The Heat is on for HFC Rule Breakers
Authorities are cracking down on those who illegally acquire and/or sell high-GWP refrigerants, as well as those who neglect to fix costly leaks
With the phase down of high-GWP HFC refrigerants, such as R-410A, it was always likely that some would try to circumvent the rules in order to acquire and/or sell these increasingly expensive products, as well as neglect to fix costly leaks. Recently, the news has been flooded with such incidents, with several companies facing significant fines as a result.
Home Depot, for example, was recently fined $1.6 million by the State of Washington for selling prohibited HFC products, after roughly two years of attempts to bring the company into compliance. The Washington legislature passed laws in 2019 and 2021 gradually phasing out the use of HFCs, and one of the restrictions banned the sale of R-134a canisters at retail stores beginning in July 2021.
After Washington’s HFC regulations took effect, businesses were notified about how to comply in November 2021. In response, most businesses voluntarily updated their websites and sales practices, but Home Depot continued to both offer and sell R-134a canisters to Washington customers on its website. During a routine compliance check in July 2023, Home Depot informed the Department of Ecology that they sold 1,058 units of the prohibited products in Washington between April 12, 2022, and Sept. 5, 2023. Based on the company’s prompt disclosure of units sold, the fine was reduced to $1,500 per violation, or $1.6 million in total.
Illegal Imports
The U.S. Department of Commerce recently determined that imports of R-410A, completed in Turkey, using China-origin HFC components, and exported from Turkey, are circumventing the antidumping duty (AD) order on HFC blends from China. According to the American HFC Coalition, Chinese producers have shipped Chinese HFC components to India, Turkey, Malaysia, and Mexico since 2016, in an effort to circumvent antidumping duties. Chinese exporters have also shipped blends of HFC components into the U.S. for re-blending after importation.
On July 5, 2024, Commerce issued affirmative findings of circumvention with respect to imports of R-410A and R-410B from Turkey and imports of R-410B, R-407G, and a custom blend from China. In June 2024, Commerce also issued a final affirmative finding with respect to imports of R-410A and R-407C from Malaysia. The decisions regarding R-410A and R-407C from Turkey and Malaysia, taken together with earlier decisions regarding Chinese HFC components blended in India, establish that merely blending Chinese-origin HFC components in a third country will not escape the antidumping duty order when the finished HFC blends are imported into the U.S.
In both the Turkey R-410A inquiry and the Malaysia inquiry, Commerce ordered that antidumping duties should be applied retroactively to all imports since November 2021. The Coalition stated that this action sends a strong message to exporters and importers tempted to blend Chinese components in any other third country in an effort to evade the antidumping duty order that such actions will not escape duty liability.
In related news, U.S. Customs and Border Protection (CBP) officers at the Laredo, Texas, Field Office are reminding the traveling public not to bring HFC canisters from Mexico into the U.S., as their importation is restricted. The warning came after CBP officers discovered numerous HFC cylinders within the cargo area of a vehicle.
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According to CBP, those who bring in canisters of such regulated HFCs without adhering to Environmental Protection Agency (EPA) regulations, face a fine for failure to declare the item and the vehicle used in the furtherance of the violation may be subject to seizure.
Too Many Leaks
Failing to comply with refrigerant management regulations is also causing problems for some end users. For example, the U.S. Attorney's Office in the Southern District of New York, recently filed a civil lawsuit against Gristedes’ Foods NY Inc. for alleged violations of the Clean Air Act and the EPA’s Recycling and Emissions Reduction (RER) Rule, due to the grocer’s failure to comply with regulations designed to limit the emission of refrigerants from appliances at its store.
Gristedes has owned and operated a chain of approximately 20 supermarkets in New York City. According to the lawsuit, between 2019 and 2021, despite utilizing HFC and HCFC refrigerants at its supermarkets, Gristedes systematically failed to comply with key aspects of the RER Rule. This includes failing to calculate the rate at which its appliances were leaking when adding new refrigerants; failing to timely repair leaks; failing to conduct verification testing after repairing appliances; failing to retrofit or retire leaking appliances; and failing to report chronically leaking appliances to EPA.
A Consent Decree has resolved the lawsuit, requiring Gristedes to pay a $400,000 civil penalty, an amount based on the company’s documented inability to pay the full civil penalty for which it otherwise would be liable. Further, the Consent Decree requires Gristedes to undertake repairs of its commercial refrigeration equipment with an estimated cost of $13,500,000; to adopt a comprehensive refrigerant compliance management plan; to convert three stores to utilize low-GWP refrigerants; and to lower its corporate leak rate below 16%.
According to U.S. Attorney, Damian Williams, “As a result of our lawsuit, Gristedes is now required to reduce its emissions by over 70% from their 2020 levels to offset at least some of the damage it has caused, and it will face significant additional penalties under the Consent Decree if it fails to do so.”
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