New Era Group — a coaltion of alternative refrigerant producers and distributors — promises it will take legal action against the U.S. Environmental Protection Agency, over the EPA's methods in managing the phaseout of the refrigerant R-22.

"The EPA is killing the development of environmentally friendly refrigerants while the greenhouse gas HCFC-22 is slowly phased out, saturating the market with the ozone-depleting compound based on flawed data," said the group, in an "intent to sue" notice, released on May 20.

New Era Group wants the EPA to launch a more comprehensive inquiry into existing HCFC-22 inventories, and companies future needs for the refrigerant. R-22 — although a fine-performing refrigerant — has been designated as an ozone depleting refrigerant; its manufacture will be completely phased out by 2020.

EPA has allocated more allowances than necessary and in the
process devastated the reclamation and alternative-refrigerant
industries, which can’t compete with an oversupply
of cheap HCFC-22. — New Era Group

During the phaseout period, the EPA controls the amount of HCFC-22 consumption through allowances. But according to the notice, because the agency has failed to collect reliable data, it has allocated more allowances than necessary and in the process devastated the reclamation and alternative-refrigerant industries, which can’t compete with an oversupply of cheap HCFC-22.

New Era Group says that without reliable data, the agency’s forthcoming rule will perpetuate the glut. The December 2013 ruling would cover the final five years of the phaseout, and allow production of more than 90 million pounds of the refrigerant in that time.

“As EPA is promulgating the final rule in the HCFC-22 phaseout, EPA must reliably and credibly account for the existing HCFC-22 inventory and make every possible effort to assure that existing reclamation capability will by fully utilized and, at the end of the phaseout period, no excess inventory will remain,” the notice said. “The purpose of New Era Group’s action will be to ensure EPA does that.”

The 2015-19 rulemaking will be the EPA’s fourth regulation around HCFC-22 after Congress tasked the agency in 1990 with implementing an international protocol for eliminating chlorofluorocarbons. In 2009, the EPA began reducing allowances for the refrigerant, raising prices and boosting the nascent markets for reclaimed and recycled HCFC-22 and alternative refrigerants, according to the petition.

In April 2013, the agency allowed an additional 100 million pounds of HCFC-22 production until 2015, purportedly resulting in a vast oversupply that reduced demand for alternatives, New Era Group says.

New Era members include Altair Partners LP, American Refrigerants Inc., Combs Investment Property, Consolidated Refrigerants Reclaim, Diversified Pure Chem, Dynatemp International, ICOR International, North Lakes Distributing Inc., Refrigerants Inc., Refrigerants Salvage Inc., RMS of Georgia, Safe Disposal Systems Inc., Summit Refrigerants and USA Refrigerants.

In the rulemaking, the EPA made “little or no effort” to determine existing inventory levels, instead attempting to “guess or estimate” how much virgin HCFC-22 allocation holders and companies in related industries have accumulated over the years and how much more was really needed, according to New Era.

“Guesses and estimates are not facts, and when facts are reasonably ascertainable, guesses and estimates are not an acceptable basis for regulatory decisions,” the notice said. “The reason there has long been a mismatch between what the market needs and what EPA allocates is EPA’s persistent unwillingness to collect reliable HCFC-22 data inventory.”

Specifically, the EPA relied in its 2013 rule on “anecdotal information” and “industry feedback,” according to the notice. The agency is allegedly basing its forthcoming rule on the responses of nine companies that supposedly hold about 80 percent of the refrigerant currently on the market.

As New Era alleged, those companies don’t hold “anywhere near” that much HCFC-22, and their responses from the end of the 2012 year are too outdated to underpin the agency’s proposal.

Of the 19 U.S. HCFC-22 allowance holders, the EPA has surveyed less than half, according to the notice.

“Our clients have noted repeatedly that EPA’s attempt to survey nine companies is insufficient to address the state of HCFC-22 inventory,” the notice said.

New Era Group companies are represented by J. Gordon Arbuckle of Patton Boggs LLP.