re-petition once if the Agency indicated ``insufficient information''
as the basis for the objection notice.
    EPA received three comments on the proposed petition process, all
of which were opposed to the requirement to petition the Agency for
importing ODS to be transformed. The commenters stated that the
petition requirements and timeframe for transformation are not
logistically feasible or commercially practical. One of the commenters
stated that they do not have full information requested in the petition
until three days prior to departure, with other data elements being
known only 14 days before departure. The commenter proposed a one-time
notification to EPA for each shipment at such time as all requested
information is finalized prior to export from the foreign port.
    In this final rule EPA is maintaining the requirement to petition
the Agency and the information requirements of the petition as proposed
with two changes. To support the prohibition on importing HFCs for
feedstock in cylinders designed to hold 100 pounds or less of a
regulated substance (see Section IX.F.3), EPA is requiring that the
petition provide (ix) the capacity of the container. To support real-
time review of imports, EPA is also requiring that the importer report
(x) the unique identification number of the container used to transport
the HFCs as part of the petition. Given the logistical realities
described by the commenters EPA is not finalizing a requirement that
the petition be submitted to EPA 30 working days before leaving the
foreign port. Rather, EPA is requiring that the petition be submitted
at least 30 days before arriving at the U.S. port. This timing will
allow the importer to provide all the necessary information and will
not hold up the normal flow of imports. For companies that can submit
complete information earlier, they would be able to submit once all
requested information is finalized prior to export from the foreign
port. EPA will issue a non-objection or objection notice within 21 days
of the submission of the petition. Some companies will face burdens and
costs associated with the Congressionally mandated phasedown; those
increased burdens and costs unfortunately create economic incentives to
avoid compliance. That reality increases EPA's statutory and policy
imperative to identify and apply tools that counter those incentives to
increase the rate of compliance. EPA has determined that petitions for
importing material that is exempt from the definition of production is
one of those compliance tools and will help along with the other tools
described in this rule to ensure material imported into the U.S. either
is imported with an allowance or has prior authorization.
    EPA also proposed that HFCs imported for transformation or
destruction be transformed or destroyed, as applicable, within 60 days
of being imported into the United States. EPA took comment on whether
it is appropriate to allow longer timeframes, up to 12 months. EPA
received three comments on these timeframes. With regard to the
timeline for transformation, commenters stated that 60 days is
impractical. One recommended 120 days while a few others recommended 12
months. One commenter also noted that it may not be possible to
identify when a specific molecule of imported HFC is transformed. For
the reasons provided by the commenters EPA agrees that 60 days is too
limited for transformation. EPA is finalizing a requirement that the
material be transformed within one year of being imported.
    EPA also received two comments that it may not be possible to
destroy HFCs within the proposed 60-day timeframe. One commenter noted
that the destruction of HFCs has to be carefully controlled to avoid
the creation of hydrofluoric acid and damage to the equipment. Both
commenters recommended 120 days. For the reasons provided by the
commenters EPA agrees that 60 days is too limited for destruction. EPA
is finalizing a requirement that the material be destroyed within 120
days of being imported.
    EPA is requiring that the petitioner submit records indicating that
the substance has been transformed or destroyed with the company's next
quarterly reporting after its transformation or destruction. EPA is
adding supporting prohibitions in Sec.  84.5 for provisions that will
be similar to 40 CFR 82.4(j)(2) and 82.15(b)(3) to prohibit the import
of HFCs for processes that result in their transformation or
destruction, or disposal by destruction, without having received a non-
objection notice consistent with this petition process.
    By providing an importer with documentation that the import is
authorized, this will both expedite Customs clearance and result in a
more secure border. It will prevent an importer from falsely claiming
that their shipment does not require allowances or authorization from
EPA because it is exempted. It also will track the movement of the
import after entering the United States by attaching reporting
obligations of the transformer or destruction facility.

F. What other limitations are there on imports of HFCs?

1. Ban on Importing Feedstock HFCs in Cylinders
    EPA proposed to prohibit the import of HFCs in cylinders designed
to hold 100 pounds or less of a regulated substance intended for use in
a process resulting in their transformation or destruction. As
discussed in Section IX.E of this preamble, feedstock HFCs may be
imported without expending consumption allowances. This minimum size
restriction is intended to prevent the submission of false information
that a particular shipment of HFCs in cylinders does not require
allowances because they are for transformation or destruction
processes. EPA does not anticipate this proposal would affect current
business practices as these HFCs are typically imported and used in
large volumes at specific facilities. Commenters, including companies
that import feedstock HFCs, were supportive of this proposal. One
commenter requested an exemption for HFCs used for research and
development purposes as these are typically needed in smaller
quantities. EPA responds that the Agency does not have sufficient
information to say that these research and development applications
qualify as transformation or that these small quantities could not be
sourced domestically.
2. Imports of Heels
    As proposed, any import of bulk regulated substance in any quantity
requires consumption allowances. As with production, this requirement
is intended to ensure that all the regulated substances listed in the
AIM Act are appropriately phased down according to the schedule
specified by Congress. EPA is concerned that allowing for imports of
HFCs that are classified as ``U.S. goods returned'' or that are a
``heel'' within an otherwise empty container could provide avenues for
illegal imports. For example, foreign produced ODS had sometimes been
declared as a U.S. good returned to circumvent the allowance system.
EPA proposed that allowances would be necessary for such imports.
    One commenter supported an exemption of heels in cylinders,
railcars, tank trucks, and ISO tanks, similar to how EPA opted to
regulate ODS heels. The commenter stated that this would allow for
easier import and export of regulated substances. Another commenter
supported EPA's proposal to require allowances for the import of such.
A third commenter noted that importing heels is a necessary part of the
global supply chain. The commenter recommended that heels be treated as
U.S. goods returned and that allowances be expended. The commenter also
suggested that any returning ISO tank include evidence that it is
directly connected to a full ISO tank shipment that originated in the
United States.
    EPA sees no statutory basis to exempt imports of heels from the
requirement to expend allowances. As explained elsewhere, consumption
allowances are required to be expended for imports of bulk chemicals,
and there is no basis in the statute to change this requirement if a
cylinder, railcar, tank truck, or ISO tank is only 5-8 percent full
(the amount of a typical heel). Further, requiring imports of heels to
involve allowance expenditure will prevent unlawful trade, since an
importer could fraudulently mark something as a heel--and therefore
exempt from needing allowances--when a container or tank was much
fuller than a heel. In finalizing this requirement, EPA expects minimal
disruption to normal activities since a cylinder, railcar, tank trunk,
or ISO tank can be weighed to determine its mass, and therefore how
many allowances will need to be expended to import any heel contained
therein. Based on a review of Customs records, it also appears
companies report this information to CBP already.
3. Transhipments
    As proposed, companies that tranship HFCs do not need to expend
allowances for that transhipment. Transhipped materials are intended to
be imported into, and then exported out of, the country in identical
quantities. To meet the definition of transhipped material, the HFCs
cannot enter U.S. commerce. An entity does not have to expend
consumption allowances for transhipped materials if the regulated
substances are exported within six months of import. If a company does
not export HFCs within six months of importation, the company would
have to expend allowances. As explained in the reporting section,
companies must notify the Agency when a transhipment is imported into
and exported from the United States. EPA proposed that the reporting
would be due within 30 working days of export, but is finalizing a
shorter timeframe of 10 working days given CBP's regulations require a
carrier to update the in-bond record within 2 business days of
exportation (see 19 CFR 18.1(h)). The intent of these provisions is to
minimize the risk of illegal imports through the guise of
transhipments. The United States experienced this method of illegal
importation during the phaseouts of CFCs and HCFCs.
    EPA requested comment on the length of time a transhipment could
reasonably be expected to be in the United States. One commenter
recommended two months and another said one year is needed. Neither
comment provided justification for their suggested timeframes.
Therefore EPA is finalizing the six-month period as proposed.

G. How is EPA tracking the movement of HFCs?

    The Agency proposed to establish a certification program that would
use tracking or identification technology such as QR codes \98\ or
another tracking identifier to track the import, sale and distribution
of HFCs starting January 1, 2024. EPA is largely finalizing this system
as proposed, but, for reasons explained later in this section, is
extending the compliance date for using this system. As of January 1,
2025, EPA will require QR codes on all containers imported, sold or
distributed, or offered for sale or distribution, by producers and
importers. As of January 1, 2026, EPA will require QR codes on all
containers filled, sold or distributed, or offered for sale or
distribution, by all other repackagers and cylinder fillers in the
United States, including reclaimers and fire suppressant recyclers. As
of January 1, 2027, EPA will require a QR code on every container of
HFCs sold or distributed, offered for sale or distribution, purchased
or received, or attempted to be purchased or received. This system is
intended to ensure that HFCs imported into and distributed or sold in
the United States for consumptive uses are covered by an allowance or
were reclaimed or recycled for fire suppression use. Distribution and
sale of HFCs that did not enter the market legally would lack a
tracking identifier and thus could be easily spotted. This program
supports compliance and, where needed, enforcement action. Buyers would
also be able to know that they are purchasing legal HFCs. EPA took
comment on the proposals related to this electronic tracking system,
including ways to make it simple to use, while maintaining the

same functionality including the ability to report electronically.
---------------------------------------------------------------------------

    \98\ A QR code is a type of matrix barcode that contains data
for a locator, identifier, or tracker that points to a website or
application using standardized encoding modes to store data. It is
recognizable as black squares arranged in a square grid on a white
background, which can be read by an imaging device such as a camera.
In this rule we use the phrase ``QR code'' or ``tracking
identifier'' as a stand-in for ``physical media that facilitate
digital inventory tracking.'' EPA may or may not require QR codes
specifically (bar codes or RFID chips are other possibilities, for
example).
---------------------------------------------------------------------------

    EPA will assign certification IDs to producers and importers based
on the quantity of production, consumption, and application-specific
allowances they have. As allowances are expended, the certification IDs
associated with those allowances will be assigned to the corresponding
containers of HFCs prior to importation or being readied for transport
from a production facility. For imports, the appropriate QR code needs
to be affixed prior to importation. This will require coordination by
the importer and the foreign producer to ensure the labels are affixed
before arrival in the United States or before importation. While the
foreign producer may be affixing the labels, it is the entity in the
United States that is expending allowances who would be liable if the
QR codes are not properly affixed. To allow for EPA to have a better
understanding and oversight of the foreign company that will be filling
the containers abroad, EPA is requiring reporting for imports on the
name, address, contact person, email address, and phone number of the
responsible party at the facility where the container of regulated
substance(s) was filled. The certification ID system will be linked
with EPA's allowance allocation tracking system to ensure that
allowances were obtained for each MTEVe produced or imported. The
certification will be tracked using a physical label with a QR code
affixed to the container in which the material was sold after being
produced in the United States or imported. When the QR code is scanned
it will point to a website with a database that will indicate if the
regulated substance in the container is legal, the quantity and common
name of the HFC or HFC blend, the name it is currently being marketed
under (e.g., trade name or brand), and the date the container was
filled.
    Each time the material is bought/sold, or partitioned into another
container, the tracking information must be updated. If HFCs are
blended, the database entry for the identifier for that container must
be updated by the blender to reflect that new information. EPA will
establish protocols that ensure that once the tracking information is
entered it may not be altered retroactively, thereby preserving the
integrity of the information.
    The container and its associated certification IDs must be tracked
until it is sold to the final customer. The final customer will differ
depending on the use of the HFCs. For example, EPA would consider an
aerosol filler to be the final customer given the HFCs are being
incorporated into a finished product. Similarly, a factory charging HFC
refrigerant into a hermetically sealed appliance would be the final
customer. HFCs used in field-charged or field-serviced applications,
such as unitary split air conditioners, chillers, or refrigeration in
supermarkets, would continue to have the certification accompany them
until they are sold to a contractor or technician. HFCs used in fire
suppression would continue to have the certification accompany them
until they are sold to a company manufacturing products containing
HFCs, such as fire extinguishers, or until they are sold to an entity
installing fire suppression system cylinders in a total flooding
application.
    EPA's general understanding of the supply chain is that HFCs (from
production or import) are shipped in large ISO tanks, railcars,
individual cylinders or drums, and small cans. The material is then
sold to entities in the distribution chain. The material may change
hands one or more times before it is purchased by the final entity in
the distribution chain and subsequently sold to the final customer.
Anyone selling bulk HFCs would need to be registered in the system to
allow for legal HFCs to be tracked from the point of import, sale,
distribution, or offer for sale or distribution to the point of sale to
the final customer (i.e., the person that will use the HFCs) so that
any illegal HFCs offered for sale at any point in the distribution
chain could be identified. Sellers need to scan the containers as they
are sold, and buyers who intend to sell the HFCs, other than the final
customer, need to do the same.
    Anyone who is filling a container or cylinder, whether for the
first time or when transferring HFC from one container to one or more
smaller or larger containers, is required to enter information in the
system and generate a QR code for the new containers and add
information on: the brand it would be sold under, the quantity and
composition of HFCs in the container, the date it was filled, the
certification IDs associated with the HFCs (if being repackaged), and
the quantity of each HFC in the container.
    EPA recognizes that not all HFCs would enter the market through the
expenditure of an allowance. Most significantly, HFCs recovered from
equipment (e.g., refrigerants and fire suppressants) are sent for
reclamation or recycling and can be resold into the market after they
meet relevant standards. EPA received comment that companies that
recycle HFCs used for fire suppression were not explicitly included in
the proposed certification ID tracking system. As discussed below, EPA
is modifying its proposed approach to add in coverage for fire
suppressant recyclers.
    Under the CAA section 608 regulations, reclaimers must be certified
by EPA and report the amounts and names of the HFCs reclaimed on an
annual basis. Recyclers of HFCs for fire suppression have not
previously had to report to EPA but will be required to report
information prospectively. EPA will generate certification IDs for
reclaimers and fire suppressant recyclers in an amount equal to the
quantity reclaimed or recycled in the previous year plus an amount
based on the average annual growth in total United States HFC
reclamation and recycling in the prior three years or 10 percent,
whichever is higher. EPA anticipates reclamation and fire suppressant
recycling will increase over time. Reclaimers and fire suppressant
recyclers can request additional certification IDs from EPA if the
initial distribution was insufficient and the reclaimer or recycler
provides information to the Agency that can allow the Agency to confirm
that additional reclamation or recycling is occurring. This could
include reclamation totals for the same quarter in the prior year, a
signed statement from a responsible official at the company stating the
amount of reclamation they project for the remainder of the year based
on current demand and available supply of recovered HFCs, or other
documentation that shows how much additional reclamation is expected.
The data behind the certification IDs and the QR code will be similar
to that for HFCs produced or imported with allowances but will indicate
that it is reclaimed or recycled and provide the name of the reclaimer
or fire suppressant recycler.
    To ensure regulated HFCs sold by reclaimers and fire suppressant
recyclers are legal and eligible for sale, reclaimers and recyclers
would need to log into the certification ID tracking system and, for
each container of HFCs prior to selling regulated substances, provide
information such as when the HFC was reclaimed or recycled and by whom;
what regulated substance(s) (and/or the blend containing regulated
substances) is in the container; how many kilograms were put in the
container and on what date the container was filled; and for reclaimers
certification that the purity of the batch was confirmed to meet the
specifications in Appendix A to 40 CFR part 82, subpart F. If a
container is filled with reclaimed and virgin HFC(s), the reclaimer and
fire suppressant recycler

would also have to provide information on how much virgin HFC was used
and have sufficient certification IDs to account for that newly
produced or imported material to associate with the newly filled
container.
    EPA is also aware that under CAA sections 608 and 609, recovered
HFC refrigerant can be resold if it was used only in a motor vehicle
air conditioning (MVAC) equipment or MVAC-like appliance and is to be
used only in MVAC equipment or MVAC-like appliance and recycled in
accordance with 40 CFR part 82, subpart B (see 40 CFR 82.154(d)). This
practice will be allowed to continue without requiring registration in
the certification ID system. If someone is selling bulk HFCs, other
than for use by that company for servicing MVAC equipment, for example
to another auto shop, they need to be registered in the certification
ID tracking system.
    EPA recognizes that a large quantity of HFCs will already be in the
United States market prior to the finalization of this rule. Therefore,
the Agency initially proposed a compliance date of January 1, 2024, for
these provisions and included a requirement that anyone in possession
of containers of HFCs register their existing inventory of containers.
As explained later in this section, after reviewing public comments EPA
is extending this compliance date and is not finalizing the requirement
to register inventory of containers that do not have certification IDs.
After January 1, 2027, when the program is fully phased in, it will be
unlawful for anyone to import, sell or distribute, or offer for sale or
distribution, HFCs in a container that does not bear a legible QR code.
The import, sale, distribution, offer for sale or distribution,
purchase, receipt, and attempted purchase or receipt of uncertified
bulk HFCs (or bulk HFCs in a container without a legible QR code) will
be illegal and subject to civil and criminal enforcement to prevent
smuggling and/or bypassing of the system.
    EPA is also finalizing its proposal to require that any person who
sells, distributes, or offers for sale or distribution, regulated
substances must register with EPA in the certification ID system. To
support this provision, EPA is prohibiting any person from purchasing
or receiving, or attempting to purchase or receive regulated substances
from someone that is not registered with EPA.
    To ensure EPA is able to provide appropriate training and
familiarize entities who will use the certification ID system, the
agency is requiring that any person who produces, imports, reclaims,
recycles for fire suppression uses, repackages or fills regulated
substances, reclaimed regulated substances, or recycled regulated
substances for fire suppression uses must register with EPA in the
certification ID system at least six months before the date they are
subject to the requirements (e.g., producers would need to register no
later than July 1, 2024). Likewise, any person who sells, distributes,
or offers for sale or distribution, a container of bulk regulated
substances must register with EPA in the certification ID system at
least six months before the date they are subject to the requirements
(e.g., a distributor not already subject to the requirements would need
to register no later than July 1, 2026).
Response to Comments
    Some commenters expressed concerns about the cost and workability
of the proposed QR code tracking system; many wanted more details about
the design of the system and more time to comply. In particular,
commenters expressed doubts about the ease of tracking individual
cylinders of HFCs through commerce. EPA responds that the tracking
system is an important part of the Agency's suite of compliance tools
and is being finalized to support implementation of subsection
(e)(2)(B) of the AIM Act (as discussed). EPA appreciates that it will
require logistical adaptation and technological investment to set up
and implement such a system effectively. For this reason, the Agency is
finalizing an extended, phased-in roll out of the tracking system.
Under this phased-in approach, the Agency will have more time to
consult industry and develop an appropriate tracking system. Similarly,
industry will have more time to adapt existing systems and/or procure
any technology needed to support the tracking system and train staff.
The new phase-in schedule starts January 1, 2025, for all containers
imported and sold or distributed by producers and importers. On January
1, 2026, EPA will require QR codes on all containers filled and sold or
distributed by all other repackagers and cylinder fillers in the United
States, including reclaimers and fire suppressant recyclers. Finally,
as of January 1, 2027, EPA will require a QR code on every container of
HFCs sold or distributed.
    These later dates allow for additional time to develop and pilot
test the system in consultation with stakeholders (e.g., including
identifying ways to integrate EPA's system with a company's existing
inventory management software and packaging equipment) and conduct
training for users of the system. Phasing in the use of QR codes also
negates the need for requiring registration of existing inventory.
While this should provide sufficient time for anyone selling HFCs in
containers without a valid QR code to sell all their inventory, EPA
will monitor the market to see if registering inventory is needed.
    A few commenters questioned EPA's authority for requiring reporting
on individual containers of HFCs using a certification ID tracking
system. Under the AIM Act, some companies will face burdens and costs
associated with the Congressionally mandated phasedown; those increased
burdens and costs unfortunately create economic incentives to avoid
compliance. That reality increases EPA's statutory and policy
imperative to identify and apply tools that counter those incentives to
increase the rate of compliance. Given the risk of noncompliance, as
described throughout Section IX, there is an imperative to use every
reasonable tool at our disposal to ensure compliance and thus the
objectives of the AIM Act. Identifying containers of HFCs that were
illegally imported and produced is directly related to and supports
EPA's ability to meet the statutory obligation in subsection (e)(2)(B)
of the AIM Act. The tracking requirement is especially important for
identifying illegal production--as that material will not have a check
at the port like imports, and illegal imports that are able to evade
authorities at the point of importation. The provision also reinforces
the prohibition on disposable cylinders and ensures the universe of
legal sales is understood through the required registration for anyone
selling HFCs, and the requirements to scan QR codes and verify HFCs
being purchased and sold are legal. Given the serious concerns about
potential noncompliance and the undermining of Congress's directive to
ensure reductions in production and consumption occur consistent with
the statutory schedule, certification ID tracking will support EPA's
ability to effectively implement the statute.
    Comments noted that this proposal did not include fire suppressant
recyclers. EPA has modified the regulatory text and approach to include
fire suppressant recyclers. These companies will have to report to EPA
and generate certification IDs on the same timeline as reclaimers. Some
companies in the fire suppression industry expressed doubts about the
ease of tracking individual cylinders of HFCs through commerce. EPA
appreciates that fire suppression

companies deal in both bulk HFCs and products containing HFCs and
engage in HFC recycling. EPA appreciates that this diversity of
processes poses challenges to the implementation of bulk HFC tracking
in fire suppression. However, these complexities are surmountable
challenges to the creation of an effective HFC tracking system in this
industry, and EPA intends to work with many stakeholders, including
those in the fire suppression industry, in developing a workable system
over the extended timeline being finalized here. EPA is committed to
engaging in a thoughtful, iterative, and collaborative process to
develop a tracking system that identifies illegal activity.
    Some commenters wanted to be able to integrate the EPA tracking
system into their existing inventory tracking systems. EPA appreciates
that some companies have already made significant investments in
digital inventory tracking systems. The Agency will use the extended
timeline being finalized in this rule to work with these companies to
identify opportunities to integrate existing systems with the new
system for generating and tracking certification IDs.
    Some comments expressed concerns about the reporting burden, in
particular for reclaimers. To help ensure the quantity of regulated
substances produced or consumed in the United States does not exceed
the Congressionally mandated cap, EPA has determined that a
comprehensive container tracking system is needed. This system will
allow EPA to more readily identify HFCs that have been illegally
produced or imported without allowances. While reclaimed and recycled
material can be sold without allowances, EPA understands it is
typically blended with virgin HFCs when sold, so inclusion in this
certification ID tracking system is needed to track the movement of
HFCs produced or imported with allowances. Additionally, reclaimers are
putting additional HFCs onto the market each year for the same types of
use that newly produced or imported material is used for. Including
such material in the certification ID system allows for parity for
anyone selling HFCs into the United States market and removes a
potential loophole for a company that seeks to sell or distribute
illegal material in the United States while claiming it is reclaimed or
recycled. For these reasons, EPA is retaining its proposed inclusion of
reclaimers and is adding in fire suppressant recyclers.
    EPA has made changes to streamline the reporting that is required
for the certification ID tracking system. For example, EPA has removed
the requirement to include the date the batch was tested for purity and
who certified the reclaimed regulated substance meets the purity
requirement, and replaced it with a certification that the reclaimed
material in a container was batch tested and meets the required purity
standard in 40 CFR part 82, subpart F. EPA has also delayed the
compliance dates and removed the requirement to register all inventory
of cylinders held by companies prior to the compliance date.
    Comments indicated the limit placed on how many certification IDs a
reclaimer could generate in a year (5 percent or the average annual
growth rate over the past three years for all reclaimers) was
unnecessarily restrictive. EPA reviewed past reclamation data and
determined that reclamation values regularly fluctuate by more than 5
percent. EPA has determined that 10 percent is a more appropriate
value, in addition to relying on the average annual growth over the
past three years for all reclamation. These same conditions would also
apply to fire suppressant recyclers. Reclaimers and fire suppressant
recyclers could still request additional certification IDs using the
process described earlier in this section.
    Some commenters were concerned about the level of detail that EPA
might include in publicly available data. EPA intends to release
several data elements associated with each container of HFCs to
potential buyers of HFC material, to support this system. To allow
buyers of HFCs to determine whether the HFC they are purchasing is
legal to buy, EPA will release the following information: (1) Whether
the HFC being sold is legal to purchase based on information available
to EPA; (2) when the container was filled; (3) the specific HFCs in the
container; and (4) and the brand name the HFCs are being sold under.
EPA will also release a list of registered suppliers so purchasers know
where they can legally buy HFCs. For further discussion on EPA's
intentions to release data and what information will be maintained as
confidential, readers are directed to Section X.C.
    Most buyers desire to purchase only legal HFCs. However, in the
absence of a way to distinguish between legal and illegal HFCs, buyers
could unwittingly buy illegal HFCs and may be unintentionally
supporting the demand for and trade in illegal HFCs. For example, in an
enforcement case that concluded in 2018,\99\ there was evidence that
cylinders likely imported without allowances were bought and sold by
multiple suppliers before they were finally determined to be
counterfeit and likely illegally imported. There was no evidence that
anyone in the supply chain knew the material was likely illegally
imported other than the importer until the final purchaser noticed the
refrigerant was off-spec and in a cylinder that did not match the
typical packaging for that brand of product. For this reason, it is
important to involve each buyer and seller in the accountability
process and provide each buyer with accurate information on the origin
of the HFCs they intend to purchase.
---------------------------------------------------------------------------

    \99\ ``O.C. Man Pleads Guilty to Illegal Sales of Ozone-
Depleting Refrigerant.'' The Orange County Register, Nov. 2018.
Available at www.ocregister.com/2018/03/08/o-c-man-pleads-guilty-to-illegal-sales-of-ozone-depleting-refrigerant.
---------------------------------------------------------------------------

H. What reporting is required to support real-time review of imports?

    In the proposed rule, EPA stated it intended to work with CBP to
develop an automated electronic mechanism to check in real time whether
there are sufficient allowances available to allow for an import of
HFCs. EPA is finalizing requirements under AIM Act authority to provide
information to EPA that generally aligns with existing CBP import
filing requirements under current Customs laws. These requirements will
allow for EPA to verify if allowances are available or the HFCs have
prior approval for import in the case of HFCs imported for destruction
or transformation under 40 CFR 84.25, or imported for transhipment
under 40 CFR 84.31(c)(3), and confirm whether a shipment should be
allowed to clear Customs or not. EPA is requiring that the following
information be electronically filed through ACE no later than 14 days
prior to importation consistent with CBP definitions at 19 CFR 101.1:
Quantity of containers and weight; importer information; consignee
information; the correct HTS code; a description of the cargo,
including the chemical name(s) of the HFCs (e.g., HFC-134a) and/or
name(s) of the HFC blend(s) (e.g., R-404A); the country of origin; and
contact information associated with the shipment. Most of these
elements are already required to be filed consistent with 19 CFR
chapter I. Specific data elements that align with existing import
filing submitted to CBP through ACE include: (1) Cargo description; (2)
quantity; (3) quantity unit of measure code; (4) quantity unit of
measure; (5) weight; (6) weight unit of measure; (7) port of entry; (8)
scheduled entry date; (9) HTS code; (10) HTS description; (11)

origin country; (12) importer name and importer of record
identification; and (13) consignee name.
    The data elements EPA is requiring import filing on, with the
exception of one element (CAS Numbers), must already be filed with CBP
through ACE or reported to EPA. Therefore, the Agency is assuming no
additional reporting burden from this requirement. Given there is not
currently a complete and exclusive list of HFC- and HFC blend-specific
HTS codes, EPA is also requiring that anyone importing HFCs must report
through ACE the CAS Number(s) of the HFC(s) included and, for HFCs that
are in a mixture with other HFCs or other substances, either the ASHRAE
numerical designation of the refrigerant or percentage of the mixture
containing each regulated substance. EPA is also requiring that non-
objection notices issued consistent with section 84.25 and proof that
the importer has reported a transhipment to EPA consistent with
84.31(c)(3) be provided to CBP electronically by loading an image of
the document to the Document Image System, or successor platform.
    To ensure EPA has sufficient data to check in real-time if an
importer has sufficient allowances or authorization for a particular
shipment of HFCs, EPA is requiring that importers of HFCs report these
data elements prior to importation. This reporting will be required
under the AIM Act, and pursuant to EPA regulations codified in this
rule, but for ease of implementation and to avoid duplicative
electronic reporting, information required to be reported under EPA's
part 84 regulations will be submitted as import filings and collected
through a CBP electronic system (e.g., ACE and its successor
platforms). CBP will make these import filing data elements available
to EPA for review. EPA is requiring that these data elements be filed
no later than 14 days before importation. Further, although EPA
acknowledges that CBP allows an importer to correct reported data
elements for a certain period of time after the goods clear Customs,
data elements reported pursuant to these part 84 regulations must be
reported no later than 14 days prior to importation. EPA will make its
determination on whether an importer has sufficient allowances for the
import at the time of review based on the information provided. If the
importer makes a valid Post Summary Correction or files a Protest that
CBP approves consistent with 19 CFR chapter I that would change the
number of allowances expended, EPA will adjust the importer's allowance
balance. If after correction the amount imported exceeds an importer's
available allowances, the importer would be in violation of 40 CFR part
84, subpart A and would be subject to administrative consequences and
enforcement action.
    As discussed elsewhere in this section, EPA and CBP require timely
access to this information to ensure that EPA can meet the statutory
requirement in subsection (e)(2)(B) that production and consumption do
not exceed Congressionally directed levels. Under the AIM Act, some
companies will face burdens and costs associated with the
Congressionally mandated phasedown; those increased burdens and costs
unfortunately create economic incentives to avoid compliance. That
reality increases EPA's statutory and policy imperative to identify and
apply tools that counter those incentives to increase the rate of
compliance. Given the risk of noncompliance, as described throughout
Section IX, there is an imperative to use every reasonable tool at our
disposal to ensure compliance and thus the objectives of the AIM Act.
Requiring companies to provide data to EPA through ACE so that EPA can
conduct a real-time review of allowances while imported material is at
the port is directly related to and supports EPA's ability to meet the
statutory obligation in subsection (e)(2)(B) of the AIM Act. Given the
serious concerns about potential noncompliance and the undermining of
Congress's directive to ensure reductions in production and consumption
occur consistent with the statutory schedule, real-time review of
import data will support EPA's ability to effectively implement the
statute.
    The concept of providing information to EPA prior to importation is
consistent with comments EPA received on the proposed rule. One
commenter suggested EPA establish a system similar to the Notice of
Arrival procedure for imports of pesticides.\100\ The commenter noted
that ``[a]n importer or its broker must already submit certain detailed
information to Customs prior to arrival of the ship containing the
HFCs. The initial information submitted includes, but is not limited
to, the importer name and address, importer number, harmonized tariff
code and country of origin.'' The commenter went on to state that EPA
and CBP could use this information to make a determination to release
the goods or examine them further. Another commenter noted that one
problem in the EU was that they did not have a system where customs
officials can cross-check whether imports are within a company's
allowance quota and encouraged EPA to provide contemporaneous
information to Customs officials. Another commenter noted similarly
that the real-time check at the border is the most important tool to
prevent illegal imports. Other commenters recommended prior
notification to EPA before shipments arrive at a port of entry. The
requirements finalized in this section are responsive to commenters'
suggestions and help address concerns raised by the commenters.
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    \100\ See https://www.epa.gov/compliance/importing-and-exporting-pesticides-and-devices#import.
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Use of Harmonized Tariff System Codes
    Consistent with EPA's proposal and the discussion in Section IX.A
regarding administrative consequences, EPA is requiring that importers
use the correct HTS code for bulk HFC imports and exports through this
final rule. EPA notes that this is also required by current CBP
regulations, so this provision would allow both agencies to bring
enforcement action for use of inaccurate HTS codes. Use of the correct
HTS code is important to ensuring EPA and by extension CBP have the
information needed to conduct a real-time check on imports and ensure
EPA meets the directive in subsection (e)(2)(B) of the AIM Act.
    The United States International Trade Commission (USITC) maintains
and publishes the HTS for the United States.\101\ The United States HTS
codes for bulk HFCs are contained in chapter 29 (for ``neat'' or single
component HFCs) and chapter 38 (for mixtures or blends containing
HFCs).\102\ The current HTS codes that cover single component bulk HFCs
include 29<IP_ADDRESS>, 29<IP_ADDRESS>, and 29<IP_ADDRESS>. For bulk HFCs
in mixtures, 38<IP_ADDRESS> and 38<IP_ADDRESS>, and to a lesser extent
38<IP_ADDRESS>, 38<IP_ADDRESS>, are generally the appropriate codes.
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    \101\ For more information, see https://www.usitc.gov/harmonized_tariff_information.
    \102\ The current HTS is available at https://hts.usitc.gov/current
---------------------------------------------------------------------------

    These codes are expected to be updated early in 2022 as part of the
five- to six-year cycle for updating the global Harmonized Commodity
Description and Coding System (often referred to as the Harmonized
System).\103\ USITC has

proposed new codes that would disaggregate codes much further than the
current codes under subheadings 2903.41.10 through 2903.49.00.\104\ For
bulk HFC mixtures/blends, the new codes would be under heading 3827,
with most HFCs falling under subheadings 3827.51.00 through 3827.68.00.
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    \103\ For more information on the Harmonized System, see http://www.wcoomd.org/en/topics/nomenclature/overview/what-is-the-harmonized-system.aspx. The United Nations Environment Program's
OzonAction developed a fact sheet explaining how the codes were
updated globally, which EPA has placed in the docket.
    \104\ See 85 FR 73294 and the associated investigation, number
1205-13, available at https://www.usitc.gov/investigations/1205/1205-13.htm.
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X. What are the recordkeeping and reporting requirements?

    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.
    This section presents an overview of the generally applicable
requirements, provisions that received public comment, and provisions
that EPA is finalizing differently than as proposed. The full reporting
requirements can be found in Sec.  84.31 of the regulatory text.

A. What are the generally applicable recordkeeping and reporting
provisions?

    Through this final rule, EPA is requiring recordkeeping and
reporting for any company that produces, imports, exports, distributes,
transforms, uses as a process agent, reclaims, or destroys regulated
substances as well as any company that receives an application-specific
allowance. Given that the AIM Act controls all production and
consumption of HFCs in the United States, and data on import, export,
destruction, reclaim, feedstock, and process agent use are relevant to
determining national production and consumption figures, all companies
are subject to the recordkeeping and reporting requirements and there
is no minimum threshold for reporting. The AIM Act in subsection
(d)(1)(A) provides EPA with clear authority to establish reporting
requirements that apply to ``each person who, within the applicable
reporting period, produces, imports, exports, destroys, transforms,
uses as a process agent, or reclaims a regulated substance'' (emphasis
added).
    Unless otherwise specified, such as for application-specific
allowance holders, EPA is requiring quarterly reporting. Quarterly
reporting helps to ensure that annual production and consumption limits
are not exceeded and is necessary for the Agency to review allowance
transfer requests. Some stakeholders generally supported quarterly
reporting, noting that it is consistent with the reporting for ODS.
Other commenters preferred annual reporting as it is less burdensome.
One such commenter stated that quarterly reporting is unnecessary given
the real-time tracking information from the certification IDs. One
commenter preferred biannual reporting and stated that the data
provided would be more accurate than quarterly data. Another company
requested that all reporting related to transformation be annual since
there are no production and consumption allowances which are required
to be tracked. EPA received additional comments on the timing for
reclaimers and companies holding application-specific allowances as
discussed separately below.
    EPA is requiring quarterly reporting as proposed. EPA is aware of
the reporting burden of this rule but disagrees that annual reporting
will significantly reduce burden given that all the data elements must
still be provided. Quarterly reporting is necessary to ensure that
allocation limits are not exceeded and allow for trading of allowances.
Providing data quarterly also has benefits to EPA by allowing more
frequent review of allowances expended, which facilitates monitoring of
compliance with the allocation limits and earlier identification of
potential issues. EPA is also able to identify and correct inaccurate
reporting when it arises. EPA disagrees that certification IDs are a
substitute for quarterly reporting. The certification ID system will
not be implemented for several years whereas the first year of
allowances begins January 1, 2022, and reports will be due 45 days
after the close of the first quarter. With regard to the comment that
biannual data would be more accurate than quarterly data, EPA does not
understand why that would be the case and the commenter did not provide
an explanation. EPA expects companies to revise their data, regardless
of reporting frequency, if they discover errors in previous
submissions. With regard to the comment on reporting transformation
activities, EPA responds that it is precisely because there are no
production and consumption allowances that close monitoring through
quarterly reporting is necessary. Without allowances, EPA must more
carefully ensure that the regulated substances are transformed as
required. EPA notes that data about process agents only needs to be
reported annually.
    Reports required by this section must be submitted within 45 days
of the end of the applicable reporting period, unless otherwise
specified. The reporting periods are January 1-March 31 (Quarter 1),
April 1-June 30 (Quarter 2), July 1-September 30 (Quarter 3), and
October 1-December 31 (Quarter 4). Quantities must be stated in terms
of kilograms for each regulated substance unless otherwise specified.
The report must be signed and attested by a responsible officer (e.g.,
appropriate responsible officer under the CAA (42 U.S.C. 7401 et
seq.)), and copies of records and reports must be retained for five
years.
    Section (d)(1)(C)(iii) of the AIM Act states that each periodic
report shall include, as applicable, the information described for the
baseline period of 2011 through 2013. EPA interprets this provision as
allowing the Agency to collect information necessary to establish the
United States' production and consumption baselines. EPA reads the
phrase ``as applicable'' to mean that every quarterly report does not
need to reiterate that baseline information, only an initial report.
    Subsection (d)(1)(C) of the AIM Act specifies that reporting is no
longer required if a company notifies EPA that they have permanently
ceased production, import, export, destruction, transformation, use as
a process agent, or reclamation of all regulated substances. Any
activity that occurs earlier in that year before the cessation of
activities must still be reported for that year. EPA is clarifying that
the recordkeeping requirements still apply and thus the company that
ceases reporting must maintain records for five years.
    Subsection (d)(2) of the AIM Act states that EPA may allow an
entity subject to the AIM Act's reporting requirements ``to combine and
include the information required to be reported under [the AIM Act]
with any other related information that the [company] is required to
report.'' Many commenters urged EPA to minimize duplicative reporting
between the AIM Act reporting requirements and the GHGRP. One commenter
noted that the HFC timeline for the first quarter will be duplicative
of annual GHGRP reports due March 31.
    EPA is coordinating reporting for similar or identical data
elements by

using the same online portal for submitting both AIM and GHGRP data (e-
GGRT) and intends to reduce duplicative reporting by populating the
annual report submitted under GHGRP with data submitted under the AIM
Act. Reports required by this rule must be submitted electronically
using EPA's e-GGRT (or a future successor system). EPA is also
requiring reports be at the facility level, and not at the corporate
level, which will also add in synchronization between these two
programs and better allow utilization of the e-GGRT system. Commenters
supported facility-level reporting especially if it allows for use of
the e-GGRT system. Reporting at the facility-level will also provide
more detail to aid in EPA's review of compliance.

B. How is EPA responding to comments on the proposed recordkeeping and
reporting provisions?

Holders of Application-Specific Allowances
    Commenters requested that EPA limit the data collected from
companies receiving application-specific allowances. They urged EPA to
only collect information that is pertinent for implementing the
phasedown of HFC usage in those end uses. One commenter provided input
on specific data elements that EPA should remove or revise. Another
urged EPA clarify that the information about regulated substances to be
reported be limited to the application and not all regulated substances
used by the company. A few commenters were also concerned about the
sensitive nature of the data to be provided and urged EPA to put in
place robust measures to protect data. A few commenters supported EPA's
proposal for biannual reporting rather than quarterly reporting. One
commenter recommended annual rather than biannual reporting as EPA will
receive data on application-specific allowance expenditures through
quarterly reports submitted by producers and importers. Several
comments noted potential sensitivities around the supply chain for
conferred application-specific allowances that would prevent the
company using HFCs for application-specific purposes from knowing all
the companies that may be conferred an application-specific allowance
before it is used for production or import.
    Any company issued application-specific allowances, or that
receives application-specific allowances through a transfer or
conferral, must certify to its producer, importer, and/or supplier when
purchasing HFCs produced or imported using those allowances that the
regulated substances are solely for the specified application in
subsection (e)(4)(B)(iv) of the Act and will not be resold or used for
other purposes. A copy of the certification must be maintained by the
company that uses the HFCs produced or imported with those allowances.
If allowances are conferred multiple times, the certification need not
flow up the chain if companies seek to keep such information private.
However, a certification must be held by all parties to each conferral.
    Additionally, to facilitate the conferral of allowances, ensure the
legitimacy of application-specific allowances that are conferred, and
to ensure EPA has the requisite information to track application-
specific allowances, the Agency is requiring anyone conferring an
application-specific allowance to report that to EPA. The Agency would
not need to pre-approve the conferral for it to proceed but would need
to issue a confirmation notice that such allowances had changed hands.
This accountability is necessary to ensure application-specific
allowances are used for production and import in the same year they are
issued, to ensure allowances conferred for one application are used in
that application, to ensure a company conferring allowances has
sufficient application-specific allowances for conferral, and to allow
for complete tracking from the entity receiving allowances and the
company using those allowances for production or import. As noted
previously, there would be no limit on the number of conferrals and
there would be no offset associated with conferrals so long as the
company issued the application-specific allowances receives the HFCs
produced or imported with such allowances.
    In response to the comment requesting annual reporting, EPA
responds that annual reporting would not provide EPA with the
information needed to manage the program. Biannual reporting is
necessary to gather the data for two objectives: (1) To provide end-of-
year accounting that must be coordinated with other annual reporting
processes, and (2) to provide information with sufficient time for EPA
to determine by October 1 the quantity of application-specific
allowances to allocate for the next year. EPA is finalizing its
proposal that recipients of application-specific allowances report by
July 31 and January 31 of each year.
    Based on comments that the Agency limit the reporting requirements
to information needed to implement the phasedown, EPA is not finalizing
some of the proposed reporting requirements. The remaining data
elements are necessary for EPA to either determine how many allowances
to allocate or ensure the integrity of the application-specific
allowance program. Given the dual nature of application-specific
allowances, EPA needs reporting on whether the allowance was expended
to produce or import the regulated substance. While EPA can gather some
of this information from reports from producers and importers, such
reports would not indicate the application and other details. EPA also
needs to understand whether an application-specific allowance holder is
expending the allowance themselves to directly import. In such
instances, the allowance holder must also submit a report under Section
84.31(c) as an importer. To determine whether the Agency did not issue
enough allowances, EPA is requiring reporting of the quantity of HFCs
purchased from the open market. This will allow the Agency to confirm
any request for additional allowances, assuming all allowances were
also expended. For the opposite reason, EPA is requesting data on
whether HFCs produced or imported through expending application-
specific allowance are held in inventory. Combined with data on trades,
this could indicate that the Agency allocated too many or too few
allowances. For similar reasons, EPA is requiring information on
quantities destroyed or recycled. EPA recognizes that this may not
apply to all end uses. Lastly, EPA is retaining the requirement that
the report include information about the companies to which
application-specific allowances were conferred. Combined with the
requirement to report to EPA when an allowance is conferred, this will
allow the Agency to track the allowance conferral should it be used for
purposes other than the application-specific end use for which it was
allocated.
    EPA is not finalizing the proposed reporting requirement for the
quantity of each regulated substance contained in exported products.
This is not information that the Agency needs to calculate consumption
since it is not a bulk substance. Nor does the Agency need to know
whether the application-specific allowances were expended to
manufacture products for the domestic or export markets. Therefore, EPA
is not finalizing those proposed data elements. However, EPA is
finalizing a requirement that application-specific allowance holders
that contract the manufacturing of defense sprays or metered dose
inhalers, or the servicing of onboard aerospace fire suppression,

include contact information for the entity doing the manufacturing or
servicing, and whether the responses in the quarterly report apply to
the company that is allocated application-specific allowances or the
company receiving the contract for manufacturing and/or servicing.
    Based on the comments received, and consideration of the data the
Agency already has received from application-specific allowance
holders, EPA is streamlining the information included in the report due
by July 31 of each year. The July 31 report must contain a description
of plans to transition to regulated substances with a lower exchange
value or alternatives to regulated substances. The added requirement to
report information related to contracted out manufacturing and
servicing is also only applicable to the July 31 report. Also, if a
company is requesting additional allowances due to unique
circumstances, the report must include a projection of the monthly
quantity of additional regulated substances needed by month and a
detailed explanation, including relevant supporting documentation to
justify the additional need. Providing these data by month allows EPA
to better assess how the facility will be scaling up its use and allow
for a more thorough review of the company's projected need for HFCs. As
noted previously, the unique circumstances that EPA will consider are:
(1) New manufacturing capacity coming on line; (2) the acquisition of
another domestic manufacturer or its manufacturing facility or
facilities;\105\ and (3) a global pandemic or other public health
emergency that increases patients diagnosed with medical conditions
treated by MDIs.
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    \105\ In addition to data and projections provided in the
application, EPA would rely on previously reported data where
appropriate to assess the need for the new owner.
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    EPA is requiring the more comprehensive information envisioned in
the proposal only from entities that are requesting application-
specific allowances for the first time. Specifically, this report would
include: (1) Total quantity of all regulated substances acquired for
application-specific use in the previous three years, including a copy
of the sales receipts, paid invoices, or other records documenting that
quantity acquired; (2) the name of the entity or entities supplying
regulated substances for application-specific use and contact
information for those suppliers; (3) the quantities of regulated
substances held in inventory for application-specific use as of June 30
of the prior year and June 30 in the current year; and (4) a
description of plans to transition to regulated substances with a lower
exchange value or alternatives to regulated substances.
    Entities allocated application-specific allowances must maintain
the following records: Records necessary to develop the biannual
reports; a copy of certifications provided to producers and/or
importers when conferring allowances; a copy of the annual submission
requesting application-specific allowances; invoice and order records
related to the purchase of regulated substances; records related to the
transfer of application-specific allowances to other entities; and
records documenting the use of regulated substances.
    As discussed elsewhere in this final rule, EPA is establishing
different, but functionally equivalent, requirements for DOD to report
on mission-critical military end uses. DOD will need to submit a
biannual report that will have different reporting elements to align
with the unique information needed for administering the program. DOD
will also need to manage and track conferral of allowances to the
eventual producer(s) or importer(s) and keep appropriate records to
support their reporting.
Reclaimers of HFCs
    Reclaimers commented that the proposed rule, including the
recordkeeping and reporting requirements, places a particularly high
burden on reclaimers, which are predominantly small businesses. One
stated that it is inappropriate for reclaimers to have the same level
of recordkeeping and reporting as production and consumption allowance
holders. This burden will increase the cost of reclaimed material and
undermine future reclamation.
    EPA is finalizing quarterly reporting for reclaimers. The data
elements are generally the same as those under 40 CFR 82.164(d). While
EPA proposed to require that reclaimers provide information on the
quantities of used, reclaimed, and virgin HFCs held in inventory onsite
at the end of each quarter, EPA is not finalizing this additional
inventory report. As noted later in this section, EPA is requiring an
annual report on inventory for reclaimers, consistent with that for
producers, importers, and exporters.
    Reclaimers must also provide a one-time report with information on
inventory, the name of the laboratory that conducts the batch testing,
a signed statement from that laboratory confirming there is an ongoing
business relationship with the reclaimer, the number of batches tested
for each regulated substance or blend containing a regulated substance
in the prior year, and the number of batches that did not meet the
specifications in Appendix A of 40 CFR part 82, subpart F in the prior
year. Reclaimers must maintain records for five years, instead of the
three years required under 40 CFR part 82, subpart F.
    Under the existing regulations in subpart F codified at 40 CFR
82.164, reclaimers must also maintain records of the analyses conducted
to verify that reclaimed refrigerant meets the necessary specifications
prescribed in Appendix A to 40 CFR part 82, subpart F, based on AHRI
Standard 700-2016, and maintain records on a transaction basis for
three years of the names and addresses of persons sending them material
for reclamation and the quantity of the material (the combined mass of
refrigerant and contaminants) by refrigerant sent to them for
reclamation.
Recyclers of HFCs Used as Fire Suppressants
    Some commenters noted to the Agency that HFCs recovered from fire
suppression applications are recycled but not reclaimed. To reclaim is
a defined term pertaining to purifying refrigerants and verifying the
purity based on an industry standard. Fire suppression agents are not
refrigerants and are not subject to that industry standard.
Consequently, companies other than EPA-certified reclaimers currently
recycle such HFCs. EPA is requiring quarterly reports from companies
that recycle HFCs used as fire suppressants that request similar
information as reclaimer reports except for provisions related to that
industry standard.
    Specifically, recyclers must report the quantity of material (the
combined mass of regulated substance and contaminants) by regulated
substance sent to them for recycling, the total mass of each regulated
substance, and the total mass of waste products. For the fourth quarter
only, each recycler must provide the quantity of each regulated
substance held in inventory onsite broken out by recovered, recycled,
and virgin. Recyclers must also maintain records of the names and
addresses of persons sending them material for recycling and the
quantity of the material (the combined mass of regulated substance and
contaminants) by regulated substance sent to them for recycling. Such
records must be

maintained on a transactional basis for five years.

C. How will EPA treat HFC data collected under the AIM Act?

    EPA proposed that several data elements that would be required to
be reported pursuant to the AIM Act regulations would not be eligible
for CBI treatment, and would be affirmatively released, including: (1)
Company-level production and consumption data, (2) aggregated national
data, (3) company-specific allowance data, (4) transfer data, (5) HFC-
23 emissions data, and (6) information relevant to the Kigali Amendment
and the Montreal Protocol. EPA alternatively proposed to not provide
CBI treatment to any element reported to the Agency pursuant to the
part 84 regulations and affirmatively release all data as reported to
the Agency, though some of the identical data elements are required
pursuant to the GHGRP and have been determined to be CBI under the
GHGRP.
    EPA is not finalizing its proposed determination that all data
collected under the regulations established in this rulemaking are not
entitled to CBI treatment. Accordingly, EPA is not finalizing the
proposed alternative path to affirmatively release all data reported to
the Agency in accordance with AIM Act reporting requirements. As
further detailed in this section, EPA is finalizing that some data
reported prospectively at chemical-specific and facility-specific
levels, such as production and consumption data, will not be entitled
to CBI treatment and will be affirmatively released by the Agency
without further notice. EPA also will not provide confidential
treatment to, and intends to make public without further notice, each
company's allowance allocations and update remaining allowance balances
periodically throughout the year. EPA is also making a final
determination in this rule that some data elements are entitled to
confidential treatment, including sales data, business relationships,
pricing information, and many elements reported pursuant to the QR
tracking system and by application-specific allowance holders.
Remaining data elements reported to the Agency that are neither labeled
as entitled to confidential treatment nor labeled as not entitled to
confidential treatment in the memo to the docket can be claimed as CBI
by reporting entities, and EPA will treat them as confidential pending
possible future CBI determinations pursuant to EPA's CBI regulations at
40 CFR part 2. For all data elements that EPA is determining to be
confidential or for which EPA will provide provisional confidential
treatment if claimed by reporters as CBI, EPA will release aggregated
data if there are three or more reporting entities. This section
describes in more specificity what information the Agency is
determining will not be provided confidential treatment, including
those data elements for which the Agency is declining to follow prior
CBI determinations made by the Greenhouse Gas Reporting Program, and
what information will be treated as confidential business information.
1. Which specific data elements are not entitled to confidential
treatment?
    EPA is finalizing the proposal to not provide confidential
treatment to, and hereby makes the determination to not provide
confidential treatment to, and affirmatively release without further
process, the following information: (1) Each company's EVe allowance
allocation with allowance balances periodically updated throughout the
year; (2) reported facility-level chemical-specific production data,
including total production, and production for feedstock and
destruction; (3) production data provided by chemical manufacturing
facilities that produce HFC-23, specifically the amount and type of
chemicals intentionally produced on a facility line that also produces
HFC-23; (4) company-level, chemical-specific data on individual import
and export shipments, including chemical type, quantity, source
country, HTS code, port of entry, date, and the intended use if for
destruction or transformation; (5) facility-level chemical-specific
destruction data; (6) all data reported on transhipments; and (7)
companies receiving transferred allowances and the quantity of
allowances received.
    As described in more detail in Section IX.G, EPA would release
several data elements associated with each container of HFCs to
potential buyers so they can verify the HFCs are legally produced,
imported, recycled, or reclaimed, including: (1) Whether the HFC being
sold is legal to purchase based on information available to EPA; (2)
when the container was filled; (3) the specific HFC(s) in the
container; (4) and the brand name the HFCs are being sold under. EPA
will also release a list of registered suppliers so purchasers know
where they can legally buy HFCs. EPA has provided in the docket a
document that provides each individual data element required to be
reported under the part 84 regulations and denotes EPA's final
determination regarding whether each element will be entitled to
confidential treatment or not. For data elements not explicitly listed
in the document in the docket, if a company claims it as CBI, EPA will
treat it that way pending a future determination, which would follow
the CBI regulations.
    Many entities that are required to report under EPA's newly
established part 84 regulations were widely opposed to EPA's proposed
approach of not providing confidential treatment for many elements
reported to the Agency. Several commenters requested that EPA follow
the approach to CBI treatment established under GHGRP. Some commenters
stated that company-level production and consumption data are highly
confidential. Some argued that increased data release divulges
proprietary information to competitors and the Agency's overall
transparency goals do not justify increased transparency through the
release of information. One commenter opposed to the broader release of
data said EPA could release the names of allowance holders and their
allocation levels without revealing CBI. One commenter supported
releasing EVe-weighted information as they consider the type of HFC(s)
it uses or may use in the future to be CBI.
    Commenters' arguments on this issue were generally broad, sweeping,
and perfunctory. While commenters alleged that releasing reported
information would be harmful to businesses or divulge proprietary
information, commenters generally did not provide sufficient
explanation in their comments to demonstrate their customary handling
of the information proposed to be released, but instead simply relied
on conclusory statements that most of the information should be kept
confidential and EPA should rely on previous determinations made under
different reporting regimes where they overlap with this rule.
Accordingly, commenters did not provide sufficient information to
demonstrate to EPA that any particular data element for which EPA is
not providing confidential treatment should be treated as CBI.
    Some commenters supported EPA's efforts to make more data reported
under this program publicly available for reasons similar to those the
Agency discussed in the proposed rule and reiterates here. Transparency
will facilitate implementation of the allocation program and increase
the public and current market participants' ability to provide
complementary compliance scrutiny. It will allow the public and the
industry to identify market participants and volumes in trade and thus
enable them to alert EPA and other federal authorities when they
suspect HFCs may have been produced,

imported, or sold without necessary allowances or any available
exceptions in violation of the regulations at 40 CFR part 84, subpart
A. Transparency in this program will also provide information on
general trends and performance of the HFC phasedown program, which
could inform public participation by means of petitions filed to the
Agency under other provisions of the AIM Act and afford the public
insight into the data upon which EPA relies for the Agency's decision
making. Additional transparency will also allow neighboring communities
to see how emissions from a particular facility compare to changes in
HFC production levels.
    Congress has required that the Administrator ``ensure that the
annual quantity of all regulated substances produced or consumed in the
United States does not exceed'' the annual caps described in subsection
(e)(2)(B). Research shows that making data publicly available
facilitates compliance. Qualitative studies have found that ``public
disclosure is [an] underutilized tool; there is powerful evidence that
publishing information about company performance drives better
behavior, as pressure is applied by customers, neighbors, investors,
and insurers.'' \106\ A recent National Bureau of Economic Research
working paper addressed the value of transparency.\107\ The researchers
examined the effects of data being reported to the GHGRP on emissions
from electric power plants. They analyzed CO2 emissions per
megawatt from power plants in the United States pre- and post-
establishment of GHGRP reporting (in 2010) and found that plants that
were required to report post-2010 (emissions greater than 25,000
MTCO2e annually) showed decreasing emissions once reporting
requirements entered into force, while plants that did not have to
report showed increased emissions. The paper posits a causal
relationship between the public availability of the emissions data and
the decrease in emissions. The effect was stronger for publicly traded
firms, and stronger yet if those firms were large (i.e., included in
the S&P 500).
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    \106\ David Hindin and Jon Silberman, ``Designing More Effective
Rules and Permits,'' George Washington Journal of Energy &
Environmental Law, Spring 2016 at 103, 117-120.
    \107\ Lavender Yang, Nicholas Z. Muller, and Pierre Jinghong
Liang, ``The Real Effects of Mandatory CSR Disclosure on Emissions:
Evidence from the Greenhouse Gas Reporting Program,'' National
Bureau of Economic Research, July 2021 Working Paper 28984.
Available at http://www.nber.org/papers/w28984.
---------------------------------------------------------------------------

    EPA has acknowledged the importance of data transparency in prior
rulemakings. As the Agency explained in the preamble to a proposed rule
(78 FR 46006, July 30, 2013) concerning the National Pollutant
Discharge Elimination System:

    To promote transparency and accountability, EPA intends to make
[a] more complete set of data available to the public, providing
communities and citizens with easily accessible information on
facility and government performance. Such data provides a powerful
incentive to improve performance by giving government, permittees,
and the public ready access to compliance information. This can
serve to elevate the importance of compliance information and
environmental performance within regulated entities, providing
opportunity for them to quickly address any noncompliance.

The same principles apply in this situation to incentivize compliance
and allow the public and competing companies to identify and report
noncompliance to EPA.
    EPA understands that some of the data elements it is announcing an
intention to release have previously been determined to be CBI under
the GHGRP. Many of the data elements reported to subpart OO of the
GHGRP were determined to be, and are treated as, confidential by EPA
(see, e.g., 76 FR 30782, May 26, 2011; 76 FR 73886, November 29, 2011;
77 FR 48072, August 13, 2012, 78 FR 71904, November 29, 2013; and, 81
FR 89188, December 9, 2016).\108\ EPA has determined through this
rulemaking and is now putting all potential submitters on notice that
prospectively, these data elements will not be provided confidential
treatment when submitted in accordance with EPA's Part 84 regulations
established through this rule. Individual instances of these
determinations are noted in a document included in the rulemaking
docket. To be clear, determinations made in this rule that certain data
elements will not be entitled to confidential treatment only apply
prospectively.
---------------------------------------------------------------------------

    \108\ For a summary, see https://www.epa.gov/sites/production/files/2020-09/documents/ghgrp_cbi_tables_for_suppliers_8-28-20_clean_v3_508c.pdf.
---------------------------------------------------------------------------

    The GHGRP and the AIM Act are separate programs with distinct
goals; it is reasonable for EPA to take a different approach than has
been taken for the GHGRP and release more disaggregated data than was
released under that program. Ensuring compliance with a regulatory
phasedown program, where EPA is obligated to ensure that domestic
production and consumption aligns with a statutorily defined schedule,
is different from a reporting program where one company's noncompliance
would mean less accurate accounting, but where achieving mandated
reductions of an environmentally harmful class of chemicals is not at
stake. Further, the goals of GHGRP can be achieved while giving a
multitude of data elements confidential treatment. In contrast, the
Agency sees increased transparency and public access to the data EPA
will be releasing as contributing to compliance under the AIM Act,
which is essential to achieving the goals of the AIM Act. It is
reasonable for EPA to take all necessary steps for the Agency to ensure
both compliance with the consumption and production caps of subsection
(e)(2)(B) and a level playing field between and among all obligated
parties, who in most cases are operating in the same or overlapping
competitive markets. Under the AIM Act, some companies will face
burdens and costs associated with the Congressionally mandated
phasedown; those increased burdens and costs unfortunately create
economic incentives to avoid compliance. That reality increases EPA's
statutory and policy imperative to identify and apply tools that
counter those incentives to increase the rate of compliance.
Transparency is one of those compliance tools. As further discussed in
Section IX which details the enforcement and compliance provisions, a
multifaceted compliance approach is important to help ensure, as EPA is
explicitly obligated to do, the phasedown targets and associated
environmental benefits Congress required are realized.
    One commenter argued that EPA's proposed approach to not provide
confidential treatment to the identified data elements was
impermissible because the AIM Act did not change Exemption 4 of the
Freedom of Information Act (``FOIA'') and regulations pursuant to the
AIM Act cannot alter FOIA. EPA agrees that the AIM Act did not amend
FOIA. FOIA and the Agency's accompanying regulations apply to
situations where information has been claimed as confidential, the
Agency is treating that information confidentially, and the Agency
receives a FOIA request for that information or later decides to
release the information on its own. In such an instance, the
confidential status of the information has not been previously
determined by the Agency. That is separate and distinct from what the
Agency is doing in this rulemaking. Here, the Agency is determining
through rulemaking that some of the data elements as listed in the
document provided in the docket will not be treated as confidential by
the Agency upon submission and cannot be claimed

as such. This is not amending FOIA Exemption 4, but faithfully applying
it in accordance with governing case law. As noted in the proposed
rule, information determined in the rule not to be entitled to
confidential treatment may be released upon submission. As such, 40 CFR
part 2.201 through 2.215 do not apply to information determined not to
be entitled to confidential treatment in this rule and there will be no
further notice to the submitters prior to release of such information.
As discussed in Section X.C.1, putting submitters on notice of how FOIA
Exemption 4 will be applied in the context of this Rule is consistent
with applicable case law, which incorporates the reasonable
expectations of submitters about whether information submitted in
particular instances will be kept confidential. Pursuant to this rule,
reporters do not have a reasonable expectation that the data elements
listed in the document provided in the docket as ``Not CBI'' will be
entitled to confidential treatment, and therefore the Agency is not
required to treat that information as confidential when it is received
and maintained in Agency records.
    Following finalization of this rule, companies are on full notice
that EPA has determined that the identified data elements outlined in
detail in the document provided in the rulemaking docket are not
entitled to confidential treatment and therefore intends to not provide
confidential treatment of those elements upon submission. Therefore,
companies do not have a reasonable expectation that the information
will be treated as confidential. Under recent Supreme Court case law,
Exemption 4 of the FOIA should not apply to information submitted with
the expectation that the information would be made public. See Food
Mktg. Inst. v. Argus Leader Media, 139 S. Ct. 2356, 2360 (2019). See
also WP Co. LLC v. U.S. Small Bus. Admin., 502 F. Supp. 3d 1, 11
(D.D.C. 2020). A few commenters disagreed that EPA could alter
expectations concerning CBI treatment through this rulemaking under the
Food Marketing standard. The Agency disagrees. As a starting point,
stakeholders have no basis for claims based on ``expectations'' on the
handling of information prospectively reported to the Agency under
these newly established regulations under the newly enacted AIM Act.
The Congressionally ordered phasedown of HFCs is only beginning with
this rule; it is these regulations that are creating and defining
expectations for the handling of and public access to data submitted to
EPA. The Agency is hereby setting a clear expectation that the data
elements as listed in the document provided in the docket will not
actually be treated as confidential for any submitters and is only
applying the rule prospectively to information submitted after this
clear expectation is in place.
    But even if there were such ``expectations,'' as noted above,
companies have not yet submitted the information to the Agency and this
notice makes clear that companies should have the expectation that the
information will be disclosed. Moreover, the information must still
meet the applicable standard for confidentiality. In Food Marketing,
the Supreme Court explained that information might be considered
``confidential'' under two conditions: ``In one sense, information
communicated to another remains confidential whenever it is customarily
kept private, or at least closely held, by the person imparting it.''
Food Mktg. Inst., 139 S. Ct. at 2366. ``In another sense, information
might be considered confidential only if the party receiving it
provides some assurance that it will remain secret.'' Id. The Court
determined that the first condition--that the information customarily
be kept private or closely held by the submitter--must be met because
``it is hard to see how information could be deemed confidential if its
owner shares it freely.'' Id. At 2363. As to the second condition--
whether information must be communicated to the government with some
assurance that it will be kept private--the Court left open the
question of whether this condition was required to demonstrate that
information is ``confidential'' within the meaning of Exemption 4, as
that condition was clearly satisfied in the case before it. Id. At
2363. Accordingly, the Court held that ``[a]t least where commercial or
financial information is both customarily and actually treated as
private by its owner and provided to the government under an assurance
of privacy, the information is `confidential' within the meaning of
Exemption 4.'' Id. At 2366. The Supreme Court's opinion did not
determine to what extent the second condition would be required to
maintain confidentiality. However, subsequent guidance from the
Department of Justice has clarified that where an express assurance is
provided by the government that information will not be kept
confidential upon submission, such information will generally not be
entitled to confidential treatment. See Exemption 4 after the Supreme
Court's Ruling in Food Marketing Institute v. Argus Leader Media,
October 4, 2019, https://www.justice.gov/oip/exemption-4-after-supreme-courts-ruling-food-marketing-institute-v-argus-leader-media. (See also
recent case law from the Federal District Court for the District of
Columbia, e.g., WP Co. LLC v. U.S. Small Bus. Admin., 502 F. Supp. 3d
1, 16 (D.D.C. 2020)).
    Therefore, EPA's decision to clearly assert in this rule that EPA
intends to release the designated information aligns with the Supreme
Court's decision and the subsequent guidance that the government's
assurances that a submission will be treated as not confidential should
dictate the expectations of submitters.
    Moreover, this interpretation and approach are consistent with
other applicable case law. While the court did not specify that an
assurance from the government was required, it was a key assumption
underlying the decision that the information was entitled to
confidential treatment. Id. At 874. In Food Marketing, the Supreme
Court also noted that several earlier Circuit Court decisions had
addressed the relevance of whether assurances of confidentiality had
been provided prior to submission:

    ``In GSA v. Benson, 415 F. 2d 878, 881 (1969), for example, the
Ninth Circuit concluded that Exemption 4 would `` `protect
information that a private individual wishes to keep confidential
for his own purposes, but reveals to the government under the
express or implied promise' '' of confidentiality. [emphasis added]
The D.C. Circuit similarly held that Exemption 4 covered sales
documents `` `which would customarily not be released to the public'
'' and which the government ``agreed to treat . . . as
confidential.'' Sterling Drug Inc. v. FTC, 450 F. 2d 698, 709
(1971); see also Grumman Aircraft Eng. Corp. v. Renegotiation Bd.,
425 F. 2d 578, 580, 582 (1970) (information a private party
``submitted `in confidence' '' or ``would not reveal to the public
[is] exempt from disclosure'').''

    Food Mktg. Inst., 139 S. Ct. at 2363. Here, the Agency is providing
affirmative notice that the Agency will not provide confidential
treatment for data elements reported under the part 84 AIM Act
regulations as outlined in detail in the document provided in the
rulemaking docket.
    One commenter stated that the Trade Secrets Act provides businesses
with a cause of action for divulging trade secrets, including business
information such as market share and customer lists. The Trade Secrets
Act (TSA) is a criminal statute that prohibits officers and employees
of federal agencies from publishing or disclosing trade secrets and
other CBI ``to any extent not authorized by law.'' 18 U.S.C. 1905. In

this instance, as explained in the prior paragraphs, the Agency is
authorized to release information that is not entitled to confidential
treatment. There is nothing in the TSA legislative history to suggest
that Congress intended the phrase ``authorized by law'' to have a
special, limited meaning different from the traditional understanding.
This rulemaking, which included a notice and comment process, makes any
future data releases authorized disclosures.
    In addition to EPA providing notice that it will not provide
confidential treatment for the listed elements, and therefore companies
do not have a reasonable expectation that such information submitted
after this rule is finalized will be withheld, some data elements
collected pursuant to the reporting regulations established in this
rule are also releasable because they are appropriately considered
emission data, including data used as inputs to emissions equations,
which is releasable under subsection (k)(1)(C), pursuant to its
incorporation of CAA section 114 for purposes of the Act and any
regulations promulgated under it, as if the AIM Act were part of title
VI of the CAA. CAA section 114(c) provides that emission data shall be
available to the public. 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. Inputs into emission equations may be
considered ``emission data'' and section 114(c) of the CAA provides
that ``emission data'' shall be available to the public. 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 has determined that these elements related to HFC-23 are emission
data and thus are not entitled to confidential treatment.
    EPA further notes that some of these data elements determined not
to be entitled to confidential treatment, particularly portions of
chemical-specific company-level import data, are publicly available
through a range of datasets.\109\ These databases charge a fee for
access to information on imports at the transaction level based on
Customs data from the United States and other countries, including
bills of lading. There are also websites that provide selected import
data at no cost.\110\ A submission available in the docket from First
Continental International (NJ) Inc., dated March 12, 2021, shows the
types of information that can be ascertained from these databases. Data
that are already publicly available cannot be considered confidential
or proprietary and do not merit confidential treatment. EPA's Chemical
Data Registry also provides some HFC production and import data
(https://chemview.epa.gov). One commenter disagreed with EPA's
assertion that import data found in public ``pay-for'' databases are
accurate, while another commenter disagreed that data were available
for imports to the extent EPA stated at proposal. EPA appreciates that
not all datasets are complete and that sometimes there is disagreement
with Customs data, data reported to EPA, and data available in free and
pay-for databases. In some cases, a company name is not released for a
shipment. In others, the quantities may not match completely in all
instances or the HTS code used may not match with the data reported to
EPA. However, the Agency is not convinced that this is a reason to
discount the data available in these datasets. Further, a significant
amount of data is available in these databases, and as such it is not
actually treated as confidential and therefore it is not appropriate to
withhold such information under FOIA Exemption 4.
---------------------------------------------------------------------------

    \109\ Examples include PIERS (https://ihsmarkit.com/products/piers.html), Panjiva (https://panjiva.com), Datamyne (https://www.datamyne.com), and ImportGenius (https://www.importgenius.com).
Mention of or referral to commercial products or services, and/or
links to non-EPA sites does not imply official EPA endorsement of or
responsibility for the opinions, ideas, data, or products presented
at those locations, or guarantee the validity of the information
provided. Mention of commercial products/services on non-EPA
websites is provided solely as a pointer to information on topics
related to environmental protection that may be useful to the public
as they review this proposed rulemaking.
    \110\ Enigma, a data science firm, makes available online what
appears to be the full Automated Manifest System import data from
2018-2020, including the names of shipment consignees and cargo
descriptions (https://aws.amazon.com/marketplace/pp/US-Imports-Automated-Manifest-System-AMS-Shipments/prodview-stk4wn3mbhx24).
Similarly, usimports.info makes a limited number of import database
queries free to users, allowing them to see data on individual bills
of lading (https://usimports.info).
---------------------------------------------------------------------------

    As noted at the start of this subsection, EPA intends to publish on
its website the names of every entity receiving production allowances,
consumption allowances, or application-specific allowances and the
amount of allowances allocated. EPA intends to revise those data at
least 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 greater benefits
will result from providing similar and more comprehensive HFC data.
Releasing allowance allocation amounts will also provide context for
understanding the reported production and import volumes. Commenters
supported the release of this information.
    One commenter stated that data regarding transformation is CBI. In
this final rule, EPA is clarifying that the Agency will not provide
confidential treatment to reported facility-level, company-specific,
and chemical-specific data on production or import for transformation
for the above-mentioned reasons, but EPA will provide confidential
treatment to data related to companies' acquiring those regulated
substances for transformation and processes in which the regulated
substances are transformed. Releasing data on production (and import
and export) for transformation is important given this type of
production and import does not require an allowance. Additional
transparency helps ensure there is visibility on the quantities
entering and exiting the United States.
    In addition to all of the above-noted items, should the United
States join the Kigali Amendment to the Montreal Protocol, it would
release data to the United Nations Environment Programme's Ozone
Secretariat regarding HFC production, consumption, and limited emission
data. 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. Should the United
States join the Kigali Amendment, EPA is putting stakeholders on notice
that it will

report\111\ the following data to the Ozone Secretariat:
---------------------------------------------------------------------------

    \111\ The reporting forms and instructions that EPA would use to
submit data are available in the docket and on the Ozone
Secretariat's website at  https://ozone.unep.org/countries/data-reporting-tools.
---------------------------------------------------------------------------

     Annual U.S. HFC production in MT aggregated 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 amounts that are 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 amounts that are 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.
    The Ozone Secretariat would release aggregated GWP-weighted annual
production and consumption on the Ozone Secretariat's website.\112\
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 submit chemical-specific production and consumption data for
2011, 2012, and 2013 to establish the United States' baseline for HFCs.
---------------------------------------------------------------------------

    \112\ 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 \113\
during the First Meeting of the Parties, which provides 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 pursuant to this Rule, 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 for which the Agency is providing confidential treatment pursuant
to this Rule as appropriate 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.
---------------------------------------------------------------------------

    \113\ ``The Montreal Protocol on Substances That Deplete the
Ozone Layer.'' Unep.org, United Nations Environment Programme.
Available at https://ozone.unep.org/treaties/montreal-protocol/meetings/first-meeting-parties/decisions/decision-i11-report-and-confidentiality-data.
---------------------------------------------------------------------------

2. Which data elements has EPA determined are entitled to confidential
treatment?
    EPA understands that a certain amount of confidentiality is
necessary for firms to function within a competitive market. Many
commenters stated that data regarding HFC uses has no particular
relevance to the phasedown. Application-specific end users had
particular concern about the release of their data. Some raised
concerns about national security and foreign competition if
application-specific data were made public. They argued it is
inconsistent with Congressional intent to support these applications by
requiring companies to divulge sensitive information in order to
receive allowances. With regard to transfers, many companies opposed
the release of pricing data. With regard to the certification ID
tracking system, many commenters were opposed to releasing data on
customers, suppliers, handlers, and other entities in the chain of
custody of the material.
    EPA is determining in this rule that some data elements are
entitled to confidential treatment, including sales data, business
relationships, pricing information, and many elements reported pursuant
to the QR tracking system and by application-specific allowance
holders. EPA is determining in this rule that the following reported
elements, among others, are entitled to confidential treatment: (1)
Information provided to the Agency in one-time reports or petitions,
such as those provided by entities that transform or destroy HFCs; (2)
information provided to the Agency in their requests for application-
specific allowances, except for annual consumption information
discussed earlier in this section; (3) information relating to an
exchange or interaction between vendors or customers, such as pricing
data; (4) most data viewable through the certification ID tracking
system in the same manner (with the exceptions described in Section
IX.G; and (5) transfer pricing information. EPA has provided in the
docket a document that lists each individual data element required to
be reported under the part 84 regulations and denotes whether each
element is entitled to confidential treatment or not.
    EPA has determined that these data elements are customarily and
actually considered to be confidential and closely held by companies.
EPA finds that these data elements meet the requirements of FOIA
Exemption 4 and are therefore appropriately treated as confidential.
EPA also does not see the same benefits of transparency of releasing
these data elements for improved enforceability and function of the HFC
phasedown program. For these reasons, the Agency is determining the
listed data elements are deserving of confidential treatment.
3. How will EPA aggregate data for release?
    For data elements that EPA has determined to grant confidential
treatment, or where EPA is not making a determination on whether data
is CBI at this time, and therefore will not be released in an
unaggregated format, EPA will release information in an aggregated
form. Specifically, EPA retains the discretion to release aggregated
data for any element on which there are three or more reporting
entities. The Agency has determined that this level of aggregation
ensures no entity can back calculate a single data element, and
therefore confidentiality can still be ensured.
    In addition to this general rule, there are various data sets that
the Agency intends to provide in aggregate form.

Through this rule, the Agency is putting stakeholders on notice that
the following information will be released in aggregate form if there
are three or more reporting entities. First, EPA intends to release
annual aggregate amounts for each HFC produced and imported (summed)
for use as a process agent, and aggregate annual emissions from such
use by HFC. EPA requested comment on current process agent use of HFCs
including 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. EPA did not
receive any comments providing such information. EPA proposed to
release aggregated HFC process agent data, if the use of HFCs was in
sufficient quantities and frequencies to allow for aggregation. EPA did
not receive comment on releasing this aggregate data and thus is
finalizing this as proposed.
    Second, EPA intends to release aggregated annual chemical-specific
HFC consumption volumes for each application-specific end use. This is
similar to how the Agency provided chemical-specific data in the market
characterizations. EPA is finalizing this approach as proposed.
Providing these data to the general public allows 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 future rulemakings. This information will be
aggregated across all application-specific allowance holders within a
specific application, so EPA expects there will be no risk of divulging
information submitters customarily keep private or closely held.
    Third, EPA will 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
summed together. This is analogous to the approach under CAA section
608 of releasing HFC reclamation data on a chemical-by-chemical basis.
EPA will 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. For
example, 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 prior
EPA allocation rulemakings. While additional information on inventory
on its own may not prevent price fluctuations, 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.
    Fourth, EPA also intends to publish aggregated data on pricing of
transfers, so long as there are at least three companies involved in
transferring allowances that year. Specifically, if there are at least
three companies involved in transfers, EPA would release the average
cost of the transfers reported. Release of these data would provide the
public with helpful information on the average value and scale of
transfers associated with the HFC phasedown.
    Similarly, EPA will release aggregated reclamation and fire
suppressant recycling data by HFC consistent with the approach taken
under CAA section 608 and its implementing regulations at 40 CFR part
82, subpart F. An example of these data is available at https://www.epa.gov/section608/summary-refrigerant-reclamation-trends. Release
of these data aids industry and consumer understanding of the
availability of various HFCs.

XI. What are the costs and benefits of this action?

    EPA conducted a RIA, 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 $1.7
billion, reflecting compliance savings of $300 million and social
benefits of $1.4 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 $16.4 billion. Table 6 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 percent.

                   Table 6--Benefits, Costs, and Net Benefits of the Final Rule for 2022-2050
                                         [Billions of 2020$] \a\ \b\ \c\
----------------------------------------------------------------------------------------------------------------
                                                       Climate benefits
                        Year                          (discounted at 3%)    Costs  (annual)      Net benefits
----------------------------------------------------------------------------------------------------------------
2022................................................                $1.4               -$0.3                $1.7
2024................................................                 5.2                -0.1                 5.1
2029................................................                 7.5                -0.6                 8.1
2034................................................                12.4               - 0.9                13.3
2036................................................                15.7                -0.7                16.4
2045................................................                25.1                -0.9                26.0
2050................................................                29.7                -1.1                30.8
----------------------------------------------------------------------------------------------------------------
\a\ Benefits include only those related to climate. See Table 4-24 in the RIA for the full range of SC-HFCs
  estimates. The costs presented in this table are annual estimates.
\b\ Rows may not appear to add correctly due to rounding.
\c\ Climate benefits are based on changes (reductions) in HFC emissions and are calculated using four different
  estimates of the SC-HFCs (model average at 2.5 percent, 3 percent, and 5 percent discount rates; and 95th
  percentile at 3 percent discount rate). The IWG emphasized, and EPA agrees, on 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.

    Climate benefits presented in Tables 6, 7, and 8 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

Tables 6 and 8, we show the benefits associated with the average SC-
HFCs at a 3 percent discount rate, but the Agency does not have a
single central SC-HFCs point estimate.
    The SC-HFC estimates used in this analysis were developed using
methodologies consistent with the methodologies underlying the interim
estimates of the social cost of carbon (SC-CO2), social cost
of methane (SC-CH4), and social cost of nitrous oxide (SC-
N2O) (collectively referred to as social cost of greenhouse
gases (SC-GHG)) published in February 2021 by the IWG. As a member of
the IWG involved in the development of the February 2021 Technical
Support Document (TSD): Social Cost of Carbon, Methane, and Nitrous
Oxide Interim Estimates under Executive Order 13990 (IWG 2021), EPA
agrees that the interim SC-GHG estimates represent the most appropriate
estimate of the SC-GHG until revised estimates have been developed
reflecting the latest, peer reviewed science. The interim SC-GHG
estimates were developed over many years, using a transparent process,
peer-reviewed methodologies, the best science available at the time of
that process, and with input from the public. Therefore, EPA views the
methods to be appropriate for estimating SC-HFCs for use in benefit-
cost analysis.
    As discussed in the February 2021 TSD, the IWG emphasized the
importance and value of considering the benefits calculated using all
four estimates (model average at 2.5, 3, and 5 percent discount rates,
and 95th percentile at 3 percent discount rate). In addition, the TSD
explained that a consideration of climate benefits calculated using
discount rates below 3 percent, including 2 percent and lower, is also
warranted when discounting intergenerational impacts. As a member of
the IWG involved in the development of the February 2021 TSD, EPA
agrees with this assessment for the purpose of estimating climate
benefits from HFC reductions as well, and will continue to follow
developments in the literature pertaining to this issue.
    Table 7 presents the sum of climate benefits across all HFCs
reduced for the final rule for 2022, 2024, 2029, 2034, 2036, 2045, and
2050.

                           Table 7--Climate Benefits for the Final Rule for 2022-2050
                                               [Billions of 2020$]
----------------------------------------------------------------------------------------------------------------
                                                  Climate benefits by discount rate and statistic
                                 -------------------------------------------------------------------------------
              Year                                                                                3%  (95th
                                     5%  (average)       3%  (average)      2.5%  (average)       percentile)
----------------------------------------------------------------------------------------------------------------
2022............................                 0.5                 1.4                 1.9                 3.7
2024............................                 2.2                 5.2                 7.0                13.8
2029............................                 3.2                 7.5                10.0                20.0
2034............................                 5.5                12.4                16.2                33.0
2036............................                 7.2                15.7                20.4                42.0
2045............................                12.0                25.1                32.2                67.4
2050............................                14.6                29.7                37.7                79.5
----------------------------------------------------------------------------------------------------------------

    EPA estimates that the present value of cumulative net benefits
evaluated from 2022 through 2050 is $272.7 billion at a three percent
discount rate, comprising $260.9 billion in cumulative benefits due to
reducing HFC emissions and $11.8 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 $5.4 billion, or $5.4 billion
in savings, and the present value of cumulative social benefits is
$94.8 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 $100.2 billion. At a 7 percent discount rate over the 15-
year period of the phasedown of HFCs, the present value of cumulative
compliance costs is negative $3.7 billion, or $3.7 billion in savings.
Over the same 15-year period of the phasedown, the present value of
cumulative net benefits is $98.5 billion at a 7 percent discount rate
for costs (and 3 percent for climate benefits). The comparison of
benefits and costs in present value (PV) and equivalent annualized
value (EAV) terms for the rule can be found in Table 8. Estimates in
the table are presented as rounded values.

 Table 8--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 Final Rule
                                 [Billions of 2020$, discounted to 2022] \a\ \b\
----------------------------------------------------------------------------------------------------------------
                                Climate benefits             Costs \c\                     Net benefits
             Year              ---------------------------------------------------------------------------------
                                  (3%) \c\ \d\          3%              7%              3%              7%
----------------------------------------------------------------------------------------------------------------
Present Value.................            $260.9          -$11.8           -$6.4          $272.7          $267.4
Equivalent Annualized Value...              13.6            -0.6            -0.5            14.2            14.1
----------------------------------------------------------------------------------------------------------------
\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\ The costs presented in this table are consistent with the costs presented in RIA Chapter 3, Table 3-6.
\d\ Climate benefits are based on changes (reductions) in HFC emissions and are calculated using four different
  estimates of the SC-HFCs (model average at 2.5 percent, 3 percent, and 5 percent discount rates; and 95th
  percentile at 3 percent discount rate). The IWG emphasized, and EPA agrees, on 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.

    The estimation of $260.9 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 was calculated
for each year of the phasedown in exchange value-weighted tons (i.e.,
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 rule using a measure of
the social cost of each HFC (collectively referred to as SC-HFCs) that
is affected by the rule. The SC-HFCs 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-HFCs 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. As with
the estimates of the social cost of other GHGs, the SC-HFC estimates
are found to increase over time within the models--i.e., the societal
harm from one metric ton emitted in 2030 is higher than the harm caused
by one metric ton emitted in 2025--because future emissions produce
larger incremental damages as physical and economic systems become more
stressed in response to greater climatic change, and because GDP is
growing over time and many damage categories are modeled as
proportional to GDP. The SC-HFCs, therefore, reflects the societal
value of reducing emissions of the gas in question by one metric ton.
The SC-HFCs is the theoretically appropriate value to use in conducting
benefit-cost analyses of policies that affect HFC emissions.
    The benefits of this rule derive mostly from preventing the
emissions of HFCs with high GWPs, thus reducing the damage from climate
change that would have been induced by those emissions. The reduction
in emissions follows from a reduction in the production and consumption
of HFCs, measured in MMTEVe. It is assumed that all HFCs produced or
consumed would be emitted eventually, either in their initial use
(e.g., as propellants), during the lifetime of HFC-containing products
(e.g., off-gassing from closed-cell foams or leaks from refrigeration
systems), or during servicing or disposal of HFC-containing products.
    The reductions in units of MMTEVe are calculated for each year by
summing the tons abated for the options utilized for that year. EPA
estimates that for the years 2022-2036 this action will avoid
cumulative consumption of 3,152 MMTEVe of HFCs in the United States.
The annual consumption avoided is estimated at 42 MMTEVe in the year
2022 and 282 MMTEVe in 2036. In order to calculate the climate benefits
associated with consumption abatement, the consumption changes were
expressed in terms of emissions reductions. EPA estimates that for the
years 2022-2050 this action will avoid cumulative emissions of 4,560
MMTEVe of HFCs in the United States. The annual avoided emissions are
estimated at 22 MMTEVe in the year 2022 and 171 MMTEVe in 2036. Note
that the emissions avoided in each year is less than the consumption
avoided in the same year because of the delay between when an HFC is
produced or imported and when it is emitted to the atmosphere.
    EPA received comments on the RIA including on the estimated costs
and benefits of the rule. While some commenters supported the use and
application of the SC-HFCs to monetize the climate benefits associated
with the rule, others noted that the estimates were not peer reviewed.
The SC-HFCs estimates used by EPA in the RIA were developed in a manner
consistent with the methodology underlying estimates of the social cost
of other greenhouse gases (SC-CO2, SC-CH4, and
SC-N2O) as presented in the Technical Support Document:
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates
under Executive Order 13990 (IWG 2021), which were developed over many
years, using a transparent process, peer-reviewed methodologies, the
best science available at the time of that process, and with input from
the public.
    Additional commenters noted methodological concerns with the
underlying climate models and inputs used to generate the SC-GHG
estimates that the SC-HFCs estimates are derived from. EPA recognizes
the shortcomings and limitations associated with the current interim
IWG estimates and underlying methodology. Since the SC-HFC estimates
are based on the same methodology underlying the SC-GHG estimates
presented in the IWG February 2021 TSD, they share a number of
limitations that are common to those SC-GHG estimates. The limitations
were outlined in the February 2021 TSD and include that the current
scientific and economic understanding of discounting approaches
suggests discount rates appropriate for intergenerational analysis in
the context of climate change are likely to be less than 3 percent,
near 2 percent or lower. Additionally, the IAMs used to produce these
estimates do not include all of the important physical, ecological, and
economic impacts of climate change recognized in the climate change
literature, and the science underlying their ``damage functions''--
i.e., the core parts of the IAMs that map global mean temperature
changes and other physical impacts of climate change into economic
(both market and nonmarket) damages--lags behind the most recent
research.
    The modeling limitations do not all work in the same direction in
terms of their influence on the SC-HFC estimates. However, as discussed
in the February 2021 TSD, the IWG has recommended that, taken together,
the limitations suggest that the SC-GHG estimates likely underestimate
the damages from GHG emissions. Therefore, as a member of the IWG
involved in the development of the February 2021 TSD, EPA agrees that
the interim SC-GHG estimates represent the most appropriate estimate of
the SC-GHG until revised estimates have been developed reflecting the
latest, peer reviewed science. The 2021 TSD previews some of the recent
advances in the scientific and economic literature that the IWG is