[Federal Register Volume 89, Number 123 (Wednesday, June 26, 2024)]
[Proposed Rules]
[Pages 53373-53380]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-13900]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 84
[EPA-HQ-OAR-2021-0643; FRL-11739-01-OAR]
Phasedown of Hydrofluorocarbons: Restrictions on the Use of HFCs
Under the AIM Act in Variable Refrigerant Flow Air Conditioning
Subsector
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
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SUMMARY: The U.S. Environmental Protection Agency is proposing to amend
a provision of the Technology Transitions regulations promulgated under
the American Innovation and Manufacturing Act. This action allows one
additional year, until January 1, 2027, solely for the installation of
new residential and light commercial air conditioning and heat pump
variable refrigerant flow systems that are 65,000 British thermal units
per hour or greater using components manufactured in the U.S. or
imported prior to January 1, 2026. The existing January 1, 2026,
compliance date for the installation of certain variable refrigerant
flow systems may result in significant stranded inventory that was
intended for new construction. EPA is promulgating this action to
mitigate the potential for significant stranded inventory in this
subsector.
DATES: Comments must be received on or before July 26, 2024.
ADDRESSES: You may send comments, identified by Docket ID No. EPA-HQ-
OAR-2021-0643, by any of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov
(our preferred method). Follow the online instructions for submitting
comments.
Email: [email protected]. Include Docket ID No. EPA-
HQ-OAR-2021-0643 in the subject line of the message.
Mail: U.S. Environmental Protection Agency, EPA Docket
Center, Air and Radiation Docket, Mail Code 28221T, 1200 Pennsylvania
Avenue NW, Washington, DC 20460.
Hand Delivery or Courier: EPA Docket Center, WJC West
Building, Room 3334, 1301 Constitution Avenue NW, Washington, DC 20004.
The Docket Center's hours of operations are 8:30 a.m.-4:30 p.m.,
Monday-Friday (except Federal Holidays).
Instructions: All submissions received must include the Docket ID
number for this rulemaking. Comments received may be posted without
change to https://www.regulations.gov, including any personal
information provided.
Do not submit any information you consider to be Confidential
Business Information (CBI) through https://www.regulations.gov. For
submission of confidential comments, please work with the person listed
in the FOR FURTHER INFORMATION CONTACT section. For additional
submission methods, the full EPA public comment policy, information
about CBI or multimedia submissions, and general guidance on making
effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.
FOR FURTHER INFORMATION CONTACT: Joshua Silver, Stratospheric
Protection Division, Office of Atmospheric Protection (Mail Code
6205A), Environmental Protection Agency, 1200 Pennsylvania Ave. NW,
Washington, DC 20460; telephone number: (202) 564-2473; email address:
[email protected]. You may also visit EPA's website at https://www.epa.gov/climate-hfcs-reduction for further information.
SUPPLEMENTARY INFORMATION:
Throughout this document, whenever ``we,'' ``us,'' ``the Agency,''
or ``our'' is used, we mean EPA. Acronyms that are used in this
rulemaking that may be helpful include:
AC--Air Conditioning
AHRI--Air-Conditioning, Heating, and Refrigeration Institute
AIM Act--American Innovation and Manufacturing Act of 2020
The Alliance--Alliance for Responsible Atmospheric Policy
APA--Administrative Procedure Act
BTU/h--British thermal units per hour
CAA--Clean Air Act
EPA--U.S. Environmental Protection Agency
FR--Federal Register
GWP--Global Warming Potential
HARDI--Heating, Air-conditioning & Refrigeration Distributors
International
HFC--Hydrofluorocarbon
OEM--Original Equipment Manufacturer
RACHP--Refrigeration, Air Conditioning, and Heat Pumps
SNAP--Significant New Alternatives Policy
VRF--Variable Refrigerant Flow
VRV--Variable Refrigerant Volume
I. General Information
A. Does this action apply to me?
You may be potentially affected by this proposed rule if you
manufacture, import, export, sell or otherwise distribute, or install
residential and light commercial air conditioning and heat pump
equipment. Potentially affected categories, by North American Industry
Classification System code, include:
Plumbing, Heating, and Air Conditioning Contractors
(238220).
Air Conditioning and Warm Air Heating Equipment and
Commercial and Industrial Refrigeration Equipment Manufacturing
(333415).
Plumbing and Heating Equipment and Supplies (Hydronics)
Merchant Wholesalers (423720).
Warm Air Heating and Air Conditioning Equipment and
Supplies Merchant Wholesalers (423730).
This list is not intended to be exhaustive, but rather provides a
guide for readers regarding entities that EPA expects could potentially
be affected by this action. Other types of entities not listed could
also be affected. To determine whether your entity may be affected by
this action, you should carefully examine the regulatory text at the
end of this document. If you have questions regarding the applicability
of this action to a particular entity, consult
[[Page 53374]]
the person listed in the FOR FURTHER INFORMATION CONTACT section.
B. What action is the Agency taking?
This proposed rule would provide one additional year, until January
1, 2027, for the installation of new residential and light commercial
air conditioning and heat pump systems using variable refrigerant
volume (VRV) or variable refrigerant flow (VRF) technology that are
65,000 British thermal units per hour (BTU/h) or larger when using
components that were manufactured in the U.S. or imported into the U.S.
before January 1, 2026. Specifically, this proposed rule would allow
for pre-2026 condensing units, evaporators, and air handlers using R-
410A, a blend of two regulated hydrofluorocarbons (HFCs) listed in the
American Innovation and Manufacturing Act of 2020 (AIM Act), or other
regulated substances and blends of regulated substances not meeting the
2023 Technology Transitions Rule's restrictions, to be assembled into
new systems (i.e., installed), so long as those systems are assembled
prior to January 1, 2027.
C. What is the Agency's authority for taking this action?
On December 27, 2020, the AIM Act was enacted as section 103 in
Division S, Innovation for the Environment, of the Consolidated
Appropriations Act, 2021 (codified at 42 U.S.C. 7675). Subsection
(k)(1)(A) of the AIM Act provides EPA with the authority to promulgate
necessary regulations to carry out EPA's functions under the Act,
including its obligations to ensure that the Act's requirements are
satisfied. Subsection (k)(1)(C) of the AIM Act also provides that CAA
sections 113, 114, 304, and 307 apply to the AIM Act and any
regulations EPA promulgates under the AIM Act as though the AIM Act
were part of title VI of the CAA.
The AIM Act authorizes EPA to address HFCs by providing new
authorities in three main areas: phasing down the production and
consumption of listed HFCs; managing these HFCs and their substitutes;
and facilitating the transition to next-generation technologies by
restricting use of these HFCs in the sector or subsectors in which they
are used. This rulemaking focuses on the third area: the transition to
next-generation technologies by restricting use of these HFCs in the
sector or subsectors in which they are used. Subsection (i) of the AIM
Act, ``Technology Transitions,'' provides that ``the Administrator may
by rule restrict, fully, partially, or on a graduated schedule, the use
of a regulated substance in the sector or subsector in which the
regulated substance is used.'' 42 U.S.C. 7675(i)(1). The AIM Act lists
18 HFCs, and by reference any of their isomers not so listed, that are
covered by the statute's provisions, referred to as ``regulated
substances'' under the Act.\1\ (42 U.S.C. 7675(c)(1)). EPA is proposing
to amend restrictions on the use of certain HFCs in the residential and
light commercial air conditioning and heat pump subsector for large
equipment that use VRV or VRF technology.
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\1\ ``Regulated substance'' and ``HFC'' are used interchangeably
in this document.
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D. What are the incremental costs and benefits of this action?
This proposed rule would reduce regulatory burden associated with
the Technology Transitions program while having a negligible
environmental impact. Original equipment manufacturers (OEMs) have
indicated that large quantities of manufactured inventory of VRF
equipment could go unsold without an extension of the installation
date. Stranding equipment that does not meet the new restrictions is
counter to the overall approach EPA has taken in the 2023 Technology
Transitions Rule. Extending the installation date for these systems
will not have an impact on the benefits modeled in the 2023 Technology
Transitions Rule because EPA is limiting the extension to equipment
manufactured in the U.S. or imported into the U.S. before the existing
compliance date of January 1, 2026 (88 FR 73098). Furthermore, EPA did
not analyze this subsector separately from the broader residential and
light commercial air conditioning and heat pump sector for which EPA
has already provided similar regulatory relief.
II. Background
A. Previous Technology Transitions Rules
On October 24, 2023, EPA's final rule establishing the Technology
Transitions program was published in the Federal Register (88 FR 73098,
hereafter ``2023 Technology Transitions Rule''). That rule restricted
the use of certain HFCs in over 40 subsectors in which they are used by
establishing limits for those subsectors based on global warming
potential (GWP). It also prohibited, among other things, the
manufacture and import of factory-completed products and the
installation of certain refrigeration, air conditioning, and heat pump
systems that use HFCs above specified GWP limits. The compliance dates
for these restrictions vary by subsector and range from January 1,
2025, to January 1, 2028. The rule also prohibited the sale,
distribution, and export of factory-completed products that do not
comply with the relevant restrictions three years after the prohibition
on manufacture and import.
After issuance of the 2023 Technology Transitions Rule,
manufacturers, importers, and distributors of residential and light
commercial air conditioning and heat pump equipment requested
clarification of the provisions of the rule regarding two categories of
equipment: residential and light commercial air conditioning and heat
pump systems and variable refrigerant flow (VRF) systems. The November
13, 2023, letter to EPA from the Air-Conditioning, Heating, and
Refrigeration Institute (AHRI), the Alliance for Responsible
Atmospheric Policy (the Alliance), and Heating, Air-conditioning &
Refrigeration Distributors International (HARDI) states that these
organizations understand that components for systems in these two
categories manufactured in the U.S. or imported into the U.S. before
January 1, 2025, and January 1, 2026, respectively, using a regulated
substance with a GWP of 700 or more, cannot be installed as new systems
after each such compliance date.\2\ The letter states that this would
be ``particularly problematic for residential new construction,
including both single-family and multi-family dwellings, where builders
order heating and cooling equipment well in advance of knowing the
exact date of install. Such equipment is not installed until
construction is nearly complete, but at time of order builders do not
know when this date will be.'' The letter further articulates that
allowing the use of components manufactured in the U.S. or imported
into the U.S. prior to the compliance date to be installed as part of
new systems for one year after the compliance date would provide some
relief to the economic and practical burdens.
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\2\ This letter can be found in the docket at EPA Docket ID No.
EPA-HQ-OAR-2021-0643.
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On December 26, 2023, EPA issued an interim final rule (88 FR
88825) that reevaluated the specific circumstances for residential and
light commercial air conditioning and heat pumps and extended the
installation compliance date for that subsector from January 1, 2025,
to January 1, 2026, when using components that were manufactured in the
U.S. or imported into the U.S. prior to January 1, 2025. EPA separately
considered comments on that rule. The Agency is proposing a similar
adjustment to the restrictions on the installation of VRF systems.
[[Page 53375]]
Specifically, EPA is proposing to extend the installation compliance
date for the VRF subsector from January 1, 2026, to January 1, 2027,
when using components that were manufactured in the U.S. or imported
into the U.S. prior to January 1, 2026.
B. Variable Refrigerant Flow Subsector
Variable refrigerant flow (VRF) and variable refrigerant volume
(VRV) systems are direct expansion multi-split systems that incorporate
the following: a split system air conditioner or heat pump
incorporating a single refrigerant circuit that is a common piping
network to two or more indoor evaporators, each capable of independent
control, or compressor units. VRF split systems contain a single module
outdoor unit or combined module outdoor units with at least one
variable capacity compressor that has three or more steps of capacity,
with air or water as the heat source. This design is generally more
energy efficient than unitary split systems without VRF. In this rule,
EPA is considering only those VRF systems that are larger than 65,000
BTU/h and are used for air conditioning.
While this technology is used in air conditioning and heat pump
equipment of any size, the 2023 Technology Transitions Rule limited its
restrictions for this subsector to air-source VRF systems with
capacities of 65,000 BTU/h (19 kW) or more and water-source VRF systems
of any capacity. EPA proposed, and finalized, a compliance date that
provided one additional year compared to the rest of the residential
and light commercial air conditioning and heat pump subsector due to
the complexity of the design and installation for large VRF systems.
Data released annually by AHRI show that equipment with capacities of
65,000 BTU/h or more constitute roughly three percent of all
residential and light commercial equipment sold. VRF equipment of that
size are a subset of that three percent. EPA has summarized this
publicly available data and included it in the docket for this proposed
rule.
C. Avoiding Stranded Inventory
An important consideration in the 2023 Technology Transitions Rule
was to avoid stranding inventory of existing equipment. This includes
systems that are already installed and operating as well as unsold
equipment in the manufacturing and distribution chain. EPA stated that
``[w]e recognize that the production and purchase of products or
components that are unable to be sold to consumers is an economic and
environmental outcome no parties desire, and the proposed rule's
forward-looking compliance dates were intended to allow all parties in
the market supply chain sufficient time to avoid that outcome'' (88 FR
73123). EPA's goal of avoiding the stranding of inventory is consistent
with the requirement in subsection (i)(6) that Technology Transition
restrictions may not take effect sooner than one year from the date of
promulgation; this provision also serves to ensure that regulated
parties have sufficient time to prepare for and comply with
restrictions under this provision. In response to concerns about
stranded inventory raised during the public comment period on the
proposed rule, EPA made two significant adjustments in the final 2023
Technology Transitions Rule.
First, EPA removed the applicability of the rule's use restrictions
to components. EPA explained that components are pieces of equipment
that do not function independently and must be assembled together in
the field in order to function for its intended purpose. Components are
replaceable and a faulty component can be swapped out to avoid
replacing an entire system. Recognizing the ongoing need for servicing
and updating previously installed systems, EPA allowed for the
continued manufacture, import, sale, distribution, offer for sale and
distribution, and export of components that rely on regulated
substances that would not meet the new restrictions. Aside from
reporting requirements, components are therefore not subject to the
restrictions in the 2023 Technology Transitions Rule, except insofar as
those components may not be installed in new systems on or after the
installation compliance dates.
Second, the proposed rule set a compliance date, one year after the
manufacture and import compliance date, by which factory-completed
products could no longer be distributed, sold, and offered for sale or
distribution (i.e., the ``sell-through'' date). For the purposes of the
refrigeration, air conditioning, and heat pump (RACHP) sector, factory-
completed products are equipment which are charged at the factory with
the full and proper amount of refrigerant needed to function. Since the
Agency received many comments on this topic, including from those
commenters that considered one year to be insufficient especially for
certain seasonal products, EPA extended the sell-through period for
factory-completed products in the 2023 Technology Transitions Rule to
be three years after the manufacture and import compliance date.
Through these two modifications in the 2023 Technology Transitions
Rule, EPA determined it had minimized the potential for stranded
inventory. Specifically with respect to components, the Agency's view
was that there would continue to be a market for components not meeting
the GWP limit thresholds for new systems, because those components
could continue to enter the market to service existing systems.
Additionally, in the 2023 Technology Transitions Rule, EPA extended
the compliance dates, or raised the GWP limit, for the installation of
most field-assembled refrigeration systems (as compared to its proposed
compliance dates), recognizing, in part, that refrigeration systems
would require manufacturers and importers to make component equipment
available and that such systems can be specifically designed for an
individual facility and would need more time to transition.\3\ EPA did
not finalize later compliance dates for the installation of systems in
the residential and light commercial air conditioning and heat pump,
and VRF, subsectors in that rule.\4\ Subsequent to promulgating the
2023 Technology Transitions Rule, EPA learned that additional time,
which had already been extended to nearly all of the subsectors
covering field-assembled refrigeration systems, was needed for those
air conditioning subsectors. EPA responded by issuing an interim final
rule reevaluating the specific circumstances for residential and light
commercial air conditioning and heat pumps and extending the
installation compliance date for that subsector by one year (88 FR
88825) and by undertaking this proposed rulemaking.
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\3\ See 88 FR 73143 (industrial process refrigeration systems--
proposed January 1, 2025, compliance date, finalized January 1, 2026
compliance date (January 1, 2028, for some subsectors); 88 FR 73149
(data centers, ITEF, computer room cooling equipment--proposed
January 1, 2025, compliance date, finalized January 1, 2027
compliance date); 88 FR 73150 (systems in retail food refrigeration
subsector--proposed January 1, 2025, compliance date, finalized a
range of compliance dates from January 1, 2026 to January 1, 2028);
88 FR 73162 (cold storage warehouses--proposed January 1, 2025,
compliance date, finalized January 1, 2026, compliance date); 88 FR
73163 (ice rinks--retained proposed January 1, 2025, compliance date
in final rule but increased GWP limit from 150 to 700); 88 FR 73175
(chillers-industrial process refrigeration--proposed January 1, 2025
compliance date, finalized compliance dates of January 1, 2026, and
January 1, 2028 depending on the system).
\4\ See 88 FR 73178 (residential and light commercial air
conditioning and heat pumps--proposed January 1, 2025, compliance
date, finalized January 1, 2025, compliance date); id. (VRF
systems--proposed January 1, 2026, compliance date, finalized
January 1, 2026, compliance date).
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[[Page 53376]]
EPA is reevaluating the planning, purchasing, and installation
timeframes for new construction using VRF equipment as referenced in
the November 13, 2023, letter from industry stakeholders and is
proposing an extension of one additional year, which would align with
the additional time already provided for many refrigeration subsectors
in the 2023 Technology Transitions Rule and in the interim final rule
for installation of certain residential and light commercial air
conditioning and heat pumps.
Multi-unit residential and commercial new construction buildings
must be planned well in advance, including plans for the heating and
cooling systems intended to be installed in that new construction.
Builders may order those planned heating and cooling systems in concert
with the planning process without knowing when those systems will be
installed. As noted by stakeholders, installation of these systems is
often one of the final steps in construction. EPA acknowledges that it
may therefore be the case that for new construction planned to occur in
2026, builders may have already designed and received a permit ahead of
the issuance of the 2023 Technology Transitions Rule, for a building
that contains a heating and cooling system that is planned to be
installed in that new construction. Specifically, EPA recognizes that
for construction planned to occur in 2026, components of residential
and light commercial air conditioning and heat pump systems using VRF
with regulated substances may have already been incorporated into the
design of the building, received a permit from the appropriate
authority having jurisdiction, and ordered by builders, such that the
VRF system equipment associated with these projects are at risk of
being stranded. EPA also recognizes that as one of the first subsectors
facing a system installation compliance date under the new Technology
Transitions program, the ability of the VRF subsector to comply with
this deadline relies on manufacturers, importers, and distributors to
quickly make commercially available component parts that comply with
the GWP thresholds. For this reason, as well, EPA has determined it is
appropriate to propose this limited extension for compliance.
As discussed in the 2023 Technology Transitions Rule, EPA
established the compliance date of January 1, 2026, based on
consideration of the AIM Act's subsection (i)(4) factors, and in
particular, the assessment that the VRF subsector will be able to meet
the 2023 Technology Transitions Rule's GWP limit of 700, and transition
from the current use of HFCs in the subsector. EPA's consideration of
the statutory factors continues to support a speedy transition for this
subsector. However, as discussed above, the Agency recognizes that the
January 1, 2026, installation compliance date could result in builders
of new construction being left with stranded inventory that could not
be used. Stranding inventory is an economically and environmentally
undesirable outcome, and the issue addressed in this proposed rule was
not brought to the Agency's attention until after the 2023 Technology
Transitions Rule was finalized. This action therefore proposes to
extend the January 1, 2026, new installation compliance date to January
1, 2027, provided the new installation uses components that were
manufactured in the U.S. or imported into the U.S. prior to January 1,
2026.
Stakeholders, including the authors of the November 13, 2023,
letter, have indicated that extending the installation compliance date
by one year would alleviate their concerns about stranded inventory.\5\
EPA also heard from one stakeholder that its concerns would be
alleviated by exempting the installation of VRF systems in buildings
from the restrictions of the 2023 Technology Transitions Rule if those
buildings received a permit prior to finalization of the 2023
Technology Transitions Rule (i.e., October 24, 2023).\6\
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\5\ The letter dated November 13, 2023, can be found in the
docket at EPA Docket ID No. EPA-HQ-OAR-2021-0643. Another letter
from a stakeholder, dated October 17, 2023, can be found in the
docket for this proposed rule.
\6\ The letter from this stakeholder, dated March 5, 2024, and
supporting documentation that accompanied that letter, are included
in the docket for this proposed rule.
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EPA recognized in the 2023 Technology Transitions Rule that some
buildings had already been permitted prior to finalization of that
rule. While permits may not always specify the refrigerant to be used
in a refrigeration or air conditioning technology in a building, some
permits may require a particular regulated substance or blend of
regulated substances. Recognizing that where earlier issued permits
required a particular regulated substance or blend, and where such
permitted systems were likely to be highly complex and costly to
redesign, the 2023 Technology Transitions Rule provided one additional
year beyond the final rule compliance dates for the installation of
certain field-assembled systems. Specifically, for the installation of
refrigeration systems in four subsectors (certain industrial process
refrigeration systems; retail food refrigeration--supermarkets; cold
storage warehouses; and ice rinks) if an approved building permit was
issued before the signature date of the 2023 Technology Transitions
Rule (i.e., October 5, 2023), and the permit specified the use of a
system containing a particular regulated substance or blend of
regulated substances with a GWP above the relevant GWP threshold for
that subsector (88 FR 73120; 40 CFR 84.54(d)).
EPA intended this limited flexibility in the 2023 Technology
Transitions Rule to prevent the need to redesign these systems and, in
some cases, the facility that houses these systems. EPA granted this
permit-based extension selectively, as most systems are not typically
designed specifically for an individual facility and/or most systems
have a later compliance date and thus can make any necessary changes
with the GWP restrictions in mind.
The stakeholder that requested an exemption of VRF systems from the
restrictions of the 2023 Technology Transitions Rule where such systems
were covered by a building permit issued prior to finalization of the
2023 Technology Transitions Rule, is a developer of buildings which are
hundreds of thousands of square feet. The stakeholder described, in
information it provided to EPA, how the time from initial permitting to
final construction can take several years.\7\ One of its buildings
received an approved permit in June of 2023, and the developer expects
the building to be completed in 2028. This stakeholder would like the
VRF system in this building to be exempted from the restrictions of the
2023 Technology Transitions Rule, which would otherwise have required
installation of GWP-compliant VRF systems starting on January 1, 2026.
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\7\ See letter from stakeholder, dated March 5, 2024, included
in the docket for this proposed rule.
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Included in the information this stakeholder provided to EPA was an
attachment from the manufacturer of VRF equipment that the developer
intends to install in its building. In this attachment, dated March 4,
2024, the manufacturer states that while it ``has not made available
selection software or complete engineering data for the upcoming R-32
product to satisfy the project'' indicated by the developer, the
manufacturer ``can confirm that on or before the date of the mandated
transition to A2L refrigerants, equipment will be available for design,
[[Page 53377]]
manufacture, and sale in North America.'' \8\
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\8\ See Attachment A, after the letter from stakeholder, dated
March 5, 2024, (page 10), included in the docket for this proposed
rule.
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EPA does not agree that it would be appropriate and consistent with
subsection (i)(4) to provide a broad, unlimited exemption from the 2023
Technology Transitions Rule to any project where the system had
received a building permit prior to finalization of the rule. EPA is
cognizant in establishing these restrictions, and in considering
requested flexibilities from stakeholders, that in some instances, the
individual costs to some regulated entities to accommodate updated
regulations in their planning must be balanced with the national
priorities established in the AIM Act of phasing down HFCs on a set
schedule and transitioning away from the use of HFCs where practicable.
In this case, EPA's analysis under the 2023 Technology Transitions Rule
was that lower-GWP substitutes for HFCs will be available for the
component equipment needed for these VRF installations in time for the
January 1, 2026, compliance date. One of the primary manufacturers of
this equipment has confirmed EPA's assessment about availability in the
materials provided to the Agency. The fact that such equipment may not
be available for purchase in early 2024 does not mean that projects
planned for 2028 should not be expected to comply with restrictions
promulgated in 2023.
However, EPA recognizes that a permit-based flexibility is an
alternative way to accommodate potential concerns about compliance. We
are therefore proposing in the alternative a similar one-year extension
that was provided to certain field-assembled systems with building
permits that specified use of a particular HFC or blend under the 2023
Technology Transitions Rule. Specifically, this proposal in the
alternative would extend the compliance date for installation of new
VRF systems from January 1, 2026, to January 1, 2027, where the
building permit both specified the HFC or HFC blend to be used and was
issued prior to the signature date of the 2023 Technology Transitions
Rule (October 5, 2023). This alternative proposal is consistent with
the permit-based flexibility provided to the four previously mentioned
refrigeration subsectors (88 FR 73120; 40 CFR 84.54(d)). However, it is
likely that fewer projects would meet the criteria for this permit-
based extension compared to the number of projects potentially impacted
by EPA's primary proposal of extending the compliance date to January
1, 2027, for installation of all VRF systems using components
manufactured in the U.S. or imported into the U.S. by January 1, 2026.
D. Limiting the Environmental Impact of This Action
EPA is narrowly tailoring this proposal to respond to stakeholder
concerns about stranded inventory in this subsector while maintaining
the human health and environmental benefits of the 2023 Technology
Transitions Rule. To do so, EPA is proposing to extend the installation
compliance date by one year to January 1, 2027, only for new VRF
systems installed from specified components (e.g., condensing units and
indoor evaporators) that were manufactured in the U.S. or imported into
the U.S. prior to January 1, 2026. This restriction means that the
total number of VRF systems using HFCs or HFC blends with a GWP above
700 installed in 2025 and 2026 would match what the Agency modeled for
installation in 2025. The extra year for installation would not
increase demand for HFCs in this subsector but rather could shift some
of the demand from 2025 into 2026.
EPA is proposing to extend the original compliance date for new
installations in this subsector to January 1, 2027, when using
components manufactured in the U.S. or imported into the U.S. on or
after January 1, 2026. These components remain subject to the original
restrictions of the 2023 Technology Transitions Rule. Specifically, if
they contain an HFC with a GWP of 700 or greater, their use is limited
to servicing previously installed systems. As elaborated on more below,
all the existing labeling, reporting, and recordkeeping requirements
also continue to apply to components using, or intended to use, any
regulated substance. Consideration of extending the compliance date for
all installations in the subsector by one year is not warranted based
on EPA's prior analysis of the availability of substitutes within this
subsector, as described in the 2023 Technology Transitions Rule and
supporting documents in the docket for that rule.\9\
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\9\ This refers to EPA Docket ID No. EPA-HQ-OAR-2021-0643.
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EPA finds that this proposed approach of providing additional time
for installation effectively responds to stakeholder concerns about
stranded inventory while remaining protective of the environment. This
approach was suggested by industry stakeholders in their letter dated
November 13, 2023, and it aligns with industry's plans to transition in
this subsector.
This proposed rule would provide an additional year for
installation only if all ``specified components'' of that system are
manufactured in the U.S. or imported into the U.S. prior to January 1,
2026. The term ``specified component'' is defined under the 2023
Technology Transitions Rule as ``condensing units, condensers,
compressors, evaporator units, and evaporators'' (88 FR 73112). Other
components of an air conditioning or heat pump system such as valves or
refrigerant piping are not restricted by the 2023 Technology
Transitions Rule and can be installed regardless of manufacture or
import date.
E. How would the labeling, recordkeeping, and reporting provisions
apply?
The 2023 Technology Transitions Rule requires labels on products
and certain components that use HFCs. The labeling requirement takes
effect for each subsector at the same time as the manufacture and
import prohibition for products or the installation prohibition for
systems. This timing reflects the primary purpose of the labels, which
is for assessing compliance of products and systems in sectors and
subsectors with active HFC restrictions.
This action would not require any specific labeling for components
that are manufactured in the U.S. or imported into the U.S. prior to
January 1, 2026. Nameplates typically include the date that a component
is manufactured, which would be sufficient for the purposes of this
action. Furthermore, it would be impractical to require entities that
are not OEMs to relabel components that are already within the
distribution chain.
This action would not change the existing labeling requirements
related to components that are effective January 1, 2026. For specified
components of systems, the 2023 Technology Transitions Rule required
labels as of the applicable installation compliance date. This means
that for specified components manufactured in the U.S. or imported into
the U.S. on or after January 1, 2026, the requirements of the 2023
Technology Transitions Rule continue to apply. These requirements
include, among others, that such components must be labeled with the
statement ``For servicing existing equipment only.'' This labeling is
particularly important to distinguish components manufactured in the
U.S. or imported into the U.S. before January 1, 2026, from those that
are not.
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The 2023 Technology Transitions Rule established recordkeeping and
reporting requirements for any entity that manufactures or imports
products or specified components that use or are intended to use HFCs
in the sectors and subsectors covered in that rule. The reporting
period for all sectors and subsectors starts on January 1, 2025, and
the first reports must be submitted to the Agency by March 31, 2026.
This action does not add to nor modify the existing reporting and
recordkeeping requirements for specified components. EPA is not
proposing to establish new reporting and recordkeeping requirements
related to the sale or installation of components manufactured in the
U.S. or imported into the U.S. prior to January 1, 2025. Reporting and
recordkeeping would still be required for specified VRF components that
are manufactured in the U.S. or imported into the U.S. on or after
January 1, 2025.
F. Evaluation of the Subsection (i)(4) Factors
Subsection (i)(4) of the AIM Act directs EPA to factor in, to the
extent practicable and using best available data, various
considerations when carrying out a rulemaking under subsection (i). As
discussed in detail in the preamble to the 2023 Technology Transitions
Rule, EPA views subsection (i)(4)(A) through (D) as providing
overarching direction for setting restrictions under subsection (i) (88
FR 73129-73141). In this action, EPA is not reconsidering the
interpretations provided in the 2023 Technology Transitions Rule
regarding how it considers the factors laid out in subsection (i)(4).
Nor is the Agency revisiting its analysis of the (i)(4) factors with
respect to the residential and light commercial air conditioning and
heat pump subsector that uses VRF technology as set forth in the 2023
Technology Transitions Rule preamble (88 FR 73177-73180). However, in
proposing this narrow adjustment to the January 1, 2026, compliance
date for the residential and light commercial air conditioning and heat
pump VRF subsector, we have considered the (i)(4) factors to the extent
practicable, as applicable to the Agency's adjustment of that
compliance date.
The issue being addressed by this proposal was brought to the
Agency's attention by stakeholders impacted by the 2023 Technology
Transitions Rule. As noted in EPA's discussion of subsection (i)(4)(A),
in addition to information generated by other governing bodies and
agencies, the Agency does also take into account information provided
by industry, environmental non-governmental organizations, trade
associations, academia, standard-setting bodies, and more (88 FR
73129). We acknowledge that in some cases, regulated entities may be
best situated to identify best available information regarding
implementation challenges. As part of this proposed rule, EPA is
providing an opportunity for comment and invites stakeholders who may
have information relevant to this action to weigh in.
With respect to the Agency's evaluation of the availability of
substitutes under subsection (i)(4)(B), EPA previously determined that
substitutes with a GWP less than 700 are available effective January 1,
2026, for the residential and light commercial air conditioning and
heat pump VRF subsector. EPA is not proposing to change that
determination and continues to find that substitutes with a GWP less
than 700 will be available January 1, 2026, for this subsector.
Manufacturers in this subsector are currently making air conditioning
and heat pump systems and components with lower-GWP refrigerants for
other markets and are prepared to meet the January 1, 2026,
installation compliance date for such systems. This action is not
proposing to reconsider the Agency's prior evaluation of the
availability of substitutes for meeting the use restrictions issued in
the 2023 Technology Transitions Rule for this subsector; rather, this
action is narrowly tailored to address the disposition of components
manufactured in the U.S. or imported into the U.S. prior to January 1,
2026.
This proposal to adjust the installation compliance date for large
VRF systems is motivated by the policy goal of avoiding stranding
inventory where possible, while recognizing that the AIM Act directs
the Agency to establish use restrictions where appropriate for sectors
and subsectors to move away from the use of high-GWP HFCs. We believe
these goals to be consistent with the direction in subsection
(i)(4)(C), which instructs the Agency to factor in, to the extent
practicable, overall economic costs and environmental impacts, as
compared to historical trends. As discussed in the 2023 Technology
Transitions Rule, EPA interprets (i)(4)(C) as purposefully
accommodating different types and degrees of analysis of economic costs
and environmental impacts, including costs and impacts that may be
difficult to quantify (88 FR 73138). The narrow adjustment being
proposed would reduce the potential to unintentionally strand large VRF
components, while still achieving a prompt transition for this
subsector. Specifically, even with the adjustments in this proposed
rule, manufacturers and importers of components for new VRF systems
will be required in the very near term (i.e., before January 1, 2026)
to transition from using R-410A and other higher-GWP regulated
substances in those components, and developers and builders will not be
permitted to install new systems that use R-410A or other non-compliant
HFCs or HFC blends beginning January 1, 2027. This proposed action
would not affect the overall consumption of HFCs because EPA does not
anticipate a change in the amount of new VRF equipment that would be
manufactured in the U.S. or imported into the U.S prior to January 1,
2026. Further discussion of environmental impacts can be found in
section III.B.
EPA requests comment on the incremental costs and benefits
associated with this action, including avoiding impacts such as
stranded inventory (e.g., number and type of units affected) and on the
incremental impacts to regulated entities regarding compliance (e.g.,
avoiding redistribution of equipment, avoiding revisions or new permits
to replace previously secured building permits).
Finally, subsection (i)(4)(D) directs the Agency to factor in, to
the extent practicable, the remaining phasedown period for regulated
substances under the allowance allocation program. The reduction in the
supply of HFCs is an important factor supporting compliance dates and
GWP limits that are as stringent as feasible under the analysis of all
the (i)(4) factors. EPA finds that this proposed rule would not
materially affect the demand for HFCs because it limits installations
to components that were manufactured in the U.S. or imported into the
U.S. prior to January 1, 2026. The effect of this proposed rule would
be to extend the installations that EPA modeled to occur in 2025 over
the two-year period of 2025 and 2026. However, given the small size of
this subsector, at a subset of roughly three percent of all equipment
sold in the residential and light commercial subsector, EPA did not
independently model this subsector in the 2023 Technology Transitions
Rule's Regulatory Impact Assessment Addendum.
G. Negotiated Rulemaking
Prior to proposing a rule, subsection (i)(2)(A) of the Act directs
EPA to consider negotiating with stakeholders in the sector or
subsector subject to the potential rule in accordance with
[[Page 53379]]
negotiated rulemaking procedures established under subchapter III of
chapter 5 of title 5, United States Code (commonly known as the
``Negotiated Rulemaking Act of 1990''). If EPA makes a determination to
use the negotiated rulemaking procedures, subsection (i)(2)(B) requires
that EPA, to the extent practicable, give priority to completing that
rulemaking over completing rulemakings under subsection (i) that are
not using that procedure. If EPA does not use the negotiated rulemaking
process, subsection (i)(2)(C) requires the Agency to publish an
explanation of the decision not to use that procedure before
commencement of the rulemaking process.
EPA noted in the 2023 Technology Transitions Rule that, where
appropriate, EPA will consider recent Agency actions and decisions
related to restrictions on the use of HFCs in sectors and subsectors
when considering using negotiated rulemaking procedures. EPA provided
the example of not issuing a separate notice to consider using
negotiated rulemaking for four petitions received after a first round
of petitions had received public notice. EPA's reasoning was that these
petitions were received well ahead of the final action and the
requested restrictions are in the same sectors and subsectors contained
in petitions for which a determination had already been made. EPA
stated that nothing in those four petitions caused EPA to reconsider
that decision and that it was unnecessary for the Agency to reconsider
whether to use negotiated rulemaking procedures.
Upon considering recent Agency action, specifically the 2023
Technology Transitions Rule, this proposed rulemaking does not merit a
reconsideration of the prior determination not to use negotiated
rulemaking procedures. This proposal is a direct and immediate response
to a specific concern arising from the recent Agency action to
establish a compliance date for the installation of certain systems
within the residential and light commercial air conditioning and heat
pump VRF subsector. EPA is not proposing to address a new subsector nor
establish a new restriction. Instead, this proposed rule would provide
targeted relief to address concerns about stranded inventory in a
single subsector subject to a recently finalized restriction.
Furthermore, this action was requested through a November 13, 2023,
letter signed jointly by AHRI, the Alliance, and HARDI, which together
represents a majority of the stakeholders in the subsector subject to
the rule. The groups did not request the use of the negotiated
rulemaking procedure in their letter, and EPA does not believe that the
rule would benefit from the negotiated rulemaking procedure especially
because timeliness is a concern universally shared by stakeholders in
this subsector.
III. Statutory and Executive Order Reviews
Additional information about these statutes and Executive Orders
can be found at https://www.epa.gov/laws-regulations/laws-and-executive-orders.
A. Executive Order 12866: Regulatory Planning and Review and Executive
Order 14094: Modernizing Regulatory Review
This action is not a significant regulatory action as defined in
Executive Order 12866, as amended by Executive Order 14094, and was
therefore not subject to a requirement for Executive Order 12866
review.
B. Paperwork Reduction Act (PRA)
This action does not impose an information collection burden under
the PRA because it does not contain any information collection
activities.
C. Regulatory Flexibility Act (RFA)
I certify that this action will not have a significant economic
impact on a substantial number of small entities under the RFA. In
making this determination, EPA concludes that the impact of concern for
this proposed rule is any significant adverse economic impact on small
entities and that the Agency is certifying that this proposed rule
would not have a significant economic impact on a substantial number of
small entities because the proposed rule would relieve regulatory
burden on the small entities subject to the rule. This proposed rule
would prevent the stranding of components used to install residential
and light commercial air conditioning and heat pump systems using
variable refrigerant flow technology. We have therefore concluded that
this action would relieve regulatory burden for all directly regulated
small entities.
D. Unfunded Mandates Reform Act (UMRA)
This action does not contain any unfunded mandate as described in
UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect
small governments. The action imposes no enforceable duty on any state,
local or tribal governments or the private sector.
E. Executive Order 13132: Federalism
This action does not have federalism implications. It will not have
substantial direct effects on the states, on the relationship between
the national government and the states, or on the distribution of power
and responsibilities among the various levels of government.
F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments
This action does not have tribal implications as specified in
Executive Order 13175. It will not have substantial direct effects on
tribal governments, on the relationship between the Federal government
and Indian tribes, or on the distribution of power and responsibilities
between the Federal government and Indian tribes, as specified in
Executive Order 13175. Thus, Executive Order 13175 does not apply to
this action.
G. Executive Order 13045: Protection of Children From Environmental
Health and Safety Risks
EPA interprets Executive Order 13045 as applying only to those
regulatory actions that concern environmental health or safety risks
that EPA has reason to believe may disproportionately affect children,
per the definition of ``covered regulatory action'' in section 2-202 of
the Executive Order. This action is narrowly tailored to prevent the
stranding of certain air conditioning and heat pump equipment using
variable refrigerant flow technology while not affecting the demand for
HFCs. Therefore, this action is not subject to Executive Order 13045
because it does not concern an environmental health risk or safety
risk. Since this action does not concern human health, EPA's Policy on
Children's Health also does not apply.
H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
This action is not subject to Executive Order 13211, because it is
not a significant regulatory action under Executive Order 12866.
I. National Technology Transfer and Advancement Act (NTTAA)
This rulemaking does not involve technical standards.
[[Page 53380]]
J. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations and
Executive Order 14096: Revitalizing Our Nation's Commitment to
Environmental Justice for All
EPA believes that this type of action does not concern human health
or environmental conditions and therefore cannot be evaluated with
respect to potentially disproportionate and adverse effects on
communities with environmental justice concerns. This action is
narrowly tailored to prevent the stranding of inventory of air
conditioning and heat pump equipment using variable refrigerant flow
technology while not affecting the demand for HFCs.
Although this action does not concern human health or environmental
conditions, EPA identified and addressed environmental justice concerns
within the 2023 Technology Transitions Rule (88 FR 73098; October 24,
2023).
List of Subjects in 40 CFR Part 84
Environmental protection, Administrative practice and procedure,
Air pollution control, Chemicals, Climate change, Emissions, Imports,
Reporting and recordkeeping requirements.
Michael S. Regan,
Administrator.
For the reasons stated in the preamble, EPA proposes to amend 40
CFR part 84 as follows:
PART 84--PHASEDOWN OF HYDROFLUOROCARBONS
0
1. The authority citation for part 84 continues to read as follows:
Authority: Pub. L. 116-260, Division S, Sec. 103.
Subpart B--Restrictions on the Use of Hydrofluorocarbons
0
2. Amend Sec. 84.54 by revising paragraph (c)(2) to read as follows:
Sec. 84.54 Restrictions on the use of hydrofluorocarbons.
* * * * *
(c) * * *
(2) Effective January 1, 2026, variable refrigerant flow systems
for use as residential or light commercial air-conditioning or heat
pumps, using a regulated substance, or a blend containing a regulated
substance, with a global warming potential of 700 or greater. New
variable refrigerant flow systems using a regulated substance, or a
blend containing a regulated substance, with a global warming potential
of 700 or greater may be installed prior to January 1, 2027, where all
specified components of that system are manufactured in the U.S. or
imported into the U.S. prior to January 1, 2026.
* * * * *
[FR Doc. 2024-13900 Filed 6-25-24; 8:45 am]
BILLING CODE 6560-50-P