[Federal Register Volume 85, Number 52 (Tuesday, March 17, 2020)]
[Rules and Regulations]
[Pages 15258-15301]
[FR Doc No: 2019-28020]

Vol. 85

Tuesday,

No. 52

March 17, 2020

Part II

Environmental Protection Agency

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40 CFR Part 82

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Protection of Stratospheric Ozone: Adjustments to the Allowance System
for Controlling HCFC Production and Import, 2020-2029; and Other
Updates; Final Rule

Federal Register / Vol. 85 , No. 52 / Tuesday, March 17, 2020 / Rules
and Regulations

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 82

[EPA-HQ-OAR-2016-0271; FRL-10003-80-OAR]
RIN 2060-AU26

Protection of Stratospheric Ozone: Adjustments to the Allowance
System for Controlling HCFC Production and Import, 2020-2029; and Other
Updates

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The U.S. Environmental Protection Agency is allocating
production and consumption allowances for specific
hydrochlorofluorocarbons, a type of ozone-depleting substance, for the
years 2020 through 2029. These hydrochlorofluorocarbons may be used to
service certain equipment manufactured before 2020. The EPA is also
updating other requirements under the program for controlling
production and consumption of ozone-depleting substances, as well as
making edits to the regulatory text for improved readability and
clarity. These updates include revising the labeling requirements for
containers of specific hydrochlorofluorocarbons; prohibiting the
transfer of hydrochlorofluorocarbon allowances allocated through this
rulemaking into allowances for hydrochlorofluorocarbons that have
already been phased out; requiring the use of an electronic reporting
system for producers, importers, exporters, transformers, and
destroyers of controlled ozone-depleting substances; revising and
removing recordkeeping and reporting requirements; improving the
process for petitioning to import used ozone-depleting substances for
reuse, including by creating more flexibility for imports of used halon
from certain halon banks and exempting imports of aircraft bottles
containing halon 1211 for hydrostatic testing from the petition
process; creating a certification process for importing both used and
virgin ozone-depleting substances for destruction; and restricting the
sale of known illegally imported substances. This rule includes
clarifications to the certification requirements for methyl bromide
quarantine and preshipment uses. The EPA is also adding polyurethane
foam systems containing ozone-depleting chlorofluorocarbons to the list
of nonessential products. Lastly, the Agency is updating the definition
of ``destruction'' as used in the context of the production and
consumption phaseout and removing obsolete provisions.

DATES:
    Effective Dates: Amendatory instructions 9 and 11 are effective on
March 17, 2020. Amendatory instructions 2 through 8, 10 and 12 through
20 are effective April 16, 2020.
    Operational Dates: For operational purposes under the Clean Air
Act, the amendments to 40 CFR 82.15(g)(5) through (7) and 82.16 are
effective as of December 19, 2019 and the amendments to 40 CFR 82.3,
82.4, 82.9, 82.10, 82.12, 82.13, 82.14, 82.15(b), 82.15(g)(8), 82.23,
82.24, appendix K to subpart A of part 82, 82.62, 82.64, 82.66, 82.104,
82.106, and 82.270 are effective as of April 16, 2020.

ADDRESSES: The EPA has established a docket for this action under
Docket ID No. EPA-HQ-OAR-2016-0271. All documents in the docket are
listed on the www.regulations.gov website. Although listed in the
index, some information is not publicly available, e.g., confidential
business information 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. All other publicly available docket materials
are available electronically through www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Katherine Sleasman, Stratospheric
Protection Division, Office of Atmospheric Programs, Mail Code 6205T,
1200 Pennsylvania Avenue NW, Washington, DC 20460; telephone number
(202) 564-7716; email address<EMAIL_ADDRESS>You may also
visit the Ozone Protection website of the EPA's Stratospheric
Protection Division at https://www.epa.gov/ods-phaseout for further
information about reporting and recordkeeping, other Stratospheric
Ozone Protection regulations, the science of ozone layer depletion, and
related topics.

SUPPLEMENTARY INFORMATION:
    Effective Dates. Portions of this rule are effective less than 30
days from publication in the Federal Register. Section 553(d) of the
Administrative Procedure Act (APA), 5 U.S.C. chapter 5, generally
provides that rules may not take effect earlier than 30 days after they
are published in the Federal Register. This rule constitutes ``the
promulgation or revision of regulations under subchapter VI of [the
CAA] (relating to stratosphere and ozone protection)'' and as such it
is covered by the rulemaking procedures in section 307(d) of the Clean
Air Act (CAA). See CAA section 307(d)(1)(I). Section 307(d)(1) of the
CAA states that: ``The provisions of section 553 through 557 . . . of
Title 5 shall not, except as expressly provided in this section, apply
to actions to which this subsection applies.'' Thus, section 553(d) of
the APA does not apply to this rule. The EPA is nevertheless acting
consistently with the policies underlying APA section 553(d) in making
a portion of the revisions finalized in this rule effective
immediately, while the remainder of the rule will be effective 30 days
after publication. APA section 553(d) allows an effective date less
than 30 days after publication for any rule that ``grants or recognizes
an exemption or relieves a restriction'' (see 5 U.S.C. 553(d)(1)). The
purpose of the general rule in Section 553(d) of the CAA that 30 days
must be provided between publication and the effective date is to
``give affected parties a reasonable time to adjust their behavior
before the final rule takes effect.'' Omnipoint Corp. v. Fed. Commc'n
Comm'n, 78 F.3d 620, 630 (D.C. Cir. 1996); see also United States v.
Gavrilovic, 551 F.2d 1099, 1104 (8th Cir. 1977) (quoting legislative
history). However, when the Agency grants or recognizes an exemption or
relieves a restriction, affected parties do not need a reasonable time
to adjust because the effect is not adverse.
    The EPA has determined that portions of this rule that are
effective fewer than 30 days from publication in the Federal Register
relieve a restriction because those revisions allocate allowances for
the production and consumption of HCFC-123 and HCFC-124 for the years
2020 through 2029, giving affected entities greater flexibility to
produce and consume these HCFCs, and, because the allowances being
allocated include allowances for calendar year 2020, ensure the
allowances will be available to producers and consumers of these HCFCs
to allow for continued production and import of these HCFCs in 2020.
    The EPA has also determined that certain other portions of this
rule that are effective fewer than 30 days from publication in the
Federal Register grant or recognize an exemption or relieve a
restriction because these revisions would allow for the import and use
of HCFC-123 for servicing fire suppression equipment manufactured
before January 1, 2020, as well as allow the use of HCFC-123 as a
refrigerant in equipment manufactured on or after January 1, 2020 but
before January 1, 2021 under certain conditions. These revisions also
remove an obsolete requirement and thus relieve the

restrictions associated with that requirement.
    Accordingly, it is in keeping with the policy underlying the APA
for the regulatory amendments to 40 CFR 82.15(g)(5) through (7) and
82.16 to take effect immediately. Finally, this CAA section 307(d) rule
is promulgated upon signature and widespread dissemination. For
operational purposes under the CAA, the EPA is making the amendments to
40 CFR 82.15(g)(5) through (7) and 82.16 and the corresponding portions
of the preamble effective as of December 19, 2019 which is the date of
signature.
    Acronyms and Abbreviations. The following acronyms and
abbreviations are used in this document.

ACE/ITDS--Automated Commercial Environment/International Trade Data
System
ARFF--Aircraft Rescue and Fire Fighting
CAA--Clean Air Act
CBP--Customs and Border Protection
CDC--Centers for Disease Control and Prevention
CDX--Central Data Exchange
CFC--Chlorofluorocarbon
CFR--Code of Federal Regulations
CROMERR--Cross-Media Electronic Reporting Regulation
DOT--Department of Transportation
EIA--Environmental Investigation Agency
EPA--Environmental Protection Agency
FAA--Federal Aviation Administration
FR--Federal Register
GPEA--Government Paperwork Elimination Act
HARC--Halon Alternatives Research Corporation
HCFC--Hydrochlorofluorocarbon
HRC--Halon Recycling Corporation
HTSA--Harmonized Tariff Schedule of the United States Annotated
Montreal Protocol--Montreal Protocol on Substances that Deplete the
Ozone Layer
MOP--Meeting of the Parties
MT--Metric Ton
NFPA--National Fire Protection Association
ODP--Ozone Depletion Potential
ODS--Ozone-Depleting Substance
Parties to the Montreal Protocol, or Party--Nations and regional
economic integration organizations that have consented to be bound
by the Montreal Protocol on Substances that Deplete the Ozone Layer
QPS--Quarantine and Preshipment
RACA--Request for Additional Consumption Allowances
SNAP--Significant New Alternatives Policy
TEAP--Technology and Economic Assessment Panel
UNEP--United Nations Environment Programme

Table of Contents

I. General Information
    A. Does this action apply to me?
    B. What action is the Agency finalizing?
    C. What is the Agency's authority for this action?
    D. What are the incremental costs and benefits of this action?
II. Background
III. Final Rule and Response to Comments
    A. Allocation of HCFC Allowances for the Years 2020 Through 2029
    B. Allocation of HCFC-123 Consumption Allowances
    C. De minimis Exemption for the Use of HCFC-123 in Chillers
    D. Addition of Fire Suppression Servicing Uses to the HCFC
Phaseout Schedule
    E. Revisions to Labeling Requirements
    F. Allocation of HCFC-124 Production and Consumption Allowances
    G. Changes To Transfer of Allowance Provisions in 40 CFR 82.23
    H. Changes To Import Requirements
    I. Electronic Reporting and Updates to Other Provisions of the
Production and Consumption Control Program
    J. Addition of Polyurethane Foam Systems Containing CFCs to the
Nonessential Products Ban
    K. Updates to 40 CFR 82.3, 82.104, and 82.270 Related to
Destruction
    L. Removal of Obsolete Provisions in 40 CFR 82.3, 82.4, 82.9,
82.10, 82.12, 82.13, 82.16, and 82.24
    M. Other Comments Not Related to the Proposal
IV. Economic Analysis
V. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Executive Order 13771: Reducing Regulations and Controlling
Regulatory Costs
    C. Paperwork Reduction Act (PRA)
    D. Regulatory Flexibility Act (RFA)
    E. Unfunded Mandates Reform Act (UMRA)
    F. Executive Order 13132: Federalism
    G. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
    H. Executive Order 13045: Protection of Children From
Environmental Health and Safety Risks
    I. Executive Order 13211: Actions That Significantly Affect
Energy Supply, Distribution, or Use
    J. National Technology Transfer and Advancement Act (NTTAA)
    K. Executive Order 12898: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations
    L. Congressional Review Act

I. General Information

A. Does this action apply to me?

    You may be potentially affected by this final action if you
manufacture, process, import, or distribute into commerce certain
ozone-depleting substances (ODS) and mixtures. The North American
Industrial Classification System (NAICS) codes have been provided to
assist you and others in determining whether this action might apply to
certain entities. Potentially affected entities may include but are not
limited to:

 Air-Conditioning and Warm Air Heating Equipment and
Commercial and Industrial Refrigeration Equipment Manufacturing
(NAICS 333415)
 Air-Conditioning Equipment and Supplies Merchant
Wholesalers (NAICS 423620)
 Basic Chemical Manufacturing (NAICS 3251)
 Chlorofluorocarbon Gas Manufacturing and Import (NAICS
325120)
 Farm Product Warehousing and Storage (NAICS 493130)
 Farm Supplies and Merchant Wholesalers (NAICS 424910)
 Flour Milling (NAICS 311211)
 Fire Extinguisher Chemical Preparations Manufacturing
(NAICS 325998)
 Fruit and Nut Tree Farming (NAICS 1113)
 General Warehousing and Storage (NAICS 493130)
 Greenhouse, Nursery, and Floriculture Production (NAICS
1114)
 Hazardous Waste Treatment and Disposal, Cement
Manufacturing, Clinker (NAICS 327310)
 Hazardous Waste Treatment and Disposal, Incinerator,
Hazardous Waste (NAICS 562211)
 Industrial Gas Manufacturing (NAICS 325120)
 Materials Recovery Facilities (NAICS 562920)
 Other Aircraft Parts and Auxiliary Equipment Manufacturing
(NAICS 336413)
 Other Chemical and Allied Production Merchant Wholesalers
(NAICS 424690)
 Other Crop Farming (NAICS 1119)
 Pesticide and Other Agricultural Chemical Manufacturing
(NAICS 325320)
 Plumbing, Heating, and Air-Conditioning Contractors (NAICS
238220)
 Portable Fire Extinguishers Manufacturing (NAICS 339999)
 Postharvest Crop Activities (except Cotton Ginning) (NAICS
115114)
 Research and Development in Physical, Engineering, and Life
Sciences (NAICS 541710)
 Rice Milling (NAICS 311212)
 Soil Preparation, Planting, and Cultivating (NAICS 115112)
 Vegetable and Melon Farming (NAICS 1112)

    This list is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be affected by this
action. Other types of entities not listed in this section could also
be affected. If you have any questions regarding the applicability of
this action to a particular entity, consult the person listed under FOR
FURTHER INFORMATION CONTACT.

B. What action is the Agency finalizing?

    The EPA is finalizing a number of revisions to the production and
consumption control program for ODS \1\

in 40 CFR part 82, subpart A, which are divided into ``class I'' and
``class II'' substances. The EPA is finalizing, as proposed (see 84 FR
41510, August 14, 2019), the allocations of annual allowances for
hydrochlorofluorocarbon (HCFC)-123 and HCFC-124 for the years 2020
through 2029 to be used for servicing certain equipment manufactured
before January 1, 2020.
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    \1\ Generally speaking, when the EPA refers to ODS in this
preamble, it is referring to class I and/or class II controlled
substances. The terms ``controlled substance'' and ``ODS'' are used
interchangeably, as are the terms ``HCFC'' and ``class II
substance.'' Section 602 of the CAA contains initial lists of class
I and class II substances and addresses additions to those lists.
The current lists appear in appendices A and B in subpart A. The EPA
did not propose, nor is it finalizing, any changes to these lists in
this rulemaking. The list of class I substances includes
chlorofluorocarbons (CFCs), halons, carbon tetrachloride, methyl
chloroform, and methyl bromide. The list of class II substances
consists entirely of HCFCs.

                                      Table 1--Final HCFC-123 and HCFC-124 Allowance Allocation, 2020 through 2030
                                                                          [MT]
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                                                         2020     2021     2022     2023     2024     2025     2026     2027     2028     2029     2030
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HCFC-123..................  Consumption..............      650      650      650      570      490      410      330      250      170       90        0
                            Production...............        0        0        0        0        0        0        0        0        0        0        0
HCFC-124..................  Consumption..............      200      200      200      175      150      125      100       75       50       25        0
                            Production...............      200      200      200      175      150      125      100       75       50       25        0
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    For HCFC-123 and HCFC-124 allowances, the EPA identified a total
number of allowances to be allocated and then determined calendar-year
allowances equal to a percentage of each company's baseline.\2\
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    \2\ The percentage of baseline allowances to be allocated for
each HCFC is determined as follows: All the company-specific
consumption baselines (listed in the table at 40 CFR 82.19) are
added to determine the aggregate amount of consumption baseline. The
total number of consumption allowances to be allocated in a given
year are then divided by the aggregate amount of baseline
consumption allowances. The same process is followed to determine
the percentage for production allowances using the company-specific
baselines listed in the table at 40 CFR 82.17.
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    The EPA is revising subpart A, as proposed, to add servicing of
existing ``fire suppression equipment'' to the authorized uses of newly
produced or imported (i.e., virgin) quantities of HCFC-123 and HCFC-124
during the years 2020 through 2029. To facilitate compliance, the EPA
is finalizing, with minor modifications from the proposal, the labeling
requirements for containers of fire suppression agent containing HCFC-
123 in subpart E. To align with existing regulations \3\ that prohibit
the production and import of phased-out HCFCs, in particular HCFC-22,
the Agency is finalizing its proposal to modify the inter-pollutant
allowance transfer provisions authorized by section 607 of the CAA to
prohibit transfers into ODS that are already phased out. The Agency is
also finalizing as proposed the de minimis exemption from the use
prohibition in section 605(a) of the CAA to allow virgin HCFC-123 to be
used for the manufacture, through December 31, 2020, of chillers that
meet specific criteria.
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    \3\ The EPA is using the term ``existing regulations'' to
describe those regulations that were in place prior to this final
rule.
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    For changes to the import of ODS, the EPA is finalizing changes to
the process for petitions to import used ODS for reuse that will meet
the Agency's goals of reducing the burden on importers while ensuring
the Agency has adequate information to verify that the material being
imported is used, as well as making other modifications to this process
as proposed. Such changes require collection of additional information
when the EPA needs additional verification to make a determination
whether the material has been previously used in considering petitions
to import used ODS for reuse. Other changes remove data elements that
are no longer necessary. Of particular note, the Agency is: (1)
Reducing the information requirements when importing halon from a
``halon bank'' so long as the EPA receives an official letter from the
appropriate government agency in the country where the material is
stored that indicates that the halon is used and that the halon bank is
authorized to collect used halon; (2) allowing submission of an
application for an export license or an official government
communication from the appropriate government agency in the country of
export in lieu of the license itself; (3) clarifying that the Agency
will request additional information when additional verification is
needed before issuing a non-objection notice, and (4) providing
flexibility for the timing of import.
    The Agency is also finalizing changes, with limited modification
from the proposal, to establish a new certification process for the
import of ODS (used and virgin) for destruction in the United States.
This new process requires importers of ODS to provide less information
on the source of the material than when petitioning to import for
reuse, but requires more information on the chain of custody and
submission of verification that the imported material is destroyed
after destruction has occurred.
    The EPA is exempting imports of aircraft bottles containing halon
1211, a potent ODS used as a fire suppression streaming agent, for
hydrostatic testing from the import petition process to make it easier
for companies to service fire suppression equipment, which promotes
proper maintenance of these bottles and prevents the emission of halon
1211.
    The Agency is prohibiting the sale or offer for sale or
distribution of any ODS that the seller knows, or has reason to know,
has been imported into the United States without consumption allowances
or is otherwise not subject to an exemption.
    The EPA is also finalizing as proposed other updates to the
production and consumption control program, including requiring the use
of an electronic reporting system for producers, importers, exporters,
transformers, and destroyers of ODS in 40 CFR 82.3, 82.13, 82.14,
82.23, and 82.24 and clarifying the certification requirements for
methyl bromide quarantine and Preshipment (QPS) uses in 40 CFR 82.4 and
82.13. The EPA is also finalizing the addition of polyurethane foam
systems containing chlorofluorocarbons (CFCs) to the list of
nonessential products. This rule also updates provisions in 40 CFR
82.3, 82.104, and 82.270 related to destruction technologies and the
definition of ``destruction'' as used in the context of the production
and consumption phaseout. Lastly, the EPA is removing outdated and
obsolete provisions related to the allocation and transfer of class I
ODS credits and allowances, and the associated recordkeeping and
reporting requirements, that are no longer in use in subpart A.

C. What is the Agency's authority for this action?

    Several sections of the CAA \4\ provide authority for the actions
finalized by the EPA in this rulemaking. Section 603 provides authority
to establish monitoring and reporting requirements for ODS. Sections
604 and 605 provide authority to phase out production and consumption
of class I and class II substances, respectively, and to restrict the
use of class II ODS. Section 606 provides the EPA authority to
establish a more stringent phaseout schedule \5\ than that set out in
sections 604 and 605 based on (1) current scientific information that a
more stringent schedule may be necessary to protect human health and
the environment, (2) the availability of substitutes, or (3) to conform
to any acceleration under the Montreal Protocol on Substances that
Deplete the Ozone Layer (Montreal Protocol). Section 607 provides the
EPA with authority to issue production and consumption allowances and
to authorize allowance transfers, including inter-pollutant and inter-
company transfers. Section 610 directs the EPA to issue regulations
that identify nonessential products that release class I substances
into the environment (including any release during manufacture, use,
storage, or disposal) and prohibit any person from selling or
distributing any such product, or offering any such products for sale
or distribution, in interstate commerce. Section 611 requires the EPA
to establish and implement labeling requirements for containers of, and
products containing or manufactured with, class I or class II ODS.
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    \4\ The Clean Air Act provisions addressing stratospheric ozone
protection are codified at 42 U.S.C. 7671-7671q.
    \5\ The following documents are available in the docket: ``EPA.
1999. The Benefits and Costs of the Clean Air Act: 1990 to 2010,''
and ``EPA. 2018. Overview of CFC and HCFC Phaseout.''
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    The EPA's authority for this rulemaking is supplemented by section
114, which authorizes the EPA Administrator to require recordkeeping
and reporting in carrying out any provision of the CAA (with certain
exceptions that do not apply here). Section 301 further provides
authority for the EPA to ``prescribe such regulations as are necessary
to carry out [the EPA Administrator's] functions'' under the CAA.
Additional authority for electronic reporting comes from the Government
Paperwork Elimination Act (GPEA) (44 U.S.C. 3504), which provides:
``(1) for the option of the electronic maintenance, submission, or
disclosure of information, when practicable as a substitute for paper;
and (2) for the use and acceptance of electronic signatures, when
practicable.''
    Additional information on the EPA's authority to establish and
manage an allocation system for the phaseout of class I and class II
substances is provided in prior EPA actions (see 58 FR 65018, December
10, 1993 and 68 FR 2820, January 21, 2003).

D. What are the incremental costs and benefits of this action?

    The EPA considered the incremental costs and benefits associated
with this rulemaking, which primarily stem from changes to reporting
and recordkeeping requirements. This action requires electronic
submissions through the Agency's Central Data Exchange (CDX), creates a
streamlined Certification of Intent to Import ODS for Destruction,
exempts halon 1211 in aircraft bottles from the import petitions
process, and adds a recordkeeping requirement for certain distributors
of methyl bromide for QPS applications. The EPA estimates the overall
annual cost savings to reporters as a result of reductions in reporting
elements, streamlining forms, and added efficiencies to be
approximately $13,000 per year. The EPA also estimates a one-time cost
of approximately $4,000 to redesign labels on containers of fire
suppression agents. In addition, the EPA performed a screening analysis
of the impact on small businesses and found that there will be no
additional costs imposed on them. See the docket for the screening
analysis on small business. A more detailed discussion is included in
Section IV.

II. Background

    The United States was one of the original signatories to the
Montreal Protocol and ratified it on April 12, 1988. After
ratification, Congress enacted, and President George H.W. Bush signed
into law, the CAA Amendments of 1990, which included Title VI on
Stratospheric Ozone Protection, codified as 42 U.S.C. Chapter 85,
Subchapter VI, to ensure that the United States could satisfy its
obligations under the Montreal Protocol, in addition to establishing
complementary measures such as the national recycling and emission
reduction programs under section 608 and the labeling requirements
under section 611, among others.
    The 1992 Copenhagen Amendment \6\ to the Montreal Protocol created
the stepwise reduction schedule, subsequently revised, and the eventual
phaseout of HCFC consumption.\7\ The next milestone is a commitment to
reduce HCFC consumption by 99.5 percent below the baseline by January
1, 2020, with consumption for the years 2020 through 2029 restricted to
the servicing of refrigeration, air-conditioning, and fire suppression
equipment existing on January 1, 2020.\8\ This is referred to as the
``servicing tail.'' In November 2018, the Parties to the Montreal
Protocol agreed to add fire suppression equipment existing on January
1, 2020 to the list of permissible servicing tail uses.
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    \6\ Further information on the Copenhagen Amendment is available
at https://ozone.unep.org/treaties/montreal-protocol/amendments/copenhagen-amendment-1992-amendment-montreal-protocol-agreed.
    \7\ Consumption is defined in 40 CFR 82.3 as production plus
imports minus exports of a controlled substance (other than
transshipments or used controlled substances). Production is defined
in 40 CFR 82.3 as the manufacture of a controlled substance from any
raw material or feedstock chemical, but does not include: (1) The
manufacture of a controlled substance that is subsequently
transformed; (2) the reuse or recycling of a controlled substance;
(3) amounts that are destroyed by the approved technologies; or (4)
amounts that are spilled or vented unintentionally.
    \8\ See Montreal Protocol Article 2F, paragraph 6.
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    The United States has chosen to implement the Montreal Protocol
phaseout schedule of HCFCs on a chemical-by-chemical basis that employs
a ``worst-first'' approach focusing on the earlier phaseout of certain
chemicals with higher ozone depletion potential (ODP). In 1993, the EPA
established a phaseout schedule to eliminate HCFC-141b first, to
greatly restrict HCFC-142b and HCFC-22 next, and to subsequently place
restrictions on all other HCFCs ultimately leading to a complete
phaseout of all HCFCs by 2030 (see 58 FR 15014, March 18, 1993 and 58
FR 65018, December 10, 1993).
    The EPA designed the allowance program to implement the production
and consumption controls of the CAA and to facilitate an orderly
phaseout. To control production, the EPA allocated production
allowances to producers of specific ODS. To control consumption,\9\ the
EPA allocated consumption allowances to producers and importers of
specific ODS. In the allowance program, the EPA allocates ``calendar-
year'' or ``annual'' allowances to companies who expend them when they
produce or import ODS. The allowances can be traded among companies
both domestically and internationally (between countries that are
Parties to the Protocol), with certain restrictions. Allocation of
production and consumption allowances for most class

I substances (CFCs, methyl chloroform, carbon tetrachloride, and
halons) ended by 1996, and in 2005 for methyl bromide. Production and
consumption allowances for class II substances (HCFCs) will be reduced
to zero in 2030.\10\
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    \9\ See CAA section 601(6), 42 U.S.C. 7671(6); 40 CFR 82.3.
    \10\ See CAA section 605(b)(2), 42 U.S.C. 7671(d)(b)(2), and
Montreal Protocol Article 2F, paragraph 6.
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    Since the EPA is implementing the HCFC phaseout on a chemical-by-
chemical basis, it allocates and tracks production and consumption
allowances on an absolute kilogram basis for each chemical. An
allowance is the unit of measure that controls production and
consumption of ODS. The EPA allocates allowances for specific years;
they are valid between January 1 and December 31 of a given control
period (i.e., calendar year). In previous rulemakings, the EPA has
allocated calendar-year allowances equal to a percentage of the
baseline for the controlled substance for a given control period. A
calendar-year allowance represents the privilege granted to a company
to produce or import one kilogram (not ODP-weighted) of the specific
controlled substance. The EPA allocates two types of calendar-year
allowances--production allowances and consumption allowances. To
produce an HCFC, an allowance holder must expend both production and
consumption allowances. To import an HCFC, an allowance holder must
expend only consumption allowances. An allowance holder exporting HCFCs
for which it has expended consumption allowances may obtain a refund of
those consumption allowances upon submittal of proper documentation to
the EPA. Production and import of virgin HCFCs without allowances are
prohibited except for transformation, destruction, transshipments, or
heels (40 CFR 82.15(a) and (b)).
    Under the chemical-by-chemical phaseout schedule for HCFCs
established by EPA regulations, as discussed above, the EPA stopped
allocating production and consumption allowances for HCFC-141b as of
2003; for HCFC-225ca/cb as of 2015; and for HCFC-22 and HCFC-142b as of
2020. The Montreal Protocol, the CAA, and the EPA regulations under 40
CFR part 82, subpart A, limit the permissible uses of newly produced or
imported quantities of the remaining HCFCs (HCFC-123 and HCFC-124).
Section 605(a) of the CAA makes it unlawful, starting January 1, 2015
to introduce into interstate commerce or use any virgin HCFCs unless
they are used as a refrigerant in appliances manufactured prior to
January 1, 2020, or are listed as acceptable for use as a fire
suppression agent for nonresidential applications in accordance with
section 612 of the CAA. In addition, prior to November 2018, Article 2F
of the Montreal Protocol provided that the only permissible uses of
HCFCs after January 1, 2020 were for the servicing of refrigeration and
air-conditioning equipment existing on January 1, 2020. In a November
2018 adjustment to Article 2F, servicing of fire suppression and fire
protection equipment existing on January 1, 2020 was added as an
additional permissible use. Section 614(b) of the CAA also provides
that in the case of a conflict between any provision of the CAA and any
provision of the Montreal Protocol, the more stringent provision shall
govern. In sum, the combination of the CAA and the Montreal Protocol
establish that the permissible uses of HCFCs after January 1, 2020 will
be limited to servicing refrigeration, air-conditioning, and fire
suppression equipment existing on January 1, 2020.
    The EPA notes that absent specific use restrictions, HCFCs can
continue to be used after their production and import has ceased, for
example, to service existing equipment such as refrigeration and air-
conditioning systems. The EPA's intent has always been to facilitate a
smooth transition to alternatives, which means avoiding stranding
equipment that has not yet reached the end of its useful life. For
example, used HCFC-22 that is recovered and reclaimed, or virgin
material produced before the 2020 phaseout may continue to be used for
as long as it is available to service existing HCFC-22 systems.
    The Title VI phaseout regulations that reduce the number of
allowances allocated over time is a central component of the United
States' approach for protecting stratospheric ozone. The EPA limits how
much ODS enters the market to meet the CAA and Montreal Protocol
phaseout milestones. To smooth the phaseout steps, the EPA also takes
complementary actions that reduce the demand for ODS, encourage
recovery and recycling or reclamation of used ODS, allow for continued
servicing to avoid stranding existing equipment, and encourage
transition to alternatives that ``reduce overall risks to human health
and the environment.'' \11\
---------------------------------------------------------------------------

    \11\ CAA section 612, 42 U.S.C. 7671(k).
---------------------------------------------------------------------------

    The EPA's most recent action related to the phaseout of HCFCs was a
2014 rule that allocated production and consumption allowances for
HCFC-22, HCFC-142b, HCFC-123, and HCFC-124 for 2015-2019 (see 79 FR
64254, October 28, 2014). In that action, the EPA further implemented
the provisions in section 605(a) of the CAA that limit production and
consumption to servicing refrigeration and air-conditioning appliances
and for use in fire suppression applications. That document provides
additional discussion of the history of the phaseout of HCFCs.

III. Final Rule and Response to Comments

    This section describes the rationale for the final actions taken in
this rulemaking, summarizes and responds to the comments received on
the proposal, and explains differences between the proposed rule and
this final action.

A. Allocation of HCFC Allowances for the Years 2020 Through 2029

    This section describes the factors that the EPA considered in
developing its approach for issuing HCFC allowances for the next
regulatory period that extends from 2020 through 2029. Additional
relevant discussion is included in other portions of section III.
Specifically, section III.B. provides more information on allowance
allocations for HCFC-123 and section III.C. provides more information
on allowance allocations for HCFC-124. As explained below, the EPA's
allocation methodologies are consistent with the CAA, EPA regulations,
and the obligations of the United States under the Montreal Protocol,
and were supported by most commenters.
    HCFC-123 and HCFC-124 are the two HCFCs not already slated for
phaseout in the United States by 2020 under the ``worst-first
approach'' described in the previous section. These HCFCs are currently
used in the refrigeration, air-conditioning, and fire suppression
sectors. The use of newly produced or imported quantities of these
HCFCs is limited under the Montreal Protocol, the CAA, and the EPA's
regulations. The EPA is relying on its authority under section 605(c)
of the CAA to promulgate regulations phasing out the production and
restricting the use of class II substances, subject to previous
accelerations under section 606 (see 58 FR 65018, December 19, 1993 and
74 FR 66411, December 15, 2009). The EPA is making limited changes to
the provisions on production, consumption, and use of class II ODS to
provide flexibility for the years 2020 through 2029 consistent with the
requirements of section 605 of the CAA and

obligations of the United States under the Montreal Protocol.
    As stated in the proposal, the EPA considered a number of factors
when developing an approach to allocating allowances for HCFC-123 and
HCFC-124 for the years 2020 through 2029 including existing company-
specific production and consumption baselines listed in 40 CFR 82.17
and 82.19; the Agency's worst-first approach; the remaining permissible
uses of HCFCs under section 605(a) of the CAA and the availability of
alternatives for those uses; the quantity needed to meet the estimated
servicing demand for each permissible use; the estimated quantity of
HCFCs that will be available from recycling, reclamation, and potential
stockpiling in advance of the 2020 phaseout step; \12\ and the
transition that must occur by 2030 when HCFC production and consumption
will be phased out completely. Further, the Agency has considered
public comments on prior drafts of the report in the docket titled The
U.S. Phaseout of HCFCs: Projected Servicing Demand in the U.S. Air
Conditioning, Refrigeration, and Fire Suppression Sectors (2020-2030),
December 2019, hereafter referred to as the 2019 Final Servicing Tail
Report, and on the proposed allocation amounts and approaches, as
discussed below and in other parts of section III.
---------------------------------------------------------------------------

    \12\ EPA. 2019. The U.S. Phaseout of HCFCs: Projected Servicing
Demand in the U.S. Air Conditioning, Refrigeration, and Fire
Suppression Sectors (2020-2030).
---------------------------------------------------------------------------

    For HCFC-123 and HCFC-124 allowances, the EPA identified a total
number of allowances to be allocated. These amounts are presented in
Table 1 in Section I.B. above and match the proposed allowance
allocations. Each company's calendar-year allowances are then
calculated as a percentage of each company's baseline. Tables
identifying the percentage of baseline production and consumption
allowances allocated appear in 40 CFR 82.16(a). As noted, the EPA
considered several factors when developing an approach to allocating
allowances for HCFC-123 and HCFC-124. The first factor the EPA
considered was the existing limitation on permissible uses of HCFCs and
the availability of alternatives for those uses. Section 605(a) of the
CAA limited the use of HCFCs beginning January 1, 2015. The statute
provides that starting on that date, it shall be unlawful for any
person to introduce into interstate commerce or use any class II
substance unless such substance: (1) Has been used, recovered, and
recycled; (2) is used and entirely consumed (except for trace
quantities) in the production of other chemicals; (3) is used as a
refrigerant in appliances manufactured before January 1, 2020; or (4)
is listed as acceptable under the Significant New Alternatives Policy
(SNAP) program for use as a fire suppression agent for nonresidential
applications. As detailed in the 2019 Final Servicing Tail Report, the
EPA considered the estimated quantity of HCFC-123 and HCFC-124 that
will be available from recycling, reclamation, and potential
stockpiling in advance of the 2020 phaseout step. The EPA also
considered the availability of alternatives with the understanding that
it is typically best to service equipment with the same refrigerant or
fire suppression agent it was designed to use.
    The SNAP program continues to review and list alternatives for
applications that use HCFCs, including refrigeration and air-
conditioning and fire suppression applications that use HCFC-123.
Substitutes are listed under that regulatory program as acceptable,
unacceptable, or acceptable subject to use restrictions for specific
uses. Any future use of substitutes listed as acceptable subject to use
restrictions must comport with any conditions of the SNAP program, if
applicable. Currently, the SNAP program lists a number of acceptable
substitutes for HCFCs for use as a fire suppression agent for
nonresidential applications as well as in the refrigeration and air-
conditioning sector, making a variety of allocation options practicable
for the years 2020 through 2029.
    As noted previously, in addition to the statutory provisions in
section 605 of the CAA, the EPA established a ``worst-first approach''
in 1993 which addressed which HCFCs may be produced and consumed and
prioritized the phaseout of HCFCs based on their ODPs. These
regulations can be found in 40 CFR 82.16. Consistent with that
approach, the EPA is issuing allowances for production and consumption
of only HCFC-123 and HCFC-124, as these are the remaining HCFCs that
have not been phased out domestically.
    In 2020, the consumption cap of the United States for all HCFCs is
0.5 percent of the U.S. baseline, which equates to 76.2 ODP-weighted
metric tons that could be available for servicing.\13\ Under section
605(c) of the CAA, the consumption of HCFCs by any person is also to be
limited to the quantity consumed by that person during the baseline
year. The EPA has implemented this requirement by limiting the number
of annual allowances allocated for each chemical in 40 CFR 82.16. The
consumption baseline is 2,014 MT (40 ODP-weighted MT) of HCFC-123 and
2,396 MT (53 ODP-weighted MT) of HCFC-124. Section 605(c) of the CAA
thus prohibits the EPA from allocating allowances above that amount for
each chemical. Consumption allowances are allocated to the entities
listed in 40 CFR 82.19.
---------------------------------------------------------------------------

    \13\ 76.2 ODP-weighted metric tons is the equivalent of 3,810 MT
of HCFC-123, if completely allocated to HCFC-123, and 3,464 MT of
HCFC-124, if completely allocated to HCFC-124.
---------------------------------------------------------------------------

    In finalizing this action, the EPA considered the quantities of
HCFC-123 and HCFC-124 needed to service equipment manufactured before
2020. These estimates are discussed in the 2019 Final Servicing Tail
Report, which is available in the docket. The final report and
allocations are based on demand projections contained in the EPA's
Vintaging Model,\14\ recent market research, discussions with industry
on current HCFC uses and trends, the expected availability of
recovered, recycled/reclaimed, and reused material, and consideration
of comments offered on the report during the public comment period on
this rulemaking, as described below. The Agency made the April 2018
draft report available on its website and in the docket along with a
Notice of Data Availability (see 83 FR 19757, May 4, 2018) and
requested comment on the data and assumptions in the report. The EPA
did not receive any comments on the draft report. As a result of the
adjustment to Article 2F of the Montreal Protocol, the EPA revised the
2018 Draft Servicing Tail Report to reflect the demand for servicing
fire suppression equipment manufactured before January 1, 2020 and
disaggregated estimated demand for fire suppression to show estimated
demand for servicing compared to demand for new equipment. The EPA
consulted with industry on the estimate of future market demand for
HCFC[hyphen]123 fire suppression applications. At the time the 2019
Draft Servicing Tail Report was published in August 2019, total demand
(the manufacture of new equipment and the servicing of existing
equipment)

over the past several years had varied, but the average was
approximately 260 MT per year. The EPA expected the demand for fire
suppression servicing to be 35 to 90 MT per year based on projections
\15\ from the Vintaging Model and feedback from industry.
---------------------------------------------------------------------------

    \14\ The EPA's Vintaging Model estimates the annual chemical
emissions from industry sectors that historically used ODS,
including refrigeration and air-conditioning and fire suppression.
The model uses information on the market size and growth for each
end-use, as well as a history and projections of the market
transition from ODS to alternatives. The model tracks emissions of
annual ``vintages'' of new equipment that enter into operation by
incorporating information on estimates of the quantity of equipment
or products sold, serviced, and retired or converted each year, and
the quantity of the compound required to manufacture, charge, and/or
maintain the equipment.
    \15\ EPA. 2019. The U.S. Phaseout of HCFCs: Projected Servicing
Demand in the U.S. Air Conditioning, Refrigeration, and Fire
Suppression Sectors (2020-2030), Table 5.
---------------------------------------------------------------------------

    In the notice of proposed rulemaking for this action, the EPA
sought comment on all aspects of the 2019 Draft Servicing Tail Report,
including the projections for the fire suppression sector. The Agency
received comments on the total demand for fire suppression during the
comment period and has updated the report accordingly. The Agency also
updated the reclamation and consumption values in the report to reflect
the data reported for 2018.
    The last factor the EPA considered is the statutory 2030 phaseout
date for production and import of HCFCs, with limited exceptions, under
section 605(b)(2) and (c) of the CAA. In 2030, HCFC-123 and HCFC-124
must be phased out completely. As in prior phaseout steps for other
HCFCs, the Agency's intent is to accomplish the statutory 2030 phaseout
in a manner that achieves a safe and smooth transition to alternatives
without stranding equipment. The EPA's goal is to allow equipment
owners to continue servicing their HCFC-123 and HCFC-124 equipment
throughout its expected lifetime. Experience with the HCFC-22 phaseout
indicates that gradually decreasing allocation levels is a better
approach than an abrupt cessation of allowances at the phaseout date,
as it provides time and the right market signals for equipment owners
to plan investments and transition to alternatives while also fostering
recovery, recycling, and reclamation of HCFCs.

B. Allocation of HCFC-123 Consumption Allowances

    This section describes the EPA's proposal for annual HCFC-123
allocations, comments received on the proposal, the Agency's responses
to those comments, and the final allocations for HCFC-123 in 2020
through 2029.
    The Agency proposed to issue consumption allowances for HCFC-123
for years 2020 through 2022 equal to the estimated 2020 demand for
servicing existing refrigeration and air-conditioning and fire
suppression equipment. The EPA proposed to then decrease the number of
allowances issued in each subsequent year by an equal amount such that
there would be zero allowances in 2030. The EPA explained that this
allocation approach would meet the full estimated servicing demand in
2020 with newly imported HCFC-123 and the full estimated servicing
demand in 2030 with reclaimed HCFC-123. The EPA also explained that
allocating at the full estimated level of servicing demand in 2020 (650
MT \16\) for the years 2020 through 2022 would allow time for the
reclamation market to increase sales to the fire suppression sector.
Currently, the reclamation market primarily services the refrigeration
and air conditioning sector. Allocating above estimated demand for the
years 2021 and 2022 (see the demand estimates in the 2019 Final
Servicing Tail Report) will ensure supply for servicing existing
refrigeration and air-conditioning, and fire suppression equipment
while that transition occurs.
---------------------------------------------------------------------------

    \16\ Equivalent to 13 ODP-weighted MT.
---------------------------------------------------------------------------

    The EPA also sought comment on two alternative approaches for
determining how many HCFC-123 consumption allowances to issue. The
first alternative approach would have issued allowances equal to the
total modeled demand each year from 2020 through 2029 (which includes
servicing of existing equipment and the manufacture of new equipment
using reclaimed HCFC-123) minus the low end of the projection for
reclamation each year from 2020 through 2029. This contrasts with the
proposed allocation amounts which, as explained above, were not
directly based on demand for the manufacture of new equipment using
reclaimed HCFC-123 or the availability of reclaimed HCFC-123 and did
not subtract allocations based on projections for reclamation as was
proposed in Alternative 1. The Agency determined that reclaimed HCFC-
123 could meet the demand for new fire suppression equipment, while
also eventually providing HCFC-123 for servicing existing equipment.
See Table 8 of the 2019 Draft Servicing Tail Report for more discussion
of estimated reclamation.
    The EPA also sought comment on a second alternative approach under
which the EPA would issue 2,014 MT of HCFC-123 consumption allowances
for each of the years 2020 through 2029. This is equal to 100 percent
of the aggregate consumption baseline for HCFC-123 and is the maximum
allocation allowed under section 605(c) of the CAA. This approach would
allocate approximately half of the annual U.S. consumption cap allowed
under the Montreal Protocol for HCFC-123 (40.3 ODP-weighted MT per year
compared to 76.2 ODP-weighted MT).
    The EPA also proposed to issue zero production allowances for the
years 2020 through 2029 because no companies produced HCFC-123
production in the baseline years of 2005 through 2007 (see 74 FR 66431,
December 15, 2009). Under section 605(b)(1) of the CAA, it is unlawful
for any person to produce any class II substance in an annual quantity
greater than the quantity of such substance produced by such person
during the baseline year.
(1) Summary of and Response to Comments on the HCFC-123 Allocation
    The EPA received supportive comments on the proposed allocation
amount from Ingersoll Rand, a stationary air-conditioning manufacturer;
National Refrigerants, a refrigerant distributor; Halon Alternatives
Research Corporation (HARC), a non-profit trade association; and an
anonymous commenter. Several commenters state that the proposal
accurately reflects the amount of HCFC-123 needed for servicing
refrigeration and air-conditioning and fire suppression equipment, the
availability of reclaimed HCFC-123, and the amount of market demand.
Hudson suggests that the Agency should reduce the allocation below the
amounts in Alternative 1 and decrease each year as opposed to staying
static in the first three years. The Environmental Investigation Agency
(EIA), an environmental non-profit, also supports an allocation below
Alternative 1, and another comment from a private citizen does not
support an allocation for any HCFC production or consumption. American
Pacific, the manufacturer of Halotron[supreg] I, a fire suppression
agent blend containing HCFC-123, is supportive of allocating the
maximum amount allowable under the CAA, consistent with Alternative 2
in the proposal. These comments and the Agency's responses are
described in detail below.
(2) Comments in Support of a Lower Allocation
    The EPA received comments that were supportive of a lower
allocation. Hudson and EIA note that allocation levels could be lower
considering the supply of reclaimed material. Hudson specifically notes
that based on the 2019 Draft Servicing Tail Report, total demand for
HCFC-123 could be met with Alternative 1. These commenters suggest the
EPA should adopt a schedule that is more aggressive than

Alternative 1 because the reclamation industry can provide 300 MT of
HCFC-123 annually. They note that the reclamation industry has supplied
nearly 85 percent of the estimated 300 MT volume over the past two
years. Furthermore, Hudson states that the reclamation industry does
not need any transition time to enter the fire suppression market
because the industry is already servicing that market, and an
accelerated schedule will spur the growth of reclamation and ensure
more than adequate supply of HCFC-123 for both the refrigeration and
air-conditioning and fire suppression markets. EIA also supports a
lower allocation, noting that the supply of reclaimed HCFC-123 ranging
from 180 to 270 MT annually over the past several years could allow the
EPA to reduce allocations by 200 MT below expected demand to 450 MT,
and then reduce by 45 MT annually until reaching zero in 2030. Both
commenters note an allocation at or below Alternative 1 would be
beneficial to the reclamation industry and the environment.
    The EPA disagrees with commenters that the Agency should finalize a
lower allocation than proposed. Starting the allocation levels below
the estimated level of demand for servicing both fire suppression and
refrigeration and air-conditioning equipment could strand serviceable
fire suppression equipment or hinder the manufacture of new fire
suppression equipment in the near term. Even though reclaimed and
stockpiled HCFC-123 will be available in 2020, the primary concern is
whether there is enough HCFC-123 for both near and longer term fire
suppression and refrigeration and air-conditioning needs. Historically,
the refrigeration and air-conditioning sector utilized the majority of
that material as the historic practice of reclaimers and importers is
to sell the ODS to refrigerant distributors. Based on their comment, we
understand that Hudson may sell some reclaimed material to the fire
suppression sector. However, that does not appear to be the norm among
reclaimers. The Agency is concerned that decreasing the allocation too
soon might not provide time for a broader fire suppression sector
transition to reclaimed material for new systems as well as servicing.
This could lead to shortages of HCFC-123 for fire suppression uses
because, as discussed above, after January 1, 2020, recovered and
recycled or reclaimed HCFC-123, as well as material stockpiled prior to
2020, is the only material that can be used to meet demand for new fire
suppression equipment. Starting with allocation levels at the estimated
level of demand for servicing both fire suppression and refrigeration
and air-conditioning equipment means that imported HCFC-123 can be used
to satisfy the servicing needs for existing equipment, making it more
likely that reclaimed and stockpiled HCFC-123 will be available for the
manufacture of new fire suppression equipment.
    The EPA anticipates that the market for reclaimers and others
involved in recovering used ODS for fire suppression purposes will
change in the near future and may resemble the market for used halons
to some extent given both halons and the blend of HCFC-123 are used in
the fire suppression sector. While halon production and consumption
were phased out in the United States in 1994 and globally in 2010,
halon is still available for new equipment (e.g., for new aircraft and
Aircraft Rescue and Fire Fighting (ARFF) vehicles). Eventually,
domestic recovery and reclamation of HCFC-123 combined with imports of
used and/or recycled HCFC-123 should meet demand potentially similar to
how the demand for halon in the United States is met through transition
to alternatives, successful management of halon banks, and imports
under the petition process for used ODS (see 40 CFR 82.13(g)(2) and
82.24(c)(3)). Ultimately, the EPA anticipates that like other ODS
sectors, alternatives will be available for all applications that
currently use halons and HCFCs. However, the fire suppression sector
will benefit from the proposed level of allocation which recognizes the
near-term changes to the market will be underway in 2020-2022.
Therefore, it would not be prudent to base the allocation on the
maximum amount of estimated reclamation in the early years or to
decrease the allocation to zero too quickly. The fact the 2018 reclaim
amount (240 MT) was lower than the 2017 reclaim amount (270 MT) further
supports the Agency's determination that it is appropriate to provide
the proposed level of allocation which is higher than Alternative 1 for
the years 2020 through 2022. The EPA recognizes the necessity of
reclaimed HCFCs to meet demand entirely after 2030 and therefore the
final allocation level for HCFC-123 is less than the estimated level of
servicing demand starting in 2023. In the longer term, this allocation
sends appropriate market signals for a smooth and orderly transition by
reducing the allocation after 2022 and completely phasing out the
import of virgin HCFC-123 in 2030.
(3) Comments in Support of a Higher Allocation and Other Comments on
the Proposed Allocation
    American Pacific supports a higher initial allocation of allowances
and no decrease in allocation level. The commenter asks that the Agency
consider the total demand for Halotron[supreg] I and notes their
concern that the proposed allocation is too low and could strand
existing equipment. American Pacific suggests that the EPA allocate the
maximum allowable number of consumption allowances for HCFC-123--an
approach presented as Alternative 2 in the proposal. American Pacific
asserts that the allocation of 2,014 MT per year during the period 2020
through 2029 is warranted because Halotron[supreg] I has gained more
acceptance as a lower ODP replacement to halon 1211 in fire suppression
equipment, particularly in wheeled units. American Pacific states that
it will continue to manufacture new fire suppression equipment with
reclaimed and stockpiled material, and asserts that the estimated total
demand for fire suppression as represented in the 2019 Draft Servicing
Tail Report, at 260 MT is an underestimate. The commenter states that
the total demand was over 300 MT in 2018 and that they expect demand in
2019 to be an additional 10 percent higher. American Pacific also
asserts that the EPA's estimate of 90 MT of fire suppression servicing
demand is low. For these reasons, they argue that annual allocation
levels should start at 2,014 MT and be kept constant from 2020 through
2029.
    The EPA disagrees with the comment that an allocation higher than
what the Agency proposed is warranted. First, the EPA responds that the
increase in demand in 2018 and 2019 does not merit allocating at the
level the commenter requests. Read together, CAA sections 605 and 614
and Article 2F of the Montreal Protocol limit the permissible uses of
newly-produced and newly-imported HCFCs to servicing of refrigeration
and air-conditioning equipment existing on January 1, 2020, and to
servicing of fire suppression and fire protection equipment existing on
January 1, 2020, and listed as acceptable for use as a fire suppression
agent for nonresidential applications in accordance with section 612 of
the CAA. Thus, when determining allocations for HCFC-123 and HCFC-124,
the EPA focused on the amount of demand for these specific uses. Since
virgin material cannot be used to manufacture new fire suppression
equipment, it would not be reasonable for the EPA to base allocation
amounts

on demand for new equipment even if, as the commenter asserts, demand
for their product is higher than historic levels. Nonetheless, based on
the new information provided for 2018 sales, the EPA is revising the
total demand estimate in the 2019 Final Servicing Tail Report issued
with this rule. With 2018 demand being 300 MT, the five-year average
reflected in the 2019 Final Servicing Tail Report increases to about
270 MT. A further 10 percent increase in demand in 2019 would result in
a five-year average of approximately 280 MT. Furthermore, even if the
EPA did consider demand for manufacturing new fire suppression
equipment in addition to servicing demand, these figures, when added to
servicing demand for refrigeration and air-conditioning equipment (560
MT in 2020), would remain below an allocation of 2,014 MT per year.
Moreover, and as noted elsewhere in this section, consistently
allocating allowances above total servicing demand would not support a
smooth and orderly transition to alternatives, nor would it foster
recovery, recycling and reclamation, which is needed as of January 1,
2020 for manufacturing new fire suppression equipment and in the longer
term as HCFC-123 is phased out.
    The EPA also disagrees with the commenter's assertion that the
Agency's servicing demand estimates are too low. As part of the
development of the Servicing Tail Report, the Agency sought and
received input from a variety of key industry stakeholders. The EPA has
estimated total demand for HCFC-123 for fire suppression at 260 MT per
year in the two previous drafts of the Servicing Tail Report based on
average reported consumption of HCFC-123 for this use over the last
several years. In the last version of the report issued in August 2019,
the Agency included a servicing demand of 35 to 90 MT per year for fire
suppression. These estimates were based on the best available
information and during public review of those drafts, interested
stakeholders did not provide any evidence to contradict the Agency's
estimates of servicing demand. Recognizing the needs for fire
suppression servicing and American Pacific's comment, the Agency's
allocation for HCFC-123 is based on the high end of the range for
servicing demand for Halotron[supreg] I fire extinguishers manufactured
prior to 2020. The Agency's review of the data supported a number
within the 35 to 90 MT range, but generally closer to the bottom half
of that range. The commenter, however, provided no additional data to
support increasing the estimate for servicing demand. For all of these
reasons, the Agency concludes that it is appropriate to base the final
allocation on the servicing demand estimate from the Servicing Tail
Report as proposed.
    The commenter states that, based on their observations of the fire
suppression industry, if EPA issues allowances at 2,014 MT, it is not
likely that fire suppression equipment manufacturers and distributors
would wait until 2029 to transition or be unprepared for the 2030
phaseout. Similarly, the commenter states that it is not necessary to
provide a gradual decrease over time to guard against consumption
levels that are higher than demand. They assert that consumption will
always closely track demand given the sourcing of this material outside
of the United States and that there is no reason to create excess
inventory. American Pacific also comments that while there are multiple
unknowns, in discussion with the industry, the use of newly-imported
HCFC-123 should be less expensive than reclaimed HCFC-123. The EPA
responds that one of the Agency's goals when setting the allocation
level is to reach the 2030 phaseout step in a manner that achieves a
safe and smooth transition to alternatives while allowing equipment
owners to continue servicing their equipment within its expected
lifetime. Issuing allowances significantly above demand would likely
suppress the reclamation market and thus increase the likelihood of
stranding equipment in 2030 and beyond. In the near term, this would
adversely affect the availability of reclaimed HCFC-123 for the fire
suppression sector because reclamation will be the only source of HCFC-
123 for the manufacture of new fire suppression equipment once
stockpiles of material imported prior to 2020 are exhausted. In the
longer term, if the reclaim market is suppressed through 2029, there
will be less ability to respond to the 2030 phaseout when the primary
supply of HCFC-123 will be from the reclaim market. Ultimately this
could result in stranded equipment after 2029. Experience with prior
HCFC phaseout steps indicates that gradually decreasing allocation
levels is better than an abrupt increase or decrease to foster
recovery, recycling, and reclamation of HCFCs and an orderly transition
to alternatives. Gradually reducing HCFC allowances fosters a safe and
smooth transition and recycling/reclamation and is consistent with the
EPA's approach in previous HCFC allocation rules (see 74 FR 66412,
December 15, 2009; 76 FR 47451, August 5, 2011; 78 FR 20004, April 3,
2013; and 79 FR 64254, October 28, 2014).
    Additionally, the commenter focuses on the fire suppression market
exclusively and does not take into account the broader market for HCFC-
123, including needs for servicing refrigeration and air-conditioning
equipment, which will have servicing needs well beyond 2029. While the
commenter asserts that it is not likely that the fire suppression
industry would be unprepared for the 2030 phaseout if the EPA issues
allowances at 2,014 MT, the commenter does not address the broader
servicing market for HCFC-123, where refrigeration and air-conditioning
account for significantly more demand. Based on other comments, the
refrigeration and air-conditioning industry is supportive of a gradual
reduction in allowances starting from 2020 estimated servicing demand
for all allowed uses.
    In response to the comment about costs, the Agency has found that
the price of HCFCs is not directly correlated to the amount of
allowances allocated. For example, experience with the phaseout of
HCFC-22 indicates that there can be temporary price changes but the
wholesale price has fallen as the allocation gradually decreased over
the past five years. The phaseout of HCFC-22 may not be identical to
the remaining phaseout step for HCFC-123 given the addition of the fire
suppression sector. The price to import and/or produce material does
not necessarily match the wholesale price for various HCFCs, so there
is no guarantee of a lower price from imported product versus reclaimed
product. Supporting this point, the EPA understands from its
interactions with reclaimers that they tend to sell their reclaimed
product at or near the market price for virgin HCFCs. The Agency cannot
conclude, based on the comments received, whether there is a difference
in the price of HCFC-123 when sold for fire suppression compared to
when it is sold as a refrigerant. The EPA agrees with the commenter
that if the Agency allocated allowances well below estimated servicing
demand, it is possible that prices would increase in the near term.
However, that is not what the Agency is finalizing in this rule.
Instead, this rule issues allowances above estimated demand for three
years specifically to allow reclaimers time to shift their market to
the fire suppression sector before reducing the number of allowances.
    The commenter further states that the proposed allocation would
strand existing fire extinguishers including

wheeled units costing between $125 to $4,000 for the telecommunications
industry and for military applications. The EPA responds that the
proposed allocation being finalized in this action accounts for the
servicing of existing fire extinguishers. As discussed earlier in this
section, the Agency estimated the demand for servicing Halotron[supreg]
I fire extinguishers manufactured prior to 2020 to be between 35 to 90
MT per year. This estimate is based on industry feedback on the two
draft Servicing Tail Reports that the Agency made available for public
comment. The final allocation includes 90 MT based on the servicing
demand for servicing fire suppression equipment and the commenter
provided no data to support increasing the Agency's estimate for
servicing demand or that the proposed allocation amount would strand
existing inventory. As described in the 2019 Final Servicing Tail
Report accompanying this action, the Agency estimates that the
allocation finalized in this rule combined with reclaimed and recycled
HCFC-123 will provide sufficient HCFC-123 to allow for servicing of
refrigeration, air-conditioning, and fire suppression equipment, as
well as the manufacture of new fire suppression equipment. The EPA
finds no support for the assertion that the proposed allocation would
strand any existing fire extinguishers.
    The EPA further notes that the fire suppression sector has a long
history of using recovered and recycled/reclaimed ODS for both
servicing and new equipment. There has been continuing demand for
halons in newly-manufactured fire suppression equipment since halons
were phased out in the United States in 1994. This demand for halons
has been satisfied with recycled/reclaimed halons, ensuring equipment
can be serviced and investments are not stranded.
    Lastly, American Pacific asks the EPA to consider an updated ODP of
0.0098 for the purposes of analysis of environmental impact and
comparison with alternatives to HCFC-123 in the fire suppression sector
such as halon 1211, hydrofluorocarbons (HFCs), and fluoroketone based
agents. The EPA responds that the Agency did not propose and is not
finalizing any changes to the listed ODP for HCFC-123. The ODP for
HCFC-123 as listed in Annex C to the Montreal Protocol and in appendix
A to 40 CFR part 82, subpart A is 0.02.

C. De Minimis Exemption for the Use of HCFC-123 in Chillers

    The EPA proposed to create a de minimis exemption from the use
prohibition in section 605(a) of the CAA to allow virgin HCFC-123 to be
used for the manufacture of chillers that meet specific criteria
through December 31, 2020. The EPA received two comments on this
proposal, from Ingersoll Rand and The Alliance, an industry coalition
of fluorocarbon producers and users, both in support of the de minimis
exemption. For the reasons cited in the proposal and reiterated in this
document, the Agency is finalizing the de minimis exemption from the
use prohibition in section 605(a). This exemption aims to address a
unique situation that has arisen because certain construction projects
that ordered HCFC-123 chillers for installation in 2019 are behind
schedule and the chillers may not be installed by the end of 2019. The
EPA understands that many of the chillers and the virgin HCFC-123 to
charge them are already on site at these construction projects and that
companies purchased virgin HCFC-123 for charging these chillers with
the expectation that they would be installed in 2019. Due to
construction delays, the final steps in the manufacture of these
chillers (including charging with refrigerant) may not occur until
after January 1, 2020. Section 605(a) prohibits the introduction into
interstate commerce or use of any class II substance with limited
exemptions. Use of a virgin class II substance ``as a refrigerant'' is
allowed only ``in appliances manufactured prior to January 1, 2020.''
The EPA is creating a de minimis exemption from this prohibition to
allow virgin HCFC-123 to be used for the manufacture of chillers that
meet specific criteria through December 31, 2020. This exemption will
only apply if the HCFC-123 chiller unit and other components were ready
for shipment to a construction location and the components were
specified for installation under a building permit or contract dated on
or before the date of signature of the proposed rule (July 24, 2019),
the HCFC-123 was imported prior to 2020 and is in the possession of the
entity that will complete the manufacture of the appliance, and all
refrigerant added to that appliance after December 31, 2020 is used,
recovered, or recycled/reclaimed.
(1) Background
    As described in Section II of this document, the CAA restricts
introduction into interstate commerce and use of HCFCs over time with
limited exceptions. The CAA prohibits the use of HCFCs to manufacture
new appliances effective January 1, 2020, unless the HCFCs are used,
recovered, and recycled. The CAA also phases out production and
consumption of HCFCs, with an interim milestone in 2015 and the full
phaseout in 2030. Additionally, the Montreal Protocol phases out the
production and consumption of HCFCs as of January 1, 2020, while
allowing a limited amount of new production and consumption for
servicing existing refrigeration and air-conditioning appliances,
servicing existing fire suppression and fire protection equipment, and
other uses not relevant for the U.S. market. The EPA codified the CAA
use and interstate commerce restrictions related to refrigeration and
air-conditioning appliances at 40 CFR part 82, subpart A, in prior
rulemakings.
    As defined in the regulations, the term manufactured \17\ ``for an
appliance, means the date upon which the appliance's refrigerant
circuit is complete, the appliance can function, the appliance holds a
full refrigerant charge, and the appliance is ready for use for its
intended purposes[.]'' Appliances used in commercial refrigeration,
such as large chillers, and industrial process refrigeration typically
involve more complex installation processes, which may require custom-
built parts, and typically are manufactured on-site. Appliances, such
as these, that are field charged or have the refrigerant circuit
completed on-site, regardless of whether additional refrigerant is
added or not, are manufactured at the point when installation of all
the components and other parts are completed, and the appliance is
fully charged with refrigerant and able to operate.
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    \17\ The definition of ``manufactured'' can be found at 40 CFR
82.3. See also 74 FR 66439.
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    The EPA learned that a limited number of HCFC-123 chillers
specified for installation in 2019 may not be fully manufactured prior
to January 1, 2020. The key uncharged components, in particular the
chiller units themselves, were ready for shipment to the construction
location in the first half of 2019. However, for some delayed projects,
even though the units and refrigerant may already be on-site, the final
steps to manufacture the appliance, in particular charging the chiller
with refrigerant, may not occur until 2020. Thus, if no regulatory
relief is provided, the virgin HCFC-123 could not be used to charge
these chillers even if it has already been purchased and is on site.
(2) De Minimis Exemption
    To provide flexibility to complete the manufacture of HCFC-123
chillers from components that are ready for shipment to a construction
location, the EPA is creating a limited de minimis exemption

to the use prohibition in 605(a). This exemption allows HCFC-123 to be
used for the initial charging of certain chillers manufactured between
January 1, 2020 and December 31, 2020 provided they meet specific
conditions. The exemption will only apply if the HCFC-123 chiller unit
and components are ready for shipment to a construction location and
the components were specified for installation under a building permit
or contract dated on or before the date of signature of the proposed
rule (July 24, 2019), the HCFC-123 was imported prior to 2020 and is in
the possession of an entity involved in the manufacture of the
appliance, and all refrigerant added to that appliance after December
31, 2020 is used, recovered, or recycled/reclaimed.
    The EPA has implied authority to establish a de minimis exemption
from the section 605(a) use restriction. The United States Court of
Appeals for the District of Columbia Circuit has recognized that
``[u]nless Congress has been extraordinarily rigid, there is likely a
basis for an implication of de minimis authority to provide exemption
when the burdens of regulation yield a gain of trivial or no value.''
Alabama Power Co. v. Costle, 636 F.2d 323, 360-61 (D.C. Cir. 1980).
Further discussion of this authority can be found in the preamble to
the proposed rule.
    The EPA concludes that it has authority to provide flexibility by
creating a de minimis exemption to the 605(a) use prohibition. Section
605(a) is not extraordinarily rigid and is ambiguous as it does not
speak directly to the circumstance presented here. In addition,
providing flexibility is consistent with the statutory intent.
    The EPA does not view section 605(a) as ``extraordinarily rigid.''
Title VI of the CAA can generally be summarized into three principal
areas: the phaseout of the production and import of ODS (sections 602-
607); the reduction of emissions of ODS via various means such as
required servicing practices, restrictions on sale and distribution of
products, and consumer education (sections 608-611); and the transition
to alternatives that reduce overall risk to human health and the
environment (section 612). Section 605 specifically addresses the
phase-out of production and consumption of class II substances. For
class II substances, section 605 established specific restrictions
beginning in 2015 on use, introduction into interstate commerce and
production, while establishing a complete phaseout of HCFCs in 2030.
Congress' overall approach to the class II phaseout was generally less
rigid than its approach to the class I phaseout, given the longer
timeframes and the presence of only one intermediate reduction step
(see section 605(b)). Given this context, the EPA does not view section
605(a) as ``extraordinarily rigid.''
    The EPA finds that section 605(a) is ambiguous as it does not speak
directly to the circumstance presented for the situation described
above. Section 605(a) does not explicitly address whether virgin HCFC-
123 may be used in a chiller where all the chiller components were
ready for shipment to a construction site before January 1, 2020 but
where the initial charge is not completed until after January 1, 2020.
Because the statute does not specify when manufacture is complete, it
does not unambiguously prohibit the use of virgin HCFC-123 for the
initial charge of chillers where all the chiller components were ready
for shipment before January 1. 2020. Thus, the EPA has authority to
resolve the ambiguity through regulation and determine whether the use
prohibition should apply in this circumstance.
    The EPA views the de minimis exemption as consistent with statutory
intent. The flexibility from the exemption will ensure the orderly
phaseout of ODS and will be consistent with the past practice of
preventing the stranding of existing appliances without being counter
to the three principal areas of Title VI described previously. First,
it will not contribute to additional production and consumption of
HCFCs and thus will not inhibit the United States from reaching the CAA
phaseout date of 2030 or complying with the Montreal Protocol. Second,
these chillers will continue to be subject to the servicing practices
and labeling requirements applicable to all ODS appliances. Third, it
will not slow the transition to alternatives. As discussed below, the
components to assemble these chillers have already been made ready for
shipment and they have been purchased for installation. While these
chillers may one day be retrofitted to an alternative, such as R-514A,
Title VI does not require the retrofitting of existing equipment.
    In addition, rigid application of section 605(a) of the CAA in the
unique circumstances presented here would ``yield a gain of trivial or
no value.'' Envtl. Def. Fund Inc. v. EPA, 82 F.3d 451, 455 (D.C. Cir.
1996) (internal quotation marks omitted). The EPA concludes that there
will be no environmental benefit associated with rigidly applying
605(a). First, because the HCFC-123 used to initially charge these
chillers must have been imported prior to 2020, existing allowances
will not be expended. There will therefore not be any increase in U.S.
consumption compared with the current allowed level of consumption for
2019. Second, this exemption will not encourage the manufacture of
additional HCFC-123 chiller units because factory operations for making
them have already ceased and the exemption will not permit such
operations for additional units.
    The number of chillers eligible for this exemption is also
anticipated to be small. Based on consultations with industry, the EPA
understands that the manufacture of up to five percent of the chillers
expected to be installed in 2019 could be delayed beyond January 1,
2020. The EPA expects the number of HCFC-123 chillers to be affected is
33. As detailed in the 2019 Final Servicing Tail Report, the EPA
assumes an average charge size for an HCFC-123 commercial chiller is
approximately 445 kg. Thus, the EPA estimates about 15 MT of HCFC-123
could be needed to complete the manufacture of chillers in 2020. This
will equate to about 0.4 percent of all HCFCs allocated in 2019.
    Beyond the HCFC-123 needed for the initial charge, the EPA has
analyzed whether the exemption could increase the servicing demand for
HCFC-123 in the years 2020 through 2029 compared with not providing
this flexibility. As an initial matter, the modeled servicing demand
described in the 2019 Final Servicing Tail Report includes the demand
from the appliances affected by this exemption. The report assumes that
chillers expected to be manufactured in 2019 are manufactured in that
year. Because the chillers that will be affected by this exemption were
anticipated to be manufactured in 2019, they will not increase expected
demand. This exemption will not alter the requirement that used,
recovered, or recycled/reclaimed HCFC-123 be used for all subsequent
servicing events on these chillers. Further, HCFC-123 chillers have
very low leak rates, and thus the amount of replacement refrigerant
will be low. Therefore, the EPA does not anticipate that future
servicing demand will affect the market for reclaimed HCFC-123 in a
manner that the EPA has not already considered when issuing allowance
allocation amounts for 2020 through 2029.
    The exemption also contains numerous constraints that limit its
potential impact. The exemption from the prohibition in section 605(a)
of the CAA on use in appliances manufactured before January 1, 2020
will apply only for one year and only in a limited set of
circumstances. It will apply only if the refrigerant used to
manufacture the

appliance was in the possession of an entity involved in the
manufacture of the appliance and imported prior to January 1, 2020. In
addition, any servicing of the equipment after December 31, 2020 will
need to be done with HCFC-123 that is used, recovered, or recycled/
reclaimed. Further, the exemption will not allow for the manufacture of
additional chillers beyond those for which the components had already
been made ready for shipment to a construction location and the
components were specified for installation under a building permit or
contract dated on or before July 24, 2019, the date of signature of the
proposed rule.
    The de minimis exemption is consistent with past EPA practice in
this program. The EPA, on past occasions, has provided limited
flexibility in applying use restrictions and phaseout dates. The Agency
has typically aimed to prevent the stranding of appliances and past
investments while phasing out controlled substances. For example, a
concern similar to the one at issue here came to the EPA's attention in
2009 when commenters requested a limited waiver from a regulatory
prohibition on manufacturing HCFC-22 appliances that was to begin in
2010 (see 74 FR 66412, 66440-41, December 15, 2009). Commenters
identified scenarios in which HCFC-22 appliances had been scheduled for
use in projects, such as construction projects, prior to January 1,
2010, but in which, for a variety of reasons, their manufacture could
not be completed prior to January 1, 2010. The EPA agreed to grant
flexibility by providing an exemption from the regulatory deadline to
allow HCFC-22 to be used as refrigerant in appliances manufactured
between January 1, 2010 and December 31, 2011, if their components were
manufactured prior to January 1, 2010, and were specified in a building
permit or contract dated before January 1, 2010, for use on a project.
The EPA explained that providing flexibility would not result in
additional consumption of HCFCs because companies had previously
produced or imported the HCFCs for use in the manufacture of
appliances, and that providing flexibility did not affect long-term
projections of servicing needs because this equipment was already
planned to be installed in the previous year (see 74 FR 66441, December
15, 2009).
    The EPA also previously created a de minimis exemption from the
statutory prohibition on the use of previously-imported virgin HCFCs.
In a 2014 rule, the EPA created an exemption from the use prohibition
in section 605(a) of the CAA to provide limited flexibility regarding
the use of HCFCs for sectors other than refrigeration and air-
conditioning and fire suppression. For example, the EPA allowed
continued use of a small amount of material that was previously
produced and/or imported using the appropriate allowances and in
inventory prior to the CAA's 2015 use restriction for solvents. The EPA
determined that the continued use of previously produced/imported
material was consistent with past practices, that production and
consumption would not be higher than that already allowed for, and that
the environmental effect would be limited (see 79 FR 64254, October 28,
2014).
    The EPA also recognizes that for these specific circumstances,
there could be negative impacts if the Agency does not provide
flexibility. Without the flexibility, chiller manufacturers would not
be able to use virgin HCFC-123 to initially charge and install new
equipment even though that virgin HCFC-123 is already on-site. Granting
flexibility allows the installation to continue using the HCFC-123
available and prevents further delay of the installation.
    For the reasons described above, the EPA is finalizing the proposal
to establish a de minimis exemption to the use restriction in section
605(a) of the CAA and to revise 40 CFR 82.15(g)(5)(iii) to allow virgin
HCFC-123 to be used for the initial charging of certain chillers
manufactured between January 1, 2020 and December 31, 2020 provided
they meet the conditions specified previously.

D. Addition of Fire Suppression Servicing Uses to the HCFC Phaseout
Schedule

    The EPA is finalizing the proposal to allow for the continued
production, consumption, introduction into interstate commerce, and use
of HCFCs for servicing fire suppression equipment manufactured before
January 1, 2020 consistent with section 605 of the CAA and the November
2018 adjustment to Article 2F of the Montreal Protocol. Specifically,
the EPA is modifying 40 CFR 82.15(g) and 82.16(e) to allow for HCFC-123
to be produced and imported, as well as introduced into interstate
commerce and used, during the years 2020 through 2029, to service fire
suppression equipment existing on January 1, 2020,\18\ so long as it is
being used as a streaming agent listed as acceptable for use or
acceptable subject to narrowed use limits for nonresidential
applications in accordance with the section 612 SNAP regulations. The
EPA received four comments from American Pacific, HARC, Hudson, and The
Alliance, which were all supportive of this proposal.
---------------------------------------------------------------------------

    \18\ This will expand the permitted uses under 40 CFR 82.15 and
82.16, which also allow for use and introduction into interstate
commerce, as well as production and consumption, of HCFCs for use as
a refrigerant in equipment manufactured before January 1, 2020.
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    Under the Montreal Protocol, the United States has committed to
phase out HCFC production and consumption by January 1, 2020, other
than production and consumption for certain narrowly defined uses in an
amount up to 0.5 percent of baseline annually.\19\ Servicing
refrigeration and air-conditioning equipment existing on January 1,
2020 had been the only recognized use under the Montreal Protocol. In
2018, the United States proposed adjusting the Montreal Protocol to add
servicing of fire suppression equipment existing on January 1, 2020, as
another allowed use. That proposal was based on extensive stakeholder
consultation on HCFC needs during the years 2020 through 2029 and the
EPA's analysis of available information, including the 2018 Draft
Servicing Tail Report. In November 2018, the Parties to the Montreal
Protocol decided to adopt an adjustment that, among other things,\20\
added to Article 2F ``the servicing of fire suppression and fire
protection equipment'' existing on January 1, 2020, as a permissible
use for newly produced or imported HCFCs.\21\ While the term ``fire
protection'' can be understood in some contexts to refer broadly to all
measures taken to protect persons or property from harm, the terms
``fire protection'' and ``fire suppression'' have been used
interchangeably in the Montreal Protocol context to refer to
suppressing or putting out fires through the use of chemical
substances. Section 605(a) of the CAA uses the term ``fire
suppression.'' In addition, the EPA views ``fire suppression'' as the
more precise term in the context of regulating ODS. The adjustment
adopted in

November 2018 entered into force on June 21, 2019.\22\
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    \19\ As noted previously, the term production does not include
the manufacture of a controlled substance that is subsequently
transformed (i.e., feedstock material) and as such the production
phaseout is not applicable to ODS manufactured for that purpose.
    \20\ The adjustment adopted at the Meeting of the Parties in
November 2018 included an essential use provision as well as the
addition of two niche applications under the 0.5 percent cap. In
this action, the EPA is making revisions to its regulations to
address the addition of fire suppression. This rule does not take
any action with regard to the other elements of the adjustment.
    \21\ Decision XXX/2 and Annex I of the ``Compilation of
decisions adopted by the parties,'' adjust Article 2F of the
Montreal Protocol.
    \22\ The final meeting report from the 30th Meeting of the
Parties and Decision XXX/2 adopting the adjustment are included in
the docket for this rulemaking.
---------------------------------------------------------------------------

    The EPA is modifying 40 CFR 82.16(e)(2) to permit the import of
HCFC-123 for servicing fire suppression equipment manufactured before
January 1, 2020. While the modified 40 CFR 82.16(e)(2) identifies the
permissible uses for which HCFC-123 may be imported, this regulatory
provision does not govern the allocation of production allowances for
HCFC-123. Section 82.16(e), which establishes limits on the production
and import of HCFC-123 starting on January 1, 2020, provides that HCFC-
123 may not be produced or imported for any purposes other than the
listed permissible uses. The revision adds ``use as a fire suppression
streaming agent in equipment manufactured before January 1, 2020 and
listed as acceptable for use or acceptable subject to narrowed use
limits for nonresidential applications'' to the list of permissible
uses. This revision allows for this additional use in the years 2020
through 2029.
    The EPA is also adding a new paragraph after 40 CFR 82.15(g)(4) to
ensure consistency with the change to 40 CFR 82.16(e)(2). Section
82.15(g) establishes limits on the introduction into interstate
commerce and use of certain HCFCs at certain dates in accordance with
the worst-first approach discussed previously. Section 82.15(g)(4)(i)
establishes limits that apply to many HCFCs including HCFC-123 and
HCFC-124, effective January 1, 2015.\23\ The EPA is adding a new
paragraph after 40 CFR 82.15(g)(4) that repeats the limits in 40 CFR
82.15(g)(4)(i) to clarify the permissible uses of HCFC-123 and HCFC-124
produced or imported after January 1, 2020. Consistent with the
restrictions on production and import in the Montreal Protocol (as
modified through the adjustment adopted in 2018) and 40 CFR 82.16, with
regard to fire suppression, HCFC-123 produced or imported after January
1, 2020, may only be used for servicing fire suppression equipment
manufactured before January 1, 2020. Existing inventories of HCFC-123
produced or imported prior to January 1, 2020, may continue to be used
to manufacture and service new fire suppression equipment after January
1, 2020. This change ensures that the regulations are clear and
consistent between 40 CFR 82.15 and 82.16, and, as a practical matter,
adds no additional limitations to those in 40 CFR 82.16.
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    \23\ Section 82.15(g)(4)(i) applies to all HCFCs not governed by
40 CFR 82.15(g)(1) through (3).
---------------------------------------------------------------------------

    For the reasons described above, the Agency is taking final action
to allow HCFC-123 to be used during the years 2020 through 2029 for
servicing existing fire suppression equipment.

E. Revisions to Labeling Requirements

    To support compliance with the finalized regulations at 40 CFR
82.16(e)(2), the EPA is revising the existing labeling requirements in
40 CFR part 82, subpart E, to reflect the limited ability to use virgin
HCFC-123 for fire suppression servicing. Labeling containers of fire
suppression agent containing HCFC-123 should increase awareness among
individuals servicing fire suppression equipment about the restriction
on the use of virgin HCFC-123 use and support compliance. The EPA is
finalizing two different labels--one for fire suppression agent
composed of newly-imported HCFC-123, and one for fire suppression agent
composed of reclaimed material or material imported prior to 2020.
Together, these labels will ensure that users have enough information
to determine which containers of fire suppression agent may be used in
which equipment in order to comply with the revisions to the HCFC
phaseout regulations. In response to comments from American Pacific,
HARC, and The Alliance, the EPA is making minor modifications to the
proposed labels.
(1) Background
    As discussed previously in this section, starting January 1, 2020,
virgin HCFCs may be used only for limited purposes. With respect to
fire suppression equipment, HCFCs imported or produced on or after
January 1, 2020, can be used only to service fire suppression equipment
manufactured before January 1, 2020. HCFCs imported on or after January
1, 2020, cannot be used to manufacture new equipment or to service
equipment manufactured after January 1, 2020. Only HCFCs that are
reclaimed or were imported prior to 2020 may be used for those
purposes.
    The only HCFC used in a fire suppression agent is HCFC-123, sold as
part of a blend under the name Halotron[supreg] I. Clean agents like
Halotron[supreg] I do not leave a residue, and are used in applications
such as data centers, clean rooms, and aircraft where it will not
damage high-value or life-saving equipment, thereby minimizing economic
damages from a fire (e.g., shorter equipment downtime or lower costs to
repair). There are three main fire suppression streaming end uses for
which clean agents are used in the United States: (1) Hand-held
portables; (2) 150-pound wheeled units; and (3) Aircraft Rescue and
Fire Fighting (ARFF) vehicles.
    As per the National Fire Protection Association (NFPA) and
Department of Transportation (DOT) regulations at 49 CFR 180.250, all
portable fire extinguishers must be maintained in a fully charged
operable condition and undergo hydrostatic testing. NFPA is a codes and
standards organization, accredited by the American National Standards
Institute, that was established to minimize the risk and effects of
fire by establishing criteria for building, processing, design,
service, and installation around the world. According to NFPA criteria,
fire extinguishers, which include portable hand-held devices and
wheeled units, are recommended to undergo maintenance to ensure that an
extinguisher will operate effectively and safely in the event of
fire.\24\ Equipment should be recharged after being used to extinguish
a fire, so that it may be usable again. Technicians who conduct
hydrostatic testing, perform inspections, or recharge fire suppression
equipment after a discharge may need additional information to aid in
distinguishing between the permissible uses of specific containers of
Halotron[supreg] I.
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    \24\ National Fire Protection Association. (2018) ``Standards
for Portable Fire Extinguishers'' available at: https://www.nfpa.org/codes-and-standards/all-codes-and-standards/list-of-codes-and-standards/detail?code=10.
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    Given that section 611 of the CAA already requires the labeling of
containers of ODS, including Halotron[supreg] I, the Agency proposed
modifying the label to support compliance with the section 605
requirement. Congress recognized that labeling requirements may be
needed to effectively implement the phaseout of ODS. In 1993, the EPA
established the labeling requirements for both class I and class II
substances in 40 CFR part 82, subpart E (see 58 FR 8136, February 11,
1993). Containers in which ODS are stored or transported must bear a
clearly legible and conspicuous warning label that can be read by
consumers before they can be introduced into interstate commerce.
Section 611 of the CAA provides specific language for the label:
``Warning: Contains [insert name of substance], a substance that harms
public health and environment by destroying ozone in the upper
atmosphere.'' This is reflected in the implementing regulations at 40
CFR 82.106. According to section 611, the label must be ``clearly
legible and conspicuous.'' Labels generally should

be within the principal display panel, the warning statement should be
in sharp contrast to any background upon which it appears, and if there
is any outer package for the container (e.g., cylinder, ISO tank, or
other container), labels should be on the outside packaging. Specific
requirements on the size, text, and location of the label are provided
in 40 CFR 82.106 through 82.110. Labeling of products manufactured with
or containing HCFCs has been required under section 611 since 2015, and
the EPA has not seen a movement away from these fire suppression agents
due to that labeling requirements. Based on this experience, the EPA
does not expect additional text being added to the label to cause a
movement away from HCFC-123 based fire suppression agents.
    In revising the labeling requirements, the EPA is relying on
authority under section 605(c) of the CAA to issue regulations phasing
out the production and consumption and restricting the use of class II
substances that may be needed for compliance. Since HCFC-123 may be
used both to manufacture new fire suppression equipment, which can only
be done with HCFC-123 imported prior to January 1, 2020 or reclaimed/
recycled material, and to service existing equipment, the EPA
identified modified labeling as the lowest cost option to ensure that
newly-produced HCFC-123 only be used to service existing equipment.
    Specifically, the EPA proposed to require the following text be
added to the label for containers of fire suppression agent containing
HCFC-123 imported on or after January 1, 2020: ``Do not use to service
equipment manufactured on or after January 1, 2020.'' The Agency also
took comment on whether to modify the label on material containing
HCFC-123 imported prior to January 1, 2020, or that is recycled/
reclaimed to clarify for individuals servicing fire suppression
equipment that all uses are allowed. Specifically, the EPA proposed the
following second sentence could be added to the existing label for
containers of Halotron[supreg] I made with recycled/reclaimed HCFC-123
or HCFC-123 imported before 2020 that reads ``Not restricted to use in
servicing pre-2020 equipment.''
    In addition to knowing whether containers contain recycled/
reclaimed HCFC-123 or HCFC-123 imported before 2020 versus virgin HCFC-
123, users will need to be able to know the date of manufacture of fire
suppression equipment. They will need to be able to distinguish fire
suppression agents that may be used only for servicing equipment
manufactured before January 1, 2020 from fire suppression agents that
may be used for manufacturing new equipment or servicing equipment
regardless of the date of manufacture. The Agency sought comment on
these points and others.
(2) Summary of and Response to Comments
    American Pacific, HARC, and The Alliance support labels on all
containers of Halotron[supreg] I. Both American Pacific and HARC
suggest the language on the label for virgin or newly imported HCFC-123
containers should be more positive than the proposed language. American
Pacific suggests the label read ``Use only for recharge of equipment
manufactured before January 1, 2020.'' American Pacific and HARC are
also supportive of an additional label for reclaimed products and
American Pacific suggests the additional label should read ``Can be
used for all Halotron[supreg] I new production and all recharge
activities.'' Commenters confirmed that users should be able to
identify the date of equipment manufacture using existing methods as is
the case with refrigeration and air-conditioning equipment. However,
without additional labeling of containers of fire suppression agents
that contain HCFC-123, it may not be possible for users to distinguish
containers that may only be used to service fire suppression equipment
manufactured before January 1, 2020, from other containers.
    In response to the comments received, the EPA concludes that
modifications to the existing label language are necessary to ensure
that users have enough information to determine which containers of
fire suppression agent may be used in which equipment, in order to
comply with the regulatory revisions described in this rule. Therefore,
the EPA is finalizing labeling requirements for containers of fire
suppression agent containing HCFC-123 with modifications to the
language proposed. For containers with virgin HCFC-123 imported on or
after January 1, 2020, the Agency is requiring the following label:
``WARNING: Contains [insert name of substance], a substance which harms
public health and environment by destroying ozone in the upper
atmosphere. Use only for recharge of equipment manufactured before
January 1, 2020.''
    For fire suppression agents that are recycled/reclaimed or imported
prior to January 1, 2020, the Agency is finalizing the following label:
``WARNING: Contains [insert name of substance], a substance which harms
public health and environment by destroying ozone in the upper
atmosphere. For use in any equipment.'' The statement, ``For use in any
equipment'' conveys the same meaning as the text provided by American
Pacific (``Can be used for all Halotron[supreg] I new production and
all recharge activities'') but is simpler, avoids mentioning a patented
product, and is analogous to the label for newly-imported material. It
clarifies for the user that HCFC-123 that was imported prior to January
1, 2020, or that is recycled/reclaimed can be used for either the
manufacture of new equipment or for servicing existing and new
equipment. The Agency is modifying the required label at 40 CFR 82.106
accordingly.
    The EPA also took comment on whether the manufacturer of
Halotron[supreg] I can designate specific containers for servicing
existing equipment, whether multiple containers would create a burden
for industry, and whether technicians would be able to locate
manufacture dates on fire suppression equipment. American Pacific
states it will establish a second product identification for the
Halotron[supreg] I that is manufactured with newly-imported HCFC-123
imported after January 1, 2020. The name of this product will be
``Halotron[supreg] I Recharge Only for Equipment Made Before 1-1-20.''
American Pacific states that the Halotron[supreg] I container will be
labeled prominently with multiple distinctive large yellow or
equivalent striping that is in contrast to the current standard
Halotron[supreg] I container, which has two green stripes. American
Pacific notes the standard bulk container will continue to be
manufactured using newly-imported HCFC-123 imported before January 1,
2020, or with recycled/reclaimed HCFC-123. Both American Pacific and
HARC assert that the maintenance of two differently labeled containers
will not result in a burden on the industry. The EPA appreciates the
steps American Pacific intends to take to ensure the proper use of
HCFC-123.
    American Pacific and HARC provided comments on the EPA's intended
approach to assist technicians with identifying which container to use
for servicing fire suppression equipment and outreach. For servicing
ARFF vehicles, the EPA explained how to identify that information in
the proposal for this rulemaking and recommends that technicians
inspect the manufactured date on the vehicle. American Pacific states
that the methods for identifying the year of manufacture of ARFF
vehicles is accurate and notes that manufacturers report the year of
manufacture as a ten-

digit VIN on the Information Data plates, which are typically located
on the floor, dashboard, or door jamb on the driver's side in ARFF
vehicles. American Pacific states that they plan to highlight the
distinction between the two products in updated filling/maintenance
guidance manuals that provide sales materials for ARFF Vehicle original
equipment manufacturers and airports users.
    For fire extinguishers, American Pacific states the EPA accurately
described the method for identifying the date of manufacture in the
proposal for this rulemaking. American Pacific notes that historically,
however, some of the UL listed fire extinguishers were not approved by
the DOT, which was referred to as ``309 exempt,'' but all extinguisher
labels as per the UL follow-up listing requirements will show a year of
manufacture. HARC also supports the EPA's intention to develop outreach
material with the final rule and is interested in working with the EPA
to help develop and distribute such material. The EPA is appreciative
of the outreach efforts American Pacific intends to pursue and is
appreciative of the clarification for ARFF vehicles and fire
extinguisher date of manufacture. The EPA intends to work with
stakeholders to develop educational materials and conduct outreach to
technicians, distributors, and service providers.

F. Allocation of HCFC-124 Production and Consumption Allowances

    The Agency received two supportive comments and one comment opposed
to allocations for HCFCs generally. Based on comments received on the
proposed allocation amount for HCFC-124 and the Agency's analysis, the
EPA is finalizing HCFC-124 production and consumption allowances in the
years 2020 through 2029 as proposed.
    As noted in the 2019 Final Servicing Tail Report, HCFC-124
consumption was approximately 250 MT per year between 2012 and 2017 and
reclamation was minimal. More recent sales data from the California Air
Resources Board, discussions with industry, and annual consumption and
production data indicate that demand for HCFC-124 is between 100 and
200 MT. As explained in the previous discussion about HCFC-123
allowance allocations, providing HCFC-124 allowances significantly in
excess of demand would not foster a smooth and orderly transition.
Thus, the EPA proposed to allocate 200 MT for the first three years and
then gradually decrease the allocation over the next seven years by an
equal amount each year.
    National Refrigerants and an anonymous commenter support the
proposed allocation of HCFC-124. The anonymous commenter states that
Alternative 2 in the proposal is inconsistent with the gradual decrease
in volume over the phase out period and may prevent the establishment
of sufficient volume of reclaimed material to serve remaining servicing
needs post-2030, as described in the 2019 Draft Servicing Tail Report.
    The EPA responds that it agrees that reducing the allocation
gradually is the appropriate choice so that equipment owners have time
to transition to alternatives and/or develop relationships to rely on
recycled and/or reclaimed HCFC-124.The EPA is finalizing the allocation
for consumption and production of HCFC-124 at 40 CFR 82.16(a) as
proposed. As stated previously, the Agency's goal is to ensure that
servicing needs can be met, while also encouraging recovery and reuse
and transition to alternatives. Providing consistent allocations for
the first three years will assist in establishing an inventory of HCFC-
124 to be used for servicing throughout the allocation period and past
the phaseout date for the expected lifetimes of all existing equipment.
The EPA does not want to strand existing equipment because of an
inadequate supply of HCFC-124. This allocation supports this goal
because it accounts for allowed end uses of HCFC-124 that may not be
captured by the Vintaging Model (e.g. use of niche refrigerant blends
containing HCFC-124 to service equipment manufactured before 2020).
Regarding the comment that allowances are not needed, the Agency
references the previous discussion in this section under the HCFC-123
allocation, as similar considerations apply for HCFC-124. In addition,
an HCFC-124 allocation is necessary because there is minimal
reclamation of HCFC-124. This allocation level is within the limit
established by the CAA and Montreal Protocol and will decrease over
time to foster transition to alternatives prior to the January 1, 2030
phaseout date.

G. Changes to Transfers of Allowance Provisions in 40 CFR 82.23

    The EPA is explicitly prohibiting calendar-year inter-pollutant
transfers of HCFC-123 and HCFC-124 to phased-out HCFCs. The Alliance
comment is supportive of limiting inter-pollutant transfers, and the
EPA is finalizing the provision as proposed.
    Under section 607 of the CAA, the EPA has issued regulations at 40
CFR 82.23 which provide for both inter-pollutant and inter-company
transfers of allowances for class II ODS under certain conditions. In
an inter-pollutant transfer, an allowance holder converts allowances
for one class II ODS into allowances for another class II ODS (40 CFR
82.23(b)). The EPA is finalizing changes in 40 CFR 82.23(b) to ensure
clarity for the regulated community. The change is intended to minimize
confusion and reduce the likelihood that an allowance holder will
mistakenly seek an inter-pollutant transfer of HCFC-123 or HCFC-124
allowances to phased-out HCFCs such as HCFC-22. This change does not
have a practical effect on the ability of allowance holders to legally
produce or import phased-out ODS given the prohibition in 40 CFR 82.16.
Inter-pollutant transfers between HCFC-123 and HCFC-124 also may
continue so long as the newly produced or imported HCFC-123 and HCFC-
124 are for an allowed use, such as for servicing refrigeration and
air-conditioning appliances manufactured before January 1, 2020.
    The Alliance commented that they support the EPA's proposal to
explicitly prohibit transfers into ODS that are already phased out.
Given the comment and the fact that the EPA received several inquiries
prior to this rulemaking about whether inter-pollutant transfers from
HCFC-123 or HCFC-124 to HCFC-22 will be allowed after the phaseout of
HCFC-22, the EPA is finalizing the proposed change to make clear that
calendar-year inter-pollutant transfers of HCFC-123 and HCFC-124 to
phased-out HCFCs are prohibited.

H. Changes to Import Requirements

    Under sections 604, 605, and 606 of the CAA, the EPA restricts the
import of ODS consistent with both the CAA and the Montreal Protocol.
As discussed previously in Section II of this document, importing
virgin ODS requires the importer to expend consumption allowances. By
controlling the number of allowances and knowing who holds those
allowances, the EPA ensures that the United States meets its phaseout
obligations. Used ODS \25\ can be imported without consumption
allowances, and generally without use restrictions, if certain
conditions are satisfied. Imports of used ODS are regulated under 40
CFR 82.13(g)(2) and (3) (for imports of used class I substances) and 40
CFR 82.24(c)(3) and

(4) (for imports of used class II substances).
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    \25\ Used ODS have been recovered from their intended use
systems (e.g., refrigeration and AC equipment) and may include
controlled substances that have been, or may be subsequently,
recycled or reclaimed. See 40 CFR 82.3.
---------------------------------------------------------------------------

    The EPA proposed and is finalizing a number of changes to update
the data collection requirements related to the import of ODS, as
described in further detail below. Such changes require collection of
additional information when the EPA considers petitions to import used
ODS to verify whether the material has been previously used. Other
changes remove data elements that the EPA no longer needs. The EPA is
also finalizing a procedure for imports of both used and virgin ODS
when they are imported for destruction, exempting aircraft bottles
containing halon 1211 imported for hydrostatic testing from the
petition process, and finalizing as proposed the prohibition on the
sale of illegally imported ODS.
    Because some of these regulatory revisions relate to the petitions
process for imports of used ODS, some background on the petitions
process under the regulations that were in place prior to this
rulemaking may provide useful context. Under that process, anyone
wanting to import used ODS must submit a petition to the Agency, and
the EPA must provide a ``non-objection notice'' approving the import
for it to proceed. The petition to import a used ODS must contain
certain information, which the EPA uses to verify whether the ODS is
used. Required information includes: A description of the previous use
of the substance; the identity of source facilities from which the
material was recovered; a contact person at each source facility; the
name, make, and model number of the equipment from which the material
was recovered at each source facility; a best estimate of when the
material was removed; and an export license from the appropriate
government agency from the country of export (see 40 CFR 82.13(g)(2)
and 82.24(c)(3)). After review, the EPA responds to the petition by
issuing either a ``non-objection notice,'' which allows the import to
proceed, or an ``objection notice,'' which has the effect of
prohibiting the import because a non-objection notice is required for
the lawful import of such material.
    The EPA established the petition process to import used class I ODS
(under sections 603 and 604 of the CAA) in 1998 (see 63 FR 41626,
August 4, 1998) and in 2003 (see 68 FR 2819, January 21, 2003) for
class II ODS (under sections 603 and 605 of the CAA) given concern that
some importers were circumventing the production and import controls by
importing virgin class I and class II substances that had been
intentionally mislabeled as used. Sections 604, 605, and 606 of the CAA
provide statutory authority for controlling the import of ODS,
including the petition process. Section 603 of the CAA requires
reporting of the amount of ODS imported on a quarterly basis or on a
basis determined by the Administrator. To the extent that these
regulatory revisions finalized in this action involve recordkeeping and
reporting of information, the EPA also relies upon its authority under
section 114 of the CAA, which authorizes the EPA to require
recordkeeping and reporting in carrying out any provision of the CAA
(with certain exceptions that do not apply here).
    The petition process has generally been effective at providing
information that allows the EPA to verify that ODS are used before they
are imported, and accordingly, for many aspects of the existing
process, the Agency did not propose and is not finalizing any changes
in this rulemaking. However, over years of implementation, the EPA has
identified potential areas for improvement. These include the fact that
the existing requirements for detailed source information are often
difficult to satisfy if the imported material comes from a halon bank,
i.e., a physical facility where halon recovered from different sources
is aggregated. Much of this halon was sent to the banks with limited or
no records of its origins or use. Additionally, current regulations
exempted only halon 1301 aircraft bottles from the petition process for
hydrostatic testing, yet aircraft bottles containing halon 1211 are
also imported for such testing and importers must petition the Agency
and receive a non-objection notice for those bottles under the existing
process. The petition process also did not distinguish imports of used
ODS that are intended to be destroyed from imports that are intended to
be reclaimed for continued use, even though the Agency recognizes that
the verification requirements do not need to be as rigorous when the
ODS are to be destroyed. Further, the existing regulations did not
provide a specific mechanism to pre-approve the import of virgin
material for destruction, resulting in delays at the port of entry
while the EPA verified the shipment. In addition, the EPA remains
concerned about the potential for illegal import of ODS and wanted to
take steps to strengthen the Agency's ability to enforce the phaseout
of ODS. To address these and other issues, the EPA proposed and is now
finalizing revisions to the regulations for imports, as described in
the following sections.
i. Changes to the Petition Process To Import Used ODS for Reuse in 40
CFR 82.13 and 82.24
    The EPA proposed changes to the petition process that would
generally reduce burden on importers while still allowing the Agency to
verify that only used material is being imported. Of particular note,
the Agency proposed to: (1) Reduce the information requirements when
importing class I ODS \26\ from a ``bank'' so long as an official
letter is provided from the appropriate government agency in that
country where the material is stored that attests that a class I
substance is ``used''; (2) allow submission of an application for an
export license in lieu of the license itself; (3) authorize the Agency
to request additional information when additional verification is
needed before issuing a non-objection notice, and (4) provide
flexibility for the timing of import.
---------------------------------------------------------------------------

    \26\ The EPA did not propose similar changes for class II ODS
given the production phaseout for these substances is still
underway.
---------------------------------------------------------------------------

    In soliciting comments on the proposal, the Agency was particularly
interested in whether streamlining the petition process, including to
facilitate imports of material from banks for class I ODS, in
particular halon, would affect compliance with the prohibition on
import of virgin ODS. The EPA welcomed suggestions from stakeholders on
how the petition process could be streamlined while ensuring
compliance. The Agency received comments on the definition of ``banks''
and whether the proposed flexibilities should be restricted to halon,
the requirement to provide an export license, extending the reduced
information requirements to class II substances, the possibility that
the EPA might request purity information in considering a petition, the
import of used HFCs containing trace quantities of ODS, and the timing
of imports after a non-objection notice has been issued.
    Taking into account the comments received, the EPA is finalizing
changes to the petition process that will meet the Agency's goals of
reducing the burden on importers while continuing to provide mechanisms
to verify that the material being imported is used. As described in
greater detail below and based on the comments received, the EPA is
finalizing two changes to what it proposed. First, the Agency is
narrowing the definition of ``bank'' which as proposed encompassed all
ODS, though only used in reference to class I ODS, to ``halon bank.''
Second, the Agency is allowing not only an application for an export
license in lieu

of the license itself, as was proposed, but also an official
communication from the appropriate government agency in the country of
export. For the following changes, the EPA received no adverse comments
and is finalizing the proposed revisions because the Agency concludes
that the revisions are warranted based on the rationale articulated in
the proposal and in this document: (1) Requiring that petitions include
email addresses in contact information (while removing the requirement
to provide fax numbers) and commodity codes for the material, and (2)
providing one year from the date stamped on a non-objection notice for
import to occur. In general, the EPA anticipates these changes will
increase the availability of used ODS in the United States and thus
help to provide a greater supply of used material for servicing
existing equipment, which might otherwise be retired before the end of
its useful life.
    With respect to the proposal to remove the requirement for some
source information for class I substances stored in either a national
government bank or a privately-operated bank authorized by a national
government with the submission of an official letter from the
appropriate government agency verifying that the class I substances are
in fact used, the EPA received comments from Hudson and National
Refrigerants in support of the proposal. In contrast, the Halon
Recovery Corporation (HRC), a non-profit trade association for halon
users, and an anonymous commenter suggest narrowing the exemption to
only halon banks rather than all class I ODS. HRC notes that the import
petition process has been structured around the refrigeration and air-
conditioning sector, and as such, these requirements have been
difficult for halon recyclers to meet. Banks do not typically have the
complete information required by the EPA's petition process, especially
since the material may have been recovered decades ago, when records of
source and use were not kept. HRC states that, unlike CFCs, there is a
large installed base of fire suppression equipment that requires future
servicing and retrofitting that equipment to use alternatives may not
always be feasible. HRC also notes that it is aware of only a few
enforcement actions taken by the Agency for the illegal importation of
halons. The anonymous commenter states their concern for reducing
information requirements in a petition to import used class I
substances is due to the potential for misuse, which would be contrary
to the Agency's effort to prohibit sale of illegally imported
controlled substances. The commenter suggests a change may be needed
for halon, as there is a large installed base that may require future
servicing, and since retrofitting that equipment for the use of
alternative substances may not be feasible, but there is not the same
need or demand for other class I substances. The commenter advises that
changes should be specific to halon, and the Agency should maintain the
existing requirements for other class I substances.
    While a couple of commenters were supportive of finalizing the
revisions as proposed, due to concerns other commenters raised about
the potential for illegal imports of class I ODS, the EPA is finalizing
provisions that are more limited than those proposed by finalizing the
definition of ``halon bank'' in 40 CFR 82.3 (rather than ``bank'') and
restricting the provisions in 40 CFR 82.13(g)(2)(iii) and (xv) to
material from a ``halon bank.'' In light of the recently discovered