HVAC Services (Board decision, April 24, 2024)
In re HVAC Services (EAB CAA Appeal No. 24-05C): bulk HFC import settlement approved
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Plain-English summary
HVAC Services provides heating and air conditioning services in Mission, Texas. EPA alleged that the company imported R-410A, R-407C, and R-404A from Mexico in April and May 2022 without expending the required allowances. The shipments totaled 10,920 kilograms of HFCs and entered the United States at Progreso, Texas before being sold to a U.S. entity. The Consent Agreement resolved the matter without adjudicating the allegations and approved a $77,679 civil penalty.
Decision snapshot
- Cited authorities: The AIM Act and Clean Air Act, 42 U.S.C. §§ 7413 and 7675, with implementing regulations in 40 C.F.R. parts 13, 19, 22, and 84
- Outcome: The Consent Agreement was ratified, HVAC Services was ordered to comply with its terms, and a $77,679 civil penalty was approved.
- Key point: Importers of bulk regulated HFCs must expend the required allowances when importing them.
Full text (EPA EAB public release)
F I L E D
Apr 24, 2024
Clerk, Environmental Appeals Board
INITIALS ________________________
ENVIRONMENTAL APPEALS BOARD
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C.
)
)
In re HVAC Services ) Docket No. CAA-2024-008449
)
)
)
)
FINAL ORDER
Pursuant to 40 C.F.R. § 22.18(b)-(c) of EPA’s Consolidated Rules of Practice, the
attached Consent Agreement resolving this matter is incorporated by reference into this Final Order and is hereby ratified.
The Respondent is ORDERED to comply with all terms of the Consent Agreement,
effective immediately.
So ordered.1
ENVIRONMENTAL APPEALS BOARD
Dated: April 24, 2024 ________
Mary Kay Lynch
Environmental Appeals Judge
1
The three-member panel ratifying this matter is composed of Environmental Appeals
Judges Wendy L. Blake, Mary Kay Lynch, and Ammie Roseman-Orr.
ENVIRONMENTAL APPEALS BOARD
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C.
)
In re: )
) Docket No. CAA-2024-008449
HVAC Services )
)
)
)
CONSENT AGREEMENT
A. PRELIMINARY STATEMENT
-
This is an administrative penalty assessment proceeding brought for alleged violations of
the American Innovation and Manufacturing Act of 2020 (“AIM Act”), 42 U.S.C. § 7675, which governs the import of bulk hydrofluorocarbons (“HFCs”), under Section 113(d) of the Clean Air Act (the “Act” or “CAA”), 42 U.S.C. § 7413(d), which authorizes the EPA to bring administrative civil enforcement actions. -
HFCs are potent greenhouse gases that accelerate climate change. The United States has
committed, as a signatory of the Kigali Amendment to the Montreal Protocol, to reduce its production and consumption of HFCs by 85% in a stepwise manner by the year 2036. -
Complainant is Mary E. Greene, Director, Air Enforcement Division, of the United States
Environmental Protection Agency. -
Respondent is HVAC Services, a Texas corporation headquartered in Mission, Texas.
Respondent is a “person” as defined in Section 302(e) of the Act, 42 U.S.C. § 7602(e). -
Complainant and Respondent (together, the “Parties”), having agreed that settlement of
this action is in the public interest, consent to the issuance of the attached final order (“Final Order” or “Order”) ratifying this Consent Agreement (“Consent Agreement” or Consent Agreement and Final Order, Docket CAA-2024-008449“Agreement”) without adjudication of any issues of law or fact herein, and Respondent
agrees to comply with the terms of this Agreement and Final Order.
B. JURISDICTION -
This Consent Agreement is entered into under Section 113(d) of the Act, as amended,
42 U.S.C. § 7413(d), and the Consolidated Rules of Practice Governing the
Administrative Assessment of Civil Penalties and the Revocation/Termination or
Suspension of Permits, 40 C.F.R. Part 22.
-
The EPA and the United States Department of Justice jointly determined that this
matter, although it involves alleged violations that occurred more than one year
before the initiation of this proceeding, is appropriate for an administrative penalty
assessment. 42 U.S.C. § 7413(d).
-
The Environmental Appeals Board is authorized to ratify this Consent Agreement,
which memorializes a settlement between Complainant and Respondent. 40 C.F.R.
§§ 22.4(a) and 22.18(b).
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The issuance of this Consent Agreement and attached Final Order simultaneously
commences and concludes this proceeding. 40 C.F.R. § 22.13(b).
C. GOVERNING LAW -
This proceeding arises under the AIM Act, 42 U.S.C. § 7675, and the regulations
promulgated thereunder, which impose limits on HFC production and consumption.
-
EPA is authorized to enforce the AIM Act and any regulation promulgated thereunder
pursuant to the federal enforcement authorities established by Section 113(a) of the CAA,
42 U.S.C. § 7413(a). 42 U.S.C. § 7675(k)(1)(C).
-
The regulations at 40 C.F.R. Part 84, Subpart A, implement the AIM Act requirement to
2 Consent Agreement and Final Order, Docket CAA-2024-008449phase down HFC production and consumption.
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The regulations at 40 C.F.R. Part 84, Subpart A, apply to anyone who imports a regulated
substance. 40 C.F.R. § 84.1(b).
-
The regulations at 40 C.F.R. Part 84, Subpart A, contain the following definitions:
(a) An “application-specific allowance” is “a limited authorization granted in
accordance with subsection (e)(4)(B)(iv) of the AIM Act for the production or import of a regulated substance for use in the specifically identified applications that are listed in that subsection and in accordance with the restrictions contained at § 84.5(c).” 40 C.F.R. § 84.3.(b) “Bulk” is defined as: “[A] regulated substance of any amount that is in a container
for the transportation or storage of that substance such as cylinders, drums, ISO tanks, and small cans. A regulated substance that must first be transferred from a container to another container, vessel, or piece of equipment in order to realize its intended use is a bulk substance. A regulated substance contained in a manufactured product such as an appliance, an aerosol can, or a foam is not a bulk substance.” 40 C.F.R. § 84.3.(c) “Consumption allowances” are “a limited authorization to produce and import
regulated substances; however, consumption allowances may be used to produce regulated substances only in conjunction with production allowances.” 40 C.F.R. § 84.3.(d) “Exchange value equivalent” (“EVe”) is defined as “the exchange value-weighted
amount of a regulated substance obtained by multiplying the mass of a regulated substance by the exchange value of that substance.” 40 C.F.R. § 84.3. 3 Consent Agreement and Final Order, Docket CAA-2024-008449(e) “Import” is defined as “to land on, bring into, or introduce into, or attempt to land
on, bring into, or introduce into, any place subject to the jurisdiction of the United States, regardless of whether that landing, bringing, or introduction constitutes an importation within the meaning of the customs laws of the United States. Offloading used regulated substances recovered from equipment aboard a marine vessel, aircraft, or other aerospace vehicle during servicing is not considered an import.” 40 C.F.R. § 84.3.(f) “Importer” is defined as: “[A]ny person who imports a regulated substance into
the United States. ‘Importer’ includes the person primarily liable for the payment of any duties on the merchandise or an authorized agent acting on his or her behalf. The term also includes: (1) [t]he consignee; (2) [t]he importer of record; (3) [t]he actual owner; or (4) [t]he transferee, if the right to draw merchandise in a bonded warehouse has been transferred.” 40 C.F.R. § 84.3.(g) “Person” is defined as “any individual or legal entity, including an individual,
corporation, partnership, association, state, municipality, political subdivision of a state, Indian tribe; any agency, department, or instrumentality of the United States; and any officer, agent, or employee thereof.” 40 C.F.R. § 84.3.(h) “Regulated substance” is defined as: “[A] hydrofluorocarbon listed in the table
contained in subsection (c)(1) of the AIM Act and a substance included as a regulated substance by the Administrator under the authority granted in subsection (c)(3).” 40 C.F.R. § 84.3. -
From January 1, 2022, to September 17, 2023, 40 C.F.R. § 84.5(b)(1) provided that “[n]o
person may import bulk regulated substances, except by expending, at the time of the
4 Consent Agreement and Final Order, Docket CAA-2024-008449import, consumption or application-specific allowances in a quantity equal to the
exchange-value weighted equivalent of the regulated substances imported.” 1 -
A current list of regulated substances, their chemical formulas, and their exchange values
can be found in Appendix A to 40 C.F.R. Part 84. See 40 C.F.R. § 84.3. -
The HFC blend R-404A contains HFC-143a, HFC-125, and HFC-134a, which are
regulated by the AIM Act. 40 C.F.R. Part 84, Appendix A. -
The HFC blend R-410A contains HFC-125 and HFC-32, which are regulated by the AIM
Act. 40 C.F.R. Part 84, Appendix A. -
The HFC blend R-407C contains HFC-32, HFC-125, and HFC-134a, which are regulated
by the AIM Act. 40 C.F.R. Part 84, Appendix A. -
From January 1, 2022, to September 17, 2023, 40 C.F.R. § 84.5(b)(2) provided that
“[e]ach person meeting the definition of importer for a particular regulated substance import transaction is jointly and severally liable for a violation of paragraph (b)(1) of this section, unless they can demonstrate that another party who meets the definition of an importer met one of the exceptions set forth in paragraph (b)(1).” 2 -
“Every kilogram of bulk regulated substances imported … constitutes a separate violation
of this subpart.” 40 C.F.R. § 84.5(b)(6). 3
1
Effective September 18, 2023, 40 C.F.R. § 84.5(b)(1) was revised to: “No person may import bulk regulated substances, either as a single component or a multicomponent substance, except . . . [i]f the importer of record possesses at the time they are required to submit reports to EPA pursuant to § 84.31(c)(7), and expends at the time of ship berthing for vessel arrivals, border crossing for land arrivals such as trucks, rails, and autos, and first point of terminus in U.S. jurisdiction for arrivals via air, consumption or application-specific allowances in a quantity equal to the exchange-value weighted equivalent of the regulated substances imported, whether present as a single component or a multicomponent blend.” 2 Effective September 18, 2023, this provision moved to 40 C.F.R. § 84.5(b)(3) and was revised to “[e]ach person meeting the definition of importer for a particular regulated substance import transaction is jointly and severally liable for a violation of paragraph (b)(1) of this section, unless they can demonstrate that the importer of record possessed and expended allowances in accordance with the requirement outlined in paragraph (b)(1)(i) or (v) of this section or another party who meets the definition of an importer met one of the exceptions set forth in paragraphs (b)(1)(ii) through (iv) of this section.” 3 Effective September 18, 2023, this provision moved to 40 C.F.R. § 84.5(b)(7).
5
Consent Agreement and Final Order, Docket CAA-2024-008449
D. STIPULATED FACTS
-
HVAC Services is a company that specializes in heating and air conditioning services
and is located at 2430 Christina Avenue in Mission, Texas. -
On or about April 27, 2022, HVAC Services imported approximately 3,402 kg of R-
410A from Mexico under Customs Entry # EST-0144146-9. -
On or about May 9, 2022, HVAC Services imported approximately 1,009 kg of R-
410A, 1,100 kg of R-407C, and 1,744 kg of R-404A from Mexico under Customs Entry # EST-0144542-9. -
On or about May 17, 2022, HVAC Services imported 2,030 kg of R-410A and 1,635 kg
of R-404A from Mexico under Customs Entry # EST-0144854 (together with the imports in Paragraphs 23 and 24, the “Subject HFCs”). -
HVAC Services’ Importer Number is 82-178514300.
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The Subject HFCs entered the United States at Progresso, Texas and were subsequently
sold to an entity in the United States. -
HVAC Services did not possess or expend any allowances when importing the Subject
HFCs. -
Using the formula provided by 40 C.F.R. § 84.3, the EPA calculated the total metric
tons of exchange value equivalents (“MTEVe”) 4 of the Subject HFCs to be approximately 28,648. 5 -
The Subject HFCs were transported in cylinders.
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Respondent is a “person,” as that term is defined in 40 C.F.R. § 84.3.
4
The EPA calculates metric tons of EVe (MTEVe) by multiplying the mass of the regulated substance in kg by the exchange value of the bulk regulated substance and dividing the product by 1,000. 5 3,379 kg of R-404A is equivalent to approximately 13,251 MTEVe; 6,441 kg of R-410A is equivalent to approximately 13,446 MTEVe; and 1,100 kg of R-407C is equivalent to approximately 1,951 MTEVe.
6
Consent Agreement and Final Order, Docket CAA-2024-008449
32. Respondent is an “importer,” as that term is defined in 40 C.F.R. § 84.3.
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The Subject HFCs are bulk regulated substances, as defined in 40 C.F.R. § 84.3.
E. ALLEGED VIOLATIONS OF LAW -
The EPA alleges that, on or about April 27, May 9, and May 17, 2022, for each of the
10,920 kg of the Subject HFCs, Respondent violated the prohibition on importing bulk
regulated substances into the United States without expending allowances as required by
40 C.F.R. § 84.5(b).
F. TERMS OF CONSENT AGREEMENT -
For the purpose of this proceeding, as required by 40 C.F.R. § 22.18(b)(2),
Respondent:
(a) admits that the EPA has jurisdiction over the subject matter alleged in
this Agreement;(b) admits the facts stipulated in Section D;
(c) neither admits nor denies the violations alleged in Section E;
(d) consents to the assessment of a civil penalty as stated below;
(e) waives any right to contest the alleged violations of law set forth in Section E
of this Consent Agreement; and(f) waives its rights to appeal the Order accompanying this Agreement.
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For the purpose of this proceeding, Respondent:
(a) agrees that this Agreement states a claim upon which relief may be
granted against Respondent;(b) acknowledges that this Agreement constitutes an enforcement action for
purposes of considering Respondent’s compliance history in any subsequent 7 Consent Agreement and Final Order, Docket CAA-2024-008449enforcement actions related to the Respondent;
(c) waives any and all remedies, claims for relief and otherwise available rights to
judicial or administrative review that Respondent may have with respect to any issue of fact or law set forth in this Agreement, including any right of judicial review under Section 307(b)(1) of the Clean Air Act, 42 U.S.C. § 7607(b)(1);(d) consents to personal jurisdiction in any action to enforce this Agreement or
Order, or both, in the United States District Court for the District of Columbia; and(e) waives any rights it may possess at law or in equity to challenge the authority
of the EPA to bring a civil action in a United States District Court to compel compliance with this Agreement or Order, or both, and to seek an additional penalty for noncompliance with this Agreement or Order, and agrees that federal law shall govern in any such civil action. -
Civil Penalty. The civil penalty agreed upon by the Parties for settlement purposes is
$77,679.
-
Penalty Payment. Respondent agrees to:
(a) Pay the civil penalty of $77,679 (“EPA Penalty”) within 30 calendar days of
the Effective Date of this Agreement.(b) Pay the EPA Penalty using any method, or combination of methods, provided
on the website https://www.epa.gov/financial/additional-instructions-making- payments-epa#Pay.gov.(c) Identify each and every payment with the docket number of this Agreement
8 Consent Agreement and Final Order, Docket CAA-2024-008449and Final Order, No. CAA-2024-008449.
(d) Within 24 hours of payment of the EPA Penalty, send proof of payment via
electronic mail to Ethan Thompson at [email protected]. “Proof of payment” means, as applicable, a copy of the check, confirmation of credit card or debit card payment, confirmation of wire or automated clearinghouse transfer, and any other information required to demonstrate that payment has been made according to the EPA requirements, in the amount due, and identified with the docket number. -
If Respondent fails to timely pay any portion of the penalty assessed under this
Agreement, the EPA may:
(a) request the Attorney General to bring a civil action in an appropriate United
States District Court to recover: the amount assessed; interest at rates established pursuant to 26 U.S.C. § 6621(a)(2); the United States’ enforcement expenses; and a 10 percent quarterly nonpayment penalty, 42 U.S.C. § 7413(d)(5);(b) refer the debt to a credit reporting agency or a collection agency, 42 U.S.C.
§ 7413(d)(5), 40 C.F.R. §§ 13.13, 13.14, and 13.33;(c) collect the debt by administrative offset (i.e., the withholding of money payable
by the United States to, or held by the United States for, a person to satisfy the debt the person owes the Government), which includes, but is not limited to, referral to the Internal Revenue Service for offset against income tax refunds, 40 C.F.R. Part 13, Subparts C and H; and(d) (1) suspend or revoke Respondent’s licenses or other privileges, or (2) suspend
or disqualify Respondent from doing business with the EPA or engaging in 9 Consent Agreement and Final Order, Docket CAA-2024-008449programs the EPA sponsors or funds, 40 C.F.R. § 13.17.
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By signing this Agreement, Respondent acknowledges that this Agreement and Order,
including identifying information such as name, federal tax ID number, mailing and
e-mail address, will be available to the public when the Agreement and Certificate of
Service are filed and uploaded to a searchable database and agrees that this
Agreement does not contain any confidential business information or other personally
identifiable information.
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By signing this Agreement, the undersigned representative of Complainant and the
undersigned representative of Respondent each certify that he or she is fully
authorized to execute and enter into the terms and conditions of this Agreement and
has the legal capacity to bind the party he or she represents to this Agreement.
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By signing this Agreement, Respondent agrees to acceptance of the Complainant’s:
(a) digital or an original signature on this Agreement; and (b) service of the fully
executed Agreement on the Respondent by mail or electronically by e-mail.
Complainant agrees to acceptance of the Respondent’s digital or an original signature
on this Agreement.
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By signing this Agreement, Respondent certifies that the information it has supplied
concerning this matter was at the time of submission true, accurate, and complete for
each such submission, response, and statement. Respondent acknowledges that there
are significant penalties for submitting false or misleading information, including the
possibility of fines and imprisonment for knowing submission of such information,
under 18 U.S.C. § 1001.
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Except as qualified by Paragraph 39(a), each party shall bear its own attorney’s fees,
10 Consent Agreement and Final Order, Docket CAA-2024-008449costs, and disbursements incurred in this proceeding.
G. EFFECT OF CONSENT AGREEMENT AND ATTACHED FINAL ORDER
-
In accordance with 40 C.F.R. § 22.18(c), completion of the terms of this Consent
Agreement and Final Order resolves only Respondent’s liability for federal civil
penalties for the violations listed in Section E of this Agreement.
-
Penalties paid pursuant to this Agreement shall not be deductible for purposes of
federal taxes.
-
Pursuant to 26 U.S.C. § 6050X and 26 C.F.R. § 1.6050X-1, EPA is required to
send to the Internal Revenue Service (“IRS”) annually, a completed IRS Form
1098-F (“Fines, Penalties, and Other Amounts”) with respect to any court order or
settlement agreement (including administrative settlements), that require a payor to
pay an aggregate amount that EPA reasonably believes will be equal to, or in
excess of, $50,000 for the payor’s violation of any law or the investigation or
inquiry into the payor’s potential violation of any law, including amounts paid for
“restitution or remediation of property” or to come “into compliance with a law.”
EPA is further required to furnish a written statement, which provides the same
information provided to the IRS, to each payor (i.e., a copy of IRS Form 1098-F).
Failure to comply with providing IRS Form W-9 or Tax Identification Number
(“TIN”), as described below, may subject Respondent to a penalty, per 26 U.S.C.
§ 6723, 26 U.S.C. § 6724(d)(3), and 26 C.F.R. § 301.6723-1. In order to provide
EPA with sufficient information to enable it to fulfill these obligations, EPA herein
requires, and Respondent herein agrees, that:
(a) Respondent shall complete an IRS Form W-9 (“Request for Taxpayer
11 Consent Agreement and Final Order, Docket CAA-2024-008449Identification Number and Certification”), which is available at
https://www.irs.gov/pub/irs-pdf/fw9.pdf;(b) Respondent shall therein certify that its completed IRS Form W-9 includes
Respondent’s correct TIN or that Respondent has applied and is waiting for issuance of a TIN;(c) Respondent shall email its completed Form W-9 to EPA’s Cincinnati Finance
Center at [email protected], within 30 days after the Final Order ratifying this Agreement is filed, and EPA recommends encrypting IRS Form W-9 email correspondence; and(d) In the event that Respondent has certified in its completed IRS Form W-9 that it
has applied for a TIN and that TIN has not been issued to Respondent within 30 days after the Effective Date, then Respondent, using the same email address identified in the preceding sub-paragraph, shall further: i. notify EPA’s Cincinnati Finance Center of this fact, via email, within 30 days after the 30 days after the Effective Date of this Agreement; and ii. provide EPA’s Cincinnati Finance Center with Respondent’s TIN, via email, within five (5) days of Respondent’s issuance and receipt of the TIN. -
This Agreement constitutes the entire agreement and understanding of the Parties and
supersedes any prior agreements or understandings among the Parties with respect to
the subject matter hereof.
-
The terms, conditions, and compliance requirements of this Agreement may not be
12 Consent Agreement and Final Order, Docket CAA-2024-008449modified or amended after it is ratified except upon the written agreement of both
parties, and approval of the Environmental Appeals Board.
-
Any violation of this Order may result in a civil judicial action for an injunction, or civil
penalties of up to $121,275 per day per violation, or both, as provided in Section
113(b)(2) of the Act, 42 U.S.C. § 7413(b)(2), as well as criminal sanctions as provided
in Section 113(c) of the Act, 42 U.S.C. § 7413(c). The EPA may use any information
submitted under this Agreement in an administrative, civil judicial, or criminal action.
-
Nothing in this Agreement shall relieve Respondent of the duty to comply with all
applicable provisions of the Act and other federal, state, or local laws or statutes, nor
shall it restrict the EPA’s authority to seek compliance with any applicable laws or
regulations, nor shall it be construed to be a ruling on, or determination of, any issue
related to any federal, state, or local permit.
-
Nothing herein shall be construed to limit the power of the EPA to undertake any action
against Respondent or any person in response to conditions that may present an
imminent and substantial endangerment to the public health, welfare, or the
environment.
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The EPA reserves the right to revoke this Agreement and settlement penalty if and to
the extent that the EPA finds, after signing this Agreement, that any information
provided by Respondent was materially false or inaccurate at the time such information
was provided to the EPA, and the EPA reserves the right to assess and collect any and
all civil penalties for any violation described herein. The EPA shall give Respondent
notice of its intent to revoke, which shall not be effective until received by Respondent
in writing.
13 Consent Agreement and Final Order, Docket CAA-2024-008449H. EFFECTIVE DATE
-
Respondent and Complainant agree to the Environmental Appeals Board’s issuance of
the attached Final Order ratifying the Agreement. The Effective Date of the
Agreement shall be the date of issuance of the Final Order. The EPA will transmit a
copy of the Final Order and ratified Consent Agreement to the Respondent.
14 Consent Agreement and Final Order, Docket CAA-2024-008449The foregoing Consent Agreement In the Matter of HVAC Services, Docket No. CAA-2024- 008449, is Hereby Stipulated, Agreed, and Approved.
COMPLAINANT:
Digitally signed by MARY
MARY GREENE
GREENE Date: 2024.03.18
12:01:24 -04'00'
____________________________________________
Mary E. Greene
Director, Air Enforcement Division
Office of Enforcement and Compliance Assurance
U.S. Environmental Protection Agency
Consent Agreement and Final Order, Docket CAA-2024-008449
CERTIFICATE OF SERVICE
I certify that copies of the foregoing “Consent Agreement” and “Final Order,” in the
matter of HVAC Services, Docket No. CAA-2024-008449, were sent to the following persons in the manner indicated:
By E-mail:
Ethan Thompson
U.S. Environmental Protection Agency
Air Enforcement Division
[email protected]
Ricardo Maldonado
HVAC Services
[email protected]
Adolfo Campero
Unimex Group
[email protected]
Apr 24, 2024
Dated: ____ ______
Annette Duncan
Administrative Specialist
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