November 2021

Regulatory Issues

AIM Act & Allowances
On Sept. 23, 2021, the U.S. Environmental Protection Agency (EPA) issued a regulation under the American Innovation & Manufacturing Act (AIM Act). The regulation mandates the phase-down of hydrofluorocarbons (HFCs) as Greenhouse Gases (GHGs). The regulation aims to reduce GHGs from HFCs by 85% by 2036.

The regulation establishes an allocation program to provide allowances for production and consumption of HFCs. The EPA has determined a baseline for both production and consumption of HFCs. Production is simply the production of bulk HFCs; consumption is production, plus import, minus export of bulk HFCs. There are 18 regulated HFCs in this rule, including some you may be familiar with—HFC-152a, HFC-134a, HFC245fa, HFC-365mfc and HFC-43-10mee.

The regulation is structured to phase-down the Global Warming Potential (GWP) from HFCs. Thus during phase-down, the more potent HFCs will allow the use of less potent HFCs. For example, HFC-134a has a global warming potential of 1,430. The EPA refers to this number as an “Exchange Value.” HFC-152a has an Exchange Value of 124, so for every pound of HFC-134a that is phased down, a manufacturer, in theory, could produce 10lbs+ of HFC-152a. Again, this phase-down is only on bulk HFCs.

The phase-down schedule is as follows:

 

 

 

 

 

Remember, these percentage reductions are on the bulk use of HFCs measured by an exchange value that is the same as the GWP of the HFC.

This regulation is 410 pages long and I have not reviewed all of it; however one high point is that the EPA has set aside the following allowances for “Application Specific” uses listed in the AIM Act:

• Propellants in metered dose inhalers (MDIs)
• Defense sprays
• Structural composite preformed polyurethane foam for marine and trailer use
• Etching of semiconductor material or wafers and cleaning for semiconductor manufacturing sector
• Mission-critical military end uses
• On-board aerospace fire suppression

Another controversial issue is the EPA’s decision, at least in this initial regulation, to not include finished goods that contain HFCs. Thus, for example, any finished aerosol product produced outside of the U.S. is not subject to this rule. It is the same with a refrigerator made outside of the U.S. The amount of HFCs in the imported finished goods is not counted towards any allowance. The EPA states that it has no way to track or count those finished goods that contain HFCs. However, it has also stated it plans to monitor the import issue and may revisit it in a 2022 rulemaking. You can read the entire document of 410 pages here.

Further, on Oct. 1, the EPA issued 2022 allowances for production and consumption of HFCs. This document indicates all the companies that have been granted allowances by the EPA for application-specific allowances, consumption allowances and production allowances. The document is only six pages long and can be found at
epa.gov/system/files/documents/2021-10/hfc-allowance-allocations-for-2022-prepublication-fri-9116-01-oar.pdf

CARB
We continue to wait for the California Air Resources Board (CARB) rule to be finalized. The first effective date is Jan. 1, 2023 and this date will not change. Therefore, companies should be reformulating now to make sure their products are in compliance.

Ravi Ramalingam, Chief of the CARB Consumer Products Branch, presented at the Western Aerosol Information Bureau (WAIB) Fall Meeting in September. He mentioned that more surveys on Consumer Products will be likely in the coming months, although they will not be as inclusive as the surveys that Industry saw in 2013, 2014 and 2015.

We all know what more surveys mean—more regulation! We will wait and see what happens. SPRAY