The U.S. Environmental Protection Agency (EPA) has finalized regulations impacting a large swath of refrigeration and cooling equipment industries. The new regulations are the most recent EPA action addressing the use of hydrofluorocarbons (HFCs), greenhouse gases often used to replace ozone-depleting substances for refrigeration and cooling, under the American Innovation and Manufacturing Act of 2020 (AIM Act). This latest set of AIM Act regulations imposes new requirements to reduce HFC emissions and create a new reclamation program. The rule will impact a wide variety of refrigeration and cooling equipment supply chains, including those that own, operate, install, service, and repair equipment containing HFCs, as well as those that recover, recycle, or reclaim HFCs or their substitutes. Together, the new regulations establish EPA’s Emission Reduction and Reclamation (ER&R) Program. Entities that are potentially impacted by the new rule will need to review the requirements carefully as they vary by industry and application.
AIM Act Background
The AIM Act was passed by Congress in response to the Kigali Amendment of the Montreal Protocol and mandates the phasedown of certain HFCs by 85% by 2036. The AIM Act authorizes EPA to address HFCs through three main mechanisms: 1) phasing down of production and consumption of listed HFCs, 2) managing HFCs and their substitutes, and 3) facilitating the transition to new technologies that use alternatives to traditional HFCs through sector-based regulatory restrictions. EPA has already finalized several sets of regulations implementing the AIM Act to establish an allocation and trading program for HFC producers and importers, and to require manufacturers to transition refrigeration and cooling equipment and products over to HFC substitutes. The latest rule addresses category two above — the AIM Act’s requirements relating to the management of HFCs.
Emission Reduction and Reclamation Program
Subsection (h) of the AIM Act directs EPA to create regulations that control activities and practices in service, repair, disposal, and installation of equipment using HFCs or new HFC substitutes, as well as reclaiming those substances. The ER&R Program will generally require repairs of leaks in appliances that contain at least 15 pounds of HFC-containing refrigerants and will require automatic leak detection (ALD) systems for certain new and existing commercial and industrial refrigeration appliances that contain at least 1,500 pounds or more of an HFC or HFC substitute. The ER&R Program also requires that service and repair of certain existing HVAC equipment be done with reclaimed HFCs while also setting limits on the amount of virgin HFCs that can be mixed in with those reclaimed HFC refrigerants. HFC reclaimers and recyclers will also be subject to new requirements related to handling, recordkeeping, reporting, and labeling. Specific requirements vary under the new ER&R Program depending on the industry equipment at issue (for example, maximum allowable leak rates are different for commercial refrigeration and for comfort cooling appliances).
EPA has been moving quickly and aggressively on HFCs as part of its broader agenda to lower the U.S.’s greenhouse gas emissions. In addition to carrying out Congress’s directions in the AIM Act, EPA added HFC enforcement to its National Enforcement Initiatives in August 2023. A year later, the agency announced an enforcement alert to address the illegal import of HFCs into the U.S. EPA has already brought several civil and criminal enforcement actions under the AIM Act and reached at least nine civil settlements.
Separately, EPA’s latest rules also established alternative Resource Conservation and Recovery Act (RCRA) standards for certain ignitable spent refrigerants when being recycled for reuse. Although the RCRA standards separate from the AIM Act regulations, they both concern refrigerants being recycled for reuse and touch the same stakeholders. Finally, EPA issued an advanced notice of proposed rulemaking alongside the finalized ER&R Program requesting input from industry stakeholders on what technical training or certifications should be required of refrigeration and cooling equipment installers, services, and technicians.
Anyone seeking to challenge the ER&R Program have 60 days from the regulations’ publication in the Federal Register to bring suit, which is expected in a matter of days.
