Extended EPA Oversight: Mastering New Skills to Support the Refrigerant Lifecycle with New HFC Regulations and Supply Chain Management Requirements

On October 6th, the EPA introduced new rules as part of the AIM Act, expanding on our last webinar that discussed updates to maintenance practices and the new 15 LB+ rulemaking.  Today, we shift gears and focus on the recycling and handling of HFCs used in air conditioning and refrigeration and Cylinder tracking and labeling requirements for equipment. The EPA is stepping in to ensure enough recycled HFCs are available. To accomplish this, better tracking of HFC containers and stricter labeling to prevent leaks is required. This week examines the new regulations, specifically the lifecycle management of refrigerants and updated labeling responsibilities for cylinders and systems.

A little Background:

As of today, the EPA has issued a sweeping set of 3 regulatory updates; we are addressing the updates in bundles because there are a lot of changes.

Maintenance Practices – proposed rule – Phase down of Hydrofluorocarbons: Management of Certain Hydrofluorocarbons and Substitutes under Subsection (h) of the AIM Act (American Innovation and Manufacturing Act).

Trakref published part 1 on October 19, 2023  – We shared updates, including the 15# rule (no longer 50), updated repair practices, new record-keeping, and reporting obligations.

Today, we are publishing Part 2. We share a summary of the cylinder tracking changes, updated changes to refrigerant use and reclaim in 20208, and labeling responsibilities.

December 2, 2023, Part 3, we will discuss flammable refrigerants and The Resource Conservation and Recovery Act (RCRA), the public law that creates the framework for properly managing hazardous and non-hazardous solid waste, which also includes certain refrigerants.

Restrictions on the Use of Certain Hydrofluorocarbons under Subsection (i) of the American Innovation and Manufacturing Act of 2020 – known as the Technology Transition – Trakref plans to deliver this in the second week of December.

2024 Allowance Allocations for Production and Consumption of Regulated Substances under the American Innovation and Manufacturing Act of 2020 and Notice of Final Administrative Consequences – Trakref plans to deliver this in the Last week of December.

Today, we focus on the remaining aspects of the section titled Proposed Rule – Phasedown of Hydrofluorocarbons: Management of Certain Hydrofluorocarbons and Substitutes under Subsection (h) of the American Innovation and Manufacturing Act.We will cover:

1. New cylinder management deadlines and requirements
2. Restrictions of use of Virgin refrigerants in 2028 and preparing for post-use reclaims needs.
3. Labeling and tagging requirements for the entire refrigerant chain of custody.

Together, a new era of refrigerant management is upon us. With the EPA’s latest Subsection (h) Regulations, there’s an urgent dialogue we need to have about how we service, repair, dispose of, and installation of equipment; in this regulatory update, the EPA is using both the carrot and the stick.

Carrot – Sustained ability to service equipment after 2028 because without a robust recovery, tracking, and reclaim program, there won’t be enough gas to meet serving needs.

Stick – New record-keeping and tracking requirements.  If you fail to track and get caught, the price will be costly, and the EPA has deployed a well-developed regulation that covers the entire lifecycle.  And they will rely on their NextGen Compliance partner, the Department of Justice, for engagement.

EPA’s concerns are the same as the marketplaces: Ensure markets have enough refrigerant for servicing high GWP equipment until its normal service life ends.

These regulations are not just a nod towards environmental protection; they directly respond to past practices that have led to potential material shortages. The focus is now on maximizing refrigerant reclaim and minimizing release while protecting those who handle these substances daily. Let’s unpack what this means for your day-to-day operations. The EPA is proposing rigorous cylinder and container tracking to monitor HFCs closely. Why? Because the historical leniency in tracking has contributed to the looming threat of refrigerant shortages. We need to know where our refrigerants are to prevent waste and ensure enough refrigerant to go around as we shift toward next-generation alternatives.

Understanding the Supply Chain Challenges facing the EPA and the Marketplace

Refrigerants are manufactured in chemical plants, some in the US and some overseas.  In most cases, they are down-packed, where bulk refrigerants are received and then transferred to smaller containers for shipment.  These smaller containers are often disposable and shipped to brokers and wholesale distributors for resale to mechanical service providers, HVAC/R service companies, owners, and operators.

The disposable cylinders are unmarked with no required denomination for manufacture date, batch, or origin, and many downpakers use generic cylinders.  As a result, neither the EPA nor suppliers in the marketplace have a firm awareness of the total amount of refrigerant in the supply chain.  Until this regulation goes into effect, all the EPA knows are three things.

1. Total production and imports – auditable since these groups are also subject to additional reporting responsibilities in other EPA areas; the data is verifiable.
2. Total Reclaim is about 2.8% of virgin sales reported by reclaimers – unaudited as no verification is required.
3. Destruction is very low and somewhat auditable since the destruction facilities have strict emissions record-keeping and reporting obligations. Still, as a share of the market, it represents less than 1% of all refrigerant sales.

Some independent companies are tracking cylinders, but from our experience, they represent less than 2% of the market.  Companies are vulnerable to phantom emissions and theft without tracking cylinders and refrigerants.  The Market is very siloed (see the diagram) right now, and each group has unique issues that isolate them from other aspects of the supply chain.  The supply chain is represented by four (4) significant segments: Manufacturers (of equipment and refrigerant), Suppliers (Wholesalers), Service Providers, and the Owners/Operators of equipment.

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Cylinder management and tracking Requirements for HFC Containers: Disposable and Reusable

Cylinders are as crucial to the EPA as the refrigerants they contain.  The EPA has its eyes on the entire refrigerant Lifecycle – from cradle to grave, and the Aim Act gives them the authority to manage every aspect of this lifecycle. There are five types of cylinders; tracking will be required for all of them

The EPA proposes staggered compliance dates for the HFC registry, record keeping, and reporting.  The goal is to make sure less refrigerant is vented, lost, or unaccounted for so that in future years, the markets will not struggle to have enough material for servicing since the phase-down will require that every resource be maximized to meet servicing demand.

For instance, disposable cylinders account for most of the market use, and each cylinder is estimated to contain between 0.5-4 pounds of residual gas at the end of its service life.  The market completely relies on these cylinders to get refrigerant to rooftops, basements, and everything in between.  The refrigerant cylinders are convenient but presently uncontrollable, and they act as a vulnerable or weak spot in the supply chain.  The heels, or residual gas from just this one aspect of the supply chain, could account for between 4-9 Million LBS of loss annually.

In 2021, the EPA provided a study, Regulatory Impact Analysis for Phasing Down Production and Consumption of where this chart is published.  It is the most recent of 3 studies conducted by the EPA, and they were very conservative in their results.  The EPA physically studied 110 cylinders, and then, as this chart shows, they extended those assumptions.

The Key proposed requirements we are discussing today include:

1. Effects disposable cylinders containing HFCs for servicing, repairing, or installing any high GWP HFC refrigerants.
2. Disposable cylinders must be sent to certified reclaimers or fire suppressant recyclers.
3. Requirement for removal of all HFCs, including the heel, before disposal by the reclaimer or fire suppressant recycler
4. Lifecycle development of refrigerant reclamation

The goal is to reduce emissions so the refrigerant that would have been vented will be available for servicing.  The EPA listened to the people submitting comments and adjusted the status of heels returned in these cylinders from “Virgin” to “Reclaimed.” Wondering what this means?

It means that the heels now become eligible to be blended with virgin material and therefore help the industry and likely you, meet your servicing needs.

But while we are here, lets look at the definition for reclaim:

Refrigerant is considered Reclaim if it has experienced bona fide use in equipment, including those regulated substances contained in the heel or the residue of a container that has had a bona fide use in the servicing, repairing, or installation of equipment

1. The EPA needs to be more precise with this definition, so the marketplace will know how to track, identify, and use these certain refrigerants.  They never specifically define what Bona Fide heel means, which could be a problem; for instance, what if the heel of the cylinder is the entire cylinder?  What happens if the user sends back a full cylinder as a heel?  The EPA never specifies a heel limit nor a heel amount or date.  What if a user has 30,000 lbs. of virgin gas in disposable cylinders and sends it back to a reclaimer as ‘heels”? Does this qualify?
2. Also, many of us want to know: “What is a Bona fide use in equipment mean?” If it only stays in the equipment for two weeks, 2 hours, or years, what is Bona Fide?   In the ’90s, a creative Russian group pushed 30,000 LBS of R-12 through one chiller system weekly for three years, then exported that to the US as “Recovered” material.  We can assume the EPA does not intend this to happen, so we expect some feedback from them after the comment period.

How does this affect Recovery cylinders used for extracting refrigerant from existing Equipment?
Cylinders used to recover HFCs from equipment are referred to as recovery cylinders. These cylinders are usually colored yellow and gray, although, in the future, flammable refrigerants will likely have to be recovered into cylinders with different color patterns.

Reclaim companies have a fleet of these cylinders; they are sent empty and in a vacuum to a wholesale company or a large owner/operator.  The empty cylinder is then sold or rented to a service person, who then takes the cylinder and uses it to recover refrigerant.  The recovered refrigerant is then sent back through this network, ultimately making its way back to a reclaim company where it will be tested, analyzed, and then the gas is cleaned – this is called the reclamation process, and then tested again for purity to meet AHRI-700 -2016, packaged and then sold.

The EPA is proposing a requirement to tag & track recovery cylinders, the same as disposable cylinders, which presents some complications, things EPA has not discussed but we are certain will become part of the conversation, including the following missing scenario consideration:

1. What if a contractor takes a cylinder and uses it for multiple refrigerants?
2. What if when a cylinder is used, the gas labeled on the system conflicts with the gas in the system? For instance, a system labeled 404A might contain 407A. How will the registry reflect the conflict in the material balance in their ledger?

 

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Labelling & tracking requirements for Cylinders

The market’s normal behavior is to puncture disposable cylinders and discard the scrap cylinders and other scrap metal.  On the other hand, recovery cylinders remain in circulation, available on the market for many years; once used, they are recirculated through existing channels. Here are the new proposed rules:

1. Return disposable HFC cylinders to certified reclaimers or fire suppressant recyclers.
2. Final processors (reclaimer or fire suppressant recyclers) to ensure all HFCs, including the heel, are recovered before disposing of the cylinder.
3.  Ensure all recovered HFCs are sent to certified reclaimers.
4. The Cylinders must be labeled with the following information:(note the slight differences related to each type of cylinder transaction.

Missing from this list is the Batch or ID for the material content; the EPA seems to have missed that point, but we expect loose ends like that to be accommodated in the final revision documents because of comments submitted by stakeholders.

The present Business-As -Usual process of adequately removing heels from cylinders is very Uncommon when disposing of disposable cylinders. The impact or seriousness of residual refrigerant content (heel) in every cylinder has been documented in three of the EPA research studies beginning in the 1990s, including the most recent Regulatory Impact Analysis for Phasing Down Production and Consumption of Hydrofluorocarbons (HFCs).  In this report,

EPA has already been through judicial review on the topic of cylinder tracking.   The court found that the EPA needed to have the authority under subsection (e)(2)(B) of the AIM Act to enforce a cylinder ban. However, this limitation is specific to that subsection and does not affect the EPA’s authority under other applicable parts of the AIM Act. The court acknowledged that the EPA has broader regulatory powers under the statute in other sections, like subsection (h)(1), which allows it to regulate practices, processes, and activities related to handling equipment. The current proposal for cylinder and tracking requirements is based on this distinct authority granted by subsection (h)(1), differing from the rules established in the Allocation Framework Rule of October 2021.

Record-keeping for HFC evacuation before cylinder disposal.

The EPA is proposing a “Chain of Custody” tracking process that ensures each aspect of refrigerant use is documented and understood by all stakeholders.  This aspect of the regulation ties owners/operators together with service providers to build a mutual responsibility for proper refrigerant management.  Presently the owners/operators can sometimes suggest that the technicians are responsible for leaks and usage, however the regulatory results contradict that when you l

Equipment Labelling – completing the lifecycle.

Although HVAC/R equipment labels are not part of the proposed regulations, the requirement to label equipment is part of provisions in the Technology Transition Final Rule

As the Chart shows, the requirements are phased in over time.  This chart shows 2 of the 4 profiles for data.  It is a limited representation of the more than 54 subsectors defined in the Pending Proposal; however, it is important to note that the items (in red) referred to in columns labeled 85.54 & 85.58 are already finalized and signed into law under the EPA Technology Transition Regulation, published 10/24 effective on 12/26/2023.

There are 4 (four) basic profiles for the labels, and they vary by requirements, with two adjustments: if it is an ice machine – maybe even an ice rink (still uncertain), the harvest rate for ice production is required, there are five (5) asset profiles that require specific labeling that requires if the asset is above or below the 200 LB threshold.

Historically, industry regulations have been focused primarily on 50 LB Refrigeration & Processing Cooling systems, that. The proposed regulation expands the effected equipment now impacting any system 15 LB and larger that contains a refrigerant with a GWP of 53 or greater, many previous conditions that kept equipment safely isolated from compliance obligations.

The proposed Tracking regulation require that effected entities must do the following three (3) things:

1. Register effected assets with the EPA’s tracking system.
2. Registration is available 30 or 60 days before compliance dates – see (Figure 1, Chart)
3. Participate in training: webinars, fact sheets, and guidance material will begin in November 2024

Any product, facility or system using a regulated substance manufactured, imported, or installed after the compliance date for that sector or subsector that lacks a label will be presumed to use a regulated substance with a global warming potential that exceeds the limit or is specifically listed in § 84.54(a) or (c).

Registration Requirements for Disposable & Reusable (recovery or virgin) Cylinders:

Beginning January 1, 2026 refrigerant all refrigerant cylinders will be tracked. Notably, the latest regulatory text, detailed in § 84.118, introduces significant changes aimed at better tracking and managing the use of refrigerants. Here are the critical points you need to be aware of:

1. Refrigerant Heels Registration: For both Virgin Disposable and Reusable cylinders, the remaining refrigerant heels can now be registered as Reclaim.
2. Uniform Tracking System: The tracking requirements that have been applicable to disposable cylinders will extended to recovery/reusable cylinders.
3. Refillable Cylinders Protocol: New protocols require detailed tracking for refillable cylinders during sale and HFC refilling, including logging cylinder details and substances added or removed.
4. Strict Prohibitions: The new framework explicitly prohibits the acquisition of regulated substances from entities that are not duly registered. This measure ensures that all refrigerants are sourced from credible and compliant sources, reinforcing the integrity of the supply chain.

 

Reclaimed HFC Refrigerants Information Requirements

The Proposed regulations establish a maximum content of 15% by weight for virgin HFCs in reclaimed HFC refrigerants, with specific exemptions allowed for certain blends and HFC substitutes.

1.  Requirements: name/brand, reclamation date, container details, content details, batch and reclaimer certification, and certification of contents.
2. Effective Date: Phase-down of HFCs and decreasing availability of virgin HFCs. (85/15 blend is required Jan 1, 2028)
3. Enforcement: Cylinders without the proper label will be considered in violation of the EPA regulation and be subject to the fines defined in section 113.

We interpret this to mean that anyone with a cylinder on or after Jan 1, 2028, will need to have label provided by one of the supply chain company groups mentioned throughout this report.  Without a label, the cylinder is essentially “illegal” and handling or using one could be subject ot significant fines and violations.

Registration into the Tracking System

Every refrigerant handler involved in packaging, cleaning, processing, producing, importing and down packing will have to register into the EPA Uniform Tracking Systems.

Plans are being considered to track recovery cylinders and offer incentives for returning them. This includes EPA suggesting that the market could offer a refund based on an initial deposit when cylinders are returned, improving the tracking of refrigerants to better understand recovery processes and supply chains. Information on how often and by whom the cylinders are maintained is also being gathered to provide insight into the use and movement of recovered substances in the market.

Regulations will require tracking of containers with HFCs during repair or installation work to better understand their distribution in the supply chain.

Recycling/reclamation – end of life Establishment of RCRA Refrigerant Recycling Alternative Standards

The EPA agency has several programs they are responsible for managing, refrigerants (EPA 608 and 609) fall under Sub Chapter C, 40 CFR Part 82 — Protection of Stratospheric Ozone (ODS refrigerants), but Congress under the AIM act expanded EPA agency’s authority to include more than ODS materials.  The present rules that most of us are familiar with only cover the handling and use, not the safety and risk related to managing flammable refrigerants. As the industry transitions to a new set of cooling materials, many other agencies and regulations will need to be updated and expanded.

The present proposed regulation focuses mainly on Title 40 of the Code of Federal Regulations (CFR) encompasses all the rules under the EPA agency jurisdiction, including those pertaining to the management of refrigerants, which are vital for air conditioning and refrigeration but pose significant environmental risks if not handled properly. The EPA has provided detailed guidance and procedures for technicians under the Refrigerant Emissions Reduction Rule to ensure compliance with proper disposal and recycling practices.

In a significant move to enhance these environmental protections, the EPA has proposed amendments to the Resource Conservation and Recovery Act (RCRA), aiming to extend its reach to include a wider array of refrigerants, particularly those that are flammable.

This proposal looks back to the historical context of 1991 when spent CFC refrigerants were excluded from being defined as hazardous waste, a decision that the agency now requires revisiting due to the evolving understanding of refrigerants’ environmental and health impacts. The EPA’s proposal seeks to reconcile the differences in flammability standards between the existing ASHRAE classifications and those under RCRA, addressing the changing characteristics of hazardous waste as it pertains to refrigerants.

The proposed alternative RCRA standards would impose new requirements for the handling of ignitable refrigerants to ensure their safe recovery and recycling. Specifically, these standards would apply to HFCs and their substitutes, excluding the most flammable (Class 3) to manage the risks associated with their lower market value and potential for mismanagement. The EPA is inviting public comment on the scope of these new standards and the possibility of including even the more flammable A3 refrigerants. The overarching goal is to foster a market for recycled refrigerants, maximize recapture, and protect human health and the environment. This includes new mandates for on-site recovery, EPA certification for facilities, emergency preparedness, and strict prohibitions against speculative accumulation. With these measures, the EPA aims to ensure that recycling is legitimate, transparent, and in line with stringent environmental standards.

Proposed Requirements for the RCRA Alternative Standards

The next generation of refrigerants is different than the previous generations, some are flammable, or toxic, or just very high pressure and can act as an asphyxiant.  The EPA has laid out new standards impacting anyone handling and processing ignitable used refrigerants. These regulations are crucial for ensuring safety, compliance, and environmental protection. Here is a simplified breakdown:

• On-Site Recovery: Refrigerant recovery must occur on-site or be managed by the equipment appliances owner.
• Preventing Speculative Accumulation: There must be no speculative stockpiling of ignitable spent refrigerants.  We expect that ASHRAE will change the storage limit in the near future.
• Certification and Preparedness: Facilities must maintain EPA certification and meet emergency response requirements, including expanded RCRA reporting and safety requirements.
• Documentation: Recordkeeping and annual reporting are mandatory to verify that reclaimed refrigerants meet EPA specification requirements.

The primary goal of these requirements is intended to promote legitimate recycling practices and safeguard human health and the environment. Facilities are required to manage refrigerants responsibly, ensuring that any ignitable substances are not accumulated without a purpose, reducing the risk of environmental contamination or safety hazards. Additionally, the EPA calls for stringent recordkeeping to track materials destined for reclamation and for facilities to report their activities annually. This ensures that all reclaimed refrigerants adhere to the necessary specification requirements, with significant consequences in place for non-compliance. Through these measures, the EPA aims to foster a transparent and accountable recycling market, while also mitigating potential risks associated with the handling of flammable refrigerants.

The Entire Supply Chain, including refrigerant distributors, wholesalers and traders will need to review their own practices, since now storage methods will also affect your risk and profile for recordkeeping and reporting.

Facilities Receiving Refrigerant for Recycling and Reuse

1.  Facilities must meet RCRA standards under 40 CFR part 261, subpart M: Addressing risks for ignitable spent refrigerants as hazardous secondary materials. There is a Proposal for facilities receiving ignitable spent refrigerants to meet emergency preparedness.
2. Third-party recyclers store larger volumes from multiple sources and so do distributors and resellers.

 

Proposed requirements:

1. Maintaining emergency equipment.
2. Access to alarm systems.
3. Aisle space requirements.
4. Arrangements with local emergency authorities – this usually requires a HMBP (Hazardous Material Business Plan)
5. Designated emergency coordinator.

 

MVAC Servicing and Reprocessed Material

The Environmental Protection Agency (EPA) shift from 50 to 15 LBS, brings a new target into view, and the new regulations will specifically impact mobile transportation fleets, specifically buses, trains, and mobile refrigeration vehicles that rely on refrigerants with high Global Warming Potential (GWP), particularly those with a refrigerant charge of 15 pounds or more. These segments are being closely examined due to the significant environmental impact of the HFCs used within their systems.

Current MVAC servicing facilities may not be facing new rules immediately, but with the EPA assessing industry practices and refrigerant purity, and the Air-Conditioning, Heating, and Refrigeration Institute (AHRI) potentially setting new standards, changes are imminent. Stakeholders in these sectors are advised to stay vigilant and prepare for the proposed regulations, which aim to reduce greenhouse gas emissions and ensure compliance with evolving environmental standards. The combined efforts of the EPA’s evaluations and the AHRI’s standards development are steering the direction of future compliance and environmental safeguarding measures within the transportation industry.

 

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The Initial Charge for Certain sectors will require reclaim when servicing or installing

The upcoming regulations mandating the use of reclaimed HFCs for initial charges in various appliance types are set to make a considerable impact on the HVAC and refrigeration industries. With approximately 10 million systems being retired annually and another 12-15 million new systems entering the market, the requirement will affect a wide range of subsectors:

1.  Residential and light commercial AC and heat pumps
2. Cold storage warehouses
3. Industrial process refrigeration
4. Stand-alone retail food refrigeration
5. Supermarket systems
6. Refrigerated transport.
7. Automatic commercial ice makersTop of Form

Implementation dates for these requirements will differ between Self Contained (factory charged) and field-charged appliances , considering the specific equipment configurations and capacity changes. This shift towards using reclaimed HFCs is a significant step towards sustainability and will have a broad and substantial impact on manufacturing and servicing within the industry.  Maybe since the EPA already has required an 85/15 blend for reclaim/virgin, they will also consider allowing that heavily weighted reclaim blend to be allowed for use in charging new appliances?

Conclusion: The EPA is on a mission – The Impact of Three Decades of EPA Regulations on refrigerants and the Ongoing Quest for Lower GWP Alternatives

The EPA’s regulations over the past 30 years have provided a complex framework of operational outcomes, influenced by successes, failures, litigation, and political factors. The results since 1994 will are instrumental in guiding the transition towards a lower GWP (Global Warming Potential) cooling profile, supporting the EPA achieve the goals of the AIM Act.

As we look towards 2028, it’s projected that the demand for reclaimed HFCs in servicing and repair will be notably high in supermarket systems, with an estimated 19,081,187 pounds needed. The 2021 reclaim data indicates a lack of industry support for existing regulations since the amounts already being reclaimed across various HFC types are very low comparative to virgin sales.

404a is the largest selling refrigerant in the refrigeration industry, in some regions it is 80% of the volume sales.  However, as the chart shows only 60,580 LBS were sent for reclaim in 2021 (the last year the EPA published reclaim rates).  This means that in 2028, if this trend continues, then the marketplace would only have access to 69,000 lbs. of R-404A, a shockingly low number, not enough to meet even 1 workday demand today in 2023.

This journey is full of challenges. The task of consistent recordkeeping and reporting, essential for ensuring percentage-based compliance, presents potential hurdles especially for the companies that are not well managed. There is a delicate balance to be struck between meeting market needs, compliance requirements and achieving policy goals set by congress.

The Subpart H adjustments proposed in this regulation, are simple,

1.  15 LB systems are the new threshold.
2. Cylinder tracking is coming for both virgin and
3. Reclaim is a key part of the future industry reliability.
4. 85/15 blend is a strong probability.
5. Assets and Cylinders will need to be auditable.
6. Mobile and transportation vehicles will be impacted.
7. Heels from disposables will be strictly managed.
8. New equipment appliance charging will require “reclaim” refrigerants.
9. Flammable refrigerants require the supply chain to upgrade its regulatory record keeping and reporting.
10. All refrigerants with a GWP of 53 and higher are impacted and this expands the effected profile to include any neat or in a blend that meets that limit, including R-408A.

Existing EPA 608 regulations effect about 5% of all equipment or appliances, this Subpart H expansion will exponentially increase that to about 70%, however 100% of all refrigerants will are impacted by cylinders tracking, handling, and reporting requirements.