EPA Finalizes HFC Technology Transition Rule

On October 19, 2023, the U.S. Environmental Protection Agency (EPA) published a final rule restricting the use of certain hydrofluorocarbons (HFCs) in aerosols, foams, refrigeration, air conditioning, and heat pump products and equipment. EPA’s Phasedown of Hydrofluorocarbons: Restrictions on the Use of Certain Hydrofluorocarbons Under the American Innovation and Manufacturing Act of 2020, is the first final rule to implement the technology transition requirements under subsection (i) of the American Innovation and Manufacturing Act of 2020 (AIM Act), 42 U.S.C. § 7675 et seq. EPA also released its proposed emissions reduction and reclamation rule under subsection (h) of the AIM Act on the same day; Beveridge & Diamond’s summary of Emissions Reduction/Reclamation Rule can be found here.

Key Takeaways

• New restrictions on high-GWP HFCs. The final rule restricts the use of certain high-GWP HFCs in new products (defined to refer to manufactured end products, such as appliances and foams, as opposed to mixtures, such as coolants and refrigerants) in specific sectors, and establishes GWP limits for certain equipment. The rule prohibits the import and manufacture, as well as the subsequent sale, distribution, and export of products that do not comply with the relevant restrictions, and imposes certain labeling, reporting, and recordkeeping requirements on operators of regulated equipment.
• Affected Stakeholders. This rule will have broad implications for manufacturers, importers, exporters, and retailers of products that contain HFCs within the refrigeration, air-conditioning, and heat pump sectors, as well as the aerosols and foams sectors. The rule will not directly regulate individuals or entities that are the ultimate consumers of these products but will undoubtedly impact supply chains.

GWP Restrictions

The final rule restricts the use in certain new products of HFCs with high global warming potential (GWP) values by imposing limits on high-GWP HFCs and by prohibiting the use of certain substances and blends in newly manufactured products in the refrigeration, air conditioning, and heat pump (RACHP) sector, as well as for foams and aerosols.

EPA imposed different GWP limits for new equipment on a sector-by-sector basis. The GWP limits for the regulated sectors range from 150 GWP to 700 GWP. While the final rule does not directly regulate the sale, distribution, and use of used equipment – apart from the important exception of imported used equipment imported -- it does restrict the manufacture and import of all factory-completed products that do not meet the GWP limits, regardless of whether the product is used. This restriction applies to all regulated products manufactured after December 27, 2020.

In response to public comment, EPA excluded equipment components (as contrasted with finished manufactured appliances and equipment) from its manufacture, import, sale, and distribution restrictions.

Revised Compliance Deadlines 

EPA extended its proposed compliance deadlines for equipment in several sectors, including retail refrigeration units, cold storage warehouse systems, and transport refrigeration. EPA had initially proposed that the manufacture and import restrictions for existing products would begin in 2025 for the RACHP, foam-blowing, and aerosol sectors, and the prohibitions on sale and distribution would begin in 2026. While EPA maintained the January 1, 2025 compliance deadline for some equipment, such as stand-alone refrigeration units, it extended the compliance deadlines for other equipment and certain aerosol end uses. For example, EPA extended its compliance deadlines for the manufacture and import of remote condensing units and cold storage warehouses to January 1, 2026, and for supermarket systems to January 1, 2027.

EPA also finalized a three-year sell-through period – two years longer than initially proposed. EPA had initially proposed a one-year sell-through period that would allow entities to continue to sell existing equipment inventory using regulated HFCs for one year after the effective manufacture and import compliance date for that industry sector. Commenters objected to the one-year sell-through provision by raising concerns about stranded inventory. In response, EPA extended the sell-through provision to three years after the applicable manufacture and import compliance date.

Reporting, Recordkeeping, and Labeling Obligations

EPA finalized new recordkeeping and reporting requirements for entities that import or domestically manufacture products that use a regulated substance. These entities are required to retain certain records substantiating import and sales data for three years. Entities in the RACHP, aerosols, and foam sectors must provide annual reports to EPA with specific data about the regulated substances in their equipment. EPA did not finalize its proposal to require reporters to include specific GWP data for the HFCs or HFC blends used in each piece of equipment.

Technology Transition Petitions 

Under subsection (i)(3) of the AIM Act, a person may petition EPA to promulgate a rule or restrict the use of a regulated substance in a sector or subsector. In this rulemaking, EPA finalized the process for submitting technology transition petitions.

Beveridge & Diamond’s Air and Climate Change group helps clients in numerous industries achieve compliance with the ever-changing legislative and regulatory landscape thereby reducing cost and risk to operations. For more information, please contact the authors.