HARDI Makes Statements at HFC Allocation Ruling

Last week, EPA hosted a public hearing on the proposed HFC allocation rule. Alex Ayers, our Government Affairs Director and Dale Norton, Sales Director for Meier Supply and Chair of our Refrigeration and Refrigerants Council, joined the hearing to make statements on behalf of our membership.

The EPA allocation rule establishes a baseline amount of HFCs, including refrigerants, that can be produced in a single year, the EPA then makes allowances to specific companies to determine how much those companies are allowed to produce or import. Please view their comments below:

Director of Government Affairs, Alex Ayers statement:

1. HARDI supports the end-goal of the American Innovation and Manufacturing Act and the Kigali Amendment to phase-down the production and use of HFC refrigerants in exchange for newer low-GWP refrigerants.

   1. The allocation rule is one of the most important parts of ensuring an orderly phase-down, however we are very concerned by some of the components in the allocation rule that go beyond the allowance system.

2. As purchasers of HFC refrigerants we want to comment on the allowance allocation system.

   1. EPA is seeking feedback on the time period used for determining allowances and we support using the full 2011-2019 range for determining allowances, however we also want to see equity in the system where bad actors, as have been identified by the Department of Commerce, should not be rewarded for improper actions during the selected time period.

   2. As purchasers we want to see a healthy market that ensures a fair price for products, and we believe EPA should correct for manipulation in determining allowances.

   3. We also want to see new entrants into the market and support the new entrant set aside to ensure continued competition.

3. HARDI also wants to see continued competition in the refrigerant market within our membership, for this reason we are very concerned by the proposals for requiring the use of refillable cylinders and the burdensome tracking process.

   1. This reduced competition within distribution could drive the entire market away from traditional wholesalers of HVACR equipment and into other industries that do not have the expertise in ensuring compliance with anti-venting regulations by end-users.

   2. HARDI believes requiring the use of refillable cylinders and tracking those cylinders through the supply chain goes beyond the authority granted by the AIM Act.

   3. EPA has authority in several areas that will have a greater impact on reducing venting and stopping illegal imports and we want to work with EPA to pursue possible proposals in these areas.

   4. HARDI fully believes the tracking and refillable cylinder requirements are misplaced by their inclusion in the allocation rule, and again we also believe these proposals skip many other more reasonable approaches to reducing the venting of HFC refrigerants into the atmosphere.

4. The allocation rule is simply the first of many rules to be promulgated regarding the phase down of HFCs.

   1. We want to work with EPA staff to ensure future rules look at key issues that must be addressed.

      1. Including ensuring proper certification and training of technicians and contractors, increasing recovery for reclaim, and ensuring a robust reclaim market is available to supply our wholesale distributor members as production and imports of new refrigerants are decreased and some HFCs are used as components in new refrigerant blends.

HARDI Refrigeration and Refrigerants Council statement:

1. The introduction of refillable cylinders will bring with it a number of added expenses that will potentially drive some smaller companies to exit the market.

   1. Increases in transportation/freight expenses. We’re now moving product in 2 directions rather than one.

   2. Increased warehousing expenses from additional storage and possible local code requirements. 

   3. Complications from storage requirements – We currently manage recovery cylinders, although on a smaller scale they have a long turn-around will require an unspecified amount of warehouse space.

   4. Handling and managing cylinder these deposits would add unnecessary complications. Each refrigerant manufacturer typically manages their own deposits for refillables. Keeping this organized between manufacturers would be a logistical mess. Cylinder deposits will also bring an unnecessary increase to company balance sheets. These are monies that have no return.

   5. The 20-month transition timeline is not only unrealistic but also not feasible. The refillable cylinder rule will open the door to industrial gas companies that utilize bulk tank and cylinder rental fee. This would displace product normally sold through a distribution that provides required support and training for a highly technical product.

2. The general consensus on the refrigerant tracking proposal is that it brings a massive burden with no benefit to the stated goals.

   1. If we’re looking to stop illegal imports – tracking can stop at the point of sale to the importer / producer to the distributor. We fail to see any benefit tracking individual cylinders through to end equipment installs. This creates an exponential added cost with no benefit.

   2. QR codes will have limited life on a cylinder becoming unreadable or lost. It’s not a reliable solution.  

In addition to HARDI’s testimony, many other groups including environmental advocates also testified, several of which supported EPA’s proposal to ban disposable cylinders and the cylinder tracking system. The next step in the proposed rule process is an open comment period that will close on July 6, 2021. Be on the lookout for future information on how to submit comments for the record.

If you have questions about the HFC phase down and transition, please submit them here. We want to ensure you have all of the information you need on this subject.

As always, feel free to reach out to Alex Ayers with any questions or concerns.