[Federal Register Volume 59, Number 198 (Friday, October 14, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25200]


[[Page Unknown]]

[Federal Register: October 14, 1994]


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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 82

[FRL-5087-6]

 

Protection of Stratospheric Ozone

AGENCY: Environmental Protection Agency.

ACTION: Proposed rule.

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SUMMARY: This document proposes to allocate potential production 
allowances to producers who have baseline allowances for the production 
of methyl bromide. These potential production allowances would be 
intended solely for the production of methyl bromide for export to 
Article 5 countries, as defined under Article 5 of the Montreal 
Protocol on Substances that Deplete the Ozone Layer. In drafting the 
accelerated phaseout rule, which was published in the Federal Register 
on December 10, 1993, the Agency inadvertently omitted methyl bromide 
from the list of chemicals for which potential production allowances 
were granted. Today's action proposes an allocation of potential 
production allowances for all control periods beginning January 1, 
1994, and ending before January 1, 2001, equal to 10 percent of a 
company's baseline production allowances. The Agency may propose 
potential production allowances for methyl bromide for control periods 
after January 1, 2001, at a later date.

DATES: Written comments on this proposed rule must be received on or 
before November 14, 1994, unless a public hearing is requested. In the 
case where a public hearing is requested, the public hearing will be 
scheduled on October 31, 1994. Comments must then be received on or 
before 30 days following the public hearing. Any party requesting a 
public hearing must notify the contact person listed below by October 
24, 1994. Inquiries regarding a public hearing should be directed to 
the Stratospheric Ozone Information Hotline at 1-800-296-1996.

ADDRESSES: Comments on this proposed rulemaking should be submitted in 
duplicate (two copies) to: Air Docket No. A-92-13, U.S. Environmental 
Protection Agency, 401 M Street, SW., room M-1500, Washington, DC 
20460.
    Materials relevant to this proposed rulemaking are contained in 
Docket No. A-92-13. The Docket is located in room M-1500, First Floor, 
Waterside Mall at the address above. The materials may be inspected 
from 8 a.m. until 4 p.m. Monday through Friday. A reasonable fee may be 
charged by EPA for copying the docket.

FOR FURTHER INFORMATION CONTACT: Tom Land, Program Implementation 
Branch, Stratospheric Protection Division, Office of Atmospheric 
Programs, Office of Air and Radiation (6205J), 401 M Street, SW., 
Washington, DC 20460, (202) 233-9185. The Stratospheric Ozone Hotline 
at 1-800-296-1996 can also be contacted for further information.

I. Background

    When Parties to the Montreal Protocol on Substances that Deplete 
the Ozone Layer (the Protocol) first met in 1987, they agreed to allow 
additional production of controlled substances for developing countries 
beyond the levels being set for the developed countries. The United 
States, as well as other Parties to the Protocol, recognized the need 
to continue to supply controlled substances to developing countries 
during the period of scheduled reductions and for a limited time after 
the phaseout of production of controlled substances. In Article 2H of 
the Protocol, the Parties agreed to allow production after the phaseout 
occurred. Under Article 5 of the Protocol, developing countries are 
defined as Parties to the Protocol consuming less than 0.3 kilograms 
per capita of class I, Group I and II controlled substances. These 
Article 5 countries have limited resources to adopt alternative 
technologies to replace the phased out controlled substances. To ensure 
that such countries do not purchase the technologies to produce 
controlled substances and otherwise bypass controls on controlled 
substances, the Parties to the Protocol agreed to provide a set-aside 
level of production for Article 5 countries. Article 5 countries must 
ensure that these imported controlled substances are used to meet basic 
domestic needs.
    The Environmental Protection Agency (EPA) implements a program 
domestically that limits and monitors production and consumption of 
controlled substances, including methyl bromide. Production for Article 
5 countries in the United States is monitored by allocating potential 
production allowances to those companies that have baseline production 
allowances. Since 1989, EPA has allocated potential production 
allowances equal to 10 percent of baseline production allowances for 
specific controlled substances. Upon the complete phaseout of a 
controlled substance, and until 10 years after the phaseout, companies 
are allocated up to 15 percent of their production baseline for export 
to Article 5 countries. EPA grants authorization to convert potential 
production allowances to production allowances to producers once they 
have exported to an Article 5 country. The July 30, 1992 Federal 
Register document (57 FR 33754) as well as the December 10, 1993 
Federal Register document (58 FR 65018) explain these controls, as well 
as the recordkeeping and reporting required for such transactions. The 
specific provisions governing production for, and export to, Article 5 
countries are in Secs. 82.9 and 82.11. Appendix D of subpart A of 40 
CFR part 82 contains a listing of Article 5 countries.1
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    \1\EPA is drafting proposed amendments to the accelerated 
phaseout rule that will make minor adjustments to the provisions for 
exports to Article 5 countries.
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II. Need To Allocate Methyl Bromide Production Allowances

    In the December 10, 1993 publication of the accelerated phaseout 
(58 FR 65018) adding methyl bromide to list of class I controlled 
substances, the Agency inadvertently neglected to also allocate 
potential production allowances for methyl bromide. At the time of 
proposal, the Agency focused on the level of control of methyl bromide 
and its phaseout, but inadvertently failed to propose additional 
production of methyl bromide for Article 5 countries. Due to this 
oversight, EPA is proposing through this Notice to grant potential 
production allowances to methyl bromide producers equal to 10 percent 
of their baseline allowances beginning in the current control period 
(which began January 1, 1994). As with other controlled substances, the 
10 percent level of production for Article 5 countries would continue 
until the effective date of the phaseout of production of the 
substance, in this case, until January 1, 2001, for methyl bromide. 
Section 602(d) of the CAA establishes the phaseout date for methyl 
bromide by stating that production may not extend beyond, ``a date more 
that seven years after January 1 of the year after the year in which 
the substance is added to the list of class I substances.'' With this 
proposal, EPA is reserving action in allocating potential production 
allowances for control periods starting with January 1, 2001, and 
beyond.

III. Legal Authority

    EPA believes that it has the authority, under both the Montreal 
Protocol and Section 604 (e) of the Clean Air Act Amendments of 1990 
(CAA) to allow increased production of methyl bromide for export to 
Article 5 countries for the control periods from 1994 to the end of 
2000. The Parties to the Protocol, in the Fourth Meeting in Copenhagen, 
agreed to list methyl bromide as a class I substance. The CAA requires 
EPA to phase out any newly-listed substances seven years after January 
1 of the year following the year in which the chemical was listed. In 
following the mandate of the CAA, methyl bromide is phased out in the 
United States by January 1, 2001. The December 10, 1993 final rule 
incorporates such a phaseout of methyl bromide and on December 30, 
1993, EPA allocated baseline production and consumption allowances for 
methyl bromide.
    Both the Protocol and the CAA allow persons with baseline 
production allowances to produce an additional 10 percent for export to 
Article 5 countries. As discussed earlier, in Article 2H of the 
Protocol, the Parties agreed to permit continued production of up to 10 
percent of baseline levels of controlled substances for export to 
Article 5 countries. The CAA also authorizes continued production for 
such purposes. CAA section 604(e) (Developing Countries) states:
    (1) Exception.--Notwithstanding the phase-out and termination of 
production required under subsections (a) and (b), the Administrator, 
after notice and opportunity for public comment may, consistent with 
the Montreal Protocol, authorize the production of limited quantities 
of a class I substance in excess of the amounts otherwise allowable 
under subsection (a) or (b), or both, solely for export to, and use in, 
developing countries that are Parties to the Montreal Protocol and are 
operating under article 5 of such Protocol. Any production authorized 
under this paragraph shall be solely for purposes of satisfying the 
basic domestic needs of such countries.
    (2) Cap on Exception.--(A) Under no circumstances may the authority 
set forth in paragraph (1) be applied to authorize any person to 
produce a class I substance in any year for which a production 
percentage is specified in Table 2 of subsection (a) in an annual 
quantity greater than the specified percentage, plus an amount equal to 
10 percent of the amount produced by such person in the baseline year.
    Section 604(e)(1) authorizes the production of limited quantities 
of a class I substance in excess of the amounts otherwise allowable 
``under subsection (a) or (b).'' In the case of methyl bromide, the 
production reductions and phaseout schedules listed in subsection (a) 
and (b) have been modifed according to section 602(d) to require a 
freeze at 1994 production levels for methyl bromide until January 1, 
2001, at which time methyl bromide may no longer be produced. Thus, 
sections 604(e)(1) & (2), as applied to methyl bromide, authorize 
additional production equal to 10% of 1994 baseline allowances solely 
for export to Article 5 countries until the year in which methyl 
bromide is phased out.
    The Clean Air Act Amendments anticipated the need to continue to 
supply controlled substances to Article 5 countries despite the freeze 
and the eventual elimination of production and consumption of these 
chemicals. Section 604(e) allows for this production, provided it is 
consistent with the Montreal Protocol. Accordingly, EPA allocated 
potential production allowances for class I substances in the December 
10, 1993 final rule. The authority to allocate such allowances applied 
to the newly-listed methyl bromide. However, due to an oversight, 
methyl bromide was not included in the list of chemicals for which 
potential production allowances were granted.

IV. Proposed Production Levels

    EPA proposes that companies that produced methyl bromide in 1991 be 
allowed to produce up to 10 percent of their baseline allowances for 
Article 5 countries for the control periods starting January 1, 1994, 
and ending before January 1, 2001. EPA is setting the level at 10 
percent to be consistent with Article 2H of the Montreal Protocol, and 
to be consistent with the approach used for all Class I controlled 
substances except for Group VII, the hydrobromofluorocarbons (no 
additional production for Article 5 countries is granted under the 
Protocol for these chemicals).
    Although EPA considered setting the level of additional production 
at less than 10 percent, EPA believes that a more stringent level would 
be disadvantageous to U.S. producers, with no added environmental 
benefit. If U.S. companies were limited to additional production of 
less than 10 percent for export to Article 5 countries, producers from 
other countries would easily meet the existing demand of Article 5 
countries. In other words, the total potential supply that the Protocol 
allows all developed countries to produce for Article 5 countries is 
much greater than the demand of all the developing countries that are 
Parties to the Protocol. Thus, if U.S. companies do not produce the 
methyl bromide for Article 5 countries, another Party will. Since the 
same amount of methyl bromide will be consumed by the developing 
countries, whether the U.S. or another Party produces it, a U.S. 
reduction in the percent of additional production would have no 
environmental impact.
    EPA believes it is important that the network of United States 
exports of methyl bromide be maintained in order to continue market 
contacts. EPA presumes that United States producers will be leaders in 
developing alternative pesticides to methyl bromide. EPA believes that 
it is U.S. producers of methyl bromide who will quickly develop 
alternative pesticide practices, and therefore provide Article 5 
countries with the alternatives necessary to eliminate the use of this 
controlled substance. The current international sales networks of U.S. 
methyl bromide producers will serve as a conduit for disseminating to 
Article 5 countries alternatives to methyl bromide once they are 
developed.
    In today's rule, EPA clarifies that under the current regulations, 
the production allowances for Article 5 countries may be retroactive to 
the beginning of the control period starting January 1, 1994. The 
current regulations refer to control periods and do not prohibit 
companies from seeking authorizations for potential production 
allowances already exported, as long as that export occurred and the 
potential production allowance is used in the same control period.

V. Summary of Supporting Analysis

A. Executive Order 12866

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the 
Agency must determine whether this regulatory action is ``significant'' 
and therefore subject to OMB review and the requirements of the 
Executive Order. The Order defines ``significant'' regulatory action as 
one that is likely to lead to a rule that may:

    (1) Have an annual effect on the economy of $100 million or 
more, or adversely and materially affect a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local, or tribal governments or communities;
    (2) Create a serious inconsistency or otherwise interfere with 
an action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlement, 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.

    It has been determined by OMB and EPA that this amendment to the 
final rule is not a ``significant regulatory action'' under the terms 
of Executive Order 12866 and is therefore not subject to OMB review 
under the Executive Order.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601-602, requires that 
Federal agencies examine the impacts of their regulations on small 
entities. Under 5 U.S.C. 604(a), whenever an agency is required to 
publish a general notice of proposed rulemaking, it must prepare and 
make available for public comment an initial regulatory flexibility 
analysis (RFA). Such an analysis is not required if the head of an 
agency certifies that a rule will not have a significant economic 
impact on a substantial number of small entities, pursuant to 5 U.S.C. 
605(b).
    EPA believes that any impact that this amendment will have on the 
regulated community will serve only to provide relief from otherwise 
applicable regulations, and will therefore limit the negative economic 
impact associated with the regulations previously promulgated under 
sections 604 and 606. An examination of the impacts on small entities 
was discussed in the final rule (58 FR 65018 and 58 FR 69235). That 
final rule assessed the impact the rule may have on small entities. A 
separate regulatory impact analysis accompanied the final rule and is 
contained in Docket A-92-01. I certify that this amendment to the 
accelerated phaseout rule will not have any additional negative 
economic impacts on any small entities.

C. Paperwork Reduction Act

    Any information collection requirements in a rule must be submitted 
for approval to the Office of Management and Budget (OMB) under the 
Paperwork Reduction Act, 44 U.S.C. 3501 et seq. Because no additional 
informational collection requirements are required by this amendment, 
EPA has determined that the Paperwork Reduction Act does not apply to 
this rulemaking and no new Information Collection Request document has 
been prepared.

List of Subjects in 40 CFR Part 82

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Chemicals, Chlorofluorocarbons, Exports, 
Hydrochlorofluorocarbons, Imports, Interstate commerce, Nonessential 
products, Reporting and recordkeeping requirements, Stratospheric ozone 
layer.

    Dated: September 30, 1994.
Carol M. Browner,
Administrator.

    40 CFR part 82 is proposed to be amended as follows:

PART 82--PROTECTION OF STRATOSPHERIC OZONE

    1. The authority citation for part 82 continues to read as follows:

    Authority: 42 U.S.C. 7414, 7671-671q.

Subpart A--Production and Consumption Controls

    2. Section 82.9 is amended by revising paragraphs (a) introductory 
text, and (a)(1) and (a)(2) to read as follows:


Sec. 82.9  Availability of production allowances in addition to 
baseline production allowances.

    (a) Every person apportioned baseline production allowances for 
class I controlled substances under Sec. 82.5 (a) through (f) is 
granted potential production allowances equal to:
    (1) 10 percent of his apportionment under Sec. 82.5 for each 
control period ending before January 1, 2000 (January 1, 2001 for 
methyl bromide); and
    (2) 15 percent of his apportionment under Sec. 82.5 for each 
control period beginning after December 31, 1999, and ending before 
January 1, 2011 (January 1, 2013 in the case of methyl chloroform; 
except for methyl bromide which is reserved).
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[FR Doc. 94-25200 Filed 10-13-94; 8:45 am]
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