for HCFC-22, HCFC-123, and HCFC-124, sometimes as an average over
several years.\89\
---------------------------------------------------------------------------

    \88\ EPA has historically shared the amount of halon 1301
imported and exported in a year, as well as the total quantity of
material approved for import under the petition process described in
40 CFR 82.13(g)(2). This information is shared via email with the
interested stakeholder associations or posted to the EPA website
(see https://www.epa.gov/ozone-layer-protection/halons-program
(accessed February 14, 2021)).
    \89\ Aggregate HCFC data can be found in the United Nations
Environment Programme's July 13, 2009, ``Workshop on management and
destruction of ozone-depleting substance banks and implications for
climate change,'' document, which can be found in the docket for
this rulemaking.
---------------------------------------------------------------------------

    Releasing similar aggregated HFC data would allow EPA to document
whether HFC consumption and production are at or below the levels
prescribed in subsection (e)(2)(C), providing transparency to the
public that EPA is meeting its statutory obligation. If aggregated data
shows that actual values exceed those allowed under the phasedown
schedule, it would highlight noncompliance with the requirements, and
could encourage additional outside efforts to identify the cause of the
exceedance, and to take further actions to ensure the caps are met. It
would also provide insight into the ongoing transition out of specific
HFCs, which might help inform future allocations of allowances and
business planning for entities seeking allowances.
    For HFCs, EPA has already released certain aggregated data on the
GHGRP website \90\ and through the recent NODA.\91\ These data include
production minus destruction minus transformation; exports; imports;
and net supply (CO2e quantities produced + imported-
exported-transformed-destroyed) for the 18 AIM Act-listed HFCs between
2011 and 2019, as well as chemical-specific import data for HFC-134a,
HFC-125, and HFC-32 for the same time period. The NODA also included a
list of companies that produced (including those that destroyed),
imported, and exported AIM Act-listed HFCs in 2011--2013. Other data
elements that are released under the GHGRP are noted at https://www.epa.gov/sites/production/files/2020-09/documents/ghgrp_cbi_tables_for_suppliers_8-28-20_clean_v3_508c.pdf. EPA expects
that release of the information in this subsection would not run any
risk of divulging information submitters customarily keep private or
closely held.
---------------------------------------------------------------------------

    \90\ ``Fluorinated Greenhouse Gas Emissions and Supplies
Reported to the GHGRP.'' Epa.gov, Environmental Protection Agency,
Feb. 24, 2021, www.epa.gov/ghgreporting/fluorinated-greenhouse-gas-emissions-and-supplies-reported-ghgrp#aim.
    \91\ See 86 FR 9059; February 11, 2021, https://www.federalregister.gov/d/2021-02774/p-1.
---------------------------------------------------------------------------

    EPA is proposing to release to the general public, without prior
communication with the affected companies, chemical-specific
information for HFCs where there are three or more reporting entities.
This is the Agency's standard practice to mask information submitters
customarily keep private or closely held. In such circumstances, a
single reporter would know their own value but would not know how to
apportion the remainder of the aggregated total among the other
entities reporting. The proposed approach would be similar in that
competitors would not be able to determine the relative share of each
HFC with just the aggregated total. EPA proposes to release the EV-
weighted quantity as a way of masking company-specific data, as well as
a list of the relevant HFCs.
    Under this separate alternate framework, EPA is proposing to
release the following data annually in aggregated form in addition to
any company or chemical specific information that is already publicly
available:
     Total aggregated annual HFC production, EV-weighted;
     Total production by mass for each HFC;
     Total aggregated annual HFC consumption, EV-weighted;
     Total consumption by mass for each HFC;
     Total aggregated annual HFC imported, EV-weighted;
     Total imports by mass for each HFC;
     Total aggregated annual HFC exported, EV-weighted;
     Total exports by mass for each HFC;
     Total aggregated annual destruction (in kilograms) for
each HFC;
     Annual aggregate amount of each HFC produced and imported
(summed) for use as a feedstock by chemical; and
     Annual aggregate amount of each HFC produced and imported
(summed) for use as a process agent, and aggregate annual emissions
from such use by HFC.
    EPA would only release chemical-specific data without further
consultation with the affected companies if it comprised data from
three or more entities, if it was already publicly available, or if it
was not claimed as CBI.
    The release of feedstock data could be useful to validate
atmospheric measurements of HFCs, identify precursors and byproducts,
and help inform decision making. Aggregated global data on production
of ODS for feedstock use has been used for this purpose. EPA
anticipates that publicly releasing feedstock data for HFCs could lead
to similar benefits, while also providing additional transparency to
the public on the ongoing use of HFCs that are being phased down under
the AIM Act, but not phased out.
    EPA is not aware of current process agent use of HFCs and, as noted
elsewhere, is seeking comment on which HFCs are used as a process
agent, how the HFC is used as a process agent, which facilities use
HFCs as a process agent, and the annual quantity of HFCs used as a
process agent. If there were to be use of HFCs as process agents in
sufficient quantities and frequencies to allow aggregation, EPA is
proposing to release aggregated HFC process agent data.
    EPA is also proposing under this separate alternative approach to
release aggregated annual consumption data associated with the use of
application-specific allowances. Specifically, EPA would release total
annual chemical-specific HFC consumption for each application, similar
to how the Agency provided chemical-specific data in the market
characterizations. Providing these data to the general public would
allow EPA to show the scale of application-specific allowance use,
identify where EPA's annual determination on the quantity of HFCs
needed for the end use may need adjustment, and inform discussion in
future rulemakings. This information would be aggregated across all
application-specific allowance holders within a specific application,
so EPA expects there would be no risk of divulging information
submitters customarily keep private or closely held.
    Under this separate alternative approach, EPA is proposing to
release

aggregated data on the quantity (in kilograms) of each HFC held in
inventory as of December 31 of each year collectively by producers,
importers, exporters, and reclaimers of HFCs. Analogous to the approach
under CAA section 608, where almost all HFC reclamation data is
released on a chemical-by-chemical basis, EPA is proposing to release
HFC inventory by chemical. EPA would only release HFC-specific
inventory values if there are three or more companies that have
inventory of that HFC. Releasing inventory data can inform decisions of
all companies in the marketplace. One motivator for this proposal is
the experience with the phaseout of HCFC-22. Lack of reliable and
widely distributed information on the scale of the existing inventory
of HCFC-22 likely contributed to dramatic price swings associated with
delays in the issuance of EPA allocation rulemakings. While additional
information on inventory on its own may not prevent price fluctuations,
the Agency expects it could provide more price predictability for the
step-downs. Releasing inventory data could also help producers and
importers make decisions about which HFCs are in short supply and/or
could help support a smooth transition away from high-GWP HFCs.
(c) Company-Specific Allowance Data
    Separate and apart from the alternatives listed in the prior
subsections, EPA is also proposing to publish on its website the names
of every company receiving calendar-year production allowances,
consumption allowances, or application-specific allowances. EPA would
also publish the amount of allowances allocated at the beginning of the
year to each company and revise that data quarterly as allowances are
expended.
    Under the ODS phaseout program, EPA released similar company-
specific allowance data, including quantities produced or imported by
each company in the baseline year by chemical and annual allocation
amounts thereafter for nearly 30 years. EPA's experience has been that
the release of this information has been important to reduce illegal
imports, facilitate transfers, and provide third parties confidence
that they were buying from a company that had allowances. EPA
anticipates the same benefits would result from providing similar HFC
data.
    In the case of HFCs, EPA is proposing to release an EV-weighted
allowance value which would not divulge what HFC(s) a company is
producing or consuming. Given this history and the fact that the data
will be masked by being EV-weighted, EPA does not believe that
producers or importers have a reasonable expectation of confidentiality
concerning their allowance allocation levels.
(d) Transfer Data
    If EPA does not release all data, as described in section IX.D.1 of
this preamble, EPA is also proposing to publish on the Agency's website
certain aggregated data on transfers, so long as there are at least
three companies involved in transferring allowances that year.
Specifically, EPA is proposing to release data on the number of
transfers, the total EV-weighted quantity of allowances transferred,
and the average price of an allowance being transferred.
    Release of these data would provide the public with information on
the frequency and scale of transfers associated with the HFC phasedown.
    While EPA sees value in releasing individual transfer data
(excluding the price of the allowances transferred), the Agency expects
that this would divulge information submitters customarily keep private
or closely held. EPA seeks comment on this proposal, including whether
submitters consider such data to be customarily kept private or closely
held and whether EPA should release more data than just aggregate data.
(e) Information Relevant to the Kigali Amendment and the Montreal
Protocol
    On January 27th, 2021, the President issued an Executive Order on
Tackling the Climate Crisis at Home and Abroad (Executive Order 14008;
86 FR 7619; January 27, 2021). Under part (j), the Executive Order
directs the Secretary of State to prepare within 60 days a transmittal
package seeking the Senate's advice and consent to ratification of the
Kigali Amendment to the Montreal Protocol on Substances that Deplete
the Ozone Layer. The Kigali Amendment requires an international
phasedown of the production and consumption of HFCs. To ensure the
United States would be prepared to comply with the data reporting
elements of the Kigali Amendment, EPA is proposing that, if the United
States were to join the Kigali Amendment, it would release data to the
United Nations Environment Programme's Ozone Secretariat regarding HFC
production, consumption, and limited emission data. With the exception
of emission data related to the destruction of HFC-23, the data
elements would be similar, if not identical, to those currently
released for ODS. Should the United States join the Kigali Amendment,
EPA will need to report \92\ the following data:
---------------------------------------------------------------------------

    \92\ The reporting forms and instructions that EPA would use to
submit such data are available in the docket and on the Ozone
Secretariat's website at https://ozone.unep.org/countries/data-reporting-tools (accessed February 14, 2021).
---------------------------------------------------------------------------

     Annual U.S. HFC production in MT by chemical for each of
the HFCs listed in subsection (c) of the AIM Act, including total HFC
production for all uses and HFC production for feedstock in the United
States;
     Annual U.S. HFC import in MT aggregated by chemical and by
country imported from for each of the HFCs listed in subsection (c) of
the AIM Act, including the amount that was new (virgin), recovered and
reclaimed, or for feedstock use;
     Annual U.S. HFC export in MT aggregated by chemical and by
country exported to for each of the HFCs listed in subsection (c) of
the AIM Act, including the amount that was new (virgin), recovered and
reclaimed, or for feedstock use;
     Annual U.S. HFC destruction in MT aggregated by chemical
for each of the HFCs listed in subsection (c) of the AIM Act; and
     Annual facility-level information on HFC-23 generated and
destroyed, including annual amounts of HFC-23:
    [cir] Generated, whether captured or not;
    [cir] generated and captured for all uses;
    [cir] generated and captured for feedstock use in the United
States;
    [cir] generated and captured for destruction;
    [cir] used for feedstock without prior capture;
    [cir] destroyed without prior capture; and
    [cir] generated emissions.
    Regarding annual facility-level information on HFC-23 generated and
destroyed, these data are inputs into emission equations that are used
under GHGRP subparts L and O to calculate and report emissions of HFC-
23, and inputs into emission equations may be considered ``emission
data.'' Section 114(c) of the CAA provides that ``emission data'' shall
be available to the public. As noted above, because subsection
(k)(1)(C) of the AIM Act states that section 114 of the CAA applies to
the AIM Act and rules promulgated under it as if the AIM Act were
included in Title VI of the CAA, the requirements under section 114(c)
of the CAA that apply to ``emission data'' also apply to data gathered
under the AIM Act that are determined to be ``emission data.'' EPA is
proposing to determine that these elements related to HFC-23 are
emission data and thus

would not be treated as confidential under this rule.
    The Ozone Secretariat would release aggregated GWP-weighted annual
production and consumption on the Ozone Secretariat's website.\93\
Additional data elements released include annual amounts destroyed,
aggregated for all reported chemicals under the Montreal Protocol in
MT, import of recovered/recycled/reclaimed substances by group (e.g.,
HFCs) in MT, and export of recovered/recycled/reclaimed substances in
MT by group. Should the United States join the Kigali Amendment, EPA
would also need to submit chemical-specific production and consumption
data consistent with the data listed for 2011, 2012, and 2013 to
establish the United States' baseline for HFCs.
---------------------------------------------------------------------------

    \93\ The Ozone Secretariat's handling of similarly reported data
from the United States on ODS is available at https://ozone.unep.org/countries/profile/usa.
---------------------------------------------------------------------------

    The Parties to the Montreal Protocol adopted Decision I/11 \94\
during the First Meeting of the Parties, which outlines the Parties'
view on how to treat the confidentiality of data submitted to the Ozone
Secretariat. In accordance with the decision, if the United States is
submitting data that it has determined to be entitled to confidential
treatment, the United States has the ability to mark the data
accordingly such that it will be treated with secrecy and maintained
confidential by the Secretariat. EPA intends to mark any data that the
Agency is not releasing to the general public for confidential
treatment in its annual reporting, were the United States to join the
Kigali Amendment. The decision requests the Ozone Secretariat to only
release aggregated data such that any data a Party to the Protocol
considers to be confidential will not be disclosed. However, Parties to
the Protocol may exercise their right under Article 12, paragraph b of
the Protocol to have access to confidential data from other parties,
provided that they send an application in writing that guarantees such
data will be treated with secrecy and not disclosed or published in any
way.
---------------------------------------------------------------------------

    \94\ ``The Montreal Protocol on Substances That Deplete the
Ozone Layer.'' Unep.org, United Nations Environment Programme,
https://ozone.unep.org/treaties/montreal-protocol/meetings/first-meeting-parties/decisions/decision-i11-report-and-confidentiality-data.
---------------------------------------------------------------------------

X. What are the costs and benefits of this proposed action?

    EPA conducted a Regulatory Impact Analysis which estimated the
costs and benefits of implementing the phasedown of HFCs as a result of
the passage of the AIM Act, as realized by promulgating this rule. This
analysis is intended to provide the public with information on the
relevant costs and benefits of this action and to comply with Executive
Orders.
    EPA estimates that in 2022 the annual net benefits are $2.6
billion, reflecting compliance costs of $200 million and social
benefits of $2.8 billion. In 2036, when the final phasedown step is
reached at 15 percent of the statutorily defined HFC baseline, the
estimated annual net benefits are $17.9 billion. Table 5 presents a
summary of the annual costs and net benefits of the rule for selected
years in the time period 2022-2050, but with the climate benefits
discounted at 3%.

                  Table 5--Benefits, Costs, and Net Benefits of the Proposed Rule for 2022-2050
                                             [Billions of 2020$] a b
----------------------------------------------------------------------------------------------------------------
                                                               Climate benefits        Costs
                            Year                              (discounted at 3%)     (annual)      Net benefits
----------------------------------------------------------------------------------------------------------------
2022........................................................                $2.8            $0.2            $2.6
2024........................................................                 6.3            -0.2             6.5
2029........................................................                10.2            -0.6            10.8
2034........................................................                13.5            -0.9            14.4
2036........................................................                17.1            -0.8            17.9
2045........................................................                25.5            -0.9            26.4
2050........................................................                30.2            -1.1            31.3
----------------------------------------------------------------------------------------------------------------
\a\ Benefits include only those related to climate. Climate benefits are based on changes (reductions) in HFC
  emissions and are calculated using four different estimates of the social cost of HFCs (SC-HFCs) (model
  average at 2.5 percent, 3 percent, and 5 percent discount rates; and 95th percentile at 3 percent discount
  rate). For the presentational purposes of this table, we show the benefits associated with the average SC-HFC
  at a 3 percent discount rate, but the Agency does not have a single central SC-HFC point estimate. We
  emphasize the importance and value of considering the benefits calculated using all four SC-HFC estimates. See
  Table 4-20 in the RIA for the full range of SC-HFC estimates. As discussed in Chapter 4 of the RIA, a
  consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent and
  lower, are also warranted when discounting intergenerational impacts. The costs presented in this table are
  annual estimates.
\b\ Rows may not appear to add correctly due to rounding.

    Table 6 presents the sum of climate benefits across all HFCs
reduced for the proposed rule for 2022, 2024, 2029, 2034, 2036, 2045,
and 2050.

                          Table 6--Climate Benefits for the Proposed Rule for 2022-2050
                                              [Billions of 2020$] a
----------------------------------------------------------------------------------------------------------------
                                                         Climate benefits by discount rate and statistic
                                               -----------------------------------------------------------------
                     Year                                                            2.5%           3%  (95th
                                                 5%  (average)   3%  (average)     (average)       percentile)
----------------------------------------------------------------------------------------------------------------
2022..........................................            $1.2            $2.8            $3.8              $7.4
2024..........................................             2.7             6.3             8.5              16.7
2029..........................................             4.4            10.2            13.5              27.1
2034..........................................             6.0            13.5            17.6              35.9
2036..........................................             7.7            17.1            22.3              45.7
2045..........................................            12.2            25.5            32.6              68.3

2050..........................................            14.9            30.2            38.4              80.9
----------------------------------------------------------------------------------------------------------------
\a\ Climate benefits are based on changes (reductions) in HFC emissions and are calculated using four different
  estimates of the social cost of HFCs (SC-HFCs) (model average at 2.5 percent, 3 percent, and 5 percent
  discount rates; and 95th percentile at 3 percent discount rate). The IWG emphasized the importance and value
  of considering the benefits calculated using all four estimates. As discussed in the Technical Support
  Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive Order 13990 (IWG
  2021), a consideration of climate benefits calculated using discount rates below 3 percent, including 2
  percent and lower, are also warranted when discounting intergenerational impacts.

    EPA estimates that the present value of cumulative net benefits
evaluated from 2022 through 2050 is $283.9 billion at a three percent
discount rate, comprising $272.8 billion in cumulative benefits due to
reducing HFC emissions and $11.1 billion in cumulative compliance
savings. The present value of net benefits is calculated over the 29-
year period from 2022-2050, to account for the years that emissions
will be reduced following the consumption reductions from 2022-2036.
Over the 15-year period of the phasedown of HFCs, the present value of
cumulative compliance costs is negative $5 billion, or $5 billion in
savings, and the present value of cumulative social benefits is $103.6
billion, both at a three percent discount rate. Over the same 15-year
period of the phasedown, the present value of cumulative net benefits
is $108.2 billion. At a 7% discount rate over the 15-year period of the
phasedown of HFCs, the present value of cumulative compliance costs is
negative $3billion, or $3 billion in savings. Over the same 15-year
period of the phasedown, the present value of cumulative net benefits
is $106.6 billion at a 7% discount rate for costs (and 3% for climate
benefits). The comparison of benefits and costs in PV and EAV terms for
the rule can be found in Table 7. Estimates in the table are presented
as rounded values.

 Table 7--Summary of Annual Values, Present Values and Equivalent Annualized Values for the 2022-2050 Timeframe
                 for Estimated Abatement Costs, Benefits, and Net Benefits for the Proposed Rule
                                  [Billions of 2020$, discounted to 2022] a b c
----------------------------------------------------------------------------------------------------------------
                                                              Costs d                      Net benefits
             Year               Climate benefits ---------------------------------------------------------------
                                     (3%) c             3%              7%              3%              7%
----------------------------------------------------------------------------------------------------------------
Present Value.................            $272.8          -$11.1           -$5.8          $283.9          $278.6
Equivalent Annualized Value...              14.2            -0.6            -0.5            14.8            14.7
----------------------------------------------------------------------------------------------------------------
\a\ Rows may not appear to add correctly due to rounding.
\b\ The annualized present value of costs and benefits are calculated over a 29-year period from 2022 to 2050.
\c\ Climate benefits are based on changes (reductions) in HFC emissions and are calculated using four different
  estimates of the social cost of HFCs (SC-HFC) (model average at 2.5 percent, 3 percent, and 5 percent discount
  rates; and 95th percentile at 3 percent discount rate). For purposes of this table, we show the benefits
  (climate benefits and net benefits) associated with the model average at a 3 percent discount rate, but the
  Agency does not have a single central SC-HFC point estimate. We emphasize the importance and value of
  considering the benefits calculated using all four SC-HFC estimates. As discussed in Chapter 4 of the RIA, a
  consideration of climate benefits calculated using discount rates below 3 percent, including 2 percent and
  lower, are also warranted when discounting intergenerational impacts.
\d\ The costs presented in this table are consistent with the costs presented in RIA Chapter 3, Table 3-5.

    The estimation of $272.8 billion in benefits due to reducing HFC
emissions involved three steps. First, the difference between the
consumption of HFCs allowed under the rule and the consumption that
would have been expected in a business-as-usual scenario (BAU) was
calculated for each year of the phasedown in exchange value-weighted
tons (EVe). Second, using EPA's Vintaging Model, the changes in
consumption were used to estimate changes in HFC emissions, which
generally lag consumption by some time as HFCs incorporated into
equipment and products are eventually released to the environment.
Finally, the climate benefits were calculated by multiplying the HFC
emission reductions for each year by the appropriate social cost of HFC
to arrive at the monetary value of HFC emission reductions.
    EPA estimates the climate benefits for this proposed rulemaking
using a measure of the social cost of each HFC (collectively referred
to as SC-HFC) that is affected by the rule. The SC-HFC is the monetary
value of the net harm to society associated with a marginal increase in
HFC emissions in a given year, or the benefit of avoiding that
increase. In principle, SC-HFC includes the value of all climate change
impacts, including (but not limited to) changes in net agricultural
productivity, human health effects, property damage from increased
flood risk and natural disasters, disruption of energy systems, risk of
conflict, environmental migration, and the value of ecosystem services.
The SC-HFC, therefore, reflects the societal value of reducing
emissions of the gas in question by one metric ton. The SC-HFC is the
theoretically appropriate value to use in conducting benefit-cost
analyses of policies that affect HFC emissions. The Interagency Working
Group on the Social Cost of Greenhouse Gases (IWG) will be taking
comment on how to incorporate the recommendations of the National
Academies (2017) and other recent science including the advances
discussed in the 2021 TSD in the development of the fully updated SC-
GHG estimates to be released by January 2022 under E.O. 13990. To
complement the IWG process, and as an active member of the IWG, EPA is
soliciting comment in this proposed rule on the SC-HFC estimates used
in this RIA and the methodology underlying them,

including on how that methodology should be adapted in future to
accommodate advances in the scientific and economic literature.
Additional benefits are derived by requiring a five-percent offset for
allowance transfers, which decreases the cap of the total allowable
HFCs in the system. EPA is also taking comment on the RIA, which is
included in the docket. The public is invited to provide comment and/or
data that would inform various analytic matters and uncertainties in
the RIA (see Executive Summary and Chapter 7 of the RIA).

XI. What should EPA consider in future rulemakings?

    In addition to the proposals included in this rulemaking, EPA is
also providing advance notice and seeking input on how the Agency
should determine company-specific allocations in 2024 and later years.
Given high baseline health risks related to air toxics in communities
near facilities that produce HFCs and potential environmental justice
concerns, EPA is also seeking input on ways to ensure that these
elevated risks not be further exacerbated by changes in the use
patterns for production of HFCs or their substitutes. Since these
topics relate to future rulemaking, rather than proposals in this
rulemaking, EPA will take comments on this section under advisement and
incorporate them, as appropriate, into such future rulemakings, with an
opportunity for public comment prior to finalization of any provisions.

A. How should EPA consider future allowance allocations?

    The AIM Act requires a phasedown of HFC production and consumption
to 15 percent of baseline by 2036 with no further lowering of the cap.
This is in contrast to the approach for ODS, where production and
consumption of chemicals were phased out, with limited exceptions. As
such, EPA is considering whether a different approach is warranted for
determining allowance allocations under the AIM Act and is seeking
advance input on several options for the allowance framework and
procedure for 2024 and later years.
    For ODS, EPA generally issued allowances to a set of companies
based on their historic levels of production and consumption. Given the
intent was to phase out the production and consumption of ODS, EPA did
not adjust the list of allowance holders once they were set, except to
reflect transfers of baseline allowances between companies. EPA is
considering whether allocating HFC allowances largely to historic
producers or importers is appropriate in the long-term for a phasedown.
    EPA is particularly interested in whether the concepts presented in
this section would benefit the environment (e.g., by encouraging
transition to low-GWP and non-HFC substances); provide an incentive or
disincentive to companies that develop and introduce low-GWP and non-
HFC substances; support the effective functioning of the HFC production
and import market; and/or create or remove barriers to new entrants to
the market, including for socially and economically disadvantaged
individuals. EPA seeks advance input on the following concepts, as well
as suggestions for additional approaches the Agency could consider for
2024 \95\ and later years.
---------------------------------------------------------------------------

    \95\ 2024 is the next milestone under the AIM Act phasedown
schedule, when aggregate allowances must be reduced to 60 percent of
the baseline.
---------------------------------------------------------------------------

    (1) Allocating allowances based on past production and consumption
from a set period of years and only adjusting allowance holders to
reflect transfers between companies;
    (2) Allocating allowances based on a reevaluation of the most
recent years of production and consumption data as reported to EPA
(e.g., three years);
    (3) Allocating allowances based on past production and consumption,
but requiring a fee for every allowance provided for production or
import of HFCs;
    (4) Establishing an auction system for the total set, or some
subset, of generally available allowances;
    (5) A combination of the above approaches, such as phasing in the
use of an auction or fee over time.
    Under the first concept, EPA would continue to issue allowances at
no cost. While there would be no cost associated with the allowances,
the allowances have value. Companies that receive allowances could
choose to remain in the market and produce or import HFCs, sell or
otherwise transfer their allowances to another company, or retire their
allowances. New entrants, other than those potentially established
through this rulemaking, would typically have to buy into the market
through the purchase of allowances. This approach may provide the least
flexibility for new entrants, and is most consistent with past practice
phasing out ODS. It would also provide ongoing value to companies
already in the market through the issuance of allowances regardless of
whether they continue to produce or import HFCs, effectively at the
expense of other allowance holders who are actively producing or
importing.
    The second concept would be similar in many respects to the first,
but would adjust each company's share of allowances periodically--
either at phasedown steps or every few years. It would reflect
transfers periodically when EPA adjusted the years of production and
consumption considered in allocating allowances, and would require new
entrants, after this initial allocation rule, to purchase or otherwise
obtain allowances from another allowance holder to enter the market
(although such new entrants may be included in future allocations after
the years considered shifted). This approach may better ensure the
companies receiving allowances are the companies who are actively
producing and importing. EPA can see advantages to this approach,
particularly for companies that continue to produce HFCs in the United
States, since allowances associated with companies that stop domestic
production would periodically be reapportioned to companies that
continue to produce domestically. However, this approach would
encourage companies to use all of their allowances or lose them at the
next periodic adjustment, potentially resulting in production and
consumption at a higher level than the market would demand. This could
also have environmental consequences if more HFCs are produced and
imported than are needed to satisfy market demand.
    The third concept would adopt an approach similar to the first two,
but would require companies pay a fee for allowances provided for
production or import of HFCs. This could address concerns about
producing or importing more HFCs than a company expects to need,
potentially resulting in benefits for the environment, but could
increase the cost of the allowance allocation and trading program.
Additionally, depending on how the fee was structured, this concept
could favor companies with more access to capital to purchase the
allowances. Given the expected increase in the market price of HFCs
that is likely to occur over time as allowances decrease, EPA would not
expect this to affect companies' profitability, but it could increase
the cost of HFCs. An increase in the cost of HFCs could foster faster
transition to alternatives, which would result in additional
environmental benefits. By increasing the cost of virgin material, it
could also increase the profitability and use of reclaimed material. As
noted previously, reclamation will be an important component to a
smooth

transition from HFCs, as it has been in past ODS phaseouts. It could
also foster a more active allowance transfer market to the extent
companies determine they have excess allowances that would earn more
profit if transferred to companies that are seeking additional
allowances based on their customers' demands.
    Under the fourth concept, EPA would determine the total allocation
level and establish an auction system for individual allowances. This
approach would provide flexibility in the marketplace such that
producers and importers could adjust their allowances from year-to-
year. This approach may allow the broadest participation in the HFC
production and import market. It could have similar benefits for the
environment by adding an extra cost to using an allowance and
discouraging entities from seeking allowances where there isn't
corresponding market demand. Increases in the price of virgin HFCs
could encourage transition to alternatives and support the use of
reclaimed material. Under an auction, EPA could consider developing a
mechanism that would permit entities to purchase allowances for the
purpose of retiring them which could result in additional environmental
benefits. The Agency seeks advance input on how best to structure such
an auction program, so as not to discourage participation by small
businesses and businesses that are socially and economically
disadvantaged. Smaller business may not have as much access to capital
and could potentially be shut out of the HFC production and import
market if the auction price was too high. This approach may also have
administrative challenges, but EPA could rely on its experience
implementing other environmental auction programs to set up and
administer such a program.
    The fifth concept would be a combination of any of the other
concepts, including allowing for future new entrants pools similar to
the one described in the proposal. In particular, EPA is interested in
whether it would be appropriate to phase in the third or fourth
concepts over time. For example, allowances in the early years of the
phasedown could be primarily allocated to companies that are currently
producing and importing (under the first two concepts), but each year
EPA could increase the share of allowances that are subject to a fee or
put up for auction. Under this approach, EPA could envision all
allowances being subject to a fee or put up for auction by 2036 when
the final phasedown step under the AIM Act is reached. This would
gradually transition the market from receiving allowances based on
historic production and import to one where any company could enter the
market.
    EPA is seeking advance input on these and other approaches for
issuing allowances starting with 2024.

B. How should EPA address the potential health effects of air toxics
associated with changes in the production of HFCS and substitutes in a
future rulemaking?

    Section III of the preamble describes EPA's initial approach in
assessing potential environmental justice concerns and poses several
questions designed to inform the Agency's analysis. The Agency's
preliminary screening-level analysis is included in the RIA, available
in the docket associated with this rulemaking. EPA is evaluating
whether there may be inadvertent or unexpected distributional effects
of the phasedown of HFCs that may cause potential environmental justice
concerns. Specifically, chemical feedstocks and byproducts emitted as
part of the production process at a facility expending allowances, or
producing substitutes, may cause or contribute to disproportionately
high exposure to certain air toxics in communities adjacent to, or
surrounding, that facility. As noted above, there is uncertainty about
how this rule would change production of HFCs and substitutes at
individual facilities, and how any such changes might affect air toxics
emissions and exposure in nearby communities.
    To support the development of comments, EPA is seeking data or
analysis to identify whether it is reasonable to expect net increases
in emissions; and if so, how we might isolate the impacts of this
program (i.e., effects resulting from the phasedown itself, the trading
of production allowances, or some other factor) to enable the Agency to
conduct a more nuanced analysis of changes in releases associated with
chemical feedstocks and byproducts for HFC substitutes, given the
inherent uncertainty regarding where, and in what quantities,
substitutes will be produced. EPA is also seeking comment on whether
there are other regulatory tools better suited than adjustments to the
HFC program design to address potential increases in emissions in non-
HFC feedstocks and byproducts at facilities subject to the
Congressionally mandated phasedown of HFCs under the AIM Act, if any.
EPA also seeks comment on whether these are the appropriate questions
or if there are other questions the Agency should be asking. EPA is
also soliciting comment on key assumptions underlying the environmental
justice analysis.
    EPA is also seeking input on the following approaches for future
rulemaking with respect to how the Agency treats allowance transfers to
address any potential for increased air toxics exposure in at-risk
communities, and the Agency is also seeking input on other approaches
that we have not considered.
1. Adjustments to Transfer Offsets
    EPA could consider adjusting the transfer offset, currently
proposed at five-percent (and taking comment on one to 10 percent),
based on factors such as the location of the receiving facility and
projected impacts to the surrounding community.
2. Issuing Allowances at a Facility Level
    EPA's current proposal is to issue allowances at a company level,
but the Agency could consider issuing allowances at a facility level in
future rulemakings to limit the potential for disproportionately high
production of HFCs.
3. Release of Relevant Facility Data
    As part of an allowance transfer request, EPA could require the
company receiving allowances to submit relevant facility data, which
would be made available to the public, that is sufficient to
demonstrate that transfers of allowances would not increase risks in
communities with high existing air toxic emissions or elevated health
risks.

XII. Statutory and Executive Order Review

A. Executive Order 12866: Regulatory Planning and Review and Executive
Order 13563: Improving Regulation and Regulatory Review

    This action is an economically significant regulatory action that
was submitted to the Office of Management and Budget (OMB) for review.
Any changes made in response to OMB recommendations have been
documented in the docket. A summary of the potential costs and benefits
associated with this action is included in the section titled, ``What
is the Summary of this Action?'' of this proposed rulemaking, and EPA
prepared an analysis of the potential costs and benefits associated
with this action, which is available in Docket Number EPA-HQ-OAR-2021-
0044.

B. Paperwork Reduction Act (PRA)

    The information collection activities in this proposed rule will be
submitted for approval to the Office of

Management and Budget (OMB) under the PRA upon publication of this
proposed rule. The Information Collection Request (ICR) document that
EPA prepared has been assigned EPA ICR number 2685.01. You can find a
copy of the ICR in the docket for this rule, and it is briefly
summarized here.
    Subsection (d)(1)(A) of the AIM Act specifies that on a periodic
basis, but not less than annually, each company that, within the
applicable reporting period, produces, imports, exports, destroys,
transforms, uses as a process agent, or reclaims a regulated substance
shall submit to EPA a report that describes, as applicable, the
quantity of the regulated substance that the company: Produced,
imported, and exported; reclaimed; destroyed by a technology approved
by the Administrator; used and entirely consumed (except for trace
quantities) in the manufacture of another chemical; or, used as a
process agent. EPA is proposing to collect such data regularly to
support implementation of the AIM Act's HFC phasedown provisions. EPA
is proposing quarterly reporting to ensure that annual production and
consumption limits are not exceeded. It is also needed for EPA to be
able to review allowance transfer requests, of which remaining
allowances is a major component of EPA's review. In addition, EPA is
proposing to collect information in order to calculate allowances, to
track the movement of HFCs through commerce, and to require auditing.
Collecting these data elements would allow for EPA to ensure that the
annual quantity of all regulated substances produced or consumed in the
United States does not exceed the cap established by the AIM Act,
consistent with subsection (e)(2)(B) of the Act.
    All information sent by the submitter electronically is transmitted
securely to protect information submitters customarily keep private or
closely held. The reporting tool guides the user through the process of
submitting CBI. Documents containing information claimed as CBI must be
submitted in an electronic format, in accordance with the recordkeeping
requirements. EPA also allows respondents to report CBI by fax and
through courier.
    Respondents/affected entities: Respondents and affected entities
will be individuals or companies that produce, import, export,
transform, distribute, destroy, or reclaim certain HFCs that are
defined as a regulated substance under the AIM Act. Respondents and
affected entities will also be individuals and companies who produce,
import, or export products in six statutorily specified applications: A
propellant in metered dose inhalers; defense sprays; structural
composite preformed polyurethane foam for marine and trailer use; the
etching of semiconductor material or wafers and the cleaning of
chemical vapor deposition chambers within the semiconductor
manufacturing sector; mission-critical military end uses, such as
armored vehicle and shipboard fire suppression systems and systems used
in deployable and expeditionary applications; and, on board aerospace
fire suppression.
    Respondent's obligation to respond: Mandatory (AIM Act).
    Estimated number of respondents: 11,664.
    Frequency of response: Quarterly, biannual, annual, and as needed
depending on the nature of the report.
    Total estimated burden: 36,540 hours (per year). Burden is defined
at 5 CFR 1320.3(b).
    Total estimated cost: $4,506,092 per year, includes $24,100
annualized capital or operation & maintenance costs.
    An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations in 40 CFR are listed in 40 CFR part 9.
    Submit your comments on the Agency's need for this information, the
accuracy of the provided burden estimates and any suggested methods for
minimizing respondent burden to EPA using the docket identified at the
beginning of this rule. You may also send your ICR-related comments to
OMB's Office of Information and Regulatory Affairs via email to
<EMAIL_ADDRESS>Attention: Desk Officer for EPA. Since OMB
is required to make a decision concerning the ICR between 30 and 60
days after receipt, OMB must receive comments no later than June 18,
2021. EPA will respond to any ICR-related comments in the final rule.
    EPA used data collected under the ICR for the Greenhouse Gas
Reporting Program (OMB Control No. 2060-0629) as well as the associated
reporting tool, the electronic Greenhouse Gas Reporting Tool (e-GGRT)
in developing this proposed rulemaking. EPA has also requested an
emergency ICR for a one-time collection request pertaining to data
necessary to establish the United States consumption and production
baselines as well as to determine potential producers, importers, and
application-specific end users who were not subject to the GHGRP (OMB
Control No. 2060-0732).

C. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic
impact on a substantial number of small entities under the RFA. The
small entities subject to the requirements of this action are suppliers
of HFCs including producers, importers, exporters, reclaimers,
companies that destroy HFCs, and companies that sell and distribute
HFCs. Details of this analysis are presented in ``Economic Impact
Screening Analysis for Proposed Allowance System for an HFC Production
and Consumption Phasedown.'' Docket ID EPA-HQ-OAR-2021-0044.
    The Regulatory Flexibility Act (RFA) generally requires an agency
to prepare a regulatory flexibility analysis of any rule subject to
notice-and-comment rulemaking requirements under the Administrative
Procedure Act or any other statute unless the agency certifies that the
rule will not have a significant economic impact on a substantial
number of small entities (SISNOSE). Small entities include small
businesses, small organizations, and small governmental jurisdictions.
For purposes of assessing the impacts of this rule on small entities,
small entity is defined as: (1) A small business as defined by the U.S.
Small Business Administration's (SBA) regulations at 13 CFR 121.201;
(2) a small governmental jurisdiction that is a government of a city,
county, town, school district, or special district with a population of
less than 50,000; or (3) a small organization that is any not-for-
profit enterprise that is independently owned and operated and is not
dominant in its field.
    If a rule may have a SISNOSE, the Agency would be required to take
certain steps to ensure that the interests of small entities were
represented in the rulemaking process. To determine whether this
proposed rule would likely have a significant economic impact on a
substantial number of small entities (SISNOSE), EPA identified
producers, importers, exporters, and reclaimers of HFCs from 2018 and
2019 that reported to EPA's Greenhouse Gas Reporting Program and the
U.S. Customs and Border Protection Automated Commercial Environment
(ACE). Available economic data about each identified entity (i.e.,
number of employees, annual sales) were obtained from the Dun and
Bradstreet databases, and the sizes compared with the U.S. Small
Business Administration's table of small business size standards
matched to NAICS codes. The small business threshold is defined by SBA
as the number of employees in the

company and varied between 100 and 1,500 employees. There were
identified HFC importers and reclaimers that met the definition of
small businesses, but no HFC producers were identified as small
businesses. To determine the likely economic impact on these small
businesses, it was assumed that a percentage of the HFCs they imported
would be replaced by an alternative, and the difference in the price
between the HFCs and their alternatives was applied to determine any
change in sales revenue. The methods used and assumptions made to
perform this analysis are described in detail in the technical support
document, Economic Impact Screening Analysis for Proposed Allowance
System for an HFC Production and Consumption Phasedown, found in the
docket of this proposed rule.
    EPA estimates that approximately 9 of the 8,746 potentially
affected small businesses could incur costs in excess of one percent of
annual sales and that approximately 4 small businesses could incur
costs in excess of three percent of annual sales. Because these levels
are below the thresholds used in EPA's other rulemakings affecting
these industries (e.g., CAA Title VI rulemakings), it can be presumed
that this action will have no SISNOSE.

D. Unfunded Mandates Reform Act (UMRA)

    This action does not contain any unfunded mandate as described in
UMRA, 2 U.S.C. 1531-1538 and does not significantly or uniquely affect
small governments. The action imposes no enforceable duty on any state,
local, or tribal governments.

E. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have
substantial direct effects on the states, on the relationship between
the national government and the states, or on the distribution of power
and responsibilities among the various levels of government.

F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments

    This action does not have tribal implications as specified in
Executive Order 13175. It will not have substantial direct effects on
tribes on the relationship between the federal government and Indian
tribes, or on the distribution of power and responsibilities between
the federal government and Indian tribes, as specified in Executive
Order 13175. Thus, Executive Order 13175 does not apply to this action.
EPA periodically updates tribal officials on air regulations through
the monthly meetings of the National Tribal Air Association and will
share information on this rulemaking through this and other fora.

G. Executive Order 13045: Protection of Children From Environmental
Health Risks and Safety Risks

    This action is subject to Executive Order 13045 (62 FR 19885, April
23, 1997) because it is an economically significant regulatory action
as defined by Executive Order 12866, and EPA believes that the
environmental health or safety risk addressed by this action has a
disproportionate effect on children. Accordingly, EPA has evaluated the
environmental health and welfare effects of climate change on children.
    GHGs, including HFCs, contribute to climate change. The GHG
emissions reductions resulting from implementation of this rule will
further improve children's health. The assessment literature cited in
EPA's 2009 and 2016 Endangerment Findings concluded that certain
populations and life stages, including children, the elderly, and the
poor, are most vulnerable to climate-related health effects. The
assessment literature since 2016 strengthens these conclusions by
providing more detailed findings regarding these groups'
vulnerabilities and the projected impacts they may experience.
    These assessments describe how children's unique physiological and
developmental factors contribute to making them particularly vulnerable
to climate change. Impacts to children are expected from heat waves,
air pollution, infectious and waterborne illnesses, and mental health
effects resulting from extreme weather events. In addition, children
are among those especially susceptible to most allergic diseases, as
well as health effects associated with heat waves, storms, and floods.
Additional health concerns may arise in low-income households,
especially those with children, if climate change reduces food
availability and increases prices, leading to food insecurity within
households. More detailed information on the impacts of climate change
to human health and welfare is provided in section I.C. of this
preamble.

H. Executive Order 13211: Actions That Significantly Affect Energy
Supply, Distribution, or Use

    This action is not a ``significant energy action'' because it is
not likely to have a significant adverse effect on the supply,
distribution, or use of energy. This action applies to certain
regulated substances and certain applications containing regulated
substances, none of which are used to supply or distribute energy.

I. National Technology Transfer and Advancement Act (NTTAA)

    This rulemaking does not involve technical standards.

J. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations

    This rule will reduce emissions of potent GHGs, which as noted
earlier in section I of this preamble will reduce the effects of
climate change, including the public health and welfare effects on
minority populations, low-income populations and/or indigenous peoples.
However, EPA is not yet able to determine whether this action has
disproportionately high and adverse effects on minority populations,
low-income populations and/or indigenous peoples, as specified in
Executive Order 12898 (59 FR 7629, February 16, 1994). A summary of the
Agency's approach for considering potential environmental justice
concerns as a result of this rulemaking can be found in section III of
the preamble, and our environmental justice analysis can be found in
the RIA, available in the docket for this rulemaking.

List of Subjects

40 CFR Part 9

    Environmental Protection, Reporting and recordkeeping requirements.

40 CFR Part 84

    Environmental protection, Administrative practice and procedure,
Air pollution control, Chemicals, Climate Change, Emissions, Imports,
Reporting and recordkeeping requirements.

Michael S. Regan,
Administrator.

    For the reasons set forth in the preamble, EPA is proposing to
amend 40 CFR part 9 and add 40 CFR part 84 as follows:

PART 9--OMB APPROVALS UNDER THE PAPERWORK REDUCTION ACT

0
1. The authority citation for part 9 continues to read as follows:

    Authority: 7 U.S.C. 135 et seq., 136-136y; 15 U.S.C. 2001, 2003,
2005, 2006, 2601-2671; 21 U.S.C. 331j, 346a, 31 U.S.C. 9701; 33
U.S.C. 1251 et seq., 1311, 1313d, 1314, 1318, 1321, 1326, 1330,
1342, 1344, 1345 (d) and (e), 1361; E.O. 11735, 38 FR 21243, 3 CFR,

1971-1975 Comp. p. 973; 42 U.S.C. 241, 242b, 243, 246, 300f, 300g,
300g-1, 300g-2, 300g-3, 300g-4, 300g-5, 300g-6, 300j-1, 300j-2,
300j-3, 300j-4, 300j-9, 1857 et seq., 6901-6992k, 7401-7671q, 7542,
9601-9657, 11023, 11048.

0
2. In Sec.  9.1 amend the table by:
0
a. Adding an undesignated heading for ``Phasedown of
Hydrofluorocarbons'' after the entry for ``82.184(e)''; and
0
b. Adding an entry for ``84.29'' in numerical order.
    The additions read as follows:

Sec.  9.1  OMB approvals under the Paperwork Reduction Act.

* * * * *

------------------------------------------------------------------------
                                                            OMB control
                     40 CFR citation                            No.
------------------------------------------------------------------------

                                * * * * *
------------------------------------------------------------------------
                     Phasedown of Hydrofluorocarbons
------------------------------------------------------------------------
84.29...................................................       2060-AV17

                                * * * * *
------------------------------------------------------------------------

0
3. Add part 84 to read as follows:

PART 84--PHASEDOWN OF HYDROFLUOROCARBONS

Subpart A--Production and Consumption Controls
Sec.
84.1 Purpose and scope.
84.3 Definitions.
84.5 Prohibitions for regulated substances.
84.7 Phasedown schedule.
84.9 Allocation of calendar-year production allowances.
84.11 Allocation of calendar-year consumption allowances.
84.13 Allocation of application-specific allowances.
84.15 Set aside of application-specific allowances, production
allowances, and consumption allowances.
84.17 Availability of additional consumption allowances.
84.19 Transfers of allowances.
84.21 Sale or transfer of regulated substances produced or imported
with application-specific allowances
84.23 Certification identification generation and tracking
84.25 Required processes to import regulated substances as
feedstocks or for destruction
84.27 Controlling Emissions of HFC-23.
84.29 Destruction of regulated substances.
84.31 Recordkeeping and reporting.
84.33 Auditing of recordkeeping and reporting.
Subpart B--{RESERVED{time}

Appendix A to Part 84--Regulated Substances

    Authority: Section 103 in Division S, Innovation for the
Environment, of the Consolidated Appropriations Act, 2021 (Pub. L.
116-260).

Subpart A--Production and Consumption Controls

Sec.  84.1  Purpose and scope.

    (a) The purpose of the regulations in this subpart is to implement
the American Innovation and Manufacturing Act of 2020 (AIM Act),
enacted as part of Public Law 116-260. The AIM Act imposes limits on
the production and consumption of certain regulated substances,
according to a specified schedule.
    (b) This subpart applies to any person that produces, transforms,
destroys, imports, exports, distributes, or reclaims a regulated
substance and to end users in the six applications listed in subsection
(e)(4)(B)(iv) of the AIM Act.

Sec.  84.3  Definitions.

    As used in this subpart, the term:
    Administrator means the Administrator of the United States
Environmental Protection Agency or his or her authorized
representative. Reports and petitions, as well as any related
supporting documents, must be submitted electronically in a format
specified by the Administrator.
    Allowance means a limited authorization for the production or
consumption of a regulated substance established under subsection (e)
of section 103 in Division S, Innovation for the Environment, of the
Consolidated Appropriations Act, 2021 (Pub. L. 116-260) (the AIM Act).
An allowance allocated under subsection (e) of section 103 in Division
S of the AIM Act does not constitute a property right and can be
retired, revoked, or withheld at the discretion of the relevant Agency
official.
    Application-specific allowance means a limited authorization
granted in accordance with subsection (e)(4)(B)(iv) of the AIM Act for
the production or import of a regulated substance for use in the
specifically identified applications that are listed in that subsection
and in accordance with the restrictions contained at Sec.  84.5(c). An
application-specific allowance does not constitute a property right and
can be retired, revoked, or withheld at the discretion of the relevant
Agency official.
    Bulk means a regulated substance of any amount that is in a
container for the transportation or storage of that substance such as
cylinders, drums, ISO tanks, and small cans. A regulated substance that
must first be transferred from a container to another container,
vessel, or piece of equipment in order to realize its intended use is a
bulk substance. A regulated substance contained in a manufactured
product such as an appliance, an aerosol can, or a foam is not a bulk
substance.
    Central Data Exchange means EPA's centralized electronic document
receiving system, or its successors.
    Chemical vapor deposition chamber cleaning means, in the context of
semiconductor manufacturing, a process type in which chambers used for
depositing thin films are cleaned periodically using plasma-generated
fluorine atoms and other reactive fluorine-containing fragments.
    Confer means to shift unexpended application-specific allowances
obtained in accordance with subsection (e)(4)(B)(iv) of the AIM Act
from the end user allocated such allowances to another entity for the
production or import of a regulated substance for use by the end user.
    Consumption, with respect to a regulated substance, means
production plus imports minus exports.
    Consumption allowances means a limited authorization to produce and
import regulated substances; however, consumption allowances may be
used to produce regulated substances only in conjunction with
production allowances. A person's consumption allowances are the total
of the allowances obtained under Sec.  84.11 or 84.15 as may be
modified under Sec. Sec.  84.17 (availability of additional consumption
allowances) and 84.19 (transfer of allowances).
    Defense spray means an aerosol-based spray used for self-defense,
including pepper spray and animal sprays, and containing the irritant
capsaicin and related capsaicinoids (derived from oleoresin capsicum),
an emulsifier, and an aerosol propellant.
    Destruction means the expiration of a regulated substance to the
destruction and removal efficiency actually achieved. Such destruction
might result in a commercially useful end product, but such usefulness
would be secondary to the act of destruction.
    Etching means, in the context of semiconductor manufacturing, a
process type that uses plasma-generated fluorine atoms and other
reactive fluorine-containing fragments that chemically react with
exposed thin-films (e.g., dielectric, metals) or substrate (e.g.,
silicon) to selectively remove portions of material.
    Exchange value means the value assigned to a regulated substance in
accordance with AIM Act subsections (c) and (e), as applicable, and as
provided in appendix A to this part.

    Exchange value equivalent (EVe) means the exchange value-weighted
amount of a regulated substance obtained by multiplying the mass of a
regulated substance by the exchange value of that substance.
    Export means the transport from inside the United States or its
territories to persons outside the United States or its territories,
excluding United States military bases and ships for on-board use.
    Exporter means the person who contracts to sell regulated
substances for export or transfers regulated substances to his
affiliate in another country.
    Facility means one or more production lines at the same location
owned by or under common control of the same person.
    Final customer means the last person to purchase a bulk regulated
substance before its intended use.
    Foreign country means an entity which is recognized as a sovereign
nation or country other than the United States of America.\1\
    Heel means the amount of a regulated substance that remains in a
container after the container is discharged or off-loaded (that is no
more than ten percent of the volume of the container).
    Import means to land on, bring into, or introduce into, or attempt
to land on, bring into, or introduce into, any place subject to the
jurisdiction of the United States, regardless of whether that landing,
bringing, or introduction constitutes an importation within the meaning
of the customs laws of the United States. Off-loading used regulated
substances from a ship during servicing are not considered imports.
    Importer means any person who imports a regulated substance into
the United States. ``Importer'' includes the person primarily liable
for the payment of any duties on the merchandise or an authorized agent
acting on his or her behalf. The term also includes, as appropriate:
    (1) The consignee;
    (2) The importer of record;
    (3) The actual owner; or
    (4) The transferee, if the right to draw merchandise in a bonded
warehouse has been transferred.
    Individual shipment means the kilograms of a regulated substance
for which a person may make one (1) U.S. Customs entry, as identified
in the non-objection notice obtained from the relevant Agency official
in accordance with Sec.  84.25.
    Metered dose inhaler (MDI) means a handheld pressurized inhalation
system that delivers small, precisely measured therapeutic doses of
medication directly to the airways of a patient. MDIs treat health
conditions such as asthma and chronic obstructive pulmonary disease and
are approved for such use by the U.S. Food and Drug Administration
(FDA).
    Mission-critical military end uses means those uses of regulated
substances by an agency of the Federal Government responsible for
national defense which have a direct impact on mission capability, as
determined by the U.S. Department of Defense, including, but not
limited to uses necessary for development, testing, production,
training, operation, and maintenance of Armed Forces vessels, aircraft,
space systems, ground vehicles, amphibious vehicles, deployable/
expeditionary support equipment, munitions, and command and control
systems.
    Non-objection notice means the limited authorization granted by the
relevant Agency official to import a specific individual shipment of a
regulated substance in accordance with Sec.  84.25.
    On board aerospace fire suppression means use of a regulated
substance in fire suppression equipment used on board commercial and
general aviation aircraft and space vehicles. On board commercial
aviation fire suppression systems are installed throughout mainline and
regional passenger and freighter aircraft, including engine nacelles,
auxiliary power units (APUs), lavatory trash receptacles, baggage/crew
compartments, and handheld extinguishers.
    Person means any individual or legal entity, including an
individual, corporation, partnership, association, state, municipality,
political subdivision of a state, Indian tribe; any agency, department,
or instrumentality of the United States; and any officer, agent, or
employee thereof.
    Process agent means the use of a regulated substance to form the
environment for a chemical reaction (e.g., use as a solvent, catalyst,
or stabilizer) where the regulated substance is not consumed in the
reaction, but is removed or recycled back into the process and where no
more than trace quantities remain in the final product. A feedstock, in
contrast, is consumed during the reaction.
    Production/Produce means the manufacture of a regulated substance
from a raw material or feedstock chemical (but not including the
destruction of a regulated substance by a technology approved by the
Administrator as provided in Sec.  84.29). The term production does not
include:
    (1) The manufacture of a regulated substance that is used and
entirely consumed (except for trace quantities) in the manufacture of
another chemical;
    (2) The reclamation, reuse, or recycling of a regulated substance;
or
    (3) The inadvertent or coincidental creation of insignificant
quantities of a regulated substance during a chemical manufacturing
process, resulting from unreacted feedstock, from the listed
substance's use as a process agent present as a trace quantity in the
chemical substance being manufactured, or as an unintended byproduct of
research and development applications.
    Production allowances means the limited authorization to produce
regulated substances; however, production allowances may be used to
produce regulated substances only in conjunction with consumption
allowances. A person's production allowances are the total of the
allowances obtained under Sec.  84.9 or 84.15 as may be modified under
Sec.  84.19 (transfer of allowances).
    Production line means any process equipment (e.g., reactor,
distillation column) used to convert raw materials or feedstock
chemicals into regulated substances or consume regulated substances in
the production of other chemicals.
    Reclaim means the reprocessing of regulated substances to all of
the specifications in appendix A of 40 CFR part 82, subpart F (based on
AHRI Standard 700-2016) that are applicable to that regulated substance
and to verify that the regulated substance meets these specifications
using the analytical methodology prescribed in section 5 of appendix A
of 40 CFR part 82, subpart F.
    Regulated substance means a hydrofluorocarbon listed in the table
contained in subsection (c)(1) of the AIM Act and a substance included
as a regulated substance by the Administrator under the authority
granted in subsection (c)(3). A current list of regulated substances
can be found in appendix A of this part.
    Source facility means the location at which a used regulated
substance was recovered from a piece of equipment.
    Structural composite preformed polyurethane foam means a foam blown
from polyurethane that is reinforced with fibers and with polymer resin
during the blowing process, and is preformed into the required shape
(e.g., specific boat or trailer design) to increase structural strength
while reducing the weight of such structures.
    Transform means to use and entirely consume (except for trace
quantities) a controlled substance in the manufacture of other
chemicals. A regulated substance that is used and entirely

consumed (except for trace quantities) in the manufacture of another
chemical is called a feedstock.
    Transhipment means the continuous shipment of a regulated
substance, from a foreign country of origin through the United States
or its territories, to a second foreign country of final destination,
as long as the shipment does not enter interstate commerce. A
transhipment, as it moves through the United States or its territories,
cannot be re-packaged, sorted or otherwise changed in condition.
    Used regulated substances means regulated substances that have been
recovered from their intended use systems (including regulated
substances that have been, or may be subsequently, recycled or
reclaimed).
\1\ Taiwan is not considered a foreign country.

Sec.  84.5  Prohibitions for regulated substances.

    (a) Production. (1) Effective January 1, 2022, no person may
produce regulated substances, intentionally or unintentionally, in
excess of the quantity of unexpended production allowances or
unexpended application-specific allowances held by that person under
the authority of this subpart at that time in that control period.
Every kilogram of production in excess of allowances expended
constitutes a separate violation of this subpart.
    (2) Effective January 1, 2022, no person may use production
allowances to produce a quantity of regulated substances unless that
person uses an equal quantity of consumption allowances at the same
time.
    (3) A person is not required to expend production allowances or
application-specific allowances to produce regulated substances if the
regulated substances are destroyed using a technology approved by the
Administrator for destruction under Sec.  84.29 within 30 days if the
destruction technology is located at the facility where production
occurred or 90 days if the destruction technology is not located at the
facility where production occurred.
    (b) Import. Effective January 1, 2022, (1) No person may import
bulk regulated substances, except:
    (i) By expending, at the time of the import, consumption or
application-specific allowances in a quantity equal to the exchange-
value weighted equivalent of the regulated substances imported;
    (ii) After receipt of a non-objection notice for substances for use
in a process resulting in their transformation or their destruction in
accordance with Sec.  84.25(a);
    (iii) After receipt of a non-objection notice for used regulated
substances imported for destruction in accordance with Sec.  84.25(b);
or
    (iv) As a transhipment in accordance with Sec.  84.31(c)(3) if all
transhipped regulated substance leaves the country within six months of
its entry.
    (2) Imports authorized under paragraph (b)(1)(ii) of this section
may not be in containers designed to hold 100 pounds or less of a
regulated substance.
    (3) A person issued a non-objection notice for the import of an
individual shipment of regulated substances under paragraphs (b)(1)(ii)
and (iii) of this section may not transfer or confer the right to
import.
    (4) No person may introduce into interstate commerce any regulated
substance claimed as a transhipment and/or held in a bonded warehouse
while in transit.
    (5) Every kilogram of bulk regulated substances imported contrary
to this paragraph (b) constitutes a separate violation of this subpart.
    (c) Application-specific uses. (1) Effective January 1, 2022, no
person may confer application-specific allowances for the production or
import of a regulated substance in excess of the amount of unexpended
application-specific allowances held by that person under the authority
of this subpart at that time in that control period. No person may
expend an application-specific allowance for regulated substances to be
used in any application other than the one identified by the
application-specific allocation expended. Every kilogram of production
in excess of the application-specific allowances expended by the
producer constitutes a separate violation of this subpart. Every
kilogram of import in excess of the application-specific allowances
expended by the importer constitutes a separate violation of this
subpart.
    (2) No person may use a regulated substance produced or imported
using application-specific allowances for any purpose other than those
for which the application-specific allowance was allocated, and as set
forth in this paragraph (c). Application-specific allowances are
apportioned to a person under Sec. Sec.  84.13 and 84.15 for the
production or import of regulated substances solely for the individual
application listed on the allowance, which may include:
    (i) A propellant in metered dose inhalers;
    (ii) Defense sprays;
    (iii) Structural composite preformed polyurethane foam for marine
use and trailer use;
    (iv) The etching of semiconductor material or wafers and the
cleaning of chemical vapor deposition chambers within the semiconductor
manufacturing sector;
    (v) Mission-critical military end uses, such as armored vehicle
engine and shipboard fire suppression systems and systems used in
deployable and expeditionary applications; and
    (vi) On board aerospace fire suppression.
    (3) Effective January 1, 2022. (i) No person may acquire
application-specific allowances unless for use in the same application
as associated with the application-specific allowance. No person may
transfer application-specific allowances unless for use in the same
application as associated with the application-specific allowance.
    (ii) No person may acquire or sell regulated substances produced or
imported using application-specific allowances for use in anything
other than the application for which it was originally allocated. Every
kilogram of a regulated substance imported or exported in contravention
of this paragraph constitutes a separate violation of this subpart.
    (d) International transfers. Effective January 1, 2022. (1) no
person subject to the requirements of this subpart may transfer a
production allowance to a person in a foreign country unless that
country has established the same or similar requirements or otherwise
undertaken commitments regarding the production and consumption of
regulated substances as are contained in the AIM Act, as determined by
the EPA.
    (2) Similarly, no person may transfer production allowances to or
from a person in a foreign country without satisfying the requirements
in Sec.  84.19. Every production allowance transferred in contravention
of this paragraph constitutes a separate violation of this subpart.
    (e) Violations. No person may sell or distribute, or offer for sale
or distribution, any regulated substance that was produced or imported
in violation of paragraphs (a) through (d) of this section, except for
such actions needed to re-export the regulated substance. Every
kilogram of a regulated substance sold or distributed, or offered for
sale or distribution, in contravention of this paragraph constitutes a
separate violation of this subpart.
    (f) False information. No person may provide false information to
the EPA when petitioning, reporting, or for any

communication required under this subpart.
    (g) Agency actions. The Agency has full discretion to retire,
revoke, or withhold the allocation of allowances for actions in
contravention of this part.
    (h) Anti-Dumping/Countervailing Duties. The relevant Agency
official reserves the right to retire, revoke, or withhold the
allocation of allowances to any otherwise qualifying importer that is
in arrears with Anti-Dumping/Countervailing Duties required under a
final determination from the Department of Commerce.
    (i) Disposable cylinders. (1) Effective July 1, 2023, no person may
import or place a regulated substance in a non-refillable cylinder.
    (2) Effective January 1, 2025, no person may sell or offer for sale
regulated substances contained in a non-refillable cylinder.
    (3) Small cans containing less than two pounds of regulated
substances that utilize a self-sealing valve that meets the
requirements in 40 CFR 82.154(c)(2) are not subject to this
restriction.
    (j) Labeling. (1) Effective January 1, 2022, no person may sell or
distribute, or offer to sell or distribute, containers containing a
regulated substance that lacks a label or other permanent markings, in
numbers and letters at least \1/8\ inch high, stating the common name
of the regulated substances or blend contained, the composition and
ratios of the regulated substances if a blend, and a cylinder serial
number.
    (2) No person other than the importer may repackage material that
was initially unlabeled or mislabeled unless the importer:
    (i) Expends consumption allowances equal to the amount of
allowances that would be required if each cylinder were full of HFC-23;
or
    (ii) Verifies the contents with independent laboratory testing
results and fixes a label on the container conveying the lab-verified
test results before the container enters interstate commerce.

Sec.  84.7  Phasedown schedule.

    (a) Phasedown from baseline. Total production and consumption of
regulated substances in the United States in each year cannot exceed
the amounts (shown as a percentage of baseline) in the following table:

------------------------------------------------------------------------
                                      Percentage of      Percentage of
                                        production        consumption
               Date                      baseline           baseline
                                        (percent)          (percent)
------------------------------------------------------------------------
2022-2023.........................                 90                 90
2024-2028.........................                 60                 60
2029-2033.........................                 30                 30
2034-2035.........................                 20                 20
2036 and thereafter...............                 15                 15
------------------------------------------------------------------------

    (b) Annual production and consumption limits. (1) The production
baseline for regulated substances is 375 million metric tons of
exchange value equivalent.
    (2) The consumption baseline for regulated substances is 299
million metric tons of exchange value equivalent.
    (3) Total production and consumption in million metric tons of
exchange value equivalent for regulated substances in the United States
in each year is derived by multiplying the production baseline or
consumption baseline by the percentage in paragraph (a) of this
section. Total production and consumption allowances issued under this
subpart may not exceed the quantities shown in the following table:

------------------------------------------------------------------------
                                     Total production  Total consumption
               Date                      (MMTEVe)           (MMTEVe)
------------------------------------------------------------------------
2022-2023.........................              337.5              269.1
2024-2028.........................                225              179.4
2029-2033.........................              112.5               89.7
2034-2035.........................                 75               59.8
2036 and thereafter...............              56.25              44.85
------------------------------------------------------------------------

Sec.  84.9  Allocation of calendar-year production allowances.

    (a) EPA will issue, through a separate notification, calendar year
production allowances to entities that produced a regulated substance
in 2020. The number of production allowances allocated to each eligible
entity for 2022-2023 is calculated as follows:
    (1) Take the highest annual exchange value-weighted production
amount that each eligible entity reported to the agency for calendar
year 2017, 2018, or 2019, whichever year is highest.
    (2) Sum the ``high year'' values determined in step 1 of all
eligible entities and determine each entity's percentage of that total.
    (3) Determine the amount of general pool production allowances by
subtracting the quantity of application specific allowances for that
year as determined in accordance with Sec.  84.13 and the set aside in
Sec.  84.15 from the production cap in Sec.  84.7(b)(3).
    (4) Determine individual entities' production allowance quantities
by multiplying each entity's percentage determined in step 2 by the
amount of general pool allowances determined in step 3.
    (b) (1) EPA will allocate calendar year production allowances to
individual entities by October 1 of the calendar year prior to the year
in which the allowances will be used based on the exchange value-
weighted quantities calculated in paragraph (a)(4) of this section.
    (2) EPA will provide public notice of the list of companies
receiving production allowances as well as the quantities they will be
allocated by that date.
    (3) In addition to the procedure in paragraph (a) of this section,
EPA will allocate calendar year production allowances to entities that
qualified for allowances under Sec.  84.15.
    (4) If there are remaining production allowances after distribution
from the set aside under Sec.  84.15, EPA will distribute such
allowances on a pro rata basis to the entities in paragraph (a) of

this section by March 31 of the calendar year in which the allowances
will be used.

Sec.  84.11   Allocation of calendar-year consumption allowances.

    (a) EPA will issue, through a separate notification, calendar year
consumption allowances to entities that imported or produced a bulk
regulated substance in 2020, unless an individual accommodation is
permitted by a relevant Agency official. If multiple importers are
related through shared corporate ownership or control, EPA will
calculate and issue allowances to a single corporate owner. The number
of consumption allowances allocated to each eligible entity for 2022-
2023 is calculated as follows:
    (1) Take the highest annual exchange value-weighted bulk
consumption amount chosen at the corporate-level for eligible entities
reporting to the agency for each calendar year 2017, 2018, or 2019,
whichever year is highest.
    (2) Sum the ``high year'' values determined in step 1 of all
eligible entities and determine each entity's percentage of that total.
    (3) Determine the amount of general pool consumption allowances by
subtracting the quantity of application specific allowances for that
year as determined in accordance with Sec.  84.13 and the set aside in
Sec.  84.15 from the consumption cap Sec.  84.7(b)(3).
    (4) Determine individual entity consumption allowance quantities by
multiplying each entity's percentage determined in step 2 by the amount
of general pool allowances determined in step 3.
    (b)(1) EPA will allocate calendar year consumption allowances to
individual entities by October 1 of the calendar year prior to the year
in which the allowances will be used based on the exchange value-
weighted quantities calculated in paragraph (a)(4) of this section.
    (2) EPA will provide public notice of the list of companies
receiving consumption allowances as well as how they will be allocated
by that date.
    (c)(1) In addition to the procedure in paragraph (a) of this
section, EPA will allocate calendar year consumption allowances to
entities that qualified for allowances under Sec.  84.15.
    (2) If there are remaining consumption allowances after
distribution from the set aside under Sec.  84.15, EPA will distribute
such allowances on a pro rata basis to the entities in paragraph (a) of
this section by March 31 of the calendar year.

Sec.  84.13   Allocation of application-specific allowances.

    (a) Application-specific allowances are available to entities for
calendar years 2022, 2023, 2024, and 2025 that use a regulated
substance in the following applications:
    (1) As a propellant in metered dose inhalers;
    (2) In the manufacture of defense sprays;
    (3) In the manufacture of structural composite preformed
polyurethane foam for marine use and trailer use;
    (4) In the etching of semiconductor material or wafers and the
cleaning of chemical vapor deposition chambers within the semiconductor
manufacturing sector;
    (5) For mission-critical military end uses; and
    (6) For on board aerospace fire suppression.
    (b) Entities in paragraph (a) of this section must request an
application-specific allowance by July 31 of the calendar year prior to
the year in which the allowances will be used starting with the
calendar year 2023 allocation. The application must include the
following:
    (1) Total quantity (in kilograms) of each specific regulated
substance acquired and used in the three calendar years prior to the
year in which the request is being made;
    (2) For regulated substances acquired over the past twelve months
by conferring allowances to a domestic producer, the quantity (in
kilograms) acquired, the specific regulated substance acquired, and the
name and contact information of the supplier.
    (3) For regulated substances acquired over the past twelve months
by conferring allowances to an importer, the quantity (in kilograms)
acquired, the specific regulated substance acquired, and the name and
contact information of the supplier.
    (4) Quantity of each specific regulated substances acquired over
the past twelve months by expending application-specific allowances for
direct import;
    (5) Quantity of each specific regulated substance acquired over the
past twelve months without expending application-specific allowances;
    (6) Quantity of regulated substances held in inventory by the
applicant or another company on behalf of the applicant;
    (7) A description of any plans to transition to regulated
substances with a lower exchange value or alternatives to regulated
substances, including not in kind substitutes.
    (c) EPA will determine the quantity of application-specific
allowances to issue to each company by taking the higher of the use of
regulated substances by the company in the specific application in the
prior year multiplied by:
    (1) The average growth rate of use for the company over the past
three years; or
    (2) The average growth rate of use by all companies requesting
allowances for that specific application over the past three years.
    (d) EPA will allocate application-specific allowances through a
letter to each eligible entity by October 1 of the calendar year prior
to the year in which the allowances will be used. The letter will
indicate the name of the company, the year of the allowance, the
quantity of allowances, and the specific application for which the
allowances may be used.
    (e) Entities that EPA was unaware of as of October 1, 2021, may
request allowances under the procedure in Sec.  84.15. Such entities
must meet the criteria for eligibility in this section and are subject
to the requirements of this section.
    (f) EPA will publish a list of companies allocated application-
specific allowances and their application.
    (g) Application-specific allowances may be expended for either the
import or production of a regulated substance.
    (h) Conferring application-specific allowances to a producer or
importer is not subject to the offset required of transfers of
allowances described in Sec.  84.19.

Sec.  84.15   Set aside of application-specific allowances, production
allowances, and consumption allowances.

    (a) Total allowances available under this section to be allocated
for calendar years 2022 and 2023 are:
    (1) Five million metric tons of exchange value equivalent
consumption allowances annually for calendar year 2022 and 2023.
    (2) One million metric tons of exchange value equivalent production
allowances for calendar year 2022 and 2023.
    (b)(1) Consumption and production allowances in paragraph (a) of
this section are available to entities that qualify for application-
specific allocations under Sec.  84.13 that EPA has not identified by
October 1, 2021.
    (2) Entities must provide the relevant Agency official with the
information contained in Sec.  84.13 by November 30, 2021, to be
eligible for consideration.
    (c) Consumption allowances in paragraph (a) of this section are
available to either:
    (1) Persons who imported regulated substances in 2020 that were not

required to report under 40 CFR part 98 that EPA has not identified by
October 1, 2021; or
    (2) Persons who are newly entering the HFC import market, do not
share corporate ownership or familial relations with entities in the
HFC import market, and meet the Small Business Administration
conditions for a small business in 13 CFR part 121.
    (d) Persons who meet the criteria listed in paragraph (c)(1) or (2)
of this section must provide the relevant Agency official with the
following information by November 30, 2021, to be eligible for
consideration:
    (1) Name and address of the company and the complete ownership of
the company (with percentages of ownership);
    (2) Whether the company is a woman or minority owned business;
    (3) Contact information for the owner of the company;
    (4) The date of incorporation and State in which the company is
incorporated;
    (5) State license identifier;
    (6) A plan for importing HFCs;
    (7) Company employment figures including number of employees and a
breakdown by race and gender;
    (8) A prospective foreign exporter that the applicant anticipates
working with; and
    (9) For persons who meet the criteria listed in paragraph (c)(2) of
this section only, documentation demonstrating that they meet
conditions for a small business concern, as defined in 13 CFR part 121.
    (e) The calendar-year 2022 and 2023 allowances in paragraph (a) of
this section are to be allocated no later than March 31, 2022, in the
following manner:
    (1) First, persons who meet the criteria listed in (b) are
allocated application-specific allowances (subtracted from both the
production and consumption portions of the set aside pool) for 2022
equal to the estimated need, based on projected, current, and
historical trends, and subject to the same conditions for such
allowances in Sec.  84.13;
    (2) Second, persons who meet the criteria listed in paragraphs
(c)(1) and (2) of this section are allocated up to 0.2 million metric
tons exchange value equivalent in allowances for 2022 and 2023.
    (3) If the requests received total an amount of allowances that
exceeds the remaining quantity of allowances in the set aside pool,
after subtracting allowances issued under paragraph (c)(1) of this
section, the amount provided to each person who meet the criteria
listed in paragraphs (c)(1) and (2) of this section that has applied to
the set aside pool will be allocated an amount of allowances that is
reduced on a pro rata basis. If any allowances remain after the steps
outlined in paragraphs (c)(1) through (3) of this section, those
allowances will be distributed to the persons who meet the criteria
listed in Sec. Sec.  84.9 and 84.11 on a pro rata basis.
    (f) Restrictions:
    (1) Allowances issued under this section may not be transferred to
another entity.
    (2) Allowances issued under this section are not available to
companies that are a subsidiary of, or have any common ownership stake
with, another allowance holder.
    (g) EPA will publish the list of entities allocated allowances
under this section by March 31, 2022.

Sec.  84.17   Availability of additional consumption allowances.

    (a) A person may obtain at any time during the year, in accordance
with the provisions of this section, consumption allowances equivalent
to the quantity of regulated substances that the person exported from
the United States and its territories to a foreign country in
accordance with this section, when that quantity of regulated substance
was produced in the United States or imported into the United States
with expended consumption allowances. Both the export of the regulated
substance and the request for additional consumption allowances must
occur during the calendar year in which the consumption allowances were
expended to produce or import those same regulated substances.
    (1) The exporter must submit to the relevant Agency official a
request for consumption allowances setting forth the following:
    (i) The identities and addresses of the exporter and the recipient
of the exports;
    (ii) The exporter's Employer Identification Number;
    (iii) The names, telephone numbers, and email addresses of contact
persons for the exporter and the recipient;
    (iv) The quantity (in kilograms) and name of the regulated
substances exported;
    (v) The source of the regulated substances and the date purchased;
    (vi) The date on which, and the port from which, the regulated
substances were exported from the United States or its territories;
    (vii) The country to which the regulated substances were exported;
    (viii) A copy of the bill of lading and the invoice indicating the
net quantity (in kilograms) of regulated substances shipped and
documenting the sale of the regulated substances to the purchaser;
    (ix) The commodity codes of the regulated substances exported; and
    (x) A written statement from the producer that the regulated
substances were produced with expended allowances or a written
statement from the importer that the regulated substances were imported
with expended allowances.
    (2) The relevant Agency official will review the information and
documentation submitted under paragraph (a)(1) of this section and will
issue a notice to the requestor.
    (i) The relevant Agency official will determine the quantity of
regulated substances that the documentation verifies was exported and
issue consumption allowances equivalent to the quantity of regulated
substances that were exported.
    (A) The grant of the consumption allowances will be effective on
the date the notice is issued.
    (B) The consumption allowances will be granted to the person the
exporter indicates, whether it is the producer, the importer, or the
exporter.
    (ii) The relevant Agency official will issue a notice that the
consumption allowances are not granted if the official determines that
the information and documentation do not satisfactorily substantiate
the exporter's claims.

Sec.  84.19   Transfers of allowances.

    (a) Inter-company transfers. Effective January 1, 2022, a person
(``transferor'') may transfer to any other person (``transferee'') any
quantity of the transferor's production allowances, consumption
allowances, or application-specific allowances for use by the same type
of application, as long as the following conditions are met:
    (1) An offset equal to five percent of the amount of allowances
transferred will be deducted from the transferor's production allowance
balance if a transfer is made of production allowances, or deducted
from the transferor's consumption allowance balance if a transfer is
made of consumption allowances. In the case of transferring
application-specific allowances, one percent of the amount of
allowances transferred will be deducted from the transferor's
application-specific allowance balance.
    (2) The transferor must submit to the relevant Agency official a
transfer claim setting forth the following:
    (i) The identities and addresses of the transferor and the
transferee;

    (ii) The names, telephone numbers, and email addresses of contact
persons for the transferor and the transferee;
    (iii) The type of allowances being transferred, including the
specific application (if applicable), for which allowances are to be
transferred;
    (iv) The quantity (in MTEVe) of allowances being transferred;
    (v) The total cost of the allowances transferred;
    (vi) The amount of unexpended allowances of the type and for the
year being transferred that the transferor holds under authority of
this subpart as of the date the claim is submitted to EPA;
    (vii) For transfers of consumption allowances or production
allowances, the quantity of the five percent offset applied to the
quantity transferred that will be deducted from the transferor's
allowance balance. For transfers of application-specific allowances,
the quantity of the one percent offset applied to the quantity
transferred that will be deducted from the transferor's allowance
balance.
    (viii) For transfers of application-specific allowances, a signed
document from the transferee certifying that the transferee will use
the application-specific allowances only for the same application for
which the application-specific allowance was allocated.
    (3) The relevant Agency official will determine whether the records
maintained by EPA indicate that the transferor possesses unexpended
allowances sufficient to cover the transfer claim as of the date the
transfer claim is processed. The transfer claim is the quantity in EVe
to be transferred plus five percent of that quantity or plus one
percent for application-specific allowances. The relevant Agency
official will take into account any previous transfers, any production,
and allowable imports and exports of regulated substances reported by
the transferor. Within three working days of receiving a complete
transfer claim, the official will take action to notify the transferor
and transferee as follows:
    (i) The relevant Agency official will issue a non-objection notice
to both the transferor and transferee indicating if EPA's records show
that the transferor has sufficient unexpended allowances to cover the
transfer claim. In the case of transfers of production allowances or
consumption allowances, EPA will reduce the transferor's balance of
unexpended allowances by the quantity to be transferred plus five
percent of that quantity. In the case of transfers of application-
specific allowances EPA will reduce the transferor's balance of
unexpended allowances by the quantity to be transferred plus one
percent of that quantity. The transferor and the transferee may proceed
with the transfer when EPA issues a non-objection notice. However, if
EPA ultimately finds that the transferor did not have sufficient
unexpended allowances to cover the claim, the transferor and
transferee, where applicable, will be held liable for any violations of
the regulations of this subpart that occur as a result of, or in
conjunction with, the improper transfer.
    (ii) The relevant Agency official will issue an objection notice
disallowing the transfer if EPA's records show that the transferor has
insufficient unexpended allowances to cover the transfer claim, or that
the transferor has failed to respond to one or more Agency requests to
supply information needed to make a determination. Either transferor or
transferee may file a notice of appeal, with supporting reasons, with
the relevant Agency official within 10 working days after receipt of
notification that a transfer was disallowed. The official may affirm or
vacate the disallowance. If no appeal is filed electronically by the
tenth working day after notification, the disallowance shall be final
on that day.
    (4) The transferer and transferee must maintain a copy of the
transfer claim and a copy of EPA's non-objection or objection notice
for five years.
    (b) International transfers of production allowances. (1) A person
may request to increase or decrease their production allowances for a
specified control period through transfers of such allowances with a
person in a foreign country if the applicable conditions in this
paragraph are met. Once transferred, all allowances transferred
consistent with this paragraph will function as a production allowance,
as defined in Sec.  84.3.
    (i) Timing of requests. Any request for an increase or decrease in
production allowances based on an international transfer under this
paragraph must be submitted by October 1 of the year prior to the
calendar year in which the transferred allowances would be useable.
    (ii) Timing of the transfer. International transfers under this
paragraph will be deemed to occur, and the transferred allowances will
be useable, as of January 1 of the calendar year to which the transfer
applies.
    (2) Transfer from a person in a foreign country--Information
requirements. (i) A person requesting to change their production
allowances based on a transfer from a person in a foreign country must
submit to the relevant Agency official at the time the international
transfer is requested a signed document from an official representative
in that country's embassy in the United States stating that the
appropriate authority within that country has revised the domestic
production limits for that country equal to the lowest of the following
three production quantities:
    (A) The maximum production level permitted in Sec.  84.7(b) in the
year of the international transfer minus the quantity of production
allowances (in exchange value-weighted kilograms) to be transferred;
    (B) The maximum production level for the applicable regulated
substances that are allowed under applicable law (including the foreign
country's applicable domestic law) minus the quantity of production
allowances (in exchange value-weighted kilograms) to be transferred; or
    (C) The average of the foreign country's actual national production
level of the applicable regulated substances for the three calendar
years prior to the year of the transfer minus the quantity of
production allowances (in exchange value-weighted kilograms) to be
transferred.
    (ii) A person requesting a revision based on a transfer from a
foreign country (``transferee'') must also submit to the relevant
Agency official a true copy of the document that sets forth the
following:
    (A) The identity and address of the transferee;
    (B) The foreign country authorizing the transfer;
    (C) The names, telephone numbers, and email addresses of contact
persons for the transferee and for the person in the foreign country;
    (D) The name of the chemical and quantity (in kilograms) of
production being transferred;
    (E) Documentation that the foreign country possesses the necessary
quantity of unexpended production rights;
    (F) The calendar year to which the transfer applies; and
    (G) A signed statement from a responsible official describing
whether the increased production is intended for export or the market
in the United States.
    (3) Transfer to a person in a foreign country--Information
requirements. A person requesting a transfer to a person in a foreign
country must submit a request to the relevant Agency official that sets
forth the following information:
    (i) The identity and address of the person seeking to transfer the
allowances (``transferor'');
    (ii) The foreign country authorizing the transfer;

    (iii) The names, telephone numbers, and email addresses of contact
persons for the transferor and for the person in the foreign country;
    (iv) The name of the chemical and quantity (in kilograms) of
allowable production being transferred; and
    (v) The calendar year to which the transfer applies;
    (vi) A signed statement from a responsible official requesting that
the relevant Agency official revise the number of production allowances
the transferor holds such that the aggregate national production in the
United States is equal the lowest of the following three production
quantities:
    (A) The maximum production level permitted in Sec.  84.7(b) in the
year of the international transfer minus the quantity of production
allowances (in exchange value-weighted kilograms) to be transferred;
    (B) The maximum production for the applicable regulated substances
that are allowed under applicable law minus the quantity of production
allowances (in exchange value-weighted kilograms) to be transferred; or
    (C) The average of the United States' actual national production
level of the applicable regulated substances for the three calendar
years prior to the year of the transfer minus the quantity of
production allowances (in exchange value-weighted kilograms) to be
transferred.
    (4) Review of international transfer request to a foreign country.
After receiving a transfer request that meets the requirements of
paragraph (b)(3) of this section, the relevant Agency official may, at
his/her discretion, consider the following factors in deciding whether
to approve such a transfer:
    (i) Potential environmental implications; and
    (ii) The total quantity of unexpended production allowances held by
U.S. entities.
    (5) Notice of transfer. The relevant Agency official will review
the submitted requests to determine whether the foreign country in
which the person is located has enacted or otherwise established the
same or similar requirements or otherwise undertaken commitments
regarding the production and consumption of regulated substances as are
contained in the AIM Act, within a reasonable time frame of the date of
its enactment. If it is determined that these conditions are not met,
the relevant Agency official will notify the requestor in writing that
no transfers to or from the country can occur. If these conditions are
satisfied such that transfers to or from the country can occur, the
relevant Agency official will consider if the request meets the
applicable requirements of paragraph (b) of this section. If the
request meets the requirements of paragraph (b)(2) of this section for
transfers from foreign countries and paragraph (b)(3) of this section
for transfers to foreign countries, and if the relevant Agency official
has not decided to disapprove the request based on consideration of
factors listed in paragraph (b)(4) of this section if applicable, the
relevant Agency official will notify the person in writing that the
appropriate production allowances were either granted or deducted and
specify the control period to which the transfer applies. Notifications
of production allowances granted or deducted will be provided before
January 1 of the calendar year to which the transfer applies.
    (i) For transfers from a foreign country, such notification will
reflect a revision of the balance of allowances held by the recipient
of the transfer to equal the unexpended production allowances held by
the recipient of the transfer plus the quantity of allowable production
transferred from the foreign country minus an offset of five percent of
the quantity transferred. The relevant Agency official will not adjust
available allowances until the foreign country's representative had
confirmed the appropriate number of allowances were deducted in the
foreign country.
    (ii) For transfers to a foreign country, such notification will
reflect a revision of the balance of production allowances for the
transferor such that the aggregate national production of the regulated
substance to be transferred is to equal the value the relevant Agency
official determines to be the lowest of:
    (A) The maximum production level permitted in Sec.  84.7(b) in the
year of the international transfer minus the quantity of production
allowances transferred and minus an offset of five percent of the
quantity transferred; or
    (B) The maximum production level for the applicable regulated
substances that is allowed under applicable law (in exchange-value
weighted kilograms) minus the quantity of production allowances
transferred and minus an offset of five percent of the quantity
transferred; or
    (C) The average of the actual annual U.S. production of the
applicable regulated substances for the three years prior to the date
of the transfer (in exchange-value weighted kilograms minus the
quantity of production allowances transferred and minus an offset of
five percent of the quantity transferred.
    (6) Revised production limit for previous transferors. If the
average actual U.S. production during the three most recent calendar
years before the date of the transfer is less than the total allowable
U.S. production for the applicable regulated substances permitted in
Sec.  84.7(b) for a calendar year for which international transfers are
approved to occur, the aggregate allowed national U.S. production of
those substances will be reduced by an additional amount beyond a
simple deduction of the number of allowances reflected in the
notifications under paragraph (b)(5)(ii)(B) of this section. In these
circumstances, the relevant Agency official will revise the production
limit for each transferor who obtained approval of a transfer of the
applicable regulated substances to a foreign country in the same
calendar year and notify each transferor of the revision in writing.
The amount of the revision will equal the result of the following set
of calculations:
    (i) The total U.S. allowable production of the applicable regulated
substances minus the average of the actual annual U.S. production of
those substances during the three most recent calendar years prior to
the calendar year of the transfer;
    (ii) The quantity of production allowances for the applicable
regulated substances transferred by the transferor in that calendar
year divided by the total quantity of production allowances for those
substances approved for transfer to a person in a foreign country by
all the persons approved to make such transfers in that calendar year;
    (iii) The result of paragraph (b)(6)(i) of this section multiplied
by the result of paragraph (b)(6)(ii) of this section.
    (iv) The unexpended production allowances held by the person minus
the result of paragraph (b)(6)(iii) of this section.
    (7) Effective date of revised production limits. If a revision is
issued under paragraph (b)(6) of this section, the change in production
allowances will be effective on the date that the notification is
issued.

Sec.  84.21   Sale or transfer of regulated substances produced or
imported with application-specific allowances.

    (a) Sale or transfer of HFCs produced or imported using
application-specific allowances. (1) Effective January 1, 2022, any
person receiving an application-specific allowance (transferor) may
sell or transfer regulated substances produced or imported using that
allowance to another person within the same application (transferee)
provided that

the relevant Agency official approves the sale or transfer.
    (2) The transferee must submit a claim to the relevant Agency
official for approval before the sale or transfer can take place. The
claim must set forth the following:
    (i) The identities and addresses of the transferor and the
transferee;
    (ii) The name, telephone numbers, and email addresses of contact
persons for the transferor and the transferee;
    (iii) The amount of each regulated substance being sold or
transfered;
    (iv) The cost of the regulated substance;
    (v) The specific products that the transferee plans to produce with
the HFCs; and
    (vi) Certification that the HFCs will be used only for the same
application for which the application-specific allowance under which
the substances were produced or imported was allocated.
    (3) The transferor must submit a letter to the relevant Agency
official stating that it concurs with the terms of the sale or transfer
as requested by the transferee.
    (4) Once the claim is complete, and if EPA does not object to the
sale or transfer, then EPA will issue letters to the transferor and the
transferee within 10 business days indicating that the transaction may
proceed. EPA reserves the right to disallow a transaction if the claim
is incomplete, or if it has reason to believe that the transferee plans
use the regulated substance in anything other than the stated
application. If EPA objects to the transaction, EPA will issue letters
to the transferor and transferee stating the basis for disallowing the
transaction.
    (5) The burden of proof is placed on the transferee to retain
sufficient records to prove that the sold or transfered regulated
substances are used only for the stated application.
    (b) [Reserved].

Sec.  84.23   Certification identification generation and tracking.

    (a) Scope and applicability. All containers of bulk regulated
substance must be associated with a certification identification as of
January 1, 2024. Certification identifications may only be generated by
a person that produces, imports, reclaims, repackages, or blends
regulated substance for distribution or sale in bulk and reports to EPA
consistent with paragraph (d) of this section.
    (b) Prohibitions. Effective January 1, 2024, every kilogram of bulk
regulated substance sold or distributed, or offered for sale or
distribution, in violation of this section is a separate violation of
this subpart. Every kilogram of bulk regulated substance purchased or
received, or attempted to be purchased or received in violation of this
section is a separate violation of this subpart.
    (1) No person may sell or distribute, or offer for sale or
distribution, and no person may purchase or receive, or attempt to
purchase or receive, a regulated substance unless the container has a
valid certification identification.
    (2) No person may sell or distribute, or offer for sale or
distribution, regulated substance unless they are registered with EPA
consistent with Sec.  84.31.
    (3) No person may purchase or receive, or attempt to purchase or
receive, the regulated substance unless the person is registered with
EPA consistent with paragraph (d) or a final customer;
    (4) The following situations are exempt from the prohibitions in
paragraphs (b)(1) through (3) of this section:
    (i) The regulated substance is part of a transhipment and the
person transhipping the regulated substance has reported to EPA
consistent with Sec.  84.31(c)(3);
    (ii) The regulated substance was:
    (A) Previously used, has been recovered from a piece of equipment,
and is intended for reclamation;
    (B) The person selling or distributing the regulated substance
certifies in writing to the person purchasing or receiving the
regulated substance was recovered from a piece of equipment and
provides the date of recovery; and
    (C) The person purchasing or receiving the regulated substance is
either an EPA-certified refrigerant reclaimer or a registered supplier
of regulated substances consistent with paragraph (d) of this section.
    (iii) The regulated substance was imported consistent with the
petition process described in Sec.  84.25 and is being distributed by
an aggregator or destruction company; or
    (iv) The material was collected for destruction at a destruction
facility.
    (5) No producer or importer may request certification
identifications that would exceed their currently available allowances.
    (6) A person who reclaims regulated substances may request
certification identifications at a level equal to their reported
reclamation for the prior year plus an amount based on the average
annual growth in total U.S. HFC reclamation in the prior three years or
five percent, whichever is higher. If that level is not sufficient, the
reclaimer must notify EPA 45 days in advance of exceeding their allowed
level and request approval to generate additional certification
identifications. The request must estimate the additional certification
identifications needed for the next six months and provide an
explanation for the increased level of reclamation. EPA will review the
request and adjust the amount of certification identifications for the
person as appropriate within 21 days. Additional requests can be
submitted throughout the year as needed.
    (7) No regulated substance repackager or blender may request
certificate identifications unless they have allowances. They may
generate new QR codes based on the certification identifications
associated with the containers currently in their possession.
    (c) Required Practices. The following practices are required,
unless the person purchasing or receiving the bulk regulated substance
is listed in paragraph (b)(4) of this section:
    (1) Any person producing, importing, reclaiming, packaging, selling
or distributing, or offering to sell or distribute regulated substances
must register with EPA consistent with paragraph (d) of this section.
    (2) Any person who introduces a container of regulated substance or
reclaimed regulated substance into U.S. commerce, must permanently
affix a QR code to the container that documents a valid certification
identification using the standards defined by EPA prior to the
container entering U.S. commerce. For the purposes of this subpart,
examples of when a container of regulated substance or reclaimed
regulated substance enters U.S. commerce include arrival at U.S.
Customs and departure from a production or reclamation facility.
    (3) At the time of sale or distribution, a person selling or
distributing regulated substance must ensure there is a valid and
legible certification identification on each container of regulated
substance, scan the certification identification system to identify a
transaction, identify the person receiving the regulated substance, and
indicate whether the person receiving the regulated substance is a
final customer or supplier.
    (4) At the time of sale or distribution, a person taking ownership
of a regulated substance that is a registered supplier must ensure
there is a valid and legible certification identification on each
container of regulated substance and scan the certification
identification in the certification identification system to identify a
transaction.
    (d) Recordkeeping and Reporting--(1) Importers. Any person
importing a

container of regulated substance must enter the following information
in the certification identification system to generate a new QR code
and associated certification identification for each container of
regulated substance: The name or brand the regulated substance is being
sold and/or marketed under, the date it was imported, the unique serial
number associated with the container, and amount and name of the
regulated substance(s) in the container.
    (2) Reclaimers. Any person filling a container with a reclaimed
regulated substance must enter the following information in the
certification identification system to generate a new QR code and
associated certification identification for each container of regulated
substance: The name or brand the regulated substance is being sold and/
or marketed under, the date the regulated substance was reclaimed and
by whom, the date the reclaimed regulated substance was put into a
container, the unique serial number associated with the container, the
amount and name of the regulated substance(s) in the container, whether
the purity of the batch was confirmed to meet the specifications in
appendix A to 40 CFR part 82, subpart F, the date the batch was tested
for purity, and who certified the reclaimed regulated substance meets
the purity specifications. If a container is filled with reclaimed and
virgin regulated substance(s), the reclaimer must provide the amount of
virgin regulated substance is included in the container and the
certification identification(s) associated with that regulated
substance.
    (3) Producers and Packagers. Anyone who is filling a container,
whether for the first time after production or when transferring
regulated substance from one container to one or more smaller or larger
containers, must enter information in the certification identification
system and generate a new QR code for the container(s) of repackaged
regulated substances: The name or brand the regulated substance is
being sold and/or marketed under, the date it was repackaged, the
certification identification(s) associated with the regulated substance
being repackaged, the unique serial number for the container, and
amount and name of the regulated substance(s) in the container, and the
quantity of containers it was packaged in, and the size of the
containers.
    (4) Receiving recovered regulated substances. Anyone receiving
recovered regulated substances for purposes of reclamation must save a
copy of the written certification required under paragraph (b)(4)(ii)
of this section.
    (5) Certification identification generators registration. Any
person who introduces a container of regulated substance or reclaimed
regulated substance into U.S. commerce must register with EPA in the
certification identification system. The report must contain the name
and address of the company; contact information for the owner of the
company; the date(s) of and State(s) in which the company is
incorporated and State license identifier(s); the address of each
facility that sells or distributes regulated substances; how the
company introduces bulk regulated substances into U.S. commerce; and
the category of final customer(s) the supplier sells or distributes
regulated substances to. These reports must be updated and resubmitted
within 60 days if information changes.
    (6) Supplier Registration. Any person who sells, distributes, or
offers for sale or distribution, regulated substances must register
with EPA in the certification identification system. The report must
contain the name and address of the company; contact information for
the owner of the company; the date(s) of and State(s) in which the
company is incorporated and State license identifier(s); the address of
each facility that sells or distributes regulated substances; and the
category of final customer(s) the supplier sells or distributes
regulated substances to. These reports must be updated and resubmitted
within 60 days if information changes.
    (7) Container inventory. one-time report. In order to receive
certification identifications for containers of previously purchased
regulated substance, any person who sells or distributes, or offers to
sell or distribute, containers of bulk regulated substance must