The Environmental Protection Agency has issued an enforcement alert providing information on common compliance issues with the importation of bulk hydrofluorocarbons and highlighting recent civil and criminal enforcement actions.
HFCs are “potent, super polluting greenhouse gases” that are commonly used in refrigeration, air conditioning, aerosols, fire suppression products, and foam blowing agents, the EPA states. The American Innovation and Manufacturing Act directs the EPA to phase down production and consumption (including imports) of HFCs to 15 percent of their baseline levels by 2036 through an allowance allocation and trading program.
Since January 2022 federal regulations have prohibited importing or producing bulk HFCs without sufficient valid allowances, which are issued to certain entities that may expend the allowances themselves or, subject to certain conditions, transfer them to other entities. Bulk HFCs imported into U.S. foreign-trade zones are subject to the same AIM Act requirements as imports into U.S. ports.
The EPA states that violations of the requirements established in the AIM Act may be subject to administrative, civil, or criminal enforcement actions. Criminal violations, including smuggling, conspiracy, money laundering, and false statements, can result in criminal penalties, incarceration, restitution, and negotiated and court-ordered environmental projects. Illegally importing HFCs may also result in civil judicial penalties of up to $121,275 per violation as well as EPA action to retire, revoke, or withhold allowances or ban a company from receiving, transferring, or conferring allowances.
Despite these consequences, the EPA “has documented widespread noncompliance” with respect to the use, importation, and production of HFCs. The agency has therefore “made it a top priority” to address these problems by “vigorously enforcing” the law using the agency’s civil and criminal enforcement authorities. For example, the EPA has completed nine civil settlements as well as various criminal enforcement actions so far in fiscal year 2024.
To help regulated entities avoid potential EPA enforcement actions, the alert details a number of recent civil and criminal cases and highlights common compliance issues, including importing HFCs without the required allowances, submitting false or misleading information, and failing to report required information.
Copyright © 2024 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.