In April 2024, the EPA filed civil penalties against USA Wholesale, Inc., a San Jose corporation that sells engine lubricants, for the alleged unlawful importation of hydrofluorocarbons (HFCs) through a U.S. port in 2022.

 

This marks the first time the EPA has used its authority under the American Innovation and Manufacturing Act of 2020 (AIM Act) to file an administrative complaint for illegally importing HFCs. The AIM Act, which implements the Kigali Amendment to the Montreal Protocol, requires the United States to phase down HFC production and consumption by 85 percent by 2036.

The “EPA is using every enforcement tool available to hold companies accountable for the illegal importation of refrigerants that damage our climate and imperil future generations,” said David M. Uhlmann, assistant administrator for the EPA’s Office of Enforcement and Compliance Assurance, in an Agency news release. “This first-ever administrative complaint for the unlawful import of super-polluting HFCs advances EPA’s National Enforcement and Compliance Initiative on Mitigating Climate Change and demonstrates how EPA is intensifying its efforts to prevent the illegal importation of HFCs.”

“USA Wholesale attempted to illegally import 34,480.3 pounds of HFC-134a, which is a potent greenhouse gas with a 100-year global warming potential of 1,430,” the EPA alleges in its news release. The “EPA issued a letter recommending that Customs and Border Protection (CBP) deny the shipment entry into the U.S., and the HFCs were subsequently exported. If released into the atmosphere, these HFCs are the equivalent of 22,365 metric tons of carbon dioxide (CO2) or the same amount of CO2 produced from powering 4,414 homes with electricity for a year.”

“The complaint seeks a ruling by the administrative law court that USA Wholesale’s importation and failure to submit required reports to EPA constitutes violations of the AIM Act and seeks civil penalties.”

The EPA has heightened enforcement actions against the illegal import of HFCs. Since January 2022, the EPA and CBP have denied entry to over 80 shipments of illegal HFCs. Under the EPA’s HFC phasedown regulations, importers must expend allowances to import HFCs. Illegal imports of HFCs undermine the phasedown, disadvantage companies that follow the rules, and contribute to global warming.

Industry groups are currently in the process of legally challenging the regulations concerning the important export of HFCs, according to a Lexology article by law firm Jones Day.

“Specifically, industry groups argue that these regulations, allowing EPA to grant decreasing allowances, improperly enable EPA to decide what businesses are allowed to participate in the HFC market. The matter is currently pending before the court,” Jones Day continues. “This comes after the recent successful challenge to part of the phasedown rule last summer, where the D.C. Circuit found that EPA's actions to implement certain new rules to phasedown HFC levels under the AIM Act exceeded EPA's authority. Specifically, the court sided with challengers that EPA did not have authority to mandate the use of refillable cylinders and implement a QR-code certification and tracking system.

“These lawsuits indicate the importance of this new regulatory scheme to industry. … Entities working with HFCs and other greenhouse gases should ensure compliance with applicable rules and regulations to avoid this trend of enforcement actions.”