Administrative Consequences Under the HFC Allocation Rule

EPA established administrative consequences in regulations codified at 40 CFR 84.35. Administrative consequences are allowance adjustments issued when EPA identifies certain activities that occur. These activities can include, but are not limited to, submitting false, inaccurate, or misleading information or data, importing HFCs without expending the required number of allowances, and failing to provide required reports consistent with the regulatory requirements, among others. Additional discussion on EPA’s administrative consequences provisions is included in 86 FR 55168.

Using this authority, EPA can retire, revoke, or withhold allowances, or ban a company from receiving, transferring, or conferring allowances. As explained in the HFC Allocation Framework Rule:

• A retired allowance is one that must go unused and expires at the end of the year;
• A revoked allowance is one that EPA takes back from an allowance holder and redistributes to all the other allowance holders; and,
• A withheld allowance is one that is retained by the Agency until an allowance holder that has failed to meet a requirement comes back into compliance, at which point EPA allocates it to the allowance holder. A withheld allowance could become a revoked allowance if the allowance holder fails to come back into compliance within a required timeframe.

Additionally, EPA can apply a premium when revoking or retiring allowances. In the HFC Allocation Framework Rule, the Agency stated its intent to apply a 50% premium for first time offenses. The table below lists administrative consequences that have taken effect as of October 15, 2024.

Under the administrative consequence provisions, each entity has 14 days after receiving notice to respond with any additional information on why the administrative consequence should not be taken. After EPA provides notice of an impending administrative consequence, the entity receiving the notice may not expend the quantity of allowances subject to the administrative consequence, nor transfer or confer any of those allowances while the administrative consequence is pending.

For entities where the Agency is taking an administrative consequence of a quantity that exceeds the entity’s calendar year allocation, the Agency will first retire in the specified year, and then continue to retire or revoke entities’ allowances until the full administrative consequence for each entity is reached.

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