completed products that
applies three years after the subsector manufacture and import
compliance dates, to allow for a sell-through period of previously
manufactured or imported products.
After issuance of the October 2023 Technology Transitions Rule,
manufacturers, importers, and distributors of residential and light
commercial air conditioning and heat pump equipment requested
clarification about split systems and VRF systems. A letter dated
November 13, 2023, to EPA from the Air-Conditioning, Heating, and
Refrigeration Institute (AHRI), the Alliance for Responsible
Atmospheric Policy (the Alliance), and Heating, Air-conditioning &
Refrigeration Distributors International (HARDI) states that these
organizations understand that components for these systems that are
manufactured or imported before January 1, 2025, and January 1, 2026,
respectively, using an HFC or blend containing an HFC with a GWP of 700
or more, cannot be installed as new systems after each such compliance
date (See Docket ID No. EPA-HQ-OAR-2021-0643-0246). The letter states
that not allowing time between the manufacture and import compliance
date and the installation date would be ``particularly problematic for
residential new construction, including both single-family and multi-
family dwellings, where builders order heating and cooling equipment
well in advance of knowing the exact date of install. Such equipment is
not installed until construction is nearly complete,
[[Page 100383]]
but at time of order builders do not know when this date will be.'' The
letter further articulates that allowing the use of components
manufactured or imported prior to the compliance date to be installed
as part of new systems for one year after the compliance date would
provide some relief to these economic and practical burdens.
In response to this letter from industry trade groups, EPA
indicated on November 29, 2023, that the Agency ``intends to act
swiftly to address concerns regarding the January 1, 2025, installation
compliance date, including by potentially amending the final regulation
to allow for installation of previously manufactured components until
January 1, 2026, and separately intends timely consideration of VRF
systems'' (See Docket ID No. EPA-HQ-OAR-2021-0643-0235). Subsequently,
EPA issued an interim final rule (88 FR 88825; December 26, 2023) to
reevaluate the specific circumstances for residential and light
commercial air conditioning and heat pump systems. That rule extended
the installation compliance date for those systems from January 1,
2025, to January 1, 2026, when using components that are manufactured
or imported prior to January 1, 2025, to prevent the stranding of
existing inventories of equipment. That rule did not address VRF
systems, which are subject to this action.
B. EPA's Proposal Regarding Variable Refrigerant Flow Systems
In response to stakeholder concerns raised in the aforementioned
letter received by EPA after the finalization of the October 2023
Technology Transitions Rule, EPA proposed to adjust the installation
compliance date for VRF systems manufactured or imported prior to
January 1, 2026 (89 FR 53373; June 26, 2024; hereafter ``VRF Proposed
Rule''). VRF systems are described in the October 2023 Technology
Transitions Rule as direct expansion multi-split systems that
incorporate the following: a split system air conditioner or heat pump
incorporating a single refrigerant circuit that is a common piping
network to two or more indoor evaporators, each capable of independent
control, or compressor units. VRF systems contain a single module
outdoor unit or combined module outdoor units with at least one
variable capacity compressor that has three or more steps of capacity,
with air or water as the heat source. While this technology is used in
air conditioning and heat pump equipment of any size, the October 2023
Technology Transitions Rule restrictions for VRF systems apply only to
air-source VRF systems with capacities of 65,000 BTU/h (19 kW) or more
and water-source VRF systems of any capacity. The regulatory text at 40
CFR 84.54(c)(2) refers to these systems as ``variable refrigerant flow
systems for use as residential and light commercial air-conditioning or
heat pumps.'' \2\ Throughout this preamble, these systems are referred
to as ``VRF systems.''
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\2\ The regulations at 40 CFR 84.54(c)(2) treat VRF systems as a
separate subsector, due to how the regulatory restriction is
structured. No difference in meaning is intended as to which systems
are addressed, however.
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The number of VRF systems is small compared to the overall number
of residential and light commercial air conditioning and heat pump
equipment. EPA used data from AHRI (See Docket ID No. EPA-HQ-OAR-2021-
0643-0245) \3\ and eJARN \4\ to estimate that approximately 42,000 VRF
units that had a capacity of 65,000 BTU/h or more were sold in 2023.
This represents 0.49% of total air conditioning and heat pump equipment
sales that year. The available data also indicate that approximately
37,000 VRF units with capacities below 65,000 BTU/h were sold in 2023.
Adding together these estimates of units sold in 2023 for VRF units of
any capacity provides an overall estimate of 79,000 VRF units, which is
approximately 0.91% of all air conditioning and heat pump equipment
sold in 2023. EPA notes that this number and percentage of VRF units is
a rough estimate intended to describe its use currently as an extremely
small percentage of all residential and light commercial air
conditioning and heat pump equipment.
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\3\ AHRI notes that its ``reports track shipments, which are
defined as when a unit transfers ownership. While some people use
the terms shipments and sales interchangeably, they may not be the
same.'' See <a href="https://www.ahrinet.org/analytics/statistics">https://www.ahrinet.org/analytics/statistics</a>. Date
Accessed: November 15, 2024.
\4\ See <a href="https://www.ejarn.com/article/detail/83750">https://www.ejarn.com/article/detail/83750</a>. In this
article, the term ``units'' is used, as in ``79,000 units.'' We note
that VRF units is not equivalent to VRF systems.
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In the VRF Proposed Rule, EPA proposed to extend the installation
compliance date for new VRF systems from January 1, 2026, to January 1,
2027, when using components that are manufactured or imported prior to
January 1, 2026 (89 FR 53373; June 26, 2024). In the alternative, EPA
proposed to extend the installation compliance date for new VRF systems
from January 1, 2026, to January 1, 2027, when using components that
are manufactured or imported prior to January 1, 2026, but only for
projects where a building permit both approved the HFC or blend
containing the HFC to be used and was issued prior to October 5, 2023.
EPA received public comments on its proposal from stakeholders
representing VRF equipment manufacturers, distributors, industry trade
groups, real estate developers, contractors, and environmental groups.
After the initial 30-day comment period ended on July 26, 2024, the
Agency reopened the comment period via a document published in the
Federal Register to offer the public an opportunity to request a public
hearing to provide oral comment, if desired (89 FR 65575; August 12,
2024). A public hearing was requested, and the Agency held a public
hearing on August 27, 2024. The comment period remained open for 30
days after the date of the public hearing, closing on September 26,
2024. All comments received on the VRF Proposed Rule and a transcript
of the public hearing are available in the docket for this action (See
Docket ID No. EPA-HQ-OAR-2021-0643).
III. EPA's Final Action
A. Final Action
After considering the comments and input received on the VRF
Proposed Rule, EPA is finalizing the extended installation compliance
date for new VRF systems to January 1, 2027, as proposed. EPA is also
providing additional time, to January 1, 2028, for the installation of
such systems in projects where a building permit approved the use of an
HFC or blend containing an HFC in such a system, and was issued prior
to October 5, 2023. Building permits are government-issued documents
that grant authorization to an entity to begin a construction project,
which are typically issued by local permitting authorities, or
authorities having jurisdiction. This includes county or city offices
of permits and licensing, departments of housing, or other authorities
having jurisdiction. Building permits vary in the level of specificity
provided; for purposes of EPA's regulations in 40 CFR part 84, subpart
B, EPA considers a building permit to include designs submitted as part
of the application that is approved by the authority having
jurisdiction.
These extensions only allow for installation of new VRF systems
using an HFC, or blend containing an HFC, with a GWP above 700 in
components that are manufactured in the United States or imported into
the United States prior to January 1, 2026.
To further limit the possibility of stranded inventory, EPA is
providing the additional time for installation to January 1, 2028, for
projects where three
[[Page 100384]]
conditions are met: (1) an approved building permit was issued for a
project prior to October 5, 2023, (2) that building permit approves the
use of an HFC or blend containing an HFC in a VRF system, and (3) all
specified components of that VRF system are manufactured in the United
States or imported into the United States prior to January 1, 2026.
Stakeholder input indicated that even a January 1, 2027, extended
installation compliance deadline could still risk stranding VRF
equipment for larger buildings using VRF systems with particularly long
construction timelines. EPA is finalizing this rule with the additional
extension given the complexity of these systems, the size of the
projects in which these systems are typically installed, and
recognizing that the projects were issued approved building permits
prior to the issuance of the Technology Transitions Rule on October 5,
2023. EPA recognizes that a subset of construction projects that use
VRF equipment were issued approved building permits prior to October 5,
2023, and may not be completed by the new installation date of January
1, 2027, and thus determines that this additional flexibility for those
projects using VRF systems with HFCs or blends containing HFCs above
the new GWP threshold is reasonable in light of the goal to avoid
stranding inventory.
B. Avoiding Stranded Inventory
An important consideration in the October 2023 Technology
Transitions Rule was to avoid stranding inventory of equipment
manufactured ahead of the various compliance deadlines. This includes
systems that are already installed and operating as well as unsold
equipment in the manufacturing and distribution chain. EPA stated that
``[w]e 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'' (88 FR
73123; October 24, 2023). EPA's goal of avoiding the stranding of
inventory is consistent with the requirement in subsection (i)(6) that
Technology Transitions restrictions may not take effect sooner than one
year from the date of promulgation; this provision also serves to
ensure that regulated parties have sufficient time to prepare for and
comply with restrictions under this provision. In response to concerns
about stranded inventory raised during the public comment period on
that proposed rule, EPA made two significant adjustments in the October
2023 Technology Transitions Rule.
First, EPA removed the applicability of the rule's use restrictions
to components. EPA explained that components are pieces of equipment
that do not function independently and must be assembled together in
the field in order to function for its intended purpose. Components are
replaceable and a faulty component can be swapped out to avoid
replacing an entire system. Recognizing the ongoing need for servicing
and updating previously installed systems, EPA allowed for the
continued manufacture, import, sale, distribution, offer for sale and
distribution, and export of components that rely on higher-GWP HFC
refrigerants. Aside from reporting and labeling requirements,
components are not subject to the restrictions in the October 2023
Technology Transitions Rule, except insofar as those components may not
be installed in new systems on or after the applicable installation
compliance dates.
Second, EPA extended the sell-through period for factory-completed
products in the October 2023 Technology Transitions Rule from one year
to three years after the manufacture and import compliance date. For
the purposes of the restrictions under that rule for the refrigeration,
air conditioning, and heat pump (RACHP) sector, factory-completed
products are pieces of equipment that are functional upon completion of
manufacturing in a factory. Functional means that the equipment's
refrigerant circuit is complete, it is charged with refrigerant, and it
is ready to use for its intended purpose. The Agency received many
comments on this topic, including from those commenters that considered
one year to be insufficient for the sale of seasonal products.
EPA believed it had minimized the potential for stranded inventory
with these two modifications to the October 2023 Technology Transitions
Rule. Specifically with respect to components, the Agency's view was
that there would continue to be a market for components not meeting the
GWP limit thresholds for new systems, because those components could
continue to enter the market to service existing systems.
EPA also finalized later compliance dates for the installation of
most field-assembled refrigeration systems, recognizing, in part, that
refrigeration systems would require manufacturers and importers to make
components available and that such systems can be specifically designed
for an individual facility and would need more time to transition.\5\
For some refrigeration subsectors, EPA also recognized in the October
2023 Technology Transitions Rule that buildings may have already been
issued an approved building permit prior to finalization of that rule.
Recognizing that where earlier issued permits approved the use of an
HFC or blend containing an HFC, and where such permitted systems were
likely to be highly complex and costly to redesign, EPA provided one
additional year beyond the final rule compliance dates for the
installation of certain field-assembled systems. Specifically, that
extension applied to the following refrigeration systems or subsectors
(certain industrial process refrigeration systems; retail food
refrigeration--supermarkets; cold storage warehouses; and ice rinks) if
an approved building permit was issued prior to the signature date of
the final rule (i.e., October 5, 2023), and the permit specified the
use of a system containing an HFC or blend containing an HFC with a GWP
above the relevant GWP threshold for that subsector (88 FR 73120; 40
CFR 84.54(d)).
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\5\ See 88 FR 73143 (industrial process refrigeration systems--
proposed January 1, 2025, compliance date, finalized January 1,
2026, compliance date (January 1, 2028, for some subsectors); 88 FR
73149 (data centers, ITEF, computer room cooling equipment--proposed
January 1, 2025, compliance date, finalized January 1, 2027,
compliance date); 88 FR 73150 (systems in retail food refrigeration
subsector--proposed January 1, 2025, compliance date, finalized a
range of compliance dates from January 1, 2026, to January 1, 2028);
88 FR 73162 (cold storage warehouses--proposed January 1, 2025,
compliance date, finalized January 1, 2026, compliance date); 88 FR
73163 (ice rinks--retained proposed January 1, 2025, compliance date
in final rule but increased GWP limit from 150 to 700); 88 FR 73175
(chillers-industrial process refrigeration--proposed January 1, 2025
compliance date, finalized compliance dates of January 1, 2026, and
January 1, 2028 depending on the system).
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EPA intended this limited flexibility in the October 2023
Technology Transitions Rule to prevent the need to redesign these
systems and, in some cases, the facility that houses these systems,
given that facilities or systems may already have been well along on
the construction timeline. EPA granted this permit-based extension
selectively, as most systems are not typically designed specifically
for an individual facility and/or most systems covered by the October
2023 Technology Transitions Rule have a later compliance date and thus
could make any necessary adjustments with the GWP restrictions in mind.
EPA did not finalize later compliance dates for the installation of
residential and light commercial air conditioning and heat pump systems
and VRF
[[Page 100385]]
systems in the October 2023 Technology Transitions Rule.\6\ After
issuing that rule, EPA learned that additional time, which EPA had
extended to nearly all of the subsectors covering field-assembled
refrigeration systems, was also needed for residential and light
commercial air conditioning systems and VRF systems. As noted
previously, EPA responded by issuing an interim final rule reevaluating
the specific circumstances for residential and light commercial air
conditioning and heat pump systems and extending the installation
compliance date for those systems by one year to January 1, 2026 (88 FR
88825; December 26, 2023), and by undertaking this rulemaking for VRF
systems.
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\6\ See 88 FR 73178 (residential and light commercial air
conditioning and heat pumps--proposed January 1, 2025, compliance
date, finalized January 1, 2025, compliance date); id. (VRF
systems--proposed January 1, 2026, compliance date, finalized
January 1, 2026, compliance date).
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EPA has reevaluated the planning, purchasing, and installation
timeframes for VRF systems in new construction projects as referenced
in the Agency's response to industry stakeholders (See Docket ID No.
EPA-HQ-OAR-2021-0643-0235). EPA is providing one additional year to
install VRF systems, which aligns with the additional time already
provided for system installations in many refrigeration subsectors in
the October 2023 Technology Transitions Rule and in the interim final
rule for installation of residential and light commercial air
conditioning and heat pump systems. In addition, EPA is allowing
installation of VRF systems that use an HFC, or a blend containing an
HFC, with a GWP above 700 until January 1, 2028, in projects where a
building permit approves the use of an HFC or blend containing an HFC
in a VRF system, and that approved building permit was issued prior to
October 5, 2023, provided the components were manufactured or imported
prior to January 1, 2026. EPA is providing this additional extension
based on information received from commenters that detailed the length
of the timeline from initial design, to permitting, to construction
completion of projects that incorporate VRF systems, which are
typically much larger and more complex than other projects. Given the
longer lead times for the compliance dates for new projects
incorporating VRF systems, EPA does not anticipate similar scenarios
for equipment used in other sectors and subsectors covered by the
October 2023 Technology Transitions Rule.
The construction of new multi-unit residential and commercial
buildings is planned well in advance, including plans for the heating
and cooling systems intended to be installed in that new construction.
Builders may order those planned heating and cooling systems in concert
with the planning process well in advance of when those systems are
installed. As noted by commenters, installation of these systems is
often one of the final steps in construction. For construction planned
to occur after January 1, 2026, components of VRF systems that use a
regulated substance, or a blend containing a regulated substance, with
a GWP above 700 may have already been incorporated into the design of
the building and ordered by builders. In addition, such buildings may
have already been issued a building permit approving the use of an HFC
or blend containing an HFC with a GWP above 700, from the appropriate
local permitting authority or the authority having jurisdiction, prior
to October 5, 2023. In these cases, the VRF equipment associated with
these projects are at risk of being stranded. EPA also recognizes that
as one of the first systems facing a system installation compliance
date under the October 2023 Technology Transitions Rule, the ability of
installers of VRF systems to comply with this deadline relies on
equipment manufacturers, importers, and distributors to quickly make
commercially available component parts that comply with the GWP
thresholds. For this reason, as well, EPA has determined it is
appropriate to provide a limited extension for compliance.
As discussed in the October 2023 Technology Transitions Rule, EPA
established the compliance date of January 1, 2026, for these systems
based on consideration of the AIM Act's subsection (i)(4) factors, and
in particular, the assessment that VRF systems will be able to meet the
GWP limit of 700 and transition from the current use of HFCs. EPA's
consideration of the statutory factors continues to support a swift
transition for these systems, but the January 1, 2026, installation
compliance date could result in builders of new construction being left
with stranded inventory that could not be used. Stranding inventory is
an economically and environmentally undesirable outcome, and the issue
addressed in this rule--that the January 1, 2026 installation deadline
for new VRF systems could result in stranded inventory--was not brought
to the Agency's attention until after the October 2023 Technology
Transitions Rule was finalized. Through this action, EPA is extending
the January 1, 2026, installation compliance date to January 1, 2027,
provided the new installation uses components that are manufactured or
imported prior to January 1, 2026. In addition, for those projects that
were issued a building permit prior to October 5, 2023 which approves
the use of an HFC or blend containing an HFC in a VRF system, EPA is
extending the installation compliance deadline to January 1, 2028,
provided all specified components of that VRF system were manufactured
or imported prior to January 1, 2026.
C. Comments and Responses
The Agency received several comments on the VRF Proposed Rule.
These comments are addressed in this section.
Comment: Several commenters, representing original equipment
manufacturers (OEMs), distributors, air conditioning contractors,
developers, and trade associations--including the groups that contacted
the Agency in the November 13, 2023, letter--expressed support for the
proposal to extend the installation compliance date by one year. They
reiterated that the proposal ``provides indispensable relief to
manufacturers, homebuilders, and other stakeholders in the
implementation of the . . . AIM Act and the [October 2023 Technology
Transitions Rule]'' (See Docket ID No. EPA-HQ-OAR-2021-0643-0255).
Commenters underscored the importance of the proposed extension to
mitigate the potential for significant stranded inventory that would
otherwise burden the industry (See Docket ID No. EPA-HQ-OAR-2021-0643-
0249). Some requested this rule to be finalized soon, or before the end
of 2024, to provide clarity for the industry (See Docket ID No. EPA-HQ-
OAR-2021-0643-0253, and Docket ID No. EPA-HQ-OAR-2021-0643-0276).
Response: EPA agrees with commenters that extending the
installation compliance date by one year, until January 1, 2027, for
such equipment would avoid stranding inventory and provide relief to
most manufacturers, distributors, builders, and other stakeholders. EPA
takes note of the request to finalize this rule quickly to provide
clarity for the industry.
Comment: Three commenters requested the Agency exempt projects that
were already permitted. One commenter suggested EPA exempt buildings
from any VRF system installation compliance date if they received a
permit prior to October 5,
[[Page 100386]]
2023. Another commenter encouraged EPA to consider a variance or
exemption for already-designed projects that had applied for permits
based on heating, ventilation, and air conditioning (HVAC) systems
then-available on the market. One commenter requested the Agency
consider a further exemption of previously permitted VRF equipment.
Response: While some flexibility is fitting, it would not be
appropriate with the application of the subsection (i)(4) factors to
provide a broad, indefinite exemption for VRF systems from the October
2023 Technology Transitions Rule to any project where the project in
which the system would be installed was issued an approved building
permit prior to October 5, 2023. EPA was cognizant in establishing
restrictions in the October 2023 Technology Transitions Rule, and in
considering the new information provided after finalization of the
October 2023 Technology Transitions Rule that there may be equipment
that would need to work its way through the distribution chain. As
demonstrated in the October 2023 Technology Transitions Rule, EPA
recognized that in discrete situations, projects that were issued
approved building permits prior to October 5, 2023, may not have the
system installed by the relevant compliance date as anticipated. EPA's
analysis under the October 2023 Technology Transitions Rule was that
substitutes with a GWP below 700 will be available for the components
needed for the installation of VRF systems in time for the January 1,
2026, compliance date. One of the primary manufacturers of this
equipment has confirmed EPA's assessment about availability in the
materials provided to the Agency during the comment period. However, as
noted previously, EPA became aware of new information after the
issuance of the October 2023 Technology Transitions Rule that indicated
the potential for stranded inventory held by some affected entities. As
a result, EPA is extending the compliance date for installation by one
year and based on the comments received, is finalizing a limited
additional extension for projects where abuilding permit approves use
of an HFC or blend containing an HFC in a VRF system, and that approved
building permit was issued by the relevant permitting authority prior
to October 5, 2023. This additional time recognizes that some projects
were well underway ahead of the issuance of the October 2023 Technology
Transitions Rule. The Agency expects that projects with an approved
building permit issued on or after October 5, 2023, will either use VRF
systems that meet the 700 GWP threshold, or will use VRF components
that are manufactured or imported prior to January 1, 2026, and will be
installed by the January 1, 2027, installation deadline.
Comment: Some commenters requested that the installation compliance
date be extended by two years, instead of one, and described the
several-year construction timeline in support of this request. One
commenter stated this extended timeline is necessary to provide
projects that have already been designed, permitted, financed, and
contracted with enough time to meet the installation compliance date
(See Docket ID No. EPA-HQ-OAR-2021-0643-0251). Other commenters stated
that more than one year is needed to provide building owners and
developers with time to comply without significantly disrupting
existing projects, particularly larger, in-process development projects
where construction has already started (See Docket ID EPA-HQ-OAR-2021-
0643-0256). Two commenters requested a blanket two-year extension to
the installation compliance date given the several-year construction
timeline. They described this timeline, from initial design to
construction completion, for buildings with VRF systems. One of these
two commenters stated that it can take six to 18 months to design a
building, obtain building permits, and go through the entitlement
process. This commenter noted that the HVAC system is incorporated into
the initial design of a building based on available equipment. Further,
this commenter stated that the construction timeline after the design
and permitting stage ranges from 12 months to three years, depending on
jurisdiction, construction type, project size, and project complexity.
The other commenter indicated the total time between initial design and
selection of the project's mechanical systems and the installation of
those mechanical systems in large development projects is typically
between four and eight years. This commenter further noted that design
takes at least two years, and that HVAC systems are selected during the
design planning process. This commenter, who is based in New York,
stated that the building permit approval process in New York takes six
to 12 months, and that construction starts three to six months after
building permits are approved. Lastly, this commenter noted that actual
construction takes two to six years, and that installation of the HVAC
systems, while purchased at the start of the construction period, are
installed within the last six months of this schedule.
Response: EPA took into consideration the comments from
stakeholders who preferred a blanket two-year extension to the
installation compliance date for VRF systems, however we do not agree
that a blanket two-year extension to the installation compliance date
for VRF systems is warranted.
EPA considered the information on construction timelines that
commenters provided. EPA's decision in this final rule to extend the
installation compliance date by one year for VRF systems, and by two
years for projects that were issued an approved building permit prior
to October 5, 2023, and meet the other conditions described in this
rule, is informed by these comments. This rule and its extension of the
compliance dates for installation of VRF systems is designed to
mitigate the narrow issue of stranded inventory without delaying the
overall transition to substitutes for VRF systems that are compliant
with the GWP thresholds established in the October 2023 Technology
Transitions Rule. Regulated parties also have a responsibility to
ensure that they are not taking actions, particularly after
promulgation of a regulation, that risk creating stranded inventory.
Such actions may include, but are not limited to, submitting building
permits for approval at such a point that does not give sufficient time
for the authority having jurisdiction to issue an approved building
permit and allow the project to be constructed, with the relevant
equipment installed, by a regulatory deadline. It also includes
purchasing equipment that may not be able to be installed by a
regulatory deadline.
In establishing the January 1, 2026, deadline in the October 2023
Technology Transitions Rule, EPA provided more than two years between
promulgation of that rule and the relevant installation compliance
date. In this action, EPA is providing an additional year for all VRF
systems that were subject to the January 1, 2026 deadline, or two
additional years under a specific set of circumstances. Most affected
regulated entities will therefore have more than three years from the
time the October 2023 Technology Transitions Rule was published in the
Federal Register, and the new installation compliance deadline. For
those projects that were issued an approved building permit prior to
the finalization of the October 2023 Technology Transitions Rule, and
were therefore further along on the
[[Page 100387]]
construction timeline, we are providing more than four years, until
January 1, 2028. Builders, VRF equipment manufacturers, distributors,
and installers therefore will have had multiple years to accommodate
the restrictions in their planning. Moreover, available information
indicates that equipment using compliant lower-GWP substitutes will be
available for installation allowing the affected regulated entities to
meet the new installation compliance date of January 1, 2027. Those
projects that were issued an approved building permit prior to the
signature of the October 2023 Technology Transitions Rule, and meet
other conditions as described in this rule, are being granted until
January 1, 2028, not because of the lack of available equipment for
compliance with the restrictions, but because it is more likely that
the construction timeline of such projects is further along such that
the likelihood of stranding inventory for these projects is greater.
Commenters requesting a blanket two-year extension did not supply
sufficient information to support such an extension, or a longer
extension, for installation of VRF systems. One commenter's
construction timeline of 12 months to three years is fully within the
time provided in this rule. The other commenter's construction timeline
of two to six years goes beyond the more than four years provided for
projects that were issued an approved building permit prior to October
5, 2023. However, this commenter noted just one project that would be
adversely affected by a January 1, 2027, compliance date, and the
extension to January 1, 2028, for projects that were issued an approved
building permit prior to October 5, 2023 and meet the other conditions
described in this rule, resolves the commenter's concern with respect
to the specified project.
The Agency is also cognizant of the remaining phasedown period for
HFCs in declining to adopt commenters' request for additional
extensions. Per Congress' phasedown schedule in the AIM Act, by 2029
overall domestic production and consumption of HFCs must be reduced by
70 percent from historic baseline levels and by 85 percent from the
baseline by 2036. AIM Act subsection (i)(4)(D) directs EPA to factor
in, to the extent practicable, ``the remaining phase-down period for
regulated substances,'' when promulgating restrictions under the
Technology Transitions program. 42 U.S.C. 7675(i)(4)(D). EPA explained
in the October 2023 Technology Transitions Rule that the fact that most
of the AIM Act's phasedown would occur by 2029 was ``an important
factor'' in finalizing the compliance dates and restrictions in the
Technology Transitions Rule (See 88 FR 73140). As the phasedown is
implemented, the supply of available HFCs will decrease significantly.
Timely restricting the use of HFCs in sectors and subsectors that are
well positioned to transition to new substitutes and technologies
supports the phasedown and fulfills Congress' direction to the Agency
in subsection (i). For VRF systems, the best available information from
manufacturers and industry commenters is that substitutes that meet the
October 2023 Technology Transitions Rule's restrictions are currently
being manufactured and will be commercially available in time to
support the transition. We therefore do not agree that extensions
beyond those established in this rule are warranted.
Comment: One commenter requested a two-year extension to the
installation compliance date for VRF systems in projects that use
higher-GWP refrigerants, were permitted prior to October 24, 2023, and
where the components for such systems are manufactured or imported
prior to January 1, 2026 (See Docket ID No. EPA-HQ-OAR-2021-0643-0251).
This commenter described that it is in the process of constructing a
building and expects to complete the installation of the VRF system in
that building by April 1, 2027. The commenter stated that this project
was issued an approved building permit prior to finalization of the
October 2023 Technology Transitions Rule and submitted its approved
permitting documents and building designs to the docket. These
documents indicate R-410A, a refrigerant blend that has a GWP of 2,088
and consists of two HFCs regulated under the AIM Act, is intended to be
used in the VRF system in the project.
Response: EPA appreciates the details and documents provided by
this stakeholder on this project. EPA notes this stakeholder's concern
would not be addressed with a one-year extension to the installation
compliance date. Projects that had already been issued an approved
building permit prior to October 5, 2023, are more likely than those
that were issued an approved building permit on or after this date to
be substantially further along in the construction timeline, such that
switching the refrigerant to one that complies with the 700 GWP
threshold could risk stranding already-manufactured, and already-
purchased, VRF equipment inventory, as well as require developers to
re-design, re-permit, and in some cases, rebuild ongoing projects to
accommodate a different VRF system (See Docket ID No. EPA-HQ-OAR-2021-
0643-0242). We are therefore finalizing an extension to January 1,
2028, for installation of VRF systems where the project was issued a
building permit prior to October 5, 2023, where the building permit
approves the use of an HFC or blend containing an HFC in a VRF system,
and where the components of the VRF system were manufactured or
imported prior to January 1, 2026.
EPA is finalizing October 5, 2023, instead of October 24, 2023, as
the date by which an approved building permit must have been issued to
allow projects to install certain VRF systems until January 1, 2028,
because this was the signature date of the October 2023 Technology
Transitions Rule, it aligns with the flexibility provided to entities
in the October 2023 Technology Transitions Rule as described in section
III.B. of this rule, and entities could have become aware of the
Technology Transitions restrictions on or around this date. In
addition, the commenter's project that was issued an approved permit
would not be adversely affected by this earlier date than their
request.
EPA can reasonably anticipate that there may be a discrete number
of projects that may also have been issued building permits ahead of
October 5, 2023, that approve the use of an HFC or blend containing an
HFC in VRF systems, and thus is providing this additional flexibility
where these circumstances exist and the other conditions in this rule
are met.
Comment: Several commenters opposed the alternative proposal in the
VRF Proposed Rule to limit the one-year extension to only those
projects with an approved building permit that specified an HFC or
blend containing an HFC and was issued prior to October 5, 2023 (See
Docket ID No. EPA-HQ-OAR-2021-0643-0252, Docket ID No. EPA-HQ-OAR-2021-
0643-0254, Docket ID No. EPA-HQ-OAR-2021-0643-0255, Docket ID No. EPA-
HQ-OAR-2021-0643-0258). They said this alternative proposal is too
narrow in comparison to the proposed extension. One commeter noted that
it ``would fail to resolve the inventory and order fulfillment concerns
articulated by industry'' (See Docket ID No. EPA-HQ-OAR-2021-0643-
0255).
Response: EPA agrees with these commenters. Based on its review of
the comments received in total, EPA finds that a limited one-year
extension solely for projects that were issued an approved building
permit prior to October 5, 2023, will not provide sufficient relief to
avoid stranding
[[Page 100388]]
inventory. Comments from multiple OEMs, distributors, developers, and
trade associations provided information that indicated that a broad
one-year extension was necessary to provide certainty to those looking
to complete construction on projects with long timeframes. We are also
cognizant that the compliance date for VRF systems is among the earlier
deadlines of all the Technology Transitions program's restrictions for
assembled systems. The flexibility of a blanket one-year extension to
January 1, 2027, to install components that were manufactured or
imported by January 1, 2026, is intended to help smooth the transition.
It provides some cushion to OEMs, distributors, and developers if roll-
out of the new rule-compliant components are delayed in any way,
ensuring that builders and installers will be able to depend on
available supply of previously manufactured equipment for these systems
to reliably meet the January 1, 2027, installation deadline.
Comment: One commenter supported the alternative approach in the
VRF Proposed Rule to limit the one-year installation compliance
extension to only those projects that were issued an approved building
permit with a specified HFC or blend containing an HFC, prior to
October 5, 2023 (See Docket ID No. EPA-HQ-OAR-2021-0643-0260). This
commenter questioned how much stranded inventory there would be since
no data was provided by OEMs on the volume of potential stranded
equipment. This commenter also encouraged the Agency to avoid continued
compliance date extensions.
Response: After reviewing the comments, EPA disagrees that it
should finalize the alternative approach described in the VRF Proposed
Rule since it is likely that far fewer projects would qualify for this
one-year extension, which could result in stranding already-purchased
VRF equipment. EPA instead agrees with other commenters that a broad
one-year extension provides certainty and avoids stranding inventory.
EPA recognizes that finalizing an extension to January 1, 2028, for
projects that were issued a building permit prior to October 5, 2023,
and where the building permit approves the use of an HFC or blend
containing an HFC with a GWP above the threshold, provides one
additional year beyond the alternative proposal that this commenter
supported. EPA is finalizing this targeted extension to still limit the
universe of who may qualify for additional time while addressing the
needs of certain affected regulated entities to avoid stranding
inventory.
Comment: One commenter requested clarification on whether a VRF-
Dedicated Outdoor Air System with a single direct expansion coil
connected to a VRF condensing unit meets the definition of VRF systems
under the Technology Transition Program and thus would be on the same
timeline as other VRF systems. This commenter also asked if outdoor
units which are tested in accordance with AHRI 1230 and listed as VRF
units, regardless of whether they are installed with one or multiple
associated evaporators, would fall under this definition of VRF
systems.
Response: Air conditioning systems that have one indoor evaporator
instead of two or more as described in the October 2023 Technology
Transitions Rule, do not fall under the description of VRF systems in
that rule. This rulemaking does not reconsider the description of VRF
systems from the October 2023 Technology Transitions Rule. For purposes
of the Technology Transitions program, the systems that the commenter
described are considered residential and light commercial air
conditioning and heat pump systems, and have an installation compliance
date of January 1, 2026, when using components that are manufactured or
imported prior to January 1, 2025. VRF systems described in this rule,
which uses the same description as the one found in the October 2023
Technology Transitions Rule, do not cover all designs using VRF
technology. For example, air-source VRF units with capacities below
65,000 BTU/h are not subject to this final rule and instead are
regulated with other residential and light commercial air conditioning
and heat pump systems.
Comment: One commenter provided their estimate that the costs
associated with an installation compliance deadline earlier than
January 1, 2028, will be $112 million for a project currently under
development (See Docket ID No. EPA-HQ-OAR-2021-0251). This project was
issued an approved building permit prior to October 5, 2023. The costs
that this commenter highlights stem from real estate taxes, land loan
interest, insurance expenses, the equity costs of capital, cost of new
VRF equipment, and the cost to re-design the building to accommodate
incorporation of additional ventilation into the building to account
for the flammability of the new refrigerant.
Response: EPA appreciates comments, including in this case, with
detailed information on cost breakdowns. EPA appreciates this
commenter's description of the cost impacts associated with a
compliance deadline earlier than January 1, 2028. With EPA's decision
to extend the installation compliance deadline to January 1, 2028, for
projects issued an approved building permit prior to October 5, 2023
and that meet the other conditions described in this rule, the
commenters' projected cost estimates, which EPA has not independently
evaluated or verified, will in any case be avoided.
Comment: One commenter suggested EPA change the definition of
``install'' to mean that VRF equipment are mounted in place, regardless
of whether the field-installed system is charged (See Docket ID No.
EPA-HQ-OAR-2021-0275).
Response: EPA is not adopting a change in the definition of
``install'' to its regulations. EPA defined that term in the October
2023 Technology Transitions Rule after a notice-and-comment rulemaking
and did not reopen that definition in this rulemaking. As such, this
request is outside the scope of this narrow rulemaking. Such a change
would have far-reaching impacts on existing stakeholder plans to comply
with the October 2023 Technology Transitions Rule in numerous
subsectors. Other subsectors with an installation compliance deadline
include, but are not limited to, chillers, industrial process
refrigeration, and several retail food subsectors. Based on the
information provided by this commenter, finalizing an additional year
to install VRF systems in certain projects that were issued an approved
building permit prior to October 5, 2023, beyond the one year as
proposed would also alleviate the commenter's concerns and would not
affect the broader Technology Transitions program.
Comment: Two commenters stated that EPA did not give the real
estate industry sufficient notice about this rule's potential effects
on the real estate industry. They note that NAICS codes that correspond
to builders and developers were not used in the October 2023 Technology
Transitions Rule, the interim final rule issued in December 2023 (88 FR
88825), or the VRF Proposed Rule (See Docket ID No. EPA-HQ-OAR-2021-
0643-0273). One commenter called this a ``major oversight'' (See Docket
ID No. EPA-HQ-OAR-2021-0643-0274). This commenter also mentioned that
EPA set installation deadlines without engaging developers, and thus
failed to meaningfully consider or discuss compliance needs and
challenges of commercial and multifamily housing
[[Page 100389]]
developers. As such, this commenter requested that EPA work with the
real estate industry to set compliance deadlines, and the other
commenter requested that EPA delay the installation compliance
deadline.
Response: EPA acknowledges that the October 2023 Technology
Transitions Rule, interim final rule (88 FR 88825), and VRF Proposed
Rule did not include NAICS codes for developers and general
construction. EPA has included those codes in this final rule and will
continue to include them where appropriate in further regulations under
the Technology Transitions program. EPA disagrees that this means the
Agency provided insufficient notice of the rule. Notice of EPA's
intention to regulate is provided through publication in the Federal
Register. The list of NAICS codes within that document serves as a
guide for readers regarding entities the EPA expects could potentially
be affected, but EPA states that the list is not intended to be
exhaustive, and that other types of entities not listed could also be
affected. EPA received input from multiple developers and real estate-
related trade associations during the comment period on this rule and
the interim final rule, and has met with real estate developers before
finalizing this rule. A record of meetings EPA held with stakeholders
after publication of the VRF Proposed Rule on June 26, 2024, is
included in the docket for this rule (See attachment 1, Docket ID No.
EPA-HQ-2021-0643-0276. EPA intends to continue its engagement with
these stakeholders.
Comment: One commenter suggested EPA should not set compliance
deadlines until it develops a building code amendment strategy with
model code bodies, state legislatures, and the buildings sector (See
Docket ID No. EPA-HQ-OAR-2021-0643-0274). This commenter stated further
that EPA should clarify the regulatory impacts that will arise on
existing buildings' air conditioning and chiller systems when they
reach the end of their useful lives. In particular, this commenter
noted that existing buildings would need to be retrofitted to
accommodate new air conditioning systems using refrigerants with lower
GWP but higher flammability ratings. Another commenter noted that the
latest building codes, which harmonize requirements for lower-GWP A2L
refrigerants, have not been adopted in numerous jurisdictions across
the country, which makes it harder to comply with these installation
compliance dates. Other commenters also noted that lack of consistent
A2L requirements across building codes could result in an inability to
complete construction for projects that have already been issued
approved building permits.
Response: This rule serves the limited purpose of extending
compliance deadlines for the installation of new VRF systems. To the
extent that commenters are identifying concerns regarding building
codes as an impediment to compliance with the October 2023 Technology
Transitions Rule deadline for installation of VRF systems, this rule
only alleviates those concerns by extending that deadline by one year,
or in specific cases, two years. This rule does not address the
retrofit of buildings to accommodate new air conditioning systems with
lower GWP and higher flammability ratings but EPA welcomes further
discussion on this topic. As discussed in section III.F. of this
preamble, in electing to provide additional time for compliance, the
Agency is not revisiting or reopening its analysis of the AIM Act
subsection (i)(4) factors with respect to VRF systems, as set forth in
the October 2023 Technology Transitions Rule preamble (88 FR 73177-
73180). In that rule, EPA considered building codes as one factor of
its assessment of the availability of substitutes for HFCs used in the
VRF systems. As noted in that final preamble, model building codes for
this subsector were updated in 2021 to incorporate the use of lower-GWP
refrigerants (88 FR 73178). When EPA issued the October 2023 Technology
Transitions Rule, it noted that 41 states had either updated state
building codes or legislatively ensured that refrigerants classified as
A2Ls (i.e., lower-GWP substitutes that can support compliance with the
October 2023 Technology Transitions Rule restrictions) could be used
(See attachment 5, p. 5-6, of Docket ID No. EPA-HQ-OAR-2021-0643-0227).
At the time of this rulemaking, only Alaska, the District of Columbia,
Kentucky, Massachusetts, Michigan, and Nevada have yet to update their
codes or legislatively provide for the use of A2Ls in air conditioning
(See attachment 2, Docket ID No. EPA-HQ-OAR-2021-0643-0276).\7\
Finally, with respect to regulatory impacts of the marginal cost of
installing a new rule-compliant system at the end of the useful lives
of existing systems, that comment is beyond the scope of this rule,
which has the limited effect of extending the deadline for compliance
for one air conditioning and heating subsector.
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\7\ See AHRI's Building Code Map, web page, accessed November
13, 2024. Available at <a href="https://www.ahrinet.org/a2l-refrigerant-building-code-map">https://www.ahrinet.org/a2l-refrigerant-building-code-map</a>.
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Comment: One commenter, noting its engagement in other EPA
partnerships, suggested that the Agency develop partnership programs
with the real estate industry to drive the responsible and methodical
phasedown of HFCs and appropriate building equipment transitions.
Response: The establishment of potential partnership programs, or
expansion of existing ones, is beyond the scope of this rulemaking. EPA
welcomes additional opportunities for communication and collaboration
with the real estate industry to successfully implement the phasedown
of HFCs.
Comment: Some commenters referenced issues outside the scope of
this rulemaking or made inaccurate statements about rules promulgated
under the AIM Act. One commenter noted concerns about how air
conditioning systems used on boats are classified under the Technology
Transitions program (See Docket ID No. EPA-HQ-OAR-2021-0643-0257). Two
commenters requested EPA extend the installation compliance date for
residential and light commercial air conditioning and heat pump systems
beyond the time provided in the interim final rule (88 FR 88825) (See
Docket ID No. EPA-HQ-OAR-2021-0643-0272 and EPA-HQ-OAR-2021-0643-0273).
One commenter noted that this rulemaking ``would set the HFC production
and consumption baseline levels from which reductions will be made
[and] establish an initial methodology for allocating and trading HFC
allowances for 2022 and 2023'' (See Docket ID No. EPA-HQ-OAR-2021-0643-
0267).
Response: These comments are outside the scope of this rulemaking,
which is solely related to an extension of the installation compliance
date for VRF systems.
D. Limiting the Environmental Impact of This Action
EPA is narrowly tailoring this action to respond to stakeholder
concerns about stranded inventory and longer construction timelines for
projects that incorporate VRF systems while maintaining the human
health and environmental benefits of the October 2023 Technology
Transitions Rule. To do so, EPA is granting the extension for
installation of a VRF system only if all ``specified components'' of
that system are manufactured or imported prior to January 1, 2026. The
term ``specified component'' is defined in the October 2023 Technology
Transitions Rule as ``condensing units, condensers,
[[Page 100390]]
compressors, evaporator units, and evaporators'' (88 FR 73112).\8\ As a
result, the total number of VRF systems using HFCs, or blends
containing HFCs, with a GWP above 700 installed in 2025, 2026, and 2027
for projects that were issued an approved building permit prior to
October 5, 2023, would match what the Agency modeled for installation
before the January 1, 2026, deadline. The extra year that is being
provided for installation of new VRF systems, and two years for certain
installations, would not increase total demand for HFCs in VRF systems,
but rather shift some of the modeled demand from 2025 into 2026 and
2027.
---------------------------------------------------------------------------
\8\ Other components of an air conditioning or heat pump system
such as valves or refrigerant piping are not restricted by the
October 2023 Technology Transitions Rule and can be installed
regardless of manufacture or import date.
---------------------------------------------------------------------------
Specified components manufactured or imported on or after January
1, 2026, remain subject to the restrictions of the October 2023
Technology Transitions Rule. Specifically, if they use or are intended
for use with an HFC or a blend containing an HFC with a GWP of 700 or
greater, their use is limited to servicing previously installed
systems. All the labeling, reporting, and recordkeeping requirements,
as delineated in the October 2023 Technology Transitions Rule, also
continue to apply to components using, or intended to use, any
regulated substance.
EPA finds that providing additional time for installation
effectively responds to stakeholder concerns about stranded inventory
while remaining protective of the environmental benefits of the
restrictions in the October 2023 Technology Transitions Rule. This
approach was suggested by industry stakeholders in their letter dated
November 13, 2023, and it aligns with industry's plans to transition
VRF systems to use lower-GWP substitutes.
E. How do the labeling, recordkeeping, and reporting provisions apply?
The October 2023 Technology Transitions Rule requires labels on
products and specified components that use regulated substances. The
labeling requirement takes effect at the time of the manufacture and
import prohibition for products and specified components. This timing
reflects the primary purpose of the labels, which is for assessing
compliance of products and systems in sectors and subsectors with
active HFC restrictions.
Consistent with the October 2023 Technology Transitions Rule, this
action does not require any new labeling for specified components
intended for use in VRF systems that are manufactured in the United
States or imported into the United States prior to January 1, 2026
(i.e., existing inventory). This action also does not change the
labeling requirements for specified components used in VRF systems that
are manufactured or imported after January 1, 2026. As such, they must
be labeled with the following: (1) the statement ``For servicing
existing equipment only,'' (2) the HFC or blend containing an HFC that
is used or intended for use, and (3) the date of manufacture.
This labeling is particularly important to distinguish between
components manufactured or imported before January 1, 2026, which are
not subject to restrictions, from those that are manufactured or
imported on or after January 1, 2026, which may be subject to the GWP
limit depending on whether it is new or intended for servicing existing
equipment. For a complete description of the Technology Transitions
program labeling requirements, including formatting requirements,
please refer to the October 2023 Technology Transitions Rule, or 40 CFR
84.58.
The October 2023 Technology Transitions Rule established
recordkeeping and reporting requirements for any entity that
manufactures or imports products or specified components that use or
are intended to use HFCs in the sectors and subsectors covered in that
rule. The reporting period for all sectors and subsectors starts on
January 1, 2025, and the first reports covering the 2025 calendar year
must be submitted to the Agency by March 31, 2026. This action does not
add to nor modify the existing reporting and recordkeeping requirements
for specified components. This rule does not establish new reporting
and recordkeeping requirements related to the sale or installation of
components manufactured or imported prior to January 1, 2025. However,
EPA notes that entities that intend to rely on the flexibility
associated with the date of their approved building permit should
maintain that approved building permit as a record and have it
available for inspection, if requested. Reporting and recordkeeping
requirements finalized in the October 2023 Technology Transitions Rule
are still applicable for specified VRF components that are manufactured
in the United States or imported into the United States on or after
January 1, 2025.
F. Evaluation of the Subsection (i)(4) Factors
Subsection (i)(4) of the AIM Act directs EPA to factor in, to the
extent practicable and using best available data, various
considerations when carrying out a rulemaking under subsection (i). As
discussed in detail in the preamble to the October 2023 Technology
Transitions Rule, EPA views subsection (i)(4)(A) through (D) as
providing overarching direction for setting restrictions under
subsection (i) (88 FR 73129-73141). In this action, EPA did not
reconsider the interpretations provided in the October 2023 Technology
Transitions Rule regarding how it considers the factors laid out in
subsection (i)(4). Nor did the Agency revisit or reopen its analysis of
the (i)(4) factors with respect to VRF systems as set forth in the
October 2023 Technology Transitions Rule preamble (88 FR 73177-73180).
However, in finalizing this narrow adjustment to the installation
compliance date for VRF systems, EPA considered the (i)(4) factors to
the extent practicable, as applicable to the Agency's adjustment of
that compliance date.
The issue being addressed by this final rule was brought to the
Agency's attention by stakeholders impacted by the October 2023
Technology Transitions Rule after the issuance of that rule. As noted
in EPA's discussion of subsection (i)(4)(A), in addition to information
generated by other governing bodies and agencies, the Agency considered
information provided by industry, environmental non-governmental
organizations, trade associations, academia, standard-setting bodies,
and more (88 FR 73129). EPA acknowledges that in some cases, regulated
entities may be best situated to identify best available information,
particularly regarding implementation challenges.
With respect to the Agency's evaluation of the availability of
substitutes under subsection (i)(4)(B), EPA previously determined that
substitutes with a GWP less than 700 are available effective January 1,
2026, for VRF systems. EPA did not change that determination and
continues to find that substitutes with a GWP less than 700 will be
available January 1, 2026, for these systems. Manufacturers and
importers in this subsector are currently making or importing VRF
systems and components with lower-GWP refrigerants for other markets
and are prepared to meet the January 1, 2026, manufacture and import
compliance date for such systems. This action did not reconsider the
Agency's prior
[[Page 100391]]
evaluation of the availability of substitutes for meeting the use
restrictions issued in the October 2023 Technology Transitions Rule for
VRF systems; rather, this action addresses the disposition of
components manufactured in the United States or imported into the
United States before January 1, 2026.
This rule to adjust the installation compliance date for VRF
systems was motivated by the policy goal of avoiding the negative
environmental and economic impacts of stranding inventory where
possible, while recognizing that the AIM Act authorizes the Agency to
establish use restrictions where appropriate for sectors and subsectors
to move away from the use of high-GWP HFCs. These goals are consistent
with the direction in subsection (i)(4)(C), which instructs the Agency
to factor in, to the extent practicable, overall economic costs and
environmental impacts, as compared to historical trends. As discussed
in the October 2023 Technology Transitions Rule, EPA interprets
(i)(4)(C) as purposefully accommodating different types and degrees of
analysis of economic costs and environmental impacts, including costs
and impacts that may be difficult to quantify (88 FR 73138). The narrow
adjustment in this final rule reduces the potential to unintentionally
strand equipment used in VRF systems, while still achieving a prompt
transition for this equipment. Specifically, even with the adjustments
in this final rule, manufacturers and importers of components for new
VRF systems will be required in the near term (i.e., before January 1,
2026) to transition away from using HFCs or blends containing HFCs with
a GWP above 700 in those components, and developers and builders will
not be allowed to install new systems that use non-compliant regulated
substances beginning January 1, 2027 (or January 1, 2028, in limited
circumstances). This action does not affect the overall consumption of
HFCs because EPA does not anticipate a change in the amount of new VRF
equipment that will be manufactured or imported prior to January 1,
2026. Further discussion of environmental impacts can be found in
section III.D.
Finally, subsection (i)(4)(D) directs the Agency to factor in, to
the extent practicable, the remaining phasedown period for regulated
substances under the allowance allocation program. The reduction in the
supply of HFCs is an important factor supporting compliance dates and
GWP limits that are as stringent as feasible under the analysis of all
the (i)(4) factors. This rule will not materially affect the demand for
HFCs because it limits installations to components that are
manufactured or imported before January 1, 2026. The effect of this
rule is to extend the installations that EPA modeled to occur in 2025
over the two-year period of 2025 and 2026, with further limited
installations extending into 2027 for projects issued an approved
building permit prior to October 5, 2023, providing the other criteria
established in this rule are met.
G. Negotiated Rulemaking
Prior to proposing a rule, subsection (i)(2)(A) of the AIM 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 subchapter III of chapter 5 of
title 5, United States Code (commonly known as 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. If EPA does not use the negotiated rulemaking
process, subsection (i)(2)(C) requires the Agency to publish an
explanation of the decision not to use that procedure before
commencement of the rulemaking process. A 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 II.G. of the VRF Proposed Rule (89 FR 53378-53380; June 26,
2024).
IV. Judicial Review
The AIM Act regulations promulgated herein may be challenged in the
United States Court of Appeals for the District of Columbia Circuit.
Pursuant to section 307(b)(1) of the CAA, petitions for judicial review
of the AIM Act regulations must be filed in that court within 60 days
after the date notice of this final action is published in the Federal
Register.
The AIM Act provides that certain sections of the CAA ``shall
apply'' to the AIM Act and actions ``promulgated by the Administrator
of [EPA] pursuant to [the AIM Act] as though [the AIM Act] were
expressly included in title VI of [the CAA].'' 42 U.S.C. 7675(k)(1)(C).
Among the applicable sections of the CAA is section 307, which includes
provisions on judicial review. Section 307(b)(1) provides, in part,
that petitions for review must only be filed in the United States Court
of Appeals for the District of Columbia Circuit: (i) when the agency
action consists of ``nationally applicable regulations promulgated, or
final actions taken, by the Administrator,'' or (ii) when such action
is locally or regionally applicable, but ``such action is based on a
determination of nationwide scope or effect.''
The AIM Act regulations promulgated herein are ``nationally
applicable regulations'' within the meaning of CAA section 307(b)(1).
These regulations establish regulatory requirements applicable across
the entire United States to implement restrictions under subsection (i)
of the AIM Act. The regulations promulgated herein amend an existing
nationally applicable regulation by adjusting a compliance deadline for
certain systems. The deadlines in the amended regulation and the
conditions required to qualify for those extended deadlines are
nationally applicable to all affected entities. Accordingly, under
section 307(b)(1) of the CAA, petitions for judicial review of these
AIM Act regulations must be filed in the United States Court of Appeals
for the District of Columbia Circuit by February 10, 2025.
V. Statutory and Executive Order Reviews
Additional information about these statutes and Executive Orders
can be found at <a href="https://www.epa.gov/laws-regulations/laws-and-executive-orders">https://www.epa.gov/laws-regulations/laws-and-executive-orders</a>.
A. Executive Order 12866: Regulatory Planning and Review and Executive
Order 14094: Modernizing Regulatory Review
This action is not a significant regulatory action as defined in
Executive Order 12866, as amended by Executive Order 14094, and was
therefore not subject to a requirement for Executive Order 12866
review.
B. Paperwork Reduction Act (PRA)
This action does not impose an information collection burden under
the PRA because it does not contain any information collection
activities.
C. Regulatory Flexibility Act (RFA)
I certify that this action will not have a significant economic
impact on a substantial number of small entities under the RFA. In
making this determination, EPA concludes that the impact of concern for
this rule is any significant adverse economic impact on small entities
and that the Agency is certifying that this rule would not have a
significant economic impact on a substantial number of small entities
[[Page 100392]]
because the rule would relieve regulatory burden on the small entities
subject to the rule. This rule will prevent the stranding of components
used to install VRF systems. EPA therefore concluded that this action
will relieve regulatory burden for all directly regulated small
entities.
D. Unfunded Mandates Reform Act (UMRA)
This action does not contain an unfunded mandate of $100 million
(adjusted annually for inflation) or more (in 1995 dollars) as
described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or
uniquely affect small governments.
E. Executive Order 13132: Federalism
This action does not have federalism implications. It will not have
substantial direct effects on the states, on the relationship between
the national government and the states, or on the distribution of power
and responsibilities among the various levels of government.
F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments
This action does not have tribal implications as specified in
Executive Order 13175. It will not have substantial direct effects on
tribal governments, on the relationship between the Federal government
and Indian tribes, or on the distribution of power and responsibilities
between the Federal government and Indian tribes, as specified in
Executive Order 13175. Thus, Executive Order 13175 does not apply to
this action.
G. Executive Order 13045: Protection of Children From Environmental
Health and Safety Risks
EPA interprets Executive Order 13045 as applying only to those
regulatory actions that concern environmental health or safety risks
that EPA has reason to believe may disproportionately affect children,
per the definition of ``covered regulatory action'' in section 2-202 of
the Executive Order. This action is narrowly tailored to prevent the
stranding of certain air conditioning and heat pump equipment using VRF
technology while not affecting the demand for HFCs. Therefore, this
action is not subject to Executive Order 13045 because it does not
concern an environmental health risk or safety risk. Since this action
does not concern human health, EPA's Policy on Children's Health also
does not apply.
H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
This action is not subject to Executive Order 13211, because it is
not a significant regulatory action under Executive Order 12866.
I. National Technology Transfer and Advancement Act (NTTAA)
This rulemaking does not involve technical standards.
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
EPA believes that this type of action does not concern human health
or environmental conditions and therefore cannot be evaluated with
respect to potentially disproportionate and adverse effects on
communities with environmental justice concerns. This action is
narrowly tailored to prevent the stranding of inventory of air
conditioning and heat pump equipment using VRF technology while not
affecting the demand for HFCs.
Although this action does not concern human health or environmental
conditions, EPA identified and addressed environmental justice concerns
within the October 2023 Technology Transitions Rule (88 FR 73098;
October 24, 2023).
K. Congressional Review Act (CRA)
This action is subject to the CRA, and the EPA will submit a rule
report to each House of the Congress and to the Comptroller General of
the United States. This action is not a ``major rule'' as defined by 5
U.S.C. 804(2).
List of Subjects in 40 CFR Part 84
Environmental protection, Administrative practice and procedure,
Air pollution control, Chemicals, Imports, Reporting and recordkeeping
requirements.
Michael S. Regan,
Administrator.
For the reasons set forth in the preamble, the EPA amends 40 CFR
part 84 as follows:
PART 84--PHASEDOWN OF HYDROFLUOROCARBONS
0
1. The authority citation for part 84 continues to read as follows:
Authority: Pub. L. 116-260, Division S, Sec. 103.
Subpart B--Restrictions on the Use of Hydrofluorocarbons
0
2. Amend Sec. 84.54 by revising paragraph (c)(2) to read as follows:
Sec. 84.54 Restrictions on the use of hydrofluorocarbons.
* * * * *
(c) * * *
(2) Effective January 1, 2026, variable refrigerant flow systems
for use as residential or light commercial air-conditioning or heat
pumps, using a regulated substance, or a blend containing a regulated
substance, with a global warming potential of 700 or greater. Such new
variable refrigerant flow systems using a regulated substance, or a
blend containing a regulated substance, with a global warming potential
of 700 or greater may be installed prior to January 1, 2027, where all
specified components of that system are manufactured or imported prior
to January 1, 2026. Such new variable refrigerant flow systems using a
regulated substance, or a blend containing a regulated substance, with
a global warming potential of 700 or greater may be installed prior to
January 1, 2028, when an approved building permit issued prior to
October 5, 2023, specifies the use of a restricted regulated substance,
or blend containing a restricted regulated substance, in such system
detailed in that building permit, and where all specified components of
that system are manufactured or imported prior to January 1, 2026.
* * * * *
[FR Doc. 2024-29243 Filed 12-11-24; 8:45 am]
BILLING CODE 6560-50-P
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</html>Indexed from Federal Register on December 12, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.