# Phasedown of Hydrofluorocarbons: Review and Renewal of Eligibility for Application-Specific Allowances > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2024-20602 ## Record - **Collection:** Federal Register - **Document type:** Proposed Rule - **Published:** September 16, 2024 - **Citation:** 89 FR 75898 ## Text ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 84 [EPA-HQ-OAR-2024-0196; FRL-10782-01-OAR] RIN 2060-AV98 Phasedown of Hydrofluorocarbons: Review and Renewal of Eligibility for Application-Specific Allowances AGENCY: Environmental Protection Agency (EPA). ACTION: Notice of proposed rulemaking. SUMMARY: The U.S. Environmental Protection Agency is undertaking this rulemaking to assess the eligibility of six applications to receive priority access to allowances allocated pursuant to the American Innovation and Manufacturing Act of 2020. This rulemaking proposes the framework for how EPA will assess whether to renew the eligibility of applications to receive application-specific allowances; decisions to renew or not renew each of the six applications that currently receive application-specific allowances; revisions to the Technology Transitions regulations as relevant to the specific applications under review; a procedural process for submitting a petition to designate a new application as eligible for priority access to allowances; narrow revisions to the methodology used to allocate allowances to application-specific allowance holders for calendar years 2026 and beyond; and limited revisions to existing regulations. EPA is also proposing to authorize an entity to produce regulated substances for export. Lastly, EPA is proposing certain confidentiality determinations for newly reported information if this rulemaking is finalized as proposed. DATES: Comments must be received on or before October 31, 2024. Any party requesting a public hearing must notify the contact listed below under FOR FURTHER INFORMATION CONTACT by 5 p.m. Eastern Daylight Time on September 23, 2024. If a virtual public hearing is held, it will take place on or before October 1, 2024 and further information will be provided at https://www.epa.gov/climate-hfcs-reduction. ADDRESSES: The U.S. Environmental Protection Agency (EPA) has established a docket for this action under Docket ID No. EPA-HQ-OAR-2024-0196. All documents in the docket are listed on the https://www.regulations.gov website. Although listed in the index, some information is not publicly available, e.g., Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the internet and will be publicly available only in hard-copy form. Publicly available docket materials are available electronically through http://www.regulations.gov or in hard copy at the EPA Docket Center, Room 3334, WJC West Building, 1301 Constitution Avenue NW, Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the EPA Docket Center is (202) 566-1742. FOR FURTHER INFORMATION CONTACT: Michelle Graff, U.S. Environmental Protection Agency, Stratospheric Protection Division, telephone number: 202-564-5387; or email address: graff.michelle@epa.gov. 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 and abbreviations that are used in this rulemaking that may be helpful include: 2-BTP—2-bromo-3,3,3-trifluoropropene AAGR—Average Annual Growth Rate AES—Automated Export System AIM Act—American Innovation and Manufacturing Act of 2020 AHRI—Air-Conditioning, Heating, and Refrigeration Institute APU—Auxiliary Power Unit ASHRAE—American Society for Heating, Refrigerating, and Air-Conditioning Engineers ASA—Application-Specific Allowance CAA—Clean Air Act CBI—Confidential Business Information CBP—U.S. Customs and Border Protection CF 3 I—Trifluoroiodomethane CFR—Code of Federal Regulations CGMP—Current Good Manufacturing Practice CHIPS Act—Creating Helpful Incentives to Produce Semiconductors Act of 2022 ClF 3 —Chlorine Trifluoride CO 2 —Carbon Dioxide COVID—Coronavirus Disease CVD—Chemical Vapor Deposition DFARS—Defense Federal Acquisition Regulation Supplement DOD—U.S. Department of Defense DOJ—U.S. Department of Justice EEI—Electronic Export Information EV—Exchange Value EVe—Exchange Value Equivalent EPA—U.S. Environmental Protection Agency FAA—Federal Aviation Administration FAR—Federal Acquisition Regulation FDA—U.S. Food and Drug Administration FIFRA—Federal Insecticide, Fungicide, and Rodenticide Act FSTOC—Fire Suppression Technical Options Committee FTOC—Flexible and Rigid Foams Technical Options Committee FR—Federal Register GHG—Greenhouse Gas GWP—Global Warming Potential HCFO—Hydrochlorofluoroolefin HFC—Hydrofluorocarbon HFIB—Hexafluoroisobutylene HFO—Hydrofluoroolefin ICAO—International Civil Aviation Organization ICR—Information Collection Request IPCC—Intergovernmental Panel on Climate Change ITN—Internal Transaction Number Kg—Kilogram MCMEU—Mission-Critical Military End Uses MCTOC—Medical and Chemicals Technical Options Committee MDI—Metered Dose Inhaler MT—Metric Ton MTEVe—Metric Tons of Exchange Value Equivalent NAICS—North American Industry Classification System NF 3 —Nitrogen Trifluoride ODP—Ozone Depletion Potential ODS—Ozone-Depleting Substances OMB—U.S. Office of Management and Budget PFC—Perfluorocarbon PII—Personally Identifiable Information PRA—Paperwork Reduction Act PU—Polyurethane RACA—Requests for Additional Consumption Allowance RFA—Regulatory Flexibility Act RIA—Regulatory Impact Analysis RSV—Respiratory Syncytial Virus SCPPU—Structural Composite Preformed Polyurethane SF 6 —Sulfur Hexafluoride SiN—Silicon Nitride SiO 2 —Silicon Dioxide SNAP—Significant New Alternatives Policy SISNOSE—Significant Economic Impact on a Substantial Number of Small Entities TCE—Trichloroethylene TEAP—Technology and Economic Assessment Panel TSCA—Toxic Substances Control Act TSD—Technical Support Document UMRA—Unfunded Mandates Reform Act Table of Contents I. Executive Summary A. Purpose of the Proposed Regulatory Action B. Summary of Proposed Actions II. General Information A. Does this action apply to me? B. What is EPA's authority for taking this action? III. Background IV. How is EPA assessing whether to extend eligibility for application-specific allowances? A. How is EPA interpreting the “no safe or technically achievable substitute will be available” criterion? B. How is EPA interpreting the insufficient supply of regulated substances criterion? C. What is EPA's proposed framework for renewing applications? V. Review of the Six Applications Listed in the AIM Act A. Overview of Total U.S. HFC Consumption B. Propellants in Metered Dose Inhalers 1. Availability of Safe and Technically Achievable Substitutes 2. Supply 3. What is EPA proposing regarding eligibility for application-specific allowances? C. Defense Sprays 1. Availability of Safe and Technically Achievable Substitutes 2. Supply 3. What is EPA proposing regarding eligibility for application-specific allowances? 4. Proposed Restriction Under EPA's Technology Transitions Program D. Structural Composite Preformed Polyurethane Foam for Marine Use and Trailer Use 1. Availability of Safe and Technically Achievable Substitutes 2. Supply 3. What is EPA proposing regarding eligibility for application-specific allowances? 4. Proposed Restriction Under EPA's Technology Transitions Program E. Etching of Semiconductor Material or Wafers and the Cleaning of Chemical Vapor Deposition Chambers Within the Semiconductor Manufacturing Sector 1. Availability of Safe and Technically Achievable Substitutes 2. Supply 3. What is EPA proposing regarding eligibility for application-specific allowances? F. Mission-Critical Military End Uses 1. Availability of Safe and Technically Achievable Substitutes 2. Supply 3. What is EPA proposing regarding eligibility for application-specific allowances? G. Onboard Aerospace Fire Suppression 1. Availability of Safe and Technically Achievable Substitutes 2. Supply 3. What is EPA proposing regarding eligibility for application-specific allowances? VI. What are the proposed requirements associated with a petition to be listed as an application that will receive application-specific allowances? VII. Proposed Revisions to Existing Regulations A. Expected Total HFC Purchases B. Unique Circumstances C. Methodology for Entities With Irregular Purchasing History and Very Small Users D. Average Annual Growth Rate Calculations E. Inventory F. Department of Defense Conferrals G. Limited Set-Aside for Unique Circumstances Related to MDIs H. Return of Unneeded Allowances I. Enabling Auctions of Illegally Imported HFCs J. Quarterly Exporter Reporting of Internal Transaction Numbers K. Date of Purchase for Requests for Additional Consumption Allowances (RACAs) VIII. Authorization To Produce for Export A. To what entities is EPA proposing to allocate production for export allowances? B. How many production for export allowances is EPA proposing to issue to Iofina on an annual basis, and for how many years is EPA proposing to issue these allowances? C. Would Iofina need to expend consumption allowances for materials produced with production for export allowances and subsequently exported? D. How will this process affect the issuance of other types of allowances? E. What are the proposed recordkeeping and reporting requirements for production for export allowances? 1. Annual Certifications 2. Quarterly Export and Inventory Reporting 3. Recordkeeping IX. How will EPA handle confidentiality for newly reported information? A. Background on Determinations of Whether Information Is Entitled to Treatment as Confidential Information B. Data Elements Associated With a Petition To Be Listed as an Application That Will Receive Application-Specific Allowances C. Data Elements Related to Proposed Revisions to Existing Regulations D. Data Elements Reported to EPA Related to Production for Export X. What are the costs and benefits of this action? XI. Statutory and Executive Order Review A. Executive Order 12866: Regulatory Planning and Review and Executive Order 14094: Modernizing Regulatory Review B. Paperwork Reduction Act (PRA) C. Regulatory Flexibility Act (RFA) D. Unfunded Mandates Reform Act (UMRA) E. Executive Order 13132: Federalism F. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments G. Executive Order 13045: Protection of Children From Environmental Health Risks and Safety Risks H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution or Use I. National Technology Transfer and Advancement Act 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 I. Executive Summary A. Purpose of the Proposed Regulatory Action The U.S. Environmental Protection Agency (EPA) is undertaking this action to implement certain provisions of the American Innovation and Manufacturing Act of 2020, codified at 42 U.S.C. 7675 (AIM Act or the Act). The Act directs EPA to implement the phasedown of hydrofluorocarbons (HFCs) by issuing a limited quantity of transferrable production and consumption allowances, which entities must expend to produce or import HFCs. In addition, subsection (e)(4)(B) of the Act authorizes EPA to allocate allowances exclusively for the use in specific applications for which there is: (1) no safe or technically achievable substitute and (2) an insufficient supply of the HFCs used in the application that can be secured from chemical manufacturers. The Act listed six applications that would receive priority access to allowances for a five-year period beginning on December 27, 2020: propellants in metered dose inhalers (MDIs), defense sprays, structural composite preformed polyurethane (SCPPU) foam for marine use and trailer use (hereafter referred to as SCPPU foam for marine and trailer uses), the etching of semiconductor material or wafers and the cleaning of chemical vapor deposition (CVD) chambers within the semiconductor manufacturing sector, mission-critical military end uses (MCMEU), and onboard aerospace fire suppression. EPA intends to finalize this proposed rule ahead of the allocation of calendar year 2026 allowances. Without finalization of this proposed rule, all applications would be ineligible for allowances for calendar year 2026. 1 EPA has created a category of allowances to provide this priority access, which EPA refers to as application-specific allowances (ASAs). ASAs are allocated ahead of general pool allowances based on a methodology intended to determine eligible entities' needs for regulated substances (see Section VII of this preamble and the Allocation Framework Rule (86 FR 55116, October 5, 2021) for more information). After the total ASA quantity is determined, the remaining allowances are distributed to general pool allowance recipients using a different methodology. 1 EPA first codified the allocation methodology for general pool and ASA holders in “ Phasedown of Hydrofluorocarbons: Establishing the Allowance Allocation and Trading Program Under the American Innovation and Manufacturing Act” (hereafter referred to as the “Allocation Framework Rule”) (86 FR 55116, October 5, 2021). The methodology for general pool allowance holders was subsequently updated in “ Phasedown of Hydrofluorocarbons: Allowance Allocation Methodology for 2024 and Later Years” (hereafter referred to as the “2024 Allocation Rule” (88 FR 46836, July 20, 2023); the ASA methodology was not updated in the 2024 Allocation Rule. Subsection (e)(4)(B)(v) of the AIM Act directs EPA to review applications receiving priority access to allowances not less frequently than once every five years, and, if the application meets the criteria above, authorize the eligibility of the application to receive priority access to allowances for a period of not more than five years. EPA is proposing how the Agency will interpret these two criteria to review applications receiving ASAs. EPA is also proposing decisions to renew or not renew each of the six applications that currently receive ASAs. Separately, subsection (i) of the Act authorizes EPA, by rulemaking, to restrict the use of HFCs in sectors or subsectors where the regulated substances are used. Under the authority of this provision, EPA finalized the rule “ Phasedown of Hydrofluorocarbons: Restrictions on the Use of Certain Hydrofluorocarbons Under the American Innovation and Manufacturing Act of 2020” (hereafter referred to as the “2023 Technology Transitions Rule”; 88 FR 73098, October 24, 2023), which established restrictions for three sectors and 39 subsectors. The rule exempted applications with a current qualification for ASAs. As such, if an application is no longer eligible to receive ASAs, it would become subject to the restrictions established in the 2023 Technology Transitions Rule. EPA is therefore proposing how the Technology Transitions regulations would apply to applications if EPA were to determine that those applications are not eligible for renewal for the full five-year period. The Act also includes a provision for the public to petition EPA to designate an application as eligible for priority access to allowances. EPA is proposing a procedural process for submitting a petition under this provision and to define minimum required elements of such a petition. In addition, this rulemaking proposes narrow revisions to the methodology used to allocate allowances to ASA holders for calendar years 2026 and beyond as well as other limited revisions to the existing 40 CFR part 84 regulations. EPA is also proposing to authorize an entity to produce regulated substances for export for application-specific uses pursuant to subsection (e)(5). Lastly, EPA is proposing certain confidentiality determinations for newly reported information if this rulemaking is finalized as proposed. B. Summary of Proposed Actions Application-specific allowance holder review: EPA is describing how it proposes to interpret the criteria under subsection (e)(4)(B) of the AIM Act and evaluate the six categories of ASA holders listed in subsection (e)(4)(B)(v) of the Act. EPA is proposing to renew the following applications for the full five-year period from 2026-2030: propellants in MDIs, the etching of semiconductor material or wafers and the cleaning of CVD chambers within the semiconductor manufacturing sector, MCMEU, and onboard aerospace fire suppression. EPA is co-proposing two options for defense sprays: do not renew or renew for a two-year period through 2027. EPA is co-proposing three options for SCPPU foams for marine and trailer uses: do not renew, renew for a two-year period through 2027, or renew for the full five-year period from 2026-2030 with allowance amounts determined based on the exchange value (EV) of a substitute HFC. In cases where EPA is proposing to change the status of ASA holders, this proposal also details how the Technology Transitions regulations would apply to those applications. Application-specific allowance holder petitions: EPA is proposing the process and information requirements for submitting petitions under subsection (e)(4)(B) of the AIM Act which seek the designation of an application as an essential use. Application-specific allowance methodology: EPA is proposing targeted revisions to the existing ASA methodology: to require companies to provide a total request for allowances for the calendar year, to expand permissible scenarios that could qualify as unique circumstances, to use a different allocation methodology for certain very small users of HFCs and entities with irregular purchasing history, how to account for inventory in allocation decisions, to establish a set-aside of allowances for situations that meet the criteria for unique circumstances related to medical conditions treated by MDIs, and to allow ASA holders to return a portion of their allowances voluntarily if they do not intend to use them. EPA is also proposing new requirements for conferrals of MCMEU allowances and an opportunity to return unneeded ASAs. Other regulatory revisions: EPA is proposing other specific regulatory changes to: clarify the ability of the Federal government to pursue, if appropriate, auctioning illegally imported HFCs that are seized by enforcement officials, require exporting companies to report “Internal Transaction Numbers” (ITNs) quarterly, and simplify the reporting on “date of purchase” for a Request for Additional Consumption Allowances (RACA). Authorization of production for export: EPA is proposing to authorize an entity to produce for export for application-specific uses abroad. Handling of confidentiality for newly reported information: EPA is proposing certain confidentiality determinations for newly reported information if this rulemaking is finalized as proposed. II. General Information A. Does this action apply to me? You may be potentially affected by this proposal if you use HFCs in one of the six applications eligible for an allocation under section (e)(4)(B)(iv) of the AIM Act. You may also potentially be affected if you produce, import, export, purify, destroy, reclaim, package, or otherwise distribute HFCs for end users in one of these six applications or are a current HFC allowance holder. Potentially affected categories, North American Industry Classification System (NAICS) codes, and examples of potentially affected entities are included in Table 1. Table 1—NAICS Classification of Potentially Affected Entities NAICS code NAICS industry description 325120 Industrial Gas Manufacturing. 325199 All Other Basic Organic Chemical Manufacturing. 325211 Plastics Material and Resin Manufacturing. 325412 Pharmaceutical Preparation Manufacturing. 325414 Biological Product (except Diagnostic) Manufacturing. 325998 All Other Miscellaneous Chemical Product and Preparation Manufacturing. 326220 Rubber and Plastics Hoses and Belting Manufacturing. 326150 Urethane and Other Foam Product. 326299 All Other Rubber Product Manufacturing. 333415 Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing. 333511 Industrial Mold Manufacturing. 334413 Semiconductor and Related Device Manufacturing. 334419 Other Electronic Component Manufacturing. 334510 Electromedical and Electrotherapeutic Apparatus Manufacturing. 336212 Truck Trailer Manufacturing. 336214 Travel Trailer and Camper Manufacturing. 336411 Aircraft Manufacturing. 336611 Ship Building and Repairing. 336612 Boat Building. 336992 Military Armored Vehicle, Tank, and Tank Component Manufacturing. SIC 373102 Military Ships, Building, and Repairing. 339112 Surgical and Medical Instrument Manufacturing. 423720 Plumbing and Heating Equipment and Supplies (Hydronics) Merchant Wholesalers. 423730 Warm Air Heating and Air-Conditioning Equipment and Supplies Merchant Wholesalers. 423740 Refrigeration Equipment and Supplies Merchant Wholesalers. 423830 Industrial Machinery and Equipment Merchant Wholesalers. 423840 Industrial Supplies Merchant Wholesalers. 423860 Transportation Equipment and Supplies (except Motor Vehicle) Merchant Wholesalers. 424690 Other Chemical and Allied Products Merchant Wholesalers. 488510 Freight Transportation Arrangement. 541380 Testing Laboratories. 541714 Research and Technology in Biotechnology (except Nanobiotechnology). 562111 Solid Waste Collection. 562211 Hazardous Waste Treatment and Disposal. 562920 Materials Recovery Facilities. 922160 Fire Protection. This table is not intended to be exhaustive, but rather provide a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this section could also be affected. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT . B. What is EPA'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). In subsection (k)(1)(A), 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 (42 U.S.C. 7675(k)(1)(A)). Subsection (k)(1)(C) of the Act also provides that Clean Air Act (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. Accordingly, this rulemaking is subject to CAA section 307(d) (see 42 U.S.C. 7607(d)(1)(I)) (CAA section 307(d) applies to “promulgation or revision of regulations under subchapter VI of this chapter (relating to stratosphere and ozone protection)”). The AIM Act authorizes EPA to address HFCs in three main ways: phasing down HFC production and consumption through an allowance allocation program, facilitating the transition to next-generation technologies by restricting use of these HFCs in the sector or subsectors in which they are used, and promulgating certain regulations for purposes of maximizing reclaiming and minimizing releases of HFCs from equipment and ensuring the safety of technicians and consumers. This proposal relates to the first area and addresses restrictions in the second area for impacted subsectors. The Act required EPA, for the five-year period beginning on December 27, 2020, to allocate the full quantity of allowances necessary, based on projected, current, and historical trends, for the production or consumption of regulated substances for the exclusive use in six applications: propellants in MDIs, defense sprays, SCPPU foam for marine and trailer uses, the etching of semiconductor material or wafers and the cleaning of CVD chambers within the semiconductor manufacturing sector, MCMEU, and onboard aerospace fire suppression (42 U.S.C. 7675(e)(4)(B)(iv)(I)). EPA has defined these allowances as ASAs. EPA intends to finalize this rulemaking ahead of the allocation of calendar year 2026 allowances. Without finalization of this rulemaking, all applications would be ineligible for application-specific allowances for calendar year 2026. Subsection (e)(4)(B)(v) of the AIM Act requires EPA to review applications receiving allocations pursuant to subsection (e)(4)(B)(iv) at least every five years. If pursuant to this review EPA determines that the requirements of two statutory criteria are met, EPA shall authorize production or consumption, as applicable, of the exclusive use of regulated substances in the application for renewable periods of not more than five years. Specifically, EPA must determine whether: (1) no safe or technically achievable substitute will be available during the applicable period for the application; and (2) the supply of the regulated substance that manufacturers or users of the regulated substance for that application are capable of securing from chemical manufacturers is insufficient to accommodate the application. Separately, an entity may file a petition for an application to receive ASAs. The AIM Act outlines timeframes and deadlines for EPA to act on such a petition and how the Agency should assess such a petition (42 U.S.C. 7675(e)(4)(B)(ii)). Specifically, not later than 180 days after receiving a petition, EPA must propose and seek public comment on whether to provide ASAs for the application. Not later than 270 days after EPA receives a petition, the Agency must take final action on the petition. Any application determined to be eligible for ASAs would also be subject to the review requirements in subsection (e)(4)(B)(v). 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)). However, rules promulgated under subsection (i) “shall not apply to . . . an essential use under clause (i) or (iv) of subsection (e)(4)(B), including any use for which the production or consumption of the regulated substance is extended under clause (v)(II) of that subsection” (42 U.S.C. 7675(i)(7)(B)(i)). Therefore, per subsection (i)(7)(B)(i), the restrictions promulgated under the Technology Transitions Program are not currently applicable to any application receiving an ASA (40 CFR 84.56(a)(2)). To the extent that this proposal would result in an application no longer receiving an ASA, this action also proposes the Technology Transitions Program restrictions that would apply to that application, if any, based on EPA's consideration of the factors listed in subsection (i)(4) of the AIM Act, should EPA finalize a determination that an application can no longer receive an ASA. 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 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. The Negotiated Rulemaking Act of 1990 (5 U.S.C. 563) provides seven criteria that the head of an agency should consider when determining whether a negotiated rulemaking is in the public interest, namely, whether: (1) there is a need for a rule; (2) there are a limited number of identifiable interests that will be significantly affected by the rule; (3) there is a reasonable likelihood that a committee can be convened with a balanced representation of persons who can adequately represent the identified interests and are willing to negotiate in good faith to reach a consensus on the proposed rule; (4) there is a reasonable likelihood that a committee will reach a consensus on the proposed rule within a fixed period of time; (5) the negotiated rulemaking procedure will not unreasonably delay the notice of proposed rulemaking and the issuance of the final rule; (6) the agency has adequate resources and is willing to commit such resources, including technical assistance, to the committee; and (7) the agency, to the maximum extent possible consistent with the legal obligations of the agency, will use the consensus of the committee with respect to the proposed rule as the basis for the action proposed by the agency for notice and comment. If a head of agency determines that the use of the negotiated rulemaking procedure is in the public interest, an agency may convene a federally chartered advisory committee, and may rely on an appointed convener under 5 U.S.C. 563(b) to assist with ascertaining the names of persons who are willing and qualified to represent interests that will be significantly affected by the proposed rule. If the agency decides to establish a negotiated rulemaking committee, the agency must publish in the Federal Register and in relevant publications a notice announcing the agency's intention to establish a negotiated rulemaking committee, a description of the subject and scope of the rule, a list of the interests which are likely to be significantly affected by the rule, a list of the persons proposed to represent such interests and the proposed agency representatives, a proposed agenda and schedule for completing the committee's work, a description of the administrative and technical support to be provided to the committee by the agency, a solicitation for comments on the proposal to establish the committee and on the proposed membership of the committee, and an explanation of how a person may apply or nominate another person for membership on the committee. The agency must provide at least 30 calendar days for the submission of comments and applications related to the membership of the committee. In establishing and administering such a committee, the agency shall comply with the Federal Advisory Committee Act, unless an exception applies. If the committee reaches consensus on a proposed rule, the committee shall transmit a report containing the proposed rule to the Federal agency. If the committee does not reach a consensus on a proposed rule, the committee may transmit a report specifying any areas upon which consensus was reached. The proposed rule is still subject to public comment, and for purposes of a rulemaking developed under the AIM Act, the requirements of CAA section 307(d). Before proposing the 2023 Technology Transitions Rule, consistent with AIM Act subsection (i)(2)(A) and (C), EPA considered whether to negotiate with stakeholders using the negotiated rulemaking procedure provided for in the Negotiated Rulemaking Act of 1990, decided not to use such procedures, and published its explanation of that decision in the Federal Register (86 FR 74080, December 29, 2021). EPA noted in the final 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 for its consideration on using negotiated rulemaking procedures. EPA did not, for example, separately consider using negotiated rulemaking for four petitions that were received after a rulemaking process had already been commenced regarding the same sectors and subsectors, nor did EPA consider anew whether or not to use negotiated rulemaking in an interim final rule (88 FR 88825, December 26, 2023) that amended one provision of the 2023 Technology Transitions Rule for one subsector. Similarly, the proposed changes to the Technology Transitions regulations contemplated in this action would be targeted at a subset of applications within a subsector subject to those restrictions. EPA is not addressing a new subsector in this proposal, nor even proposing a different level of stringency from already promulgated restrictions; rather, this action proposes only to establish deadlines by which applications would need to comply with Technology Transitions regulations in the event that those applications no longer receive ASAs. EPA does not believe that the public interest would be served by using the negotiated rulemaking procedure for this limited adjustment to the Technology Transitions regulations, especially because timeliness is a concern. III. Background HFCs are anthropogenic 2 fluorinated chemicals that have no known natural sources. HFCs are used in a variety of applications such as refrigeration and air conditioning, foam blowing agents, solvents, aerosols, and fire suppression. HFCs are potent greenhouse gases (GHGs) with 100-year global warming potentials (GWPs) (a measure of the relative climatic impact of a GHG) that can be hundreds to thousands of times that of carbon dioxide (CO 2 ). 2 While the overwhelming majority of HFC production is intentional, EPA is aware that HFC-23 can be a byproduct associated with the production of other chemicals, including but not limited to hydrochlorofluorocarbon (HCFC)-22 and other fluorinated gases. HFC use and emissions have been growing worldwide due to the global phaseout of ozone-depleting substances (ODS) under the Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal Protocol), and the increasing use of refrigeration and air-conditioning equipment globally. HFC emissions had previously been projected to increase substantially over the next several decades. In 2016, in Kigali, Rwanda, countries agreed to adopt an amendment to the Montreal Protocol, known as the Kigali Amendment, which provides for a global phasedown of the production and consumption of HFCs. The United States ratified the Kigali Amendment on October 31, 2022. Global adherence to the Kigali Amendment would substantially reduce future emissions, leading to a peaking of HFC emissions before 2040. There are hundreds of possible HFC compounds. The 18 HFCs listed as regulated substances by the AIM Act are some of the most commonly used HFCs (neat and in blends) and have high impacts as measured by the quantity of each substance emitted multiplied by their respective GWPs. These 18 HFCs are all saturated, meaning they have only single bonds between their atoms, and therefore have longer atmospheric lifetimes than fluorinated compounds that are unsaturated. More detailed information on HFCs, their uses, and their impacts is available in the Allocation Framework Rule (86 FR 55116, October 5, 2021). IV. How is EPA assessing whether to extend eligibility for application-specific allowances? As noted in Section II.B of this preamble, the AIM Act directs EPA to undertake a review of applications receiving allowances pursuant to subsection (e)(4)(B)(iv) at least every five years. The statute says that access to ASAs shall be authorized for a renewed period if two statutory criteria are met. Specifically: (1) “no safe or technically achievable substitute will be available during the applicable period for that application; and” (2) “the supply of the regulated substance that manufacturers or users of the regulated substance for that application are capable of securing from chemical manufacturers . . . including any quantities of a regulated substance available from production or import, is insufficient to accommodate the application” (42 U.S.C. 7675(e)(4)(B)(1)). In this section, we outline how EPA interprets these criteria, what information the Agency will consider in assessing these criteria, and a proposed framework for evaluating if an application is eligible for renewal for up to five years. EPA notes that under the statute, these criteria also apply to new applications that may be listed, but, aside from Section VI addressing the petition process, this proposed rulemaking is primarily focused on the renewal of existing applications. However, EPA's interpretations of the criteria discussed in this section would apply to future actions to add new applications. The AIM Act includes additional evaluation considerations for new applications in subsection (e)(4)(B)(i), but the Agency is not addressing their interpretation in this rulemaking. A. How is EPA interpreting the “no safe or technically achievable substitute will be available” criterion? In order for an application to continue to be eligible to receive ASAs, EPA must determine “no safe or technically achievable substitute will be available” for the application during the time period under review (42 U.S.C. 7675(e)(4)(B)(i)(I)). EPA is proposing that the best interpretation of this criterion is that if there is an available substitute that is both safe and technically achievable, an application would not meet this criterion for renewal. EPA acknowledges that the statutory language could be ambiguous as to whether a substitute must be both safe and technically achievable. However, reading the statutory language differently than proposed would seem to create a perverse outcome. In such a scenario, an application would become ineligible for ASAs if EPA identified a substitute that was technically achievable, but not safe. EPA reads the context of subsection (e)(4) as indicating that Congress intended that listed applications continue to receive priority access to allowances as long as the application needed to use regulated substances. In a situation where an identified substitute is not safe, EPA believes that it would be Congress's intent to continue to provide priority access to allowances such that the application was not prematurely forced to transition to an unsafe substitute. Similarly, it does not seem reasonable to take away access to ASAs when an identified substitute is safe, but not technically achievable. If the application cannot technically implement the transition to a substitute, it seems unrealistic to think that there could be a transition away from regulated substances. Accordingly, EPA proposes to interpret the statutory text and surrounding framework such that if EPA determines there is no safe substitute that is technically achievable for an application, or a technically achievable substitute is not safe, the application would meet the first criterion for renewal. In looking at potential substitutes for an application under subsection (e)(4)(B)(i)(I), EPA is proposing to consider regulated substances ( i.e., other HFCs), alternative substances ( e.g., hydrofluoroolefins (HFOs), hydrocarbons), and blends of HFCs and/or HFC alternatives that can perform the same general function as the current HFC in use. EPA is proposing that such an interpretation of the term “substitute” is most consistent with the statutory language of subsection (e)(4)(B) as a whole. Specifically, in its direction to EPA to review applications receiving ASAs every five years, Congress directed EPA to “review the availability of substitutes, including any quantities of the regulated substance available.” This sentence structure, indicating that examination of quantities of regulated substances available would be included as part of analyzing what substitutes are available, suggests that regulated substances are part of the universe of substitutes that Congress intended EPA to include in its review. In addition to EPA's determination that such an approach is more consistent with the statutory language than an approach of only looking at non-regulated substances as substitutes, EPA has also identified other benefits of this interpretation. For example, it would seem to be a perverse outcome if EPA renewed an application's eligibility for ASAs at historic quantities where there was an available substitute that did not require any or required fewer allowances to procure. Non-HFCs may be able to fill the same role as the HFC, often functioning as a chemical-for-chemical replacement or requiring limited design changes. EPA is proposing, as part of its assessment of what chemicals may be determined to be safe as a substitute for applications under review, to only include substances, including blends of substances, with a lower GWP than the regulated substance currently in use. As explained in the Allocation Framework Rule (86 FR 55116, October 5, 2021), the HFC phasedown's significant benefits are derived from the reduction of production and consumption of certain chemicals on a GWP-weighted basis. 3 Considering higher-GWP substances or blends of substances would run against this overall objective and could reduce the benefits of the HFC phasedown, especially if this rulemaking led to the uptake of higher-GWP non-HFC technologies ( e.g., semiconductor manufacturers transitioning back to using higher-GWP perfluorocarbons (PFCs)). In addition, this proposed interpretation aligns with the approach under the 2023 Technology Transitions Rule (88 FR 73098, October 24, 2023), which established GWP limits for subsectors and considered substitutes as only those with lower GWPs. Further discussion regarding the sources EPA is relying on to determine if a substitute is safe ( e.g., listed by EPA's Significant New Alternatives Policy (SNAP) Program) can be found below. 3 While the AIM Act calls for reduction of HFC production and consumption on an EV-weighted basis, EV and GWP are numerically equal. Lower GWP is an important consideration for whether a substitute is safe, so EPA is using GWP instead of EV in the discussion in this section of the rule. In addition to looking at chemicals that could serve as substitutes, EPA is also including in its analysis any potentially available not-in-kind technologies ( e.g., finger-pump bottles that would not use any chemical propellant in lieu of aerosol cans) for purposes of subsection (e)(4)(B)(i)(I). Such an approach is consistent with the common understanding of the plain language definition of “substitute.” For example, Merriam Webster defines substitute as a thing that “takes the place of function of another” and the Oxford dictionary similarly notes a substitute is a “thing acting or serving in place of another.” In general, not-in-kind technologies can serve the need of some applications, so it is appropriate to include them within the scope of assessing safe and technically achievable substitutes. It would be unnecessarily limiting to exclude from the scope of the analysis a technology that performs the same general function for the application as the current HFC in use does. EPA also acknowledges that market pressure from the HFC phasedown may encourage a transition into not-in-kind technologies (and non-HFCs) by limiting the supply of HFCs on a GWP-weighted basis, while the Technology Transitions Program prohibits the use of certain HFCs in certain sectors and subsectors. There is also precedent for considering not-in-kind technologies under CAA Title VI, such as the SNAP Program and Nonessential Product Bans, and the AIM Act Technology Transitions Program, all of which also evaluate not-in-kind substitutes as possible alternatives to ODS and HFCs, respectively. EPA is aware that a transition to certain substitutes will require changes to how the HFCs are used in the application ( e.g., accommodating a flammable HFC in the manufacturing process). Shifts to not-in-kind technologies will inherently require a change in manufacturing and/or the product, so it would be a consistent approach to also not outright exclude substitute chemicals that would similarly require a change in manufacturing process or the product. EPA does not want to unnecessarily limit the scope of the substitute analysis at this point in time, and therefore is considering a wide range of possible safe and technically achievable substitutes. The phasedown of HFCs is still nascent, and, at this point, we cannot know the full breadth of technologies that will be developed as replacements for the current HFCs in use. The Agency is proposing to assess this criterion, specifically that a substitute is safe, technically achievable, and available, on an application-wide basis. For applications that use multiple HFCs, a substitute would need to be able to replace all HFCs used (or multiple substitutes that replace all individual HFCs would need to be available). For applications that have sub-applications ( e.g., defense sprays include those intended for humans and those intended for animals), there would need to be a viable substitute for known sub-applications. EPA's interpretation is that it would be unreasonable to consider an application as having met this criterion and thereby ineligible for renewal unless all known sub-applications can successfully transition away from their currently used HFC(s). EPA's evaluation of each application is not intended to be a company-specific review; the commercialization 4 of a substitute by one sub-application suggests the substitute is safe or technically achievable for the entire application barring evidence, such as testing data, to the contrary. However, there are additional barriers to commercialization, which are considered when assessing if the identified substitute is available for an entire application. In addition, EPA's interpretation of the statutory language is that applications are intended to be viewed as a whole and not necessarily renewed by sub-application. Specifically, the listing of the applications in subsection (e)(4)(B)(iv)(I) does not break down the application into sub-applications ( e.g., “defense sprays” is not listed as multiple separate applications, e.g., “personal defense sprays,” “law enforcement defense sprays,” and “bear defense sprays”). Similarly, for applications that use multiple HFCs and have specific uses for the individual HFCs, it would not be reasonable to assess this criterion as being met if an application does not have an available safe and technically achievable substitute for each HFC. It is EPA's opinion that Congress did not intend for an application to lose its eligibility for ASAs if it could only transition some, but not all, of the HFCs currently used in the application. 4 EPA is using the term “commercialization” to mean that the substitute is commercially available and actively being used in an application's equipment or sold on the market (domestically or internationally) for use in the application. “Commercialization” is not intended to be equated with “available,” as explained in more detail in the main text. EPA reviewed a range of sources in developing its assessment of the availability of safe, technically achievable substitutes for each application at issue here. Sources include, but are not limited to: manufacturer announcements; information provided by stakeholders under part 84 reporting requirements and other communications; relevant Federal and State regulations; evaluations carried out under the 2023 Technology Transitions Rule (88 FR 73098, October 24, 2023) and the SNAP Program; standards from industry, standard-setting bodies ( e.g., American Society for Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE)), and the U.S. Government ( e.g., the U.S. Food and Drug Administration's (FDA) standards for MDIs); and peer-reviewed technical reports. The Technical Support Document (TSD) “Draft Review of Applications in the American Innovation and Manufacturing (AIM) Act Section (e)(4)(B)(4)” contains a comprehensive array of sources we looked at for each application, and EPA is taking comment on other relevant sources that should be considered. As noted, EPA is considering the listings under the SNAP Program as part of its assessment. The SNAP Program has an established history evaluating substitutes for ODS, many of which are also possible substitutes for HFCs. Where relevant, in its assessment of the availability of safe substitutes, EPA considered information from the SNAP Program, including the listings themselves and the information underlying SNAP Program decisions. The SNAP Program does not evaluate substitutes for semiconductor etching and cleaning of CVD chambers. Some military applications are covered under the SNAP Program. In other cases, such as MDIs and SCPPU foams, while these applications are within the scope of the SNAP Program, there may be other sources of information ( e.g., the FDA, company information) that may be more appropriate. In its evaluation of substitutes and related decisions ( e.g., to list as acceptable or unacceptable), the SNAP Program carries out a comparative risk evaluation and considers whether a substitute to an ozone-depleting substance presents human health and environmental risks that are lower than or comparable to such risks from other substitutes that are currently or potentially available for the same uses. The human health risks analyzed include safety, and in particular, flammability, toxicity, and exposure (of workers, consumers, and the general population) to chemicals with direct toxicity; environmental risks include ozone depletion potential (ODP) and GWP. Information and data relied upon in the SNAP Program are directly relevant to EPA's assessment of substitutes in this rulemaking, and therefore EPA has pulled from and relied upon SNAP Program assessments as appropriate. EPA evaluates substitutes under the SNAP Program on an ongoing basis and over time has listed numerous substances as “acceptable,” “acceptable, subject to use conditions,” or “acceptable, subject to narrowed use limits.” “Acceptable subject to use conditions” indicates that a substitute is acceptable only if used in a certain way. Use conditions can include, but are not limited to, warning labels, compliance with relevant safety standards, and restrictions on where a substitute is used ( e.g., HFC-134a is acceptable for FDA-approved MDIs for medical purposes but is not acceptable for a majority of aerosol uses, and some fire suppression substitutes may only be used in typically unoccupied spaces). EPA can also list substitutes as “acceptable subject to narrowed use limits” under SNAP, indicating that a substitute may be used only within certain specialized applications within an end use and may not be used for other applications within that end use ( e.g., SNAP has previously listed some substitutes as acceptable for only narrowed use limits for military or space- and aeronautics-related applications). In listing of a chemical as acceptable or acceptable subject to use conditions directly relevant to the application, the SNAP Program makes an assessment that the benefits outweigh the risks relative to other alternatives; these listings are relevant data to support EPA's determination under AIM Act subsection (e)(4)(B) on whether a substitute is “safe” under the interpretation proposed in this rulemaking. EPA lists substitutes as “unacceptable” under SNAP if the Agency determines that they may increase overall risk to human health and the environment, compared to other alternatives that are available or potentially available for the same use. EPA has listed substitutes as unacceptable considering the human health criteria described above, as well as the environmental factors considered under SNAP. For example, SNAP has listed certain substitutes as unacceptable due to unusually high ODP, GWP, toxicity and exposure, and flammability (where it is not clear how to mitigate risks sufficiently). Substitutes listed as unacceptable in an end use are prohibited for that use and therefore would not be an available safe or technically achievable substitute for an application under our proposed interpretation of this criterion. The Agency is also reviewing the evaluations carried out for the 2023 Technology Transitions Rule (88 FR 73098, October 24, 2023) and relying on information and assessments done in that rulemaking, as appropriate. In establishing restrictions, the Technology Transitions Program factored in the availability of substitutes, considering both safety and technological achievability, among other factors. The Technology Transitions Program relied on information from a wide range of sources when assessing availability, including but not limited to, SNAP, the Montreal Protocol's Technology and Economic Assessment Panel (TEAP), standards bodies, and information provided by industry, States, and environmental non-governmental organizations. Though the Technology Transitions Program looked subsector-wide, not at specific end uses, and did not specifically analyze the applications currently receiving ASAs under subsection (e)(4)(B)(iv), some of these applications ( e.g., defense sprays and SCPPU foams for marine and trailer uses) have similarities with the subsectors currently subject to restrictions. As a result, in carrying out the assessments undertaken in this rulemaking, EPA is considering relevant information from the Technology Transition Program's evaluations. In the assessment undertaken in this rulemaking, EPA is also taking into account other Federal standards and regulations, both within EPA and from other U.S. Government agencies. For many applications under review in this rulemaking, there are applicable regulations and standards that outline requirements related to the chemicals or technologies used within an application. In these situations, such standards and regulations may in some instances limit use of possible substitutes. In some instances, it may not be possible for a substitute to ever be used. In other instances, applicable regulations may require entities to go through a regulatory approval process that would affect when an application can transition to a substitute. Some examples of regulations and standards we are considering as part of our proposed evaluations include EPA's regulations covering pesticides such as bear spays and dog sprays (sub-applications of defense sprays) under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA; 7 U.S.C. 136-136y), the FDA's requirements for MDIs, and the U.S. Federal Aviation Administration's (FAA) requirements for onboard aerospace fire suppression. Additional standards and regulations for each application are discussed further in the relevant chapter of the TSD. EPA invites comment on any other standards or regulations that entities think EPA should consider in determining an application's ability to transition to a substitute. EPA also considered the work undertaken by the Montreal Protocol's TEAP in the proposed application assessment given the TEAP's analytical work on substitutes and alternative technologies to substances controlled under the Montreal Protocol, including HFCs. TEAP assesses technical and economic information that serves as the basis for parties' assessment of control measures of substances under the purview of the Montreal Protocol. Such information is related to substitutes that may replace the substances controlled under the Montreal Protocol and alternative technologies that may be used without adverse impact on the ozone layer and climate, production and consumption of controlled substances, emissions of controlled substances, potential alternatives for exempted uses and others, as mandated by the parties. This assessment includes applications listed in AIM subsection (e)(4)(B)(iv). In addition, TEAP develops assessments in response to decisions taken by the parties to the Montreal Protocol, including but not limited to Decision XXVIII/2, which call for an assessment of alternatives to HFCs every five years. EPA particularly looked at the 2022 Assessment Reports by the Medical and Chemical Technical Options Committee, concerning semiconductors, aerosols, and MDIs; the Flexible and Rigid Foams Technical Options Committee (FTOC); and the Fire Suppression Technical Options Committee (FSTOC). TEAP reports have included information on technical achievability and safety. TEAP reports are developed by experts around the world and provide insight into the HFC substitutes currently in use and under development in the United States and globally. As such, EPA is considering relevant information from these reports when carrying out the assessment of available safe or technically achievable substitutes undertaken in this rulemaking. As described throughout this section, EPA is considering information from a wide range of sources in its assessment of the availability of safe or technically achievable substitutes for the applications receiving ASAs under subsection (e)(4)(B)(iv)(I), and no one source will be determinative for this criterion. Further information about sources consulted for each application can be found in Section V of this preamble and the TSD. EPA invites comment on its interpretation of “no safe or technically achievable substitute will be available” and the sources it is considering in its assessment of this criterion. B. How is EPA interpreting the insufficient supply of regulated substances criterion? Under the second criterion for renewal of an application's eligibility to receive ASAs, EPA must determine that “the supply of the regulated substance that manufacturers or users of the regulated substance for that application are capable of securing from chemical manufacturers . . . , including any quantities of a regulated substance available from production or import, is insufficient to accommodate the application” (42 U.S.C. 7675(e)(4)(B)(i)(II)). As described here and in the sections of the proposed rule discussing each of the six applications, a determination that there is insufficient supply could be based on a number of different factors, including the available domestic supply of the HFC(s) at issue, demand for said HFC(s), and supply chain constraints particular to a given application ( e.g., federally required purity specifications). Priority access to allowances through ASAs has the potential to address insufficient supply of HFCs by allowing entities that use HFCs in an eligible application to more easily procure HFCs from a domestic supplier by conferring allowances to authorize production or import or to import the HFCs themselves. In this proposed rulemaking, EPA is interpreting this criterion as requiring an assessment related to the supply of the HFC(s) currently used in an application's equipment or to manufacture the application's products for use. Under this proposed interpretation, EPA would not evaluate HFC(s) currently used exclusively for research and development in assessing whether there is insufficient supply. EPA recognizes that the research and development process may find various alternatives to be unsuitable for an application. Therefore, it would be premature to consider supply of potentially unsuitable HFC alternatives until such time as they have been commercialized or are close to commercialization. Further, it could also have the perverse effect of limiting research into alternatives if an application's initial research could prematurely contribute to removal from eligibility for ASAs. EPA is proposing to consider regulated substances supplied by chemical manufacturers in its assessment of supply. EPA interprets the reference to regulated substances “from chemical manufacturers” in 42 U.S.C. 7675(e)(4)(B)(i)(II) as direction from Congress to assess supply from chemical manufacturers only, and that this direction could cover both virgin and recovered and reprocessed HFCs. EPA is proposing to include HFCs produced domestically and those that are produced abroad and imported in its assessment of supply under this criterion. Congress directed EPA to consider regulated substances “from chemical manufacturers . . . , including any quantities of a regulated substance available from production or import” in its assessment under 42 U.S.C. 7675(e)(4)(B)(i)(II). Because of Congress's reference to production and import of regulated substances, and the lack of any language suggesting that chemical manufacturers should be read as limited to only U.S. producers, EPA intends to consider imported material from foreign HFC producers in addition to regulated substances from domestic producers. As a result, EPA is proposing not to consider HFC supply held by and available to entities that do not produce or import HFCs in its assessment of this criterion. This would exclude quantities of HFCs held by entities that do not produce or import HFCs with allowances, potentially including reclaimers, distributors, HFC blenders, 5 and HFC repackagers. EPA considers this proposed interpretation to be most consistent with the statutory language in 42 U.S.C. 7675(e)(4)(B)(i)(II). 5 For a discussion on the difference between producing HFCs consistent with the AIM Act and blending HFCs to make various refrigerant blends, see “Response to Comments”, pg. 193, Docket ID No. EPA-HQ-OAR-2021-0044, associated with the Allocation Framework Rule (86 FR 55116) and the discussion in the 2024 Allocation Rule (88 FR 46863). The Agency is proposing to consider multiple sources of data in its evaluation of whether supply of a regulated substance is insufficient to accommodate an application. Specifically, in developing the analysis for each application, EPA has drawn information regarding the total expected HFC consumption in the United States, global production of individual HFCs used in the applications, manufacturer announcements regarding production of specific HFCs, past and projected market trends for an application that can inform projected demand for the HFC(s) it uses, and allowance usage by application to date, including conferrals, imports, and open market purchases by ASA holders, as well as expenditures of conferred allowances by suppliers to ASA holders. EPA is intending to consider data from all of these sources collectively in order to gain a more complete picture of projected supply for the relevant individual HFC(s), rather than relying on one data point. EPA is taking comment on these and any other sources the agency should consider when assessing insufficient supply. EPA is proposing to assess insufficient supply on an application-wide basis. If an application uses multiple HFCs, and the supply of at least one of those HFCs is insufficient to accommodate the application, EPA would consider the criterion met for the application. EPA interprets 42 U.S.C. 7675(e)(4)(B)(i)(II) to require the Agency to review the supply of the regulated substance for each regulated substance an application uses. If there is an insufficient supply for one HFC, EPA would determine that this criterion is met, and the application would continue to be eligible for ASAs, assuming the first criterion regarding substitutes is also met. EPA is proposing that such an approach is the best interpretation of the AIM Act direction in 42 U.S.C. 7675(e)(4)(B)(i)(II) that if both criteria are met, “the Administrator shall authorize the production or consumption, as applicable, of any regulated substance used in the application.” A converse approach would result in EPA not renewing the ASA eligibility of an application that has no available substitutes and there is an insufficient supply available of a regulated substance used by that application. EPA is interpreting the AIM Act to provide ASAs to an application where at least one regulated substance that manufacturers are capable of securing is insufficient to accommodate the application, even if the supply of a different regulated substance is not insufficient. In addition to looking generally at the supply of HFCs, EPA is also considering relevant restrictions, if any, on the type of HFC or supplier of HFCs that would further limit supply to a particular application. For example, FDA regulations govern use of pharmaceutical-grade HFCs by MDI manufacturers. Facilities manufacturing the regulated substances must comply with FDA regulations, and there are a limited number of purifiers. EPA is considering any applicable relevant Federal regulations and standards (examples listed above in Section IV.A.), including required regulatory approvals and purity levels, that could limit the supply of the HFC(s) used within an application. C. What is EPA's proposed framework for renewing applications? In outlining the requirement that EPA review the applications eligible for ASAs at least every five years, the AIM Act states that if EPA determines “that the requirements described in subclauses (I) and (II) of clause (i) are met” then the EPA will renew the application's eligibility to continue to receive ASAs (42 U.S.C. 7675(e)(4)(B)(v)(II)) (emphasis added). Accordingly, EPA interprets the statutory language to mean that both criterion (I) of clause (i) (that a substitute is not available) and criterion (II) (that supply is insufficient) must be met for an application to be renewed as eligible for ASAs. If either or both criteria are not met as of January 1, 2026, EPA proposes to not renew an application's eligibility to receive ASAs. Put another way, if EPA determines, for example, that supply is not insufficient to accommodate an application as of January 1, 2026, EPA would propose to not renew that application's eligibility for ASAs, regardless of whether a substitute is available. If both statutory criteria are met as of January 1, 2026, EPA intends to assess whether an application's fulfillment of a criterion may change over the following five-year period. The outcome of this assessment would be determinative of how long EPA will deem an application eligible to receive ASAs. For example, if EPA determines that there is no substitute available as of January 1, 2026, but a substitute will be available by January 1, 2028, EPA would renew the application's eligibility to receive ASAs for only two years ( i.e., calendar years 2026 and 2027). Similarly, if supply is deemed insufficient to accommodate the application as of January 1, 2026, but the market will change such that supply will not be insufficient to accommodate the application as of January 1, 2028, EPA would renew the application's eligibility to receive ASAs for only two years ( i.e., calendar years 2026 and 2027). If EPA determines that an application has a safe or technically achievable substitute available that is a regulated substance, EPA proposes to evaluate the supply of the substitute HFC and assess if supply of the substitute HFC is insufficient to accommodate the application. If the Agency did not do this, the application would not be eligible for renewal because it had met the substitute criterion, regardless of the supply of this substitute HFC; EPA sees this as counter to Congress's intent when it established priority access to allowances for these applications. Further, it is EPA's assessment that it would be counterproductive to an application's efforts to transition away from the currently used HFC(s) if EPA did not consider the supply of the HFC substitute when assessing eligibility for renewal for ASAs ( i.e., if an application had insufficient supply of the substitute HFC, an entity may be forced to return to using its original HFC). Under the framework proposed in this rulemaking, if EPA determines there is an HFC substitute, but there is insufficient supply of that HFC substitute, EPA would continue to list the application as eligible for ASAs. This approach would allow an entity transitioning to a lower-GWP HFC to remain eligible to receive allowances until supply of that lower-GWP HFC is no longer insufficient (or a non-HFC substitute is identified). EPA is also proposing that if an application is eligible to be renewed for ASAs for less than five years, the application will not be reviewed for eligibility for ASAs ahead of the next five-year renewal period. The direction in the statute under AIM subsection (e)(4)(B)(v) is to review each “application receiving an allocation of allowances under clause (i) or (iv) . . . not less frequently than once every 5 years,” and, if the criteria are met, EPA shall renew the application “for renewable periods of not more than 5 years.” EPA interprets this language, coupled with the lack of language in the statute directing EPA to do another review of an application that is no longer eligible for allowances at the end of its renewal period, as direction that EPA is not required to re-review this application for eligibility for ASAs ahead of the next five-year period. Congress's direction to undertake a renewal is specific to applications receiving ASAs under 42 U.S.C. 7675(e)(4)(B)(i) and (iv). If an application is renewed for only two of five years at this stage, when the next renewal period arises, it would not be receiving ASAs under 42 U.S.C. 7675(e)(4)(B)(i) or (iv). Therefore, EPA is proposing that the best interpretation of the AIM Act language is that once EPA determines that an application is no longer eligible for ASAs, EPA would not re-review that application at any future time. If an application is determined to no longer be eligible for ASAs and an entity is interested in being considered for eligibility for ASAs again, the entity would need to petition the Agency to be evaluated for eligibility, and the Agency would then undertake the relevant petition review process; see Section VI of this preamble for further discussion of the petition process requirements. V. Review of the Six Applications Listed in the AIM Act EPA reviewed the six applications listed in AIM Act subsection (e)(4)(B)(iv)(I)—propellant in MDIs; defense sprays; SCPPU foam for marine use and trailer use; the etching of semiconductor material or wafers and the cleaning of CVD chambers within the semiconductor manufacturing sector; MCMEU; and onboard aerospace fire suppression—as required under 42 U.S.C. (e)(4)(B)(v)(I). Pursuant to that review, in this rulemaking EPA is proposing and seeking comment on whether the criteria for renewal described in Section IV of this preamble are met for any part, or the entirety, of the 2026-2030 time period. This section begins with an overview of total projected U.S. HFC consumption and then proceeds into EPA's assessment of the criteria for each application and proposed decision regarding whether to renew each application's eligibility to receive ASAs. EPA provides additional information in the TSD available in the docket for this rulemaking. A. Overview of Total U.S. HFC Consumption This section contains a summary of total projected U.S. HFC consumption. We assess specific HFC supply considerations on an application-by-application basis below. EPA provides additional information regarding this analysis in the TSD. The global and domestic HFC markets have been rapidly changing since agreement to the Kigali Amendment to the Montreal Protocol in 2016. 6 The domestic HFC market has been further changing since the passage of the AIM Act in 2020 and the subsequent promulgation of domestic regulations. In 2021, EPA promulgated regulations to implement the required phasedown of HFC production and consumption in the United States. Additional regulations coming into effect, as early as January 1, 2025, will also further alter this overall market and impact demand for certain HFCs. EPA anticipates the market will be dynamic as it responds to these additional regulations and continues adapting to the global phasedown of HFCs. 6 The United States ratified the Kigali Amendment in October 2022. In the addendum to the HFC Phasedown Regulatory Impact Analysis (RIA) updated for the 2023 Technology Transitions Rule (88 FR 73098, October 24, 2023), EPA modeled total HFC consumption to be significantly lower than the limit established by the statutory phasedown cap for all years of the phasedown, assuming compliance with the restrictions. The 2023 Technology Transitions Rule established subsector-level GWP limits and restrictions on the use of certain regulated substances. These requirements take effect as early as January 1, 2025, and as late as January 1, 2028. While some subsectors already use either HFCs that are below the GWP limit or non-HFC substitutes, other subsectors will need to transition away from their currently used HFC to comply with these regulations. In addition, the proposed rulemaking “ Phasedown of Hydrofluorocarbons: Management of Certain Hydrofluorocarbons and Substitutes Under Subsection (h) of the American Innovation and Manufacturing Act of 2020 ” (88 FR 72216, October 19, 2023) (hereafter “Emissions Reduction and Reclamation Rule”) has proposed requirements that reclaimed and recycled HFCs be used for certain equipment in the refrigeration, air-conditioning, and heat pump sector and fire suppression sector (onboard aerospace fire suppression, as an application eligible for ASAs, is currently exempt) as early as early as January 1, 2028. If finalized as proposed, these requirements are also expected to limit use of virgin HFCs for specific activities ( e.g., servicing for certain refrigeration and air conditioning subsectors). 7 In general, there is uncertainty associated with these estimates, as they are based on expected industry transitions in response to AIM Act rulemakings and predicted market dynamics. If HFC consumption is lower than the amount allowed under the AIM Act in a given year, the result may be that there are more allowances than are needed to meet market demand in that year. 8 If demand for HFCs is lower than the cap, it is possible that general pool consumption and production allowances, which are currently used to produce or import HFCs for entities that do not hold allowances and entities that use HFCs in an application-specific use, would be available to allow for the production or import of HFCs for use by entities that historically have relied upon ASAs. While current ASA holders can access material produced using general pool allowances or purchase HFCs on the open market, if demand by non-ASA entities is lower than the cap, it is possible that the “leftover” allowances could be used to supply ASA holders and therefore decrease the need for ASAs. It is also possible that all allowances are used, and the HFCs that are not sold in that year are stockpiled in anticipation of future needs. 7 See Emissions Reduction and Reclamation Rule (88 FR 72216, 72292, October 19, 2023). 8 The actions taken pursuant to subsection (h) and (i) of the AIM Act did not propose to and did not accelerate the HFC phasedown. The RIAs associated with those actions did not analyze an acceleration of the HFC phasedown. Rather, HFCs will continue to be available consistent with the phasedown codified at 40 CFR part 84, subpart A, and this action does not propose to change that phasedown schedule. Even if the requirements finalized pursuant to subsections (h) and (i) in effect reduce the production or consumption of HFCs used in particular sectors or subsectors faster than the scheduled reductions under the AIM Act, that does not make those rules an acceleration under subsection (f). The Agency cannot fully predict shifts in chemical production, domestically and internationally, that may occur. As the HFC phasedown progresses, EPA anticipates suppliers may focus their business on supplying lower-GWP HFCs, since production and consumption of these lower-GWP HFCs requires the expenditure of fewer allowances for the same volume of substance. 9 At the same time, sectors that are not yet ready to transition and are not covered by the 2023 Technology Transitions Rule (88 FR 73098, October 24, 2023) may continue to use higher-GWP HFCs and could grow in size. 9 In the Allocation Framework Rule, EPA established a system whereby allowances are measured on an EV equivalent basis. 86 FR at 55142. To determine the total number of allowances needed, producers and importers multiply the quantity of the HFC they seek to produce or import by its EV. For example, an importer would need to expend 143 consumption allowances to import 100 kilograms (kg) of HFC-134a. Given the variation in EVs, one would need to expend 5.3 allowances to import 100 kg of HFC-152a. EPA also does not yet have data on how the market is reacting to the 2024 stepdown in HFC allowances (from 90 percent of the HFC consumption baseline to 60 percent of baseline); at the time of this proposal the market is only a few months into adjusting to the 2024 HFC stepdown, and EPA has received only one set of quarterly reports. Among other things, data on market reactions could inform how the market will react to the next large stepdown in 2029 (from 60 percent of baseline to 30 percent of baseline). For example, the decrease in available consumption allowances could encourage users of HFCs to transition faster than projected. However, given the significant amount of HFCs in inventory at the end of 2022, the transition away from HFCs could also be slower than projected. Though it seems likely that demand could be below the cap for the 2025-2028 period based on existing regulations, it is uncertain if 2029 (the fourth year of the five-year renewal period) will see similar space between consumption and allowed consumption under the cap. EPA also notes the 2024 stepdown in permissible production and consumption is unique given its scale and that it is occurring early in the overall AIM Act implementation. There will be significantly more information regarding the state of the HFC market after the January 1, 2024, stepdown at the time EPA is finalizing this proposal, and EPA intends to analyze available data to inform its decisions regarding whether supply of individual HFCs is insufficient to accommodate the individual applications. In addition, there are also other constraints on supply of specific HFCs used in the six applications that EPA is taking into consideration ( e.g., purity specifications required by Federal standards and regulations and limited number of producers), as explained in more detail in Sections V.B through V.G. of this preamble. Supply chain dynamics for each of the six applications could affect whether general pool allowances would be able to be used to provide HFCs for each application. B. Propellants in Metered Dose Inhalers EPA has been allocating ASAs for regulated substances used for propellants in MDIs in accordance with subsection (e)(4)(B)(iv)(I)(ff) of the AIM Act. In the Allocation Framework Rule, EPA defined a “metered dose inhaler” as “a handheld pressurized inhalation system that delivers small, precisely measured therapeutic doses of medication directly to the airways of a patient. MDIs treat health conditions such as asthma and chronic obstructive pulmonary disease and are approved for such use by the U.S. Food and Drug Administration (FDA)” (40 CFR 84.3). Patients using MDIs to treat pulmonary conditions work closely with their healthcare provider to identify the right treatment for their condition. Pharmaceutical grade HFC-227ea and HFC-134a, purified from technical grade HFC-227ea and HFC-134a, respectively, are both used in MDIs as a propellant. EPA is proposing to determine that no safe or technically achievable substitute will be available for propellants in MDIs and that supply of the regulated substance that manufacturers and users are capable of securing from chemical manufacturers is insufficient to accommodate this application through calendar year 2030. Therefore, EPA proposes to renew the eligibility of entities using regulated substances for propellants in MDIs to receive ASAs for the five-year period of calendar years 2026 through 2030. 1. Availability of Safe and Technically Achievable Substitutes EPA has not identified substitutes that it would propose to deem safe and technically achievable that are available for propellants in the metered-dose inhalers application at this time. In assessing the availability of substitutes for MDIs, EPA reviewed information from sources such as the FDA, the EPA SNAP Program, the TEAP's Medical and Chemicals Technical Options Committee (MCTOC), industry, scientific journal articles, and more, which is described in greater detail in the TSD included in the docket for this proposed action. After reviewing relevant information and analyses, EPA is aware of two potential replacements for HFC-134a and HFC-227ea as propellants in MDIs, specifically HFO-1234ze(E) and HFC-152a. MDIs, including those containing an alternative propellant other than HFC-134a or HFC-227ea, are subject to the approval requirements under section 505 of the Federal Food, Drug and Cosmetic Act. The process to develop an MDI with a new propellant is complex and will take time. A sponsor ( i.e., MDI manufacturer) will need to reformulate the MDI product to use the new alternative propellant and conduct a development program to obtain data, including clinical data, with the new MDI product. If the development program is successful, a sponsor will then need to submit an application to the FDA for approval; the review timeline for a new drug application is 10 to 12 months. The overall process to develop an MDI product containing a new alternative propellant is expected to take years. EPA regularly consulted with the FDA throughout development of this proposed rule, and the reformulation of the majority of MDIs with an alternative propellant may extend beyond the end of the renewal period of 2030. EPA is aware that a few MDI manufacturers have begun the development process, some of whom are expecting to soon begin Phase 3 trials and FDA has stated that it is possible that they may receive new drug applications for a small number of MDI products with alternative propellants by 2030. However, these new drug applications will need to undergo FDA review. For new drug applications that receive FDA approval, the commercialization plans for new MDIs are unknown but is anticipated to take additional time. Unlike for some of the other uses receiving ASAs where commercialization of substitutes across the entire application after those products are first available on the market may take a few years, for MDIs, EPA anticipates that it will take many years before alternatives are available across the application. That is, it will take time for reformulation, approval, and commercialization to occur for each of the individual MDI products used to treat pulmonary disease. For example, manufacturers of generic MDIs may face delay in transitioning to alternative propellants, as generic drug products must be shown to be a duplicate of, and bioequivalent to, a previously approved drug product and rely on FDA's finding that the previously approved product is safe and effective. Applicants request approval for generic drug products, including MDIs, in Abbreviated New Drug Applications (ANDAs). FDA provides its recommendations for establishing bioequivalence in its product-specific guidances, which for orally inhaled products like MDIs, have generally included some combination of in vitro and in vivo studies, along with recommendations related to the formulation and device. FDA committed to review 90% of standard original ANDAs within 10 months from the date of submission, but often multiple review cycles are necessitated by application quality. This review time can be extended if a site/facility is not ready for inspection. The timing of ANDA approval also depends on, among other things, the patent and exclusivity protections for the previously approved product. According to the MCTOC 2022 Assessment Report, the transition from HFC-134a and HFC-227ea to HFC-152a and HFO-1234ze(E) in MDIs is expected to begin in non-Article 5 countries 10 in 2025 and continue through at least 2032, and no other feasible, lower-GWP MDI propellants have been identified in the United States and abroad. 11 HFO-1234ze(E) and HFC-152a, along with other aerosol propellants, are listed as acceptable by EPA's SNAP Program and are commercially available and currently used in commercial and/or technical aerosol products. Furthermore, they also have most of the requisite physical properties to function as a propellant in MDIs with significantly lower GWPs than the current HFCs in use; however, neither propellant has significant use in pharmaceuticals today and will require extensive clinical research and FDA approval before they could replace the current HFCs. 10 Non-Article 5 countries are defined as developed countries under the Montreal Protocol. For a list of Article 5 and non-Article 5 countries see https://ozone.unep.org/classification-parties. 11 See https://ozone.unep.org/system/files/documents/MCTOC-Assessment-Report-2022.pdf. In light of the above analysis, it is EPA's assessment that there is no information before the Agency at the time of this proposal to suggest that there would be a safe and technically achievable substitute available prior to the next five-year review. 2. Supply As previously mentioned, pharmaceutical-grade HFC-134a and HFC-227ea (also known as HFA-134a and HFA-227ea) are currently used as propellants in MDIs. As part of the manufacturing process for MDIs, technical grade HFC-134a and HFC-227ea are purified into pharmaceutical-grade HFC-134a and HFC-227ea. Documents the FDA requires as part of the drug approval process must specify the facility manufacturing the HFC propellant. The supply of pharmaceutical-grade HFC- 134a comes from technical grade HFC-134a that is produced at a limited number of production facilities in other countries, including a single plant in the United States, and then purified at a single facility in the United Kingdom and reimported to the United States for consumption in MDIs. In its analysis of other applications, EPA has noted that HFC-134a is the most widely available HFC. However, this fact does not equate to a sizeable supply for the MDI application because MDI manufacturers are not easily able to switch suppliers of pharmaceutical-grade HFCs. Unlike other applications, where EPA has discussed the diverse number of chemical suppliers for HFC-134a globally, in this instance the options are constrained. As components of drug products, the use of HFCs in MDIs are subject to certain FDA requirements. FDA's Current Good Manufacturing Practice (CGMP) requirements under the statute (21 U.S.C. 351(a)) apply to drugs, including their components (21 U.S.C. 321(g)(1)), and include requirements related to methods, facilities, controls, manufacturing, processing, packing, and holding to assure that drugs meet requirements for safety, identity, strength, and quality and purity. FDA has also promulgated CGMP regulations for finished pharmaceuticals in 21 CFR 210 and 211. These CGMP regulations also contain requirements for manufacturers in their handling, control, storage, and testing of components used in manufacture of drug products. HFC purification occurs in dedicated facilities that are subject to FDA CGMP requirements for drugs and devices, as well as other international quality standards, as MDI manufacturers may serve markets in addition to that of the United States. If an MDI manufacturer wanted to change their supplier of pharmaceutical grade HFC, this would trigger FDA review. MDI manufacturers who change suppliers of pharmaceutical grade HFCs would need to provide data to ensure the safety and quality of the new propellant and submit the data to the FDA for review and approval. This data may include pharmacology/toxicology data, product quality data of the new propellant source, and a comparison of the current and proposed new propellant sources, and quality data that demonstrates the drug made with the new propellant meets all applicable quality requirements. Depending upon the comparability of the HFA sources, additional data may be requested by the FDA (21 CFR 314.70). There are three suppliers of pharmaceutical-grade HFC-227ea for use in the United States. One of the suppliers is a producer that purifies the technical grade HFC-227ea at one of their facilities in the United States. The second produces and purifies the pharmaceutical-grade HFC-227ea at their facility in Germany, which is then imported by that producer for distribution to domestic MDI manufacturers. The third supplies pharmaceutical-grade HFC-227ea to the United States from their facility in the United Kingdom. At least two of these facilities also supply pharmaceutical-grade HFC-227ea globally for MDI manufacture. Producers of pharmaceutical-grade HFC-227ea must also comply with FDA requirements as described above, which limits their ability to switch to other suppliers of HFC-227ea. 3. What is EPA proposing regarding eligibility for application-specific allowances? EPA is proposing to renew the eligibility of entities using regulated substances for propellants in MDIs to receive ASAs for the five-year period of calendar years 2026 through 2030. EPA is proposing to determine “that the requirements described in subclauses (I) and (II) of clause (i) are met” in accordance with the requirements of 42 U.S.C. 7675(e)(4)(B)(v)(II). Specifically, for the reasons outlined earlier in this section, EPA is proposing to determine that no safe or technically achievable substitute will be available for propellants in MDIs and that supply of the regulated substance that manufacturers and users are capable of securing from chemical manufacturers is insufficient to accommodate propellants in MDIs through calendar year 2030. EPA is proposing to determine that the supply of both HFC-134a and HFC-227ea is insufficient to accommodate the propellants in MDIs application. C. Defense Sprays Per subsection (e)(4)(B)(iv)(I)(bb) of the AIM Act, EPA has been allocating ASAs for defense sprays since 2021. EPA defined a “defense spray” as “an aerosol-based spray used for self-defense, including pepper spray and animal sprays, and containing the irritant capsaicin and related capsaicinoids (derived from oleoresin capsicum), an emulsifier, and an aerosol propellant,” (40 CFR 84.3). Within this application, there are four primary uses: bear sprays, dog sprays, personal defense sprays, and law enforcement sprays. The defense sprays chapter in the TSD contains more details on these product categories. HFC-134a is the primary propellant currently used for the majority of defense sprays and is the only HFC for which EPA has allocated allowances since 2022. After analyzing information relevant to the statutory criteria, as outlined in this section and the TSD, EPA is proposing two options—to not renew the eligibility for entities in this application to receive ASAs or to renew for two years. EPA is also taking comment on the possibility of renewing for a full five-year period. 1. Availability of Safe and Technically Achievable Substitutes There has already been commercialization of alternatives to HFC-134a as a propellant in some defense spray uses, and transition is underway for other parts of the application. Thus, while many defense sprays currently use HFC-134a as a propellant, EPA is aware of entities that have already successfully commercialized alternative propellants, including non-HFCs, in some of their products. The availability of safe and technically achievable substitutes for this application will continue to expand, and EPA will take any additional information into account in the final rulemaking. All dog defense sprays commercialized in the United States and registered with EPA under FIFRA use a non-HFC propellant and have never used an HFC propellant; from company communications, EPA is aware that at least three dog sprays utilize compressed nitrogen gas. In addition, EPA is aware from company communications that two bear sprays using propellants other than HFC-134a are available domestically, one using a non-HFC, HFO-1234ze(E), and one utilizing a lower-GWP HFC, HFC-152a. Both products have been available for multiple years. In addition, there is one bear spray that is manufactured domestically, but sold into the Canadian market, that also utilizes HFO-1234ze(E). EPA is also aware of at least one defense spray used on humans available in other countries, but manufactured in the United States, that uses HFO-1234ze(E). The commercialization of defense sprays with alternative propellants suggests that there are safe and technically achievable substitutes to HFC-134a available within this application, but it is not clear that they are immediately available for the entire application. In other words, there are multiple different uses within this application, and many of the uses have similar technical requirements ( e.g., large spray volume and distance) and safety considerations ( e.g., flammability). Thus, EPA's assessment is that while there are certain differences amongst the uses, generally a propellant commercialized for one use should be safe and technically achievable for another use as explained in more detail below. It is EPA's understanding that defense sprays have industry-set technical requirements that differentiate them from other aerosols, but that outside of FIFRA requirements for bear sprays, 12 defense sprays do not need to be certified or comply with Federal regulatory standards to be sold in the United States. EPA is aware of some voluntary standards for law enforcement sprays, explained in more detail in the defense sprays chapter of the TSD, that specify performance requirements and test methods for the evaluation of these sprays. EPA's understanding is that defense sprays do not need to be certified under this standard to be sold into the law enforcement market. 12 Defense sprays used to deter bears, dogs, and other animals are considered pesticides under FIFRA, so must comply with related requirements, including approval for the inert ingredients ( e.g., the propellant) used in the product. In addition to HFC-134a, both HFC-152a and HFO-1234ze(E) are approved for use as inert ingredients for non-food pesticidal use ( e.g., animal sprays). Transitioning a product to another approved propellant is a relatively simple process that only requires submission of product performance data ( i.e., no tests related to safety, impacts on human health, etc.), and approval can occur in five to seven months. This action would be a Pesticide Registration Improvement Act B680 or B681. See https://www.epa.gov/pria-fees/pria-fee-category-table-biopesticides-and-pollution-prevention-division-bppd-amendments for more information. While some entities have successfully commercialized alternative propellants, there are steps other entities will need to undertake in order to use these alternatives, such as their own research and development process, approval under FIFRA for bear sprays, and potentially changes to manufacturing facilities. For example, EPA is aware of at least two defense spray manufacturers that had made significant investments to potentially transition to a non-HFC as a propellant that did not pursue the transition due to performance concerns. 13 The multiple defense spray products commercialized using alternative propellants suggests that past challenges can be overcome, though EPA acknowledges that commercialization of alternative propellants across this entire application may take a few years. 13 Written testimony submitted for the record from Safariland and Security Equipment Corporation for the U.S. Senate Committee on Environment and Public Works hearing on the AIM Act. https://www.epw.senate.gov/public/index.cfm/2020/3/s-2754-american-innovation-and-manufacturing-act-of-2019-written-testimony-and-questions-for-the-record . Outside of what has already been commercialized by some defense spray companies, EPA is not aware of any other substances under consideration as safe and technically achievable substitutes for this application. Multiple propellants, including HFC-152a, HFO-1234ze(E), and hydrocarbons, have been listed as acceptable under SNAP and identified as technically and economically feasible alternatives for propellants in aerosols by the TEAP's MCTOC. However, there are additional technical demands in the defense spray application that provide unique challenges as compared to other types of aerosol applications. For example, given their use for personal protection and crowd control, defense sprays need to have a larger spray cloud and longer spray distance, and stakeholders have noted that law enforcement's use of defense sprays alongside stun guns ( e.g., Tasers) poses specific concerns around flammability. Therefore, alternatives identified as acceptable for aerosols, such as hydrocarbons, may not be available for all defense spray uses. SNAP lists substitutes for aerosols at the end use level, not the application level ( e.g., the Agency has listed substitutes for aerosol propellants, which would allow for those substitutes in defense sprays), and TEAP's MCTOC has not specifically discussed or evaluated defense sprays as an individual use. More information about the specialized nature of defense sprays can be found in the defense sprays chapter of the TSD. To inform determinations in this rulemaking, EPA invites comment on whether the alternatives commercialized for some defense spray uses are not available for the entire application, including any supporting data and information; EPA is particularly interested in data regarding flammability of alternative propellants at the concentrations found in defense sprays and testing results demonstrating safety risks in the situations where defense sprays are typically utilized. 2. Supply The majority of defense sprays currently use HFC-134a as their propellant. HFC-134a is the most widely produced HFC globally and is produced in substantial quantities in multiple countries, including the United States. In 2022, domestic production of HFC-134a was 61,377 metric tons (MT), making up 46 percent of U.S. HFC production on a mass basis; this production amount is also nearly double the domestic production amount of the HFC produced in the second highest quantity. EPA is aware that one domestic producer of HFC-134a is transitioning its facility to produce a different chemical. 14 In addition, there are multiple entities that import HFC-134a. In 2022, 7,363.1 MT of HFC-134a were imported into the United States. Overall, HFC-134a made up approximately 32 percent of total U.S. HFC consumption 15 in 2022 on a mass basis. This application has very limited demand for HFC-134a in comparison to U.S. consumption of HFC-134a; allocated ASAs for this application in 2024 are equivalent to 0.1 percent of calculated domestic consumption of HFC-134a in 2022, on a metric tons of exchange value equivalent (MTEVe) basis. In addition, at the end of 2022, suppliers held 51,902.9 MT of HFC-134a in domestic inventory, which is equivalent to about 101 percent of calculated consumption of HFC-134a in 2022, and 1,036.8 MT of HFC-134a was reclaimed; the entities both holding this material in inventory and reclaiming these HFCs are broader than EPA's interpretation of chemical manufacturers (see Section IV.B for more information), so not all of this HFC-134a may be considered available supply. 14 See https://www.arkema.com/usa/en/media/news/global/corporate/2022/20221006-two-major-steps-develop-supply-forane-1233zd/. 15 Consumption = (Total Production + Production for Feedstock + Imports [Virgin and Used])−(Exports [Virgin and Used] + Destruction). However, as described in more detail in Section V.A of this preamble, the overall market for HFCs and for HFC-134a in particular is likely to continue changing in light of the AIM Act and other restrictions. There is uncertainty regarding how the market is reacting to the stepdown of the level of permissible production and consumption of HFCs that took effect on January 1, 2024, and EPA anticipates further market changes as a result of the stepdown taking effect on January 1, 2029. However, global production capacity is expected to remain substantial over the coming years, given production will continue in countries on later HFC phasedown schedules, and EPA expects continued domestic and global demand for HFC-134a. EPA will analyze any available information on market adjustment to the January 1, 2024, stepdown and regulations effective January 1, 2025, in finalizing this rulemaking. In considering supply of the regulated substance currently used by this application, EPA also notes that the Agency is unaware of any reason why this application cannot use recovered and reprocessed HFCs. For example, EPA is not aware of any specific purity requirements for HFCs used in this application. As a result, the supply of recovered and reprocessed HFCs that can be secured from chemical manufacturers is relevant when assessing whether the supply of HFC-134a is insufficient to accommodate this application. The likeliest source of these reprocessed HFCs for defense sprays would be reclaimed refrigerants, which must meet specific purity requirements. 16 Since there are no Federal purity requirements or industry purity standards for HFCs used in aerosols, the purity of reclaimed HFCs is likely the same or higher than the virgin HFCs used in this application. The supply of reclaimed HFC-134a in the United States is substantial and increases the supply of HFC-134a available to this application. However, as is true in many other parts of EPA's supply analysis, there is uncertainty regarding the overall supply and demand for reclaimed HFCs. 16 In alignment with the definition in 42 U.S.C. 7675(b)(9), EPA defined reclaim as “the reprocessing of regulated substances to all of the specifications in appendix A to 40 CFR part 82, subpart F (based on Air-Conditioning, Heating, and Refrigeration Institute (AHRI) Standard 700-2016) that are applicable to that regulated substance and to verify that the regulated substance meets these specifications using the analytical methodology prescribed in section 5 of appendix A to 40 CFR part 82, subpart F” (40 CFR 84.3). Thus, HFC-134a refrigerant that is reclaimed and used by a different user than the one recovering the refrigerant must meet the purity requirements of AHRI 700, Standard for Specifications for Refrigerants. That standard, among other things, requires that reclaimed HFC-134a must be visibly clean (that is, no visible solids or particulate), no more than 1.5 percent by volume of air in the vapor phase, no more than 10 parts per million of water by weight, and no more than 0.5 percent by weight of other volatile impurities. There is additional uncertainty around the supply and demand for HFC-134a as a result of the 2023 Technology Transitions Rule (88 FR 73098, October 24, 2023). GWP restrictions under the 2023 Technology Transitions Rule begin taking effect January 1, 2025, with the latest restriction taking effect on January 1, 2028. Overall demand for HFC-134a could fall since all subsectors subject to Technology Transitions restrictions will not be permitted to use neat HFC-134a, as its GWP of 1,430 is greater than the highest GWP limit ( i.e., 700). However, many subsectors subject to Technology Transition restrictions already use chemicals that fall below the GWP restriction levels, and where this is the case EPA does not anticipate any change in demand of HFC-134a. Additionally, some sectors may use blends with HFC-134a as a component where the GWP is below the applicable limit. Moreover, HFC-134a will likely continue to be used in other applications not subject to these restrictions ( e.g., heavy-duty trucks), as well as for servicing existing equipment ( e.g., light-duty motor vehicle air conditioning). HFC suppliers may also shift their production and import practices, such that supply of HFC-134a changes. EPA intends to review available information on market shifts that occur when the first set of Technology Transition restrictions take effect on January 1, 2025, and where possible will incorporate any relevant information into the analysis underpinning finalization of this rulemaking. Based on this additional information, at finalization of this proposed rule, EPA may be in a position to determine that the supply of HFC-134a is not insufficient to accommodate this application once all of the Technology Transition restrictions take effect as of January 1, 2028, if not earlier ( i.e., as early as January 1, 2026). EPA also intends to finalize a rulemaking under subsection (h) of the AIM Act, the Emissions Reduction and Reclamation Rule (88 FR 72216, October 19, 2023), in the summer of 2024. EPA proposed a number of requirements including those concerning use of reclaimed HFCs for certain activities. In addition, EPA intends to finalize a rulemaking, “ Trichloroethylene (TCE); Regulation Under the Toxic Substances Control Act (TSCA) ” (88 FR 74712, October 31, 2023), later this year; this rulemaking has proposed to ban the use of TCE due to unreasonable risk of injury to human health. If finalized as proposed, this would prohibit TCE from being used as a feedstock to manufacture HFC-134a within eight and a half years from when that rule is finalized. While this could end the production of HFC-134a in the United States, 17 it is unclear how this change would affect overall supply of HFC-134a, as there is currently still global supply of HFC-134a that could be imported into the United States. EPA anticipates being able to consider the projected effects of these other rules prior to finalizing this rulemaking. 17 Though there are other pathways to produce HFC-134a, the pathway using TCE is the primary production pathway in the United States, and it is EPA's understanding that it is complex to change production pathways. Entities do not need to seek or receive ASAs in order to use HFC-134a in defense sprays. Further, entities do not have to expend an allowance to purchase HFC-134a from another entity that has imported or produced the regulated substance. EPA notes that of the six defense spray entities that have received ASAs at some point for calendar years 2022, 2023, and 2024, three did not receive ASAs in at least one of those years. EPA is also aware of at least two entities selling bear sprays that use HFC-134a that have never applied for, and therefore never received, ASAs. This suggests that at least those two entities were able to acquire HFC-134a on the open market without having ASAs. These facts could suggest that ASAs may not be imperative for entities in this application to access HFC-134a. In sum, HFC-134a is currently more widely available than other HFCs, and defense sprays' need for HFC-134a is small compared to the overall demand for HFC-134a across a range of sectors. At the same time, there is inherent uncertainty in the HFC market due to future stepdowns and new regulations coming into effect. Further information regarding EPA's assessment of the supply of HFC-134a related to the needs of the defense sprays application can be found in the defense sprays chapter of the TSD. EPA is also considering the supply of HFC-152a, as it is used in at least one defense spray product, as noted above. HFC-152a is produced in substantial quantities, though the current domestic production of HFC-152a is about half that of HFC-134a, on a mass basis. 18 In 2022, domestic production of HFC-152a was 29,654.9 MT, about 22 percent of U.S. HFC production by mass. There is currently only one U.S. HFC-152a production facility, and that producer has announced plans to increase production by approximately 20 percent by mid-2024. 19 At the time of this proposal, the facility expansion is not yet complete, so EPA cannot say with certainty when it will be available. However, there is also substantial global production of HFC-152a, which also supplies the U.S. market. Multiple entities imported HFC-152a in 2022, importing a total of 5,810.1 MT. Overall, HFC-152a made up approximately 20 percent of total U.S. HFC consumption in 2022 on a mass basis. In addition, at the end of 2022, suppliers held 5,076.3 MT of HFC-152a in domestic inventory, which is equivalent to about 16 percent of calculated consumption of HFC-152a in 2022. The company that has commercialized the bear spray using HFC-152a has never received allowances for HFC-152a, which suggests that at least this entity is able to acquire HFC-152a on the open market without having ASAs. 18 See https://www.epa.gov/climate-hfcs-reduction/hfc-data-hub/expanded-hfc-data. 19 See https://www.chemours.com/en/news-media-center/all-news/press-releases/2023/chemours-announces-capacity-increase-of-hfc-152a-providing-reliable-domestic-supply-of-low-global-wa. In addition, HFC-152a has one of the lowest EVs relative to other regulated HFCs, so fewer allowances are needed to import or produce HFC-152a in comparison to the same volume of higher-EV HFCs. For example, an importer would need to expend 143 consumption allowances to import 100 kg of HFC-134a compared to 12.4 allowances to import 100 kg of HFC-152a—a greater than 90% reduction. This means that, from a strictly allowance-focused view, HFC-152a will be easier to acquire than most other HFCs as the phasedown progresses and the number of HFC allowances is reduced. Allowances allocated to an end user may therefore not be necessary to secure production or import of HFC-152a. Future projections suggest that there could be increased demand for HFC-152a, although there is inherent uncertainty with how industry will respond to the phasedown of HFCs at this early stage. HFC-152a has a GWP that is below all the GWP limits for sectors and subsectors subject to the 2023 Technology Transitions Rule (88 FR 73098, October 24, 2023). The 2023 Technology Transitions Rule identified HFC-152a as an available or potentially available substitute for all 13 foam subsectors, aerosol propellants, motor vehicle air conditioning, and household refrigerators and freezers. 20 However, there are also multiple other acceptable alternatives, including non-HFCs, and, for subsectors where a transition to another substitute has already occurred ( e.g., motor vehicle air conditioning, household refrigerators and freezers), it is highly unlikely that a new transition to HFC-152a would be considered. For subsectors where HFC-152a neat or in blends is likely under consideration, it is not yet known if there will be any significant shift toward use of HFC-152a, particularly as many relevant subsectors have begun to move out of HFCs entirely. For example, the MCTOC 2022 Assessment report notes that a significant proportion of aerosols already use non-HFCs as propellants. Similarly, the FTOC 2022 Assessment Report highlights that fluorocarbon use in foams has been falling for decades, and foams are largely expected to continue transitioning to non-HFCs, including hydrocarbons, HFOs, and hydrochlorofluoroolefins (HCFOs). Demand for HFC-152a may therefore change in future years as subsectors transition to alternatives from their currently used HFC. 20 See 2023 Technology Transitions Rule (88 FR 73098, October 24, 2023) TSD “American Innovation and Manufacturing Act of 2020—Subsection (i)(4) Factors for Determination: List of Substitutes.” This list is not exhaustive, so it is possible HFC-152a is an available alternative for other subsectors. In addition, EPA did not identify information for products or equipment containing certain substitutes, which may indicate a lack of current commercial demands for the substitutes in those products or equipment. However, this did not automatically remove those substitutes from the list of available substitutes, as commercial demands is only one subfactor that needed to be considered under subsection (i)(4)(B). In sum, while there is a reasonably large supply of HFC-152a that is expected to increase over the coming years relative to other HFCs, there is uncertainty around future demand for the reasons described above. 3. What is EPA proposing regarding eligibility for application-specific allowances? Given the rapidly changing landscape for HFC supply and EPA's assessment of substitute availability application-wide, EPA is proposing two options based on our current analysis and in anticipation of additional available information before this proposed rule is finalized. Specifically, EPA is proposing to finalize one of the following outcomes: (1) No renewal, such that the application will not receive ASAs or (2) Renew eligibility for ASAs for two years, such that ASAs are available for calendar years 2026 and 2027. 21 EPA is also seeking comment on renewing eligibility for the full five-year period. 21 The proposed amendatory text included in this Federal Register notice shows only one of the co-proposed options. This is for illustrative purposes and should not be read as EPA favoring one co-proposal over another. As explained earlier in this proposal, an application must meet both criteria to be eligible to receive ASAs. For the reasons described earlier in this section, EPA is proposing to determine that there is not a safe and technically achievable substitute that is immediately available for the entire application, but a safe or technically achievable substitute will be available for the entirety of the defense spray application by January 1, 2028. In other words, EPA proposes to determine that the criterion in subsection (e)(4)(B)(i)(I) is not met for defense sprays starting January 1, 2028. Under this proposed determination, even if EPA received information to determine that supply of the currently used regulated substance was insufficient, defense sprays would not be eligible for renewal as of January 1, 2028, unless they have insufficient supply of a substitute HFC, as discussed in more detail below. EPA is also proposing to determine that either (1) the supply of HFC-134a is not insufficient to accommodate this application; or (2) the supply of HFC-134a will not be insufficient to accommodate this application as of January 1, 2028. In other words, EPA proposes to determine that the criterion in subsection (e)(4)(B)(i)(I) is either: (1) not met at all for this application for HFC-134a, and therefore the application would not be eligible to receive ASAs starting January 1, 2026; or (2) not met as of January 1, 2028, and therefore the application would not be eligible to receive ASAs starting January 1, 2028. Under the first option, this means that even if the application does not have a safe or technically achievable substitute available, ASAs would not be available for defense spray manufacturers as of January 1, 2026. For the second option, defense sprays would not be an eligible application for ASAs as of January 1, 2028, regardless of the availability of substitutes. EPA does not have sufficient information to make a definitive determination on whether supply of HFC-152a is insufficient to accommodate this application at the time of this proposal. We are monitoring this issue and will be seeking information on the alternatives that subsectors subject to Technology Transitions restrictions transition into and how much additional domestic production capacity of HFC-152a comes online in the coming year. EPA is also taking comment on whether defense sprays should be eligible to receive ASAs for the full five-year period from 2026-2030. A full five-year renewal could be without restriction or could be based on and tailored only to the application's need to purchase HFC-152a. As explained earlier, HFC-152a is used commercially in one bear spray product, so this latter scenario could be relevant if HFC-152a is an available safe and technologically achievable substitute for the entire defense spray application by 2028. Under this scenario, EPA would follow an approach similar to the option proposed for SCPPU foams for marine and trailer uses in Section V.D.3. EPA intends to review comments and other relevant information received on this proposal to further understand how the market surrounding this application evolves and the availability of substitutes application-wide before EPA finalizes this proposed rule. Specifically, we intend to review additional information on how the HFC market adjusts to the 2024 stepdown, defense sprays' research into alternative propellants and related trials (including relevant data on flammability), what alternatives consumer aerosols transition to (as they are subject to the Technology Transitions restrictions starting in 2025), and research into alternative propellants intended to be used in technical aerosols (which are subject to the Technology Transitions restrictions starting in 2028). EPA invites submission of comment and additional data related to these data gaps. EPA will consider this new information, in addition to public comments, in making a final determination for this application. 4. Proposed Restriction Under EPA's Technology Transitions Program The 2023 Technology Transitions Rule (88 FR 73098, October 24, 2023) restricts the manufacture and import of all aerosol products that use HFCs or HFC blends that have a GWP greater than 150. This restriction begins January 1, 2025, for all aerosols except for those specifically listed in the final rule as technical aerosols, which have manufacture and import restrictions starting January 1, 2028. The listed technical aerosols are applications for which EPA received sufficient information through the comment period or through EPA's own analysis indicating that additional time is needed to transition to substitutes due to various technical requirements, such as non-flammability and/or a specific vapor pressure. The list of technical aerosols does not include defense sprays. The 2023 Technology Transitions Rule exempts applications that receive ASAs (40 CFR 84.56(a)(2)). However, as finalized in the October 24, 2023, rule, if an application no longer qualifies for ASAs, the Technology Transitions restrictions then apply. While most aerosols are required under the Technology Transitions Program to meet a 150 GWP limit starting on January 1, 2025, the EPA provided additional time to comply with this limit for some technical aerosol uses. Most of the U.S. aerosol industry subject to the January 1, 2025, compliance date has already transitioned to using propellants that meet the 150 GWP limit, 22 and therefore has available substitutes for use based on EPA's consideration of the factors listed in subsection (i)(4)(B) ( e.g., technological achievability, commercial demands, safety, consumer costs, etc.). By contrast, the uses that received an extension for compliance with the 150 GWP limit until January 1, 2028, 40 CFR 84.54(a)(16)(i)(A)-(O), currently use HFC-134a (most often as a propellant) and have limitations that require additional time “to reformulate, test, and transition” to ensure availability of substitutes under subsection (i)(4)(B) for these technical uses. 22 See Household and Commercial Products Association (HCPA) and National Aerosols Association (NAA) Technology Transitions Petition to EPA dated July 6, 2021. Available in the public docket at EPA-HQ-OAR-2021-0289-0037. EPA is proposing that defense sprays would be considered under the Technology Transitions Program consistent with technical aerosols, with [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2024-20602. Public record. Not legal advice.