SUPPLEMENTARY INFORMATION:

Subsection (e)(2)(D)(i) of the American Innovation and Manufacturing Act of 2020 (AIM Act) directs the Environmental Protection Agency (EPA) to determine, by October 1 of each calendar year, the quantity of allowances for the production and consumption of regulated substances that may be used for the following calendar year. EPA has codified the production and consumption baselines and phasedown schedules for regulated substances in 40 CFR 84.7. Under the phasedown schedule, for 2026, total production allowances may not exceed 229,521,263 metric tons of exchange value equivalent (MTEVe) and total consumption allowances may not exceed 181,522,990 MTEVe.

EPA regulations at 40 CFR part 84, subpart A, outline the process by which the Agency determines the number of allowances each entity is allocated. EPA allocated allowances consistent with the regulatory requirements and has posted entity-specific allowance allocations on its website. An allowance allocated under the AIM Act does not constitute a property right and is a limited authorization for the production or consumption of a regulated substance. EPA also tracks information on how those allowances are used. Reported information for calendar year 2024 HFC activity, including how many allowances were used and total U.S. production and consumption of HFCs in 2024, can be found on EPA's website in its HFC Data Hub. Both allowance allocations and the HFC Data Hub can be found by visiting https://www.epa.gov/​climate-hfcs-reduction.

Note that while allowances may be transferred or conferred once they are allocated, they can only be expended to cover imports and production in the calendar year for which they are allocated. In other words, calendar year 2026 allowances may only be expended for production and import of bulk HFCs between January 1, 2026, and December 31, 2026. ( printed page 52392)

Application-Specific Allowances

EPA established the methodology for issuing application-specific allowances in the 2021 final rule titled Phasedown of Hydrofluorocarbons: Establishing the Allowance Allocation and Trading Program Under the American Innovation and Manufacturing Act (86 FR 55116, October 5, 2021) and updated this methodology in the final rule titled Phasedown of Hydrofluorocarbons: Review and Renewal of Eligibility for Application-Specific Allowances (90 FR 41676, August 26, 2025), hereinafter referred to as the HFC Allocation Framework Rule and the 2025 Application-specific Allowance Review and Renewal Rule, respectively. The methodology for application-specific allowance allocations is codified in 40 CFR 84.13. Because application-specific allowances can be expended to either produce or import HFCs, and application-specific allowances must be provided from within the overall annual production and consumption caps, EPA subtracts the amount of application-specific allowances allocated from both the production and consumption general allowance pools. EPA issues application-specific allowances to end users in four applications: propellants in metered dose inhalers (MDIs), structural composite preformed polyurethane foam for marine use and trailer use, etching of semiconductor material or wafers and the cleaning of chemical vapor deposition chambers within the semiconductor manufacturing sector, and onboard aerospace fire suppression. Additionally, EPA issues application-specific allowances to the U.S. Department of Defense for mission-critical military end uses.

Applying the methodology codified in 40 CFR 84.13, EPA allocated the number of application-specific allowances shown in Table 1.

EPA's 2025 Application-specific Allowance Review and Renewal Rule established an annual set-aside of 1,000,000 MTEVe allowances to accommodate unforeseen HFC needs resulting from a global pandemic, other public health emergency, or other healthcare system need (referred hereafter as the “MDI set-aside”). EPA has set aside 1,000,000 MTEVe allowances for that purpose from both the consumption and production pools. Entities that use HFCs as a propellant in MDIs have until April 30, 2026, to apply for these allowances. Once the deadline passes, EPA will evaluate such requests and expects to issue allowances within 60 days. EPA also intends to distribute any remaining set-aside allowances pro rata amongst general pool allowance holders within 60 days of the April 30 request date. For more information, see the 2025 Application-specific Allowance Review and Renewal Rule and 40 CFR 84.15.

General Pool Allowances

EPA's 2023 final rule titled Phasedown of Hydrofluorocarbons: Allowance Allocation Methodology for 2024 and Later Years (88 FR 46836, July 20, 2023) updated the methodology for how the Agency would issue production and consumption allowances for 2024 through 2028 for general pool allowance holders. These updates are codified in 40 CFR 84.9 (production) and 40 CFR 84.11 (consumption), and EPA has issued allowances to entities who meet the criteria in the regulations, including those who were previously issued consumption allowances as new market entrants pursuant to 40 CFR 84.15.

EPA also created a new form of allowances called “production for export allowances” in the 2025 Application-specific Allowance Review and Renewal Rule. In accordance with the provisions codified in that rule at 40 CFR 84.18, prior to issuing general pool production allowances, EPA allocated 3,000 MTEVe production for export allowances to Iofina Chemical.

EPA allocated the number of production allowances shown in Table 2.

EPA allocated the number of consumption allowances shown in Table 3.

( printed page 52395)

Administrative Consequences

Separate from the allocation of calendar year 2026 allowances, EPA hereby provides notice that it also took final actions establishing administrative consequences for specific entities. Each action, which EPA took through a letter issued to the relevant entity, is a separate final action informing the recipient entity of an administrative consequence. The requirements pertaining to administrative consequences are codified in 40 CFR 84.35. Under this provision, EPA can retire, revoke, or withhold the allocation of allowances, or ban an entity from receiving, transferring, or conferring allowances. A retired allowance is one that must go unused and expire 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 eligible allowance holders; and a withheld allowance is one that is retained by the Agency until an allowance holder that has failed to meet a regulatory requirement comes back into compliance, at which point EPA allocates it to the allowance holder. More information on EPA's approach to administrative consequences can be found at 86 FR 55168.

EPA finalized administrative consequences for certain entities that were allocated application-specific allowances, listed in Table 1 for calendar year 2026. These entities failed to submit either their auditing reports as required in 40 CFR 84.33 or their application-specific allowance holder biannual report(s) as required in 40 CFR 84.31(h)(1) and therefore EPA has withheld a portion of their allowances (if allowances were allocated to the entity) and will continue withholding these allowances until the missing reports are submitted and subsequently verified by EPA: Guardian Protective Devices, Odin Pharmaceuticals, Proteng Distribution, and Wolfspeed. These final actions became effective on September 30, 2025, and are summarized below in Table 4.

EPA finalized administrative consequences for certain entities that were allocated consumption allowances, as listed in Table 3 for calendar year 2026. These final actions affecting calendar year 2026 allowances became effective on September 30, 2025. Specifically, the following entity failed to submit auditing reports as required in 40 CFR 84.33 and therefore EPA has withheld a portion of their consumption allowances until the missing reports are filed and verified by EPA: MEK Chemical Corporation. The following entities imported regulated HFCs without expending the requisite number of consumption allowances at the time of import and therefore EPA has retired and/or revoked consumption allowances commensurate with the quantities of regulated substances imported without allowances: IGas Holdings, Matheson Tri-Gas, Inc., and Wilhelmsen Ships Service. A summary of these administrative consequences is included in Table 5.

( printed page 52396)

In addition to the administrative consequences listed in Tables 4 and 5 that were finalized in the past year, 62,674.8 MTEVe of consumption allowances were retired and 982,654.4 MTEVe were revoked, consistent with administrative consequences finalized in prior years and described in Phasedown of Hydrofluorocarbons: Notice of 2024 Allowance Allocations for Production and Consumption of Regulated Substances Under the American Innovation and Manufacturing Act of 2020, and Notice of Final Administrative Consequences (88 FR 72060, Oct. 19, 2023), hereafter referred to as the 2024 Notice of HFC Allowance Allocations. The entities subject to those prior year actions include American Air Components, Bluon, Honeywell International (now known as Solstice Advanced Materials US), and Resonac America.

Adjustments to Application-Specific Allowances

As described above, certain entities listed in Table 1 have had a portion of their calendar year 2026 allowances withheld for not submitting the auditing report required in 40 CFR 84.33 or their calendar year 2024 application-specific allowance holder biannual report(s) as required in 40 CFR 84.31(h)(1). These allowances will be withheld until the missing reports are submitted and subsequently verified by EPA. Accordingly, Table 7 shows the number of application-specific allowances available to each entity as a result of finalized administrative consequences.

( printed page 52397)

Adjustments to Consumption Allowances

An entity is eligible to receive redistributed allowances if they were not subject to administrative consequences that took effect on the same day (except entities that had allowances withheld). For example, if EPA revoked 50 MTEVe allowances from company A and 50 MTEVe allowances from company B, effective on the same day, EPA's redistribution of that single pool of 100 MTEVe allowances would go to all general pool allowances holders except company A and company B. This applies regardless of whether the revocation happens in one year or over multiple years. However, entities who only had allowances withheld by the Agency, e.g., as a result of failure to comply with the auditing requirements as contained in 40 CFR 84.33, were eligible to receive allowances that were redistributed.

For 2026, the total number of revoked and redistributed allowances is 1,068,198.7 MTEVe, which are being apportioned to eligible consumption allowance holders based on their relative market share, and the total number of retired allowances in 2026 is 64,161.5 MTEVe. These amounts are the result of administrative consequences with various effective dates. For more information on the administrative consequences finalized in 2023 that impact calendar year 2026 consumption allowances, see the 2024 Notice of HFC Allowance Allocations (88 FR 72060, Oct. 19, 2023).

Table 8 reflects 2026 consumption allowance totals available to each entity as of October 1, 2025, after taking into account the administrative consequences and eligibility described elsewhere in this notice.

Judicial Review

The AIM Act provides that certain sections of the Clean Air Act (CAA) “shall apply to” the AIM Act and actions “promulgated by the Administrator of [EPA] pursuant to [the AIM Act] as though [the AIM Act] were expressly included in title VI of [the CAA].” 42 U.S.C. 7675(k)(1)(C). Among the applicable sections of the CAA is section 307, which includes provisions governing judicial review. 42 U.S.C. 7607(b)(1). Section 307(b)(1) provides, in part, that petitions for review must only be filed in the United States Court of Appeals for the District of Columbia Circuit: (i) When the agency action consists of “nationally applicable regulations promulgated, or final actions taken, by the Administrator,” or (ii) when such action is locally or regionally applicable, but “such action is based on a determination of nationwide scope or effect and if in taking such action the Administrator finds and publishes that such action is based on such a determination.”

The issuance of calendar year 2026 allowances for the production and consumption of hydrofluorocarbons herein noticed is “nationally applicable” within the meaning of CAA section 307(b)(1). The AIM Act imposes a national cap on the total number of allowances available for each year for all entities nationwide. 42 U.S.C. 7675(e)(2)(B)-(D). For 2025, there was a national pool of 229,521,263 production allowances and 181,522,990 consumption allowances available to distribute. The allocation action noticed herein distributed that finite set of allowances consistent with the methodology EPA established in the nationally applicable framework rule. As such, the allowance allocation is the division and assignment of a single, nationwide pool of HFC allowances to entities across the country according to the uniform, national methodology established in EPA's regulations. Each entity's allowance allocation is a relative share of that pool; thus, any additional allowances awarded to one entity directly affects the allocations to others. For these reasons, the final action of the Agency allocating hydrofluorocarbon allowances to entities located throughout the country is nationally applicable.

Under section 307(b)(1) of the CAA, petitions for judicial review of this allocation action must be filed in the United States Court of Appeals for the District of Columbia Circuit by January 20, 2026.

As described, in this notice EPA is also publishing notice of adjudicatory actions establishing administrative consequences that were previously taken effective September 30, 2025. Under section 307(b)(1) of the CAA, any petition for judicial review of such a final action must be filed in the United States Court of Appeals for the appropriate circuit by January 20, 2026.

Filing a petition for reconsideration by the Administrator does not affect the finality of any action noticed herein for purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed and ( printed page 52399) shall not postpone the effectiveness of such action. The final actions described herein may not be challenged later in proceedings to enforce their requirements. 42 U.S.C. 7607(b)(2).