On November 9, 2015, the US Environmental Protection Agency (EPA) announced a proposed rule that would overhaul the way industrial process refrigeration, commercial refrigeration, and comfort cooling equipment is maintained, serviced, and repaired (Proposed Rule).1

Perhaps the most notable aspect of the Proposed Rule is that it seeks to extend existing requirements for ozone-depleting substances (ODSs) to their non-ODS substitutes in part to reduce emissions of greenhouse gases (GHG). The Proposed Rule is the latest in EPA's recent series of rulemakings designed to reduce emissions of hydrofluorocarbons (HFCs) in response to President Obama's June 2013 Climate Action Plan and specifically one of the Plan's goals of reducing HFC emissions.2

This advisory summarizes some of the key elements of the November 9, 2015, Proposed Rule and focuses on requirements that apply to industrial process and commercial refrigeration systems. Comments to the Proposed Rule are due by January 8, 2016.

I.         Background

Congress initially called for the regulation of ODS as part of Title VI of the Clean Air Act (CAA) Amendments of 1990. Title VI, entitled Stratospheric Ozone Protection, was intended to establish a nationwide program that would help eliminate the threat to the earth's protective high-level ozone layer by reducing use and release of ODSs, primarily chlorofluorocarbons (CFCs), and hydrochlorofluorocarbons (HCFCs). Title VI includes Section 608 of the CAA, which: (1) requires EPA to promulgate "regulations establishing standards and requirements regarding the use and disposal of" certain ODSs; and (2) makes it "unlawful for any person, in the course of maintaining, servicing, repairing, or disposing of an appliance or industrial process refrigeration, to knowingly vent or otherwise knowingly release or dispose of" certain ODS or certain non-ODS substitutes (i.e., the no venting prohibition).3

In setting forth its legal authority for the Proposed Rule, EPA relies primarily on CAA Section 608. The original EPA rule on this subject (often referred to as the "no-venting rule") was published on May 14, 1993 (58 CFR. 28660), and is codified at 40 CFR Part 82, Subpart F.

II.      Overview of the Proposed Rule

The Proposed Rule and EPA's preamble spans one hundred pages of the Federal Register and we do not attempt here to summarize all of them. Instead, we focus on the following five more significant proposed changes to existing refrigerant management requirements:

  1. Extending the existing venting prohibition and sales restrictions beyond ODS and to a broad class of non-exempt substitutes that have replaced ODCs as refrigerants, such as HFCs, perfluorocarbons (PFCs), and hydrofluoroolefins (HFOs);
  2. Adding new leak detection and monitoring requirements;
  3. Reducing the leak rates that trigger the regulatory requirement to repair, retrofit, or retire equipment;
  4. Establishing a two-year back-stop on the maximum allowable amount of leaks from repaired systems; and
  5. Introducing a new requirement to address all leaks identified during system inspections.

Each of these key provisions is briefly summarized below.

A.           Extending Title VI to Non-Ozone Depleting Substitute Refrigerants

EPA proposes to update the existing requirements in 40 CFR Part 82 that apply to ODSs and extend these revised requirements to non-ozone-depleting substitute refrigerants including, but not limited to, HFCs, PFCs, and HFOs. EPA is taking this action to comply with CAA Section 608(c)(2)'s requirement that the no-venting prohibition cover non-ODS substitutes.

However, EPA's additional motivation in extending this prohibition is to reduce GHG emissions. HFC-134a, for example, is a non-ODS substitute, but EPA estimates that it traps 1,430 times "as much heat per kilogram as carbon dioxide does over 100 years."4 EPA estimates that the Proposed Rule's extension of these Title VI requirements to HFCs would result in the reduction of 3.7 million metric tons of carbon dioxide-equivalent (MMTCO2eq) per year,5 and thereby advances the President's goal of reducing HFC emissions.

Not all ODS substitutes would be covered by the revised rule. The Proposed Rule would have no effect on those substitutes that EPA has already exempted from the mandates of CAA Section 608.6

B.           New Leak Detection Requirements

EPA has proposed "annual or quarterly leak inspections as a proactive maintenance practice depending on the type and size of the appliance:" (1) quarterly leak inspections for commercial refrigeration appliances or industrial process refrigeration equipment normally containing 500 or more pounds of refrigerant; (2) annual inspections for such equipment containing 50 pounds or more, but less than 500 pounds, of refrigerant; and (3) annual inspections for comfort cooling appliances and other appliances normally containing 50 or more pounds of refrigerant.7

The Proposed Rule would allow owners and operators to forgo these periodic inspections, if they install and operate a continuous and automatic leak detection system that meets certain requirements, including that the system is audited and calibrated annually and records of these activities are maintained.8 EPA is also soliciting comments on additional requirements for such automatic detection systems, such as whether to require more frequent calibration and whether to mandate such systems for appliances with a full change of 2,000 pounds or more of refrigerant.9

C.           Introducing Lower Trigger Rates

Under EPA's existing leak repair rule, it is not a violation for a system to leak refrigerant. The violation occurs when an owner or operator of a system containing more than 50 pounds of ODS either fails to properly calculate and document the leakage rate or identifies a leak rate over an applicable regulatory threshold and fails to act in a timely manner.10 In most instances, owners have 30 days - or 120 days if an industrial process shutdown would be required - after exceeding the leak rate threshold to repair, retrofit, or retire refrigeration and air-conditioning equipment.

The Proposed Rule would: (1) lower the threshold for industrial process refrigeration and commercial refrigeration from 35% to 20%; and (2) lower the threshold for comfort cooling equipment from 20% to 10%.11 The Proposed Rule also proposes to extend the mandatory initial and follow-up verification tests for industrial process refrigeration to comfort cooling and commercial appliances.12

D.           The New Two-Year Limit For Attempted Repairs

In addition to lowering the trigger thresholds, EPA proposes a new two-year limit on chronically leaking systems.13 Specifically, EPA has proposed that, if a system containing 50 pounds or more of refrigerant leaks more than 75% of its full charge in any two consecutive 12-month periods, then the owner must retire that equipment. The 75% amount appears to stem from data collected by the California Air Resources Board which demonstrated that, in 2013, approximately 8% of reporting appliances leaked more than 75% of their full charge and were responsible for 38% of refrigerant emissions.14 EPA has requested comments on "whether it should finalize a higher or lower two-year leak limit."15

E.           New Requirement to Fix All Leaks

In a further attempt to reduce emissions from leaks, the Proposed Rule would also require the owner or operator, once the applicable leak rate threshold is exceeded, to (1) conduct a leak inspection test; and (2) repair all identified leaks and not just those leaks that are sufficient to bring the system back under the threshold.16 The leak inspections include "using a calibrated refrigerant leak detection device, a bubble test, or visual inspection for oil residue,"17 but do not need to be conducted by certified technicians and would not require "evacuating or shutting down the appliance."18 EPA is also soliciting comments on potential variations on this requirement, including whether to exempt from the repair obligation certain leaks that are "not the result of a faulty component or connection and . . . would not be reduced from repair or adjustment."19

III.      Timing

January 8, 2016, is the deadline to submit comments on the Proposed Rule. EPA's online docket is available at www.regulations.gov under the Docket ID Number EPA-HQ-OAR-2015-0453 and already includes over forty documents supporting the Proposed Rule.

For most of the requirements summarized in this Advisory, EPA has proposed a delayed compliance date of 18 months after its publication of a final rule, but has requested comments on whether to change this timeframe to sometime between 6 months and 2.5 years.20 EPA is proposing an aspirational effective date for its final rule of January 1, 2017, and so the requirements summarized here may not begin to apply until June 1, 2018, assuming EPA meets its aspirational deadline and does not change the 18 month delayed compliance date.

IV.      Conclusion

Owners and operators of commercial refrigeration appliances, industrial process refrigeration equipment, and comfort cooling appliances are the latest front in EPA's comprehensive plan for reducing GHG emissions and must start to evaluate their compliance options under the Proposed Rule, especially the feasibility of meeting the new requirements designed to curb refrigerant leaks.