[Federal Register Volume 59, Number 243 (Tuesday, December 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31232]
[[Page Unknown]]
[Federal Register: December 20, 1994]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 82
[FRL-5125-1]
RIN 2060-AD91
Protection of Stratospheric Ozone: Supplemental Rule To Amend
Phaseout of Ozone-Depleting Substances To Include Potential Production
Allowances for Methyl Bromide
AGENCY: Environmental Protection Agency.
ACTION: Final rule.
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SUMMARY: With this action, EPA allocates potential production
allowances to producers who have baseline allowances for the production
of methyl bromide. These potential production allowances are intended
solely for the production of methyl bromide for export to Article 5
countries, as defined under Article 5 of the Montreal Protocol on
Substances that Deplete the Ozone Layer. In drafting the accelerated
phaseout rule, which was published in the Federal Register on December
10, 1993, the Agency inadvertently omitted methyl bromide from the list
of chemicals for which potential production allowances were granted.
Today's action correctly allocates potential production allowances for
all control periods beginning January 1, 1994, and ending before
January 1, 2001, equal to 10 percent of a company's baseline production
allowances. The Agency may propose potential production allowances for
methyl bromide for control periods after January 1, 2001, at a later
date. Today's action makes the above-mentioned correction while
maintaining the goals of the accelerated phaseout to protect human
health and the environment.
EFFECTIVE DATE: December 20, 1994. Potential production allowances for
methyl bromide are granted for the 1994 control period (which began
January 1, 1994) and for control periods until January 1, 2001.
ADDRESSES: Materials relevant to this amendment to the accelerated
phaseout of ozone-depleting substances are contained in Air Docket No.
A-92-13 at U.S. Environmental Protection Agency, 401 M St., SW,
Washington, DC 20460. The public docket is located in room M-1500,
Waterside Mall (Ground Floor). Material may be inspected from 8 a.m. to
5:30 p.m. Monday through Friday. A reasonable fee may be charged by EPA
for copying docket materials. Information on this amendment can also be
obtained from the Stratospheric Protection Information Hotline at 1-
800-296-1996.
FOR FURTHER INFORMATION CONTACT: The Stratospheric Protection
Information Hotline at 1-800-296-1996 or Tom Land, Stratospheric
Protection Division, Office of Atmospheric Programs, Office of Air and
Radiation (6205J), 401 M Street SW., Washington, DC 20460, (202)-233-
9185.
I. Background
When Parties to the Montreal Protocol on Substances that Deplete
the Ozone Layer (the Protocol) first met in 1987, they agreed in
Article 2H to allow additional production of controlled substances
beyond the levels being set for the developed countries for developing
countries. The United States, as well as other Parties to the Protocol,
recognized the need to continue to supply controlled substances to
developing countries during the period of scheduled reductions and for
a limited time after the phaseout of production of controlled
substances. Under Article 5 of the Protocol, developing countries are
defined as Parties to the Protocol consuming less than 0.3 kilograms
per capita of class I, Group I and II controlled substances. These
Article 5 countries have limited resources to adopt alternative
technologies to replace the phased out controlled substances. To ensure
that such countries do not purchase the technologies to produce
controlled substances and otherwise bypass controls on controlled
substances, the Parties to the Protocol agreed to provide a set-aside
level of production for Article 5 countries. Article 5 countries must
ensure that these imported controlled substances are used to meet basic
domestic needs.
The Environmental Protection Agency (EPA) implements a program
domestically that limits and monitors production and consumption of
controlled substances, including methyl bromide. Production for Article
5 countries in the United States is monitored by allocating potential
production allowances to those companies that have baseline production
allowances. Since 1989, EPA has allocated potential production
allowances equal to 10 percent of baseline production allowances for
specific controlled substances. EPA grants authorization to producers
to convert potential production allowances to production allowances
once they have exported to an Article 5 country. The July 30, 1992,
Federal Register document (57 FR 3375), as well as the December 10,
1993, Federal Register document (58 FR 65018), explains these controls,
as well as the recordkeeping and reporting required for such
transactions. The specific provisions governing production for, and
export to, Article 5 countries are in Secs. 82.9 and 82.11. Appendix D
of subpart A of 40 CFR part 82 contains a listing of Article 5
countries.1
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\1\EPA is drafting a final rule that amends the accelerated
phaseout rule to adjust the dates relating to exports for Article 5
countries. That final rule will also reflect today's amendments
granting methyl bromide potential production allowances.
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II. Summary of Proposal
In the October 14, 1994 proposal to grant potential production
allowances for methyl bromide, EPA discussed the inadvertent omission
of the allocation of these allowances in the final rule published
December 10, 1993 (58 FR 65018). In drafting the December 10, 1993
final rule, EPA focused on the level of control of methyl bromide and
its phaseout, but inadvertently failed to allocate additional
production allowances of methyl bromide for exports to Article 5
countries. Due to this oversight, EPA proposed on October 14 to
allocate potential production allowances to methyl bromide producers
equal to 10 percent of their baseline production allowances beginning
in the current control period (which began January 1, 1994). Because
section 82.11 indicates that authorizations to convert potential
production allowances to production allowances are valid during the
control period in which the controlled substance departed the United
States, companies may use these potential production allowances for
methyl bromide only for the control period in which the shipment
departed the United States. The 10 percent level of additional
production for Article 5 countries would continue until the effective
date of the phaseout of production of methyl bromide, January 1, 2001.
Section 602(d) of the Clean Air Act Amendments of 1990 establishes the
phaseout date for methyl bromide by stating that production may not
extend beyond ``a date more than seven years after January 1 of the
year after the year in which the substance is added to the list of
class I substances.'' Methyl bromide was added to the list of class I
substances in 1993. With this proposal, EPA is reserving action in
allocating potential production allowances for control periods starting
January 1, 2001, and beyond.
III. Comments on the Proposal
a. General Comments
EPA received three comments on the proposed allocation of potential
production allowances for methyl bromide. Two of these comments support
the allocation of potential production allowances for methyl bromide
for export to Article 5 countries.
The two supporting comments agree with EPA's proposal stating that:
``(1) The Agency has the legal authority to adopt this amendment; (2)
there is a serious need for this amendment; and (3) this amendment will
have no adverse environmental consequences.'' The legal authority to
grant potential production allowances for methyl bromide was discussed
in the proposal published October 14, 1994 (59 FR 52126). One of the
two supporting comments acknowledged that, ``there is no contrary
authority (within the Montreal Protocol or the Clean Air Act Amendments
of 1990) to these provisions; therefore, EPA has the legal authority to
promulgate this amendment to 40 CFR Part 82.''
The two comments state, and EPA agrees, that the need for this
amendment to allocate potential production allowances for methyl
bromide stems from a need to maintain competitiveness in world markets
for U.S. methyl bromide producers. Without the additional production
allowances, U.S. companies are placed at a competitive disadvantage
relative to other producers of methyl bromide in developed countries
for the methyl bromide markets in Article 5 countries. The demand
within Article 5 countries for methyl bromide is smaller than the
potential global supply as currently allowed under the Montreal
Protocol (100 percent of 1991 levels plus the 10 percent to meet basic
domestic needs in Article 5 countries). Therefore, methyl bromide will
be produced and exported to Article 5 countries, regardless of whether
it is supplied by U.S. companies or another Party. EPA believes that it
is important for U.S. producers of methyl bromide to continue to
maintain their position in these markets as international contacts will
enable U.S. companies to lead the global transition to alternative
pesticides other than methyl bromide.
The two comments state, and EPA agrees, that the allocation of
potential production allowances to U.S. companies for the export of
methyl bromide to Article 5 countries will not have a detrimental
environmental impact. The allocation of potential production allowances
for methyl bromide to U.S. companies will not change global emissions;
nor will global emissions increase if such additional allowances are
granted. Because the demand for methyl bromide from Article 5 countries
is limited, the percent of methyl bromide that will be emitted during
the use and application of methyl bromide will be the same, regardless
of the supplier.
The provisions in the Protocol for additional production to meet
the basic domestic needs of Article 5 countries were included by the
Parties for sound environmental policy reasons. The additional
production provided in the U.S. by potential production allowances is
designed to meet the basic domestic needs of Article 5 countries. The
Parties felt it would be preferable to meet the basic domestic needs of
Article 5 countries through production and exports from existing
facilities than through construction of new production facilities in
Article 5 countries. If Article 5 countries were to build new
production facilities, the level of production would not be subject to
the same controls as those in developed countries and more methyl
bromide would potentially be produced over a longer time period because
Article 5 countries have a 10-year grace period beyond the phaseout
date for the various ozone-depleting substances.
The third comment EPA received on the October 14, 1994, proposal
was from an environmental group that also expressed support for the
Montreal Protocol and the potential production allowances for Article 5
countries. However, the commenter expressed concern about EPA's
argument justifying the quantity of allowances allocated. EPA does not
believe this is a valid concern as the quantity of allowances
authorized to be allocated (the 10 percent additional production for
export to Article 5 countries) is not set unilaterally by EPA, but is
derived from provisions of the Protocol.
The commenter also expressed concern with EPA's argument that if
U.S. companies do not produce methyl bromide for Article 5 countries,
another Party will. The commenter indicated that if this view is
adopted by other Parties, it would encourage increased use and
dependence on methyl bromide by Article 5 countries. EPA disagrees with
these comments. As stated above, the potential global supply of methyl
bromide far exceeds current demand in Article 5 countries. Therefore,
there is no environmental benefit in denying U.S. companies the 10
percent additional production which is granted under the Protocol.
Protecting stratospheric ozone can only be achieved through a
cooperative global effort and EPA does not wish to put U.S. companies
at a disadvantage in competing in the global methyl bromide market
unless there is an environmental benefit. In this case, EPA does not
believe an environmental benefit would accrue from a lesser allocation
of potential production allowances for methyl bromide. Furthermore,
denying the potential production allowances intended by the Parties to
the Protocol to be allocated to all producers of class I substances at
the 10 percent rate would be disadvantage producers without evidence of
significant environmental detriment.
The third comment also urged EPA to revisit the issue and ``to
craft a more stringent regulation regarding the production of methyl
bromide for export to Article 5 countries.'' EPA believes that the 10
percent allocation of potential production allowances for the export of
methyl bromide to Article 5 countries in today's notice does not
preclude future consideration of more stringent regulations for methyl
bromide. In fact, EPA is continuing to analyze methyl bromide's role in
stratospheric ozone depletion and the potential environmental and
health benefits that could potentially be obtained through further
regulatory controls.
b. Use of Allocation and Conversions During the Control Period
In the proposal of October 14, 1994, EPA stated that the allocation
of potential production allowances for Article 5 countries may be
retroactive to the beginning of the control period starting January 1,
1994. In this final action, EPA allocates potential production
allowances for the control period starting January 1, 1994, to those
companies with baseline production allowances for methyl bromide.
EPA received a comment that further clarification is needed that
conversions of potential production allowances into production
allowances should also be made retroactive for the 1994 control period.
As noted earlier, authorizations to convert potential production
allowances to production allowances are valid during the control period
in which the controlled substance was exported. Thus, EPA agrees with
this comment and will process requests to convert potential production
allowances to production allowances for exports that occurred in the
1994 control period.
EPA will process authorizations to convert potential production
allowances into production allowances for exports that occur within the
1994 control period (before midnight of December 31, 1994) as long as
the paperwork is received by EPA before the final day of the first
quarter of 1995. The current regulations refer to control periods and
do not prohibit companies from seeking authorizations to convert for
quantities of methyl bromide exported, as long as the export occurs in
the same control period in which the production allowances are used.
The export, conversion and use of the production allowances must all
occur within the same control period. Therefore, a company that
receives production allowances through a conversion during the first
quarter of the year following the export will not be able to use these
allowances for production, but may use them to ensure compliance for
the control period in which the export occurred.
c. Production Levels
With this amendment, EPA allocates to companies that produced
methyl bromide in 1991 production up to 10 percent of their baseline
allowances for Article 5 countries for the control periods starting
January 1, 1994, and ending before January 1, 2001. EPA is setting the
level at 10 percent to be consistent with Article 2H of the Montreal
Protocol, and to be consistent with the approach used for all Class I
controlled substances except for Group VII, the hydrobromofluorocarbons
(no additional production for Article 5 countries is granted under the
Protocol for these chemicals.)
d. Use of 1994 Potential Production Allowances
EPA received a comment that requests a change in the procedures for
the use of 1994 production allowances and/or consumption allowances for
methyl bromide exports to Article 5 countries. The commenter makes two
proposals to rectify the granting of potential production allowances
late in the 1994 control period. The commenter requests that companies
be able to use production allowances converted from 1994 potential
production allowances for six months into 1995. As a less desirable
alternative, the commenter suggests that, ``production using the
converted potential production allowances could occur in the 1994
control period without the requirement that consumption allowances be
available at the time of production.''
EPA disagrees with the suggestions for rectifying the late granting
of potential production allowances in 1994 because the Protocol
establishes strict limits on production for Parties to the Protocol for
each control period. Therefore, EPA may not alter the definition of a
control period, nor exceed the limits on production for a control
period. EPA's regulations lay out a system for allocating production
and consumption allowances in accordance with the Protocol to limit
production and importation within control periods. Both production
allowances and consumption allowances are needed simultaneously, to be
able to produce within a control period. To extend the use of
allowances from one control period into the following control period
would be a violation of the United States commitments under the
Montreal Protocol to limit production. EPA will also not allow
production without consumption allowances. This would set an
unacceptable precedent that is contrary to existing regulatory
requirements and the Protocol. EPA suggests that the companies continue
to apply for consumption allowances for exports to Article 5 countries
and use these to produce in conjunction with existing production
allowances and those requested for conversion from potential production
allowances.
A commenter added that the time taken to grant the conversion of
potential production allowances to production allowances ``requires at
least 3 weeks after the documentation is submitted to EPA.'' EPA
believes that the average time taken to process a request to convert is
five days and almost never exceeds ten working days.
e. Allocation After the Phaseout
In the October 14, 1994 proposal, EPA reserved the right to
allocate potential production allowances after the phaseout date for
methyl bromide, starting January 1, 2001, and beyond. One comment was
received suggesting EPA state an intention to allocate potential
production allowance, at some level, after the U.S. phaseout date. EPA
intends to analyze the role of methyl bromide in the depletion of
stratospheric ozone as more scientific information is gathered over the
next few years. EPA also intends to monitor global and U.S. production
of methyl bromide and its use. At this time, EPA cannot predict the
future actions relative to the post-phaseout period for methyl bromide.
Based on the monitoring and analysis activities, EPA will continue to
consider proposing an allocation of potential production allowances
after the U.S. phaseout date for methyl bromide.
IV. Summary of Supporting Analysis
A. Executive Order 12866
Under Executive Order 12866 (58 FR 51735, October 4, 1993), the
Agency must determine whether this regulatory action is ``significant''
and therefore subject to OMB review and the requirements of the
Executive Order. The Order defines ``significant'' regulatory action as
one that is likely to lead to a rule that may:
(1) have an annual effect on the economy of $100 million or more,
or adversely and materially affect a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local, or tribal governments or communities;
(2) create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlement, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
It has been determined by OMB and EPA that this amendment to the
final rule is not a ``significant regulatory action'' under the terms
of Executive Order 12866 and is therefore not subject to OMB review.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act, 5 U.S.C. 601-602, requires that
Federal agencies examine the impacts of their regulations on small
entities. Under 5 U.S.C. 604(a), whenever an agency is required to
publish a general notice of proposed rulemaking, it must prepare and
make available for public comment an initial regulatory flexibility
analysis (RFA). Such an analysis is not required if the head of an
agency certifies that a rule will not have a significant economic
impact on a substantial number of small entities, pursuant to 5 U.S.C.
605(b).
EPA believes that any impact that this amendment will have on the
regulated community will serve only to provide relief from otherwise
applicable regulations, and will therefore limit the negative economic
impact associated with the regulations previously promulgated under
Section 604 and 606. An examination of the impacts on small entities
was discussed in the final rule (58 FR 65018 and 58 FR 69235). That
final rule assessed the impact the rule may have on small entities. A
separate regulatory impact analysis accompanied the final rule and is
contained in Docket A-92-01. I certify that this amendment to the
accelerated phaseout rule will not have any additional negative
economic impacts on any small entities.
C. Paperwork Reduction Act
Any information collection requirements in a rule must be submitted
for approval to the Office of Management and Budget (OMB) under the
Paperwork Reduction Act, 44 U.S.C. 3501 et seq. Because no additional
informational collection requirements are required by this amendment,
EPA has determined that the Paperwork Reduction Act does not apply to
this rulemaking and no new Information Collection Request document has
been prepared.
List of Subjects in 40 CFR Part 82
Environmental protection, Administrative practice and procedure,
Air pollution control, Chemicals, Chlorofluorocarbons, Exports,
Reporting and recordkeeping requirements, Stratospheric ozone layer.
Dated: December 13, 1994.
Carol Browner,
Administrator.
40 CFR Part 82 is 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, 7601, 7671-7671q.
Subpart A--Production and Consumption Controls
2. Section 82.9 is amended by revising paragraphs (a) introductory
text, (a)(1) and (a)(2) to read as follows:
Sec. 82.9 Availability of production allowances in addition to
baseline production allowances.
(a) Every person apportioned baseline production allowances for
class I controlled substances under Sec. 82.5 (a) through (f) is also
granted potential production allowances equal to:
(1) 10 percent of his apportionment under Sec. 82.5 for each
control period ending before January 1, 2000 (January 1, 2001 for
methyl bromide); and
(2) 15 percent of his apportionment under Sec. 82.5 for each
control period beginning after December 31, 1999, and ending before
January 1, 2011 (January 1, 2013 in the case of methyl chloroform;
except for methyl bromide which is reserved).
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[FR Doc. 94-31232 Filed 12-19-94; 8:45 am]
BILLING CODE 6560-50-P