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Chemical Manufacturers, Importers, and Exporters: Frequent Questions

The following information can help manufacturers, importers, and exporters better understand their responsibilities in the phaseout of ozone-depleting substances (ODSHelpODSA compound that contributes to stratospheric ozone depletion. ODS include chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs), halons, methyl bromide, carbon tetrachloride, hydrobromofluorocarbons, chlorobromomethane, and methyl chloroform. ODS are generally very stable in the troposphere and only degrade under intense ultraviolet light in the stratosphere. When they break down, they release chlorine or bromine atoms, which then deplete ozone. A detailed list (http://www.epa.gov/ozone/science/ods/index.html) of class I and class II substances with their ODPs, GWPs, and CAS numbers are available.).

Q. Why is there a cap on production and import of hydrochlorofluorocarbons (HCFCs)?

A. HCFCs are substances that deplete the ozone layer. In 1992, the Parties to the Montreal ProtocolHelpMontreal ProtocolThe international treaty governing the protection of stratospheric ozone. The Montreal Protocol on Substances That Deplete the Ozone Layer and its amendments control the phaseout of ODS production and use. Under the Montreal Protocol, several international organizations report on the science of ozone depletion, implement projects to help move away from ODS, and provide a forum for policy discussions. In addition, the Multilateral Fund provides resources to developing nations to promote the transition to ozone-safe technologies. The full text of the Montreal Protocol (http://ozone.unep.org/Publications/MP_Handbook/Section_1.1_The_Montreal_Protocol/) is available from the United Nations Environmental Programme (UNEP). on Substances that Deplete the Ozone Layer established a limit (cap) on the combined production and import of HCFCs for industrialized countries; this went into effect in 1996. The United States has used a "worst first" approach to phase out HCFCs with the highest ozone depletion potentialHelpozone depletion potentialA number that refers to the amount of ozone depletion caused by a substance. The ODP is the ratio of the impact on ozone of a chemical compared to the impact of a similar mass of CFC-11. Thus, the ODP of CFC-11 is defined to be 1.0. Other CFCs and HCFCs have ODPs that range from 0.01 to 1.0. The halons have ODPs ranging up to 10. Carbon tetrachloride has an ODP of 1.2, and methyl chloroform's ODP is 0.11. HFCs have zero ODP because they do not contain chlorine. A table of all ozone-depleting substances (http://www.epa.gov/ozone/science/ods/index.html) shows their ODPs, GWPs, and CAS numbers.s earliest.

Q. Why did EPA institute an HCFC allowance allocation system?

A. To ensure that the United States achieves the required reductions in production and consumption of HCFCs that were agreed to under the Protocol, EPA developed a marketable allowance system. The allowance system retains the flexibility for industry to continue to operate efficiently, while ensuring the United States does not violate the parameters agreed to as a Party to the Protocol.

Q. How does the allowance system work?

A. The allowance system is based on the need to ultimately balance the global output of hydrochlorofluorocarbons (HCFCs). Since 2010, the allowance system has included seven types of HCFCs: HCFC-22, HCFC-123, HCFC-124, HCFC-141b, HCFC-142b, HCFC-225ca, and HCFC-225cb.

There are two types of allowances: 1) production allowances and 2) consumption allowances. Each producer or importer of HCFCs is allocated allowances (one allowance per each kilogram of HCFC), based on historical production and import. A company expends one production allowance and one consumption allowance for each kilogram of HCFC produced. An importer expends one consumption allowance for each kilogram imported. If a producer expends allowances to make HCFCs, then exports those HCFCs, the producer can request additional allowances equal to the amount exported.

Learn more about the allocation system.

Q. Can a company transfer allowances?

A. Yes, a company can trade a consumption or production allowance for one kilogram of an HCFC to another company, which would then be eligible to consume or produce one kilogram of that same type of HCFC. Companies can conduct trades within its own company or between companies, and from one type of HCFC to another type.

Because each HCFC in the allowance system has a different ozone-depletion potential (ODPHelpODPA number that refers to the amount of ozone depletion caused by a substance. The ODP is the ratio of the impact on ozone of a chemical compared to the impact of a similar mass of CFC-11. Thus, the ODP of CFC-11 is defined to be 1.0. Other CFCs and HCFCs have ODPs that range from 0.01 to 1.0. The halons have ODPs ranging up to 10. Carbon tetrachloride has an ODP of 1.2, and methyl chloroform's ODP is 0.11. HFCs have zero ODP because they do not contain chlorine. A table of all ozone-depleting substances (http://www.epa.gov/ozone/science/ods/index.html) shows their ODPs, GWPs, and CAS numbers.), each has its own ODP value. When trades occur between chemicals, they must be weighted by ODP.

To trade allowances, a company must submit a transfer request to EPA. EPA will determine if the transferor possesses enough unexpended allowances to cover the claim.

Learn more about allowance transfers in a guidance document developed by EPA (PDF) and the specific provisions described in 40 CFR 82.23 . Additional information is found in the January 21, 2003, Final Rule (68 FR 2819) (PDF)  and in the December 2009 Rule (74 FR 66412) (PDF) [Final Rule (74 FR 66412)].

Q. May I produce, import, and export HCFCs other than the ones that EPA has established allocations for?

A. Yes, but companies must report all HCFC transactions to EPA so that EPA can fulfill its reporting obligations under the Montreal ProtocolHelpMontreal ProtocolThe international treaty governing the protection of stratospheric ozone. The Montreal Protocol on Substances That Deplete the Ozone Layer and its amendments control the phaseout of ODS production and use. Under the Montreal Protocol, several international organizations report on the science of ozone depletion, implement projects to help move away from ODS, and provide a forum for policy discussions. In addition, the Multilateral Fund provides resources to developing nations to promote the transition to ozone-safe technologies. The full text of the Montreal Protocol (http://ozone.unep.org/Publications/MP_Handbook/Section_1.1_The_Montreal_Protocol/) is available from the United Nations Environmental Programme (UNEP).. These transactions include quantities produced, imported, exported, transformed, and destroyed. Keep in mind that generally speaking, no person may introduce into interstate commerce or use any HCFC unless it is:

  • used, recovered and recycled; 
  • for use as a refrigerant in equipment manufactured before January 1, 2020; 
  • for use as a fire suppression streaming agent listed as acceptable by the SNAP program;
  • for use in a process resulting in its transformation or its destruction;
  • for export to Article 5 Parties;
  • as a transhipment or heel; or
  • covered by the limited exemptions for HCFC-225ca or HCFC-225cb as a solvent (excluding use in manufacturing a product containing HCFC-225ca or HCFC-225cb) or for HCFC-124 as a sterilant for the manufacture and testing of biological indicators.

Q. What are the restrictions for importing virgin HCFC-22 or HCFC-142b in bulk?

A. First, you must hold allowances to import virgin HCFC-22 or HCFC-142b. Second, you may only use the virgin HCFC-22 or HCFC-142b for servicing existing refrigeration and air-conditioning equipment, with a few limited exceptions. Third, you must comply with all recordkeeping and reporting provisions. Reporting forms for Class II substances can be found here.

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

A. Yes, you do not need allowances to export HCFC-22 or HCFC-142b in bulk, but some importing countries have their own restrictions and requirements. Check with the government representing the importing country for more information.

Also, you can only export HCFC-22 and HCFC-142b (and blends containing those compounds) to developed countries if the HCFCs 1) are used, recovered, and recycled, 2) will be used for transformation, or 3) will be used as a refrigerant in appliances manufactured before January 1, 2010.

Companies that provide verification to EPA on exported quantities of HCFCs that were originally produced or imported with proper allowances can request a refund of the allowances used to import or produce that quantity. Exporters need to follow the EPA recordkeeping and reporting requirements. Reporting forms are available here.

Companies holding baseline production allowances may also produce an amount of HCFCs for export to developing countries to meet that country's basic developing need. This amount is limited to 10 percent of that company's production baseline. A list of these countries (called "Article 5" countries under the Montreal Protocol) is found here. Exit

Q. May I export virgin HCFC-123, HCFC-124, HCFC-225ca or HCFC-225cb in bulk?

A. Yes, if the material is:

  • used, recovered and recycled; 
  • for use as a refrigerant in equipment manufactured before January 1, 2020; 
  • for use as a fire suppression streaming agent listed as acceptable by the SNAP program; or
  • for use in a process resulting in its transformation or its destruction.

You do not need allowances to export HCFC-22 or HCFC-142b in bulk, but some importing countries have their own restrictions and requirements. Check with the government representing the importing country for more information.

Companies that provide verification to EPA on exported quantities of HCFCs that were originally produced or imported with proper allowances can request a refund of the allowances used to import or produce that quantity. Exporters need to follow the EPA recordkeeping and reporting requirements. Reporting forms are available here.

Companies holding baseline production allowances may also produce an amount of HCFCs for export to developing countries to meet that country's basic developing need. This amount is limited to 10 percent of that company's production baseline. A list of these countries (called "Article 5" countries under the Montreal Protocol) is found here. Exit

Q. May I import used HCFCs in bulk?

A. Yes, but you must first petition EPA for permission and receive a non-objection notice from EPA to import these HCFCs. In evaluating a petition, EPA determines whether the Class II substance to be imported is, in fact, previously used. EPA requires information on a contact person in the foreign country, as well as a detailed description of the source facility and the specific equipment from which the Class II substance was recovered. This information ensures U.S. compliance under the Montreal Protocol. More information about importing HCFCs is available here.

Q. Do any import or export restrictions apply to HCFC substitutes that do not contribute to ozone depletion, such as hydrofluorocarbon (HFC)-134a or R-410A?

A. No. Currently there are no restrictions in the United States on the production, import, or export of HFC refrigerants, including HFC-134a or R-410A. However, importers should expect that U.S. Customs and Border Protection  would request verification of contents prior to entering the United States. Also, other countries may have restrictions or requirements for HFC refrigerants exported to them.

EPA also requires reporting under the Greenhouse Gas Reporting program.

Q. May I produce or import a substitute that contains HCFC-22 or HCFC-142b if EPA's SNAP Program found it acceptable?

A. Not necessarily. EPA's Significant New Alternatives Policy (SNAP) Program evaluates and finds acceptable substitutes for ODS, including blends. However, SNAP acceptability does not give authorization to produce or import blends containing ODS.

The importation and sale of HCFC-22 and HCFC-142b is now prohibited for most uses, with exceptions for use in existing refrigeration and air-conditioning equipment, for use as a feedstock for manufacturing other chemicals, for use in thermostatic expansion valves, and for use in sterilizing medical equipment. For the excepted uses, you still must hold allowances for the HCFC-22 and/or HCFC-142b.

Also, you must hold consumption allowances to import HCFC-142b, HCFC-22, or blends containing these HCFCs. You must hold consumption and production allowances to produce HCFC-142b and HCFC-22, or blends that contain these HCFCs. Thus, manufacturers of blends containing these substances may have difficulty obtaining the HCFC components necessary to formulate their blends, even if the SNAP Program lists those blends as acceptable.

Other Frequent Questions About the Phaseout of HCFC-22