On December 12, 2024, the U.S. Environmental Protection Agency (USEPA) published its final rule extending the time for certain new variable refrigerant flow (VRF) air conditioning and heat pump systems to comply with the hydrofluorocarbon (HFC) phasedown requirements of the American Innovation and Manufacturing Act of 2020 (AIM Act).

HFCs are greenhouse gases with global warming potentials (GWPs) that can be hundreds to thousands of times more potent than carbon dioxide. To address this climate risk, the AIM Act authorizes USEPA to restrict the use of HFCs in specific technology sectors such as foam, aerosols, refrigeration, air conditioning, and heat pumps. USEPA issued final regulations to implement the AIM Act in October 2023 and created the Technology Transitions Program to guide the HFC phasedown process.

The 2023 regulations prohibit the manufacture, import, export, sale, distribution, and installation of listed technologies and systems that use HFCs with high GWPs, as defined in the regulations. The compliance deadlines depend on the type of systems but are generally January 1, 2025 or 2026. For example, after January 1, 2025, the following systems cannot be installed with HFCs above the listed GWPs: chillers for comfort cooling, ice rinks, and certain refrigerated transport.

In response to feedback from the regulated community, USEPA’s December 2024 rule provides one additional year, until January 1, 2027, for the installation of certain new VRF air conditioning and heat pump systems where the components are manufactured in the United States or imported into the United States before January 1, 2026. The rule provides a further extension to January 1, 2028 for the installation of certain new VRF air conditioning and heat pump systems where a building permit approving the use of an HFC or HFC-containing blend in the VRF system was issued prior to October 5, 2023.

As relevant to building owners and developers, as well as associated service providers, the 2023 regulations provide that no person may install any regulated system, nor have any such system be installed through their position as a designer, owner, or operator of that system. “Install” is defined in the 2023 regulations as “to complete a field-assembled system’s circuit, including charging with a full charge, such that the system can function and is ready for use for its intended purpose.” The 2023 regulations specify that “[t]he following actions, upon charging the system to full charge, are considered an installation of a refrigeration, air conditioning, and heat pump system under paragraph (c) of this section: (1) Assembling a system for the first time from used or new components; (2) Increasing the cooling capacity, in BTU per hour, of an existing system; or (3) Replacing 75 percent or more of evaporators (by number) and 100 percent of the compressor racks, condensers, and connected evaporator loads of an existing system.”

USEPA’s December 2024 rule recognizes the lengthy design, permitting, and construction schedules faced by many real estate developers and owners and aims to avoid stranding equipment that was manufactured and incorporated into project designs prior to the regulatory changes.

SPR is tracking implementation of the AIM Act and Technology Transitions Program as part of its building systems and real estate management practice.