Administrative Consequences Under the HFC Allocation Rule
EPA established administrative consequences in regulations codified at 40 CFR 84.35. Administrative consequences are allowance adjustments issued when EPA identifies certain activities that occur. These activities can include, but are not limited to, submitting false, inaccurate, or misleading information or data, importing HFCs without expending the required number of allowances, and failing to provide required reports consistent with the regulatory requirements, among others. Additional discussion on EPA’s administrative consequences provisions is included in 86 FR 55168.
Using this authority, EPA can retire, revoke, or withhold allowances, or ban a company from receiving, transferring, or conferring allowances. As explained in the HFC Allocation Framework Rule:
- A retired allowance is one that must go unused and expires at the end of the year;
- A revoked allowance is one that EPA takes back from an allowance holder and redistributes to all the other allowance holders; and,
- A withheld allowance is one that is retained by the Agency until an allowance holder that has failed to meet a requirement comes back into compliance, at which point EPA allocates it to the allowance holder. A withheld allowance could become a revoked allowance if the allowance holder fails to come back into compliance within a required timeframe.
Additionally, EPA can apply a premium when revoking or retiring allowances. In the HFC Allocation Framework Rule, the Agency stated its intent to apply a 50% premium for first time offenses. The table below lists administrative consequences that have taken effect as of September 29, 2023.
Entity | Number of Allowances Affected (MTEVe) | Allowance Type | Applicable Year | Administrative Consequence Action | Reasoning | Effective Date |
---|---|---|---|---|---|---|
Altair Partners | 2,449,616.4 | Consumption | 2023 | Retire | Misreported data | 10/30/2022 |
Altair Partners | 4,523.7 | Consumption | 2022 | Retire | Misreported data used for purposes of allocating allowances | 6/29/2022 |
Altair Partners | 2,441,028.6 | Consumption | 2022 | Retire | Misreported data used for purposes of allocating allowances | 4/30/2022 |
American Air Components | 81,617 | Consumption | 2022 | Retire | Imported regulated HFCs without expending the requisite number of allowances | 4/30/2022 |
American Air Components | 40,808.5 | Consumption | 2023 | Retire | Imported regulated HFCs without expending the requisite number of allowances | 4/30/2022 |
AutoZone Parts | 1,022,990.5 | Consumption | 2023 | Retire | Misreported data | 12/15/2022 |
AW Product Sales & Marketing | 194,505.7 | Consumption | 2023 | Retire | Misreported data | 10/30/2022 |
ComStar International Inc. | 27,434.8 | Consumption | 2023 | Retire | Misreported data | 11/29/2022 |
Meraki Group | 96,703.8 | Consumption | 2022 | Retire | Imported regulated HFCs without expending the requisite number of allowances | 5/29/2022 |
Meraki Group | 48,351.9 | Consumption | 2023 | Retire | Imported regulated HFCs without expending the requisite number of allowances | 5/29/2022 |
Waysmos USA | 147,359.8 | Consumption | 2023 | Retire | Misreported data | 10/30/2022 |
American Air Components | 208,516.5 | Consumption | 2024 and future years as needed | Retire | Imported regulated HFCs without expending the requisite number of allowances | 9/29/2023 |
American Air Components | 104,258.3 | Consumption | 2025 and future years as needed | Revoke | Imported regulated HFCs without expending the requisite number of allowances | 9/29/2023 |
AFK & Co. | 5,701.9 | Consumption | 2024 | Retire | Imported regulated HFCs without expending the requisite number of allowances | 9/29/2023 |
AFK & Co. | 2,851.0 | Consumption | 2024 | Revoke | Imported regulated HFCs without expending the requisite number of allowances | 9/29/2023 |
Artsen | 346.7 | Consumption | 2024 | Retire | Imported regulated HFCs without expending the requisite number of allowances | 9/29/2023 |
Artsen | 173.4 | Consumption | 2024 | Revoke | Imported regulated HFCs without expending the requisite number of allowances | 9/29/2023 |
Bluon | 575,800.7 | Consumption | 2024 and future years as needed | Retire | Imported regulated HFCs without expending the requisite number of allowances | 9/29/2023 |
Bluon | 288,855.8 | Consumption | As early as 2025 and future years as needed | Revoke | Imported regulated HFCs without expending the requisite number of allowances | 9/29/2023 |
Electronic Fluorocarbons | 64,931.9 | Consumption | 2023 | Retire | Imported regulated HFCs without expending the requisite number of allowances | 9/23/2023 |
Electronic Fluorocarbons | 32,466.0 | Consumption | 2024 | Revoke | Imported regulated HFCs without expending the requisite number of allowances | 9/29/2023 |
Fluorofusion Specialty Chemicals | 5,502.2 | Consumption | 2024 | Revoke | Imported regulated HFCs without expending the requisite number of allowances | 9/29/2023 |
Resonac American (formerly known as Showa Chemicals of America) | 200,070.5 | Consumption | 2024 and future years as needed | Retire | Imported regulated HFCs without expending the requisite number of allowances | 9/29/2023 |
Resonac American (formerly known as Showa Chemicals of America) | 100,035.3 | Consumption | As early as 2025 and future years as needed | Revoke | Imported regulated HFCs without expending the requisite number of allowances | 9/29/2023 |
Honeywell International | 231,334.0 | Consumption | 2024 | Revoke | Produced and imported regulated HFCs without expending the requisite number of allowances | 9/29/2023 |
Honeywell International | 462,668.1 | Consumption | 2025 | Revoke | Produced and imported regulated HFCs without expending the requisite number of allowances | 9/29/2023 |
Honeywell International | 925,336.2 | Consumption | 2026 | Revoke | Produced and imported regulated HFCs without expending the requisite number of allowances | 9/29/2023 |
Honeywell International | 1,388,004.3 | Consumption | 2027 | Revoke | Produced and imported regulated HFCs without expending the requisite number of allowances | 9/29/2023 |
Honeywell International | 1,619,338.4 | Consumption | 2028 | Revoke | Produced and imported regulated HFCs without expending the requisite number of allowances | 9/29/2023 |
Air Liquide USA | 64,336.6 | Consumption | 2024 | Withhold | Failure to submit complete HFC reports as required in 40 CFR 84.31 | 9/29/2023 |
Creative Solution | 25,797.6 | Consumption | 2024 | Withhold | Failure to submit complete HFC reports as required in 40 CFR 84.31 | 9/29/2023 |
Matheson Tri-Gas | 4,403.1 | Consumption | 2024 | Withhold | Failure to submit complete HFC reports as required in 40 CFR 84.31 | 9/29/2023 |
Under the administrative consequence provisions, each entity has 14 days after receiving notice to respond with any additional information on why the administrative consequence should not be taken. After EPA provides notice of an impending administrative consequence, the entity receiving the notice may not expend the quantity of allowances subject to the administrative consequence, nor transfer or confer any allowances while the administrative consequence is pending.
For entities where the Agency is taking an administrative consequence of a quantity that exceeds the entity’s calendar year 2024 allocation, the Agency will first retire in calendar year 2024, and then continue to retire or revoke entities’ allowances until the full administrative consequence for each entity is reached.