42 U.S.C. § 7675 — American innovation and manufacturing

(a) Short title: This section may be called the "American Innovation and Manufacturing Act of 2020."

(b) Definitions: This section defines the key terms it uses. "Administrator" means the head of the EPA. "Allowance" means a limited permission to produce or consume a set amount of a regulated substance, created under subsection (e). "Consumption" of a regulated substance means the amount produced in the U.S. plus the amount imported into the U.S., minus the amount exported from the U.S. "Consumption baseline" is the starting-point figure set under subsection (e)(1)(C). "Exchange value" is a number assigned to a substance under subsections (c) and (e) that lets different substances be compared on the same scale. "Import" means bringing something into any place under U.S. jurisdiction, even if it wouldn't technically count as an "import" under ordinary customs law. "Produce" means manufacturing a regulated substance from a raw material or feedstock chemical — but not destroying it using EPA-approved technology; it also excludes making a substance that gets entirely used up (except in trace amounts) in making another chemical, and excludes reclaiming, reusing, or recycling a substance. "Production baseline" is the starting-point figure set under subsection (e)(1)(B). "Reclaim" and "reclamation" mean reprocessing a recovered substance to at least a set purity standard, and verifying that purity. "Recover" means removing a substance from equipment, in any condition, and storing it in a separate container. "Regulated substance" means a substance listed in the table in subsection (c)(1), or one the EPA later adds under subsection (c)(3).

(c) Listing of regulated substances: (1) A table lists specific hydrofluorocarbon (HFC) chemicals as regulated substances, each with an assigned exchange value — for example, HFC-134a has a value of 1430, and HFC-23 has a value of 14800. (2) The EPA may periodically review these exchange values and, after public comment, adjust them — but only based on the best available science and information consistent with widely accepted values. (3) The EPA may add other saturated hydrofluorocarbon chemicals to the regulated list, after public comment, if the chemical has an exchange value over 53 and adding it fits this section's purposes. However, this power doesn't let the EPA treat a "blend" of substances as regulated just because it contains a hydrofluorocarbon for phase-down purposes — though the EPA can still separately regulate that hydrofluorocarbon on its own, even within a blend.

(d) Monitoring and reporting requirements: (1) On a schedule the EPA sets, but at least once a year, anyone who produces, imports, exports, destroys, transforms, uses as a process agent, or reclaims a regulated substance must report to the EPA how much of the substance they handled in each of those ways. The report must be signed and attested by a "responsible officer" as the Clean Air Act defines that term. A person^* no longer needs to file these reports once they've permanently stopped all these activities for every regulated substance and told the EPA so in writing. Each report must also cover this same information for the 2011–2013 baseline period. (2) The EPA may let a person combine this report with other related information they already have to report to the EPA.

(e) Phase-down of production and consumption of regulated substances: (1) Baselines — The EPA must set a "production baseline" and a "consumption baseline" covering all regulated substances combined. The production baseline is the average yearly amount produced in the U.S. from 2011 through 2013, plus 15 percent of the 1989 U.S. production of hydrochlorofluorocarbons (HCFCs) and 0.42 percent of the 1989 U.S. production of chlorofluorocarbons (CFCs). The consumption baseline is calculated the same way, using consumption figures instead of production figures. Two further tables assign exchange values specifically to HCFCs and CFCs, used only for these baseline calculations; the EPA may periodically review and adjust these values too, following the same public-comment, best-science process as in (c)(2). (2) Production and consumption phase-down — Starting on set dates, no one may produce a regulated substance without matching production allowances (except as allowed in paragraph (5)), consume one without matching consumption allowances, or hold, use, or transfer any allowance except under EPA regulations. Each year, the EPA must keep total U.S. production and consumption at or below a shrinking share of the baselines: 90 percent for 2020 through 2023, 60 percent for 2024 through 2028, 30 percent for 2029 through 2033, 20 percent for 2034 and 2035, and 15 percent from 2036 onward. By October 1 each year, the EPA calculates how many allowances will exist for the following year. An allowance is not a property right — it is only a limited permission that the government can end or limit at any time. (3) Within 270 days of December 27, 2020, after public comment, the EPA had to issue a final rule setting up the allowance-trading system for both production and consumption, following the phase-down schedule above. (4) Exceptions; essential uses — This section (other than the reporting rule in (d)(1)) doesn't apply to a substance fully used up in making another chemical, or one not fully used up if the leftover amount is later destroyed. Starting December 27, 2020, the EPA may — after weighing feasibility, cost, safety, and other factors including economic and environmental impacts — hand out extra allowances, for up to 5 years at a time, for an "essential use," meaning no safe substitute is available and normal supply is insufficient for that use. If someone petitions for an essential-use designation, the EPA must make the petition public and take comment within 180 days, and issue a final decision within 270 days. Anyone who gets such an allocation can't produce or consume more than their allowance permits. Separately, for the 5 years starting December 27, 2020, the EPA must automatically allocate whatever allowances are needed, through rulemaking, for these specific uses: propellants in metered-dose inhalers, defense sprays, certain marine and trailer foam, semiconductor manufacturing (etching and chamber cleaning), certain mission-critical military uses, and onboard aerospace fire suppression. For every essential-use allocation, the EPA must review substitute availability at least every 5 years, and shall authorize the production or consumption, as applicable, of the regulated substance used in the application for renewable periods of not more than 5 years for exclusive use in the application if the same conditions still hold. The EPA may also, by rule and after public comment, let a producer exceed their production allowance if the extra production happens at a U.S. facility solely for export to a country not covered by the export ban in subsection (j)(1), for renewable periods of up to 5 years, as long as it doesn't violate the overall compliance limit in paragraph (2)(B).

(f) Accelerated schedule: The EPA may, only in response to a petition and after public comment, set a phase-down schedule stricter than the one in subsection (e)(2)(C). Any such rule must apply the allowance system uniformly, ensure enough supply for essential-use and mandatory-allocation applications, encourage continued reclaiming, and can't set allowances below what was actually consumed the year before the EPA's final decision. Anyone may petition for a faster schedule, following EPA-set requirements and including supporting data. The EPA must make the petition public and seek comment within 180 days, and take final action within 270 days, weighing the best data, substitute availability (including cost, safety, and related factors), economic and environmental costs compared to historical trends, and how much of the phase-down period is left. If the EPA decides to grant the petition, the final rule must be issued within 1 year of that decision. Either way, the EPA must publish its reasons for granting or denying. If the petition's data is insufficient, the EPA may use other legal authority to gather more. An accelerated rule can't take effect before January 1, 2025. The EPA must review substitute availability for any accelerated schedule by January 1, 2026, again by January 1, 2031, and at least every 5 years after that, and make each review public. This subsection can never be used to make the phase-down schedule less strict than subsection (e)(2)(C) already requires.

(g) Exchange authority: Within 270 days of December 27, 2020, after public comment, the EPA had to issue a final rule governing how production allowances can be transferred between parties, using the exchange values from subsection (c)(1) or from any rule that added a new regulated substance. That rule must ensure such transfers cause greater total production cuts than would happen without them; must allow two or more parties to trade production allowances only if the seller takes on an enforceable, measurable production cut that exceeds what they'd otherwise have to cut, exceeds the amount of production represented by the transferred allowances, and wouldn't have happened without the trade; and must let consumption allowances be traded the same way.

(h) Management of regulated substances: To maximize reclaiming, minimize leaks from equipment, and keep technicians and consumers safe, the EPA must write rules controlling — where appropriate — the servicing, repair, disposal, or installation of equipment involving a regulated substance, a substitute for one, or the reclaiming of either as a refrigerant, including requiring trained technicians who meet minimum standards. In carrying this out, the EPA must consider using its authority to expand opportunities for reclaiming refrigerants. A recovered refrigerant must be reclaimed before it's sold or transferred to a new owner^*, unless it's transferred specifically to be reclaimed or destroyed. The EPA may coordinate these rules with other related rules on servicing, repair, disposal, installation, or reclaiming. None of these rules apply to a regulated substance or its substitute while it's contained in foam. Subject to available funding, the EPA must also set up a grant program for small businesses (as defined in 15 U.S.C. § 632) to help them buy new equipment for recycling, recovering, or reclaiming substitutes — including approved refrigerant recycling equipment for motor vehicle air conditioning systems. The business must cover at least 25 percent of the project^* cost itself. Up to $5,000,000 a year is authorized for this grant program for fiscal years 2021 through 2023.

(i) Technology transitions: The EPA may, by rule, fully or partly restrict — or phase out on a graduated schedule — the use of a regulated substance in a particular industry sector or subsector. Before proposing such a rule, the EPA must consider negotiating with the affected industry using the formal negotiated-rulemaking process under 5 U.S.C. chapter 5, subchapter III (the Negotiated Rulemaking Act of 1990). If the EPA does negotiate this way, it should generally give priority to finishing that rulemaking over others under this subsection that weren't negotiated. If the EPA decides not to negotiate, it must publish its reasons before starting the rulemaking. Anyone may petition for a restriction rule, including a request that the EPA negotiate with the relevant industry. The EPA must grant or deny the petition within 180 days; if it denies the petition, it must publish its reasons in the Federal Register; if it grants the petition, it must issue a final rule within 2 years; and it must make any petition public within 30 days of receiving it. In writing these rules or deciding petitions, the EPA must weigh the best data, substitute availability (feasibility, cost, safety, and related factors), economic and environmental costs compared to historical trends, and how much phase-down time is left. The EPA must also evaluate substitutes for each sector or subsector, including their safety, and make that evaluation public. A rule under this subsection can't take effect until at least 1 year after the EPA issues it. These rules don't apply to an essential use under clause (i) or (iv) of subsection (e)(4)(B), including any use for which production or consumption of the regulated substance is extended under clause (v)(II) of that subsection, or — except for equipment being retrofitted — to equipment already in place in a sector before December 27, 2020. "Retrofit" means upgrading existing equipment to change the regulated substance it uses, including changing lubricants, gaskets, filters, driers, valves, o-rings, or other components for that purpose.

(j) International cooperation: Except as allowed in paragraph (2), no one covered by this section may trade or transfer a production allowance, or — after January 1, 2033 — export a regulated substance, to someone in a foreign country that the EPA determines hasn't adopted similar production and consumption requirements or commitments within a reasonable time after December 27, 2020. A U.S. person may still transfer a production allowance to someone in a foreign country if, at the time of transfer, the EPA revises U.S. production limits so that total U.S. production for the substance equals the smallest of: the maximum allowed that year under this section, minus the transfer; the maximum allowed that year under other applicable law, minus the transfer; or the 3-year average of actual U.S. production, minus the transfer. Likewise, a U.S. person may acquire a production allowance from someone in a foreign country if the EPA finds that country revised its own domestic production limits in the same way. The EPA may lower or raise U.S. production limits as needed to make these transfers work. The EPA had to issue a final rule to carry out this subsection within 1 year of December 27, 2020, and must review — and revise if necessary — that rule at least once a year after that.

(k) Relationship to other law: The EPA may issue whatever regulations are needed to carry out its duties under this section, and may delegate its powers under this section to any appropriate EPA officer or employee. Certain Clean Air Act enforcement and judicial-review provisions — sections 113, 114, 304, and 307 — apply to this section and any rule issued under it as though this section were formally part of Title VI of the Clean Air Act. For the 5 years starting December 27, 2020, no state^* or political subdivision may enforce its own statute or administrative action restricting the management or use of a regulated substance within an exclusive use that received a mandatory allocation under subsection (e)(4)(B)(iv)(I) — unless the EPA extends that use's allocation under subsection (e)(4)(B)(v)(II), in which case this same state and local preemption extends too, for up to 5 more years beyond the original period.