Chemical Manufacturers, Importers, and Exporters Frequently Asked Questions

The import, export, and production of HCFCs are managed by the allowance system, as first established through rulemaking on January 21, 2003. 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 allowance system work?

The HCFC allowance system grants importers and producers allowances based on the amount of HCFCs they historically produced or imported. An allowance is a unit of measure equal to one ODP-weighted kilogram of ozone-depleting substance (ODS). There are two types of allowances: production allowances and consumption allowances. "Consumption" allowances are for production or import of several HCFCs. "Production" allowances are only for production. A company is required to use its allowances in order to produce or import restricted HCFCs (i.e., HCFC-22, HCFC-142b, and HCFC-141b).

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. In 2003, EPA distributed baseline HCFC allowances for HCFC-141b, HCFC-22, and HCFC-142b. Only companies that hold consumption allowances are allowed to import these HCFCs. EPA included in the allocation allowances for new entrants to the HCFC market. International trade is restricted according to the guidelines set forth in the June 17, 2004, Final Rule (11pp, 210K, About PDF).

For more information on the HCFC allowance system, see Part 4 (27pp, 202K, About PDF) of the Guidance Document for the Stratospheric Ozone Protection Program (115pp, 1.87MB, About PDF). The guidance is a intended to provide timely relevant information about regulations that help protect stratospheric ozone, and EPA will update the document to reflect current regulations and policy.

Can a company transfer allowances?

The marketable allowance system lets a person trade the 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 ODP, each of them has been assigned an ODP number. 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. Offsets are a manner of achieving greater total reductions than would otherwise occur without a trade. 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 if the convertor has sufficient, unexpended allowances to cover the transfer, EPA also deducts an additional 0.1 percent of the quantity for the transfer.

For those interested in the domestic transfer of allowances with other companies or between types of HCFCs, there are specific provisions, which are described in 40 CFR 82.23 and in more detail in the January 21, 2003, Final Rule. The transferor must submit to EPA a transfer claim and EPA will determine if the transferor possesses unexpended allowances to cover the claim.

May I produce, import, and export HCFCs other than HCFC-141b, HCFC-22, or HCFC-142b?

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. The allowance system only includes HCFC-22, HCFC-142b, and HCFC-141b.

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

Yes, but you must hold allowances to import virgin HCFC-22 and HCFC-142b. Also, you must comply with all recordkeeping and reporting provisions. EPA tracks all trades in its allowance system. Reporting forms are available from EPA.

International trading is only permitted between specific countries, as described in Appendix A (17pp, 233K, About PDF) of the Guidance Document for the Stratospheric Ozone Protection Program (115pp, 1.87MB, About PDF). The 2010 production cut of HCFC-22 and HCFC-142b will prohibit the import of these substances unless they are imported for servicing equipment manufactured prior to that date. The import of these controlled substances must be reported to EPA.

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

Yes, unlike importers, exporters do not need allowances in order to export HCFC-22 or HCFC-142b in bulk. 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 the same countries have banned the import of ODS. Exporters need to follow the EPA recordkeeping and reporting requirements. Reporting forms are available from EPA.

May I import used HCFCs in bulk?

Yes, but you must seek and receive approval from EPA. Used HCFC-22 and HCFC-142b do not require consumption allowances, but you must petition EPA for permission and receive a non-objection notice from EPA to import these HCFCs (Section 4.7 of the Guidance Document, 27pp, 202K, About PDF). 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 (facilities) and the specific equipment from which the class II substance was recovered. This information ensures U.S. compliance under the Montreal Protocol.

May I import bulk shipments of HCFCs other than HCFC-22 or HCFC-142b?

Yes, the production and import of HCFC-141b is prohibited, but other HCFCs may be produced or imported until their respective phaseout dates when EPA will ban their production and import. Importers and exporters of all HCFCs must report these activities according to EPA's recordkeeping and reporting requirements.

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

No. There are no restrictions in the United States on the production, import, or export of HFC refrigerants, including R-134a. 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 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. You still must hold allowances for the HCFC-22 and/or HCFC-142b used in the substitute refrigerant. 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. Future SNAP listings will include this point for clarity.

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.

Chemical Manufacturers, Importers, and Exporters Frequently Asked Questions

Other Frequently Asked Questions About the Phaseout of HCFC-22

Local Navigation