Hot on the heels of HFC rule breakers

With the phase-out of high GWP HFC refrigerants such as R-410A, it was always likely that some would try to circumvent the regulations to purchase and/or sell these increasingly expensive products, as well as neglect to repair costly leaks. Recently, the news has been flooded with such incidents, resulting in several companies facing significant fines.

Home Depot, for example, was recently fined $1.6 million by Washington state for selling banned HFC products, after about two years of trying to get the company into compliance. The Washington state Legislature passed laws in 2019 and 2021 to phase out the use of HFCs, and one of the restrictions was a ban on the sale of R-134a canisters in retail stores starting in July 2021.

After the HFC regulations went into effect in Washington State, companies were notified of how to comply in November 2021. In response, most companies voluntarily updated their websites and sales practices, but Home Depot continued to offer and sell R-134a canisters to Washington State customers on its website. During a routine compliance inspection in July 2023, Home Depot informed the Department of Ecology that it had sold 1,058 units of the prohibited products in Washington State between April 12, 2022, and September 5, 2023. Based on the company’s prompt disclosure of the units sold, the fine was reduced to $1,500 per violation, or a total of $1.6 million.

Illegal import

The U.S. Department of Commerce recently determined that imports of R-410A, manufactured in Turkey using HFC components sourced from China and exported from Turkey, circumvent an antidumping duty (AD) order on HFC blends from China. According to the American HFC Coalition, Chinese manufacturers have been shipping Chinese HFC components to India, Turkey, Malaysia and Mexico since 2016 to avoid the AD duties. Chinese exporters have also been shipping HFC component blends to the U.S. for re-blending after import.

On July 5, 2024, Commerce issued positive circumvention determinations regarding 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 final positive determinations regarding 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 the mere blending of HFC components originating in China in a third country will not avoid the antidumping duty order when finished HFC blends are imported into the United States.

In both the Turkey R-410A investigation and the Malaysia investigation, the Commerce Department ordered that anti-dumping duties be applied retroactively to all imports from November 2021. The coalition said this action sends a strong signal to exporters and importers who are tempted to mix Chinese components in any other third country to circumvent the anti-dumping duty order that such actions will not avoid customs liability.

In related news, U.S. Customs and Border Protection (CBP) officers from the Laredo, Texas, field office are reminding travelers not to bring HFC canisters from Mexico into the U.S. because their import is restricted. The warning comes after CBP officers discovered numerous HFC canisters in the cargo area of ​​a vehicle.

According to CBP, individuals importing containers of such regulated HFCs without following Environmental Protection Agency (EPA) regulations face fines for failure to declare the container, and the vehicle used to commit the offense may be seized.

Too many leaks

Failure to comply with refrigerant management regulations also causes problems for some end users. For example, the United States Attorney’s Office for 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, because the grocery store failed to comply with regulations designed to limit refrigerant emissions from its store’s equipment.

Gristedes owned and operated a chain of approximately 20 supermarkets in New York City. According to the lawsuit, from 2019 to 2021, despite using HFC and HCFC refrigerants in its supermarkets, Gristedes systematically failed to comply with key aspects of the RER. This included failing to calculate the rate at which its equipment leaked when new refrigerants were added; failing to repair leaks in a timely manner; failing to conduct verification testing after equipment was repaired; failing to retrofit or recall leaking equipment; and failing to report chronically leaking equipment to the EPA.

The consent decree resolved the lawsuit by requiring Gristedes to pay a civil penalty of $400,000, an amount based on the company’s documented inability to pay the full civil penalty for which it otherwise would be liable. In addition, the consent decree requires Gristedes to undertake repairs to commercial refrigeration equipment at an estimated cost of $13,500,000; adopt a comprehensive refrigerant compliance management plan; convert three stores to use low-GWP refrigerants; and reduce its corporate leak rate to below 16%.

According to U.S. Attorney Damian Williams, “As a result of our lawsuit, Gristedes is now required to reduce its emissions by more than 70% from 2020 levels to compensate for at least some of the harm it has caused, and if it fails to do so, it will face significant additional penalties under the settlement agreement.”