Refrigerant Rule Revisions: Is Your Facility Prepared?



Recent amendments to the Montreal Protocol and EPA refrigerant management regulations will significantly impact refrigerant compliance and maintenance programs at petroleum refineries and other industrial facilities. The revised Protocol, which is likely to go into effect in 2019, expands its focus from strictly stratospheric ozone depleting substances (ODSs) to refrigerants that are greenhouse gases (GHGs). This is driven through a phase down schedule for production of hydrofluorocarbons (HFCs) such as R-134a and R-410A, which are some of the most commonly used refrigerants across the U.S. The EPA has already moved forward with initial changes to their regulations by disapproving the use of certain HFCs in specific end-uses and overhauling the refrigerant management regulations within Title 40 Code of Federal Regulations, Part 82 (40 CFR 82), Subpart F. The revised Subpart F provisions contain numerous substantial updates, including extending the requirements to cover substitute refrigerants that do not contain ODS modifying appliance disposal requirements, lowering the leak rate thresholds that trigger repair requirements, adding leak inspection or monitoring requirements, adding numerous recordkeeping requirements, as well as several other updates with phased in compliance deadlines of January 1, 2017, 2018, and 2019.

With the large number of environmental regulations that impact petroleum refineries and other industrial facilities, the rules that govern the use of refrigerants and other ODSs are often overlooked by site environmental compliance staff. With recent changes to the ODS regulatory landscape, however, industrial facilities, more than ever, need to fully understand their exposure to expected significant increases in refrigerant costs as well as how the rule revisions will impact the procedures and work practices used at to manage refrigerants and refrigerant-containing appliances.

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Impacts of Changes to Refrigerant Phase Out Schedules

Introduction

The Montreal Protocol, which is widely viewed as the most successful international treaty in history, sets forth phase out schedules for production and importation of ODSs containing chlorine and bromine. These phase out schedules were adopted into the Clean Air Act as part of the 1990 Clean Air Act Amendments, which then authorized the EPA to develop implementing regulations that reside in 40 CFR 82. The Protocol and the EPA both have used a "worst first" approach that initially phased out production of specific ODS chemicals that posed the largest threat to the stratospheric ozone layer as defined by their scope of use and ozone depletion potential (ODP). For example, production of first generation chlorofluorocarbons (CFCs) such as R-11 and R-12, which have the highest ODPs and were the most widely used refrigerants prior to 1990, was completely phased out by 1996.

Initially, the most common refrigerants approved by EPA under its Significant New Alternatives Policy (SNAP) program as substitutes for CFCs were second generation hydrochlorofluorocarbons (HCFCs) such as R-22, which have a much lower, but non-zero ODP. The phase out of HCFCs was not initiated until 2004 with a relatively modest 35 percent phase down level, but has accelerated rapidly with the 90 percent phase down level achieved in 2015 and almost total phase out starting in 2020.

While CFCs and HCFCs can continue to be used in existing appliances even after total production phase out, their availability within the marketplace is limited to existing stockpiles and materials that are recovered and reclaimed for reuse. Accordingly, the prices of these first and second generation refrigerants has risen dramatically. For example, the price for R-22, the most common HCFC refrigerant in use across the U.S., has risen from approximately $2.33 per pound in 2006 to over $25 per pound in 2017 in many places. And, these prices will further inflate as we approach total phase out of R-22 in 2020.

Historically, the EPA has also approved for use several non-ODS refrigerants under its SNAP program. The most common non-ODS refrigerants being used today are third generation hydrofluorocarbons (HFCs), which do not deplete the ozone layer, but are potent GHGs with very high global warming potentials (GWPs). The most commonly used HFCs within industrial facilities are R-134a, R-410A, and R-407C. But, as described below, just as the installed capacity of HFC based refrigerants has risen at many sites, the HFCs have recently become the new target for future production phase down.

HFCs are the New Phase Down Target

Under former President Barack Obama's Climate Action Plan that was released in mid-2013, curtailment of the production and use of HFCs due to their GWP has been a focus of the U.S. In 2014, President Obama's Administration partnered with the private sector to obtain commitments from HFC producers, appliance manufacturers, and other end-users to avoid 700 million metric tons of carbon dioxide equivalent (CO2e) emissions via reductions in the production and use of HFCs.1 In addition, the former Administration gained widespread support from within the U.S. HFC prodution and appliance manufacturing sectors to amend the Montreal Protocol to implement a global phase down of HFCs.

Consistent with President Obama's plan, the EPA initiated efforts to reduce American reliance on HFCs via the SNAP program disapproval process. SNAP Rules 20 and 21, which were announced in 2015 and 2016, respectively, are a case in point. In each rule, the EPA disapproved of previously approved uses of HFCs in specific refrigeration end-uses starting as early as 2019 specifically due to their GWP and the availability of other so-called next generation refrigerants.2 Common classes of next generation refrigerants that do not deplete the ozone layer and have relatively low GWPs, are hydrocarbons such as propane and isobutane, and hydrofluoroolefins (HFOs) such as R-1234yf.

Then,in October 2016, the Kigali Amendment, which contains a global phase down schedule for the production of HFCs, was approved at the 28th Meeting of the Parties of the Montreal Protocol. If ratified, which is expected by 2019, the U.S. will agree to reduce HFC production as follows relative to a 2011 2013 production baseline:3

  • 2019 - 10 percent reduction
  • 2024 - 40 percent reduction
  • 2029 - 70 percent reduction
  • 2034 - 80 percent reduction
  • 2036 - 85 percent reduction

Although the new administration under President Donald Trump has demonstrated a resistance to moving forward with several Obama-era climate change policies, the Kigali Amendment does have wide ranging support from the U.S. HFC prodution and appliance manufacturing sectors. As such, ratification of the amendment by the U.S. is still expected to occur in the next few years.

Impacts of Impending HCFC Phase Out and Potential HFC Phase Down

Phase out and phase down means reduced refrigerant supply within the marketplace and increased refrigerant prices. This, in turn, means that facilities managers could be faced with unexpected costs for replacement refrigerant and acceleration of appliance obsolescence due to those increased overall costs. In order to fully understand their site's exposure to limited availability and rising prices of refrigerants, facility managers are urged to develop a complete inventory of refrigerant containing appliances that includes their refrigerant charge (pounds of refrigerant), refrigerant type, leak history, and age. Facility managers can then determine how expected refrigerant price increases may impact maintenance budgets in the future. A typical refinery, for example, can have anywhere from several hundred to several thousand pounds of installed R-22 cooling capacity. Most of the appliances are standard heating, ventilation, and air conditioning/refrigeration (HVAC/R) units use to cool buildings, office areas, or cafeteria equipment, while those on the high end of the scale are typically reserved for refineries that have large process chillers that use R-22 for light ends recovery in process units like catalytic reformers.

For sites that still operate a considerable number of HCFC appliances, there is no time to delay looking at retrofits and replacements. As stated above, R-22 costs have already increased by an order of magnitude since 2006. As we approach complete phase out in 2020, these prices are only going to increase further. In fact, given the extremely large amount of installed R-22 capacity across the U.S., price increases in the next few years could be unprecedented. Mr. Ted Atwood, founder and owner of trakref®, a business that assists with the management of HVAC/R assets, estimates that the U.S. consumes over 200 million pounds of R-22 annually and that existing stockpiles of R-22 are currently less than 75 million pounds. In 2018, production of new R-22 will be limited to 9 million pounds and EPA's recent estimates indicate that recovery and reclamation account for less than 10 million pounds annually. As such, new production, existing stockpiles, and recovery/reclamation are estimated to comprise less than 50 percent of the estimated R-22 demand in the U.S. in 2018.

As indicated, a typical industrial facility can have anywhere from several hundred to several thousand pounds of installed R-22 cooling capacity. In certain cases, even at current R-22 prices, the refrigerant within a single large chiller can represent a several hundred thousand dollar investment to replace if it were to leak out unexpectedly. Considering replacements and retrofits for HCFC units, R-22's price escalation, and lack of availability as it continues to be phased out provides valuable insight to facility managers. During the planning of capital expenditures with life expectancies in the 15 to 20 plus year range, now is the time to consider appliances that utilize next generation refrigerants as an alternative to the HFC units most commonly installed today. For these longer-life appliances, the anticipated HFC phase down will affect refrigerant cost and availability for the unit and may potentially result in early replacement.

For sites that have already made a concerted effort to switch from HCFCs to HFCs, they are now faced with the dilemma of potentially having to make a second switch to a next generation refrigerant. However, given that HFC phase down levels are not expected to be significant until the mid-2020s, sites will have some time to adjust their strategies for their installed base. As suggested above, these sites should consider evaluating next generation refrigerants for all new installations so as not to compound the potential HFC issue that will likely arise in the next 7-10 years.

Impacts of Changes to Refrigerant Management Requirements

Introduction

The refrigerant management regulations contained in 40 CFR 82, Subpart F have been in place since the early to mid-1990s. The regulations promote the recovery, recycling, and reclamation of refrigerants through a prohibition on the intentional venting of refrigerants, sales restrictions, technician certification requirements, disposal requirements, and leak repair provisions for large (≥ 50 pound) appliances. On November 11, 2016, EPA significantly revised Subpart F, including extending the requirements to cover substitute refrigerants that do not contain ODS, overhauling the leak repair provisions for large appliances, and requiring more stringent records for appliance disposal.4 Each of these rule revisions, and its potential impact to industrial facilities are described below.

Expansion of Work Practices to Non-Exempt Substitutes

Prior to the 2016 rule revision, the applicability of 40 CFR 82, Subpart F to non-ODS containing refrigerants was limited to the general prohibition to intentionally vent refrigerants to the atmosphere. Specifically, the pre-2016 rule prohibited venting (except in de minimis quantities) of all ODS-containing refrigerants and all substitute refrigerants that were not specifically exempted by rule. The list of substitutes exempt from the venting prohibition has been and continues to be very narrow and does not include common non-ODS refrigerants such as HFCs.

With the 2016 rule, however, all the other provisions of 40 CFR 82, Subpart F will apply to non-exempt substitutes, including HFCs. The revised rule includes varying compliance dates for the applicability to non-exempt substitutes as summarized in Table 1. This expansion of Subpart F to non-ODS refrigerants that have significant GWPs, such as HFCs, also supports the Obama-era goal to reduce release of GHGs to the atmosphere.

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In practice, the leak repair provisions are typically the only portion of the rule that most industrial facilities and their HVAC/R contractors have differentiated between ODS-containing refrigerants and non-ODS substitutes. This is true for sites requiring all HVAC/R technicians to be EPA certified in order to service any type of refrigeration appliance, regardless of refrigerant type. Thus for these sites, the most significant compliance challenge presented by the expansion of applicability to non-ODS refrigerants such as HFCs will be the leak repair provisions, which have been overhauled as a result of this same rule change and as is discussed in detail below.

Overhaul of the Leak Repair Provisions for Large (≥ 50 Pound) Appliances

The most publicized revision that EPA made to the refrigerant management provisions is the overhaul of the leak repair provisions for large appliances. Table 2 contains a summary of the key rule changes for industrial facilities such as petroleum refineries that go into effect on January 1, 2019.5

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Perhaps the most beneficial change to sites in the revised rule is the additional flexibility provided to leaking comfort cooling appliances (CCAs) that cannot be repaired with 30 days. Under the previous rule, CCA owners/operators' only option to extend the repair window beyond 30 days was to mothball (i.e., evacuate and temporarily shutdown) the appliance. As stated in Table 2, the revised rule includes multiple options for owners/operators of CCAs to extend the repair window, including situations where needed parts are unavailable.

For the most part, however, the revised rule raises the compliance challenge that the leak repair provisions pose to industrial facilities. For example, records of service and leak repair events often times do not meet the rather minimal requirements of the existing leak repair rule. So, the expansion of the leak repair recordkeeping requirements in the revised rule is likely to present a significant compliance hurdle for industrial facilities. Adding verification testing to CCAs could also prove to be a challenge for sites with multiple large HVAC/R systems that do not already implement verification testing on all large appliances, which is a common best management practice.

The compliance challenges that industrial facilities face with the revised leak repair provisions are also heightened when you couple the significance of the changes summarized in Table 2 with the fact that the rules will also apply to a much larger inventory of appliances since it expands applicability to large appliances containing non-exempt substitutes such as HFCs. As such, it is highly recommended for facilities to start attempting to comply with the revised rule in 2018 in order to fine tune implementation prior to the January 1, 2019, compliance date.

More Stringent Records Required for Appliance Disposal

Historically, appliance disposal recordkeeping requirements have been limited to small (≤ 5 pound) appliances and large (≥ 50 pound) appliances. With the 2016 rule revision, explicit records are now required for disposal of medium (> 5 pound and < 50 pound) appliances starting January 1, 2018. Specifically, 40 CFR 82.156(a)(3) requires technicians to maintain the following records for disposal of medium appliances:

  • Company name,
  • Location of the appliance,
  • Date of recovery,
  • Type of refrigerant recovered for each appliance, and
  • The quantity of refrigerant, by type, recovered from all disposed appliances in each calendar month.

The last item will likely be the most challenging recordkeeping requirement for medium appliance disposal given that it will require industrial facilities to summarize the amounts of re-frigerant recovered across multiple in-house technicians each month.

And, if the refrigerant recovered from medium appliances is transferred off-site for reclamation and/or destruction by in-house technicians, the following additional records must be retained by the site:

  • The quantity of refrigerant, by type, transferred for reclamation and/or destruction,
  • The person to whom it was transferred, and
  • The date of transfer

Note, also, that EPA clarified within the preamble to the final rule that owners and operators are only required to maintain the medium appliance disposal records if they directly employ the technician that performed the evacuation and recovery prior to disposal of the appliance. This is in direct contrast with the large appliance disposal records of 82.157(l)(2), which are required to be provided by technicians, but maintained by the owner/operator of the appliance.

EPA also made a nuanced change to the long-standing small (≤ 5 pound) appliance disposal recordkeeping provisions that could present its own compliance challenges. Prior to describing this change, however, we will briefly review the small appliance disposal recordkeeping requirements that have been in place since the mid-1990s. In recognition that small appliances frequently enter the waste stream with their refrigerant charge intact, EPA developed its rules to allow entities that take the final step in the disposal process, which typically are landfills or metal recyclers, to either 1) evacuate refrigerant from small appliances prior to final disposal, or 2) require entities to evacuate refrigerant from small appliances prior to delivery to the final disposer. When choosing the second compliance option, entities are required to A) provide the final disposer with signed statements documenting refrigerant recovery for each appliance or shipment of appliances, or B) agree to contract language with the final disposer that guarantees the entity will evacuate refrigerant from small appliances prior to delivery to the final disposer.

EPA clarified, via guidance, that signed statements required to be provided to the ultimate disposal facility should identify those small appliances for which refrigerant recovery was not possible because the refrigerant leaked out due to system failures, accidents, or other unavoidable occurrences. With the 2016 rule change, EPA has now codified this requirement within 40 CFR 82.155. Note, also, that although the plain language of the revised rule appears to require the leaked-out records to be maintained via the signed statement compliance method (option 2A), EPA has confirmed with this author that this new requirement can be satisfied via amended contract language when opting to use the contract language compliance method (option 2B).

While this rule change does not appear to be significant, it is expected to create the need for technicians and owners/operators to be more diligent when readying small appliances for shipment to final disposers so they can distinguish between appliances for which recovery was performed and those appliances from which refrigerant leaked out due to unavoidable occurrences. As such, it is recommended that industrial facilities review their small appliance disposal practices to ensure technicians and/or contractors have recordkeeping forms that allow them to make this distinction when disposing of small appliances.

Conclusion

Impending phase out and phase down schedules for the production of many of the most common refrigerants used at industrial facilities is expected to have a significant impact on maintenance budgets. The production phase out of the ODS HCFC refrigerant R-22, for example, has already resulted in a tenfold increase in refrigerant cost over the past 10 years. And, as we approach the total production phase out deadline of 2020, R-22 costs are likely to increase even more. The more recent focus on non-ODS HFC refrigerants such as R-134a and R-410A due to their GWP could have a similar effect on their prices starting in the mid-2020s. Industrial facilities are, therefore, urged to analyze their current HCFC and HFC refrigerant-based cooling capacity to gain a thorough understanding of how expected price increases may impact maintenance budgets in the future and to incorporate these factors into capital expenditure decisions in the near term.

Furthermore, EPA's recent overhaul of the refrigerant management regulations within 40 CFR 82, Subpart F present additional challenges to refrigerant compliance programs at industrial facilities. The revised rules expand applicability to numerous non-ODS substitutes such as HFC refrigerants, significantly change the leak repair provisions for large (≥ 50 pound) appliances, and increase the recordkeeping burden associated with the disposal of refrigerant containing appliances. It is advisable for industrial facilities to review and modify their appliance disposal practices, leak repair programs and associated recordkeeping systems in the near term in order to prepare for the forthcoming compliance dates of January 1, 2018, and January 1, 2019, respectively.

Note: This article is based on a paper recently presented at the American Fuel and Petrochemical Manufacturers 2017 Environmental Conference.

1 https://obamawhitehouse.archives.gov/the-press-office/2014/09/16/fact-sheet-obama-administration-partners-private-sector-new-commitments-; accessed on August 28, 2017.
2 Note that SNAP Rule 20 was vacated by the U.S. Court of Appeals for the District of Columbia on August 8, 2017 (Mexichem Fluor, Inc. v. EPA, 2017 U.S. App. LEXIS 14539). The 2-to-1 decision indicates that EPA cannot utilize the SNAP Program to disapprove of previously approved non-ODS substitutes such as HFCs. While EPA had not commented on the decision at the time this article was written, EPA and/or one or more of its intervenors (i.e., Chemours, Honeywell) are expected to appeal this decision to the D.C. Circuit.
3 For the U.S. and most other developed countries, the baseline for phase down is, the carbon dioxide equivalent (CO2e) of the average of HFC production levels in 2011-2013 plus 15 percent of the HCFC baseline, which is based on the 1989 consumption of HCFC and a small portion of CFC consumption in that year.
4 In August 10, 2017, letters from EPA Administrator Scott Pruitt to attorneys for the National Environmental Development Association's Clean Air Project (NEDA/CAP) and the Air Permitting Forum, EPA indicates it may revisit aspects of extension to non-ODS substitutes and feasibility of meeting the January 1, 2018 compliance date for certain provisions of the revised rule.
5 Since the revised rules do not go into effect until January 1, 2019, facilities must comply with the existing leak repair provisions within 40 CFR 82.156(i) until the end of 2018.