EPA Finalizes R-22 Allocations for 2012-2014

By Charlie McCrudden | April 4, 2013 | Leave a Comment

On April 3, the U.S. EPA published in the Federal Register the final rule adjusting the allocation of HCFCs (including R-22 refrigerants) for the years 2012-2014 (2013 Final Adjustment Rule).

According to the Final Adjustment Rule, R-22 allowances for 2013 will rise by about 13% relative to 2012, and decrease by 20% in 2014 relative to 2012. The allocations for the years 2015-2019 will be set in a subsequent rulemaking. These allocations became effective on April 3, 2013.
See the chart below (click to enlarge).

Contractors may want to contact their wholesalers or gas distributors to inquire about any changes in pricing or sales policies in light of the 2013 Final Adjustment Rule. Despite the unexpected increase in the allocations for 2013, the market remains volatile and prices for R-22 may not respond to the increased supply.

Background
The U.S. EPA controls the production and use of HCFCs, including the refrigerant R-22, through a cap and trade program. The amount of virgin R-22 that can be produced in a given year is set by annual allocations. The production and use of HCFCs is slowly being phased out in the United States, because these chemicals are known to damage the ozone layer when released into the atmosphere.

In 2011 the EPA was ordered to reopen the 2009 Allocation Rule that set the allocations for the years 2010-2014. The order came from the U.S. Court of Appeals for the District of Columbia Circuit in a lawsuit filed by two gas producers who charged that the EPA had failed to recognize their legally traded allocations.
In August 2011, the EPA proposed to adjust the R-22 allocations in the three remaining years of the 2009 Allocation Rule (2012-2014).

Based on consultation with industry stakeholders, the EPA determined there was an oversupply of virgin R-22 in the marketplace, evident with low demand, increased reuse of R-22, and low wholesale prices. In 2010, R-22 producers only utilized 86% of their allocations. A trade organization representing the manufacturers and importers of R-22 supported these claims, and advocated for a 20% reduction in allocations for 2012-2014.

Since 2012 refrigerant producers and importers have been operating with only temporary, 12 month authority through “No Action Assurance” letters from the EPA. Without a finalized Adjustment Rule, and without the No Action Assurance letters, virgin R-22 could not be legally produced or imported into the United States. The No Action Assurance letter from the EPA advised allocations would be less than the 2009 Allocation Rule.

The 2013 Final Adjustment Rule sets the allocations for the years 2012 (retroactively), 2013, and 2014.
In 2013, the total amount of R-22 allocated to all producers and importers is about 62.8 million pounds, compared with about 55.4 million pounds allocated for 2012. In 2014, the total allocation of R-22 will drop to 51 million pounds.

DuPont Wins Counterfeit Case

January 21, 2013

WILMINGTON, Del. — DuPont Refrigerants recently finished a two-year effort to investigate counterfeit activity of DuPont refrigerant brands in Quzhou City, Zhejiang Province, China.

In 2009, a distributor alerted DuPont to potential counterfeiting of DuPont Suva and DuPont Freon brands. The information they provided led Dupont to suspect counterfeiting activity of Quzhouzhou Fuming Co. Ltd., in Quzhou City. With assistance from a local law firm, DuPont requested that local authorities conduct a raid of the suspected counterfeit facility. A raid action in late September 2011 resulted in the seizure of 1,500 empty refrigerant cylinders with DuPont Suva and Freon packaging, 1,000 counterfeit labels, and 1,000 counterfeit DuPont Freon R-22 cylinders.

After the raid, DuPont issued cease-and-desist letters, however, the company did not respond to the request and continued to sell the counterfeit refrigerants. In response, DuPont filed legal action against those responsible.
A court case was undertaken in China and a judicial settlement was reached in August 2012. The defendant was required to pay the equivalent of $39,400 to the Chinese government and $32,000 in damages and court costs to DuPont. The company is under a permanent injunction to not sell DuPont refrigerants or engage in counterfeit activities involving DuPont trademarks going forward. As part of the sentence, the judge also required the company to post a formal public apology in two Chinese newspapers.

“We will continue to combat counterfeiting of DuPont refrigerants, using assistance from local law enforcement, government officials, and customs organizations,” said Greg Rubin, DuPont global business manager. “This effort is ongoing and this case was an excellent example of cross-regional work between DuPont and our distributors. This is a collaborative effort. We can’t combat counterfeiting alone.”

Publication date: 1/21/2013 AHRI THE NEWS

A-GAS INTERNATIONAL EXPANDS ITS PRESENCE IN AMERICA

LEADING REFRIGERANTS SUPPLIER A-GAS INTERNATIONAL COMPLETES STRATEGIC ACQUISITION OF KEY INDEPENDENT US REFRIGERANTS SUPPLIER AND DISTRIBUTOR, COOLGAS

Bristol-based A-Gas International (or“the Group”), one of the world’s largest independent suppliers of refrigerants, associated environmental services, and speciality gases and chemicals, has completed the acquisition of Houston, Texas based Coolgas Inc. (“Coolgas”), a leading independent supplier and distributor of refrigerants to the US market. The terms of the transaction were not disclosed.

The transaction represents the fifth strategic acquisition completed by A-Gas so far in 2012, and forms part of the Group’s acquisitive growth strategy which is being executed both in the UK and internationally. The enlarged group will have a turnover of c. £130m and 237 employees.

Founded in 1994 by Jesse Combs, Coolgas has grown over the past 18 years to become one of the leading independent distributors of refrigerants in the US. Coolgas’ “refrigerants made simple” philosophy reflects the focus on customer service that has enabled it to grow first to a regional and then to a national player. Coolgas has recently commissioned a new refrigerant storage and packaging facility in Houston and has distribution centres in California, Utah, Arizona, Indiana, Michigan, Maryland and Georgia ensuring that Coolgas is close to its customers wherever they are located.

In recent years Coolgas has also become an EPA registered reclaimer of refrigerants and a project developer for the generation of carbon offsets on the California Climate Action Reserve exchange. These capabilities enable Coolgas to manage the lifecycle of Ozone Depleting Substances (ODS) and substances with high Global Warming Potential (GWP) to safeguard the environment.

The acquisition builds on A-Gas’acquisition of Ohio based refrigerant reclaimer and halocarbon management specialist RemTec International in July 2012. Coolgas provides a strong strategic fit, bringing a strong brand and complementary footprint that will accelerate refrigerants sales growth. Further the reclaim and carbon credits businesses extend A-Gas’ existing operations in the US Environmental Services market which is already well established in the UK and Europe.

The acquisition of Coolgas follows on from the successful acquisitions not only of RemTec International in July 2012 but also of Australian based Technochem in March 2012 and SA Rural in May 2012, and UK based A-Zone Technologies in April 2012.

Commenting on the acquisition:

John Rutley, Executive Chairman and founder of A-Gas International said:
Jesse Combs and his management team have built a great business in the US refrigerant sector and we are delighted to add it to our rapidly expanding presence in this important market. The fit with our recently acquired business, RemTec, is perfect and allows us to offer a full range of products and services to our customers in the world’s largest refrigerant market.

Jon Masters, Regional Managing Director of A-Gas International said:

The acquisition of Coolgas will significantly strengthen our position as the leading independent global supplier of refrigerants at a time when regulatory changes are providing increasing opportunities for reclamation and recycling of used refrigerants using our market leading technology developed in the UK. We look forward to supporting the Coolgas management team and workforce in continuing to provide outstanding service to its customers.

Jesse Combs, CEO of Coolgas said:

I feel honoured that A-Gas saw Coolgas as a strategic fit and entry point into the US refrigerants’ distribution business. Our team of professionals have a customer service mind-set that I believe sets Coolgas apart from the rest of the industry. I have the upmost confidence that the A-Gas team will support and grow upon our "refrigerants made simple" philosophy for many years to come.

About A-Gas International

A-Gas is an international group of companies with headquarters in Bristol, UK. A-Gas is a market leader in the supply of refrigerants within its core territories in the U.K., South Africa, and Australia, and has state of the art storage, blending, packaging and reclamation facilities in Bristol, Cape Town, and Melbourne. The company also has marketing and distribution centres in Singapore, Thailand, China and Mexico. In the US, A-Gas has a Performance Chemicals business located in Doylestown, Pennsylvania; RemTec International, a refrigerant reclaimer and halocarbon management specialist located in Bowling Green, Ohio; and now Coolgas, headquartered in Houston, Texas. For more information, visit www.agas.com

About Coolgas

Coolgas Inc. was started in 1994 as a distributor of refrigerant gases. Through a continual focus on customer service embodied by its “refrigerants made simple” philosophy it has gained customers across the United States and grown to become one of the leading independent distributors of refrigerants. Coolgas supplies a full product range from essential use CFCs through to the most recent HFC blends. Coolgas also supplies in a wide variety of formats from the smallest auto aftermarket disposable cans through to bulk tankers for industrial customers. Coolgas is an EPA approved refrigerant reclaimer. The Coolgas, Inc. headquarters are located 40 miles north of Houston, Texas. For more information visit www.coolgas.com

US seafood company to pay $700,000 for R22 violations

USA: One of the USA's largest seafood companies has agreed to pay a $700,000 fine for illegally importing R22 and committing other clean air violations.

The settlement, outlined in a consent decree lodged by the US Department of Justice on behalf of the US Environmental Protection Agency, concerns the improper release and illegal import of ozone depleting refrigerants.

American Seafoods Co and Pacific Longline Co, both subsidiaries of the American Seafoods Group have agreed to phase out the use of ozone depleting refrigerants, implement a comprehensive leak detection and repair programme aboard a number of their vessels and pay a $700,000 penalty to resolve federal Clean Air Act violations.



Between 2006 and 2009, American Seafoods Company and Pacific Longline Company used R22 as a refrigerant in industrial refrigeration units aboard its fishing vessels. American Seafoods illegally imported 70,000 kg of R22 refrigerant to the United States without holding valid allowances. 



The companies were also said to have failed to repair refrigerant leaks in a timely manner; failed to verify adequacy of repairs to its refrigeration systems; having inadequate records of repair service on refrigerant system and using uncertified employees to perform refrigerant-related work.

In addition to the penalty, the companies will spend an estimated $9m to $15m to convert refrigeration systems on several vessels to operate using non-ozone depleting refrigerants. The companies have also purchased and retired R22 allowances to offset the harm caused by their illegal importation.


American Seafoods Company is one of the country's largest seafood harvesters and at-sea processors of pollock, hake, cod, scallops and yellowfin sole. The company sells its products in the United States, Asia and Europe. American Seafoods Company and Pacific Longline Company are based in Seattle.