[Federal Register Volume 59, Number 217 (Thursday, November 10, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27019]


[[Page Unknown]]

[Federal Register: November 10, 1994]


_______________________________________________________________________

Part IV





Environmental Protection Agency





_______________________________________________________________________



40 CFR Part 82




Protection of Stratospheric Ozone; Proposed Rule
ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 82

[FRL-5100-4]
RIN 2060-AE70

 
Protection of Stratospheric Ozone

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of proposed rulemaking.

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SUMMARY: With this action, EPA is proposing amendments to anticipate 
the phaseout of production and consumption of various ozone-depleting 
substances and to clarify minor aspects of the current regulation as 
provided for under section 604 and 606 of the Clean Air Act Amendments 
of 1990 (CAA). To ensure an orderly phaseout of the production and 
consumption of halons in 1994, and of chlorofluorocarbons (CFCs), 
carbon tetrachloride, methyl chloroform and hydrobromofluorocarbons in 
1996, this action proposes to alter the administrative requirements of 
the regulations so companies may continue to produce for special 
exempted uses. Today's action also proposes clarifications to improve 
the efficiency of the current requirements and to reduce the burden on 
the affected companies while ensuring continued compliance with Title 
VI of the CAA and in a manner consistent with the United States' 
obligations under the Montreal Protocol on Substances that Deplete the 
Ozone Layer as amended.
    Specifically, EPA proposes to (1) change the requirements for the 
post-phaseout period for transformation and destruction of ozone-
depleting substances; (2) establish the framework for the post-phaseout 
exempted production for essential uses; (3) revise the controls for 
imports of controlled substances that are used or recycled; (4) ease 
the requirements for exporting substances to Article 5 countries; (5) 
change the allowance requirements for exports of ozone-depleting 
substances; (6) clarify the definitions for transhipments and heels; 
(7) provide a period of reconciliation in which allowance balances may 
be adjusted; and (8) adjust the recordkeeping and reporting 
requirements.

DATES: Written comments on this proposed rule must be received on or 
before December 12, 1994, unless a public hearing is requested. 
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 5 p.m. Eastern Standard Time on November 
21, 1994. If a hearing is held EPA will publish a document in the 
Federal Register announcing the hearing information.

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. 
Inquiries regarding a public hearing should be directed to the 
Stratospheric Ozone Information Hotline at 1-800-296-1996.
    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 docket materials.

FOR FURTHER INFORMATION CONTACT: Tom Land, U.S. Environmental 
Protection Agency, Stratospheric Protection Division, Office of 
Atmospheric Programs, 6205J, 401 M Street SW., Washington, DC, 20460, 
(202)-233-9185.

SUPPLEMENTARY INFORMATION:

I. Background
II. Administrative Changes in the Stratospheric Protection Program
    A. Program Requirements for Continued Post-Phaseout Production 
and Imports
    1. Post-Phaseout Requirements for Transformation and Destruction 
of Controlled Substances
    2. Post-Phaseout Requirements for Essential-Use Production
    B. Imports of Used Controlled Substances
    1. Information Requirements
    2. Certification by the Country of Export
    C. Program Adjustments and Clarifications to Become Effective 
January 1, 1995
    1. Changes in Requirements for Export to Article 5 Countries
    2. Administrative Changes to the Consumption Allowance 
Requirements for Exports
    3. Administrative Changes to Production Allowance Requirements 
for Exports that are Transformed or Destroyed
    4. Treatment of Controlled Substances Remaining in Emptied 
Containers, i.e. ``Heels''
    5. Clarification of the Definition of Transhipment
    6. Provision of Account Reconciliation Period
    7. Additional Clarifications
    8. Clarification of Reporting and Recordkeeping Requirements
III. Summary of Supporting Analysis
    A. Executive Order 12866
    B. Regulatory Flexibility Act
    C. Paperwork Reduction Act

I. Background

    The current regulatory requirements of the Stratospheric Ozone 
Protection Program that limit production and consumption of ozone-
depleting substances were promulgated by the Environmental Protection 
Agency (EPA) in the Federal Register on December 10, 1993 (58 FR 
65018), and on December 30, 1993 (58 FR 69235). These rules set out the 
requirements of an Allowance Program (the Program).
    The Allowance Program was originally developed in 1988 (published 
on August 12, 1988, 58 FR 30568) in response to the 1987 ``Montreal 
Protocol on Substances that Deplete the Ozone Layer,'' an international 
agreement that requires nations that are Parties to the Protocol to 
reduce and eventually eliminate their production and consumption of 
ozone-depleting chemicals.\1\
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    \1\Several minor revisions to the original 1988 rule were issued 
on the following dates: February 9, 1989 (54 FR 6376), April 3, 1989 
(54 FR 13502), July 5, 1989 (54 FR 28062), July 12, 1989 (54 FR 
29337), February 13, 1990 (55 FR 5005), June 15, 1990 (55 FR 24490) 
and June 22, 1990 (55 FR 25812).
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    In 1990, the Parties to the Protocol amended the Montreal Protocol 
during their meeting in London and added other ozone-depleting 
chemicals and designated phaseout dates for production and consumption 
of these chemicals. Shortly after the 1990 meeting of the Protocol 
Parties, the United States Congress passed the Clean Air Act Amendments 
(CAA). The CAA requires the phaseout of ozone-depleting chemicals on a 
schedule parallel to, or in some cases more stringent than, that of the 
Protocol.
    The Allowance Program promulgated in the Federal Register, first on 
March 6, 1991 (56 FR 9518), and then as a final rule on July 30, 1992 
(57 FR 33754), was designed to ensure that the United States meet its 
obligations to control and phase out these substances under the 
Protocol and consistent with Title VI of the CAA. Since that time, the 
Parties to the Protocol agreed to accelerate the phaseout of all class 
I substances (except Group VI), to control class II substances and to 
add methyl bromide and hydrobromofluorocarbons (HBFCs) to the list of 
class I substances. EPA modified its control requirements in a final 
rule promulgated December 10, 1993, in the Federal Register, to be 
consistent with Title VI and the Protocol adjustments and amendments.
    The substances that are listed in the Protocol, and controlled in 
the accelerated phaseout, are:

CLASS I

 Chlorofluorocarbons (CFCs);
 Halons;
 Carbon Tetrachloride;
 Methyl Chloroform;
 Methyl Bromide;
 Hydrobromofluorocarbons (HBFCs);

CLASS II

 Hydrochlorofluorocarbons (HCFCs).
(These substances are described in greater detail in 58 FR 65018).

    EPA promulgated regulations on December 10, 1993, accelerating the 
phaseout of halons to January 1, 1994, the phaseout of 
chlorofluorocarbons (CFCs), carbon tetrachloride, methyl chloroform, 
and HBFCs to January 1, 1996, and the phaseout of methyl bromide to 
January 1, 2001. The rule also accelerates the phaseout of class II 
substances, HCFC-22, HCFC-141b and HCFC-142b.
    Both the Protocol and the Clean Air Act require the phaseout of 
production and consumption of ozone-depleting substances. In the 
context of the Program, the use of the term consumption may be 
misleading. It is not the ``use'' of these substances that is 
controlled through the regulations but rather the amount of the 
substance available for U.S. domestic consumption, defined as 
production plus imports minus exports of bulk virgin chemicals.
    In developing the regulatory program, EPA collected information on 
the amounts of ozone-depleting substances produced, imported, exported, 
transformed and destroyed domestically. This information was used to 
establish the U.S. production and consumption ceilings for these 
chemicals. The data was also used to assign company-specific production 
and import rights in most cases for companies either importing or 
producing during the base years of the data collection. These rights 
are called allowances.
    Companies expend allowances when they produce or import ozone-
depleting substances. With certain restrictions, the allowances can be 
traded among companies both domestically and internationally (between 
Party countries). To control production, the Agency allocated baseline 
production allowances to producers of specific ozone-depleting 
chemicals. To control consumption, the Agency allocated baseline 
consumption allowances to producers and importers of specific ozone-
depleting chemicals. Allowances for class I substances are currently 
provided to companies on an annual basis except for the production of 
halons, which was phased out on January 1, 1994.
    In summary, the Program currently operates as follows:
     In order to produce controlled ozone-depleting substances, 
companies must use both production and consumption allowances;
     In order to import controlled substances, companies must 
use consumption allowances;
     No allowances are required in order to export, once 
allowances are expended in the production or importation of the 
substance. Rather, companies that export can apply for and be granted 
additional consumption allowances;
     If a company exports certain controlled substances to an 
Article 5 country (developing nations as defined by the Protocol that 
consume less than .3 kilograms of CFCs per capita), the company 
producing these chemicals can request additional production allowances 
as well as the consumption allowances normally granted for export. 
Production by Parties to the Protocol for these developing countries 
will continue for 10 years after the phaseout in the United States. The 
number of additional production allowances that can be provided to a 
company for this purpose is currently limited to 10 percent of their 
baseline allowance but will increase to 15 percent upon phaseout of 
these controlled substances.
     No allowances are required to produce ozone-depleting 
substances that are transformed or destroyed domestically;
     Used or recycled ozone-depleting chemicals can be imported 
without allowances. No consumption allowances are granted if used or 
recycled ozone-depleting chemicals are exported;
     Companies are required to maintain records and to provide 
the data to ensure compliance with the regulation and to meet the 
reporting requirements of the Protocol.
    The Program currently controls and monitors the production and 
consumption of ozone-depleting substances in the United States. The 
production and import of halons has already been phased out, and the 
phaseout for the remaining class I substances, except for methyl 
bromide, is scheduled for January 1, 1996. In order to ensure an 
orderly phaseout in 1996, the EPA must alter the administrative 
requirements of the regulations so companies may continue to produce 
for exempted uses permitted under the Montreal Protocol and Clean Air 
Act Amendments.
    In addition, the Agency is seeking to improve the efficiency of the 
requirements and to reduce the burden on the affected companies while 
ensuring continued compliance with Title VI of the CAA and the Montreal 
Protocol. In light of these objectives, the Agency is proposing the 
following administrative changes to improve the Program.

II. Administrative Changes in the Stratospheric Protection Program

A. Program Requirements for Continued Post-Phaseout Production and 
Imports

    The paragraphs under Section A., Program Requirements for Continued 
Post-Phaseout Production and Imports, describe the administrative 
changes being proposed by EPA to facilitate the phaseout of all class I 
ozone-depleting substances effective January 1, 1996 (except for methyl 
bromide), and the special production and importation scenarios allowed 
for essential uses.\2\
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    \2\In contrast, the changes in Section C., Program Adjustments 
and Clarifications, are proposed to modify the current regulation in 
order to increase the effectiveness of the program and ease 
administrative burdens and will go into effect January 1, 1995.
---------------------------------------------------------------------------

    The Program currently requires the use of allowances by companies 
that produce or import class I chemicals, except halons (Group II), 
which were phased out January 1, 1994. Under the current regulation, 
the phaseout of the production and consumption of the following Groups 
of class I controlled substances will be complete by January 1, 1996:

Group I, CFCs
Group II, Halons
Group III, Other CFCs
Group IV, Carbon Tetrachloride
Group V, Methyl Chloroform, and
Group VII, HBFCs.

    A list of the specific class I ozone-depleting chemicals in each 
Group is in Appendix A and F in Subpart A.
    Due to the phaseout, the Agency is proposing to no longer use 
production and consumption allowances for all class I controlled 
substances, except Group VI, methyl bromide, beginning January 1, 1996. 
Today's proposal anticipates the 1996 production phaseout agreed to by 
the Parties to the Protocol for CFCs, carbon tetrachloride, methyl 
chloroform and HBFCs, but allows production for essential uses to 
become effective January 1, 1996, contingent upon approval for such 
essential uses by the Parties to the Protocol at the October 1994 
meeting.
    Although EPA proposes to no longer use production and consumption 
allowances for class I controlled substances (except methyl bromide) 
beginning January 1, 1996, the Agency envisions that the manufacture of 
class I controlled substances will continue after January 1, 1996, 
provided the substances are:
     either transformed or destroyed,
     exported to Article 5 countries,
     produced for essential uses as authorized by the Protocol 
and CAA and consistent with essential-use allowances, or
     produced with destruction or transformation credits.
    In addition, EPA envisions class I controlled substances (except 
methyl bromide) being imported without the need for consumption 
allowances after January 1, 1996, if:
     the substance is either transformed or destroyed,
     the substance was previously used, recycled or reclaimed,
     the substance was imported using destruction or 
transformation credits, or
     the substance was imported using essential-use allowances.
    Although the proposal is to no longer use production or consumption 
allowances for the phased out class I substances (except methyl 
bromide), the Agency wishes:
    (1) to maintain a category of Article 5 allowances (previously 
called potential production allowances),
    (2) to create a new category of essential-use allowances, and
    (3) to create destruction and transformation credits (similar to 
the previous process for granting additional production allowances when 
substances produced or imported with expended allowances are 
transformed or destroyed).
    The following paragraphs describe the allowance requirements for a 
variety of production and importation scenarios under the current 
Allowance Program. In addition, the paragraphs describe the 
administrative changes being proposed by EPA to facilitate the phaseout 
of all class I ozone-depleting substances effective January 1, 1996, 
(except for methyl bromide) and the special production and importation 
scenarios proposed for the post-phaseout period.
1. Post-Phaseout Requirements for Transformation and Destruction of 
Controlled Substances
    The current regulation distinguishes between two categories of 
controlled substances that are transformed or destroyed. The two 
categories are: (1) controlled substances that were produced or 
imported explicitly for uses that result in transformation or 
destruction, and (2) controlled substances that were produced or 
imported with the intention of putting the substance to an ``emissive 
use.'' EPA proposes adding the definition of emissive use to the 
current regulation, such that emissive use would be those uses of 
controlled substances that do not result in the transformation or 
destruction of the substance. Examples of emissive uses would be the 
incorporation of controlled substances into a refrigerator or an air 
conditioner (for a car, household or building), or the use of a 
controlled substance as a solvent to clean machine parts or circuit 
boards.
    The current program assumes that when a controlled substance is 
produced or imported for other than transformation or destruction it is 
intended for an emissive use. When the controlled substance is produced 
or imported for an intended emissive use, the producer or importer must 
expend allowances under the current program. Whether or not the 
controlled substance is actually incorporated into an emissive use is 
not as important as the fact that it was intended for an emissive use. 
If the controlled substance is intended for an emissive use at the time 
of production or importation, the person producing or importing the 
substance is required to expend allowances. However, the expenditure of 
allowances is not sufficient to define emissive use. For example, a 
controlled substance recovered from an air conditioner, refrigerator or 
dehumidifier manufactured before the current program became effective 
(July 1989) would not have been produced with expended allowances.
    In the following discussion, EPA proposes changes to the 
requirements for controlled substances that are produced explicitly for 
transformation and destruction, and to the requirements for controlled 
substances that are produced for intended emissive uses and then 
subsequently transformed or destroyed. The requirements differ 
according to the intended purpose of the controlled substance during 
production.
    a. Production or importation of controlled substances explicitly 
for uses that result in domestic transformation or destruction. The 
current regulation does not require a person to expend allowances if 
they are explicitly producing or importing a controlled substance for a 
use that will result in the transformation or destruction of that 
substance in the United States. In other words, allowances do not need 
to be expended at the time of production or importation as long as the 
producer or importer has certification that the controlled substance 
will be transformed or destroyed by themselves, by a second-party, or 
by a third-party. As long as the producer or importer has such 
certification that the substance will be transformed or destroyed 
domestically, there is no need to expend allowances for the production 
or importation of the substance. To confirm the future transformation 
or destruction of the controlled substance, the current regulation 
requires the second- or third-party person, who will transform or 
destroy the substance, to submit a transformation certification or 
destruction verification to the producer or exporter.
    EPA proposes that the current system continue after January 1, 
1996, and that companies be permitted to produce or import controlled 
substances explicitly for uses that result in transformation or 
destruction with the same requirements as under the current 
regulation.\3\ Therefore, such producers and importers will continue to 
receive an IRS certification of intent to transform or a destruction 
verification from the second- or third-party transformers or 
destroyers. The producers and importers will also continue to submit 
these certificates or verifications to EPA along with their quarterly 
reports (see Section C.7. Recordkeeping and Reporting).
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    \3\Controlled substances produced for export to be transformed 
or destroyed are discussed in section C.3. ``Administrative Changes 
to Production Allowance Requirements for Exports that are 
Transformed or Destroyed.''
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    b. Production or importation of controlled substances intended for 
emissive use but subsequently transformed or destroyed. Under the 
current regulation a person who transforms or destroys a controlled 
substance that was produced or imported with expended allowances may 
petition the Agency for ``additional'' consumption and production 
allowances. The person who transforms or destroys a controlled 
substance that was produced or imported with expended allowances is 
essentially requesting a ``refund'' of the allowances originally used 
in the production or importation of the substance.
    EPA proposes that, after the phaseout begins on January 1, 1996, 
companies will no longer be able to request additional production 
allowances or consumption allowances for the transformation or 
destruction of controlled substances which were produced or imported 
for emissive uses (other than for methyl bromide). The Agency proposes 
the elimination of the specific provisions that grant additional 
production and consumption allowances, beginning January 1, 1996, for 
all class I controlled substances, except methyl bromide, in 
anticipation of the post-phaseout elimination of production and 
consumption allowances for those substances. Thus, a person who expends 
allowances to produce or import a class I substance, other than methyl 
bromide, and then transforms or destroys that substance after January 
1, 1996, will not be granted additional production or consumption 
allowances. However, a person who expends allowances and then 
transforms or destroys methyl bromide after January 1, 1996, would 
still be able to petition the Agency for additional production and 
consumption allowances until January 1, 2001, as under the current 
regulation. In this respect, a person who transforms or destroys methyl 
bromide that was produced or imported for an intended emissive use may 
continue to follow the existing regulation as described under Sec. 82.9 
and Sec. 82.10.
    c. The post-phaseout procedures for granting destruction and 
transformation credits. At the Fourth Meeting of the Protocol Parties 
in Copenhagen in 1992, in Decision IV/24, the Parties agreed to urge 
``all practicable measures to prevent releases of controlled substances 
into the atmosphere.'' In accordance with this Decision, EPA wishes to 
continue encouraging destruction and transformation of controlled 
substances after the phaseout begins January 1, 1996, especially for 
those controlled substances that were produced or imported for intended 
emissive uses. EPA believes a system of incentives can be devised to 
foster destruction or transformation of ozone-depleting substances in 
order to prevent their emission to the atmosphere.
    In this action, EPA proposes a system of incentives to encourage 
destruction or transformation after the accelerated phaseout dates by 
offering credits for the destruction or transformation of controlled 
substances. These credits would be used to produce or import an amount 
of controlled substance. The Agency believes a system of incentives to 
encourage destruction or transformation of controlled substances after 
the phaseout is an important mechanism to deter individuals from 
releasing the unneeded controlled substance to the atmosphere.
    As discussed below, EPA believes that Decision IV/24 of the Parties 
to the Protocol urging measures to prevent the release of unneeded 
controlled substances to the atmosphere and the Protocol definition of 
production provide the basis to devise incentives for destruction or 
transformation after the accelerated phaseout and until the interim and 
final phaseout dates set forth in the CAA.
    The Protocol defines production as the ``amount of controlled 
substances produced, minus the amount destroyed by technologies to be 
approved by the Parties and minus the amount entirely used as feedstock 
in the manufacture of other chemicals.'' Under the Protocol, Parties 
may continue to produce controlled substances after they are phased out 
as long as the amount of the controlled substance produced is offset in 
each control period by the same amount that is transformed\4\ or 
destroyed by an approved technology.\5\ The Protocol definition of 
production indicates that an amount of controlled substance produced 
and the same amount destroyed or transformed would balance in a 
calculation of atmospheric loading and result in a net environmental 
impact of zero.
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    \4\Under the current regulation, transformation is defined as 
the amount entirely used as feedstock (except for trace quantities) 
in the manufacture of other chemicals.
    \5\To date, Parties have approved five technologies for 
destruction (Decision IV/11) which are listed in the definition or 
``destruction'' under Sec. 82.3.
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    Although the definition of production in the Protocol would permit 
continued production beyond the phaseout as long as such production was 
offset by transformation or destruction, the definition of production 
under the Clean Air Act Amendments is distinct and does not permit such 
offsetting. The CAA defines ``produce,'' ``produced'' and 
``production'' as the ``manufacture of a controlled substance from any 
raw material or feedstock chemical, but such terms do not include (A) 
the manufacture of a substance that is used and entirely consumed 
(except for trace quantities) in the manufacture of other chemicals, or 
(B) the reuse or recycling of a substance.'' Under the CAA definition, 
once production of a controlled substance is phased-out, it may no 
longer be produced for emissive purposes because there are no 
provisions, as in the Protocol's definition, to permit that continued 
production be offset by destruction or transformation.
    Pursuant to CAA section 614, in the case of conflict between any 
provision of the CAA and the Montreal Protocol, the more stringent 
provision shall govern. Because the CAA definition of production is 
more stringent than that of the Protocol, the definition of production 
under the CAA shall apply when the phaseout dates under the CAA take 
effect. Section 604 of the CAA sets interim reductions and final 
phaseout dates for listed class I substances. The class I substances 
listed in the CAA must be phased out by the year 2000, except for 
methyl chloroform which must be phased out by the year 2002. In 
addition, under the terms of the CAA, methyl bromide must be phased out 
by 2001. Section 604 also includes interim reductions for the listed 
class I substances as outlined in Table I below.
    In today's rule, EPA proposes to authorize the use of destruction/
transformation credits until the respective dates when the terms of the 
CAA become more stringent than those of the Protocol (2000 for most 
class I controlled substances, 2001 for methyl bromide, and 2002 for 
methyl chloroform). For example, under the terms of the Protocol, CFC-
12 must be phased out by 1996, but production may be continued as long 
as it is offset by either transformation or destruction. However, the 
CAA requires that in 1996, the maximum allowable production of CFC-12 
be no more than 40 percent of the quantity produced in the baseline 
year. From 1995 until 1999, the CAA requires that the maximum allowable 
production of CFC-12 be no more than 15 percent of the quantity 
produced in the baseline year, and in the year 2000, no CFC-12 may be 
produced.
    Today's proposal permits the use of destruction and/or 
transformation credits, but does not permit continued production beyond 
the maximum allowable limits set forth in the CAA. Thus in the example 
above, for 1996, individuals may use destruction and/or transformation 
credits, but in no case may CFC-12 be produced for emissive purposes 
beyond 40 percent of the quantity produced in the baseline year. To 
comply with the 1996 phaseout date and definition of production under 
the Protocol, production of this amount of CFC-12 must be offset by the 
amount transformed or destroyed.\6\
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    \6\Limits are being proposed in today's action for production 
after 1996 regarding destruction and transformation credits, 
essential-use allowances (to be discussed in the next section of the 
preamble) and Article 5 allowances (discussed in section C.1. 
``Changes in Requirements for Export to Article 5 Countries'' of the 
preamble.)
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    Below is a chart indicating the dates and the maximum permissible 
production levels set forth in the Clean Air Act Amendment of 1990.

  Table I.--Title VI of the Clean Air Act Amendments of 1990 Production 
             Phaseout Schedule for Ozone-Depleting Substance            
------------------------------------------------------------------------
                                                                 Other  
                                       Carbon       Methyl      class I 
               Date                tetrachloride  chloroform  substances
                                     (percent)     (percent)   (percent)
------------------------------------------------------------------------
1994.............................           70           85          65 
1995.............................           15           70          50 
1996.............................           15           50          40 
1997.............................           15           50          15 
1998.............................           15           50          15 
1999.............................           15           50          15 
2000.............................  .............         20             
2001.............................  .............         20             
------------------------------------------------------------------------

    Proposed System for Credits--EPA is seeking comments on a system 
that would grant destruction credits and/or transformation credits as 
an incentive to destroy and/or transform controlled substances produced 
or imported for intended emissive uses. EPA is seeking comments on this 
system in which a person may submit, after January 1, 1996, a request 
to the Agency for credits based on the destruction or transformation of 
a quantity of controlled substances in the United States that were 
initially produced for an emissive use. The person requesting credits 
would need to identify the amount of controlled substance that was 
destroyed or transformed and the previous use of the controlled 
substance. In addition, the person would need to submit to EPA a copy 
of the destruction efficiency certification as under Sec. 82.13(k). 
Upon approval, EPA would grant the person credits equal to the amount 
of the controlled substance they destroyed or transformed minus an 
offset. EPA proposes that credits could be used for: (i) the 
importation of a calculated level of the controlled substance, or (ii) 
the production of a calculated level of the controlled substance. 
Consistent with the parameters set for control periods by the Montreal 
Protocol, EPA proposes that credits not be carried over from one 
control period to the next, due to the limits on net production. The 
recordkeeping and reporting requirements associated with the credits 
described in these paragraphs are outlined in paragraph C.7.a.iv and 
C.7.a.v below.
    Under the proposed system, the Agency will create a balance of 
credits for the person upon approval of a request. Deductions will be 
made from this balance of credits based upon quarterly reports to EPA 
showing production and importation. EPA is proposing that inter-
pollutant transfers of credits as currently defined in Sec. 82.12 be 
permitted within the Groups of class I substances listed in Appendix A 
and F to Subpart A, subtracting a one percent offset. The Agency is 
also proposing that inter-company transfers of credits be permitted as 
currently defined in Sec. 82.12, subtracting the one percent offset. 
Inter-Party trades of credits would also be permitted under today's 
proposal as currently described in Sec. 82.9 with the actual controlled 
substance returning to the United States.
    Discussion of Options--The following discussion outlines options 
considered by EPA in proposing today's system to grant credits for the 
destruction or transformation of controlled substances. The initial 
discussion focuses on options for destruction credits. This is followed 
by a summary of how the same arguments pertain to a parallel system for 
granting transformation credits.
    Options for Destruction Credits--The Agency considered many factors 
in analyzing how to provide incentives to destroy controlled substances 
in the post-phaseout period.
    EPA envisions granting destruction credits to people who destroy 
controlled substances that were recovered from use systems, as well as 
controlled substances that were produced or imported for intended 
emissive uses. The Agency believes that as the phaseout goes into 
effect on January 1, 1996, an increasing number of people will retrofit 
or switch from use systems that use class I controlled substances to 
use systems that occupy other chemicals or processes less damaging to 
stratospheric ozone. However, in the near term the Agency anticipates a 
period of transition in which some people continue to use equipment 
that occupies class I substances. To meet the needs of people with 
equipment designed for class I controlled substances after the 
phaseout, EPA presumes market demand will engender a service industry 
to recover the phased out substances from existing equipment, such as 
building chillers, commercial refrigeration units, and automobile air 
conditioners as this equipment is retrofitted with alternative 
chemicals or is taken out of commission. EPA anticipates that much of 
the recovered controlled substances will be recycled or reclaimed and 
stored (banked) to meet the near term needs of people still using 
equipment that requires phased out substances. At this point in time, 
it is difficult to project what the future supply and demand for 
controlled substances will be once the post-phaseout period begins 
(January 1, 1996) and how long the transition period will last.
    EPA is proposing destruction credits to encourage the destruction 
of controlled substances when the supply of these substances exceeds 
the demand. In time, the demand for class I controlled substances 
should fall as the majority of equipment is converted to alternative 
chemicals or new systems replace old systems. The Agency presumes this 
will occur as alternative substances, retrofits and new equipment are 
brought into wider use throughout all sectors, obviating the need for 
banked class I controlled substances. Under this scenario, when the 
supply of a class I substance being banked for the period of transition 
exceeds the demand, the price will drop and the existing stocks will 
become ``unneeded,'' as mentioned in Decision IV/24 of the Parties to 
the Protocol cited above. When the substances are unneeded, the demand 
for phased out controlled substances may no longer even warrant 
storage. A person with a stored quantity of class I controlled 
substance that no longer has a market due to the conversion and 
replacement of equipment should be encouraged through a meaningful 
incentive system to destroy the substance. Without such an incentive, 
individuals may continue storing these controlled substances, 
increasing the risk of leaks, accidental releases or intentional 
releases to the atmosphere. EPA believes destruction should be 
encouraged to prevent such releases into the atmosphere.
    The proposed system encourages the destruction of controlled 
substances that are unneeded as demand shifts from one specific 
substance to alternatives or other types of equipment. The system of 
granting destruction credits allows market flexibility in meeting 
demand by allowing inter-pollutant transfers of destruction credits at 
the same time that it provides an incentive to destroy the excess 
supply of a given substance that might potentially be released into the 
atmosphere. As a hypothetical example, CFC-11 might be recovered from 
several use systems and banked during the first years after the 
phaseout (January 1, 1996) to meet demand during the period of 
transition. But as alternative substances and/or equipment are brought 
to market to replace the need for CFC-11, the supply of CFC-11 that was 
banked would become unnecessary. Today's proposed destruction credits 
would encourage the destruction of this excess supply of CFC-11 and the 
credits could be used, through an inter-pollutant transfer, to produce 
or import a different controlled substance in the same Group of 
controlled substances, such as CFC-12, to satisfy a still unmet demand 
for CFC-12.
    As under the current regulation, the Agency will grant credits 
equal to 100 percent of the volume destroyed (minus the offset) for 
controlled substances that are completely destroyed (using the current 
definition of completely destroy). For controlled substances destroyed 
at less than a 98 percent destruction efficiency, EPA will grant 
allowances commensurate with that percent of destruction efficiency 
that is actually achieved (minus the offset).
    Another factor considered in proposing an incentive system was the 
general technical destruction characteristic of the chlorinated and 
brominated compounds regulated under the current rule. Due to the 
chemical composition of these ozone-depleting substances, the by-
products of destruction are often corrosive acids. The corrosivity of 
these destruction by-products may influence the maintenance costs for 
approved destruction technologies. Increased rates of destruction of 
controlled substances could increase the frequency with which operators 
of approved incineration technologies would need to replace the liners 
of their incineration units. Therefore, operators will probably 
continue to charge high prices for the destruction of controlled 
substances.
    EPA received anecdotal information that very few incineration 
facilities in the United States are now accepting bulk quantities of 
CFCs for destruction and as a result the price being charged is 
extremely high. The Agency does not want the maintenance costs at 
incineration facilities to impede the overall availability of 
destruction for controlled substances, especially as controlled 
substances are taken from existing use systems. If destruction is 
limited and expensive, the release of controlled substances to the 
atmosphere may be an unfortunately attractive option. Offering credits 
for destruction provides an economic incentive to persons who have 
controlled substances but would like to dispose of them. The credits 
have economic value which could offset the high costs of destruction. 
If persons gain a benefit from destroying a controlled substance, they 
will be more likely to destroy the controlled substance than release it 
to the atmosphere. The overall goal of providing the incentives for 
destruction is to prevent the release of ozone- depleting substances to 
the atmosphere.
    EPA believes that the proposed system for granting destruction 
credits will have an overall environmental benefit. Without an 
incentive to increase the current rate of destruction the Agency 
presumes there will be greater release of controlled substances to the 
atmosphere as equipment that contains the phased out substances is 
taken out of commission. Today's proposal is to grant destruction 
credits equal to the quantity of controlled substance destroyed minus 
an offset of 15 percent. Although the credits can be used to produce or 
import controlled substances, the amount produced or imported will be 
less than the amount destroyed due to the offset. The credits also 
provide an incentive to destroy ozone-depleting substances that 
otherwise might be emitted.
    In making today's proposal the Agency considered other ways of 
encouraging destruction. EPA considered a voluntary system for 
encouraging destruction of controlled substances. The voluntary system 
would not grant credits but simply try to persuade companies to destroy 
ozone-depleting substances with publicity and public relations 
assistance. For instance, the Agency could develop a list of companies 
actively destroying controlled substances as ``friends of the ozone'' 
in a national publicity campaign. EPA believes, however, that a system 
of credits would provide greater incentive to increase current rates of 
destruction and there would be less chance of controlled substances 
being released to the atmosphere.
    Another option considered by EPA was to grant destruction credits 
equal to the amount of controlled substance destroyed. Under an option 
of giving 1:1 credits for kilograms, a person who destroys 100 
kilograms of CFC-12 would be given a calculated level of 100 kilograms 
of destruction credits which could be used to produce or import 100 
kilograms of new CFC-12. Although the incentive would be great to 
destroy unneeded stocks of controlled substances without an offset, EPA 
believes the environmental benefits of the actual destruction would be 
balanced by the subsequent production or importation of an equal amount 
of additional controlled substance.
    In developing today's proposal, EPA considered offsetting the 
number of credits to be granted by one percent from the actual quantity 
destroyed. A one percent offset is used throughout the current 
regulation in calculating allowances authorized in various transfers; 
both between Groups of controlled substances (inter-pollutant trades) 
and between companies (inter-company trades). The offset was developed 
to address Section 607 of the CAA which requires that trades result in 
less overall production or consumption than would have occurred absent 
the trade. The one percent offset was proposed in the September 30, 
1991 rule, as an amount large enough to provide a net environmental 
benefit but without discouraging the trading that might be necessary to 
meet market demand.
    In today's proposal, EPA recommends a 15 percent offset. The 15 
percent offset is proposed to ensure that environmental benefits result 
from the proposed incentive system granting additional production or 
importation to encourage destruction and prevent the release of 
controlled substances. The 15 percent offset proposed today is based on 
an estimate of the amount of controlled substances that could possibly 
be destroyed given the capacity of U.S. approved technologies. 
Estimates of destruction capacity for controlled substances in the 
United States for 1992 are 15 percent of annual production.\7\ 
Therefore, the greatest environmental benefit that can be obtained in 
the U.S. from destruction is 15 percent of annual U.S. production. The 
15 percent offset means a person who destroys a quantity of controlled 
substance after the phaseout (January 1, 1996) may request credits 
equal to 85 percent of the quantity destroyed. The 85 percent is the 
portion of annual United States production of controlled substances for 
intended emissive uses that cannot be destroyed due to the limits of 
estimated domestic destruction capacity. To control and reduce the 
damage caused by corrosive by-products from the destruction of 
controlled substances, operators of incineration units usually 
incorporate a small percentage of halogenated substances in each batch. 
The offset would encourage owners of approved destruction technologies 
to maximize their capacity for incorporating controlled substances.
---------------------------------------------------------------------------

    \7\United States capacity for destruction of halogenated 
compounds at commercial and public hazardous waste incineration 
facilities is 63,600 metric tons per year. United Nations 
Environmental Programme's Report from the Ad-Hoc Technical Advisory 
Committee on ODS Destruction Technology, May 1992.
---------------------------------------------------------------------------

    Options for Transformation Credits--The discussion of destruction 
credits above also pertains to a system for granting transformation 
credits. Transformation credits would be granted to a person who 
transforms controlled substances originally produced or imported for 
intended emissive uses. EPA is seeking comment on a system that would 
grant transformation credits as a parallel system to the system for 
destruction credits described above. In other words, transformation 
credits would be granted for a quantity of controlled substance 
transformed originally produced or imported for intended emissive uses, 
minus the 15 percent offset.
    EPA is aware that most controlled substances currently produced or 
imported for intended emissive uses do not subsequently become a 
feedstock for a transformation process. However, EPA believes that new 
technologies may appear that can transform controlled substances that 
were produced or imported for intended emissive uses. As defined in the 
current regulation, transformation is the process of entirely consuming 
a controlled substance (except for trace quantities) in the manufacture 
of other chemicals for commercial purposes. The Agency has learned of 
independent efforts to develop transformation technologies that would 
transform controlled substances into commercially useful chemicals. The 
information EPA has on these technologies suggests that they may be 
able to transform even controlled substances that are taken from use 
systems and that are contaminated. Today's proposal anticipates the 
development of these new technologies and would offer an incentive for 
the transformation of controlled substances that might otherwise be 
released into the atmosphere.
    EPA is proposing to implement the Decision of the Parties to the 
Protocol to encourage practicable measures to prevent the release of 
controlled substances to the atmosphere, recognizing that there are 
many options for creating incentives that also achieve varying degrees 
of environmental benefits. EPA is therefore seeking comments on today's 
proposed system for granting credits as an incentive for the 
destruction or transformation of controlled substances after the 
phaseout and the options discussed above.
2. Post-Phaseout Requirements for Essential-Use Production
    EPA discussed the issue of essential uses in its Federal Register 
notice containing the final accelerated allowance regulations (December 
10, 1993, 58 FR 65018). While recognizing the need to include 
provisions to implement the essential use provisions of the Montreal 
Protocol, the final rule did not address how this would be incorporated 
into EPA's allowance program.
    a. Protocol Decisions Regarding Essential-Use Production. The 
Montreal Protocol established an essential use provision at the Fourth 
Meeting of the Parties (Decision IV/25). Production and consumption are 
only to be permitted past the phaseout date for those applications 
approved under this Decision. The Decision established both criteria 
for determining whether a specific use should be approved as essential 
and a process for the Parties to use in making such a determination.
    The criteria for an essential use adopted by the Parties is the 
following:
    ``(1) that a use of a controlled substance should qualify as 
`essential' only if:
    (i) it is necessary for the health, safety or is critical for the 
functioning of society (encompassing cultural and intellectual 
aspects); and
    (ii) there are no available technically and economically feasible 
alternatives or substitutes that are acceptable from the standpoint of 
environment and health;
    (2) that production and consumption, if any, of a controlled 
substance for an essential use should be permitted only if:
    (i) all economically feasible steps have been taken to minimize the 
essential use and any associated emission of the controlled substance; 
and
    (ii) the controlled substance is not available in sufficient 
quantity and quality from existing stocks of banked or recycled 
controlled substances, also bearing in mind the developing country need 
for controlled substance.''
    Thus, any proposed application for an essential use would be 
evaluated based on the social utility of that application, the 
availability of substitutes, and the potential for meeting that need 
through banked or recycled controlled substances.
    Decision IV/25 also set out the procedural steps for implementing 
this process. It first calls for individual Parties to nominate 
essential uses. These nominations are then to be evaluated by the 
Protocol's Technology and Economic Assessment Panel (TEAP or the Panel) 
which makes recommendations to representatives of all Protocol Parties. 
The final decision on which nominations are to be approved is to be 
taken by a meeting of the Parties.
    The initial cycle of implementing this Decision has been completed 
in the context of halons which were phased out of production at the end 
of 1993. EPA issued a Federal Register notice requesting nominations 
for essential uses of halons (February 2, 1993; 58 FR 6786). In 
response, the Agency received over ten nominations, but was able to 
work with applicants to resolve their near-term requirements. As a 
result, the U.S. did not nominate any uses for continued halon 
production in 1994. About a dozen other nations put forth nominations 
which were reviewed by the Technical and Economics Assessment Panel. 
Because the Panel determined that in each case alternatives existed or 
that the existing supply of banked halons was adequate to meet near-
term needs, it did not recommend approval of any of the nominations. In 
November of 1993, at the Fifth Meeting, the Parties unanimously adopted 
the recommendation of the Panel not to approve any essential uses for 
the production or consumption of halons in 1994.
    EPA issued a second notice for essential use nominations for halons 
on October 18, 1993 (58 FR 53722). These nominations covered possible 
production of halons in 1995 for essential uses. In response to this 
inquiry, EPA received no nominations.
    Only one nomination (from France) was received by the TEAP for 
production and consumption of halons for an essential use in 1995. The 
TEAP did not recommend approval of this nomination.
    EPA also issued a Federal Register notice requesting nominations 
for essential use applications which would need to continue beyond the 
1996 phaseout of consumption and production allowances for CFCs, methyl 
chloroform, carbon tetrachloride, and hydrobromofluorocarbons (May 20, 
1993, 58 FR 29410). EPA received 20 applications in response to this 
notice. For several of these applications, EPA determined that the 
criteria contained in the Decision had not been satisfied. For example, 
two applications sought CFCs for servicing existing air-conditioning 
equipment. EPA rejected these applications on the basis that if all 
economically feasible steps were taken prior to the 1996 phaseout, then 
adequate supplies of banked and recycled CFCs should be available. 
However, in rejecting these nominations, the United States noted that 
servicing existing air-conditioning and refrigeration remains a major 
challenge to the successful transition from the use of CFCs and that a 
future nomination in this area might be necessary if a combination of 
retrofits, replacements, recycling, recovery at disposal, and banking 
do not adequately address these needs.
    Of the responses to the Federal Register request for essential use 
applications, the United States submitted essential use nominations to 
the Protocol for the following uses of CFCs: metered dose inhalers and 
other selected medical applications; a bonding agent for the Space 
Shuttle; aerosol wasp killers; limited use in a specified bonding agent 
and polymer application; and a generic application for laboratory uses 
under specified limitations. (Letter from Pomerance to UNEP, September 
27, 1993).
    Nominations from the U.S. and other countries for over 200 specific 
uses were submitted to the Montreal Protocol Secretariat and provided 
to the Technical and Economics Assessment Panel for review. In March 
1994, the Panel issued the ``1994 Report of the Technology and Economic 
Assessment Panel.'' The Report includes the Panel's recommendations for 
essential-use production and consumption exemptions. The Panel 
recommended that essential use exemptions be granted for nominations 
of: methyl chloroform in solvent bonding of the Space Shuttle; CFCs 
used in metered dose inhalers; and specific controlled substances 
needed for laboratory and analytical applications.
    For each of the other nominations submitted, the Panel determined 
that one or more of the criteria for evaluating an essential use had 
not been satisfied. For example, in the case of several of the U.S. 
nominations, the report states that alternatives are available and 
therefore the essential use exemption is not warranted.
    The next meeting of the Parties is scheduled for October 1994. At 
that session the Parties will review the recommendations by the 
Technology and Economic Assessment Panel and make final decisions on 
this round of essential use nominations.
    In 1993, the Parties to the Protocol modified the timetable for 
submission of essential use nominations to combine both halons and all 
the other class I controlled substances (except methyl bromide) and to 
reduce the overall length of time between nomination and decision. 
According to Decision V/18, essential use nominations for halon 
consumption and production for 1995 and beyond, and essential use 
nominations for all the other class I controlled substances (except 
methyl bromide) for 1997 and beyond, must be submitted to the 
Secretariat prior to January 1st of the year prior to the year for 
which production and consumption is being sought.\8\ Parties must 
submit essential use nominations for CFCs for 1997 (nominations for 
1996 have already been considered) to the Montreal Protocol Secretariat 
by January 1, 1996. EPA will revise its domestic schedule to require 
that nominations be submitted at least three months prior to the 
Protocol Secretariat deadline for submission, and will issue a Federal 
Register notice in August 1994, calling for essential use nominations 
for halons for 1996 and beyond. The next call by EPA for other class I 
controlled substances will be in August of 1995 for 1997 essential-use 
exemption nominations.
---------------------------------------------------------------------------

    \8\Decision V/18 also directed the Technology and Economic 
Assessment Panel to develop a ``Handbook of Essential Use 
Nominations.'' The Handbook is being prepared and will contain forms 
and instructions for how to apply for an essential-use exemption. 
When available, the Handbook may be obtained from the Stratospheric 
Protection Division, U.S. Environmental Protection Agency or the 
Ozone Secretariat of the Montreal Protocol in Nairobi.
---------------------------------------------------------------------------

    b. Domestic Implementation of Essential-Use Program. Any essential 
use exemptions would also have to comply with the provisions of the 
CAA. Section 604 of the CAA authorizes the granting of specific 
exemptions from the phaseout schedules contained in the Clean Air Act 
for essential uses for methyl chloroform for which no safe and 
effective substitute is available (section 604(d)(1)), for limited 
quantities of class I substances solely for use in medical devices if 
such authorization is determined to be necessary (section 604(d)(2)) 
and for limited quantities of halon-1211, halon-1301 and halon-2402 
solely for use in aviation safety if no safe and effective substitute 
is available and if such authorization is necessary. The CAA also 
authorizes specific exemptions from the phaseout schedule of CFC-114, 
halon-1211, halon-1301 and halon-2402 for national security (section 
604(f)).
    In today's action, EPA does not propose essential uses under the 
provisions of the CAA. However, EPA does propose to permit continued 
production for the essential uses authorized under the Protocol, so 
long as these essential use exemptions do not exceed amounts allowed in 
the schedule contained in section 604(a) of the CAA.
    As indicated on the table below, EPA is proposing essential uses 
for specified controlled substances for the years 1996 and 1997. As 
discussed in section A.1.c., ``The Post-Phaseout Procedures for 
Granting Destruction and Transformation Credits,'' EPA proposes to 
authorize continued production for essential uses permitted under the 
Montreal Protocol, but not to exceed the maximum allowable limits set 
forth in section 604(a) of the CAA. As used in a previous example in 
section A.1.c., the CAA requires that in 1996, the maximum allowable 
production of CFC-12 may be no more than 40 percent of the quantity 
produced in the baseline year. Thus, in 1996, if total production of 
CFC-12 were to be used for essential uses, the amount produced for 
those essential uses may not exceed 40 percent of the quantity produced 
in the baseline year. Although production may be used for some 
combination of essential uses, destruction credits, or transformation 
credits, the total amount produced could not exceed the maximum 
allowable limits set forth in the CAA as reproduced in Table I below.
    To incorporate the essential-use provisions under the Montreal 
Protocol into our domestic allowance program, EPA is proposing the 
creation of a new class of allowances to be referred to as ``essential-
use allowances.''
    The essential-use allowances will be allocated to United States 
entities based on the nominations made to the Protocol which will be 
decided upon by the Parties at the October 1994 meeting and at meetings 
thereafter. In the nominations to the Protocol, U.S. entities apply for 
an essential-use exemption from the production and consumption phaseout 
for a specific quantity of controlled substance for a specific use. EPA 
proposes using the applications that are agreed to by the Parties to 
the Protocol to make specific allocations of essential-use allowances. 
Although the TEAP has received applications for essential-use 
exemptions beyond 1997, today's proposal only includes those 
recommendations by the Panel for 1996 and 1997. In today's rulemaking, 
EPA proposes an allocation of essential-use allowances up to the amount 
being recommended by the Technology and Economic Assessment Panel to 
the Parties for their meeting in October 1994. It should be noted that 
the final essential-use allowances promulgated by EPA may not exceed 
the exemptions adopted by the Parties.

               Essential Uses Recommendation by the UNEP Technology and Economic Assessment Panel               
----------------------------------------------------------------------------------------------------------------
                                                                                                       Quantity 
                          Company                               Year              Chemical             (metric  
                                                                                                        tons)   
----------------------------------------------------------------------------------------------------------------
Metered Dose Inhalers:                                                                                          
    International Pharmaceutical & Aerosol Consortium.....         1996  CFC-11....................        749.8
                                                            ...........  CFC-12....................       2353.2
                                                            ...........  CFC-114...................        314.1
                                                                   1997  CFC-11....................        658.3
                                                            ...........  CFC-12....................       2166.5
                                                            ...........  CFC-114...................        311.4
Sterling Winthrop.........................................         1996  CFC-12....................         10.2
                                                            ...........  CFC-114...................         29.6
                                                                   1997  CFC-12....................         10.5
                                                            ...........  CFC-114...................         31.7
----------------------------------------------------------------------------------------------------------------
                                              Space Shuttle Solvent                                             
----------------------------------------------------------------------------------------------------------------
NASA/Thiokol..............................................         1996  Methyl Chloroform.........         56.8
                                                                   1997  Methyl Chloroform.........         56.8
----------------------------------------------------------------------------------------------------------------
                                     Laboratory and Analytical Applications                                     
----------------------------------------------------------------------------------------------------------------
Global Exemption..........................................         1996  CFCs, Methyl Chloroform,          (\1\)
                                                                          Carbon Tetrachloride.                 
                                                                   1997  (\2\).....................       (\2\) 
----------------------------------------------------------------------------------------------------------------
\1\No quantity specified.                                                                                       
\2\Same.                                                                                                        

    The nomination for essential uses in 1996, 1997 and 1998 of CFCs, 
methyl chloroform and carbon tetrachloride in analytical and laboratory 
applications is being recommended by the Technology and Economic 
Assessment Panel for a global exemption which will not specify the 
quantity granted to each Party. The TEAP describes the many analytical 
and laboratory procedures for which small quantities of controlled 
substances are now used and for which applications were received, such 
as: equipment calibration; extraction solvents, diluents, or carriers 
for specific chemical analyses; inducing chemical-specific health 
effects for biochemical research; and other critical purposes in 
research and development where substitutes are not readily available or 
where standards set by national and international agencies require 
specific use of a controlled substance. The TEAP recommendation for a 
global exemption pertains only to 1996, 1997 and 1998 and refers to the 
manufacture of CFCs, methyl chloroform and carbon tetrachloride of very 
high purities to be packaged in small containers. Additional detailed 
information regarding the purity of the substances and the size of the 
containers being recommended by the TEAP is contained in Appendix G to 
subpart A. In anticipation of the Parties adopting this recommendation 
of the Technology and Economic Assessment Panel, EPA is proposing that 
a specific quantity of essential-use allowances for laboratory and 
analytical use not be designated.
    In anticipation of a Decision by the Parties at the October 1994 
meeting that does not specify the quantity of essential use allowances 
permitted for analytical and laboratory application, but a global 
essential-use exemption, EPA is proposing that producers or importers 
of the controlled substance require that laboratories certify they are 
purchasing the designated essential-use controlled substances only for 
laboratory or analytical uses, and that the substance will not be 
resold (see Recordkeeping and Reporting in Section C.7.b.). Unlike the 
system for the allocation of essential-use allowances for metered dose 
inhalers and space shuttle solvents, there will not be specific 
recipients of analytical/laboratory essential-use allowances. A person 
who claims the essential need for an analytical or laboratory 
application of a substance that has been phased out will be permitted 
to purchase the requested quantity as long as a certificate is provided 
to the importer or producer of the substance. The certificates will 
allow EPA to monitor the quantities of phased-out controlled substances 
that are used in analytical or laboratory applications domestically. 
EPA reserves the right to amend these procedures in the future based on 
information collected through the certificates and changes made by the 
Protocol.
    In the case of the allowances for specific essential uses, EPA 
proposes that the recipient of essential-use allowances confer to a 
producer or importer the right to produce or import a specific quantity 
of the specific controlled substance. The company conferring the 
essential-use allowances must, as in the case of laboratories, certify 
to the producer or importer that the controlled substance will only be 
used for the specified essential use. The producer or importer will 
report to EPA quarterly the quantity produced for essential uses, 
submitting the certification from the holder of the essential-use 
allowance.
    Due to the specific nominations of specific substances for specific 
uses, EPA is proposing that inter-pollutant transfers of essential-use 
allowances not be permitted. The application process described above in 
which U.S. companies petitioned the Parties to the Protocol through EPA 
for an essential-use exemption for a specific quantity of a specific 
substance for a given year indicated that the substance is essential 
for the specific application because no practicable alternative 
chemical exists. EPA reviewed these applications and made 
recommendations to the TEAP, which in turn reviewed the claims that the 
specific substance is essential for the application and recommended an 
exemption be given in those cases where experts felt no substitute 
exists. For the same reason, EPA proposes that inter-company transfers 
of essential-use allowances not be permitted because allowances will be 
allocated based on a company's application to the Parties through EPA 
for a specific quantity of a controlled substance for a specific use. 
As a result, EPA is also proposing that inter-Party trades not be 
permitted since these would be trades between companies internationally 
and the allocations being recommended by the TEAP to the Parties for 
the October 1994 meeting are country-specific.

B. Imports of Used Controlled Substances

    In recognition of the critical role that previously used materials 
would play in ensuring a smooth transition to ozone- friendly 
substances, the Parties to the Montreal Protocol decided to encourage 
their expanded use. Specifically, in Decision IV/24 (Copenhagen, 1992), 
the Parties decided ``not to take into account, for calculating 
consumption, the import and export of recycled and used controlled 
substances.'' EPA implemented this decision domestically in the 
December 10, 1993 phaseout rule (December 10, 1993; 58 FR 65018). 
Accordingly, EPA rules now allow importation of previously used or 
recycled controlled substances without allowances (Sec. 82.4(a) and 
(b)).
    Although the December rule allows importation of used or recycled 
controlled substances, EPA is now investigating several cases of 
potential fraud in which the importer claimed that the substance was 
used or recycled when in fact, the Agency believes the substance was 
virgin or ``off-spec'' virgin (a newly manufactured substance that does 
not meet industry specifications for quality). Several other countries 
are investigating importation of controlled substances that were 
believed to be fraudulently labelled as used or recycled. Due to the 
difficulty of determining whether a substance is used or recycled, the 
Parties to the Montreal Protocol are very likely to consider a 
clarification of Decision
IV/24 during the 1994 meeting. In an effort to facilitate final 
adoption of a rule that is consistent with the Protocol Parties' 
action, EPA is today proposing alternative methods for ensuring that 
materials brought into the country under the used and recycled 
allowance exemption are in fact used or recycled.
    Additionally, EPA is today proposing that the current definition of 
used and recycled controlled substances be changed to include only the 
term ``used'' since EPA believes recycled and reclaimed substances fall 
under the current definition. In this manner, a controlled substance is 
defined as used if it was recovered from a use system, regardless of 
whether it was subsequently recycled or reclaimed. The proposed change 
simplifies the references to used substances without confusion 
regarding their subsequent treatment.
1. Information Requirements
    One method for ensuring that a substance claimed to be used is in 
fact used is to require that the importer have proof of the origin of 
the substance prior to import. Naming the previous use of the substance 
offers opportunities for verification, whether through chemical 
analysis or through knowledge of a country's infrastructure. Therefore, 
EPA is considering incorporating some or all of the following 
information requirements:

--the name and address of the firm that recovered the chemical,
--the type of equipment from which the substance was recovered,
--the type of machine used to recover and/or recycle the material,
--the name of the facility and/or the name of the equipment employed to 
reclaim a previously used substance, or
--a chain of ownership of the substance from recovery to final import,
--a certification from the foreign seller that the substance is 
previously used,
--a chemical test of used imports where the quantity of the import 
exceeds some specified weight (e.g., 10,000 pounds).

    EPA is aware that the importer may not always know if the imported 
substance was in fact previously used. In the absence of information 
requirements such as those noted above, the importer might be forced to 
rely solely on the statements of exporters from other countries--
individuals about whom the importer may know little or nothing. The 
types of information noted above are designed to provide an opportunity 
for independent verification of the nature of the substance being 
imported (both from the U.S., and by the exporting country government).
    As an alternative, or in addition to requiring import information 
such as that noted above, EPA proposes that it be able to request post-
import information designed to ensure that the product is treated in a 
manner consistent with the claimed import status. Importers of used 
material that was not reclaimed may be asked to provide information on 
the facilities that they will use for reclaiming the used substances 
once imported. Information that EPA may require could include, where 
applicable:

--the name of the reclamation facility that will clean a used or a 
recycled substance to the specified ARI-700 Standard,
--information demonstrating that such cleaning will take place, or
--the bills of sale from the exporter to the actual purchaser of the 
substance (not necessarily the importer).

    EPA requests comment on the above-noted list of potential 
information requirements, and requests comment on alternative 
information requirements that can reasonably be expected to result in 
an accurate determination of whether the substance being imported is in 
fact used.
2. Certification by the Country of Export
    In future meetings, the Parties to the Protocol may decide to 
require the government of the country of origin of a material to 
certify its status as used prior to export. While this might obviate 
the need for some of the information listed in paragraph B.1. above, it 
would also require EPA to establish a program to certify any U.S. 
exports of used controlled substances. EPA already has a limited 
certification program for certain reclamation facilities. Under this 
program, reclamation facilities must be able to ensure that previously 
used substances will be reclaimed to a level of purity called for by 
the ARI-700 Standard. With regard to exports of used substances, with 
such Protocol changes, U.S. exporters could be required to certify to 
EPA that the ``used'' substance that it wishes to export was indeed 
taken from a use system. The exporter could also be required to keep 
records on selected items under paragraph B.1. above, to facilitate 
future verification. EPA requests comments on this approach to certify 
that the used and recycled class I substances being exported are being 
recovered from use systems.
3. Creation of a Permit Program for the Importation of Used Materials
    EPA is considering the use of a permit system for the importation 
of used controlled substances. In addition to the measures discussed in 
paragraphs B.1. and B.2. above, EPA believes a permit system may deter 
fraudulent import of mislabelled controlled substances, and may provide 
greater control over the entry of used controlled substances into 
United States jurisdiction. The European Union requires importers to 
have permits to control the import of mislabelled ozone-depleting 
substances that are used. EPA believes that adoption of a similar 
system of permits for the importation of used controlled substances may 
increase the effectiveness of enforcement actions against the illegal 
importation of used substances into the U.S. EPA seeks comments on the 
potential effectiveness of a permit system in controlling the import of 
mislabelled used controlled substances, in general, and the specific 
permit systems described below. Under all options being considered, an 
importer would not be able to import until a permit was granted.
    Currently, EPA receives a monthly list of importers of controlled 
substances from U.S. Customs. With a permit system, EPA would collect 
information from importers of used controlled substances and could 
match persons on the monthly U.S. Customs list with the list of persons 
who have permits to import used controlled substances. A person 
appearing on the U.S. Customs list who does not have a permit would be 
in potential violation of the regulation. A permit system would also 
enable compliance and enforcement staff to link suspicious imports by 
permitted importer to a specific person, i.e., the name and address of 
the company. Importers would also be aware that EPA held information on 
each import, providing a disincentive for fraudulent activity.
    One option EPA is considering would require individuals to obtain a 
permit from EPA prior to each proposed import of a used controlled 
substance. EPA would require the person to submit an application for a 
permit 15 days before the import is due to enter U.S. jurisdiction. EPA 
would then have 5 days in which to grant the permit. If EPA does not 
act within 5 days, the permit would be granted automatically. EPA would 
review the information to determine if the information is sufficient 
and verify the accuracy of the claims. If the application is denied, 
the person may appeal within 5 days. EPA would then have 5 days in 
which to review the appeal and deny or grant the permit. If EPA does 
not make a determination on the appeal within 5 days, the permit would 
be granted automatically.
    The application for an import permit for a particular shipment of 
used controlled substances would need to include the name and address 
of the importer, their importer identification number, and the quantity 
of controlled substance that the person intends to import. In addition, 
the individual would be required to furnish information such as that 
outlined under paragraph B.1., ``Information Requirements,'' that 
ensures the substance being imported is in fact ``used.'' EPA is 
requesting comment on a list of information requirements in paragraph 
B.1. to identify those which might best verify that a controlled 
substance is in fact ``used.'' In addition, importers of used 
controlled substances may be asked to provide information on the 
reclamation facility they will use once the substance is imported, in 
order to bring the contaminated material to chemical and physical 
specifications for sale in the United States. EPA is considering this 
option because it would provide detailed, timely information on each 
shipment and allow more accurate compliance determinations. However, 
EPA is seeking comments on the potential constraints on trade that a 
shipment by shipment permitting system might impose.
    Another option EPA is considering would require all importers of 
used controlled substances to apply each year for a permit. Such a 
permit application would need to be submitted to EPA between November 1 
and November 15 in the year prior to the control period for which it 
would be applicable. The permit application would include the person's 
name and address, their importer identification number, and the 
intended quantity of used controlled substance that the person 
estimates will be imported during the control period. The estimates 
would not be binding, but would provide EPA with information on the 
total potential import of used controlled substances for the U.S. for 
that year. EPA would need to make a determination within 30 days of the 
receipt of an application. If the application is denied due to 
insufficient information, the person would have 5 days in which to 
appeal the decision. EPA would then have an additional 5 days in which 
to deny or grant the permit. If EPA did not act in the 5 days, the 
permit would be granted automatically. A person wishing to import used 
controlled substances who did not apply for a permit during the 
designated time before the control period, may submit an application at 
any time during the year. However, EPA would maintain the right to 
review the application within 60 days of its receipt. A 60-day review 
of the application is justified by the fact that the person is applying 
outside of the designated time for processing permits. Any person 
receiving a permit outside of the designated time period for 
application would be required to apply again for the following control 
period, during the designated period.
    The importers granted permits for a year would be asked to furnish 
information upon the import of each shipment of used controlled 
substance. EPA is requesting comment on a list of information 
requirements in paragraph B.1. to determine those that best verify that 
an imported controlled substance is used. Such information would become 
the reporting requirements for each particular shipment for individuals 
holding a permit to import used controlled substances.
    The yearly permit system described may be easier to implement and 
comply with than a permit system for each imported shipment of used 
controlled substance. A permit system for each shipment, however, could 
provide more detailed information and potential control over each 
particular import of used substances. The Agency seeks comments on the 
options discussed above and also solicits suggestions on other 
approaches for permit requirements that are not burdensome but 
adequately ensure that imported used controlled substances are in fact 
``used.''

C. Adjustments and Clarifications of the Allowance Program to Become 
Effective January 1, 1995

    This section describes proposed changes to the current regulation 
in an effort to address issues that have arisen since the December 10, 
1993 rule. The proposed clarifications in this section are made to 
increase the efficiency of the requirements and reduce the 
administrative burden for affected individuals and the Agency. The 
following paragraphs propose changes to the current rule that would go 
into effect January 1, 1995, for the last control period before the 
phaseout begins on January 1, 1996.
1. Changes in Requirements for Export to Article 5 Countries
    In accordance with the Montreal Protocol, limited production of 
controlled substances for export to Article 5 countries may continue 
after the phaseout. Specifically, Article 2 of the Protocol allows 
Parties to produce beyond the January 1, 1996 phaseout to meet the 
basic domestic needs of Article 5 countries. Article 5 countries are 
defined by the Parties as developing countries ``whose annual 
calculated level of consumption of class I, Group I controlled 
substances is less than 0.3 kilograms per capita.'' Article 5 countries 
are listed in Appendix E to Subpart A.
    Under the current Allowance Program, a company must have production 
and consumption allowances before producing a controlled substance for 
export to an Article 5 country. Companies with a baseline allocation of 
consumption and production allowances for specific controlled 
substances currently are given an allocation of potential production 
allowances amounting to ten percent of their baseline production 
allowances until January 1, 2000, and fifteen percent of baseline 
production allowances from January 1, 2000, until January 1, 2011 based 
on phaseout dates required by the Clean Air Act (see discussion below 
regarding proposed changes in percentage allocations, based on 
accelerated phaseout dates). These companies may request the conversion 
of these potential production allowances to production allowances after 
exporting a controlled substance to an Article 5 country.
    Effective January 1, 1995, EPA proposes changing the name of 
potential production allowances to Article 5 allowances. In today's 
rule, EPA also proposes to eliminate the process for converting 
potential production allowances to production allowances beginning 
January 1, 1995. This proposed change would eliminate the current 
process where companies expend production and consumption allowances 
up-front to produce a controlled substance for export to an Article 5 
country and, after the export, request the conversion of potential 
production allowances to production allowances. The changes are 
proposed to anticipate the elimination of production allowances for 
class I controlled substances (except methyl bromide) after January 1, 
1996, and to ease the administrative burdens created by the current 
process.
    EPA proposes that beginning January 1, 1995, the Agency assign 
Article 5 allowances to companies that have an allocated baseline of 
production allowances.\9\ Under the proposed system, a company would 
notify the Agency at the end of the quarter in which they exported to 
Article 5 countries. EPA would then deduct the amount of controlled 
substance exported to Article 5 countries from the balance of Article 5 
allowances held by the company, rather than require an application to 
convert potential production allowances to production allowances.
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    \9\Under a separate Federal Register notice, EPA is allocating 
Article 5 allowances for production of methyl bromide (class I, 
Group VI) to persons with baseline production allowances.
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    The Agency is also proposing to correct the date from which, and 
until which, companies may produce 15 percent of baseline allowances 
for export to Article 5 countries. CAA section 604(e)(2)(C) permits 
production for developing countries to exceed baseline allowances by up 
to 15 percent beginning January 1, 2000, and to continue until January 
1, 2010 (2012 in the case of methyl chloroform). However, the Protocol 
permits production for export to Article 5 countries at 15 percent of 
baseline allowances beginning with the phaseout date (January 1, 1994, 
for halons, and January 1, 1996, for CFCs, methyl chloroform and carbon 
tetrachloride) and continuing for ten years after the Protocol phaseout 
(until 2003 for halons and until 2006 for CFCs, methyl chloroform and 
carbon tetrachloride). Since the terms of the Protocol are more 
stringent than those of the CAA, EPA proposes to permit production of 
class I substances for export to Article 5 countries to continue until 
2006 (2003 for halons).
    At the 1992 London meetings, the Parties agreed that Parties may 
produce fifteen percent of baseline production allowances of all class 
I controlled substances (except methyl bromide and HBFCs) to meet the 
basic domestic needs of Article 5 countries starting from the phaseout 
date (January 1, 1994, for halons, and January 1, 1996, for CFCs, 
methyl chloroform and carbon tetrachloride). CAA section 604(e)(2) 
authorizes production of a class I substance at the production 
percentage specified for a given year (see phaseout schedule in Table I 
of section A.2. Post-Phaseout Requirements for Essential-Use 
Production), plus an amount equal to 10 percent of the baseline 
production allowances for export to developing countries. In the year 
in which the CAA phases out production of class I controlled 
substances, section 604(e)(2)(B) authorizes production of a class I 
controlled substance for export to developing countries up to 15 
percent of baseline allowances. Under the CAA, production of listed 
class I controlled substances terminates on January 1, 2000, except for 
methyl bromide on January 1, 2001, and methyl chloroform on January 1, 
2002.
    CAA section 604(e)(2) permits production based on limits imposed 
under section 604(a) plus 10 percent of the baseline allowance. Thus, 
in the example cited above for 1996, the CAA authorizes 40 percent of 
baseline production for CFC-12 as listed in Table I in this preamble, 
plus an additional 10 percent for export to Article 5 countries, for a 
total production of 50 percent of total baseline production for that 
year. Under today's proposal, because the Protocol phases out 
production of CFCs in 1996, up to 50 percent of baseline could be 
produced through a combination of destruction credits, transformation 
credits, essential use allowances and Article 5 allowances. A person's 
total production in 1996 could not exceed 50 percent of baseline 
allowances. Of this total production, production for export to Article 
5 countries could not exceed 15 percent of baseline allowances as 
authorized under the Protocol. In addition, any amount of production in 
excess of 40 percent of baseline allowances would have to be for export 
to Article 5 countries. This same scenario would pertain to the 
production of halons for export to Article 5 countries from 1994. EPA 
invites comment on this interpretation.
    In proposing today's changes to the procedures for Article 5 
allowances, EPA considered the following changes to the provisions for 
transfers and conversions in Sec. 82.12. Inter-pollutant transfers of 
Article 5 allowances, as currently defined in Sec. 82.12, will continue 
to be permitted within the Groups of class I substances listed in 
Appendix A and F of Subpart A. Inter-pollutant transfers of Article 5 
allowances will continue to require a one percent offset, as required 
by section 607 of the CAA and stipulated in the current regulation.
    The Agency is also proposing that inter-company transfers of 
Article 5 allowances be permitted as currently defined in Sec. 82.12 
and inter-Party trades of Article 5 allowances be permitted as 
currently described in Sec. 82.9. However, the requirement that the 
controlled substance in an inter-Party trade return to the country from 
whom the allowances were traded will not apply in the case of Article 5 
allowances as stipulated in Sec. 82.9(a)(b)(1)(vi). As an example, if 
one Party to the Protocol wants to trade Article 5 allowances to 
another Party to achieve improved economies of scale, the controlled 
substance produced with the allowances would not need to be returned to 
the Party from whom the allowances were traded; instead, the substance 
could be sold directly to an Article 5 country. The Agency proposes 
maintaining the requirement that the contract contain the statement 
that the controlled substance exported to an Article 5 country will 
only be used to meet basic domestic needs, as defined by the Montreal 
Protocol, and will not be reshipped. In addition, EPA understands that 
the Parties to the Protocol are considering, for future discussion, 
that reports be sent from the exporter to Article 5 countries 
indicating that they should expect to receive a shipment of a specific 
quantity of controlled substance. The Parties may discuss requirements 
that the exporting company send a copy of the sales contract for an 
export to the head of the Montreal Protocol delegation of the Article 5 
country or to the stratospheric ozone unit in the Article 5 country.
    EPA seeks comments on the proposed changes to the system for 
controlling and monitoring exports of controlled substances to Article 
5 countries.
2. Administrative Changes to the Consumption Allowance Requirements for 
Exports
    The current regulation requires that production of controlled 
substances for export to Parties meet the requirements for both 
consumption and production allowances. The current rule requires 
producers to expend both production and consumption allowances to 
produce class I controlled substances. If the controlled substance is 
then exported to a Party, the producer (or exporter) may request that 
EPA ``refund'' consumption allowances equal to the amount exported.
    EPA considered not proposing any changes to the administrative 
procedures because only one year remains before the phaseout of class I 
controlled substances begins on January 1, 1996. However, EPA 
recognizes that the administrative process of expending consumption 
allowances to produce class I controlled substances for export, with 
the subsequent request to have the consumption allowances refunded for 
these exported substances, is cumbersome for the producer, especially 
at this point in the schedule of the phaseout. In the last control 
period before the phaseout (from January 1, 1995 to January 1, 1996), 
producers are reducing their production to a fraction of the quantity 
they produced in previous years (see schedule for phaseout in 
Sec. 82.8).
    EPA believes United States companies should be able to respond in a 
timely manner to requests for controlled substances. If United States 
companies are not able to respond to requests for controlled substances 
in a timely manner due to the administrative procedures created by the 
current rule, these business opportunities will be lost to foreign 
competitors.
    According to reports from producers, the time lag between the 
expenditure of consumption allowances during production and the receipt 
of the refunded consumption allowances for an export can often mean 
missing the opportunity to fulfill a request for a controlled 
substance. As a result, the Agency is proposing to reduce the time 
taken to refund consumption allowances for an exported controlled 
substance.
    By changing the reporting requirements so companies report earlier 
to the Agency, EPA proposes to reduce the time taken to refund the 
consumption allowances expended in the production of controlled 
substances that are exported. This proposal would permit a U.S. company 
to report the export of a controlled substance to a Party at the time 
the export is initiated, rather than requiring the producer to submit 
the completed bill of lading and the invoice with the request for 
additional refunded consumption allowances. This change in the 
reporting procedures would allow the company to submit a preliminary 
report of export earlier. Therefore, EPA would be able to authorize the 
refund of consumption allowances earlier, contingent upon verification 
of the export when the company submitted the bill of lading and 
invoice. Today's proposal would permit companies to expend the 
contingent consumption allowances to meet their production or 
importation needs in a more timely manner. The contingent authorization 
of consumption allowances will accelerate the time in which companies 
receive the allowances, allowing them to meet requests for controlled 
substances in a timely manner. Thus, companies will be less constrained 
by the time lag caused by current administrative requirements. However, 
in the event that documentation submitted by the company does not 
support the export, EPA will consider that the granting of the 
consumption allowances never occurred, potentially putting the company 
in violation of the requirements.
    EPA also considered another option in making today's proposal. The 
option considered would exempt the production of class I controlled 
substances from the consumption allowance requirements, if the 
substance is exported to Parties during the one remaining control 
period before the phaseout (from January 1, 1995 to January 1, 1996). 
This option would include an exemption for methyl bromide from the 
consumption allowance requirements for exports beginning January 1, 
1995, and extending until January 1, 2001. Producers would be allowed 
to produce class I controlled substances for export to a Party with 
only the expenditure of production allowances.
    Under the second option described above, exports would be exempt 
from the requirements to expend consumption allowances. If the producer 
is certain that a person purchasing the controlled substance in the 
United States would export to a Party, there would be no requirement to 
expend consumption allowances in the production of that substance under 
this option. The exporter would certify to the producer, either in the 
sales agreement or in a letter, that the controlled substance would be 
exported. When the producer has no guarantee that the substance would, 
or would not, be exported to a Party, they would expend both production 
and consumption allowances in producing the controlled substance.
    Under the current regulation, a person in the United States may 
receive both production and consumption allowances from a Party to the 
Protocol in an inter-Party trade (under the Protocol this is called 
industrial rationalization). The U.S. company that receives the 
allowances from the other Party expends the production and consumption 
allowances to produce a controlled substance. The controlled substance 
produced with the traded allowances is then exported to the Party from 
whom the allowances were traded. The U.S. company expends consumption 
allowances in the production of the controlled substance for an inter-
Party trade and then asks EPA for a ``refund'' of these consumption 
allowances because the controlled substance was exported.
    Due to the redundant cycling of consumption allowances in inter-
Party trades to the United States described above, EPA is also 
considering the option that a person not receive additional consumption 
allowances through inter-Party trades for the remaining control period 
from January 1, 1995, to January 1, 1996. Under this option, 
consumption allowances would not be expended in the production of 
controlled substances as part of an inter-Party trade. The option of 
eliminating consumption allowances for inter-Party trades to the United 
States for methyl bromide would begin January 1, 1995, and extend until 
January 1, 2001. EPA seeks comments on this considered option to 
alleviate administrative requirements for consumption allowances for 
the export of controlled substances to Parties to the Protocol.
    Today's proposal is to receive a preliminary export report from 
U.S. companies at the time they initiate an export and authorize a 
contingent refund of consumption allowances with verification conducted 
later when the company submits the bill of lading and invoice for the 
export. However, the Agency considered two other options for today's 
proposed rulemaking: (1) to maintain the status quo requirements and 
reporting procedures in the current regulation for the remaining 
control period from January 1, 1995 to January 1, 1996, (2) to 
eliminate the requirement that consumption allowances be expended if 
the controlled substance is produced for export to a Party to the 
Protocol. EPA seeks comments on today's proposal and the other options 
considered for controlled substances exported to Parties of the 
Protocol.
3. Administrative Changes to Production Allowance Requirements for 
Exports that are Transformed or Destroyed
    EPA is proposing that a person who produces a controlled substance 
for exportation to a Party to the Protocol for transformation or 
destruction may request from the Agency the refund of the production 
allowances expended in the production of the substance. The proposal 
pertains to the production of class I controlled substances for the 
control period beginning January 1, 1995 and ending January 1, 1996, 
except for methyl bromide. For methyl bromide, the proposed refund of 
expended production allowances for quantities exported to Parties which 
are certified to be for transformation or destruction would begin 
January 1, 1995 and extend until January 1, 2001. As with the 
procedures for refunding consumption allowances, a person in the U.S. 
producing or purchasing a class I controlled substance may, upon export 
to a Party for subsequent transformation or destruction, request from 
EPA a ``refund'' of production allowances with a certification that the 
production allowances were expended in the production of the substance. 
To ensure that the controlled substance is in fact transformed or 
destroyed by the recipient in a Party country, the Agency is proposing 
exporters be required to include in the sales contract a certification 
of the future transformation or destruction.
    In parallel with the administrative changes proposed in the 
previous section for consumption allowances, the Agency proposes 
accelerating the procedures for requesting production allowances for 
the export of substances that will be transformed or destroyed. This 
proposal would permit a U.S. company to report the export of a 
controlled substance for transformation or destruction at the time the 
export is initiated, rather than requiring a completed bill of lading 
and invoice with a certification in order to grant additional 
production allowances. EPA would authorize the refund of production 
allowances contingent upon verification of the export for 
transformation or destruction by the bill of lading and invoice and the 
certification of transformation or destruction. The company could 
expend the contingent production allowances to meet their production or 
importation needs in a timely manner. However, in the event that 
documentation submitted by the company does not support the export for 
transformation or destruction, EPA will consider that the granting of 
the production allowances never occurred, which may mean the company is 
in violation if they do not have sufficient production allowances for 
the quantity of controlled substances produced.
    In making today's proposal, EPA also considered eliminating the 
expenditure of production allowances for class I controlled substances 
to be exported to Parties of the Protocol for transformation or 
destruction. Under this option, the production of all class I 
controlled substances explicitly for transformation or destruction in 
the U.S. or in a Party after January 1, 1995, would not require the 
producer to expend production allowances. The producer would need a 
certification of intent to transform or verification of destruction. To 
ensure that the controlled substance is transformed or destroyed by the 
recipient in a Party country, the Agency would require the exporter to 
include a certification of future transformation or destruction in the 
sales contract.
    EPA seeks comments on today's proposal to allow a person to request 
production allowances for the export of class I controlled substances 
to Parties for transformation or destruction.
4. Treatment of Controlled Substances Remaining in Emptied Containers, 
i.e. ``Heels''
    Heels are the amount of a substance remaining in a vessel or 
container after the majority is off-loaded or discharged. For example, 
when a ship returns from transporting a controlled substance, the 
container that held the controlled substance often retains a residue of 
the substance. This is known as the heel. Heels can be as much as ten 
percent of the volume of a given container. A ship returning with a 
heel represents a significant volume of controlled substance returning 
to the United States.
    Heels are included in the current definition of bulk controlled 
substance in the current regulation. Therefore, the current 
interpretation of a bulk controlled substance requires ships returning 
with a heel to the United States to expend consumption allowances to 
import that substance.
    EPA proposes amending the current consumption allowance 
requirements to exempt heels, effective January 1, 1995. The amended 
definition will allow vessels with heels to return to the United States 
if the company certifies that certain conditions are met. EPA proposes 
that heels be exempted from the consumption allowance requirements if 
the company bringing the heel into the United States certifies that the 
residual amount will remain in the container and be included in a 
future shipment, or recovered and banked for future recycling, 
reclamation, transformation, destruction or non-emissive use. The 
industry rule-of-thumb is that a heel is up to ten percent of the 
volume of the container. Therefore, EPA proposes that containers 
returning to the United States with more than ten percent of their 
volume filled with controlled substance, and labelled as a heel, be 
required to expend consumption allowances to import the substance until 
January 1, 1996. After January 1, 1996, a heel that is greater than ten 
percent of the volume of the container would require the use of 
destruction or transformation credits for the importation for the 
amount in excess of ten percent.
    The Agency is proposing that persons who bring heels back to the 
United States report annually their returns of heels. The Agency will 
review this information to determine if the returns of heels is cause 
for concern due to volume and frequency of occurrence. Comments are 
requested on this issue of exempting heels from the requirements to 
expend consumption allowances to import.
5. Clarification of the Definition of Transhipment
    Under the current regulation a person who transships a controlled 
substance from one foreign country through the United States to another 
foreign destination does not need allowances.
    In the current regulation, transhipments of controlled substances 
are excluded from the limits and requirements for allowances. The 
current regulation excludes transhipments from the allowance 
requirements consistent with the Decision of the Parties to the 
Protocol. However, EPA wishes to further elaborate on the definition of 
transhipment.
    The request to clarify the definition of transhipment was made by a 
company who ships controlled substances through United States ports. 
The company brings controlled substances from other countries to United 
States ports where the contents of a larger vessel are subdivided into 
smaller vessels for shipment to other countries. The question arose 
whether this constituted repackaging and therefore was considered an 
import and thus subject to the requirements of the regulation. Although 
the language of the regulation does not preclude repackaging, the 
preamble states that transhipments are shipments of bulk chemicals that 
are ``not repackaged within the United States.'' Therefore, the 
transfer of a controlled substance from one ship to another while in a 
U.S. port could possibly be interpreted to constitute repackaging.
    In today's proposal, EPA further clarifies the definition of 
transhipment to allow for the transfer of controlled substances between 
ships in United States ports as long as the substance does not enter 
into United States jurisdiction. In other words, repackaging of 
controlled substances that are being transhipped through the United 
States, and that do not enter into United States jurisdiction, do not 
require the expenditure of allowances. Today's proposal is intended to 
clarify that transhipments do not require consumption allowances to be 
expended, whether or not the controlled substance is repackaged. 
Today's clarification does not change the current rule; and 
transhipments are still excluded from the requirements for production 
and consumption allowances.
    EPA wishes to further clarify the definition of transhipment to 
allow for shipments into and out of United States foreign trade zones 
and subzones without requiring the expenditure of production or 
consumption allowances. Controlled substances that enter United States 
foreign trade zones and subzones are not considered to be entering into 
United States jurisdiction. EPA seeks comments on the proposed 
clarification of the definition of transhipment.
6. Provision of an Account Reconciliation Period
    EPA recognizes that as the phaseout enters the final year (1995) 
for production and consumption of class I controlled substances (except 
methyl bromide), the administrative task increases for a company to 
ensure that it has a balance of allowances at the end of the year. This 
is particularly difficult given the need to meet requirements for each 
controlled substance and to reconcile transformations, destructions, 
exports, imports and production. Several companies that produce, 
import, export, transform or destroy controlled substances have 
requested a period in which to reconcile all previous transactions in a 
year.
    EPA is proposing an administrative change to ease the end-of-year 
burden of reconciling the balance of allowances without changing the 
level of environmental protection provided by the regulation. To ease 
this burden, EPA is proposing a 45-day period of reconciliation beyond 
the end of the control period in which persons may make inter-pollutant 
transfers of class I controlled substances as defined in the current 
regulation. Inter-pollutant transfers of controlled substances can only 
be made between controlled substances in the same Group as listed in 
Appendix A and F of Subpart A. In addition, the inter-pollutant 
transfer must be authorized by EPA and will include a one percent 
offset. The Agency is proposing that inter-company trades not be 
allowed past the end of the control period (December 31st of 1995), and 
every subsequent control period for methyl bromide. The proposal allows 
for a potential net environmental benefit and greater flexibility for 
end-of-control-period compliance.
    The proposed reconciliation period is being limited only to inter-
pollutant transfers, in part, to provide a margin of latitude for 
companies in the final year of the phaseout when balancing production 
and consumption allowances at the end of year is important before 
closing the books. For many companies, the final year will be 
particularly difficult because there is less margin of error afforded 
in the amount of allowances provided for imports and production. Inter-
pollutant transfers at the end of the control period are intra-company 
adjustments to the balance of allowances through paper accounting 
rather than an extension of the control period for trades, exports or 
transfers between companies. EPA seeks comments on the proposed period 
for the reconciliation of these specific allowances at the end of the 
control period.
7. Additional Clarifications
    a. Unintended by-products of research and development. EPA proposes 
adding the production of unintended by-products of research and 
development applications to the list of inadvertent or coincidental 
creation of insignificant quantities of listed substances in Appendix A 
or Appendix B in the definition of ``controlled substance.'' The Agency 
is proposing that these inadvertent or coincidental creations of 
insignificant quantities of unintended by-products during research and 
development applications not be considered controlled substances. The 
Agency believes that an unintended by-product a substance generated 
during research and development can be considered an inadvertent 
creation of a controlled substance. In addition, EPA received 
information from various companies that the amounts generated during 
research and development applications are generally insignificant 
quantities. The Agency reserves the right to require a person to 
destroy the unintended by-products of research and development 
applications if they are determined to be no longer insignificant.
    b. Export of increased production that is received through a trade 
from a party. EPA proposes removing the requirements under 
Sec. 82.9(b)(vi) and Sec. 82.10(c)(3) that compel increased production 
to return to the Party from whom a U.S. producer receives additional 
production or consumption allowances through an international trade. As 
a result of this proposal, U.S. companies could receive allowances 
through an international trade to produce for either the demand within 
the country from whom the allowances were traded or for the demand in 
the U.S. domestic market. The proposal would permit greater 
international market flexibility without increasing global production 
of ozone-depleting substances. EPA believes that U.S. producers will 
need greater flexibility to meet domestic demand as they enter the 
final year before the production of class I controlled substances is 
phased out (January 1, 1996). Sections 82.9 and 82.10 of the current 
regulation permit international trades in accordance with the 
Protocol's definition of ``international rationalization'' as discussed 
in the Federal Register proposed rule published on December 14, 1987. 
Today's proposal would further support international rationalization by 
increasing opportunities for achieving ``economic efficiencies'' 
globally. Achieving these economic efficiencies is particularly 
important as all Parties continue to reduce production prior to the 
phaseout in 1996. EPA seeks comments on the proposed amendment that 
would allow international trades from Parties to meet market demand for 
class I controlled substances within the United States.
8. Clarification of Reporting and Recordkeeping Requirements
    EPA is proposing amendments to the current recordkeeping and 
reporting requirements to more effectively address issues that have 
arisen and are likely to arise as the phaseout date is near and for the 
period following the end of production of class I controlled substances 
in the United States. In addition, EPA proposes to amend reporting and 
recordkeeping requirements to reflect the proposed changes discussed 
earlier.
    a. Reporting and recordkeeping for transformation and destruction. 
As with the earlier section describing transformation and destruction 
(Section A.1.), this section distinguishes between the different 
categories of recordkeeping and reporting requirements for producers, 
importers, transformers and destroyers.
    EPA is proposing that the administrative changes to the 
recordkeeping and reporting requirements for transformation and 
destruction be effective January 1, 1995. The changes are made to 
reduce redundancy and clarify the responsibilities of companies that 
produce or import substances that are transformed or destroyed, as well 
as the responsibilities of transformers or destroyers controlled 
substances (see paragraph A.1. of this proposed rule). EPA is proposing 
changes to the recordkeeping and reporting requirements for importers 
to address issues of importation of used, recycled or reclaimed 
controlled substances. These proposed recordkeeping and reporting 
requirements for importers are described in greater detail in Section 
C.7.c., Recordkeeping and Reporting for Imports.
    (i) Reporting and recordkeeping requirements for producers and 
importers of controlled substances that were produced or imported 
explicitly for transformation or destruction in the United States. 
Today's proposal does not change the recordkeeping and reporting 
requirements for persons who produce controlled substances that are 
explicitly for transformation or destruction within the United States. 
Although EPA is proposing changes to the recordkeeping and reporting 
requirements for importers to address issues of importation of used, 
recycled or reclaimed controlled substances (described in greater 
detail in Section C.7.c., Recordkeeping and Reporting for Imports), 
there are no changes to the requirements for importing controlled 
substances that are explicitly for transformation or destruction.
    Under the current regulation, companies that produce or import 
controlled substances explicitly for destruction or transformation in 
the United States are required to maintain records and to report to EPA 
quarterly. The producers and importers must report quarterly the 
``amount of controlled substances sold or transferred during the 
quarter to a person for use in processes resulting in their 
transformation or destruction,'' and submit the IRS transformation 
certification or destruction verification. Producers and importers must 
also report quarterly on the quantity that they themselves transform or 
destroy in the quarter.
    (ii) Reporting and recordkeeping requirements for producers and 
importers of controlled substances that were produced or imported for 
intended emissive uses but subsequently transformed or destroyed. 
Today's proposal does not change these requirements regarding 
controlled substances sold for intended emissive uses that are 
subsequently transformed or destroyed.
    The current regulation requires producers and importers to report 
on controlled substances sold for emissive uses. However, the current 
rule does not require producers or importers to maintain records or 
report to the Agency on the subsequent transformation or destruction of 
controlled substances initially produced for emissive uses. Once the 
controlled substance is sold for an emissive use the producer or 
importer is no longer responsible for informing the Agency of its 
subsequent disposition, whether it be for emissive use, for 
transformation, or, for destruction.
    (iii) Reporting and recordkeeping requirements for transformers and 
destroyers of controlled substances that were produced or imported 
explicitly for transformation or destruction. The Agency is not 
proposing changes to the recordkeeping and reporting requirements for 
those persons who transform or destroy controlled substances that were 
produced or imported explicitly for transformation or destruction. The 
transformers will continue to submit an IRS certification of intent to 
transform to the producer or importer and the destroyers will continue 
to submit a destruction verification to the producer or importer. Those 
transformers and destroyers who submit a certification or verification 
must continue to report annually to EPA as in the current regulation 
under Sec. 82.13(m). The Agency verifies the transformation or 
destruction of controlled substances that were explicitly produced or 
imported for transformation or destruction through this annual 
reporting.
    The current regulation requires all companies that destroy or 
transform controlled substances, regardless of whether or not they were 
produced or imported explicitly for transformation or destruction, to 
maintain records and to report to EPA the amounts of substances 
destroyed or transformed within 45-days of the end of the control 
period (annually). Facilities that transform or destroy controlled 
substances that were explicitly produced or imported for transformation 
or destruction must submit an IRS certificate of intent to transform or 
a destruction verification to the producer when the substance is sold 
or transferred. The producer reports to EPA quarterly the quantities 
sold or transferred for transformation or destruction with a copy of 
the IRS transformation certification or the destruction verification. 
EPA requires the information from both the producer/importer and the 
transformer/destroyer to crosscheck and verify the quantity of 
controlled substances claimed to be produced or imported without 
expended allowances explicitly because it was for transformation or 
destruction.
    (iv) Reporting and recordkeeping requirements for transformers of 
controlled substances produced or imported for intended emissive uses. 
Under the current regulation, a person who transforms a controlled 
substance that was produced for intended emissive uses may request 
additional production allowances or consumption allowances from the 
Agency. The current regulation lists the information the Agency must 
receive to consider a request for additional production allowances in 
Sec. 82.9(c) and for additional consumption allowances in 
Sec. 82.10(b). A person may only request additional production 
allowances and consumption allowances for the transformation of class I 
controlled substances (except methyl bromide) that were produced for 
intended emissive uses during the remaining control period from January 
1, 1995, to January 1, 1996. A person transforming methyl bromide that 
was produced for intended emissive uses may request additional 
production and/or consumption allowances until January 1, 2001.
    EPA proposes waiving the annual reporting requirement for 
transformation facilities that receive controlled substances that were 
produced or imported for intended emissive uses, as long as the 
facility does not request from EPA additional production or consumption 
allowances before January 1, 1996, and does not request transformation 
credits after January 1, 1996. If a person transforms a controlled 
substance produced or imported for intended emissive use for which 
additional production or consumption allowances are requested from EPA 
during the control period from January 1, 1995, until January 1, 1996, 
or for which transformation credits are requested from the Agency after 
January 1, 1996, the transformer must report to the Agency the name and 
quantity of substance transformed at the end of the control period.
    The proposed recordkeeping and reporting requirements for a 
transformer who requests transformation credits (beginning after 
January 1, 1996) are similar to the current requirements for obtaining 
additional production allowances as listed under Sec. 82.9(c). 
Effective January 1, 1996, a person who transforms a class I controlled 
substance (except methyl bromide) that was produced or imported for 
intended emissive use may submit specific information to EPA requesting 
transformation credits (see Section A.1.c., ``The Post-Phaseout 
Procedures for Granting Destruction or Transformation Credits). The 
following information must be submitted to request transformation 
credits:

--The identity and address of the person requesting the credits;
--The name, quantity, and volume of controlled substance transformed;
--A copy of the invoice or receipt documenting the sale of the 
controlled substance to the person;
--The name of the use system from which the controlled substance was 
recovered;

    (v) Reporting and recordkeeping requirements for destroyers of 
controlled substances produced or imported for intended emissive uses. 
Under the current regulation, all facilities that destroy controlled 
substances that were produced or imported for intended emissive uses 
are required to report the names and quantities of class I substances 
destroyed within 45-days of the end of the control period. In addition, 
these destroyers may request additional production allowances and/or 
consumption allowances from EPA under the current regulation in 
Sec. 82.9(c) and Sec. 82.10(b).
    EPA proposes waiving the annual reporting requirement for 
destruction facilities that receive controlled substances that were 
produced or imported for intended emissive uses, as long as the 
facility does not request from EPA additional production or consumption 
allowances before January 1, 1996, and does not request destruction 
credits after January 1, 1996. However, if a person destroys a 
controlled substance produced or imported for intended emissive use for 
which additional production or consumption allowances are requested 
from EPA during the control period from January 1, 1995, until January 
1, 1996, or for which destruction credits are requested from the Agency 
after January 1, 1996, the destroyer must report to the Agency the name 
and quantity of substances destroyed at the end of the control period.
    The recordkeeping and reporting requirements for a destroyer who 
requests destruction credits (beginning after January 1, 1996) are 
similar to the information now required for additional production 
allowances as listed under Sec. 82.9(c). Effective January 1, 1996, a 
person who destroys a class I controlled substance (except methyl 
bromide) that was produced or imported for intended emissive use may 
submit specific information to EPA requesting destruction credits (see 
Section A.1.c. for a description of the ``The Post-Phaseout Procedures 
for Granting Destruction and Transformation Credits''). The information 
someone must submit to request destruction credits is:

--The identity and address of the person requesting the credits;
--The name, quantity, and volume of controlled substance destroyed;
--A copy of the invoice or receipt documenting the sale of the 
controlled substance to the person;
--The name of the use system from which the controlled substance was 
recovered;
--The efficiency of the destruction process.

    (vi) Recordkeeping and reporting for exporters of controlled 
substances that are transformed or destroyed. The current regulation 
has no specific recordkeeping or reporting requirements for exporters 
of controlled substances that are transformed or destroyed. All 
exporters of controlled substances, regardless of whether the substance 
is exported for an intended emissive use, for transformation or for 
destruction, must submit the information listed under Sec. 82.13(h) to 
the Agency annually.
    Today's proposal includes procedures for refunding expended 
production allowances for controlled substances exported for 
transformation or destruction in the final control period. A person who 
requests additional production allowances for controlled substances 
exported for transformation or destruction must submit the same 
information required under the current rule for persons requesting 
additional consumption allowances in Sec. 82.10(a):

--The identities and addresses of the exporter and the recipient of the 
exports;
--The exporter's Employer Identification Number;
--The names and telephone numbers of contact person for the exporter 
and recipient;
--The quantity and type of controlled substance exported;
--The source of the controlled substance and the date purchased;
--The date on which and port from which the controlled substances are 
exported from the United States or its territories;
--The country to which the controlled substances were exported;
--The bill of lading and the invoice indicating the net quantity of 
controlled substances shipped and documenting the sale of the 
controlled substances to the purchaser for either transformation or 
destruction;
--The commodity code of the controlled substance exported.

    In today's proposal, EPA wishes to accelerate the time when 
exporters of controlled substances to Parties can submit forms for the 
``refund'' of consumption allowances, whether or not the substance is 
for transformation or destruction or for an emissive use. EPA is 
proposing that exporters submit the current ``Request for Additional 
Consumption Allowances'' form at the initiation of the export of a 
specific quantity of controlled substance to a Party rather than wait 
until a completed bill of lading and invoice are prepared. The proposed 
change accelerates the time taken to grant consumption allowances for 
exports. EPA proposes that the consumption allowances be granted for 
the quantity of controlled substance exported, with confirmation 
contingent upon receipt of the bill of lading and invoice. Granting of 
the consumption allowances will be confirmed upon review of the bill of 
lading and invoice. Such allowances may be used at the time granted, 
prior to confirmation. In the event, however, that EPA determines that 
the controlled substances are not exported for whatever reason, then 
EPA will consider that allowances were expended by the producer for the 
production of the controlled substance and the consumption allowances 
were never granted. Without the consumption allowances, the producer 
may have a negative balance, at which time the producer will be out of 
compliance.
    b. Reporting and recordkeeping for essential uses. Today's proposal 
creates a new category of allowances called essential-use allowances in 
anticipation of the special exemptions that Parties to the Protocol 
will most likely approve for essential-use production after January 1, 
1996.
    In today's rule, EPA is proposing that the final allocation of 
essential-use allowances be published in the final rule based on the 
Decisions of the Parties at their meeting in October of 1994. Once the 
Parties have reached a final Decision in this first round of essential-
uses designations, EPA will propose allocations of essential-use 
allowances that parallel the specific quantities of a controlled 
substance for the specific uses as nominated by specific U.S. entities 
to the Protocol.
    EPA is proposing a system whereby deductions will be made from the 
control period allocations of essential-use allowances based on 
quarterly reports submitted by producers and the recipient of the 
essential-use allowances.
    The producer or importer of controlled substances for essential 
uses must maintain, under today's proposal, the following records: (i) 
The letter conferring the essential-use allowances from the recipient 
of the allowances certifying that the controlled substance will be used 
only for the specified essential-use, and (ii) in the case of 
essential-use production for laboratory or analytical use, a 
certification from the laboratories that the quantity of the specific 
substance purchased will be used only for laboratory/analytical 
applications and will not be resold.
    EPA is also proposing that the producers and importers of 
controlled substances for essential uses submit the following 
information to the Agency quarterly: (i) A list of the labs and 
essential-use allowance holders for whom specific controlled substances 
were produced or imported during the quarter, (ii) the name and 
quantity of the controlled substance produced or imported for each lab 
and essential-use allowance recipient.
    To verify and crosscheck that essential-use allowances were 
conferred and that the controlled substance was delivered, EPA is 
proposing that the original recipients of essential-use allowances 
submit quarterly a list of the producers or importers to whom they 
transferred allowances and the quantity of the specific controlled 
substance that will be, or was, delivered. Those persons purchasing 
controlled substances under the global exemption for labs must provide 
the producer or importer with a detailed description of the analytical 
procedures requiring the substance with references to published 
instructions, standards, or specifications.
    c. Reporting and recordkeeping for importers. EPA is proposing a 
clarification of the reporting and recordkeeping for importers to 
include the entry of virgin and ``off-spec'' virgin controlled 
substances under current requirements in order to forestall those 
mislabelled as used, recycled or reclaimed controlled substance (the 
issue raised in Section B. ``Imports of Used or Recycled Controlled 
Substances,'' of this preamble). EPA is proposing that importers in 
general, including importers of used, recycled or reclaimed controlled 
substances, be required to maintain records on the items included in 
Section B. of this preamble that are included in the final rule. In 
addition, EPA is proposing that the current quarterly reports from 
importers differentiate between quantities of imported virgin 
substances and imported substances that are used, recycled or 
reclaimed.
    EPA is also proposing that, at the point of entry into U.S. 
jurisdiction, importers of used refrigerant provide documentation (or 
verification) of the reclamation facility where the controlled 
substance will be sent before it is sold within the United States. In 
accordance with the regulation published in the Federal Register on May 
14, 1993, (40 CFR Part 82) no class I or class II controlled substance 
may be sold or offered for sale for use as a refrigerant unless it has 
been reclaimed to the ARI-700 Standard (Sec. 82.154). Therefore, EPA is 
proposing that importers of used or recycled controlled substances 
(including halons) provide information regarding the facility at which 
the substance will be reclaimed. The proposal asks for information that 
should be readily available to the importer because it is required by 
40 CFR Part 82. By asking the importer to name the point of 
reclamation, EPA hopes to deter the immediate sale of virgin or off-
spec virgin controlled substances that are mislabelled as imported used 
or recycled substances.
    To deter the import of virgin or off-spec virgin controlled 
substances that are mislabelled as reclaimed, EPA is proposing that 
importers identify, at the point of entry into U.S. jurisdiction, the 
name and address of the overseas reclamation facility to verify that 
the substance was indeed previously used and reclaimed. There are a 
limited number of reclamation facilities for controlled substances 
worldwide, and as a Party to the Protocol, the United States can 
identify those Parties capable of reclamation. Through the continued 
cooperation with U.S. Customs, EPA plans to develop coordinated 
procedures for reviewing import documents at the point of entry into 
U.S. Customs territory that will identify controlled substances 
suspected of being mislabelled virgin or off-spec virgin entering the 
U.S. as used, recycled or reclaimed.
    The specific reporting requirements (in addition to any 
recordkeeping requirements that may be established under Section B. of 
this preamble) that EPA is proposing, which would accompany the bill of 
lading and the bill of sale for the import of used, recycled or 
reclaimed controlled substances, are:
    (i) For imports of used or recycled controlled substance, the 
previous use of each substance, and the intended reclamation 
destination of the controlled substances in the United States, or
    (ii) For imports of reclaimed controlled substances, the country of 
origin of the used controlled substance, and the foreign reclamation 
facility (reclamation equipment used) where the substance was 
reclaimed.
    d. Reporting and recordkeeping for article 5 exports. The current 
regulation asks producers to report quarterly on the amount of 
potential production allowances that are converted to production 
allowances and the amount of unexpended potential production 
allowances. Today's proposal changes the name of potential production 
allowances to Article 5 allowances but does not change the reporting 
requirements. Instead of requiring the quarterly reporting of converted 
and unexpended potential production allowances, today's proposal 
requires the producer to indicate the amount of Article 5 allowances 
expended quarterly in production for export to Article 5 countries.
    Today's proposed amendments to the recordkeeping and reporting 
requirements are made to anticipate the phaseout of class I controlled 
substances (except methyl bromide) in January 1, 1996. EPA proposes 
simplifying the quarterly reporting beginning January 1, 1996, so that 
producers indicate which of the production exceptions applies (i.e., 
essential-use allowances, Article 5 allowances, destruction credits, 
transformation credits, transformation or destruction) for a given 
quantity of controlled substance. EPA is proposing many of the changes 
to the requirements to address issues and concerns raised by industry 
regarding the maintenance of a transparent and openly competitive 
market in controlled substances during the transition to the phaseout. 
EPA requests comments on today's proposed amendments to the 
recordkeeping and reporting requirements.

III. 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 proposed 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).
    The Agency originally published an RFA to accompany the August 12, 
1998 final rule (53 FR 30566) that placed the initial limits on the 
production and consumption of CFCs and halons. That RFA was also 
updated as Appendix G of the Regulatory Impact Analysis for the 
regulations implementing the phaseout schedule of section 604 of the 
Clean Air Act Amendments of 1990. The Addendum to the Regulatory Impact 
Analysis was further updated in 1993 to examine the impact of the 
acceleration of the phaseout and the phaseout of HCFCs on small 
businesses. The analysis in the Addendum indicated that the actions 
were not expected to have a substantial impact on small entities. 
Today's proposed amendments to the current regulation do not 
significantly change the current requirements, and in many cases reduce 
reporting or recordkeeping burdens that might possibly impact small 
businesses. However, almost all businesses participating in the 
phaseout program for ozone-depleting substances are large companies. 
Therefore, today's proposed amendments are expected to have minimal if 
any impact on small entities.
    Under section 605 of the Regulatory Flexibility Act, 5 U.S.C. 605, 
I certify that the regulation promulgated in this notice will not have 
any additional negative economic impacts on any small entities.

C. Paperwork Reduction Act

    The information collection requirements in this proposed rule have 
been submitted for approval to the Office of Management and Budget 
(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et. seq. An 
Information Collection Request document has been prepared by EPA (ICR 
No. 1432.15) and a copy may be obtained from Sandy Farmer, Information 
Policy Branch, U.S. EPA, 401 M St., SW., (2136), Washington, DC 20460 
or by calling (202)-260-2740.
    The information collection requirements for this proposed action 
has an estimated reporting burden averaging 23.3 hours per response. 
This estimate includes time for reviewing instructions, searching 
existing data sources, gathering and maintaining the data needed and 
completing the collection of information.
    Send comments regarding the burden estimate of any other aspect of 
this collection of information, including suggestions for reducing this 
burden to Chief, Information Policy Branch, U.S. EPA, 401 M St., SW., 
(2316), Washington, DC 20503, marked ``Attention: Desk Officer for 
EPA.'' The final rule will respond to any OMB or public comments on the 
information collection requirements contained in this proposal.

List of Subjects in 40 CFR Part 82

    Administrative practice and procedure, Air pollution control, 
Chemicals, Chlorofluorocarbons, Exports, Hydrochlorofluorocarbons, 
Imports, Ozone layer, Reporting and recordkeeping requirements, 
Stratospheric ozone layer.

    Dated: October 25, 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, 7671-7671q.

    2. Subpart A is revised to read as follows:

Subpart A--Production and Consumption Controls

Sec.
82.1  Purpose and scope.
82.2  Effective date.
82.3  Definitions.
82.4  Prohibitions.
82.5  Apportionment of baseline production allowances.
82.6  Apportionment of baseline consumption allowances.
82.7  Grant and phased reduction of baseline production and 
consumption allowances for class I controlled substances.
82.8  Grant and freeze of baseline production and consumption 
allowances for class II controlled substances. [Reserved]
82.9  Availability of production allowances in addition to baseline 
production allowances.
82.10  Availability of consumption allowances in addition to 
baseline consumption allowances.
82.11  Exports to Article 5 Parties.
82.12  Transfers.
82.13  Recordkeeping and reporting requirements.

Appendix A to Subpart A--Class I Controlled Substances
Appendix B to Subpart A--Class II Controlled Substances
Appendix C to Subpart A--Parties to the Montreal Protocol and 
Nations Complying with, but Not Parties to, the Protocol
Appendix D to Subpart A--Harmonized Tariff Schedule
Description of Products That May Contain Controlled Substances in 
Appendix A to Subpart A, Class I, Groups I and II
Appendix E to Subpart A--Article 5 Parties
Appendix F to Subpart A--Listing of Ozone Depleting Chemicals
Appendix G to Subpart A--UNEP Recommendations for Conditions
Applied to Exemption for Laboratory and Analytical Uses
Appendix H to Subpart A--Clean Air Act Amendments of 1990
Phaseout Schedule for Production of Ozone-Depleting Substances

Subpart A--Production and Consumption Controls


Sec. 82.1  Purpose and scope.

    (a) The purpose of the regulations in this subpart is to implement 
the Montreal Protocol on Substances that Deplete the Ozone Layer and 
sections 603, 604, 605, 606, 607 and 616 of the Clean Air Act 
Amendments of 1990, Public Law 101-549. The Protocol and section 604 
impose limits on the production and consumption (defined as production 
plus imports minus exports, excluding transhipments and used controlled 
substances) of certain ozone-depleting substances, according to 
specified schedules. The Protocol also requires each nation that 
becomes a Party to the agreement to impose certain restrictions on 
trade in ozone-depleting substances with non-Parties.
    (b) This subpart applies to any person that produces, transforms, 
destroys, imports or exports a controlled substance or imports a 
controlled product.


Sec. 82.2  Effective date.

    (a) The regulations under this subpart take effect January 1, 1995, 
unless otherwise noted herein.
    (b) The regulations under this subpart that were effective prior to 
[date of publication of the final rule] continue to apply for purposes 
of enforcing the provisions that were applicable prior to January 1, 
1995.


Sec. 82.3  Definitions.

    As used in this subpart, the term:
    Administrator means the Administrator of the Environmental 
Protection Agency or his authorized representative.
    Article 5 allowances means the allowances apportioned under 
Sec. 82.9(a) of this subpart.
    Baseline consumption allowances means the consumption allowances 
apportioned under Sec. 82.6 of this subpart.
    Baseline production allowances means the production allowances 
apportioned under Sec. 82.5 of this subpart.
    Calculated level means the weighted amount of a controlled 
substance determined by multiplying the amount (in kilograms) of the 
controlled substance by that substance's ozone depletion weight listed 
in Appendix A or Appendix B to this subpart.
    Class I refers to the controlled substances listed in Appendix A to 
this subpart.
    Class II refers to the controlled substances listed in Appendix B 
to this subpart.
    Completely destroy means to cause the expiration of a controlled 
substance at a destruction efficiency of 98 percent or greater, using 
one of the destruction technologies approved by the Parties.
    Complying with the Protocol, when referring to a foreign state not 
Party to the 1987 Montreal Protocol, the London Amendments, or the 
Copenhagen Amendments, means that the non-Party has been determined as 
complying with the Protocol, as indicated in Appendix C to this 
subpart, by a meeting of the Parties as noted in the records of the 
directorate of the United Nations Secretariat.
    Consumption means the production plus imports minus exports of a 
controlled substance (other than transhipments, or used controlled 
substances).
    Consumption allowances means the privileges granted by this subpart 
to produce and import class I controlled substances; however, 
consumption allowances may be used to produce class I controlled 
substances only in conjunction with production allowances. A person's 
consumption allowances are the total of the allowances obtained under 
Secs. 82.7 and 82.6 of this subpart and Sec. 82.10 of this subpart, as 
may be modified under Sec. 82.12 of this subpart (transfer of 
allowances).
    Control period means the period from January 1, 1992 through 
December 31, 1992, and each twelve-month period from January 1 through 
December 31, thereafter.
    Controlled product means a product that contains a controlled 
substance listed as a Class I, Group I or II substance in appendix A to 
this subpart. Controlled products include, but are not limited to, 
those products listed in appendix D to this subpart. Controlled 
products belong to one or more of the following six categories of 
products:
    (1) Automobile and truck air conditioning units (whether 
incorporated in vehicles or not);
    (2) Domestic and commercial refrigeration and air-conditioning/heat 
pump equipment (whether containing controlled substances as a 
refrigerant and/or in insulating material of the product), e.g. 
Refrigerators, Freezers, Dehumidifiers, Water coolers, Ice machines, 
Air-conditioning and heat pump units;
    (3) Aerosol products, except medical aerosols;
    (4) Portable fire extinguishers;
    (5) Insulation boards, panels and pipe covers;
    (6) Pre-polymers.
    Controlled substance means any substance listed in appendix A or 
appendix B to this subpart, whether existing alone or in a mixture, but 
excluding any such substance or mixture that is in a manufactured 
product other than a container used for the transportation or storage 
of the substance or mixture. Thus, any amount of a listed substance in 
appendix A or appendix B to this subpart that is not part of a use 
system containing the substance is a controlled substance. If a listed 
substance or mixture must first be transferred from a bulk container to 
another container, vessel, or piece of equipment in order to realize 
its intended use, the listed substance or mixture is a ``controlled 
substance.'' The inadvertent or coincidental creation of insignificant 
quantities of a listed substance in appendix A or appendix B to this 
subpart; during a chemical manufacturing process; resulting from 
unreacted feedstock; from the listed substance's use as a process agent 
present as a trace quantity in the chemical substance being 
manufactured; or as an unintended byproduct of research and development 
applications, is not deemed a controlled substance. Controlled 
substances are divided into two classes, Class I in appendix A to this 
subpart, and Class II listed in appendix B to this subpart. Class I 
substances are further divided into seven groups, Group I, Group II, 
Group III, Group IV, Group V, Group VI, and Group VII, as set forth in 
appendix A to this subpart.
    Copenhagen Amendments means the Montreal Protocol on Substances 
That Deplete the Ozone Layer, as amended at the Fourth Meeting of the 
Parties to the Montreal Protocol in Copenhagen in 1992.
    Destruction means the expiration of a controlled substance to the 
destruction efficiency actually achieved, unless considered completely 
destroyed as defined in this section. Such destruction does not result 
in a commercially useful end product and uses one of the following 
controlled processes approved by the Parties to the Protocol:
    (1) Liquid injection incineration;
    (2) Reactor cracking;
    (3) Gaseous/fume oxidation;
    (4) Rotary kiln incineration; or
    (5) Cement kiln.
    Destruction Credits means those privileges that may be obtained 
under Sec. 82.9 of this subpart to produce or import controlled 
substances.
    Emissive Use means that use of a controlled substance that does not 
result in the transformation or destruction of the controlled substance 
as defined in this subpart.
    Essential-Uses means those uses of controlled substances designated 
by the Parties to the Protocol to be necessary for the health and 
safety of, or critical for the functioning of, society; and for which 
there are no available technically and economically feasible 
alternatives or substitutes that are acceptable from the standpoint of 
environment and health. Beginning January 1, 2000 (January 1, 2002 for 
methyl chloroform) the essential use designations for class I 
substances must be made in accordance with the provisions of the Clean 
Air Act Amendments of 1990.
    Essential-Use Allowances means the privileges granted by 
Sec. 82.4(o) of this subpart to produce class I substances, effective 
January 1, 1996 until January 1, 2000, as determined by allocation 
decisions made by the Parties to the Montreal Protocol and in 
accordance with the restrictions delineated in the Clean Air Act 
Amendments of 1990.
    Export means the transport of virgin or used controlled substances 
from inside the United States or its territories to persons outside the 
United States or its territories, excluding United States military 
bases and ships for on-board use.
    Exporter means the person who contracts to sell controlled 
substances for export or transfers controlled substances to his 
affiliate in another country.
    Facility means any process equipment (e.g., reactor, distillation 
column) used to convert raw materials or feedstock chemicals into 
controlled substances or consume controlled substances in the 
production of other chemicals.
    Foreign state means an entity which is recognized as a sovereign 
nation or country other than the United States of America (Taiwan is 
not considered a foreign state).
    Foreign state not Party to or Non-Party means a foreign state that 
has not deposited instruments of ratification, acceptance, or other 
form of approval with the Directorate of the United Nations 
Secretariat, evidencing the foreign state's ratification of the 
provisions of the 1987 Montreal Protocol, the London Amendments, or of 
the Copenhagen Amendments, as specified.
    Heel means the amount of a controlled substance that remains in a 
container after it is discharged or off-loaded (that is no more than 
ten percent of the volume of the container) and that the person owning 
or operating the container certifies will remain in the container and 
be included in a future shipment or recovered and banked for future 
recycling, reclamation, transformation, destruction or for non-emissive 
purposes.
    Import means 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 whether or not such landing, 
bringing, or introduction constitutes an importation within the meaning 
of the customs laws of the United States, with the following 
exemptions:
    (1) Off-loading used or excess controlled substances or controlled 
products from a ship during servicing,
    (2) Bringing controlled substances into the U.S. from Mexico where 
the controlled substance had been admitted into Mexico in bond and was 
of U.S. origin; and
    (3) Bringing a controlled product into the U.S. when transported in 
a consignment of personal or household effects or in a similar non-
commercial situation normally exempted from U.S. Customs attention.
    Importer means any person who imports a controlled substance or a 
controlled product 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, as appropriate:
    (1) The consignee;
    (2) The importer of record;
    (3) The actual owner; or
    (4) The transferee, if the right to draw merchandise in a bonded 
warehouse has been transferred.
    London Amendments means the Montreal Protocol, as amended at the 
Second Meeting of the Parties to the Montreal Protocol in London in 
1990.
    Montreal Protocol means the Montreal Protocol on Substances that 
Deplete the Ozone Layer, a protocol to the Vienna Convention for the 
Protection of the Ozone Layer, including adjustments adopted by the 
Parties thereto and amendments that have entered into force.
    1987 Montreal Protocol means the Montreal Protocol, as originally 
adopted by the Parties in 1987.
    Nations complying with, but not joining, the Protocol means any 
nation listed in appendix C, Annex 2, to this subpart.
    Party means any foreign state that is listed in appendix C to this 
subpart (pursuant to instruments of ratification, acceptance, or 
approval deposited with the Depositary of the United Nations 
Secretariat), as having ratified the specified control measure in 
effect under the Montreal Protocol. Thus, for purposes of the trade 
bans specified in Sec. 82.4(h)(2) pursuant to the London Amendments, 
only those foreign states that are listed in appendix C to this subpart 
as having ratified both the 1987 Montreal Protocol and the London 
Amendments shall be deemed to be Parties.
    Person means 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.
    Plant means one or more facilities at the same location owned by or 
under common control of the same person.
    Production means the manufacture of a controlled substance from any 
raw material or feedstock chemical, but does not include:
    (1) The manufacture of a controlled substance that is subsequently 
transformed;
    (2) The reuse or recycling of a controlled substance;
    (3) Amounts that are destroyed by the approved technologies; or
    (4) Amounts that are spilled or vented unintentionally.
    Production allowances means the privileges granted by this subpart 
to produce controlled substances; however, production allowances may be 
used to produce controlled substances only in conjunction with 
consumption allowances. A person's production allowances are the total 
of the allowances he obtains under Sec. 82.7 and Sec. 82.5 of this 
subpart and Sec. 82.9 of this subpart, and as may be modified under 
Sec. 82.12 of this subpart (transfer of allowances).
    Transform means to use and entirely consume (except for trace 
quantities) a controlled substance in the manufacture of other 
chemicals for commercial purposes.
    Transformation Credits means those privileges that may be obtained 
under Sec. 82.9 of this subpart to produce or import controlled 
substances.
    Transhipment means the continuous shipment of a controlled 
substance from a foreign state of origin through the United States, its 
territories, or foreign trade zones, including possible repackaging, to 
a second foreign state of final destination, as long as the shipment 
does not enter into United States jurisdiction.
    Unexpended consumption allowances means consumption allowances that 
have not been used. At any time in any control period a person's 
unexpended consumption allowances are the total of the level of 
consumption allowances the person has authorization under this subpart 
to hold at that time for that control period, minus the level of 
controlled substances that the person has produced or imported (not 
including transhipments and used controlled substances) in that control 
period until that time.
    Unexpended production allowances means production allowances that 
have not been used. At any time in any control period a person's 
unexpended production allowances are the total of the level of 
production allowances he has authorization under this subpart to hold 
at that time for that control period, minus the level of controlled 
substances that the person has produced in that control period until 
that time.
    Used controlled substances means controlled substances that have 
been recovered from their intended use systems.


Sec. 82.4  Prohibitions.

    (a) Prior to January 1, 1996, for all Groups of class I controlled 
substances, except Group VI, and prior to January 1, 2001 for Group VI, 
no person may produce, at any time in any control period, any 
controlled substance (except that are transformed or destroyed) in 
excess of the amount of unexpended production allowances or unexpended 
Article 5 allowances for that substance held by that person under the 
authority of this subpart at that time for that control period. Every 
kilogram of excess production constitutes a separate violation of this 
subpart.
    (b) Effective January 1, 1996, no person may produce, at any time 
in any control period, any class I, Group I, Group II, Group III, Group 
IV, Group V, or Group VII controlled substance (except for controlled 
substances that are transformed or destroyed) in excess of the amount 
of unexpended essential-use allowances under Sec. 82.4, amount of 
unexpended Article 5 allowances as allocated under Sec. 82.9 or the 
amount of unexpended destruction or transformation credits as obtained 
under Sec. 82.9 for that substance held by that person under the 
authority of this subpart at that time for that control period. Every 
kilogram of excess production constitutes a separate violation of this 
subpart.
    (c) Effective January 1, 1996, no person's total production of a 
class I controlled substance (except Group VI) as allocated under 
Sec. 82.4 for essential-use allowances, and as obtained under Sec. 82.9 
for destruction or transformation credits, may, at any time, in any 
control period until January 1, 2000, exceed the percent limitation of 
baseline production in appendix H of this subpart, as set forth in the 
Clean Air Act Amendments of 1990.
    (d) In addition to total production permitted under Sec. 82.4(c), 
effective January 1, 1996, for class I, Group I, Group III, Group IV 
and Group V controlled substances, and effective January 1, 1995, for 
class I, Group II, a person may, at any time, in any control period 
until January 1, 2000, produce 10 percent of baseline production as 
apportioned under Sec. 82.5 for export to Article 5 countries. No 
person may, at any time, in any control period until January 1, 2000, 
produce class I, Group I, Group II, Group III, Group IV, and Group V 
controlled substances for export to Article 5 countries in excess of 
the Article 5 allowances allocated under Sec. 82.9(a).
    (e) Prior to January 1, 1996, for all Groups of class I controlled 
substances, except Group VI, and prior to January 1, 2001, for Group 
VI, no person may produce or (except for transhipments, heels, or for 
used controlled substances) import, at any time in any control period, 
any class I controlled substance (except for controlled substances that 
are transformed, or destroyed) in excess of the amount of unexpended 
consumption allowances held by that person under the authority of this 
subpart at that time for that control period. Every kilogram of excess 
production or importation (other than transhipments or used and 
recycled controlled substances) constitutes a separate violation of 
this subpart.
    (f) Effective January 1, 1995, no person may import, at any time in 
any control period, a heel of any class I controlled substance that is 
greater than 10 percent of the volume of the container in excess of the 
amount of unexpended consumption allowances, unexpended destruction 
credits or unexpended transformation credits held by that person under 
the authority of this subpart at that time for that control period. 
Every kilogram of excess importation constitutes a separate violation 
of this subpart.
    (g) Prior to January 1, 1996, for all Groups of class I controlled 
substances, except Group VI, and prior to January 1, 2001, for Group 
VI, a person may not use production allowances to produce a quantity of 
a class I controlled substance unless that person holds under the 
authority of this subpart at the same time consumption allowances 
sufficient to cover that quantity of class I controlled substances nor 
may a person use consumption allowances to produce a quantity of class 
I controlled substances unless the person holds under authority of this 
subpart at the same time production allowances sufficient to cover that 
quantity of class I controlled substances. However, only consumption 
allowances are required to import class I controlled substances with 
the exception of transhipments, heels and used controlled substances.
    (h) Every kilogram of a controlled substance, and every controlled 
product, imported or exported in contravention of this subpart 
constitutes a separate violation of this subpart, thus no person may:
    (1) Import or export any quantity of a controlled substance listed 
in Class I, Group I or Group II, in appendix A to this subpart from or 
to any foreign state not listed as a Party to the 1987 Montreal 
Protocol unless that foreign state is complying with the 1987 Montreal 
Protocol (See appendix C, Annex 2 of this subpart);
    (2) Import or export any quantity of a controlled substance listed 
in Class I, Group III, Group IV or Group V, in appendix A to this 
subpart, from or to any foreign state not Party to the London 
Amendments (as noted in appendix C, Annex 1, to this subpart), unless 
that foreign state is complying with the London Amendments (as noted in 
appendix C, Annex 2, to this subpart); or
    (3) Import a controlled product from any foreign state not Party to 
the 1987 Montreal Protocol (as noted in appendix C, Annex 1, to this 
subpart), unless that foreign state is complying with the Protocol (as 
noted in appendix C, Annex 2, to this subpart).
    (i) Effective January 1, 2003, no person may produce HCFC-141b 
except in a process resulting in its transformation, use in a process 
resulting in destruction, or for exceptions stated in paragraph (p) of 
this section.
    (j) Effective January 1, 2003, no person may import HCFC-141b 
except for use in a process resulting in its transformation, use in a 
process resulting in destruction, or for exceptions stated in paragraph 
(p) of this section.
    (k) Effective January 1, 2010, no person may produce or consume (as 
defined under Sec. 82.3 of this subpart) HCFC-22 or HCFC-142b for any 
purpose other than for use in a process resulting in their 
transformation, use in a process resulting in their destruction, for 
use in equipment manufactured prior to January 1, 2010, or for 
exceptions stated in paragraph (p) of this section in excess of 
baseline allowances allocated Sec. 82.5(h) and Sec. 82.6(h).
    (l) Effective January 1, 2020, no person may produce or consume (as 
defined under Sec. 82.3 of this subpart) HCFC-22 or HCFC-142b for any 
purpose other than for use in a process resulting in their 
transformation, use in a process resulting in their destruction or for 
exceptions stated in paragraph (p) of this section.
    (m) Effective January 1, 2015, no person may produce or consume (as 
under defined under Sec. 82.3 of this subpart) class II substances not 
previously controlled, for any purpose other than for use in a process 
resulting in its transformation, use in a process resulting in their 
destruction, as a refrigerant in equipment manufactured before January 
1, 2020, or for exceptions stated in paragraph (p) of this section, in 
excess of baseline production and consumption levels defined in 
Sec. 82.5(h) and Sec. 82.6(h).
    (n) Effective January 1, 2030, no person may produce or consume 
class II substances, for any purpose other than for use in a process 
resulting in their transformation, use in a process resulting in their 
destruction, or for exceptions stated in paragraph (p) of this section.
    (o) Effective January 1, 1996, essential-use allowances are 
apportioned to a person for the exempted production of specified class 
I (except class I, Group VI) controlled substances.
    (1) Essential-uses for the production of controlled substances as 
agreed to by the Parties to the Protocol and subject to the periodic 
revision of the Parties are:
    (i) Medical Dose Inhalers--aerosols.
    (ii) Space Shuttle--solvents.
    (iii) Laboratory and Analytical Applications (see Appendix G of 
this subpart).
    (2) Persons in the following list are allocated essential-use 
allowances for a specific quantity of a specific class I controlled 
substances for a specific essential-use exemption:
    (i) Metered Dose Inhalers--Aerosols.

                Essential Uses Recommendation by the UNEP Technology and Economic Assessment Panel              
----------------------------------------------------------------------------------------------------------------
                                                                                                Quantity (metric
                        Company                             Year             Chemical                 tons)     
----------------------------------------------------------------------------------------------------------------
                                              Metered Dose Inhalers                                             
----------------------------------------------------------------------------------------------------------------
International Pharmaceutical & Aerosol Consortium......       1996  CFC-11....................  749.8           
                                                                    CFC-12....................  2353.2          
                                                                    CFC-114...................  314.1           
                                                              1997  CFC-11....................  658.3           
                                                                    CFC-12....................  2166.5          
                                                                    CFC-114...................  311.4           
Sterling Winthrop......................................       1996  CFC-12....................  10.2            
                                                                    CFC-114...................  29.6            
                                                              1997  CFC-12....................  10.5            
                                                                    CFC-114...................  31.7            
----------------------------------------------------------------------------------------------------------------
                                              Space Shuttle Solvent                                             
----------------------------------------------------------------------------------------------------------------
NASA/Thiokol...........................................       1996  Methyl Chloroform.........  56.8            
                                                              1997  Methyl Chloroform.........  56.8            
----------------------------------------------------------------------------------------------------------------
                                     Laboratory and Analytical Applications                                     
----------------------------------------------------------------------------------------------------------------
Global Exemption.......................................       1996  CFCs, Methyl Chloroform,    No quantity     
                                                                     Carbon Tetrachloride.       specified.     
                                                              1997  Same......................  Same.           
----------------------------------------------------------------------------------------------------------------

    (p) The following exemptions apply to the production and 
consumption restrictions under paragraphs (i), (j), (k), (l), (m) and 
(n) of this section:
    (1) Medical Devices [Reserved].
    (2) Exports to developing countries [Reserved].


Sec. 82.5  Apportionment of baseline production allowances.

    Persons who produced controlled substances in Group I or Group II 
in 1986 are apportioned baseline production allowances as set forth in 
paragraphs (a) and (b) of this section. Persons who produced controlled 
substances in Group III, IV, or V in 1989 are apportioned baseline 
production allowances as set forth in paragraphs (c), (d), and (e) of 
this section. Persons who produced controlled substances in Group VI 
and VII in 1991 are apportioned baseline allowances as set forth in 
paragraphs (f) and (g) of this section.

------------------------------------------------------------------------
                                                            Allowances  
    Controlled substance                Person                 (kg)     
------------------------------------------------------------------------
                  (a) For Group I Controlled Substances                 
                                                                        
CFC-11.....................  Allied-Signal, Inc.........      23,082,358
                             E.I. DuPont de Nemours & Co      33,830,000
                             Elf Atochem, N.A...........      21,821,500
CFC-12.....................  Laroche Chemicals..........      12,856,364
                             Allied-Signal, Inc.........      35,699,776
                             E.I. DuPont de Nemours & Co      64,849,000
                             Elf Atochem, N.A...........      31,089,807
CFC-113....................  Laroche Chemicals..........      15,330,909
                             Allied-Signal, Inc.........      21,788,896
CFC-114....................  E.I. DuPont de Nemours & Co      58,553,000
                             Allied-Signal, Inc.........       1,488,569
CFC-115....................  E.I. DuPont de Nemours & Co       4,194,000
                             E.I. DuPont de Nemours & Co       4,176,000
                                                                        
                 (b) For Group II Controlled Substances                 
                                                                        
Halon-1211.................  Great Lakes Chemical Corp..         826,487
                             ICI Americas, Inc..........       2,135,484
Halon-1301.................  E.I. DuPont de Nemours & Co       3,220,000
                             Great Lakes Chemical Corp..       1,766,850
Halon-2402                                                              
                                                                        
                 (c) For Group III Controlled Substances                
                                                                        
CFC-13.....................  Allied-Signal, Inc.........         127,125
                             E.I. DuPont de Nemours & Co         187,831
                             Elf Atochem, N.A...........           3,992
                             Great Lakes Chemical Corp..          56,381
                             Laroche Chemicals..........          29,025
CFC-111....................  *****......................           *****
CFC-112....................  *****......................           *****
CFC-211....................  E.I. DuPont de Nemours & Co              11
CFC-212....................  E.I. DuPont de Nemours & Co              11
CFC-213....................  E.I. DuPont de Nemours & Co              11
CFC-214....................  E.I. DuPont de Nemours & Co              11
CFC-215....................  E.I. DuPont de Nemours & Co             511
                             Halocarbon Products Corp...           1,270
CFC-216....................  E.I. DuPont de Nemours & Co         170,574
CFC-217....................  E.I. DuPont de Nemours & Co             511
                                                                        
                 (d) For Group IV Controlled Substances                 
                                                                        
CCI4.......................  Akzo Chemicals, Inc........       7,873,615
                             Degussa Corporation........          26,546
                             Dow Chemical Company, USA..      18,987,747
                             E.I. DuPont de Nemours & Co           9,099
                             Hanlin Chemicals--WV, Inc..         219,616
                             ICI Americas, Inc..........         853,714
                             Occidental Chemical Corp...       1,059,358
                             Vulcan Chemicals...........      21,931,987
                                                                        
                  (e) For Group V Controlled Substances                 
                                                                        
Methyl Chloroform..........  Dow Chemical Company, USA..     168,030,117
                             E.I. DuPont de Nemours & Co               2
                             PPG Industries, Inc........      57,450,719
                             Vulcan Chemicals...........      89,689,064
                                                                        
                 (f) For Group VI Controlled Substances                 
                                                                        
Methyl Bromide.............  Great Lakes Chemical             19,945,788
                              Corporation.                              
                             Ethyl Corporation..........       8,233,894
                                                                        
                 (g) For Group VII Controlled Substances                
                                                                        
HBFC 22B1-1................  Great Lakes Chemical                 46,211
                              Corporation.                              
                                                                        
            (h) For Class II Controlled Substances (Reserved)           
------------------------------------------------------------------------

Sec. 82.6  Apportionment of baseline consumption allowances.

    Persons who produced, imported, or produced and imported controlled 
substances in Group I or Group II in 1986 are apportioned chemical-
specific baseline consumption allowances as set forth in paragraphs (a) 
and (b) of this section. Persons who produced, imported, or produced 
and imported controlled substances in Group III, Group IV, or Group V 
in 1989 are apportioned chemical-specific baseline consumption 
allowances as set forth in paragraphs (c), (d) and (e) of this section. 
Persons who produced, imported, or produced and imported controlled 
substances in Group VI or VII in 1991 are apportioned chemical specific 
baseline consumption allowances as set forth in paragraphs (f) and (g) 
of this section.

------------------------------------------------------------------------
                                                            Allowances  
    Controlled substance                Person                 (kg)     
------------------------------------------------------------------------
                  (a) For Group I Controlled Substances                 
                                                                        
CFC-11.....................  Allied-Signal, Inc.........      22,683,833
                             E.I. DuPont de Nemours & Co      32,054,283
                             Elf Atochem, N.A...........      21,740,194
                             Hoechst Celanese                    185,396
                              Corporation.                              
                             ICI Americas, Inc..........       1,673,436
                             Kali-Chemie Corporation....          82,500
                             Laroche Chemicals..........      12,695,726
                             National Refrigerants, Inc.         693,707
                             Refricentro, Inc...........         160,697
                             Sumitomo Corporation of               5,800
                              America.                                  
CFC-12.....................  Allied-Signal, Inc.........      35,236,397
                             E.I. DuPont de Nemours & Co      61,098,726
                             Elf Atochem, N.A...........      32,403,869
                             Hoechst Celanese                    138,865
                              Corporation.                              
                             ICI Americas, Inc..........       1,264,980
                             Kali-Chemie Corporation....         355,440
                             Laroche Chemicals..........      15,281,553
                             National Refrigerants, Inc.       2,375,384
                             Refricentro, Inc...........         242,526
CFC-113....................  Allied-Signal, Inc.........      18,241,928
                             E.I. DuPont de Nemours & Co      49,602,858
                             Elf Atochem, N.A...........         244,908
                             Holchem....................         265,199
                             ICI Americas, Inc..........       2,399,700
                             Refricentro, Inc...........          37,385
CFC-114....................  Sumitomo Corp. of America..         280,163
                             Allied-Signal, Inc.........       1,429,582
                             E.I. DuPont de Nemours & Co       3,686,103
                             Elf Atochem, N.A...........          22,880
CFC-115....................  ICI Americas, Inc..........          32,930
                             E.I. DuPont de Nemours & Co       2,764,109
                             Elf Atochem, N.A...........         633,007
                             Hoechst Celanese                      8,893
                              Corporation.                              
                             ICI Americas, Inc..........       2,366,351
                             Laroche Chemicals..........         135,520
                             Refricentro, Inc...........          27,337
                                                                        
                      (b) For Controlled Substances                     
                                                                        
Halon-1211.................  Elf Atochem, N.A...........         411,292
                             Great Lakes Chemical Corp..         772,775
                             ICI Americas, Inc..........       2,116,641
                             Kali-Chemie Corporation....         330,000
Halon-1301.................  E.I. DuPont de Nemours & Co       2,772,917
                             Elf Atochem, N.A...........          89,255
                             Great Lakes Chemical Corp..       1,744,132
                             Kali-Chemie Corporation....          54,380
Halon-2402.................  Ausimont...................          34,400
                             Great Lakes Chemical Corp..          15,900
                                                                        
                 (c) For Group III Controlled Substances                
                                                                        
CFC-13.....................  Allied-Signal, Inc.........         127,124
                             E.I. DuPont de Nemours & Co         158,508
                             Elf Atochem, N.A...........           3,992
                             Great Lakes Chemical Corp..          56,239
                             ICI Americas, Inc..........           5,855
                             Laroche Chemicals..........          29,025
                             National Refrigerants, Inc.          16,665
CFC-111....................  Sumitomo Corporation of               5,912
                              America.                                  
CFC-112....................  TG (USA) Corporation.......           9,253
                             E.I. DuPont de Nemours & Co              11
CFC-211....................  E.I. DuPont de Nemours & Co              11
CFC-212....................  E.I. DuPont de Nemours & Co              11
CFC-213....................  E.I. DuPont de Nemours & Co              11
CFC-214....................  E.I. DuPont de Nemours & Co             511
CFC-215....................  Halocarbon Products Corp...           1,270
                             E.I. DuPont de Nemours & Co         170,574
CFC-216....................  E.I. DuPont de Nemours & Co             511
                                                                        
CFC-217....................                                             
                 (d) For Group IV Controlled Substances                 
                                                                        
CCl4.......................  Crescent Chemical Co.......              41
                             Degussa Corporation........              56
                             Dow Chemical Company, USA..          12,466
                             E.I. DuPont de Nemours & Co       8,170,561
                             Elf Atochem, N.A...........          26,537
                             Hanlin Chemicals-WV, Inc...         103,133
                             Hoechst Celanese                          3
                              Corporation.                              
                             ICC Chemical Corp..........       1,173,723
                             ICI Americas, Inc..........         855,466
                             Occidental Chemical Corp...         497,478
                             Sumitomo Corporation of                   9
                              America.                                  
                                                                        
                  (e) For Group V Controlled Substances                 
                                                                        
Methyl Chloroform..........  3V Chemical Corp...........           3,528
                             Actex, Inc.................          50,171
                             Atochem North America......          74,355
                             Dow Chemical Company, USA..     125,200,200
                             E.I. DuPont de Nemours & Co               2
                             IBM........................           2,026
                             ICI Americas, Inc..........      14,179,850
                             Laidlaw....................         420,207
                             PPG Industries.............      45,254,115
                             Sumitomo...................           1,954
                             TG (USA) Corporation.......           7,073
                             Unitor Ships Service, Inc..          14,746
                             Vulcan Chemicals...........      70,765,072
                                                                        
                 (f) For Group VI Controlled Substances                 
                                                                        
Methyl Bromide.............  Great Lakes Chemical             15,514,746
                              Corporation.                              
                             Ethyl Corporation..........       6,379,906
                             AmeriBrom, Inc.............       3,524,393
                             TriCal, Inc................         109,225
                                                                        
                 (g) For Group VII Controlled Substances                
                                                                        
HBFC 22B1-1................  Great Lakes Chemical                 40,110
                              Corporation.                              
                                                                        
            (h) For Class II Controlled Substances (Reserved)           
                                                                        
------------------------------------------------------------------------

Sec. 82.7  Grant and phase reduction of baseline production and 
consumption allowances for class I controlled substances.

    For each control period specified in the following table, each 
person is granted the specified percentage of the baseline production 
and consumption allowances apportioned to him under Secs. 82.5 and 82.6 
of this subpart.

----------------------------------------------------------------------------------------------------------------
                                      Class I                                                          Class I  
                                     substances    Class I      Class I      Class I      Class I     substances
          Control period            in groups I   substances   substances   substances   substances    in Group 
                                      and III    in group II  in group IV   in group V  in group VI      VII    
                                     (percent)    (percent)    (percent)    (percent)    (percent)    (percent) 
----------------------------------------------------------------------------------------------------------------
1994..............................           25            0           50           50          100          100
1995..............................           25            0           15           30          100          100
1996..............................            0            0            0            0          100            0
1997..............................            0            0            0            0          100            0
1998..............................            0            0            0            0          100            0
1999..............................            0            0            0            0          100            0
2000..............................            0            0            0            0          100            0
2001..............................            0            0            0            0            0            0
----------------------------------------------------------------------------------------------------------------

Sec. 82.8  Grant and phased reduction of baseline production and 
consumption allowances for class II controlled substances. [Reserved]


Sec. 82.9  Availability of 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 (e) of this 
subpart is also granted Article 5 allowances equal to:
    (1) 15 percent of his baseline production allowances for class I, 
Group II controlled substances listed under Sec. 82.5 of this subpart 
for each control period beginning January 1, 1994 until January 1, 
2003;
    (2) 10 percent of his baseline production allowance listed for 
class I, Group I, Group III, Group IV, and Group V controlled 
substances listed under Sec. 82.5 of this subpart for each control 
period ending before January 1, 1996;
    (3) 15 percent of his baseline production allowances for class I, 
Group I, Group III, Group IV, and Group V controlled substances listed 
under Sec. 82.5 of this subpart for each control period beginning 
January 1, 1996 until January 1, 2006.
    (b) Effective January 1, 1995, a person allocated Article 5 
allowances may produce class I controlled substances for export to 
Article 5 countries as under Sec. 82.11 and transfer Article 5 
allowances as under Sec. 82.12. In addition, a company may also 
increase or decrease its Article 5 allowances by trading with another 
Party to the Protocol according to the provisions under this paragraph 
of this section. A nation listed in Appendix C to this subpart (Parties 
to the Montreal Protocol) must agree either to transfer to the person 
for the current control period some amount of Article 5 production that 
the nation is permitted under the Montreal Protocol or to receive from 
the person for the current control period some amount of Article 5 
production that the person is permitted under this subpart.
    (c) Until January 1, 1996, a company may also increase or decrease 
its production allowances by trading with another Party to the Protocol 
according to the provision under this paragraph of this section. A 
nation listed in Appendix C to this subpart (Parties to the Montreal 
Protocol) must agree either to transfer to the person for the current 
control period some amount of production that the nation is permitted 
under the Montreal Protocol or to receive from the person for the 
current control period some amount of production that the person is 
permitted under this subpart.
    (1) For trades from a Party, the person must obtain from the 
principal diplomatic representative in that nation's embassy in the 
United States a signed document stating that the appropriate authority 
within that nation has established or revised production limits for the 
nation to equal the lesser of the maximum production that the nation is 
allowed under the Protocol minus the amount transferred, the maximum 
production that is allowed under the nation's applicable domestic law 
minus the amount transferred, or the average of the nation's actual 
national production level for the three years prior to the transfer 
minus the production allowances transferred. The person must submit to 
the Administrator a transfer request that includes a true copy of this 
document and that sets forth the following:
    (i) The identity and address of the person;
    (ii) The identity of the Party;
    (iii) The names and telephone numbers of contact persons for the 
person and for the Party;
    (iv) The chemical type and level of production being transferred; 
and
    (v) The control period(s) to which the transfer applies.
    (2) For trades to a Party, a person must submit a transfer request 
that sets forth the following:
    (i) The identity and address of the person;
    (ii) The identity of the Party;
    (iii) The names and telephone numbers of contact persons for the 
person and for the Party;
    (iv) The chemical type and level of allowable production to be 
transferred; and
    (v) The control period(s) to which the transfer applies.
    (3) After receiving a transfer request that meets the requirements 
of paragraph (b)(2) of this section, the Administrator may, at his 
discretion, consider the following factors in deciding whether to 
approve such a transfer:
    (i) Possible creation of economic hardship;
    (ii) Possible effects on trade;
    (iii) Potential environmental implications; and
    (iv) The total amount of unexpended production allowances held by 
United States entities.
    (4) The Administrator will issue the person a notice either 
granting or deducting production allowances and specifying the control 
period to which the transfer applies, provided that the request meets 
the requirement of paragraph (c)(1) of this section for trades from 
Parties and paragraphs (c)(2) of this section for trades to Parties, 
unless the Administrator has decided to disapprove the trade under 
paragraph (c)(3) of this section for trades to Parties. For a trade 
from a Party, the Administrator will issue a notice that revises the 
allowances held by the person to equal the unexpended production 
allowances held by the person under this subpart plus the level of 
allowable production transferred from the Party. For a trade to a 
Party, the Administrator will issue a notice that revises the 
production limit for the person to equal the lesser of:
    (i) The unexpended production allowances held by the person under 
this subpart minus the amount transferred; or
    (ii) The unexpended production allowances held by the person under 
this subpart minus the amount by which the United States average annual 
production of the controlled substance being traded for the three years 
prior to the transfer is less than the total allowable production 
allowable for that substance under this subpart minus the amount 
transferred. The change in allowances will be effective on the date 
that the notice is issued.
    (5) If after one person obtains approval for a trade of allowable 
production of a controlled substance to a Party, one or more other 
persons obtain approval for trades involving the same controlled 
substance and the same control period, the Administrator will issue 
notices revising the production limits for each of the other persons 
trading that controlled substance in that control period to equal the 
lesser of:
    (i) The unexpended production allowances held by the person under 
this subpart minus the amount transferred; or
    (ii) The unexpended production allowances held by the person under 
this subpart minus the amount by which the United States average annual 
production of the controlled substance being traded for the three years 
prior to the transfer is less than the total allowable production for 
that substance under this subpart multiplied by the amount transferred 
divided by the total amount transferred by all the other person trading 
the same controlled substance in the same control period minus the 
amount transferred by that person.
    (iii) The Administrator will also issue a notice revising the 
production limit for each person who previously obtained approval of a 
trade of that substance in that control period to equal the unexpended 
production allowances held by the person under this subpart plus the 
amount by which the United States average annual production of the 
controlled substance being traded for the three years prior to the 
transfer is less than the total allowable production under this subpart 
multiplied by the amount transferred by that person divided by the 
amount transferred by all of the persons that have traded that 
controlled substance in that control period. The change in production 
allowances will be effective on the date that the notice is issued.
    (d) Effective January 1, 1996, there will be no trade in production 
or consumption allowances with Parties to the Protocol for class I 
controlled substances, except for class I, Group VI, methyl bromide.
    (e) Until January 1, 1996, for all class I controlled substances, 
except Group VI, and until January 1, 2001, for class I, Group VI, a 
person may obtain production allowances for that controlled substance 
equal to the amount of that controlled substance produced in the United 
States that was transformed or destroyed within the United States in 
the cases where production allowances were expended to produce such 
substance in accordance with the provisions of this paragraph. A 
request for production allowances under this section will be considered 
a request for consumption allowances under Sec. 82.10(b) of this 
subpart.
    (1) Until January 1, 1996, for all class I controlled substances, 
except Group VI, and until January 1, 2001, for class I, Group VI, a 
person must submit a request for production allowances that includes 
the following:
    (i) The identity and address of the person;
    (ii) The name, quantity, and level of controlled substance 
transformed or the name, quantity and volume destroyed;
    (iii) A copy of the invoice or receipt documenting the sale of the 
controlled substance to the person;
    (iv) A certification that production allowances were expended for 
the production of the controlled substance;
    (v) If the controlled substance is transformed, the name, quantity, 
and verification of the commercial use of the resulting chemical 
transformed; and
    (vi) If the controlled substance is destroyed, the efficiency of 
the destruction process.
    (2) Until January 1, 1996, for all class I controlled substances, 
except Group VI, and until January 1, 2001, for class I, Group VI, the 
Administrator will review the information and documentation submitted 
under paragraph (e)(1) of this section and will assess the quantity of 
class I controlled substance that the documentation and information 
verifies was transformed or destroyed. The Administrator will issue the 
person production allowances equivalent to the controlled substances 
that the Administrator determines were transformed or destroyed. For 
controlled substances completely destroyed under this rule, the Agency 
will grant allowances equal to 100 percent of volume intended for 
destruction. For those controlled substances destroyed at less than a 
98 percent destruction efficiency, the Agency will grant allowances 
commensurate with that percentage of destruction efficiency that is 
actually achieved. The grant of allowances will be effective on the 
date that the notice is issued.
    (3) Until January 1, 1996, for all class I controlled substances, 
except Group VI, and until January 1, 2001, for class I, Group VI, if 
the Administrator determines that the request for production allowances 
does not satisfactorily substantiate that the person transformed or 
destroyed controlled substances as claimed, or that modified allowances 
were not expended, the Administrator will issue a notice disallowing 
the request for additional production allowances. Within ten working 
days after receipt of notification, the person may file a notice of 
appeal, with supporting reasons, with the Administrator. The 
Administrator may affirm the disallowance or grant an allowance, as 
she/he finds appropriate in light of the available evidence. If no 
appeal is taken by the tenth day after notification, the disallowance 
will be final on that day.
    (f) Until January 1, 1996, for all class I controlled substances, 
except Group VI, and until January 1, 2001, for class I, Group VI, a 
person may obtain production allowances for that controlled substance 
equal to the amount of that controlled substance produced in the United 
States that was exported to be transformed or destroyed within a Party 
in the cases where production allowances were expended to produce such 
substance in accordance with the provisions of this paragraph.
    (1) Until January 1, 1996, for all class I controlled substances, 
except Group VI, and until January 1, 2001, for class I, Group VI, a 
person must submit a request for production allowances that includes 
the following:
    (i) The identities and addresses of the exporter and the recipient 
of the exports;
    (ii) The exporter's Employer Identification Number;
    (iii) The names and telephone numbers of contact persons for the 
exporter and the recipient;
    (iv) The quantity and type of controlled substances exported;
    (v) The source of the controlled substance and the date purchased;
    (vi) The date on which, and the port from which, the controlled 
substances were exported from the United States or its territories;
    (vii) The country to which the controlled substances were exported;
    (viii) The bill of lading and the invoice indicating the net 
quantity of controlled substances shipped and documenting the sale of 
the controlled substances to the purchaser for either transformation or 
destruction;
    (ix) The commodity code of the controlled substance exported.
    (x) Written statement from the producer that the controlled 
substance was produced with expended allowances.
    (2) Until January 1, 1996, for all class I controlled substances, 
except Group VI, and until January 1, 2001, for class I, Group VI, the 
Administrator will review the information and documentation submitted 
under paragraph (f)(1) of this section and will assess the quantity of 
class I controlled substance that the documentation and information 
verifies was exported to be transformed or destroyed. The Administrator 
will issue the person production allowances equivalent to the 
controlled substances that the Administrator determines were exported 
to be transformed or destroyed. The Agency will grant allowances equal 
to 100 percent of volume intended for destruction or transformation. 
The grant of allowances will be effective on the date that the notice 
is issued.
    (3) Until January 1, 1996, for all class I controlled substances, 
except Group VI, and until January 1, 2001, for class I, Group VI, if 
the Administrator determines that the documentation for production 
allowances does not satisfactorily substantiate that the person 
exported for transformation or destruction as claimed, the 
Administrator will issue a notice disallowing the request for 
additional production allowances. Within ten working days after receipt 
of notification, the person may file a notice of appeal, with 
supporting reasons, with the Administrator. The Administrator may 
affirm the disallowance or grant an allowance, as she/he finds 
appropriate in light of the available evidence. If no appeal is taken 
by the tenth day after notification, the disallowance will be final on 
that day.
    (g) Effective January 1, 1996, and until January 1, 2000, a person 
may obtain destruction or transformation credits for a class I 
controlled substance (except class I, Group VI) equal to the amount of 
that controlled substance produced in the United States that was 
destroyed or transformed within the United States in cases where the 
controlled substance was produced for an emissive use in accordance 
with the provisions of this subpart, subtracting an offset of 15 
percent.
    (1) Effective January 1, 1996, and until January 1, 2000, a person 
must submit a request for destruction or transformation credits that 
includes the following:
    (i) The identity and address of the person;
    (ii) The name, quantity and volume of controlled substance 
destroyed or transformed;
    (iii) A copy of the invoice or receipt documenting the sale or 
transfer of the controlled substance to the person;
    (iv) A certification of the previous use of the controlled 
substance;
    (v) For destruction credits, a certification that the controlled 
substance was destroyed and a certification of the efficiency of the 
destruction process; and
    (vi) For transformation credits, an IRS certificate of feedstock 
use or transformation of the controlled substance.
    (2) Effective January 1, 1996, and until January 1, 2000, the 
Administrator will issue the person destruction or transformation 
credits equivalent to the class I controlled substance (except class I, 
Group VI) produced for emissive uses that the Administrator determines 
were destroyed or transformed, subtracting the offset of 15 percent. 
For controlled substances completely destroyed under this rule, the 
Agency will grant destruction credits equal to 100 percent of volume 
destroyed minus the offset. For those controlled substances destroyed 
at less than a 98 percent destruction efficiency, the Agency will grant 
destruction credits commensurate with that percentage of destruction 
efficiency that is actually achieved minus the offset. The grant of 
credits will be effective on the date that the notice is issued.
    (3) Effective January 1, 1996, and until January 1, 2000, if the 
Administrator determines that the request for destruction or 
transformation credits does not satisfactorily substantiate that the 
person destroyed or transformed a class I controlled substance (except 
class I, Group VI) as claimed, or that the controlled substance was not 
previously used for an emissive purpose, the Administrator will issue a 
notice disallowing the request for additional destruction or 
transformation credits. Within ten working days after receipt of 
notification, the person may file a notice of appeal, with supporting 
reasons, with the Administrator. The Administrator may affirm the 
disallowance or grant an allowance, as she/he finds appropriate in 
light of the available evidence. If no appeal is taken by the tenth day 
after notification, the disallowance will be final on that day.


Sec. 82.10  Availability of consumption allowances in addition to 
baseline consumption allowances.

    (a) Until January 1, 1996, for all class I controlled substances, 
except Group VI, and until January 1, 2001 for class I, Group VI, any 
person may obtain, in accordance with the provisions of this 
subsection, consumption allowances equivalent to the level of class I 
controlled substances (other than used controlled substances or 
transhipments) that the person has exported from the United States and 
its territories to a Party (as listed in Appendix C to this subpart).
    (1) Until January 1, 1996, for all class I controlled substances, 
except Group VI, and until January 1, 2001 for class I, Group VI, to 
receive consumption allowances in addition to baseline consumption 
allowances, the exporter of the class I controlled substances must 
submit to the Administrator a request for consumption allowances 
setting forth the following:
    (i) The identities and addresses of the exporter and the recipient 
of the exports;
    (ii) The exporter's Employer Identification Number;
    (iii) The names and telephone numbers of contact persons for the 
exporter and the recipient;
    (iv) The quantity and type of controlled substances exported;
    (v) The source of the controlled substance and the date purchased;
    (vi) The date on which, and the port from which, the controlled 
substances were exported from the United States or its territories;
    (vii) The country to which the controlled substances were exported;
    (viii) The commodity code of the controlled substance exported; and
    (ix) Written statement from the producer that the controlled 
substance was produced with expended allowances.
    (2) The Administrator will review the information and documentation 
submitted under paragraph (a)(1) of this section. The Administrator 
will issue the exporter contingent consumption allowances equivalent to 
the level of controlled substances that the Administrator determined 
will be exported contingent upon receipt of confirming documentation.
    (3) To receive the consumption allowances, the exporter of the 
class I controlled substances must submit to the Administrator a 
request for consumption allowances including the following:
    (i) The bill of lading and the invoice indicating the net quantity 
of controlled substances shipped and documenting the sale of the 
controlled substances to the purchaser.
    (ii) [Reserved]
    (4) The Administrator will assess the quantity of controlled 
substances that the documentation under paragraph (a)(3) verifies was 
exported. The Administrator will issue the exporter consumption 
allowances equivalent to the level of controlled substances that the 
Administrator determined were exported. The grant of the consumption 
allowances will be effective on the date the notice is issued. If the 
Administrator determines that the confirming documentation does not 
satisfactorily substantiate that the person exported controlled 
substances as claimed the Administrator will issue a notice that the 
consumption allowances are not granted.
    (b) A person may obtain consumption allowances for that controlled 
substance equal to the amount of a controlled substance either produced 
in, or imported into, the United States that was transformed or 
destroyed in the case where consumption allowances were expended to 
produce or import such substance in accordance with the provisions of 
this paragraph. Effective January 1, 1996, consumption allowances will 
not be granted for a class I controlled substance (except class I, 
Group VI) produced in, or imported into, the United States that was 
transformed or destroyed. However, a person producing or importing a 
controlled substance (except class I, Group VI) that was transformed or 
destroyed must submit to the Administrator the information described 
under Sec. 82.13 (f)(3) (i) and (ii).
    (c) A company may also increase its consumption allowances by 
receiving production from another Party to the Protocol for class I, 
Group I through Group V and Group VII controlled substances until 
January 1, 1996, and for class I, Group VI controlled substances until 
January 1, 2001. A nation listed in Appendix C to this subpart (Parties 
to the Montreal Protocol) must agree to transfer to the person for the 
current control period some amount of production that the nation is 
permitted under the Montreal Protocol. For trades from a Party, the 
person must obtain from the principal diplomatic representative in that 
nation's embassy in the United States a signed document stating that 
the appropriate authority within that nation has established or revised 
production limits for the nation to equal the lesser of the maximum 
production that the nation is allowed under the Protocol minus the 
amount transferred, the maximum production that is allowed under the 
nation's applicable domestic law minus the amount transferred, or the 
average of the nation's actual national production level for the three 
years prior to the transfer minus the production allowances 
transferred. The person must submit to the Administrator a transfer 
request that includes a true copy of this document and that sets forth 
the following:
    (1) The identity and address of the person;
    (2) The identity of the Party;
    (3) The names and telephone numbers of contact persons for the 
person and for the Party;
    (4) The chemical type and level of production being transferred; 
and
    (5) The control period(s) to which the transfer applies.
    (d) On the first day of each control period the Agency will grant 
consumption allowances to any person that produced and exported a Group 
IV controlled substance in the baseline year and that was not granted 
baseline consumption allowances under Sec. 82.5 of this subpart.
    (1) The number of consumption allowances any such person will be 
granted for each control period will be equal to the number of 
production allowances granted to that person under Sec. 82.7 for that 
control period.
    (2) Any person granted allowances under this paragraph must hold 
the same number of unexpended consumption allowances for the control 
period for which the allowances were granted by February 15 of the 
following control period. Every kilogram by which the person's 
unexpended consumption allowances fall short of the amount the person 
was granted under this paragraph constitutes a separate violation.


Sec. 82.11  Exports to Article 5 Parties.

    (a) A person may produce class I controlled substances for export 
(not including exports resulting in transformation or destruction, or 
used controlled substances) to foreign states listed in appendix E to 
this subpart (Article 5 countries) if apportioned Article 5 allowances 
under Sec. 82.9(a). Upon notification, the Administrator will deduct 
from the person's balance of Article 5 allowances the amount equal to 
the class I controlled substance exported.
    (b) A person must submit a notice to the Administrator of exports 
to Article 5 countries (except transhipments, exports resulting in 
transformation or destruction, or used controlled substances) at the 
end of the quarter that includes the following:
    (1) The identities and addresses of the exporter and the recipient 
of the exports;
    (2) The exporter's Employee Identification Number;
    (3) The names and telephone numbers of contact persons for the 
exporter and for the recipient;
    (4) The quantity and the type of controlled substances exported, 
its source and date purchased;
    (5) The date on which, and the port from which, the controlled 
substances were exported from the United States or its territories;
    (6) The country to which the controlled substances were exported;
    (7) A copy of the bill of lading and invoice indicating the net 
quantity shipped and documenting the sale of the controlled substances 
to the purchaser;
    (8) The commodity code of the controlled substance exported; and
    (9) A copy of the contract covering the sale of the controlled 
substances to the recipient that contains provisions forbidding the 
reexport of the controlled substance in bulk form and subjecting the 
recipient or any transferee of the recipient to liquidated damages 
equal to the resale price of the controlled substances if they are 
reexported in bulk form.


Sec. 82.12  Transfers.

    (a) Inter-company transfers.
    (1) Until January 1, 1996, for all class I controlled substances, 
except for Group VI, and until January 1, 2001, for Group VI, any 
person (``transferor'') may transfer to any other person 
(``transferee'') any amount of the transferor's consumption allowances 
or production allowances or Article 5 allowances, as follows:
    (i) The transferor must submit to the Administrator a transfer 
claim setting forth the following:
    (A) The identities and addresses of the transferor and the 
transferee;
    (B) The name and telephone numbers of contact persons for the 
transferor and the transferee;
    (C) The type of allowances or authorizations being transferred, 
including the names of the controlled substances for which allowances 
are to be transferred;
    (D) The group of controlled substances to which the allowances or 
authorizations being transferred pertains;
    (E) The amount of allowances or authorizations being transferred;
    (F) The control period(s) for which the allowances or 
authorizations are being transferred;
    (G) The amount of unexpended allowances of the type and for the 
control period being transferred that the transferor holds under 
authority of this subpart as of the date the claim is submitted to EPA; 
and
    (H) The amount of the one percent offset applied to the unweighted 
amount traded that will be deducted from the transferor's allowance 
balance (except for trades from transformers and destroyers to 
producers or importers for the purpose of allowance reimbursement).
    (ii) The Administrator will determine whether the records 
maintained by EPA, taking into account any previous transfers and any 
production, allowable imports and exports of controlled substances 
reported by the transferor, indicate that the transferor possesses, as 
of the date the transfer claim is processed, unexpended allowances 
sufficient to cover the transfer claim (i.e., the amount to be 
transferred plus, in the case of transferors of production or 
consumption allowances, one percent of that amount). Within three 
working days of receiving a complete transfer claim, the Administrator 
will take action to notify the transferor and transferee as follows:
    (A) If EPA's records show that the transferor has sufficient 
unexpended allowances to cover the transfer claim, the Administrator 
will issue a notice indicating that EPA does not object to the transfer 
and will reduce the transferor's balance of unexpended allowances by 
the amount to be transferred plus, in the case of transfers of 
production or consumption allowances, one percent of that amount. When 
EPA issues a no objection notice, the transferor and the transferee may 
proceed with the transfer. However, if EPA ultimately finds that the 
transferor did not have sufficient unexpended allowances to cover the 
claim, the transferor and transferee will be held liable for any 
violations of the regulations of this subpart that occur as a result 
of, or in conjunction with, the improper transfer.
    (B) If EPA's records show that the transferor has insufficient 
unexpended allowances to cover the transfer claim, or that the 
transferor has failed to respond to one or more Agency requests to 
supply information needed to make a determination, the Administrator 
will issue a notice disallowing the transfer. Within 10 working days 
after receipt of notification, either party may file a notice of 
appeal, with supporting reasons, with the Administrator. The 
Administrator may affirm or vacate the disallowance. If no appeal is 
taken by the tenth working day after notification, the disallowance 
shall be final on that day.
    (iii) In the event that the Administrator does not respond to a 
transfer claim within the three working days specified in paragraph 
(a)(1)(ii) of this section, the transferor and transferee may proceed 
with the transfer. EPA will reduce the transferor's balance of 
unexpended allowances by the amount to be transferred plus, in the case 
of transfers of production or consumption allowances, one percent of 
that amount. However, if EPA ultimately finds that the transferor did 
not have sufficient unexpended allowances to cover the claim, the 
transferor and transferee will be held liable for any violations of the 
regulations of this subpart that occur as a result of, or in 
conjunction with, the improper transfer.
    (2) Effective January 1, 1995, any person (``transferor'') may 
transfer to any other person (``transferee'') any amount of the 
transferor's Article 5 allowances. The transfer proceeds as follows:
    (i) The transferor must submit to the Administrator a transfer 
claim setting forth the following:
    (A) The identities and addresses of the transferor and the 
transferee;
    (B) The name and telephone numbers of contact persons for the 
transferor and the transferee;
    (C) The type of allowances being transferred, including the 
controlled substances for which allowances are to be transferred;
    (D) The group of controlled substances to which the allowances 
being transferred pertains;
    (E) The amount of Article 5 allowances being transferred;
    (F) The control period(s) for which the Article 5 allowances are 
being transferred; and
    (G) The amount of unexpended Article 5 allowances for the control 
period being transferred that the transferor holds under authority of 
this subpart as of the date the claim is submitted to EPA.
    (H) The amount of the one-percent offset applied to the unweighted 
amount traded that will be deducted from the transferor's balance.
    (ii) The Administrator will determine whether the records 
maintained by EPA, taking into account any previous transfers and any 
production of controlled substances reported by the transferor, 
indicate that the transferor possesses, as of the date the transfer 
claim is processed, unexpended Article 5 allowances sufficient to cover 
the transfer claim. Within three working days of receiving a complete 
transfer claim, the Administrator will take action to notify the 
transferor and transferee as follows:
    (A) If EPA's records show that the transferor has sufficient 
unexpended Article 5 allowances to cover the transfer claim the 
Administrator will issue a notice indicating that EPA does not object 
to the transfer and will reduce the transferor's balance of unexpended 
Article 5 allowances by the amount to be transferred. When EPA issues a 
no objection notice, the transferor and the transferee may proceed with 
the transfer. However, if EPA ultimately finds that the transferor did 
not have sufficient unexpended Article 5 allowances to cover the claim, 
the transferor and transferee will be held liable for any violations of 
the regulations of this subpart that occur as a result of, or in 
conjunction with, the improper transfer.
    (B) If EPA's records show that the transferor has insufficient 
unexpended Article 5 allowances to cover the transfer claim, or that 
the transferor has failed to respond to one or more Agency requests to 
supply information needed to make a determination, the Administrator 
will issue a notice disallowing the transfer. Within 10 working days 
after receipt of notification, either party may file a notice of 
appeal, with supporting reasons, with the Administrator. The 
Administrator may affirm or vacate the disallowance. If no appeal is 
taken by the tenth working day after notification, the disallowance 
shall be final on that day.
    (iii) In the event that the Administrator does not respond to a 
transfer claim within the three working days specified in paragraph 
(a)(2)(ii) of this section, the transferor and transferee may proceed 
with the transfer. EPA will reduce the transferor's balance of 
unexpended Article 5 allowances by the amount to be transferred. 
However, if EPA ultimately finds that the transferor did not have 
sufficient unexpended allowances to cover the claim, the transferor and 
transferee will be held liable for any violations of the regulations of 
this subpart that occur as a result of, or in conjunction with, the 
improper transfer.
    (3) Effective January 1, 1996, any person (``transferor'') may 
transfer to any other person (``transferee'') any amount of the 
transferor's destruction credits or transformation credits. The type of 
credit received by the transferee in a transfer are the same type of 
credits transferred by the transferor. The transfer proceeds as 
follows:
    (i) The transferor must submit to the Administrator a transfer 
claim setting forth the following:
    (A) The identities and addresses of the transferor and the 
transferee;
    (B) The name and telephone numbers of contact persons for the 
transferor and the transferee;
    (C) The type of credits being transferred, including the names of 
the controlled substances for which credits are to be transferred;
    (D) The group of controlled substances to which the credits being 
transferred pertains;
    (E) The amount of destruction credits or transformation credits 
being transferred;
    (F) The control period(s) for which the destruction credits or 
transformation credits are being transferred;
    (G) The amount of unexpended destruction credits or transformation 
credits for the control period being transferred that the transferor 
holds under authority of this subpart as of the date the claim is 
submitted to EPA; and
    (H) The amount of the one-percent offset applied to the unweighted 
amount traded that will be deducted from the transferor's balance.
    (ii) The Administrator will determine whether the records 
maintained by EPA, taking into account any previous transfers and any 
production of controlled substances reported by the transferor, 
indicate that the transferor possesses, as of the date the transfer 
claim is processed, unexpended destruction credits or transformation 
credits sufficient to cover the transfer claim (i.e., the amount to be 
transferred plus one percent of that amount). Within three working days 
of receiving a complete transfer claim, the Administrator will take 
action to notify the transferor and transferee as follows:
    (A) If EPA's records show that the transferor has sufficient 
unexpended destruction credits or transformation credits to cover the 
transfer claim the Administrator will issue a notice indicating that 
EPA does not object to the transfer and will reduce the transferor's 
balance of unexpended or credits by the amount to be transferred plus 
one percent of that amount. When EPA issues a no objection notice, the 
transferor and the transferee may proceed with the transfer. However, 
if EPA ultimately finds that the transferor did not have sufficient 
unexpended credits to cover the claim, the transferor and transferee 
will be held liable for any violations of the regulations of this 
subpart that occur as a result of, or in conjunction with, the improper 
transfer.
    (B) If EPA's records show that the transferor has insufficient 
unexpended destruction credits or transformation credits to cover the 
transfer claim, or that the transferor has failed to respond to one or 
more Agency requests to supply information needed to make a 
determination, the Administrator will issue a notice disallowing the 
transfer. Within 10 working days after receipt of notification, either 
party may file a notice of appeal, with supporting reasons, with the 
Administrator. The Administrator may affirm or vacate the disallowance. 
If no appeal is taken by the tenth working day after notification, the 
disallowance shall be final on that day.
    (iii) In the event that the Administrator does not respond to a 
transfer claim within the three working days specified in paragraph 
(a)(2)(ii) of this section, the transferor and transferee may proceed 
with the transfer. EPA will reduce the transferor's balance of 
unexpended destruction credits or transformation credits by the amount 
to be transferred plus one percent of that amount. However, if EPA 
ultimately finds that the transferor did not have sufficient unexpended 
credits to cover the claim, the transferor and transferee will be held 
liable for any violations of the regulations of this subpart that occur 
as a result of, or in conjunction with, the improper transfer.
    (b) Inter-pollutant conversions.
    (1) Until January 1, 1996, for all class I controlled substances, 
except Group VI, and until January 1, 2001 for Group VI, any person 
(``convertor'') may convert consumption allowances or production 
allowances for one class I controlled substance to the same type of 
allowance for another class I controlled substance within the group of 
controlled substances as the first as follows:
    (i) The convertor must submit to the Administrator a conversion 
claim setting forth the following:
    (A) The identity and address of the convertor;
    (B) The name and telephone number of a contact person for the 
convertor;
    (C) The type of allowances being converted, including the names of 
the controlled substances for which allowances are to be converted;
    (D) The group of controlled substances to which the allowances 
being converted pertains;
    (E) The amount and type of allowances to be converted;
    (F) The amount of allowances to be subtracted from the convertor's 
unexpended allowances for the first controlled substance, to be equal 
to 101 percent of the amount of allowances converted;
    (G) The amount of allowances or to be added to the convertor's 
unexpended allowances for the second controlled substance, to be equal 
to the amount of allowances for the first controlled substance being 
converted multiplied by the quotient of the ozone depletion factor of 
the first controlled substance divided by the ozone depletion factor of 
the second controlled substance, as listed in Appendix A to this 
subpart;
    (H) The control period(s) for which the allowances are being 
converted; and
    (I) The amount of unexpended allowances or authorizations of the 
type and for the control period being converted that the convertor 
holds under authority of this subpart as of the date the claim is 
submitted to EPA.
    (ii) The Administrator will determine whether the records 
maintained by EPA, taking into account any previous conversions, any 
transfers, and any production, imports (not including transshipments, 
or used controlled substances), or exports (not including 
transshipments, or used controlled substances) of controlled substances 
reported by the convertor, indicate that the convertor possesses, as of 
the date the conversion claim is processed, unexpended allowances 
sufficient to cover the conversion claim (i.e., the amount to be 
converted plus, in the case of conversions of production or consumption 
allowances, one percent of that amount). Within three working days of 
receiving a complete conversion claim, the Administrator will take 
action to notify the convertor as follows:
    (A) If EPA's records show that the convertor has sufficient 
unexpended allowances to cover the conversion claim the Administrator 
will issue a notice indicating that EPA does not object to the 
conversion and will reduce the convertor's balance of unexpended 
allowances by the amount to be converted plus, in the case of 
conversions of production or consumption allowances, one percent of 
that amount. When EPA issues a no objection notice, the convertor may 
proceed with the conversion. However, if EPA ultimately finds that the 
convertor did not have sufficient unexpended allowances to cover the 
claim, the convertor will be held liable for any violations of the 
regulations of this subpart that occur as a result of, or in 
conjunction with, the improper conversion.
    (B) If EPA's records show that the convertor has insufficient 
unexpended allowances to cover the conversion claim, or that the 
convertor has failed to respond to one or more Agency requests to 
supply information needed to make a determination, the Administrator 
will issue a notice disallowing the conversion. Within 10 working days 
after receipt of notification, the convertor may file a notice of 
appeal, with supporting reasons, with the Administrator. The 
Administrator may affirm or vacate the disallowance. If no appeal is 
taken by the tenth working day after notification, the disallowance 
shall be final on that day.
    (iii) In the event that the Administrator does not respond to a 
conversion claim within the three working days specified in paragraph 
(b)(2) of this section, the convertor may proceed with the conversion. 
EPA will reduce the convertor's balance of unexpended allowances by the 
amount to be converted plus, in the case of conversions of production 
or consumption allowances, one percent of that amount. However, if EPA 
ultimately finds that the convertor did not have sufficient unexpended 
allowances to cover the claims, the convertor will be held liable for 
any violations of the regulations of this subpart that occur as a 
result of, or in conjunction with, the improper conversion.
    (2) Effective January 1, 1995, any person (``convertor'') may 
convert Article 5 allowances for one class I controlled substance to 
the same type of allowance for another class I controlled substance 
within the same Group of controlled substances as the first, as 
follows:
    (i) The convertor must submit to the Administrator a conversion 
claim setting forth the following:
    (A) The identity and address of the convertor;
    (B) The name and telephone number of a contact person for the 
convertor;
    (C) The type of Article 5 allowances being converted, including the 
names of the controlled substances for which allowances are to be 
converted;
    (D) The group of controlled substances to which the Article 5 
allowances being converted pertains;
    (E) The amount and type of allowances to be converted;
    (F) The amount of allowances to be subtracted from the convertor's 
unexpended allowances for the first controlled substance, to be equal 
to 101 percent of the amount of allowances converted.
    (G) The amount of Article 5 allowances to be added to the 
convertor's unexpended allowances for the second controlled substance, 
to be equal to the amount of allowances for the first controlled 
substance being converted multiplied by the quotient of the ozone 
depletion factor of the first controlled substance divided by the ozone 
depletion factor of the second controlled substance, as listed in 
Appendix A to this subpart.
    (H) The control period(s) for which the Article 5 allowances are 
being converted; and
    (I) The amount of unexpended Article 5 allowances for the control 
period being converted that the convertor holds under authority of this 
subpart as of the date the claim is submitted to EPA.
    (ii) The Administrator will determine whether the records 
maintained by EPA, taking into account any previous conversions, any 
transfers, and any production, or exports of controlled substances 
reported by the convertor, indicate that the convertor possesses, as of 
the date the conversion claim is processed, unexpended Article 5 
allowances sufficient to cover the conversion claim. Within three 
working days of receiving a complete conversion claim, the 
Administrator will take action to notify the convertor as follows:
    (A) If EPA's records show that the convertor has sufficient 
unexpended Article 5 allowances to cover the conversion claim the 
Administrator will issue a notice indicating that EPA does not object 
to the conversion and will reduce the convertor's balance of unexpended 
allowances by the amount to be converted. When EPA issues a no 
objection notice, the convertor may proceed with the conversion. 
However, if EPA ultimately finds that the convertor did not have 
sufficient unexpended Article 5 allowances to cover the claim, the 
convertor will be held liable for any violations of the regulations of 
this subpart that occur as a result of, or in conjunction with, the 
improper conversion.
    (B) If EPA's records show that the convertor has insufficient 
unexpended Article 5 allowances to cover the conversion claim, or that 
the convertor has failed to respond to one or more Agency requests to 
supply information needed to make a determination, the Administrator 
will issue a notice disallowing the conversion. Within 10 working days 
after receipt of notification, the convertor may file a notice of 
appeal, with supporting reasons, with the Administrator. The 
Administrator may affirm or vacate the disallowance. If no appeal is 
taken by the tenth working day after notification, the disallowance 
shall be final on that day.
    (iii) In the event that the Administrator does not respond to a 
conversion claim within the three working days specified in paragraph 
(b)(2)(ii) of this section, the convertor may proceed with the 
conversion. EPA will reduce the convertor's balance of unexpended 
allowances by the amount to be converted. However, if EPA ultimately 
finds that the convertor did not have sufficient unexpended allowances 
to cover the claims, the convertor will be held liable for any 
violations of the regulations of this subpart that occur as a result 
of, or in conjunction with, the improper conversion.
    (3) Effective January 1, 1996, any person (``convertor'') may 
convert destruction and/or transformation credits for one class I 
controlled substance to the same type of credits for another class I 
controlled substance within the same group of controlled substances as 
the first as follows:
    (i) The convertor must submit to the Administrator a conversion 
claim setting forth the following:
    (A) The identity and address of the convertor;
    (B) The name and telephone number of a contact person for the 
convertor;
    (C) The type of destruction and/or transformation credits being 
converted, including the names of the controlled substances for which 
credits are to be converted;
    (D) The group of controlled substances to which the destruction 
and/or transformation credits being converted pertains;
    (E) The amount and type of credits to be converted;
    (F) The amount of credits to be subtracted from the convertor's 
unexpended credits for the first controlled substance, to be equal to 
101 percent of the amount of credits converted;
    (G) The amount of destruction and/or transformation credits to be 
added to the convertor's unexpended credits for the second controlled 
substance, to be equal to the amount of credits for the first 
controlled substance being converted multiplied by the quotient of the 
ozone depletion factor of the first controlled substance divided by the 
ozone depletion factor of the second controlled substance, as listed in 
Appendix A to this subpart.
    (H) The control period(s) for which the destruction and/or 
transformation credits are being converted; and
    (I) The amount of unexpended destruction and/or transformation 
credits for the control period being converted that the convertor holds 
under authority of this subpart as of the date the claim is submitted 
to EPA.
    (ii) The Administrator will determine whether the records 
maintained by EPA, taking into account any previous conversions, any 
transfers, and any production, imports (not including transhipments, or 
used controlled substances), or exports (not including transhipments, 
exports for destruction or transformation, or used controlled 
substances) of controlled substances reported by the convertor, 
indicate that the convertor possesses, as of the date the conversion 
claim is processed, unexpended destruction and/or transformation 
credits sufficient to cover the conversion claim (i.e., the amount to 
be converted plus one percent of that amount). Within three working 
days of receiving a complete conversion claim, the Administrator will 
take action to notify the convertor as follows:
    (A) If EPA's records show that the convertor has sufficient 
unexpended destruction and/or transformation credits to cover the 
conversion claim the Administrator will issue a notice indicating that 
EPA does not object to the conversion and will reduce the convertor's 
balance of unexpended credits by the amount to be converted plus one 
percent of that amount. When EPA issues a no objection notice, the 
convertor may proceed with the conversion. However, if EPA ultimately 
finds that the convertor did not have sufficient unexpended destruction 
and/or transformation credits to cover the claim, the convertor will be 
held liable for any violations of the regulations of this subpart that 
occur as a result of, or in conjunction with, the improper conversion.
    (B) If EPA's records show that the convertor has insufficient 
unexpended destruction and/or transformation credits to cover the 
conversion claim, or that the convertor has failed to respond to one or 
more Agency requests to supply information needed to make a 
determination, the Administrator will issue a notice disallowing the 
conversion. Within 10 working days after receipt of notification, the 
convertor may file a notice of appeal, with supporting reasons, with 
the Administrator. The Administrator may affirm or vacate the 
disallowance. If no appeal is taken by the tenth working day after 
notification, the disallowance shall be final on that day.
    (iii) In the event that the Administrator does not respond to a 
conversion claim within the three working days specified in paragraph 
(b)(2) of this section, the convertor may proceed with the conversion. 
EPA will reduce the convertor's balance of unexpended destruction and/
or transformation credits by the amount to be converted plus one 
percent of that amount. However, if EPA ultimately finds that the 
convertor did not have sufficient unexpended destruction and/or 
transformation credits to cover the claims, the convertor will be held 
liable for any violations of the regulations of this subpart that occur 
as a result of, or in conjunction with, the improper conversion.
    (3) Effective January 1, 1995, and for every control period 
thereafter, inter-pollutant trades will be permitted during the 45 days 
after the end of a control period.
    (c) Inter-company transfers and Inter-pollutant conversions.
    (1) Until January 1, 1996, if a person requests an inter-company 
transfer and an inter-pollutant conversion simultaneously, the amount 
subtracted from the convertor-transferor's unexpended allowances for 
the first controlled substance will be equal to 101 percent of the 
amount of allowances converted and transferred in the case of transfer-
conversions of production or consumption allowances.
    (2) Effective January 1, 1995, if a person requests an inter-
company transfer and an inter-pollutant conversion simultaneously, the 
amount subtracted from the convertor-transferor's unexpended Article 5 
allowances for the first controlled substance will be equal to 101 
percent of the amount of Article 5 allowances converted and transferred 
in the case of transfer-conversions of Article 5 allowances.
    (3) Effective January 1, 1996, if a person requests an inter-
company transfer and an inter-pollutant conversion simultaneously, the 
amount subtracted from the convertor-transferor's unexpended 
destruction and/or transformation credits for the first controlled 
substance will be equal to 101 percent of the amount of destruction 
and/or transformation credits converted and transferred in the case of 
transfer-conversions of destruction and/or transformation credits 
allowances.


Sec. 82.13  Record-keeping and reporting requirements.

    (a) Unless otherwise specified, the recordkeeping and reporting 
requirements set forth in this section take effect on January 1, 1995.
    (b) Reports and records required by this section may be used for 
purposes of compliance determinations. These requirements are not 
intended as a limitation on the use of other evidence admissible under 
the Federal Rules of Evidence.
    (c) Unless otherwise specified, reports required by this section 
must be mailed to the Administrator within 45 days of the end of the 
applicable reporting period.
    (d) Records and copies of reports required by this section must be 
retained for three years.
    (e) In reports required by this section, quantities of controlled 
substances must be stated in terms of kilograms.
    (f) Every person (``producer'') who produces class I controlled 
substances during a control period must comply with the following 
recordkeeping and reporting requirements:
    (1) Within 120 days of November 10, 1994, or within 120 days of the 
date that a producer first produces a class I controlled substance, 
whichever is later, every producer who has not already done so must 
submit to the Administrator a report describing:
    (i) The method by which the producer in practice measures daily 
quantities of controlled substances produced;
    (ii) Conversion factors by which the daily records as currently 
maintained can be converted into kilograms of controlled substances 
produced, including any constants or assumptions used in making those 
calculations (e.g., tank specifications, ambient temperature or 
pressure, density of the controlled substance);
    (iii) Internal accounting procedures for determining plant-wide 
production;
    (iv) The quantity of any fugitive losses accounted for in the 
production figures; and
    (v) The estimated percent efficiency of the production process for 
the controlled substance.
    Within 60 days of any change in the measurement procedures or the 
information specified in the above report, the producer must submit a 
report specifying the revised data or procedures to the Administrator.
    (2) Every producer of a class I controlled substance during a 
control period must maintain the following records:
    (i) Dated records of the quantity of each controlled substance 
produced at each facility;
    (ii) Dated records of the quantity of controlled substances 
produced for use in processes that result in their transformation or 
for use in processes that result in their destruction and quantity sold 
for use in processes that result in their transformation or for use in 
processes that result in their destruction;
    (iii) Dated records of the quantity of controlled substances 
produced for an essential-use;
    (iv) Dated records of the quantity of controlled substances 
produced with expended destruction and/or transformation credits;
    (v) Copies of invoices or receipts documenting sale of controlled 
substance for use in processes resulting in their transformation or for 
use in processes resulting in destruction;
    (vi) Dated records of the quantity of each controlled substance 
used at each facility as feedstocks or destroyed in the manufacture of 
a controlled substance or in the manufacture of any other substance, 
and any controlled substance introduced into the production process of 
the same controlled substance at each facility;
    (vii) Dated records identifying the quantity of each chemical not a 
controlled substance produced within each facility also producing one 
or more controlled substances;
    (viii) Dated records of the quantity of raw materials and feedstock 
chemicals used at each facility for the production of controlled 
substances;
    (ix) Dated records of the shipments of each controlled substance 
produced at each plant;
    (x) The quantity of controlled substances, the date received, and 
names and addresses of the source of recyclable or recoverable 
materials containing controlled substances which are recovered at each 
plant;
    (xi) Records of the date, the controlled substance, and the 
estimated quantity of any spill or release of a controlled substance 
that equals or exceeds 100 pounds;
    (xii) For transformation or destruction in the United States, 
copies of IRS certification that the controlled substance will be 
transformed or of the verification that it will be destroyed; for 
transformation or destruction outside the United States, a copy of all 
sales contracts certifying that the controlled substance that was 
exported, by the producer or another U.S. company, to a Party to the 
Protocol, will be transformed or destroyed in cases when production and 
consumption allowances were not expended;
    (xiii) Written verifications that essential-use allowances were 
conveyed to the producer for the production of specified quantities of 
a specific controlled substance that will only be used for the named 
essential-use; and
    (xiv) Written verifications from a U.S. purchaser that the 
controlled substance was exported to an Article 5 country in cases when 
Article 5 allowances were expended during production.
    (3) For each quarter, each producer of a class I controlled 
substance must provide the Administrator with a report containing the 
following information:
    (i) The production by company in that quarter of each controlled 
substance, specifying the quantity of any controlled substance used in 
processing, resulting in its transformation by the producer;
    (ii) The amount of production for use in processes resulting in 
destruction of controlled substances by the producer;
    (iii) The levels of production (expended allowances) for each 
controlled substance;
    (iv) The producer's total of expended and unexpended production 
allowances, consumption allowances, Article 5 allowances, essential-use 
allowances and destruction and/or transformation credits at of the end 
of that quarter;
    (v) The quantity of recyclable and recoverable materials received 
containing the controlled substances which are recovered;
    (vi) The amount of controlled substance sold or transferred during 
the quarter to a person other than the producer for use in processes 
resulting in its transformation or eventual destruction;
    (vii) Internal Revenue Service Certificates in the case of 
transformation, or the purchaser's destruction verification in the case 
of destruction, showing that the purchaser or recipient of a controlled 
substance intends to either transform or destroy the controlled 
substance;
    (viii) A list of the essential-use allowance holder and/or 
laboratory from whom orders were placed and the quantity of specific 
essential-use controlled substances requested and produced;
    (ix) A list of U.S. purchasers of controlled substances that 
exported to an Article 5 country in cases when Article 5 allowances 
were expended during production; and
    (x) A list of the quantities and names of controlled substances 
exported, by the producer and or by other U.S. companies, to a Party to 
the Protocol that will be transformed or destroyed and therefore were 
not produced expending production or consumption allowances.
    (4) For any person who fails to maintain the records required by 
this paragraph, or to submit the report required by this paragraph, the 
Administrator may assume that the person has produced at full capacity 
during the period for which records were not kept, for purposes of 
determining whether the person has violated the prohibitions at 
Sec. 82.4 of this subpart.
    (g) Importers of class I controlled substances during a control 
period must comply with record-keeping and reporting requirements 
specified in this subsection.
    (1) Recordkeeping--Importers. Any importer of a class I controlled 
substance (including used, recycled and reclaimed controlled 
substances) must maintain the following records:
    (i) The quantity of each controlled substance imported, either 
alone or in mixtures, including the percentage of each mixture which 
consists of a controlled substance;
    (ii) The quantity of those controlled substances imported that are 
used, recycled or reclaimed;
    (iii) The quantity of controlled substances other than 
transhipments or used, recycled or reclaimed substances imported for 
use in processes resulting in their transformation or destruction and 
quantity sold for use in processes that result in their destruction or 
transformation;
    (iv) The date on which the controlled substances were imported;
    (v) The port of entry through which the controlled substances 
passed;
    (vi) The country from which the imported controlled substances were 
imported;
    (vii) The commodity code for the controlled substances shipped;
    (viii) The importer number for the shipment;
    (ix) A copy of the bill of lading for the import;
    (x) The invoice for the import;
    (xi) The quantity of imports of used class I controlled substances 
and class II controlled substances;
    (xii) The U.S. Customs entry form;
    (xiii) Dated records documenting the sale or transfer of controlled 
substances for use in process resulting in transformation or 
destruction;
    (xiv) Copies of IRS certifications that the controlled substance 
will be transformed or destruction verifications that it will be 
destroyed;
    (xv) Dated records of the quantity of controlled substances 
produced for an essential-use; and
    (xvi) Copies of documents conveying the right to import controlled 
substances for essential uses.
    (2) Reporting Requirements-Importers. For each quarter, every 
importer of a class I controlled substance (including importers of used 
controlled substances) must submit to the Administrator a report 
containing the following information:
    (i) Summaries of the records required in paragraph (g)(1)(i) 
through (xvi) of this section for the previous quarter;
    (ii) The total quantity imported in kilograms of each controlled 
substance for that quarter;
    (iii) The quantity of those controlled substances imported that are 
used, recycled or reclaimed;
    (iv) The levels of import (expended consumption allowances) of 
controlled substances for that quarter and totaled by chemical for the 
control-period-to-date;
    (vii) The importer's total sum of expended and unexpended 
consumption allowances by chemical as of the end of that quarter;
    (viii) The amount of controlled substances imported for use in 
processes resulting in their transformation or destruction;
    (ix) The amount of controlled substances sold or transferred during 
the quarter to each person for use in processes resulting in their 
transformation or eventual destruction;
    (x) The amount of controlled substances sold or transferred during 
the quarter to each person for an essential use;
    (xi) Internal Revenue Service Certificates showing that the 
purchaser or recipient of imported controlled substances intends to 
transform those substances or destruction verifications showing that 
purchaser or recipient intends to destroy the controlled substances; 
and
    (xii) A list of the essential-use allowance holder and/or 
laboratory from whom orders were placed and the quantity of specific 
essential-use controlled substances requested and imported.
    (h) Reporting Requirements-Exporters. For any exports of class I 
controlled substances not reported under Sec. 82.10 of this subpart 
(additional consumption allowances), or under Sec. 82.13(f)(3) 
(reporting for producers of controlled substances), the exporter who 
exported a class I controlled substances must submit to the 
Administrator the following information within 45 days after the end of 
the control period in which the unreported exports left the United 
States:
    (1) The names and addresses of the exporter and the recipient of 
the exports;
    (2) The exporter's Employee Identification Number;
    (3) The type and quantity of each controlled substance exported and 
what percentage, if any, of the controlled substance are recycled or 
used;
    (4) The date on which and the port from which the controlled 
substances were exported from the United States or its territories;
    (5) The country to which the controlled substances were exported; 
and
    (6) The commodity code of the controlled substance shipped.
    (7) The sales contract certifying that the controlled substance 
that was exported to a Party to the Protocol will be transformed or 
destroyed.
    (i) Every person who has requested additional production allowances 
or destruction and/or transformation credits under Sec. 82.9 (e), (f) 
and (g) of this subpart or consumption allowances under Sec. 82.10(b) 
of this subpart or who transforms or destroys class I controlled 
substances not produced by that person must maintain the following:
    (1) Dated records of the quantity and level of each controlled 
substance transformed or destroyed;
    (2) Copies of the invoices or receipts documenting the sale or 
transfer of the controlled substance to the person;
    (3) In the case where those controlled substances are transformed, 
dated records of the names, commercial use, and quantities of the 
resulting chemical(s);
    (4) In the case where those controlled substances are transformed, 
dated records of shipments to purchasers of the resulting chemical(s);
    (5) Dated records of all shipments of controlled substances 
received by the person, and the identity of the producer or importer of 
the controlled substances;
    (6) Dated records of inventories of controlled substances at each 
plant on the first day of each quarter; and
    (7) A copy of the person's IRS certification of intent to transform 
or the purchaser's or recipient's destruction verification of intent to 
destroy, in the case where substances were purchased or transferred for 
transformation or destruction purposes.
    (j) Persons who destroy class I controlled substances shall, 
following promulgation of this rule, provide EPA with a one-time report 
stating the destruction unit's destruction efficiency and the methods 
used to record the volume destroyed and those used to determine 
destruction efficiency and the name of other relevant federal or state 
regulations that may apply to the destruction process. Any changes to 
the unit's destruction efficiency or methods used to record volume 
destroyed and to determine destruction efficiency must be reflected in 
a revision to this report to be submitted to EPA within 60 days of the 
change.
    (k) Persons who purchase or receive and subsequently destroy 
controlled class I substances that were originally produced without 
expending allowances shall provide the producer or importer from whom 
they purchase or receive controlled substances to be destroyed with a 
verification that controlled substances will be used in processes that 
result in their destruction.
    (1) The verification shall include the following:
    (i) Identity and address of the person intending to destroy 
controlled substances;
    (ii) Indication of whether those controlled substances will be 
completely destroyed, as defined in Sec. 82.3 of this rule, or less 
than completely destroyed, in which case the destruction efficiency at 
which such substances will be destroyed must be included;
    (iii) Period of time over which the person intends to destroy 
controlled substances; and
    (iv) Signature of the verifying person.
    (2) If, at any time, any aspects of this verification change, the 
person must submit a revised verification reflecting such changes to 
the producer from whom that person purchases controlled substances 
intended for destruction.
    (l) Persons who purchase class I controlled substances and who 
subsequently transform such controlled substances shall provide the 
producer or importer with the IRS certification that the controlled 
substances are to be used in processes resulting in their 
transformation.
    (m) Any person who transforms or destroys class I controlled 
substances who has submitted an IRS certificate of intent to transform 
or a destruction verification to the producer of the controlled 
substance, or who has requested destruction and/or transformation 
credits from the Administrator must report the names and quantities of 
class I controlled substances transformed and destroyed for each 
control period within 45 days of the end of such control period.
    (n) Every person who produces, imports, or exports class II 
chemicals must report its quarterly level of production, imports, and 
exports of these chemicals within 45 days of the end of each quarter 
(except those substances transformed or destroyed).
    (o) Persons who import used, recycled or reclaimed controlled 
substances must label their bill of lading or invoice indicating that 
the controlled substance is used, recycled or reclaimed.
    (1) Every person who imports used or recycled controlled substances 
must present a letter to United States Customs for entry clearance, 
that contains the following:
    (i) the previous use of each controlled substance in each shipment, 
and
    (ii) the intended reclamation destination of each controlled 
substance in a shipment.
    (2) Every person who imports reclaimed controlled substances must 
present a letter to United States Customs for entry clearance, that 
contains the following:
    (i) the previous use(s) of each controlled substance in a shipment, 
and
    (ii) the reclamation facility (or name of equipment used) in the 
foreign country where the controlled substance was reclaimed.
    (p) Persons who export used, recycled or reclaimed controlled 
substances must label their bill of lading or invoice indicating that 
the controlled substance is used, recycled or reclaimed.
    (q) Persons who import heels of controlled substances must label 
their bill of lading or invoice indicating that the controlled 
substance in the container is a heel.
    (r) Every person who brings back a container with a heel to the 
United States must report the annual quantity brought back into the 
United States within 45 days of the end of the control period.
    (s) Every person who imports or exports used, recycled or reclaimed 
group II, class I controlled substances, or class II controlled 
substances must report its annual level within 45 days of the end of 
the control period.
    (t) Every person who transships a controlled substance must 
maintain records that indicate that the controlled substance shipment 
originated in one country destined for another country, and does not 
enter interstate commerce with the United States.
    (u) Any person who submits an order to a producer or importer for a 
controlled substance for an essential use must report the annual 
quantity received from each producer or importer within 45 days of the 
end of the control period. Those persons receiving controlled 
substances under the exemption for laboratories must provide a detailed 
description of the analytical procedures for which the specific 
controlled substance is essential and reference the published 
instructions, standards or specifications. The person reporting should 
submit the following:
    (1) The identity and address of the person;
    (2) The name, quantity, and level of controlled substance 
transformed or the name, quantity and volume destroyed;
    (3) A copy of the invoice or receipt documenting the sale of the 
controlled substance to the person;
    (4) A certification that production allowances were expended for 
the production of the controlled substance;
    (5) If the controlled substance is transformed, the name, quantity, 
and verification of the commercial use of the resulting chemical 
transformed; and
    (6) If the controlled substance is destroyed, the efficiency of the 
destruction process.

Appendix A to Subpart A--Class I Controlled Substances

------------------------------------------------------------------------
                                                                Ozone   
                                                              depletion 
               Class 1 controlled substances                  potential 
                                                                (ODP)   
------------------------------------------------------------------------
A. Group I:                                                             
    CFCl3-Trichlorofluoromethane (CFC-11)..................          1.0
    CF2Cl2-Dichlorofifluoromethane (CFC-12)................          1.0
    C2F3Cl3-Trichlorotrifluoroethane (CFC-113).............          0.8
    C2F4Cl2-Dichlorotetrafluoroethane (CFC-114)............          1.0
    C2F5Cl-Monochloropentafluoroethane (CFC-115)...........          0.6
    All isomers of the above chemicals.                                 
B. Group II:                                                            
    CF2ClBr-Bromochlorodifluoromethane (Halon-1211)........          3.0
    CF3Br-Bromotrifluoromethane (Halon-1301)...............         10.0
    C2F4Br2-Dibromotetrafluoroethane (Halon-2402)..........          6.0
    All isomers of the above chemicals.                                 
C. Group III:                                                           
    CF3Cl-Chlorotrifluoromethane (CFC-13)..................          1.0
    C2FCl5-(CFC-111).......................................          1.0
    C2F2Cl4-(CFC-112)......................................          1.0
    C3FCl7-(CFC-211).......................................          1.0
    C3F2Cl6-(CFC-212)......................................          1.0
    C3F3Cl5-(CFC-213)......................................          1.0
    C3F4Cl4-(CFC-214)......................................          1.0
    C3F5Cl3-(CFC-215)......................................          1.0
    C3F6Cl2-(CFC-216)......................................          1.0
    C3F7Cl-(CFC-217).......................................          1.0
    All isomers of the above chemicals.                                 
D. Group IV:                                                            
    CCl4-Carbon Tetrachloride..............................          1.1
E. Group V:                                                             
    C2H3Cl3-1,1,1 Trichloroethane (Methyl chloroform)......          0.1
    All isomers of the above chemical except 1,1,2-                     
     trichloroethane.                                                   
F. Group VI:                                                            
    CH3Br--Bromomethane (Methyl Bromide)...................          0.7
G. Group VII:                                                           
    CHFBR2.................................................         1.00
    CHF2Br (HBFC-2201).....................................         0.74
    CH2FBr.................................................         0.73
    C2HFBr4................................................      0.3-0.8
    C2HF2Br3...............................................      0.5-1.8
    C2HF3Br2...............................................      0.4-1.6
    C2HF4Br................................................      0.7-1.2
    C2H2FBr3...............................................      0.1-1.1
    C2H2F2Br2..............................................      0.2-1.5
    C2H2F3Br...............................................      0.7-1.6
    C2H2FBr2...............................................      0.1-1.7
    C2H3F2Br...............................................      0.2-1.1
    C2H4FBr................................................     0.07-0.1
    C3HFBr6................................................      0.3-1.5
    C3HF2Br5...............................................      0.2-1.9
    C3HF3Br4...............................................      0.3-1.8
    C3HF4Br3...............................................      0.5-2.2
    C3HF5Br2...............................................      0.9-2.0
    C3HF6Br................................................      0.7-3.3
    C3H2FBr5...............................................      0.1-1.9
    C3H2F2Br4..............................................      0.2-2.1
    C3H2F3Br3..............................................      0.2-5.6
    C3H2F4Br2..............................................      0.3-7.5
    C3H2F5Br...............................................       0.9-14
    C3H3FBr4...............................................     0.08-1.9
    C3H3F2Br3..............................................      0.1-3.1
    C3H3F3Br2..............................................      0.1-2.5
    C3H3F4Br...............................................      0.3-4.4
    C3H4FBr3...............................................     0.03-0.3
    C3H4F2Br2..............................................      0.1-1.0
    C3H4F3Br...............................................     0.07-0.8
    C3H5FBr2...............................................     0.04-0.4
    C3H5F2Br...............................................     0.07-0.8
    C3H6FB.................................................     0.02-0.7
------------------------------------------------------------------------


        Appendix B to Subpart A.--Class II Controlled Substances        
------------------------------------------------------------------------
                   Controlled substance                         ODP     
------------------------------------------------------------------------
CHFC12-Dichlorofluoromethane (HCFC-21)...................  [reserved]   
CHF2C1-Chlorodifluoromethane (HCFC-22)...................  0.05         
CH2FC1-Chlorofluoromethane (HCFC-31).....................  [reserved]   
C2HFC14-(HCFC-121).......................................  [reserved]   
C2HF2C13-(HCFC-122)......................................  [reserved]   
C2HF3C12-(HCFC-123)......................................  0.02         
C2HF4C1-(HCFC-124).......................................  0.02         
C2H2FC13-(HCFC-131)......................................  [reserved]   
C2H2F2C12-(HCFC-132b)....................................  [reserved]   
C2H2F3C1-(HCFC-133a).....................................  [reserved]   
C2H3FC12-(HCFC-141b).....................................  0.12         
C2H3F2C1-(HCFC-142b).....................................  0.06         
C3HCFC16-(HCFC-221)......................................  [reserved]   
C3HF2C15-(HCFC-222)......................................  [reserved]   
C3HF3c14-(HCFC-223)......................................  [reserved]   
C3HF4C13-(HCFC-224)......................................  [reserved]   
C3HF5C12-(HCFC-225ca)....................................  [reserved]   
C3HF5C1-(HCFC-225cb).....................................  [reserved]   
C3HF6C1-(HCFC-226).......................................  [reserved]   
C3H2FC15-(HCFC-231)......................................  [reserved]   
C3H2F2C14-(HCFC-232).....................................  [reserved]   
C3H2F3C13-(HCFC-233).....................................  [reserved]   
C3H2F4C12-(HCFC-234).....................................  [reserved]   
C3H2F5C1-(HCFC-235)......................................  [reserved]   
C3H3FC14-(HCFC-241)......................................  [reserved]   
C3H3F2C13-(HCFC-242).....................................  [reserved]   
C3H3F3C12-(HCFC-243).....................................  [reserved]   
C3H3F4C1-(HCFC-244)......................................  [reserved]   
C3H4FC13-(HCFC-251)......................................  [reserved]   
C3H4F2C12-(HCFC-252).....................................  [reserved]   
C3H4F3C1-(HCFC-253)......................................  [reserved]   
C3H5FC12-(HCFC-261)......................................  [reserved]   
C3H5F2C1-(HCFC-262)......................................  [reserved]   
C3H6FC1-(HCFC-271).......................................  [reserved]   
All isomers of the above chemicals.                                     
------------------------------------------------------------------------


 Appendix C to Subpart A.--Parties to the Montreal Protocol and Nations Complying With, But Not Parties to, the 
                                                    Protocol                                                    
                                   [Annex 1--Parties to the Montreal Protocol]                                  
----------------------------------------------------------------------------------------------------------------
                                                                          Montreal       London      Copenhagen 
                             Foreign State                                Protocol     Amendments    Amendments 
----------------------------------------------------------------------------------------------------------------
Algeria...............................................................            ............
Antigua and Barbuda...................................................               
Argentina.............................................................            ............
Australia.............................................................            ............
Austria...............................................................            ............
Bahamas...............................................................               
Bahrain...............................................................            ............
Bangladesh............................................................       ............  ............
Barbados..............................................................       ............  ............
Belarus...............................................................       ............  ............
Belgium...............................................................            ............
Benin.................................................................       ............  ............
Bosnia and Herzegovina................................................       ............  ............
Botswana..............................................................       ............  ............
Brazil................................................................            ............
Burnei................................................................       ............  ............
Bulgaria..............................................................       ............  ............
Burkina Faso..........................................................       ............  ............
Cameroon..............................................................            ............
Canada................................................................            ............
Central African Republic..............................................       ............  ............
Chile.................................................................            ............
China.................................................................            ............
Colombia..............................................................       ............  ............
Congo.................................................................       ............  ............
Costa Rica............................................................       ............  ............
Cote Ivoire...........................................................       ............  ............
Croatia...............................................................            ............
Cuba..................................................................       ............  ............
Cyprus................................................................       ............  ............
Czech Republic........................................................       ............  ............
Denmark...............................................................               
Dominica..............................................................            ............
Ecuador...............................................................               
Egypt.................................................................            ............
El Salvador...........................................................       ............  ............
European E.C..........................................................            ............
Fiji..................................................................       ............  ............
Finland...............................................................               
France................................................................            ............
Gabon.................................................................       ............  ............
Gambia................................................................       ............  ............
Germany...............................................................               
Ghana.................................................................            ............
Greece................................................................            ............
Grenada...............................................................            ............
Guatemala.............................................................       ............  ............
Guinea................................................................            ............
Guyana................................................................            ............
Honduras..............................................................       ............  ............
Hungary...............................................................            ............
Iceland...............................................................            ............
India.................................................................            ............
Indonesia.............................................................            ............
Iran..................................................................       ............  ............
Ireland...............................................................            ............
Israel................................................................            ............
Italy.................................................................            ............
Jamaica...............................................................            ............
Japan.................................................................            ............
Jordan................................................................            ............
Kenya.................................................................       ............  ............
Kiribati..............................................................       ............  ............
Korea, Republic of....................................................            ............
Kuwait................................................................       ............  ............
Lebanon...............................................................            ............
Libya.................................................................       ............  ............
Liechtenstein.........................................................       ............  ............
Luxembourg............................................................            ............
Malawi................................................................               
Malaysia..............................................................               
Maldives..............................................................            ............
Malta.................................................................            ............
Marshall Islands......................................................               
Mauritius.............................................................               
Mexico................................................................            ............
Monaco................................................................            ............
Morocco...............................................................       ............  ............
Myranmar..............................................................            ............
Namibia...............................................................       ............  ............
Netherlands...........................................................            ............
New Zealand...........................................................               
Nicaragua.............................................................       ............  ............
Niger.................................................................       ............  ............
Nigeria...............................................................       ............  ............
Norway................................................................               
Pakistan..............................................................            ............
Panama................................................................            ............
Papua New Guinea......................................................            ............
Paraguay..............................................................            ............
Peru..................................................................            ............
Philippines...........................................................            ............
Poland................................................................       ............  ............
Portugal..............................................................            ............
Romania...............................................................            ............
Russian Federation....................................................            ............
Saint Kitts and Nevis.................................................       ............  ............
Saint Lucia...........................................................       ............  ............
Samoa.................................................................       ............  ............
Saudi Arabia..........................................................               
Senegal...............................................................            ............
Seychelles............................................................               
Singapore.............................................................            ............
Slovenia..............................................................            ............
Solomon Islands.......................................................            ............
South Africa..........................................................            ............
Spain.................................................................            ............
Sri Lanka.............................................................            ............
Sudan.................................................................       ............  ............
Swaziland.............................................................       ............  ............
Sweden................................................................               
Switzerland...........................................................                        
Syrian Arab Republic..................................................       ............  ............
Tanzania, United Republic of..........................................            ............
Thailand..............................................................            ............
Togo..................................................................       ............  ............
Trinidad and Tobago...................................................       ............  ............
Tunisia...............................................................            ............
Turkey................................................................       ............  ............
Turkministan..........................................................       ............  ............
Tuvalu................................................................       ............  ............
Uganda................................................................            ............
Ukranian SSR..........................................................       ............  ............
United Arab Emirates..................................................       ............  ............
United Kingdom........................................................            ............
United States.........................................................               
Uruguay...............................................................            ............
Uzbekistan............................................................       ............  ............
Venezuela.............................................................            ............
Viet Nam..............................................................               
Yugoslavia............................................................       ............  ............
Zambia................................................................       ............  ............
Zimbabwe..............................................................       ............  ............
----------------------------------------------------------------------------------------------------------------

Annex 2--Nations Complying With, but not Parties to, the Protocol  
[Reserved]

Appendix D to Subpart A--Harmonized Tariff Schedule Description of 
Products That May Contain Controlled Substances in Appendix A to 
Subpart A, Class I Groups I and II

    This Appendix is based on information provided by the Ozone 
Secretariat of the United Nations Ozone Environment Programme.\1\ The 
Appendix lists available U.S. harmonized tariff schedule codes 
identifying headings and subheadings for Annex D products that may 
contain controlled substances. The Harmonized Tariff Schedule of the 
United States uses an enumeration system to identify products imported 
and exported to and from the U.S. This system relies on a four digit 
heading, a four digit subheading and additional two digit statistical 
suffix to characterize products. The United States uses the suffix for 
its own statistical records and analyses. This Appendix lists only 
headings and subheadings.
---------------------------------------------------------------------------

    \1\``A Note Regarding the Harmonized System Code Numbers for the 
Products Listed in Annex D.'' Adopted by Decision IV/15 paragraph 3, 
of the Fourth Meeting of the Parties in Copenhagen, 23-25 November, 
1992.
---------------------------------------------------------------------------

    While some can be readily associated with harmonized system codes, 
many products cannot be tied to HS classifications unless their exact 
composition and the presentation are known. It should be noted that the 
specified HS classifications represent the most likely headings and 
subheadings which may contain substances controlled by the Montreal 
Protocol. The codes given should only be used as a starting point; 
further verification is needed to ascertain whether or not the products 
actually contain controlled substances.

Category 1. Automobile and Truck Air Conditioning Units (Whether 
Incorporated in Vehicles or Not)

    There are no separate code numbers for air conditioning units 
specially used in automobiles and trucks. Although a code has been 
proposed for car air conditioners, it is not yet officially listed in 
the Harmonized Tariff Schedule (see category 2). The following codes 
apply to the vehicles potentially containing air conditioning units.

------------------------------------------------------------------------
Heading/subheading                   Article description                
------------------------------------------------------------------------
\2\8701.(10, 20,    Tractors.                                           
 30, 90).                                                               
8702..............  Public-transport type passenger motor vehicles.     
8702.10...........  With compression-ignition internal-combustion piston
                     engine (diesel or semi-diesel).                    
8702.90...........  Other.                                              
8703..............  Motor cars and other motor vehicles principally     
                     designed for the transport of persons (other than  
                     those of heading 8702), including station wagons   
                     and racing cars.                                   
8703.10...........  Vehicles specially designed for traveling on snow;  
                     golf carts and similar vehicles; includes          
                     subheading 10.10 and 10.50.                        
8703.(21, 22, 23,   Other vehicles, with spark-ignition internal        
 24).                combustion reciprocating engines.                  
8703.(31, 32, 33,   Other vehicles, with compression-ignition internal  
 90).                combustion piston engine (diesel or semi-diesel).  
8704..............  Motor vehicles for the transport of goods.          
8704.10.(10, 50)..  Dumpers designed for off-highway use.               
8704.(21, 22, 23).  Other, with compression-ignition internal combustion
                     piston engine (diesel or semi-diesel).             
8704.(31, 32, 90).  Other, with compression-ignition internal combustion
                     piston engine.                                     
8705..............  Special purpose motor vehicles, other than those    
                     principally designed for the transport of persons  
                     or goods (for example, wreckers, mobile cranes,    
                     fire fighting vehicles, concrete mixers, road      
                     sweepers, spraying vehicles, mobile workshops,     
                     mobile radiological units).                        
8705.10...........  Crane lorries.                                      
8705.20...........  Mobile drilling derricks.                           
8705.30...........  Fire fighting vehicles.                             
8705.90...........  Other.                                              
------------------------------------------------------------------------
\2\At this time vehicle air conditioning units are considered components
  of vehicles or are classified under the general category for air      
  conditioning and refrigeration equipment. Vehicles containing air     
  conditioners are therefore considered products containing controlled  
  substances.                                                           

Category 2. Domestic and Commercial Refrigeration and Air 
Conditioning/Heat Pump Equipment

    Domestic and commercial air conditioning and refrigeration 
equipment fall primarily under headings 8415 and 8418.

------------------------------------------------------------------------
Heading/subheading                   Article description                
------------------------------------------------------------------------
8415..............  Air conditioning machines, comprising a motor-driven
                     fan and elements for changing the temperature and  
                     humidity, including those machines in which the    
                     humidity cannot be separately regulated.           
8415.20...........  Proposed code for air conditioning of a kind used   
                     for persons, in motor vehicles.                    
8415.10.00........  A/C window or wall types, self-contained.           
8415.81.00........  Other, except parts, incorporating a refrigerating  
                     unit and a valve for reversal of the cooling/heat  
                     cycle.                                             
8415.82.00........  Other, incorporating a refrigerating unit.          
                    Self-contained machines and remote condenser type   
                     air conditioners (not for year-round use).         
                    Year-round units (for heating and cooling).         
                    Air conditioning evaporator coils.                  
                    Dehumidifiers.                                      
                    Other air conditioning machines incorporating a     
                     refrigerating unit.                                
8415.83...........  Automotive air conditioners.                        
8418..............  Refrigerators, freezers and other refrigerating or  
                     freezing equipment, electric or other; heat pumps, 
                     other than air conditioning machines of heading    
                     8415; parts thereof.                               
8418.10.00........  Combined refrigerator-freezers, fitted with separate
                     external doors.                                    
8418.21.00........  Refrigerators, household type, Compression type.    
8418.22.00........  Absorption type, electrical.                        
8418.29.00........  Other.                                              
8418.30.00........  Freezers of the chest type.                         
8418.40...........  Freezers of the upright type.                       
8418.50.0040......  Other refrigerating or freezing chests, cabinets,   
                     display counters, showcases and similar            
                     refrigerating or freezing furniture.               
8418.61.00........  Other refrigerating or freezing equipment; heat     
                     pumps.                                             
8418.69...........  Other.                                              
                    Icemaking machines.                                 
                    Drinking water coolers, self-contained.             
                    Soda fountain and beer dispensing equipment.        
                    Centrifugal liquid chilling refrigerating units.    
                    Absorption liquid chilling units.                   
                    Reciprocating liquid chilling units.                
                    Other refrigerating or freezing equipment (household
                     or other).                                         
8479.89.10........  Dehumidifiers (other than those under 8415 or 8424  
                     classified as ``machines and mechanical appliances 
                     having individual functions, not specified or      
                     included elsewhere'').                             
------------------------------------------------------------------------

Category 3.--Aerosol Products

    An array of different products use controlled substances as 
aerosols and in aerosol applications. Not all aerosol applications use 
controlled substances, however. The codes given below represent the 
most likely classifications for products containing controlled 
substances. The product codes listed include:\3\
---------------------------------------------------------------------------

    \3\Other categories of products that may contain controlled 
substances are listed below. EPA is currently working to match them 
with appropriate codes. They include: coatings and electronic 
equipment (e.g., electrical motors), coatings or cleaning fluids for 
aircraft maintenance, mold release agents (e.g. for production of 
plastic or elastomeric materials), water and oil repellant 
(potentially under HS 3402), spray undercoats (potentially under 
``paints and varnishes''), spot removers, brake cleaners, safety 
sprays (e.g., mace cans), animal repellant, noise horns (e.g., for 
use on boats), weld inspection developers, freezants, gum removers, 
intruder alarms, tire inflators, dusters (for electronic and non-
electronic applications), spray shoe polish, and suede protectors.
---------------------------------------------------------------------------

     varnishes
     perfumes
     preparations for use on hair
     preparations for oral and dental hygiene
     shaving preparations
     personal deodorants, bath preparations
     prepared room deodorizers
     soaps
     lubricants
     polishes and creams
     explosives
     insecticides, fungicides, herbicides, disinfectants
     arms and ammunition
     household products such as footwear or leather polishes
     other miscellaneous products

------------------------------------------------------------------------
Heading/subheading                   Article description                
------------------------------------------------------------------------
3208..............  Paints and varnishes\4\ (including enamels and      
                     lacquers) based on synthetic polymers of chemically
                     modified natural polymers, dispersed or dissolved  
                     in a non-aqueous medium;                           
3208.10...........  Based on polyesters.                                
3208.20...........  Based on acrylic or vinyl polymers.                 
3208.90...........  Other.                                              
3209..............  Paints and varnishes (including enamels and         
                     lacquers) based on synthetic polymers or chemically
                     modified natural polymers, dispersed or dissolved  
                     in an aqueous medium.                              
3209.10...........  Based on acrylic or vinyl polymers.                 
3209.90...........  Other.                                              
3210.00...........  Other paints and varnishes (including enamels,      
                     lacquers and distempers) and prepared water        
                     pigments of a kind used for finishing leather.     
3212.90...........  Dyes and other coloring matter put up in forms or   
                     packings for retail sale.                          
3303.00...........  Perfumes and toilet waters.                         
3304.30...........  Manicure or pedicure preparations.                  
3305.10...........  Shampoos.                                           
3305.20...........  Preparations for permanent waving or straightening. 
3305.30...........  Hair lacquers.                                      
3305.90...........  Other hair preparations.                            
3306.10...........  Dentrifices.                                        
3306.90...........  Other dental (this may include breath sprays).      
3307.10...........  Pre-shave, shaving or after-shave preparations.     
3307.20...........  Personal deodorants and antiperspirants.            
3307.30...........  Perfumed bath salts and other bath preparations.    
3307.49...........  Other (this may include preparations for perfuming  
                     or deodorizing rooms, including odoriferous        
                     preparations used during religious rites, whether  
                     or not perfumed or having disinfectant properties).
3307.90...........  Other (this may include depilatory products and     
                     other perfumery, cosmetic or toilet preparations,  
                     not elsewhere specified or included).              
3403..............  Lubricating preparations (including cutting-oil     
                     preparations, bolt or nut release preparations,    
                     anti-rust or anti-corrosion preparations and mould 
                     release preparations, based on lubricants), and    
                     preparations of a kind used for the oil or grease  
                     treatment of textile materials, leather, fur skins 
                     or other materials, but excluding preparations     
                     containing, as basic constituents, 70 percent or   
                     more by weight of petroleum oils or of oils        
                     obtained from bituminous minerals.                 
3402..............  Organic surface-active agents (other than soap);    
                     surface-active preparations, washing preparations  
                     and cleaning operations, whether or not containing 
                     soap, other than those of 3401.                    
3402.20...........  Preparations put up for retail sale.                
3402.19...........  Other preparations containing petroleum oils or oils
                     obtained from bituminous minerals.                 
3403..............  Lubricating preparations consisting of mixtures     
                     containing silicone greases or oils, as the case   
                     may be.                                            
2710.00...........  Preparations not elsewhere specified or included,   
                     containing by weight 70 percent or more of         
                     petroleum oils or of oils obtained from bituminous 
                     minerals, these oils being the basic constituents  
                     of the preparations.                               
3403.11...........  Lubricants containing petroleum oils or oils        
                     obtained from bituminous minerals used for         
                     preparations from the treatment of textile         
                     materials, leather, fur skins or other materials.  
3403.19...........  Other preparations containing petroleum oils or oils
                     obtained from bituminous minerals.                 
3405..............  Polishes and creams, for footwear, furniture,       
                     floors, coachwork, glass or metal, scouring pastes 
                     and powders and similar preparations excluding     
                     waxes of heading 3404.                             
3405.10...........  Polishes and creams for footwear or leather.        
3405.20...........  Polishes for wooden furniture, floors or other      
                     woodwork.                                          
36................  Explosives.                                         
3808..............  Insecticides, rodenticides, fungicides, herbicides, 
                     anti-sprouting products and plant-growth           
                     regulators, disinfectants and similar products, put
                     up in forms or packings for retail sale or as      
                     preparations or articles (for example, sulphur-    
                     treated bands, wicks and candles, and fly papers). 
3808.10...........  Insecticides.                                       
3808.20...........  Fungicides.                                         
3808.30...........  Herbicides, anti-sprouting products and plant growth
                     regulators.                                        
3808.40...........  Disinfectants.                                      
3808.90...........  Other insecticides, fungicides.                     
3809.10...........  Finishing agents, dye carriers to accelerate the    
                     dyeing or fixing of dye-stuffs and other products  
                     and preparations (for example, dressings and       
                     mordants) of a kind used in the textile, paper,    
                     leather or like industries, not elsewhere specified
                     or included, with a basis of amylaceous substances.
3814..............  Organic composite solvents and thinners (not        
                     elsewhere specified or included) and the prepared  
                     paint or varnish removers.                         
3910..............  Silicones in primary forms.                         
9304..............  Other arms (for example, spring, air or gas guns and
                     pistols, truncheons), excluding those of heading   
                     No. 93.07. Thus, aerosol spray cans containing tear
                     gas may be classified under this subheading.       
0404.90...........  Products consisting of natural milk constituents,   
                     whether or not containing added sugar or other     
                     sweetening matter, not elsewhere specified or      
                     included.                                          
1517.90...........  Edible mixtures or preparations of animal or        
                     vegetable fats or oils or of fractions of different
                     fats or oils of this chapter, other than edible    
                     fats or oils or their fractions of heading No.     
                     15.16.                                             
2106.90...........  Food preparations not elsewhere specified or        
                     included.                                          
------------------------------------------------------------------------
\4\Although paints do not generally use contain controlled substances,  
  some varnishes use CFC 113 and 1,1,1, trichlorethane as solvents.     

Category 4.--Portable Fire Extinguishers

------------------------------------------------------------------------
Heading/subheading                   Article description                
------------------------------------------------------------------------
8424..............  Mechanical appliances (whether or not hand operated)
                     for projecting, dispersing, or spraying liquids or 
                     powders; fire extinguishers whether or not charged,
                     spray guns and similar appliances; steam or sand   
                     blasting machines and similar jet projecting       
                     machines.                                          
8424.10...........  Fire extinguishers, whether or not charged.         
------------------------------------------------------------------------

Category 5.--Insulation Boards, Panels and Pipe Covers

    These goods have to be classified according to their composition 
and presentation. For example, if the insulation materials are made of 
polyurethane, polystyrene, polyolefin and phenolic plastics, then they 
may be classified Chapter 39, for ``Plastics and articles thereof''. 
The exact description of the products at issue is necessary before a 
classification can be given.\6\
---------------------------------------------------------------------------

    \6\This category may include insulating board for building 
panels and windows and doors. It also includes rigid appliance 
insulation for pipes, tanks, trucks, trailers, containers, train 
cars & ships, refrigerators, freezers, beverage vending machines, 
bulk beverage dispensers, water coolers and heaters and ice 
machines.

------------------------------------------------------------------------
Heading/subheading                   Article description                
------------------------------------------------------------------------
3917.21 to 3917.39  Tubes, pipes and hoses of plastics.                 
3920.10 to 3920.99  Plates, sheets, film, foil and strip made of        
                     plastics, non-cellular and not reinforced,         
                     laminated, supported or similarly combine with     
                     other materials.                                   
3921.11 to 3921.90  Other plates, sheets, film, foil and strip, made of 
                     plastics.                                          
3925.90...........  Builders' ware made of plastics, not elsewhere      
                     specified or included.                             
3926.90...........  Articles made of plastics, not elsewhere specified  
                     or included.                                       
------------------------------------------------------------------------

Category 6.--Pre-Polymers

    According to the Explanatory Notes to the Harmonized Commodity 
Description and Coding System, ``prepolymers are products which are 
characterized by some repetition of monomer units although they may 
contain unreacted monomers. Prepolymers are not normally used as such 
but are intended to be transformed into higher molecular weight 
polymers by further polymerization. Therefore the term does not cover 
finished products, such as di-isobutylenes or mixed polyethylene 
glycols with very low molecular weight. Examples are epoxides based 
with epichlorohydrin, and polymeric isocyanates.''

------------------------------------------------------------------------
Heading/subheading                   Article description                
------------------------------------------------------------------------
3901..............  Pre-polymers based on ethylene (in primary forms).  
3902..............  Pre-polymers based on propylene or other olefins (in
                     primary forms).                                    
3903, 3907, 3909..  Pre-polymers based on styrene (in primary forms),   
                     epoxide and phenols.                               
------------------------------------------------------------------------

Appendix E to Subpart A--Article 5 Parties

    Algeria, Antigua and Barbuda, Argentina, Bahamas, Bahrain, 
Bangladesh, Barbados, Benin, Bosnia and Hertsegovina, Botswana, Brazil, 
Burkina Faso, Cameroon, Central African Republic, Chile, China, 
Colombia, Costa Rica, Cote Ivoire, Croatia, Cuba, Dominica, Ecuador, 
Egypt, El Salvador, Fiji, Gambia, Ghana, Grenada, Guatemala, Guinea, 
Guyana, Honduras, India, Indonesia, Iran, Jamaica, Jordan, Kenya, 
Kiribati, Lebanon, Libya, Malawi, Malaysia, Maldives, Malta, Mauritius, 
Mexico, Myranmar, Namibia, Nicaragua, Niger, Nigeria, Pakistan, Panama, 
Papua New Guinea, Paraguay, Peru, Philippines, Romania, Saint Kitts and 
Nevis, Saint Lucia, Samoa, Senegal, Seychelles, Slovenia, Solomon 
Islands, Sri Lanka, Sudan, Swaziland, Syrian Arab Republic, Tanzania, 
Thailand, Togo, Trinidad and Tobago, Tunisia, Turkey, Tuvalu, Uganda, 
Uruguay, Venezuela, Viet Nam, Yugoslavia, Zambia, Zimbabwe.


Appendix F to Subpart A--Listing of Ozone Depleting Chemicals

----------------------------------------------------------------------------------------------------------------
                  Controlled substance                        ODP\1\         AT L\2\         CLP\3\       BLP\4\
----------------------------------------------------------------------------------------------------------------
A. Class I:                                                                                                     
  1. Group I:                                                                                                   
    CFCl3-Trichlorofluoromethane (CFC-11...............  1.0                      60.0  1.0                 0.00
    CF2Cl2-Dichlorodifluoromethane (CFC-12)............  1.0                     120.0  1.5                 0.00
    C2F3Cl3-Trichlorotrifluoroethane (CFC-113).........  0.8                      90.0  1.11                0.00
    C2F4Cl2-Dichlorotetrafluoroethane (CFC-114)........  1.0                    200.00  1.8                 0.00
    C2F5Cl-Monochloropentafluorethane (CFC-115)........  0.6                     400.0  2.0                 0.00
    All isomers of the above chemicals. [Reserved]                                                              
  2. Group II:                                                                                                  
    CF2ClBr-Bromochlorodifluoromethane (Halon-1211)....  3.0-18               12.0-.08  0.06-0.03           0.13
    CF3Br-Bromotrifluoromethane (Halon-1301)...........  10.0-107                 72.0  0.00                1.00
    C2F4Br2-Dibromotetrafluoroethane (Halon-2402)......  6.0-28                   23.0  0.00-0.37           0.30
    All isomers of the above chemicals. [Reserved]                                                              
  3. Group III:                                                                                                 
    CF3Cl-Chlorotrifluoromethane (CFC-13)..............  1.0-250            120.0-1.83  0.88                0.00
    C2FCl5-(CFC-111)...................................  1.0-90              60.0-1.56  1.04                0.00
    C2F2Cl4-(CFC-112)..................................  1.0-90              60.0-1.35  0.90                0.00
    C3FCl7-(CFC-211)...................................  1.0-500            100.0-8.81  1.76                0.00
    C3F2Cl6-(CFC-212)..................................  1.0-500            100.0-7.98  1.60                0.00
    C3F3Cl5-(CFC-213)..................................  1.0-500            100.0-7.06  1.41                0.00
    C3F4Cl4-(CFC-214)..................................  1.0-500            100.0-6.01  1.20                0.00
    C3F5Cl3-(CFC-215)..................................  1.0-500            100.0-4.82  0.96                0.00
    C3F6Cl2-(CFC-216)..................................  1.0-500            100.0-3.45  0.69                0.00
    C3F7Cl-(CFC-217)...................................  1.0-500            100.0-1.87  0.37                0.00
    All isomers of the above chemicals. [Reserved]                                                              
  4. Group IV:                                                                                                  
    CCl4-Carbon Tetrachloride..........................  1.1                      50.0  1.0                 0.00
  5. Group V:                                                                                                   
    C2H3Cl31,1,1 Trichloroethane (Methyl chloroform)...  0.1                       6.3  0.11                0.00
    All isomers of the above chemical except 1,1,2-                                                             
     trichloroethane. [Reserved]                                                                                
  6. Group VI:                                                                                                  
    CH3Br-Bromomethane (Methyl Bromide)................  0.7               ...........  [Reserved]       .......
  7. Group VII:                                                                                                 
    CHFBr2-............................................  1.00              ...........  [Reserved]       .......
    CHF2Br-(HBFC-22B1).................................  0.74              ...........  [Reserved]       .......
    CH22FBr............................................  0.73              ...........  [Reserved]       .......
    C2HFBr4............................................  0.3-0.8           ...........  Reserved]        .......
    C2HF2Br3...........................................  0.5-1.8           ...........  [Reserved]       .......
    C2HF3Br2...........................................  0.4-16            ...........  [Reserved]       .......
    C2HF4Br............................................  0.7-1.2           ...........  [Reserved]       .......
    C2H2FBr3...........................................  0.1-1.1           ...........  [Reserved]       .......
    C2H2F2Br2..........................................  0.2-1.50          ...........  [Reserved]       .......
    C2H2F3Br...........................................  0.7-1.6           ...........  [Reserved]       .......
    C2H3FBr2...........................................  0.1-1.7           ...........  [Reserved]       .......
    C2H3F2Br...........................................  0.2-1.1           ...........  [Reserved]       .......
    C2H4FBr............................................  0.07-0.1          ...........  [Reserved]       .......
    C3HFBr6............................................  0.3-1.5           ...........  [Reserved]       .......
    C3HF2Br5...........................................  0.2-1.9           ...........  [Reserved]       .......
    C3HF3Br4...........................................  0.3-1.8           ...........  [Reserved]       .......
    C3HF4Br3...........................................  0.5-2.2           ...........  [Reserved]       .......
    C3HF5Br2...........................................  0.9-2.0           ...........  [Reserved]       .......
    C3HF6Br............................................  0.7-3.3           ...........  [Reserved]       .......
    C3H2FBr5...........................................  0.1-1.9           ...........  [Reserved]       .......
    C3H2F2Br4..........................................  0.2-2.1           ...........  [Reserved]       .......
    C3H2F3Br3..........................................  0.2-5.6           ...........  [Reserved]       .......
    C3H2F4Br2..........................................  0.3-7.5           ...........  [Reserved]       .......
    C3H2F5Br...........................................  0.9-1.4           ...........  [Reserved]       .......
    C3H3FBR4...........................................  0.08-1.9          ...........  [Reserved]       .......
    C3H3F2Br3..........................................  0.1-3.1           ...........  [Reserved]       .......
    C3H3F3Br2..........................................  0.1-2.5           ...........  [Reserved]       .......
    C3H3F4Br...........................................  0.3-4.4           ...........  [Reserved]       .......
    C3H4FBr3...........................................  0.03-0.3          ...........  [Reserved]       .......
    C3H4F2Br2..........................................  0.1-1.0           ...........  [Reserved]       .......
    C3H4F3Br...........................................  0.07-0.8          ...........  [Reserved]       .......
    C3H5FBr2...........................................  0.04-0.4          ...........  [Reserved]       .......
    C3H5F2Br...........................................  0.07-0.8          ...........  [Reserved]       .......
    C3H6FB.............................................  0.02-0.7          ...........  [Reserved]       .......
B. Class II:                                                                                                    
    CHFCl2-Dichlorofluoromethane (HCFC-21).............  [Reserved]                2.1  0.03                0.00
    CHF2Cl-Chlorodifluoromethane (HCFC-22).............  0.05                     15.3  0.14                0.00
    CH2FCl-Chlorofluoromethane (HCFC-31)...............  [Reserved]               1.44  0.02                0.00
    C2HFCl4(HCFC-121)..................................  [Reserved                 0.6  0.01                0.00
    C2HF2Cl3-(HCFC-122)................................  [Reserved]                1.4  0.02                0.00
    C2HF3Cl2-(HCFC-123)................................  0.02                      1.6  0.016               0.00
    C2HF4Cl-(HCFC-124).................................  0.02                      6.6  0.04                0.00
    C2HF2Cl3-(HCFC-131)................................  [Reserved]                4.0  0.06                0.00
    C2H2F2Cl2-(HCFC-132b)..............................  [Reserved]                4.2  0.05                0.00
    C2H2F3Cl-(HCFC-133a)...............................  [Reserved]                4.8  0.03                0.00
    C2H3FCl2-(HCFC-141b)...............................  0.12                      7.8  0.10                0.00
    C2H3F2Cl-(HCFC-142b)...............................  0.06                     19.1  0.14                0.00
    C3HFCl6-(HCFC-221).................................  [Reserved]        ...........  ...............     0.00
    C3HF2Cl5-(HCFC-222)................................  [Reserved]        ...........  ...............     0.00
    C3HF3Cl4-(HCFC-223)................................  [Reserved]        ...........  ...............     0.00
    C3HF4Cl3-(HCFC-224)................................  [Reserved]        ...........  ...............     0.00
    C3HF5Cl2-(HCFC-225ca)..............................  [Res.]-1.7                1.5  0.01                0.00
      (HCFC-225cb).....................................  [Reserved]                5.1  0.04                0.00
    C3HF6Cl-(HCFC-226).................................  [Reserved]        ...........  ...............     0.00
    C3H2FCl5-(HCFC-231)................................  [Reserved]        ...........  ...............     0.00
    C3H2F2Cl4-(HCFC-232)...............................  [Reserved]        ...........  ...............     0.00
    C3H2F3Cl3-(HCFC-233)...............................  [Reserved]        ...........  ...............     0.00
    C3H2F4Cl2-(HCFC-234)...............................  [Reserved]        ...........  ...............     0.00
    C3H2F5Cl-(HCFC-235)................................  [Reserved]        ...........  ...............     0.00
    C3H3FCl4-(HCFC-241)................................  [Reserved]        ...........  ...............     0.00
    C3H3F2Cl3-(HCFC-242)...............................  [Reserved]        ...........  ...............     0.00
    C3H3F3Cl2-(HCFC-243)...............................  [Reserved]        ...........  ...............     0.00
    C3H3F4Cl-(HCFC-244)................................  [Reserved]        ...........  ...............     0.00
    C3H4FCl3-(HCFC-251)................................  [Reserved]        ...........  ...............     0.00
    C3H4F2Cl2-(HCFC-252)...............................  [Reserved]        ...........  ...............     0.00
    C3H4F3Cl-(HCFC-253)................................  [Reserved]        ...........  ...............     0.00
    C3H5FCl2-(HCFC-261)................................  [Reserved]        ...........  ...............     0.00
    C2H5F2Cl-(HCFC-262)................................  [Reserved]        ...........  ...............     0.00
    C3H6FCl-(HCFC-271).................................  [Reserved]        ...........  ...............     0.00
    All isomers of the above chemicals. [Reserved]                                                              
----------------------------------------------------------------------------------------------------------------
\1\Ozone Depletion Potential.                                                                                   
\2\Atmospheric Lifetime.                                                                                        
\3\Chlorine Loading Potential.                                                                                  
\4\Bromine Loading Potential.                                                                                   

Appendix G to Subpart A--UNEP Recommendations for Conditions 
Applied to Exemption for Laboratory and Analytical Uses

    1. Laboratory purposes are identified at this time to include 
equipment calibration; use as extraction solvents, diluents, or 
carriers for chemcial analysis; biochemical research; inert solvents 
for chemical reactions, as a carrier or laboratory chemical and other 
critical analytical and laboratory purposes. Production for laboratory 
and analytical purposes is authorized provided that these laboratory 
and analytical chemicals shall contain only controlled substances 
manufactured to the following purities:

CTC (reagent grade)..........................................       99.5
1,1,1=trichloroethane........................................       99.0
CFC-11.......................................................       99.5
CFC-13.......................................................       99.5
CFC-12.......................................................       99.5
CFC-113......................................................       99.5
CFC-114......................................................       99.5
Other w/ Boiling P>20 deg. C.................................       99.5
Other w/ Boiling P<20 deg. C.................................       99.0

    2. These pure, controlled substances can be subsequently mixed by 
manufacturers, agents or distributors with other chemicals controlled 
or not controlled by the Montreal Protocol as is customary for 
laboratory and analytical uses.
    3. These high purity substances and mixtures containing controlled 
substances shall be supplied only in re-closable containers or high 
pressure cylinders smaller than three litres or in 10 millilitre or 
smaller glass ampoules, marked clearly as substances that deplete the 
ozone layer, restricted to laboratory use and analytical purposes and 
specifying that used or surplus substances should be collected and 
recycled, if practical. The material should be destroyed if recycling 
is not practical.
    4. Parties shall annually report for each controlled substance 
produced: the purity; the quantity; the application, specific test 
standard, or procedure requiring its uses; and the status of efforts to 
eliminate its use in each application. Parties shall also submit copies 
of published instructions, standards, specifications, and regulations 
requiring the use of the controlled substance.

Appendix H to Subpart A--Clean Air Act Amendments of 1990 Phaseout 
Schedule for Production of Ozone-Depleting Substances

------------------------------------------------------------------------
                                       Carbon       Methyl       Other  
         Class I and date          tetrachloride  chloroform  substances
                                     (percent)     (percent)   (percent)
------------------------------------------------------------------------
1994.............................          70             85          65
1995.............................          15             70          50
1996.............................          15             50          40
1997.............................          15             50          15
1998.............................          15             50          15
1999.............................          15             50          15
2000.............................  .............          20  ..........
2001.............................  .............          20  ..........
------------------------------------------------------------------------

[FR Doc. 94-27019 Filed 11-9-94; 8:45 am]
BILLING CODE 6560-50-P