



                          THE U.S. PHASEOUT OF HCFCS:
ESTIMATED COSTS FOR PROPOSED REGULATORY CHANGES TO LABELING OF CONTAINERS OF HCFC FIRE SUPPRESSION AGENT, 2020-2029
                     U.S. ENVIRONMENTAL PROTECTION AGENCY
                          Office of Air and Radiation
                       Stratospheric Protection Division
                         1200 Pennsylvania Avenue, NW
                             Washington, DC 20460
                                       
                                       
                                       
                                   July 2019
Questions concerning this memo should be directed to: 

Katherine Sleasman
Stratospheric Protection Division 
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue, NW (6205T)
Washington, D.C. 20460
1-202-564-7716 (phone)
1-202-343-2338 (fax)
sleasman.katherine@epa.gov

This memo was prepared with support from ICF under contract number EP-BPA-16-H-0021.






















Background 
Under Title VI of the Clean Air Act (CAA), the U.S. Environmental Protection Agency (EPA) is responsible for developing and implementing programs that protect the stratospheric ozone layer. The EPA regulates the use of ozone-depleting substances (ODS) that are being phased out consistent with CAA Title VI and the Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal Protocol). The EPA is also implementing complementary measures under CAA Title VI, including a provision to require labeling to alert the public that a product contains or is manufactured with a substance known to harm public health and environment by destroying ozone in the upper atmosphere. 
Hydrochlorofluorocarbons (HCFCs) are a class of ODS undergoing a phaseout in the United States and globally. Specifically, the United States is obligated to phase out production and consumption of HCFCs by 2030 by making graduated reductions in HCFC production and consumption by certain dates. The U.S. HCFC phasedown schedule is summarized in Table 1. 
              Table 1: Detailed Regulatory HCFC Phaseout Schedule
Date
Restriction
January 1, 2003
 Ban on production and import of HCFC-141b.
January 1, 2010
 Ban on production and import of HCFC-22 and HCFC-142b except for on-going servicing demand in equipment manufactured before January 1, 2010.[a]
January 1, 2015
 Ban on production, import, and introduction into interstate commerce or use of HCFCs except where the HCFCs are used as a refrigerant in equipment manufactured prior to January 1, 2020, or where HCFCs are used as a fire suppression agent for non-residential applications.[a]
January 1, 2020
 Ban on remaining production and import of HCFC-22 and HCFC-142b.[a]
 Ban on production and import of all other HCFCs except for use in servicing AC and refrigeration equipment[b] manufactured before January 1, 2020.
January 1, 2030
 Ban on production and import of all HCFCs.[a]
    [a] Exemptions apply, including exemptions for 1) HCFCs used in processes resulting in their transformation or destruction, and 2) HCFCs that are recovered and either recycled or reclaimed.
    [b] The EPA is proposing to allow servicing of fire suppression equipment with newly-imported HCFCs until January 1, 2030 following the November 2018 adjustment to the Montreal Protocol (Decision XXX/2). 

Product labeling is mandated by Section 611 of the CAA, and requirements are specified in Title 40 Part 82 Subpart E in the Code of Federal Regulations (40 CFR 82.100 - 82.124). Products imported or manufactured after January 1, 2015 that contain or were manufactured with HCFCs must bear a clearly legible and conspicuous warning label that can be read by consumers before they can be introduced into interstate commerce (EPA 2013):

WARNING: [Contains / Manufactured with] [insert name of HCFC], a substance that harms public health and environment by destroying ozone in the upper atmosphere.
WARNING: [Contains / Manufactured with] [insert name of HCFC], a substance that harms public health and environment by destroying ozone in the upper atmosphere.
HCFC-123 -- the primary constituent in Halotron I (also referred to as HCFC Blend B) -- is currently used as a streaming agent in fire suppression equipment including handheld extinguishers, wheeled extinguishers, and aircraft rescue and firefighting (ARFF) vehicles in various commercial, industrial, transportation, and military applications in the United States. After January 1, 2020, a distinction is drawn where only recovered and recycled or reclaimed HCFC-123, as well as stockpiled material imported prior to 2020, can be used to manufacture new fire suppression equipment, and newly imported material can only be used to service existing equipment. 

Since HCFC-123 imported after January 1, 2020 can only be used to service fire suppression equipment manufactured prior to January 1, 2020, the EPA is proposing to revise the existing labeling requirements for certain containers of HCFC-123 fire suppression agent to provide clarity to the regulated community. These proposed changes would require redesign of labels already required under CAA Section 611. In particular, the EPA is proposing to revise labels for containers of fire suppression agent made with HCFC-123 imported after January 1, 2020 by adding language to inform anyone using that fire suppression agent that the contents can only be used to service equipment manufactured before January 1, 2020. The labels for all fire suppression agent containers made with HCFC-123 imported on or after January 1, 2020 would read: 

WARNING: [Contains / Manufactured with] HCFC-123, a substance that harms public health and environment by destroying ozone in the upper atmosphere. Can only be used to service equipment manufactured prior to January 1, 2020.
WARNING: [Contains / Manufactured with] HCFC-123, a substance that harms public health and environment by destroying ozone in the upper atmosphere. Can only be used to service equipment manufactured prior to January 1, 2020.

The EPA is requesting comment on whether it should also require a modified label for containers made with recycled or reclaimed HCFC-123 or HCFC-123 imported before January 1, 2020:[2] 

WARNING: [Contains / Manufactured with] HCFC-123, a substance that harms public health and environment by destroying ozone in the upper atmosphere. Not restricted to use in servicing pre-2020 equipment.
WARNING: [Contains / Manufactured with] HCFC-123, a substance that harms public health and environment by destroying ozone in the upper atmosphere. Not restricted to use in servicing pre-2020 equipment.

The EPA is also requesting comment on whether there is another way to distinguish containers for servicing fire suppression equipment, such as having all containers labeled "Virgin material may not be used to service equipment manufactured on or after January 1, 2020," and then include additional labeling on containers that distinguish "virgin" vs. "reclaimed" material. 

This analysis presents an estimate of the overall costs associated with these proposed revisions to labeling for containers of fire suppression agent manufactured with HCFC-123 e.g., Halotron I. It is assumed that the manufacturer of the HCFC-123 fire suppression agent will redesign the first label noted above. Additional, but minor, costs may be incurred if the manufacturer of the fire suppression agent also redesigns the label for containers made with recycled or reclaimed HCFC-123 or HCFC-123 imported before 2020.

Given all HCFC-123 containers would have redesigned labels, it is not expected that costs for the various labeling options that may require additional labels would increase significantly from one option to the other. 
Methodology and Cost Assumptions
The costs to revise labels for fire suppression agent containers were calculated by estimating the one-time labor costs and printing preparation costs associated with redesigning the existing label for HCFC-123 fire suppressant agent containers manufactured between 2020 and 2029. Products containing HCFC-123 are assumed to require one-color vinyl sticker labels.
 
Companies producing HCFC-123 fire suppression agent are assumed to incur labeling redesign costs associated with the following: 
 Administrative activities (e.g., work by purchasing, marketing, legal, and/or regulatory staff to initiate and approve label development or changes). 
 Graphic design (e.g., work by a graphic designer to develop or alter the label).
 Prepress and engraving activities to convert the design created by the graphic designer into the film or files that are used to engrave or etch the printing plates or cylinders, and then engrave the plates or cylinders for printing. 
These one-time costs for fire suppression agent labeling are assumed to be incurred on a company-level basis in response to proposed new labeling redesign requirements for the 2020 - 2029 regulatory period and are estimated based on information from the U.S. Food and Drug Administration (FDA) Labeling Cost Model (RTI 2003). 
Administrative and graphic design labor costs are estimated based on the total number of hours required to redesign existing labels as well as hourly labor costs. Administrative and graphic design costs (one-color printing) for redesign were assumed to require half the amount of time estimated for new design activities in the FDA Labeling Cost Model, because the redesigned labels will be similar to the existing labels. The average hourly labor cost for a marketing manager (administrative) is $191.72 and the average hourly labor cost for a graphic designer is $70.16 (U.S. Department of Labor 2017a and 2017b). These hourly costs include wages, overhead rates, and fringe rates. 
Prepress and engraving costs vary depending on the printing method used and the number of colors. For the purposes of this analysis, which assumes printing of vinyl sticker labels, companies are assumed to use flexographic printing with one color. The EPA assumes that the redesigned labels will have similar dimensions (i.e., in accordance with 40 CFR 82) and will be constructed with the same material (i.e., vinyl) as the existing label. Therefore, the EPA expects that printing the redesigned labels will cost the same amount as printing the existing label.
Results
The labor and printing preparation costs associated with redesigning labels for HCFC-123 fire suppression agent containers are summarized in Table 2. The calculated labor cost includes the administrative labor costs and graphic design labor costs associated with redesigning the labels. The prepress and engraving costs are estimated to be between $501 and $1,333 per label. The total cost per producer includes labor costs and prepress and engraving costs.
   Table 2. Labor and Printing Preparation Costs of Labeling Redesign (2017$)
Criteria
                                Lower Estimate
                               Central Estimate
                                Higher Estimate
Administrative Hours (Redesign)[a]
                                      1.5
                                      3.5
                                      5.5
Administrative Labor Costs (Redesign)[b]
                                     $288
                                     $671
                                    $1,054
Graphic Design Hours (Redesign)[a]
                                      3.8
                                      5.6
                                      7.5
Graphic Design Labor Cost (Redesign)[b]
                                     $263
                                     $395
                                     $526
Subtotal for Labor Costs[c]
                                     $551
                                    $1,066
                                    $1,580
Prepress Costs (per label)
                                     $311
                                     $330
                                     $698
Engraving Costs (per label)
                                     $190
                                     $254
                                     $635
Subtotal for Prepress and Engraving Costs (per label)
                                     $501
                                     $584
                                    $1,333
Total Cost per Producer[d]
                                    $1,052
                                    $1,650
                                    $2,913
  Sources: RTI (2003), U.S. Department of Labor (2017a and 2017b)
  a The hours shown are rounded to the nearest tenth of an hour. 
  [b] Labor cost totals may not reflect independent rounding of hours shown in the table.
  [c] The labor costs are assumed to be the same if producers also redesign the label for containers made with recycled/reclaimed HCFC-123 or HCFC-123 imported before 2020.
  [d] If producers also redesign the label for containers made with recycled/reclaimed HCFC-123 or HCFC-123 imported before 2020, the prepress and engraving costs will double, and the total cost per producer is estimated to be between $1,553 and $4,246.
References
RTI. 2003. FDA Labeling Cost Model: Final Report. Prepared for DHHS/PHS/FDA/CFSAN/OSAS/DMST by RTI. Revised January 2003. Available online at: http://foodrisk.org/default/assets/File/labeling_cost_model.pdf. 

U.S. Department of Labor. 2017a. Occupational Employment and Wages, May 2017. 27-1024 Graphic Designers. Available online at: http://www.bls.gov/oes/current/oes271024.htm.

U.S. Department of Labor. 2017b. Occupational Employment and Wages, May 2017. 11-2021 Marketing Managers. Available online at: https://www.bls.gov/oes/current/oes112021.htm.

U.S. Environmental Protection Agency. 2013. Labeling HCFC Products Starting 2015: What You Need to Know. Office of Air and Radiation (6205J). EPA-402-E-13-001. August 2013. Available online at: https://www.epa.gov/sites/production/files/2015-07/documents/labeling_hcfc_products_starting_2015_what_you_need_to_know.pdf.  


