[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.
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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]
C