What's in this episode?
How do you ensure EPA 608 compliance in 2019-2020? We deep dive into best practices for staying compliant and what you can expect to impact your business starting in 2019. Also check out our blog on EPA 608 compliance.
Trey: Good morning and welcome back to the continuation of series two for our Facilities Management Coffee Talks. We've had a serious request from our listeners to invite a couple of industry experts on the podcast to address today's market challenges and industry trends.
Trey: Our guest today is Mike Parks, and he is here to discuss enterprise refrigerant management, compliance reporting, and the best way to track refrigerant. Thanks for joining the call Mike.
Mike: Hey. Thanks so much for having me Trey. I really appreciate you guys letting me be on the show.
Trey: Now Mike, you're a senior vice president of product strategy at Accruent today, but I think our listeners are going to be really intrigued with your background in history and grocery. Can you share a little bit about your background?
Mike: Yeah. I sure can. Thanks so much Trey. I actually joined the grocery industry in the mid-1980s, I'm going to age myself a little bit. I started for an organization in southern California, called Alpha Beta, which was purchased by The Yucaipa Group, then Ralph's Grocery Company, and then Fred Meijer, and finally the Kroger Organization. And throughout roughly 23 years in that industry, I've been a box person, and apprentice meat cutter, a night crew manager, a store manager, an assistant district manager, I've run training, been involved in operations and accounting, and certainly run facilities, maintenance, and energy throughout my career. It's been an amazing career, and really prepped me for my foray into this [inaudible 00:01:25]side of the business.
Trey: I'm loving it here, Mike. I'm grinning on my end, because our listeners are really looking for that expertise in grocery and somebody that has experienced the same climb, some of the same challenges they have.
Trey: So, today's subject is really diving into enterprise refrigerant management, from the compliance guidelines. With the Trump administration in place, EPA guidelines have rolled back a little bit, there seem to be a lot of changes. Can you share a little of your feedback on where you see this affected our listener's business?
Mike: Yeah, so keeping politics out of it, the one thing I would say is that legislation on this subject typically takes a long time to get passed. When I look at regulations that are taking effect in January first of 2019, those were initially proposed in 2015, and then finalized in September of 2016. So any changes that may be made by the new EPA administrator that has been appointed by president Trump, I don't see those taking effect in the foreseeable future. What I would recommend our clients do is to ensure that they either have internal subject matter expertise, or they're engaged with a software provider or a consultant that does that on their behalf, so they can stay abreast of upcoming regulations, including any proposed changes to section 608 of the EPA's guidelines.
Trey: Well that's news to me, Mike. I did not realize it took that long for this legislation to hit. And I'm taking notes, I will come back to some of the idea on an industry expert, but talk to us about what you're seeing now, if you don't mind.
Mike: Yeah, absolutely.
Mike: So effective January first of 2019, there are some new thresholds within section 608 of the EPA's guidelines, that require updated leak repair and maintenance practices for industrial process refrigeration, commercial refrigeration, and comfort cooling systems greater than 50 pounds.
Trey: Okay, that's good. So, we're finding in the past it had just been outside of some of the federal mandates, it had also been some state mandates in California. Are you finding some other states getting involved?
Mike: Yes, so the California Air Resources Board certainly has more stringent guidelines than the EPA, and we have seen other states, like New York and New Jersey, with proposed plans for their particular state. I have not seen any that has passed through the state legislature as of yet, but we do have experts on our team that are responsible for staying on top of those issues.
Trey: So that's helpful, and I like that you just said your team. Our listeners obviously are operators, they're facility managers, they're people in the field, and they want to do the work, they don't want to have to respond to some of this. Where does this leave their business and where do you recommend they look to get help, responding and staying in compliance?
Mike: Yeah, so there's some fantastic organizations that they could potentially take advantage of. The food management industry has a fantastic group on refrigeration management. The EPA itself has an organization called GreenChill, that best in class operators in terms, in terms of refrigerant emissions and carbon footprints are members of, today. And then certainly through either a consultancy or working with a software provider, they can potentially have access to some subject matter expertise that they do not have on staff.
Trey: So knowing that these folks are operators, I like your experience background, where do you think they should get started to address concerns with leak rates? And then obviously capturing and staying in compliance with these guidelines?
Mike: Yeah, so often times when people talk about the management of refrigeration systems, and specifically Freon, or fugitive gases, they think compliance, but it really should be reviewed as a repaired maintenance expense, and a very expensive asset within those locations, that you can potentially do better with to reduce your operating expense. So, the first thing that I would say is you need to have a single source of the truth. And what I mean by that is an accurate measurement of all the refrigerated systems that you have across your state, hopefully that is not on paper, or an Excel document, but that can be stored on the cloud, and easily accessible by your engineering team, and your external service contractors, so that they can view the state of refrigerated system, the size or capacity of that system, the type of refrigerant that is in that system, as well as all of the information regarding any repairs or modifications that have been done to that system throughout its history.
Trey: It's interesting because these operators, so they go down this path, and they either adopt a better process, or incorporate a software package that ensure compliance. How do they make sure their service providers are onboard as well, because honestly it's not just the operator, right? It's the people doing the repairs as well.
Mike: Yeah, absolutely. So, I am not a mechanical engineer, a refrigeration engineer, by trade. I went to school and studied English composition with a minor in broadcast journalism, but I have worked with enough talented, professional engineers, and people have told me things that just stuck with me over time. I had a buddy I used to work with, his name was Gail Mote, and he told me that refrigerated compressors do not die, they get assassinated. Meaning that motor will run forever if it is operated correctly, and if the system is engineered correctly. And so to ensure that you get buy-in from your service contractors, you need to make sure that you give them a system that is easy for them to use, and that also provides value to them as their service contractor.
Mike: So if I'm an engineer, and I go to a store to work on a refrigerated cabinet, or a refrigerated system, the symptom that I'm looking at, and its potential cause, doesn't live in a silo. Someone potentially installed this system, or worked on this system, before I did, and having access to see what other people have done with the system, and what they've potentially tried to do in the past to make it operate more efficiently is incredibly beneficial to me, and that's why this online collaboration and ability for technicians to see the work that other technicians have done, as well as the ability to see refrigerant that has been added to the system, if the system has been retrofitted, it only benefits technicians in the field.
Mike: That said, operators win when technicians are fixing equipment, they don't win when they are filling out paper forms, or spending 20 minutes at the computer entering details. The system needs to be easy for them to use.
Trey: So that goes back to your system of record, or your single source for the truth, and I think it makes a tone of sense. People won't do the work, or they won't capture the information, unless it's easy for them to do so.
Mike: That's absolutely right, Trey, and you certainly can have some systems today that A, recording of refrigerant events will require, can be requirements to be done, for the contractor to receive payment for an invoice. And you can also have a closed loop system where through an integration with a computerized maintenance management solution, or a mobile workforce management solution, if a technician is doing work on a refrigeration system, or an HVAC unit, the application can ask, "Was a refrigerant used on this work order?"
Mike: And if the answer is yes, it will quickly take them to a page to record that event, so that it doesn't have to be done on paper, it doesn't have to be done in the back office, and the process is seamless to that tech in the field.
Trey: So one of the things some of ... you know, in my travels I get to meet with clients, and I get to meet with some of our listeners, and one of the things that they say is, "What are the ramifications if I just don't do this? If I just ignore the reporting problems? Are there issues that I have to deal with?"
Mike: Yeah, so there are lots of different compliance issues that potentially you could be liable for within section 608 of the EPA guidelines. First and foremost, you can't have a system that exceeds the EPA guidelines for leak rate, as of January first of 2019, that's 20 percent for commercial refrigeration and 10 percent for comfort cooling, and those are systems that exceed 50 pounds in size. You also have to make sure that you've done a follow up leak inspection and verification, within 30 days of a leak repair.
Mike: Either of those two events, if you are over that leak threshold for an extended period of time, or you don't do your follow up leak inspection, the EPA has the ability to fine you up to 37,500 dollars per day, per instance. So if I'm an operator of size, and I have 100 sites with 13 to 15 system per site, I could have one or two percent of my systems that are out of compliance that could quickly add up to millions of dollars' worth of potential liability.
Trey: That's a big number, and that's a lot of exposure. Well, let me close out, I know your focused on product strategy, and over at Accruent you guys are doing some work in this space obviously. Did you have a product that y'all developed very specifically focused on solving this problem?
Mike: Yeah, we sure do. So we have a product called enterprise refrigerant management, it is our vx Sustain application, and it's actually the longest standing software solution that we have within that common framework. Our first customer on the application was back in 1998, we've been managing leak rates for customers over the past 20 plus years through that application, and we are proud to have gone on some journeys with customers that are really driving best in class leak rate performance across their systems. The food management industry typically says that refrigerated systems leak between 21 and 23 percent of their Freon every year, dependent upon the year and the type of system. GreenChill members typically average between 12 and a half and 13 percent in the last couple of years. [inaudible 00:11:27] customers as an aggregate through Accruent, average just under 10 percent total leak rate, and we've got some best in class customers that have had single digit leak rates for five, six, and even seven years, concurrently.
Trey: Mike, this is, I think, exactly what our listeners were looking for. I'm sure you will understand if they look at multiple solutions out there, but this gives them a great jumping off point, and obviously helps them understand some of the challenges they're facing now.
Mike: I really appreciate it, Trey. The one thing I would add, and I would want to make sure that all of the people listening to the podcast understand, is there is one new regulation that is part of the EPA changes that take effect in January first of 2019, that is most critical. And that is at the end of 2019, each operator will be required to submit a report to the EPA my March first of 2020, with every system across their state that had a leak rate over 125 percent, including all of the repairs done to that system, and all of the Freon added.
Mike: And we personally view that as an open invitation from the EPA to require their customer base, or their operator base, to self police. And I don't think that enough organizations have taken the time to run a sample report to see which systems could be out of compliance today, and then to take the corrective measures to ensure that that list is as clean as possible, before it's required on March first of 2020.
Trey: So that's incredibly interesting to me, and I'm sure to our listeners. I think we came on the podcast assuming we would talk about some of the impact of the Trump administration, and what we've learned is, boy, there's a lot of history here, and the legislation that took place in 2015 and 16 is certainly where our focus should be, near term.
Trey: So all right, thanks Mike. To our listeners, we are going to invite Mike back, based on his grocery background, we'll probably be digging into managing master service agreements, and even looking at questionable invoices from service providers. So we'll look forward to those talks, please tune in sometime soon.
Mike: Thanks so much for having me, Trey.