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Chemical Manufacturers, Importers, and Exporters Frequently Asked Questions

The import, export, and production of HCFCs are managed by the allowance system, first established through rulemaking on January 21, 2003, and amended through rulemaking in December 2009. Chemical manufacturers, importers, and exporters are required to operate within this framework. EPA provides the following information to help those in the chemical industry understand their role in the phaseout of HCFCs in the United States.

How does the HCFC allocation system work?

EPA grants importers and producers allowances based on the amount of HCFCs they historically produced or imported. One allowance is equal to one kilogram of ozone-depleting substance (ODS). There are two types of allowances: production allowances and consumption allowances. A producer must use one production allowance and one consumption allowance for each kilogram produced. An importer must use one consumption allowance for each kilogram imported.

The allowance system prior to 2010 included HCFC-22, HCFC-142b, and HCFC-141b. EPA has widened the scope of the allowance system to include HCFC-123, HCFC-124, and HCFC-225ca/cb after 2010.

Companies that provide verification to EPA on exported quantities of HCFCs that were originally produced or imported with proper allowances can receive a refund of the allowances for that quantity. Only companies that hold consumption allowances for an HCFC are allowed to import that specific HCFC. International trade is restricted according to the guidelines set forth in the June 17, 2004, Final Rule (69 FR 34024).

More information on the allocation system is found here.

Can a company transfer allowances?

Under the allowance system, a person can trade a consumption or production allowance for one kilogram of an HCFC to another company, who would then be eligible to consume or produce one kilogram of that same type of HCFC. It also permits a trade within a company or between companies, and from one type of HCFC to another type. Because each of the HCFCs have varying levels of ozone-depleting potential (ODP), each of them has an ODP value. When trades occur between chemicals, they must be weighted by ODP.

The Clean Air Act requires that a trade of allowances result in a benefit to the environment. When it processes an inter-company transfer, EPA deducts an offset (0.1 percent of the trade) from the transferor's allowance balance. For inter-pollutant transfers, when EPA determines that the convertor has sufficient unexpended allowances to cover the transfer, EPA also deducts an additional 0.1 percent of the quantity for the transfer.

Those interested in the domestic transfer of allowances with other companies or between types of HCFCs should review a guidance document developed by EPA and the specific provisions described in 40 CFR 82.23. Additional discussion on the transfer of allowances is found in the January 21, 2003, Final Rule (68 FR 2819) and in the December 2009 Rule. The transferor must submit to EPA a transfer request and EPA will determine if the transferor possesses unexpended allowances to cover the claim.

May I produce, import, and export HCFCs other than the seven that EPA has established allocations for?

Yes. However, all HCFCs are controlled substances, so EPA requires companies to report all HCFC transactions. This includes quantities produced, imported, exported, transformed, and destroyed. This requirement allows EPA to fulfill its reporting obligations under the Montreal Protocol.

What are the restrictions for importing virgin HCFC-22 or HCFC-142b in bulk?

You must first hold allowances to import virgin HCFC-22 and HCFC-142b. Second, the virgin HCFC-22 or HCFC-142b may only be used for the purpose of servicing existing refrigeration and air conditioning equipment, with a few limited exceptions. Third, you must comply with all recordkeeping and reporting provisions. Reporting forms for Class II substances are here.

May I export virgin HCFC-22 or HCFC-142b in bulk?

Unlike importers, exporters do not need allowances to export HCFC-22 or HCFC-142b in bulk, although the importing country may have its own restrictions. However, starting January 1, 2010, HCFC-22 and HCFC-142b (and blends containing those compounds) may only be exported to developed countries if the HCFCs 1) are used, recovered, and recycled, 2) will be used for transformation, or 3) will be used as a refrigerant in appliances manufactured before January 1, 2010.

Companies that provide verification to EPA on exported quantities of HCFCs that were originally produced or imported with proper allowances can receive a refund of the allowances for that quantity. Exporters should check with the government representing the country of import, as some countries have banned or placed requirements on the import of ODS. Exporters need to follow the EPA recordkeeping and reporting requirements. Reporting forms are available here.

Companies holding baseline production allowances may also produce an amount of HCFCs for export to developing countries to meet that country's basic developing need. This amount is limited to 15 percent of that company's production baseline. A list of these countries (called "Article 5" countries under the Montreal Protocol) is found here. Exit EPA Disclaimer

May I export virgin HCFC-123, HCFC-124, HCFC-225 or HCFC-225cb in bulk?

Yes. The export restrictions do not apply until January 1, 2015.

May I import used HCFCs in bulk?

Used HCFCs do not require consumption allowances, but you must petition EPA for permission and receive a non-objection notice from EPA to import these HCFCs. There is no EPA petition form, and it may be in any format as long as it includes the required information. In evaluating a petition, EPA determines whether the class II substance to be imported is, in fact, previously used. In order to independently verify the previous use of the class II substance, EPA requires information on a contact person in the foreign country, including telephone and fax numbers. In addition, EPA requires a detailed description of the source facility and the specific equipment from which the class II substance was recovered. This information ensures U.S. compliance under the Montreal Protocol. More information is on the Class II used ODS imports page.

May I import bulk shipments of HCFC-141b?

No, the production and import of HCFC-141b is prohibited. More information on HCFC-141b is found here.

Do any import or export restrictions apply to HCFC substitutes that do not contribute to ozone depletion, such as HFC-134a or R-410A?

No. Currently there are no restrictions in the United States on the production, import, or export of HFC refrigerants, including R-134a or R-410A. However, importers should expect that U.S. Customs and Border Protection would request verification of contents prior to entering the United States. Also, other countries may have restrictions or requirements for HFC refrigerants exported to them.

May I produce or import a substitute that contains HCFC-22 or HCFC-142b if EPA's SNAP Program found it acceptable?

Not necessarily. Beginning January 1, 2010, the importation and sale of HCFC-22 and HCFC-142b will be prohibited for most uses, with exceptions for use in existing refrigeration and air conditioning equipment, for use as a feedstock for manufacturing other chemicals, for use in thermostatic expansion valves, and for use in sterilizing medical equipment. For the excepted uses, you still must hold allowances for the HCFC-22 and/or HCFC-142b. EPA's Significant New Alternatives Policy (SNAP) Program evaluates and finds acceptable substitutes for ozone-depleting substances, including blends that may contain smaller quantities of ozone-depleting substances. However, SNAP acceptability does not give authorization to produce or import blends containing ozone-depleting substances.

Import of HCFC-142b, HCFC-22, or blends containing these HCFCs is limited to persons holding consumption allowances. Production of HCFC-142b and HCFC-22, or blends that contain these HCFCs, is limited to persons holding consumption allowances and production allowances. Thus, manufacturers of blends containing these substances may have difficulty obtaining the HCFC components necessary to formulate their blends, even if the SNAP Program lists those blends as acceptable.

Other Frequently Asked Questions About the Phaseout of HCFC-22

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