[Federal Register Volume 68, Number 1 (Thursday, January 2, 2003)]
[Rules and Regulations]
[Pages 237-254]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-32986]



[[Page 237]]

-----------------------------------------------------------------------

Part VI





Environmental Protection Agency





-----------------------------------------------------------------------



40 CFR Part 82



Protection of Stratospheric Ozone: Process for Exempting Quarantine and 
Preshipment Applications of Methyl Bromide; Final Rule

Federal Register / Vol. 68, No. 1 / Thursday, January 2, 2003 / Rules 
and Regulations

[[Page 238]]


-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 82

[FRL-7434-1]


Protection of Stratospheric Ozone: Process for Exempting 
Quarantine and Preshipment Applications of Methyl Bromide

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: With this rulemaking, EPA is taking final action to amend the 
accelerated phaseout regulations that govern the production, import, 
export, transformation and destruction of substances that deplete the 
ozone layer under the authority of Title VI of the Clean Air Act 
Amendments of 1990 (CAA or the Act). Today's amendments incorporate an 
exemption permitted under the Montreal Protocol on Substances that 
Deplete the Ozone Layer (Protocol) and required by changes in Title VI 
of the CAA. Specifically, EPA is creating an exemption from the 
consumption and production phaseout for quantities of Class I, Group VI 
controlled substances (methyl bromide) that are used for quarantine and 
preshipment.

DATES: This rule is effective January 1, 2003.

ADDRESSES: Materials relevant to this rulemaking are contained in 
Docket No. A-2000-24. The Docket is located at EPA West, 1301 
Constitution Avenue NW., Room B108, Mail Code 6102T, Washington, DC 
20460, Phone: (202)-566-1742, Fax: (202)-566-1741. The materials may be 
inspected from 8:30 a.m. until 4:30 p.m. Monday through Friday. A 
reasonable fee may be charged by EPA for copying docket materials.

FOR FURTHER INFORMATION CONTACT: Kate Choban, U.S. Environmental 
Protection Agency, Global Programs Division (6205J), 1200 Pennsylvania 
Ave., NW., Washington, DC, 20460, 202-564-3524.

Table of Contents

I. What is the Background of the Phaseout Regulations for Ozone-
Depleting Substances?
II. What is the Background for Today's Action?
III. What is Methyl Bromide?
IV. What are Examples of Quarantine and Preshipment Uses of Methyl 
Bromide?
V. What is the Legal Authority for Exempting the Production and 
Import of Methyl Bromide for Use in Quarantine and Preshipment 
Applications?
VI. What are the Definitions of Quarantine and Preshipment 
Applications?
    A. Are there clarifications regarding trade within the U.S.?
    B. Are there additional qualifiers associated with the 
definition of preshipment applications?
    C. Are there additional qualifiers associated with the 
definition of quarantine applications?
    D. How does the exemption of quarantine applications apply to 
commodities issued ``phytosanitary certificates''?
    E. How do these definitions of preshipment and quarantine 
applications apply to food sanitation?
    F. How do these definitions apply to ``propagative material''?
    G. How do these definitions apply to in-transit applications?
VII. What is the Process for Exempting Methyl Bromide for Use in 
Quarantine and Preshipment Applications?
    A. What recordkeeping and reporting must producers and importers 
perform?
    B. Are methyl bromide applicators required to report?
    C. Are distributors required to report?
    D. What about methyl bromide exported for quarantine and 
preshipment applications?
    E. Will there be a FIFRA pesticide label change?
VIII. What were Other Considerations and Situations on which EPA 
Sought or Received Comment?
    A. Methyl bromide is the only feasible treatment option.
    B. Has the Agency Considered Definitions Under the International 
Plant Protection Convention (IPPC)?
    C. What Action is the Agency Taking Regarding Prophylactic 
Fumigation of U.S. Exports When the Fumigation Is Not Mandated by 
Import Regulations?
    D. What Action is the Agency Taking Regarding the Exclusion of 
Specific Quarantine and Preshipment Applications From the Exemption 
at Some Future Time?
IX. What are the Steps to Conform the U.S. Methyl Bromide Phaseout 
Schedule and Exemptions to the Montreal Protocol and Amended Clean 
Air Act?
X. Administrative Requirements
XI. Congressional Review
    Entities potentially regulated by this action are those 
associated with methyl bromide that is used for quarantine and 
preshipment applications. In addition, this action potentially 
regulates entities importing and exporting methyl bromide. 
Potentially regulated categories and entities include:

------------------------------------------------------------------------
             Category                  Examples of regulated entities
------------------------------------------------------------------------
Industry..........................  Producers, Importers and Exporters
                                     of methyl bromide.
                                    Distributors of methyl bromide used
                                     for quarantine and preshipment.
                                    Applicators of methyl bromide used
                                     for quarantine and preshipment.
                                    Commodity Owners or Shippers of
                                     Goods that request the quarantine
                                     or preshipment application of
                                     methyl bromide in accordance with
                                     official controls or requirements.
------------------------------------------------------------------------

    The above table is not intended to be exhaustive, but rather 
provides a guide for readers regarding entities likely to be regulated 
by this action. This table lists the types of entities that EPA is now 
aware could potentially be regulated by this action. Other types of 
entities not listed in the table could also be regulated. To determine 
whether your facility, company, business, organization, etc. is 
regulated by this action, you should carefully examine the regulations 
promulgated at 40 CFR part 82, subpart A. If you have questions 
regarding the applicability of this action to a particular entity, 
consult the person listed in the preceding FOR FURTHER INFORMATION 
000000CONTACT section.

I. What Is the Background of the Phaseout Regulations for Ozone-
Depleting Substances?

    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 or the Agency) in the Federal Register on December 20, 1994 
(59 FR 65478), May 10, 1995 (60 FR 24970), August 4, 1998 (63 FR 
41625), and October 5, 1998 (63 FR 53290). The regulatory program was 
originally published in the Federal Register on August 12, 1988 (53 FR 
30566), in response to the 1987 signing of the Montreal Protocol on 
Substances that Deplete the Ozone Layer (Protocol).\1\ The U.S. was one 
of the original signatories to the 1987 Montreal Protocol and the U.S. 
ratified the Protocol on April 21, 1988. Congress then enacted, and 
President Bush signed into law, the Clean Air Act Amendments of 1990 
(CAA or the Act) that included Title VI on Stratospheric Ozone 
Protection.
---------------------------------------------------------------------------

    \1\ Several revisions to the original 1988 rule were issued on 
the following 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) July 30, 1992 (57 FR 33754), December 10, 
1993 (58 FR 65018).
---------------------------------------------------------------------------

    Today's action amends the existing EPA regulations published under 
Title VI of the CAA that govern the production and consumption of 
ozone-depleting substances. Today's action establishes an exemption 
from the methyl bromide production and import reduction and phaseout 
schedule for quantities to be used for quarantine and preshipment 
applications. Today's amendments are intended to implement requirements 
of the Protocol and the CAA, including amendments to Title VI as 
created by Section 764 of the 1999 Omnibus Consolidated and Emergency

[[Page 239]]

Supplemental Appropriations Act (Public Law 105-277, October 21, 1998) 
(section 604(d)(5) of the Clean Air Act).
    The requirements contained in the final rules published in the 
Federal Register on December 20, 1994 and May 10, 1995 establish an 
Allowance Program. The Allowance Program and its history are described 
in the notice of proposed rulemaking (NPRM) published in the Federal 
Register on November 10, 1994 (59 FR 56276). The control and the 
phaseout of production and consumption of ozone-depleting substances, 
as required under the Protocol and CAA, are accomplished through the 
Allowance Program.
    In developing the Allowance Program, EPA collected information on 
the amounts of ozone-depleting substances produced, imported, exported, 
transformed and destroyed within the United States for specific 
baseline years for specific chemicals. This information was used to 
establish the U.S. production and consumption ceilings for these 
chemicals. The data were also used to assign company-specific 
production and import rights to companies that were in most cases 
producing or importing during the specific year of data collection. For 
methyl bromide, 1991 was the baseline year used to establish the 
ceiling and assign company-specific production and import rights. 
Production or import rights are called ``allowances.'' Production 
allowances and consumption allowances continue to exist for only one 
specific class I controlled ozone-depleting substance--methyl bromide. 
All other production or consumption of class I controlled substances is 
prohibited under the Protocol and the CAA, save for a few exemptions. 
For methyl bromide, the remaining schedule for the phaseout of 
production and consumption allowances is as follows: 50 percent 
reduction of baseline beginning January 29, 2001, 70 percent reduction 
of baseline beginning January 1, 2003, and a 100 percent reduction of 
baseline beginning January 1, 2005, with narrow exemptions for critical 
uses and emergencies, as well as for quarantine and preshipment uses.
    In the context of the regulatory program, the use of the term 
consumption may be misleading. Consumption does not mean the ``use'' of 
a controlled substance, but rather is defined as the formula: 
consumption = production + imports--exports, of controlled substances 
(Article 1 of the Protocol and section 601 of the CAA). Class I 
controlled substances that were produced or imported through the 
expenditure of allowances prior to their phaseout date can continue to 
be used by industry and the public after that specific chemical's 
phaseout under these regulations, unless otherwise precluded under 
separate regulations.
    The specific names and chemical formulas for the controlled ozone-
depleting substances in Groups of class I controlled substances are in 
appendix A and appendix F in subpart A of 40 CFR part 82. The specific 
names and chemical formulas for the class II controlled ozone-depleting 
substances are in appendix B and appendix F in subpart A.

II. What Is the Background for Today's Action?

    EPA published an interim final rule in the Federal Register on July 
19, 2001 (66 FR 37752) to provide methyl bromide users in the United 
States with an exemption to the phaseout of methyl bromide for 
quarantine and preshipment applications. The interim final rule 
solicited public comment on a number of issues related to EPA's 
implementation of the Quarantine and Preshipment Exemption. Today's 
action responds to public comment and finalizes the specifications for 
the exemption.

III. What Is Methyl Bromide?

    Methyl bromide is an odorless, colorless, toxic gas, which is used 
as a broad-spectrum pesticide. Methyl bromide is used in the United 
States and throughout the world as a fumigant to control a variety of 
pests, such as insects, weeds, rodents, pathogens, and nematodes. 
Additional characteristics and details about the uses of methyl bromide 
can be found in the proposed rule published in the Federal Register on 
March 18, 1993 (58 FR 15014) and the final rule published in the 
Federal Register on December 10, 1993 (58 FR 65018). Information on 
methyl bromide can be found at the following sites of the World Wide 
Web: http://www.epa.gov/ozone/mbr/ and http://www.teap.org or by 
contacting the Stratospheric Ozone Protection Hotline at 1-800-296-
1996.

IV. What Are Examples of Quarantine and Preshipment Uses of Methyl 
Bromide?

    An example of a quarantine application of methyl bromide is the 
fumigation of a commodity, such as rice and spices, which are subject 
to infestation by a specific and officially recognized quarantine pest, 
such as the khapra beetle (Trogoderma granarium Everts) when the 
fumigation is conducted before transport of the commodity to meet 
official quarantine requirements (see discussion in part VI below). The 
purpose of quarantine fumigation is to prevent the introduction of 
specific quarantine pest(s) into a defined geographical area, such as 
an importing country. An example of a preshipment use of methyl bromide 
is the application to wheat immediately before shipment (see discussion 
in part VI below) because of official phytosanitary requirements of the 
destination country.
    In 1998, the Methyl Bromide Technical Options Committee (MBTOC), a 
sub-group under the independent advisory body of the Technical and 
Economic Assessment Panel (TEAP) to the Montreal Protocol, published an 
assessment that gives further details about uses of methyl bromide and 
possible alternatives and substitutes for controlling pests. The MBTOC 
and TEAP assessments can be found on the web at http://www.teap.org/html/methyl_bromide_reports.html and http://www.teap.org/.

V. What Is the Legal Authority for Exempting the Production and Import 
of Methyl Bromide for Use in Quarantine and Preshipment Applications?

    In Article 2H of the Montreal Protocol, which establishes the 
phaseout schedule for methyl bromide for developed countries, paragraph 
6 states that, ``[t]he calculated levels of consumption and production 
under this Article shall not include the amounts used by the Party for 
quarantine and pre-shipment applications.'' EPA notes that paragraph 6, 
of Article 2H indicates that the exemption is to exclude from the 
U.S.'s calculation of methyl bromide consumption and production the 
amounts used by the U.S. for quarantine and preshipment applications. 
In addition, Article 7 requires each Party to report on, ``the annual 
amount used for quarantine and preshipment applications.'' Beyond the 
critical uses allowed in Article 2H, Paragraph 5, quarantine and 
preshipment uses are the only exemptions explicitly allowed for under 
the Montreal Protocol.
    In 1998 Congress added several provisions to the Clean Air Act 
regarding methyl bromide including a provision title ``Sanitation and 
Food Protection,'' which is related to the Protocol exemption for 
quarantine and preshipment. This provision, which was codified as 
section 604(d)(5) of the CAA, was added by section 764(b) of the 1999 
Omnibus Consolidated and Emergency Supplemental Appropriations Act 
(Public Law 105-277). Section 604(d)(5) says, ``To the extent 
consistent with the Montreal Protocol's quarantine and

[[Page 240]]

preshipment provisions, the Administrator shall exempt the production, 
importation, and consumption of methyl bromide to fumigate commodities 
entering or leaving the United States or any State (or political 
subdivision thereof) for purposes of compliance with Animal and Plant 
Health Inspection Service requirements or with any international, 
Federal, State or local sanitation or food protection standard.'' Prior 
to Congressional passage of section 604(d)(5), the CAA did not provide 
authority for creating such an exemption to the methyl bromide phaseout 
schedule. In today's final regulation, EPA is implementing the express 
language provided in Article 2H, paragraph 6, of the Protocol under the 
authority provided by section 604(d)(5) of the CAA. EPA is also acting 
in a manner consistent with, and to fulfill the obligations of, section 
614(b) of the CAA. Section 614(b) of the CAA states that, ``[t]his 
title as added by the Clean Air Act Amendments of 1990 shall be 
construed, interpreted, and applied as a supplement to the terms and 
conditions of the Montreal protocol, as provided in Article 2, 
paragraph 11 thereof, and shall not be construed, interpreted, or 
applied to abrogate the responsibilities or obligations of the United 
States to implement fully the provisions of the Montreal Protocol. In 
the case of a conflict between any provision of this title and any 
provision of the Montreal Protocol, the more stringent provision shall 
govern.''
    EPA's interim final rule related to the process for exempting 
quarantine and preshipment applications of methyl bromide, published in 
the Federal Register on July 19, 2001 (66 FR 37752), defined quarantine 
and preshipment applications as agreed by the Parties to the Montreal 
Protocol in Decisions VII/5 and XI/12, respectively. EPA received ten 
comments regarding our decision to adhere to the language of the 
Parties' Decisions. All commenters stated that Decisions of the Parties 
do not have the same force of law as the Protocol itself, its 
amendments, or adjustments adopted by the Parties and, as such, EPA is 
not bound to their language. The comments submitted to EPA in response 
to the interim final rule echo a legal memorandum submitted to EPA by 
the legal counsel of the Methyl Bromide Industry Panel at a July 1999 
meeting. A more detailed discussion of the arguments made in this 
memorandum can be found in the interim final rule published in the 
Federal Register on July 19, 2001 (66 FR 37752).
    EPA responded directly to the legal memorandum submitted by the 
Methyl Bromide Industry Panel in the interim final rule. EPA has 
reconsidered the issue as it was raised by the comments submitted in 
response to the interim final rule and has concluded that its approach 
reflects widely accepted principles of customary international law. The 
provisions of the Vienna Convention on the Law of Treaties (VCLT), 8 
International Legal Materials 679 (1969), that concern treaty 
interpretation generally reflect customary international law. Paragraph 
1 of Article 31 of the VCLT provides that a treaty ``shall be 
interpreted in good faith in accordance with the ordinary meaning to be 
given to the terms of the treaty in their context and in the light of 
its object and purpose.'' Paragraph 3 of Article 31 of the VCLT states, 
``[t]here shall be taken into account, together with any context: * * * 
(a) any subsequent agreement between the parties regarding the 
interpretation of the treaty or the application of its provisions.'' 
Decisions VI/11, VII/5, XI/12 and XI/13 constitute subsequent consensus 
agreements among the Parties to the Montreal Protocol (including the 
United States) regarding the interpretation and application of the 
quarantine and preshipment provision of Article 2H. Therefore it is 
appropriate for EPA, when determining what is consistent with the 
``Montreal Protocol's quarantine and preshipment provisions,'' to take 
into account the Decisions of the Parties.
    Furthermore, in amending the CAA, Congress specifically cited the 
plural ``quarantine and preshipment provisions.'' If Congress intended 
for this phrase to be limited to the single provision in the Protocol 
referencing quarantine and preshipment in Article 2H, and not the 
subsequent Decisions between the Parties regarding interpretation or 
application of the treaty, Congress would have presumably directed the 
Agency to be consistent with the singular provision.
    Precedents within the current regulations (40 CFR part 82) 
demonstrate that the United States has routinely considered Decisions 
that clarify and interpret obligations under the Montreal Protocol to 
be authoritative and that such Decisions of the Parties are currently 
implemented through regulations under the CAA. Examples of such 
regulatory implementation of Decisions of the Parties include the 
current U.S. definitions of ``controlled substance'' (based on Decision 
IV/12) and ``essential use''. Additional examples of how U.S. 
regulations incorporate Decisions by the Parties to the Protocol can be 
found in the preamble of the interim final rule published in the 
Federal Register on July 19, 2001 (66 FR 37752) and in 40 CFR part 82, 
subpart A.

VI. What Are the Definitions of Quarantine and Preshipment 
Applications?

    In today's final action, EPA is defining quarantine applications 
and preshipment applications, as agreed by the Parties to the Montreal 
Protocol. The Parties to the Protocol agreed to the following 
definition of ``quarantine applications'' in Decision VII/5: 
``quarantine applications, with respect to methyl bromide, are 
treatments to prevent the introduction, establishment and/or spread of 
quarantine pests (including diseases), or to ensure their official 
control, where: (i) Official control is that performed by, or 
authorized by, a national plant, animal, or environmental protection or 
health authority; (ii) quarantine pests are pests of potential 
importance to the areas endangered thereby and not yet present there, 
or present by not widely distributed and being officially controlled.''
    The Parties to the Protocol first agreed to the following 
definition for preshipment applications of methyl bromide in Decision 
VI/11 and VII/5: ``preshipment applications are those treatments 
applied directly preceding and in relation to export, to meet the 
phytosanitary or sanitary requirements of the importing country or 
existing phytosanitary or sanitary requirements of the exporting 
country.'' At the 11th Meeting of the Parties in December 1999, the 
Parties further clarified the intent of the term preshipment by 
agreeing to the following definition in Decision XI/12: ``* * * 
preshipment applications are those non-quarantine applications within 
21 days prior to export to meet the official requirements of the 
importing country or the existing official requirements of the 
exporting country. Official requirements are those which are performed 
by, or authorized by, a national plant, animal, environmental, health 
or stored product authority.''
    EPA adopted the above definition of preshipment applications in the 
interim final rule and received nine related comments. All of the 
commenters raised the concern that the 21-day limitation on treatments 
to qualify as a preshipment application is unduly restrictive and 
arbitrary. One commenter stated that the time restriction is unrelated 
to the purpose of the preshipment exemption and that so long as a 
treatment is done to meet the official non-quarantine requirements of

[[Page 241]]

the importing or exporting country it ought to qualify as a preshipment 
application.
    EPA believes that the incorporation of a time restriction within 
the definition of preshipment application is necessary to meet the 
purpose of this exemption as intended by the Parties to the Montreal 
Protocol. The preshipment exemption applies to treatments of 
commodities near the time of export to meet the official non-quarantine 
requirements of the exporting or importing country. Eliminating the 
time requirement would invite misuse of the exemption. With no 
established time window, the argument could be made that a pre-plant 
soil application of methyl bromide qualifies as a preshipment 
application because the crop being cultivated would eventually be 
exported from U.S. soil. By imposing a time restriction, Decision XI/12 
of the Parties demonstrates that their intent was not to imbue the 
preshipment exemption with a lifecycle-wide scope. The 21-day 
restriction was agreed upon by the Parties (based on the advice of 
global experts) as a reasonable time limitation for the preshipment 
exemption. EPA has received no comment indicating that another time 
limitation would be better justified and meet the intent of the Parties 
in implementing the preshipment exemption.
    In addition to the above, the definition of quarantine applications 
is qualified by the scope of the exemption as stated in the CAA. As 
passed by Congress, the CAA specifically applies the quarantine and 
preshipment exemption to quantities of methyl bromide used to 
``fumigate commodities entering or leaving the United States or any 
State (or political subdivision thereof)* * *''(CAA section 504(d)(5)). 
This language makes clear Congress's intent to apply the exemption only 
where there is the transport of goods from one distinct locality to 
another, and thus to prevent the potential for the geographic spread of 
pests. As a result, today's action adds the following sentence to the 
definition of quarantine applications: ``This definition excludes 
treatments of commodities not entering or leaving the United States or 
any State (or political subdivision thereof).'' Section III.D. further 
discusses the uses of methyl bromide that are excluded from today's 
exemption for quarantine applications.
    With today's final action, EPA is defining quarantine applications 
and preshipment applications as follows:
    Quarantine applications, with respect to class I, Group VI 
controlled substances, are treatments to prevent the introduction, 
establishment and/or spread of quarantine pests (including diseases), 
or to ensure their official control, where: (i) Official control is 
that performed by, or authorized by, a national (including state, 
tribal or local) plant, animal or environmental protection or health 
authority; (ii) quarantine pests are pests of potential importance to 
the areas endangered thereby and not yet present there, or present but 
not widely distributed and being officially controlled. This definition 
excludes treatments of commodities not entering or leaving the United 
States or any State (or political subdivision thereof).
    Preshipment applications, with respect to class I, Group VI 
controlled substances, are those non-quarantine applications within 21 
days prior to export to meet the official requirements of the importing 
country or existing official requirements of the exporting country. 
Official requirements are those which are performed by, or authorized 
by, a national plant, animal, environmental, health or stored product 
authority.
    As specified in the above definitions, a quarantine application of 
methyl bromide must be ``performed by, or authorized by, a national 
(including state, tribal or local) plant, animal or environmental 
protection, or health authority.'' In addition, as delineated in the 
above definition, quarantine applications must be directed at 
quarantine pests. Today's definition of preshipment applications is 
limited to applications ``to meet the official requirements of the 
importing country or existing official requirements of the exporting 
country.'' The definition of preshipment applications specifies that 
the phrase ``official requirements'' means ``those which are preformed 
by, or authorized by, a national plant, animal, environmental, health 
or stored product authority.''

A. Are There Clarifications Regarding Trade Within the U.S.?

    The interim final rule interpreted ``quarantine applications'' as 
including interstate and inter-county treatments required to control 
quarantine pests. This interpretation is consistent with the Technical 
and Economic Assessment Panel's (TEAP) recommendation that the Parties 
of the Protocol interpret Decision VII/5 to include officially required 
treatments for intra-country trade within the territory of the Party 
and reconciles the language of the Montreal Protocol with section 
604(d)(5) of the CAA on Sanitation and Food Protection, which refers to 
international, Federal, state and local requirements.
    In recognizing official state, county, tribal, and local quarantine 
requirements, EPA's final rulemaking interprets the definition of 
quarantine applications such that an intra-country quarantine treatment 
required by state, county, tribal, or local plant, animal, 
environmental, or health government authorities constitutes an official 
control. Today's action adds parenthetically that ``national'' is meant 
to include state, tribal or local authorities for purposes of the 
definition of quarantine applications.
    In contrast to the definition of quarantine applications, which 
accommodates intra-country trade, the Protocol definition of 
preshipment applications is specific to trade between countries because 
of the phrase ``applications within 21 days prior to export.'' This 
distinction was noted in the interim final rule and EPA received no 
comment. Therefore, for the purposes of today's final action, the 
exemption for preshipment applications remains limited to the movement 
of goods from the U.S. to another country, and does not include 
movement of goods within the U.S.

B. Are There Additional Qualifiers Associated With the Definition of 
Preshipment Applications?

    The interim final rule noted, in agreement with the 1998 TEAP 
interim explanatory notes for the Parties, the focus within the 
definition of ``preshipment applications'' on applications to meet 
``official requirements'' and not ``informal or purely contractual or 
commercial arrangements not required under official regulations'' 
(April 1998 TEAP Report, page 145). EPA is continuing to stress the 
importance of this limitation in the scope of the preshipment 
exemption. The definition of preshipment applications specifies that 
the phrase ``official requirements'' means, ``those which are performed 
by, or authorized by, a national plant, animal, environmental, health, 
or stored product authority.''
    The interim final rule's definition of preshipment applications 
further qualifies the term ``official requirements'' as it relates to 
exporting countries to include only ``existing official requirements''. 
EPA interpreted this phrase to imply the need to establish a cutoff 
date. EPA asked for comment on four possible interpretations for the 
term ``existing official requirements of the exporting country''. The 
options listed were to exempt applications pursuant to official

[[Page 242]]

preshipment requirements of the exporting country that were: (1) In 
effect prior to the date the Parties to the Protocol adopted Decision 
XI/12, which was December 3, 1999, (2) in effect at the time the 
interim final rule was published in the Federal Register, which was 
July 19, 2001, (3) in place at the time this final rule on the 
quarantine and preshipment exemption is published in the Federal 
Register, or (4) existing at the time of the methyl bromide application 
(since it would be an ``existing'' requirement of the exporting country 
upon going into effect).
    EPA received eight comments related to the interpretation of 
``existing official requirements.'' All commenters supported the fourth 
option, which is to exempt applications pursuant to official 
preshipment requirements of the exporting country that exist at the 
time of the methyl bromide application. Commenters noted that this 
interpretation recognizes the possibility of future outbreaks of new 
pests requiring official action. EPA notes the value to such 
flexibility within the rule and believes that this interpretation is 
consistent with the intended purpose of the exemption.
    It should be noted that the qualifier ``existing'', as used within 
the preshipment application definition, applies only to the official 
requirement of the exporting country (the U.S.) and not to the 
preshipment requirements of importing countries. Thus, if an importing 
country were to establish a new official requirement for the 
preshipment application of methyl bromide, nothing in this rule would 
prevent a U.S. exporter from using methyl bromide to meet the new 
requirement of the importing country.

C. Are There Additional Qualifiers Associated With the Definition of 
Quarantine Applications?

    With today's final action EPA is establishing the following 
parameters for the quarantine exemption. For commodities imported to, 
exported from, and transported within the U.S., the exemption for 
quarantine applications will apply when: (1) Methyl bromide is 
identified within quarantine regulations as the unique treatment option 
for specific quarantine pests; (2) methyl bromide is identified within 
quarantine regulations as one among a list of treatment options for 
specific quarantine pests; and (3) methyl bromide is required for an 
emergency quarantine application. Under section 3, section 18, and 
section 24a of the Federal Insecticide, Fungicide and Rodenticide Act 
(FIFRA), EPA is notified of emergency quarantine applications of methyl 
bromide in accordance with specific requirements published under FIFRA. 
In addition to the above, for commodities being exported from the U.S. 
to a foreign nation, the exemption applies to quarantine applications 
when there is a broad performance-based quarantine requirement. In 
other words, the exemption applies when an importing country has 
quarantine regulations which broadly require U.S. exported commodities 
to be free of quarantine pests without specifying the types of 
treatments.
    The above follows EPA's decision in the interim final rule. The 
Agency received 12 comments on the scope of the quarantine exemption. 
Every commenter said that the broadest possible option should be 
implemented by the Agency. EPA believes that the scope of the exemption 
described above is the broadest interpretation that it can reasonably 
adopt for each given type of commodity. For example, for imports, USDA/
APHIS requirements are explicit regarding treatment options acceptable 
for the control of specific crop/pest combinations. EPA considered 
limiting the scope of the quarantine exemption to only those instances 
where APHIS lists methyl bromide as the only acceptable treatment 
option for a given pest. However, as many commenters noted, variations 
in climate, etc. can affect the level of efficacy of treatment options 
in different regions. Thus, EPA chose to adopt a broader definition of 
the quarantine exemption which applies to quantities of methyl bromide 
used to meet quarantine requirements where fumigation with methyl 
bromide is the listed, or one of the listed, treatment options.
    While EPA believes that such an interpretation is sufficiently 
broad for the purposes of imported and domestically traded commodities 
given the applicable U.S. regulations, the Agency recognizes that some 
foreign countries lack such specificity within their quarantine 
regulations for imported commodities. EPA chose to create even greater 
flexibility within the quarantine exemption in order to accommodate the 
broad, performance-based quarantine requirements of these foreign trade 
partners.

D. How Does the Exemption for Quarantine Applications Apply to 
Commodities Issued ``Phytosanitary Certificates''?

    Today's final action exempts methyl bromide in situations when a 
foreign country's regulations require a certification that U.S. 
commodities be exported free of quarantine pests. EPA understands that 
both USDA/APHIS and State agencies issue ``phytosanitary certificates'' 
that accompany U.S. commodities exported to foreign countries. These 
phytosanitary certificates are often required by importing foreign 
countries to ensure that U.S. exports are free of quarantine pests. To 
the extent that methyl bromide is used by a U.S. exporter to meet a 
foreign quarantine requirement, the phytosanitary certificates (PPQ 
Form 577, PPQ Form 578, and PPQ Form 579) issued by USDA/APHIS or an 
authorized State agency will be an additional means for EPA to cross-
check quarantine applications of methyl bromide under today's 
exemption.
    As was noted in the interim final rule, and for this final action, 
EPA is not exempting methyl bromide used for non-quarantine 
applications, even if the foreign country requires the U.S. exporter to 
obtain a phytosanitary certificate. Today's exemption applies to the 
use of methyl bromide to meet an official foreign quarantine 
requirement. If PPQ Forms or other types of certificates are issued for 
commodities meeting state or local quarantine requirements then methyl 
bromide used in these cases is considered exempt under today's action, 
provided that methyl bromide is one of the listed treatment options.

E. How Do the Definitions of Preshipment and Quarantine Applications 
Apply to Food Sanitation?

    The language of the Clean Air Act related to the quarantine and 
preshipment exemption explicitly limits the exemption to quantities of 
methyl bromide used ``to fumigate commodities entering or leaving the 
United States or any State (or political division thereof) for purposes 
of compliance with Animal and Plant Health Inspection Service 
requirements * * *'' (emphasis added). By applying the quarantine and 
preshipment exemption only to quantities of methyl bromide used to 
fumigate commodities being transported from one geographical location 
to another, Congress imposed limitations on how the definitions of 
preshipment and quarantine applications apply to food sanitation.
    As defined in today's action, preshipment applications are those 
non-quarantine applications within 21 days prior to export to meet the 
official requirements of the importing country or existing official 
requirements of the exporting country. Official requirements are those 
which are performed by, or authorized by, a national plant, animal, 
environmental, health or stored product

[[Page 243]]

authority. Methyl bromide used any time within 21 days prior to export 
of a commodity to meet ``official requirements'' related to food 
sanitation would qualify under the preshipment exemption. Any treatment 
performed outside of this 21 day window, by definition, does not 
qualify for the preshipment exemption.
    The exemption of methyl bromide for quarantine applications, as 
defined by the interim final action, did not apply to preventative 
treatments to meet food sanitation standards. EPA received 4 comments 
about the interaction between food sanitation standards and the 
quarantine exemption. All commenters asserted that preventative 
treatments of commodities with methyl bromide to meet food sanitation 
requirements should qualify as ``quarantine applications'' because 
``such standards are geared to preventing the dissemination of pests, 
although admittedly for human health and food sanitation purposes.''
    EPA's final action is bound by the limitations imposed on the 
quarantine exemption by the definitions and determination of scope 
agreed upon by the Parties to the Montreal Protocol and adopted by 
Congress in the Clean Air Act. EPA understands that certain industries 
often use methyl bromide as a prophylactic treatment for periodic 
quality control fumigations associated with food sanitation. Stored 
commodities, such as dried fruits, nuts, and cocoa beans, as well as 
grain mills and pasta manufacturing facilities are often fumigated 
periodically with methyl bromide to prevent populations of pests, such 
as insects and rodents, from increasing to a point where they would 
adversely affect food quality. Such in situ population control measures 
do not qualify as quarantine applications since they are not performed 
on ``commodities entering or leaving the United States or any state (or 
political subdivision thereof) * * *''
    Additionally, food sanitation requirements that are directed at 
controlling population levels of pests endemic to the region would not 
qualify under the definition of ``quarantine applications''. The 
quarantine definition, as established in today's final action, stresses 
that exempt applications of methyl bromide are ``to prevent the 
introduction, establishment and/or spread of quarantine pests 
(including diseases).'' Quarantine pests are defined as ``pests of 
potential importance to the areas endangered thereby and not yet 
present there, or present but not widely distributed and being 
officially controlled.'' Endemic pests are not quarantine pests.
    The above limitations were noted in the interim final version of 
this rule. Likewise, the Agency noted in that publication its interest 
in comments related to prophylactic uses of methyl bromide to meet food 
sanitation standards in order to use this information in the Agency's 
development of the Critical Use Exemption to the phaseout of methyl 
bromide. Please see the discussion below (Section VIIIA) related to the 
Critical Use Exemption.

F. How Do These Definitions Apply to ``Propagative Material''?

    The use of methyl bromide to fumigate the soil for growing 
propagative material, such as strawberry rhizomes, differs from many 
quarantine applications of methyl bromide. The Agency sought comment on 
the use of methyl bromide for propagative materials and received a 
variety of information on relevant quarantine regulations, planting and 
fumigating practices, and propagative materials (other than strawberry 
rhizomes) that use methyl bromide to meet quarantine requirements.
    With today's final action, the exemption for quarantine 
applications applies to methyl bromide used for growing propagative 
material if the methyl bromide is being used to grow propagative 
material to meet official quarantine requirements of the destination to 
which the propagative material will be transported. Although the 
interim final rule only cited strawberry rhizomes in the discussion of 
the exemption for propagative material, with today's action EPA wishes 
to clarify that the exemption also covers other propagative material, 
including tree seedlings, when the methyl bromide is used to meet an 
official quarantine requirement of the destination to which the 
propagative material will be transported.
    EPA notes the following qualifiers in the application of the 
quarantine exemption to methyl bromide used to grow propagative 
material (also referred to as ``plants for planting''). First, as noted 
above (see discussion in part VI.C.), the Clean Air Act language 
specifies that the scope of the quarantine exemption is limited to use 
of methyl bromide for fumigation of goods for transport from one 
distinct locality to another. Thus, the exemption for propagative 
materials only applies for use with ``plants for planting'' that are to 
be transported (complete with rootstock) from one distinct locality to 
another. Second, today's action only exempts the use of methyl bromide 
for pre-plant fumigation of soil to meet official quarantine 
requirements specifying that the underground portions of the 
propagative material are to be free from quarantine pests. The purpose 
of such regulations is ensuring that quarantine pests are not spread to 
the region where the regulated rootstock will be replanted. This 
exemption does not apply to pre-plant soil treatment for commodities 
transported without their attached rootstock, or commodities 
transported for any purpose other than for replant.
    Finally, with this action, EPA is only exempting quantities of 
methyl bromide used to grow propagative material to meet official 
quarantine requirements of the destination to which such material will 
be transported. If the material is transported to a destination that 
has no applicable official quarantine requirements, then the methyl 
bromide used does not qualify for this exemption. This is true even in 
an instance where a farmer legitimately justified using exempted methyl 
bromide to meet a quarantine requirement for propagative materials, yet 
due to economic or market conditions the farmer does not send the 
seedlings to the planned destination, and instead sends the seedlings 
to a region without relevant quarantine requirements. EPA recognizes 
that many of the propagative materials for which this exemption applies 
are planted far in advance of their trade and transplant and that 
farmers face some difficulty in accurately predicting their 
commodities' ultimate destination. The Agency reminds methyl bromide 
users that non-exempted quantities will be available until the January 
1, 2005 phaseout date and that the Critical Use Exemption will become 
available after the phaseout (see discussion in part VIII.A. below).
    The use of exempted methyl bromide to grow propagative material 
that the grower planned to ship to a destination with a propagative 
material quarantine requirement, but which the grower ultimately 
shipped to a destination without such a requirement, may raise 
compliance issues for the United States under the Protocol. Such 
quantities of methyl bromide would count against the U.S. cap for 
domestic methyl bromide consumption. The U.S. could exceed its control 
obligations under the Protocol if all U.S. production and consumption 
allowances for methyl bromide were expended in a particular control 
period (calendar year) and some methyl bromide in the same control 
period was mistakenly exempted for quarantine applications when, in 
fact, the propagative material was sent to a place without quarantine 
requirements. With this action, EPA is implementing the

[[Page 244]]

following options for rectifying such discrepancies. The methyl bromide 
user found to be incorrectly using exempt quantities of methyl bromide 
for propagative uses as described above may choose either of the 
following options to rectify their actions. First, a methyl bromide 
user in the above situation may choose to buy an equivalent amount of 
production allowances for any ozone-depleting substance, on an ozone-
depleting potential (ODP) weighted basis, and retire those allowances, 
thus rendering them unable to be expended for new production in 
accordance with subpart A of 40 CFR part 82. Alternatively, a person 
who uses exempted methyl bromide to meet a propagative material 
quarantine requirement, and who ultimately changes the material's 
destination to one without a quarantine requirement, can choose to 
destroy an amount of any ozone-depleting substance that is equivalent 
on an ODP-weighted basis to the amount of methyl bromide used. This 
approach differs from the first option, in that it requires the person 
to physically destroy an existing quantity of an ozone-depleting 
chemical rather than reduce the overall quantity produced in the 
future.
    Those users of methyl bromide required to perform one of the 
compensatory measures described above to rectify a non-compliance 
situation must submit to EPA a letter of certification detailing the 
following information: (1) The quantity of exempt methyl bromide used 
on propagative materials that were shipped to a destination lacking a 
quarantine requirement; (2) the compensatory option chosen (see 
discussion above); (3) the ozone-depleting substance destroyed or the 
type of production allowance obtained; and (4) the quantity of ozone-
depleting substance destroyed or production allowances retired. See the 
section above entitled FOR FURTHER INFORMATION CONTACT for submittal 
information.
    Monitoring and compliance issues are a concern associated with the 
use of methyl bromide for pre-plant propagative material uses. EPA 
expressed a concern in the interim final rule about situations where 
propagative materials are grown in proximity to crops that do not 
qualify for quarantine and preshipment exemption. EPA believed that it 
would be difficult to ensure that exempted quantities of methyl bromide 
were being properly used. However, the Agency received input from 3 
commenters that state that propagative material is rarely, if ever, 
grown in proximity to other crops, which alleviates the Agency's 
concern. The Agency will continue to monitor this possibility.

G. How Do These Definitions Apply to In-Transit Applications?

    EPA understands that some users of methyl bromide may be testing 
and/or using ``on-ship'' fumigation of commodities while they are ``in-
transit.'' With today's final action, EPA is interpreting the 
definition of quarantine application to apply to these quantities of 
methyl bromide used ``in-transit'' when the use is to meet an official 
U.S. quarantine requirement and is in accordance with other U.S. 
regulations for commodities being imported into the U.S., (see 
discussion in part VI.C. above for more information on what is 
considered an official quarantine requirement for an imported 
commodity) or for commodities moving from one location to another 
within the U.S. However, today's action does not exempt quantities of 
methyl bromide used outside of U.S. jurisdiction on U.S. exported 
commodities to meet the importing country's official quarantine 
requirements while the commodities are ``in-transit.'' Today's action, 
likewise, does not exempt quantities of methyl bromide used on U.S. 
exported commodities when they are being transshipped through a foreign 
country en route to the destination importing country. Finally, today's 
action does not exempt quantities of methyl bromide used to meet an 
importing country's requirements when a commodity is simply being 
transshipped through the U.S. from the exporting foreign country en 
route to the importing foreign country.
    It should be noted that use of methyl bromide after a shipment 
leaves the Unites States is not an exempt preshipment application 
because the application did not occur ``within 21 days prior to 
export'' from the U.S., where the word ``export'' is interpreted to 
mean the departure of a commodity from the Unites States.

VII. What Is the Process for Exempting Methyl Bromide for Use in 
Quarantine and Preshipment Applications?

    With this action, EPA is establishing a process to exempt methyl 
bromide used for quarantine and preshipment applications from the 
Allowance Program's control measures that phase out production and 
consumption of methyl bromide (described in Part I. Background above). 
Today's action exempts quantities of methyl bromide used for quarantine 
and preshipment applications from the production and consumption 
reduction steps between now and 2005, as well as beyond the final 
phaseout of production and consumption under the Montreal Protocol and 
Clean Air Act on January 1, 2005.
    EPA is creating a recordkeeping and reporting process that is 
flexible enough to respond to demands arising when commodities need to 
be protected from infestations by quarantine pests and when commodities 
need to be treated immediately prior to shipment in accordance with 
official requirements. Such flexibility needs to be balanced with the 
U.S. Government's reporting requirements under the Montreal Protocol. 
Today's action includes a certification and reporting procedure under 
authority of the Clean Air Act (CAA) for exempted production and 
consumption of methyl bromide for quarantine and preshipment 
applications.

A. What Recordkeeping and Reporting Must Producers and Importers 
Perform?

    Until the January 1, 2005 phaseout date for methyl bromide, U.S. 
companies will continue to hold production and consumption allowances, 
calculated as a percentage of their baseline production and 
consumption. After January 1, 2005, there will not be production 
allowances and consumption allowances for methyl bromide. The 
relationship between each company's baseline production allowance and 
baseline consumption allowances and the reduction steps in these 
allowances is in accordance with the control measures under the 
Montreal Protocol and the Clean Air Act as described in part I of 
today's rule and in the direct final rule published in the Federal 
Register on November 28, 2000 (65 FR 70795).
    Because quarantine and preshipment applications are exempted from 
the phaseout, the total quantities of methyl bromide produced and 
imported that are specifically designated for quarantine and 
preshipment will not be counted as net production or net import for the 
purposes of the Allowance Program. In order for EPA to ensure that 
qualifying quarantine and preshipment quantities of methyl bromide are 
being properly exempted from companies' total allowed production/
import, the Agency must have a record of those exempted quantities.
    Currently, Sec.  82.13 requires producers and importers to submit 
quarterly reports to EPA with information on the gross quantity of 
methyl bromide produced or imported in that quarter. In that same 
report, producers and importers indicate the quantity specifically 
designated for transformation and for destruction and,

[[Page 245]]

thus, exempted from the reduction steps and phaseout of methyl bromide. 
EPA subtracts these quantities for transformation and for destruction 
from the gross quantity reported to obtain the company's net production 
or import. The interim final rule required producers and importers to 
include the quantities of methyl bromide specifically designated for 
quarantine and preshipment applications on these same quarterly 
reports. Quantities of methyl bromide used for quarantine and 
preshipment applications are also subtracted from the gross quantity of 
production or import because of their exempted status and, thus, are 
not counted against a company's production and consumption allowances.
    In addition to the reporting requirements outlined above, the 
interim final rule established the following recordkeeping requirements 
for producers and importers. Domestic purchasers (distributors or 
customers) must provide producers and importers with certifications 
that a designated quantity is being purchased solely for quarantine and 
preshipment applications (discussion of requirements for foreign 
purchasers appears below in part VII.D.) Certifications from 
distributors will attest that the material will be sold only for 
quarantine and preshipment applications, and certifications from 
applicators purchasing directly from a producer or importer will attest 
that the material will be used only for quarantine and preshipment 
applications.
    While EPA received no comments on the specific recordkeeping and 
reporting procedures described in the interim final rule, several 
commenters submitted general feedback. All comments on this topic 
focused on the burden of recordkeeping and reporting and suggested that 
the creation of a FIFRA label specific to quarantine and preshipment 
would help to ease that burden. EPA recognizes the potential utility of 
a quarantine and preshipment specific FIFRA label (see full discussion 
below in part VII.E.). However, until such a label can be established, 
EPA must rely on another means of obtaining the information it needs to 
meet the U.S.'s reporting obligations under the Montreal Protocol and 
to ensure domestic compliance with the phasedown and phaseout schedule 
for production and import. The requirements created by the interim 
final rule were discussed with many industry representatives and 
represent one of the least burdensome options available. Thus, with 
this final action EPA is continuing the recordkeeping and reporting 
requirements for producers and importers established by the interim 
final rule and described in the above text.

B. Are Methyl Bromide Applicators Required To Report?

    Today's action includes a certification requirement for purchases 
of methyl bromide by applicators. Applicators must submit a 
certification to the seller of the methyl bromide when they want to 
purchase a specific quantity of methyl bromide explicitly for 
quarantine and preshipment applications. The applicator will certify 
that the quantity purchased will be used solely for quarantine and 
preshipment applications. The applicator must send the certification to 
the company selling the methyl bromide before the seller ships the 
cylinders of methyl bromide (i.e., certification before shipment).
    The applicator can obtain the certification form at EPA's Web site 
at http://www.epa.gov/ozone/mbr or from their methyl bromide 
distributor. The applicator must check the box indicating that the 
particular quantity being ordered is solely for quarantine and 
preshipment applications as defined on the form (see the definition 
above in Part VI) and will neither be sold nor used for any other 
purpose. The applicator must sign the form certifying, under penalty of 
law, that the quantity of methyl bromide purchased will be used solely 
for quarantine and preshipment applications in accordance with the 
definitions. The applicator must return the completed and signed form 
to the distributor. The distributor retains the certification form in 
order to compile data that they will submit to EPA on the quantity of 
methyl bromide sold under the exemption for quarantine and preshipment 
applications. The certification form ensures that quantities of methyl 
bromide produced or imported under the exemption for quarantine and 
preshipment applications are used only in accordance with the strict 
requirements of the exemption. It is important to note that the 
applicator will also be able to purchase non-exempt methyl bromide 
until the phaseout date for methyl bromide.
    For quarantine applications, the applicator must collect 
documentation citing the regulatory requirement or other official 
requirement that justifies the use of exempted methyl bromide. 
Acceptable documentation for a quarantine application includes the 
forms provided directly to the applicator by an official from a 
national plant, animal, environmental protection or health authority 
(e.g. USDA/APHIS) requesting the treatment of commodities to control 
quarantine pests. In the absence of official documentation from a 
plant, animal, environmental protection or health authority, the 
commodity owner, shipper or their agent must provide a letter to the 
methyl bromide applicator requesting the use of methyl bromide that 
explicitly cites the regulation requiring a quarantine treatment or 
quarantine official control. Likewise, the applicator must collect 
documentation citing the official requirement calling for a preshipment 
application. The commodity owner, shipper or their agent must provide a 
letter to the methyl bromide applicator requesting the use of methyl 
bromide that explicitly cites the official requirement for a 
preshipment application. The letter that the commodity owner, shipper 
or their agent presents to the applicator must include the following 
statement: ``I certify knowledge of the requirements associated with 
the exempted quarantine and preshipment applications published in 40 
CFR part 82, including the requirement that this letter cite the 
treatments or official controls for quarantine applications or the 
official requirements for preshipment requirements.'' Both the 
commodity owner, shipper or their agent and the applicator must 
maintain this letter for three years in accordance with current 
recordkeeping requirements in 40 CFR part 82, subpart A. Neither the 
applicator nor the commodity owner, shipper or their agents are 
required to submit the letter to EPA.
    The requirements established by today's final action exactly match 
the requirements of the interim final rule. EPA received one comment 
related to these reporting requirements. The commenter raised the 
concern that requiring distributors to send and recover Certification 
Forms prior to every sale could cause supply delays and backlog of 
commodities needing fumigation at ports. EPA does not believe that the 
above requirements will cause such a backlog if efficiently managed. 
While the above protocol explicitly requires that distributors must 
receive completed Certification Forms prior to distributing the order 
of methyl bromide, there is flexibility regarding when distributors 
must provide the blank forms to their customers. In fact, a distributor 
may send a blank Certification Form to every applicator with 
instructions to make many copies of the blank form, so each applicator 
is ready to place immediate, ``rush'' orders for methyl bromide for 
quarantine and preshipment applications. However, in

[[Page 246]]

situations when an applicator needs to have methyl bromide on-hand to 
fumigate a shipment hours after it arrives, EPA understands applicators 
strive to anticipate these busy seasons and accordingly place large 
orders well in advance. Under today's exemption, when an applicator 
places a large order in anticipation of future needs for methyl bromide 
for quarantine and preshipment applications, the applicator can and 
must submit the Certification Form for the quantity that will be stored 
to be used solely for quarantine and preshipment applications in the 
future.

C. Are Distributors Required To Report?

    With today's action, EPA is requiring that a person who distributes 
methyl bromide to applicators (the distributor) compile all the 
information from applicator certifications (as described in part VII.B 
above) on a quarterly basis and submit the summary data to EPA. In 
administering other parts of the stratospheric ozone protection program 
over the past decade, regulated companies have often expressed an 
appreciation for the submission of smaller, quarterly reports, rather 
than one large, end-of-year report. EPA also believes that regular, 
quarterly tracking by distributors will increase the accuracy of 
reporting. Since EPA received no comments objecting to the submission 
of quarterly reports, we are requiring distributors to submit quarterly 
reports that summarize the total quantity of methyl bromide sold over a 
quarter to applicators who submitted certifications described in part 
VII.B above.
    The collection of information on the quantity of methyl bromide 
sold and certified for quarantine and preshipment applications is 
needed so that the U.S. can respond to a recent amendment to the 
Protocol. The amendment, to which the Parties agreed at their Eleventh 
Meeting in Beijing in 1999, adds a provision to Article 7 (Reporting of 
Data), requiring Parties to submit information on the amounts of methyl 
bromide used for quarantine and preshipment applications. Reporting by 
the distributors will allow a comparison between the quantities of 
methyl bromide sold and certified for quarantine and preshipment 
applications with the amount of methyl bromide produced and imported 
for quarantine and preshipment applications, as reported in the 
producers'/importers' report as described in part VII.A above.

D. What About Methyl Bromide Exported for Quarantine and Preshipment 
Applications?

    With today's action, producers and others that export methyl 
bromide must report the total quantity of methyl bromide explicitly 
exported to individual foreign countries for quarantine and preshipment 
applications on a quarterly basis. Under Sec.  82.13, producers and 
exporters already distinguish other exempted quantities of methyl 
bromide explicitly exported for transformation or destruction. For each 
export of methyl bromide for quarantine and preshipment applications, 
as for exports for transformation or destruction, the exporter must 
obtain a certification from the foreign person (entity) importing the 
methyl bromide stating that the material will be used only for 
quarantine and preshipment applications. These certifications must be 
submitted with the quarterly reports. These certifications will then be 
shared with the appropriate foreign government officials in the 
importing country and the compiled data will be shared with UNEP 
advisory bodies to the Protocol. Certifications must accompany the 
reporting on quantities exported for quarantine and preshipment 
applications because of a concern that the U.S., as one of the largest 
worldwide producers of methyl bromide, could potentially contribute to 
the creation of a loophole for non-exempt uses of methyl bromide around 
the globe. EPA feels it will be important to closely monitor and track 
production of methyl bromide that is exported for quarantine and 
preshipment applications because these uses are exempt from Protocol 
control measures.
    The above requirements are consistent with those created by the 
interim final rule. EPA received no comments related to this issue.

E. Will There Be a FIFRA Pesticide Label Change?

    The interim final rule introduced the possibility of EPA's Office 
of Pesticide Programs developing, under the authority of the Federal 
Insecticide, Fungicide and Rodenticide Act (FIFRA), a unique label for 
methyl bromide specifically designated for quarantine and preshipment 
use. The Agency received five comments in support of such an action. 
Commenters advocated that EPA replace the record keeping and reporting 
requirements established by the interim rule (and continued with 
today's action) with such a label in order to reduce the burden on 
users associated with the Quarantine and Preshipment Exemption.
    EPA recognizes the potential burden reduction that creating a new 
QPS-specific FIFRA label could offer, however, the Agency also remains 
cognizant of the need to retain access to the information it needs to 
meet the U.S. government's own international reporting requirements as 
established by the Montreal Protocol. Thus, after the Office of 
Pesticide Programs finishes the process of making changes that create a 
new QPS-specific FIFRA label for methyl bromide, the Office of Air and 
Radiation will consider ways to simplify today's recordkeeping and 
reporting requirements but likely retain some of these requirements to 
ensure the accurate submission of data in accordance with U.S. 
obligations under the Montreal Protocol.
    A registration/label change would designate individual cylinders of 
methyl bromide specifically for quarantine and preshipment applications 
and it would be illegal to use the material in these cylinders for 
other uses. Under an approved registration/label change there would be 
unique registration numbers for the new labels that would accompany 
each cylinder through the chain of commerce from producers or importers 
to the end-user (the applicator). As currently required under FIFRA, 
establishments would report total quantities of methyl bromide under 
this new quarantine and preshipment registration/label to EPA's Office 
of Pesticide Programs on an annual basis. Following a change in the 
FIFRA authorized registration/label, it would be possible for the 
Agency to reconcile the total quantity of methyl bromide certified to 
be solely for quarantine and preshipment applications under procedures 
described in parts VII.B and VII.C above, the total quantity of methyl 
bromide produced or imported for quarantine and preshipment 
applications under today's part VII.A above, and the annual FIFRA 
establishment reports on methyl bromide, which reference specific 
products by registration number.
    EPA's Office of Pesticide Programs is continuing to work with the 
Methyl Bromide Industry Panel to develop a registration and label 
change for methyl bromide products. EPA reserves the ability to 
reevaluate the record keeping and reporting requirements established in 
today's action if and when such a label is created.

VIII. What Were Other Considerations and Situations on Which EPA Sought 
or Received Comment?

    In the interim final rule, EPA sought comment on a number of 
possible variations on the exemption that were

[[Page 247]]

not incorporated into the interim rule as it was published. The Agency 
received comment on some of these items, as well as on other topics for 
which comment was not expressly sought.
    EPA recognizes that additional questions may arise regarding 
aspects of today's final action. If a person has a question about 
whether a certain aspect of today's final action applies to their 
situation, EPA is encouraging the submissions of written questions 
accompanied by a detailed description of how methyl bromide relates to 
the person's particular enterprise. The Agency will consider questions 
about whether aspects of today's final action apply in the context of 
EPA's regular process for issuing written determinations.

A. Methyl Bromide Is the Only Feasible Treatment Option

    EPA received 31 comments in response to the interim final rule that 
addressed the lack of feasible alternatives available for specific uses 
of methyl bromide and the economic impact of the phaseout on sectors of 
the agricultural industry. In response to such comments, EPA notes that 
there is no ``critical need'' requirement associated with the 
Quarantine and Preshipment Exemption at this juncture. The exemption 
applies only to uses of methyl bromide that qualify as a quarantine or 
preshipment application, as defined by this final action, regardless of 
the availability of alternatives.
    The Montreal Protocol and the CAA created two distinct exemptions 
to the methyl bromide phaseout: (1) The Quarantine and Preshipment 
Exemption, and (2) the Critical Use Exemption. The Critical Use 
Exemption was created by the Parties to the Protocol to address the 
possibility that substitutes and alternatives may not be available for 
all methyl bromide uses by the January 1, 2005 phaseout date. The term 
``critical use'' is defined, in part, by the lack of technically or 
economically feasible alternatives. For more information about the 
Critical Use Exemption please consult the person listed in the 
preceding FOR FURTHER INFORMATION CONTACT section or visit http://www.epa.gov/ozone/mbr/cueqa.html.

B. Has the Agency Considered Definitions Under the International Plant 
Protection Convention (IPPC)?

    Under the International Standards for Phytosanitary Measures 
(ISPMs) adopted by members of the International Plant Protection 
Convention (IPPC) on April 22, 2001, the definition of ``official 
control'' is different than the definition that was agreed to by the 
Parties to the Montreal Protocol and adopted by EPA in the interim 
final rule. The IPPC definition of the phrase ``official control'' is, 
``the active enforcement of mandatory phytosanitary regulations and the 
applications of mandatory phytosanitary procedures with the objective 
of eradication or containment of quarantine pests or the management of 
regulated non-quarantine pests.'' The IPPC glossary of phytosanitary 
terms defines ``official'' as ``established, authorized or performed by 
a National plant protection Organization (NPPO).'' In the United 
States, the NPPO is the USDA Animal and Plant Health Inspection Service 
(APHIS), Plant Protection and Quarantine (PPQ) Program.
    Further, under the ISPMs adopted by the IPPC, the phrase 
``regulated non-quarantine pests'' is defined as, ``a non-quarantine 
pest whose presence in plants for planting affects the intended use of 
those plants with an economically unacceptable impact and which is 
therefore regulated within the territory of the importing contacting 
party.''
    EPA sought comment in the interim final rule on this IPPC 
definition of ``official control'' and received 3 comments. All 
commenters stated that EPA ought to adopt the IPPC definition because 
it is broader than that adopted in the interim final rule.
    In this final action, EPA is adopting the definition of ``official 
control'' found in the interim final rule and agreed upon by the 
Parties to the Montreal Protocol. The IPPC definition is broader, 
insofar as includes within its scope not only regulated quarantine 
pests but also regulated ``non-quarantine pests'', an addition not 
found in EPA's definition. However, IPPC defines the phrase ``non-
quarantine pests'' as being applicable only to ``plants for planting''. 
[With this final action, EPA explicitly applies the quarantine 
exemption to use of methyl bromide for growing propagative material if 
it is being used to meet official quarantine requirements of the 
destination to which the propagative materials are being transported. 
However, the IPPC's definition is much narrower than the Protocol's, 
because the word ``official'' under the IPPC is limited only to 
national plant protection organization, and the Protocol's quarantine 
definition refers to ``plant, animal or environmental protection or 
health authority'' and the preshipment definition refers to ``national 
plant, animal, environmental, health or stored product authority''.
    Additionally, in 1998, the TEAP explicitly laid out the differences 
between the IPPC's and the Montreal Protocol's definitions of 
``official control'' for consideration by the Parties. The Parties 
rejected making any changes to the Protocol's definition of ``official 
control'' even when presented with the IPPC language (See discussion in 
section IV above). The Agency is acting in conformity with customary 
international law by adhering to the decision of the Parties on this 
matter.

C. What Action Is the Agency Taking Regarding Prophylactic Fumigation 
of U.S. Exports When the Fumigation Is Not Mandated by Import 
Regulations?

    U.S. businesses sometimes use methyl bromide against non-quarantine 
pests for a commodity that is being exported because it is known that 
the importing country will treat with methyl bromide at the port of 
entry if the detected level of these non-quarantine pests during port-
of-entry inspection exceeds that country's standards. Some U.S. 
exporters give their commodities a prophylactic treatment in the U.S. 
to prevent a much more damaging treatment in the receiving country that 
could occur if non-quarantine pests were found, possibly reducing the 
quality of the commodity. In cases where an official foreign Party 
requirement is specific to quarantine pests, or there is a general 
performance-based quarantine requirement, the use of methyl bromide 
under the exemption for quarantine applications would be appropriate. 
In addition, fumigation with methyl bromide to meet U.S. government or 
foreign non-quarantine requirements 21 days prior to export of the 
commodity would also be exempt under the definition of preshipment 
applications. The Agency reminds methyl bromide users that non-exempted 
quantities will be available until the January 1, 2005 phaseout date 
and that the Critical Use Exemption will become available after the 
phaseout (see section VII.A. above).

D. What Action is the Agency Taking Regarding the Exclusion of Specific 
Quarantine and Preshipment Applications From the Exemption at Some 
Future Time?

    The Parties to the Protocol in Decision XI/13 request Parties to 
``review their national plant, animal, environmental, health an stored 
product regulations with a view to removing the requirement for the use 
of methyl bromide for quarantine and preshipment where technically and 
economically feasible alternatives exist.'' The reason for a review 
process

[[Page 248]]

would be to limit the production and import of methyl bromide to only 
those cases where no other ``technologically and economically feasible 
alternatives exist.'' Through time, it is likely that the use of methyl 
bromide will be less and less necessary for quarantine and preshipment 
applications. When technically and economically feasible alternatives 
to methyl bromide are available, a process will be devised that will 
allow the U.S. to limit the use of this ozone-depleting substance while 
taking into account the need to protect international trade. In the 
years beyond the methyl bromide production and consumption phaseout, 
there will continue to be an exemption for quarantine and preshipment 
applications but there may no longer be price pressures for moving away 
from these quarantine and preshipment applications of methyl bromide. 
Therefore, the Parties to the Protocol emphasize the importance of 
reviewing quarantine and preshipment applications and identifying when 
technically and economically feasible alternatives exist, and removing 
these applications from the exemption.
    EPA offered several options for implementing such a review process 
in the interim final rule. The Agency received 5 comments related to 
this issue. All commenters asserted that the option to eliminate the 
Quarantine and Preshipment Exemption after the phaseout and ask users 
to apply for critical-use exemptions where no technically or 
economically feasible alternatives exist offered by EPA in the interim 
final rule was contrary to the provisions of the Montreal Protocol and 
could not be pursued without an amendment to the agreement. Given the 
request by the Parties for a future contraction of the Quarantine and 
Preshipment Exemption, EPA does not agree that the Protocol prohibits 
such a course of action. However, the Agency agrees that this option 
may impose the burden of completing a Critical Use Exemption 
Application on users where it may not be necessary. Thus, with this 
action, EPA sets forth its intent to meet the Parties' request for a 
domestic review process for quarantine and preshipment applications of 
methyl bromide by establishing a procedure for excluding specific 
quarantine and preshipment applications from the exemption when EPA 
determines by notice and comment rulemaking that alternatives are in 
significant international use for the specific applications. In 
undertaking the process of notice and comment rulemaking, EPA will 
consult with USDA/APHIS regarding alternatives that are efficacious for 
quarantine and preshipment and are in significant international use for 
specific quarantine and preshipment applications. Such a notice and 
comment rulemaking process will allow U.S. users of methyl bromide for 
quarantine and preshipment applications to make the case that although 
alternative(s) are in significant international use, the specific 
circumstances of their U.S. applications are unique (e.g., the 
alternatives are not feasible or commercially available in the U.S.) 
and continue to warrant the use of methyl bromide.
    EPA considered relying on market prices to guide methyl bromide use 
as an alternative to the formal review process described above. 
However, the Agency was unable to gather adequate information to 
determine whether the price of methyl bromide would be sufficiently 
likely to provide an incentive for the development and use of 
alternatives. Without adequate economic analysis, the Agency is unable 
to rely on market forces to meet the U.S.'s international commitment.

IX. What Are the Steps To Conform the U.S. Methyl Bromide Phaseout 
Schedule and Exemptions to the Montreal Protocol and Amended Clean Air 
Act?

    During stakeholder meetings, and in the proposed and final rules 
that established the 25 percent reduction in methyl bromide baseline 
allowances beginning in 1999 (64 FR 9290, 64 FR 29240), EPA described 
its intention to follow with separate rulemakings that would include 
the additional phaseout steps for methyl bromide and establish 
additional exemptions in accordance with the Protocol and the CAA. The 
rule establishing the remaining reduction and phaseout schedule for 
methyl bromide was published November 28, 2000 (65 FR 70795). The 
reduction and phaseout schedule is listed above at the end of part I.
    After the phaseout on January 1, 2005, critical-use exemptions are 
permitted under the Montreal Protocol and the Clean Air Act when 
nominated by the United States and approved by the Parties. In 
addition, an emergency use exemption of no more than 20 metric tonnes 
is available after the phaseout on January 1, 2005. In 2001, EPA 
initiated stakeholder meetings to develop a process for an emergency 
use exemption and for critical use exemptions, which is designed to 
ensure that the U.S. meets its obligations under the Montreal Protocol 
consistent with statutory requirements in the Clean Air Act. On May 10, 
2002 EPA published a Federal Register document (67 FR 31798) asking for 
people to submit Critical Use Exemption Applications. At this time no 
final decision has been published regarding what uses will be exempted 
as ``critical.'' Sometime in advance of 2005, EPA will establish a 
process for an emergency use exemption through notice and comment 
rulemaking.

X. Administrative Requirements

A. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local, and tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year. Before promulgating an EPA rule for which a written statement 
is needed, section 205 of the UMRA generally requires EPA to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, most cost-effective or least burdensome alternative 
that achieves the objectives of the rule. The provisions of section 205 
do not apply when they are inconsistent with the applicable law. 
Moreover, section 205 allows EPA to adopt an alternative other than the 
least costly, most cost-effective of least burdensome alternatives if 
the Administrator publishes with the final rule an explanation why that 
alternative was not adopted. Before EPA establishes any regulatory 
requirements that may significantly or uniquely affect small 
governments, including tribal governments, it must have developed under 
section 203 of the UMRA a small government agency plan. The plan must 
provide for notifying potentially affected small governments, enabling 
officials of affected small governments to have meaningful and timely 
input in the development of EPA regulatory proposals with significant 
Federal intergovernmental mandates, and informing, educating, and 
advising small governments on compliance with the regulatory 
requirements.
    EPA has determined that this rule does not contain a Federal 
mandate that may result in expenditures of $100 million or more for 
State, local, and tribal governments, in the aggregate, or the private 
sector in any one year. The rule imposes no enforceable duty on any

[[Page 249]]

State, local, or tribal government. The recordkeeping and reporting 
requirements are the only mandates imposed on those members of the 
private sector that choose to take advantage of the exemption to the 
methyl bromide phaseout established by this rulemaking, which EPA 
calculated to be under $100 million per year. Thus, today's rule is not 
subject to the requirements of sections 202 and 205 of the UMRA. EPA 
has also determined that this rule contains no requirements that might 
significantly or uniquely affect small governments. Thus, today's rule 
is not subject to the requirements of section 203 of the UMRA.

B. Regulatory Flexibility Analysis

    EPA has determined that it is not necessary to prepare a regulatory 
flexibility analysis in connection with this final rule. EPA has also 
determined that this rule will not have a significant economic impact 
on a substantial number of small entities. For purposes of assessing 
the impacts of today's rule on small entities, small entity is defined 
as: (1) A small business that is identified by the North American 
Industry Classification System code (NAICS) in the Table below; (2) a 
small governmental jurisdiction that is a government of a city, county, 
town, school district or special district with a population of less 
than 50,000; and (3) a small organization that is any not-for-profit 
enterprise which is independently owned and operated and is not 
dominant in its field.

----------------------------------------------------------------------------------------------------------------
                                                                                   Size standard   Size standard
                       Type of enterprise                           NAICS Code      (number of     (millions of
                                                                                    employees)       dollars)
----------------------------------------------------------------------------------------------------------------
Pesticide and Other Agricultural Chemical Manufacturing.........           32532             500  ..............
Support Activities for Agriculture and Forestry.................             115  ..............            $6.0
Exterminating and Pest Control Services.........................           56171  ..............            $6.0
----------------------------------------------------------------------------------------------------------------

    After considering the economic impacts of today's final rule on 
small entities, EPA has concluded that this action will not have a 
significant economic impact on a substantial number of small entities. 
We have determined that although some small percentage of distributors 
may be small entities and many of the applicators are too, that all 
entities regulated by today's action receive a benefit through the 
exemption, which allows them to continue to obtain quantities of methyl 
bromide outside of the reduction schedule and phaseout controls. We 
estimate that these benefits are equal to approximately 7 to 10% of the 
U.S. baseline of methyl bromide, annually, or about 1,787 to 2,552 
metric tonnes, which at current prices for methyl bromide of 
approximately $3.00/pound would be equal to an estimated annual benefit 
of $12 to $17 million. The costs of this exemption arise from the 
limited recordkeeping and reporting requirements which are estimated to 
be less than $53 thousand per year for the entire industry that uses 
methyl bromide for quarantine and preshipment applications.
    Although this final rule will not have a significant economic 
impact on a substantial number of small entities, EPA nonetheless has 
tried to reduce the impact of this rule on small entities. EPA held 
several stakeholder meetings to explore options for establishing a 
reasonable record keeping and reporting system that would allow the 
Agency to monitor and collect information for the U.S. reporting 
obligations to the Montreal Protocol. One option considered would have 
asked for certifications from applicators to be submitted to producers 
or importers prior to exempted production or import. This and other 
options were not only administratively too burdensome, but would also 
be too disruptive of normal commerce. In today's action, for each level 
in the methyl bromide market chain, the Agency chose the least 
burdensome method for collecting the minimum amount of information that 
would allow the U.S. to accurately fulfill its Protocol reporting 
requirements.

C. 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 result in a rule that may: (1) Have an annual 
effect on the economy of $100 million or more, or adversely affect in a 
material way the economy, 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 
entitlements, grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raise novel legal mandates, 
the President's priorities, or the principles set forth in the 
Executive Order.
    Pursuant to the terms of Executive Order 12866, OMB has notified 
EPA that it considers this a ``significant regulatory action'' within 
the meaning of the Executive Order. EPA has submitted this action to 
OMB for review. Changes made in response to OMB suggestions or 
recommendations on the original rule submitted to them will be 
documented in the public record.

D. Applicability of Executive Order 13045 (Children's Health 
Protection)

    Executive Order 13045: ``Protection of Children from Environmental 
Health Risks and Safety Risks'' (62 FR 19885 (April 23, 1997)) applies 
to any rule that: (1) Is determined to be ``economically significant'' 
as defined under Executive Order 12866, and (2) concerns an 
environmental health or safety risk that EPA has reason to believe may 
have a disproportionate effect on children. If the regulatory action 
meets both criteria, the Agency must evaluate the environmental health 
or safety effects of the planned rule on children, and explain why the 
planned regulation is preferable to other potentially effective and 
reasonably feasible alternatives considered by the Agency.
    EPA interprets Executive Order 13045 as applying only to those 
regulatory actions that are based on health or safety risks, such that 
the analysis required under section 5-501 of the Order has the 
potential to influence the regulation. This rule is not subject to 
Executive Order 13045 because it implements a specific exemption set 
forth by Congress in section 604(d)(5) of the Clean Air Act.

E. Paperwork Reduction Act

    The Office of Management and Budget (OMB) has approved the 
information collection requirements contained in this rule for three 
years under the provisions of the Paperwork Reduction

[[Page 250]]

Act, 44 U.S.C. 3501 et seq. The OMB control number is 2060-0170.
    In relation to the expected benefits of today's exemption from the 
phaseout schedule for methyl bromide, this action is maintaining the 
additional reporting and record keeping requirements required in the 
interim final rule. This action requires reporting by distributors of 
methyl bromide regarding the total quantity sold that is certified to 
be solely for quarantine and preshipment applications. This action also 
requires applicators of methyl bromide to certify that specified 
quantities purchased will be used solely for quarantine and preshipment 
applications. Producers and importers of methyl bromide must include 
additional information in existing quarterly reports. As in the interim 
final rule, producers that export and third-party exporters must submit 
additional information regarding quantities of methyl bromide exported 
for quarantine and preshipment applications. Today's action also 
maintains the record keeping requirements of the interim final rule 
associated with the reporting listed above and for commodity owners or 
shippers who must formally request methyl bromide use citing the 
official control or official requirement for the quarantine and 
preshipment application.
    EPA is making the reporting forms associated with this rule 
available electronically, as a first step. In addition, EPA is working 
to make it possible for people to complete the forms electronically 
with special guidance on a ``file naming protocol.'' EPA wants to 
create this ``file naming protocol'' so forms completed electronically 
by producers and importers can be saved with similar nomenclature for 
transmission to EPA by email. For example, the company, Acme Ltd., 
might complete the third-quarter importer's report electronically and 
save the document with the name 3Q--ImpR--Acme and send it, by email, 
to EPA. The Agency believes guidance on a ``file naming protocol'' will 
ease the process for electronically filing, searching and identifying 
forms for both the Agency and companies, and be especially helpful if a 
question arises about information in a specific form. EPA will strive 
to have forms available that can be completed electronically by the 
regulatory deadline for submission of the first-quarter reports (30 
days after the end of the quarter in 2003), and will make every effort 
to have them available no later than for submission of second-quarter 
reports. Concurrent with the process for making it possible to 
electronically complete forms for submission by email, EPA is pursuing 
technical and logistical questions about creating a secure Web-based 
system for direct electronic reporting of data. If EPA deems that it is 
feasible and efficient to create a secure Web-based database for direct 
electronic reporting, then EPA will work to bring such a system online 
by 2004.
    The information collection under this action is designed to 
implement the exemption in paragraph 6 under article 2H of the Montreal 
Protocol for quantities of methyl bromide used for quarantine and 
preshipment applications as well as the exemption under 604(d)(5) of 
the CAA. The information collection under this rule is authorized under 
section 603(b) and 603(d) of the CAA. This information collection is 
conducted to meet U.S. obligations under Article 7, Reporting 
Requirements, of the Montreal Protocol on Substances that Deplete the 
Ozone Layer (Protocol); and to carry out the requirements of Title VI 
of the CAA, including sections 603 and 614. The reporting requirements 
included in this rule are intended to: (1) Allow exempted production 
and import for a specific exemption and the consequent tracking of that 
production and import; (2) respond to industry comments on the 
functioning of the program to streamline reporting and eliminate 
administrative inefficiencies; (3) satisfy U.S. obligations under the 
international treaty, The Montreal Protocol on Substances that Deplete 
the Ozone Layer (Protocol), to report data under Article 7; (4) fulfill 
statutory obligations under Section 603(b) of Title VI of the Clean Air 
Act Amendments of 1990 for reporting and monitoring; and (5) provide 
information to report to Congress on the production, use and 
consumption of class I controlled substances as statutorily required in 
section 603(d) of Title VI of the CAA.
    EPA informs respondents that they may assert claims of business 
confidentiality for any of the information they submit. Information 
claimed confidential will be treated in accordance with the procedures 
for handling information claimed as confidential under 40 CFR part 2, 
Subpart B, and will be disclosed only to the extent, and by means of 
the procedures, set forth in that subpart. If no claim of 
confidentiality is asserted when EPA receives the information it may be 
made available to the public without further notice to the respondents 
(40 CFR 2.203).
    The information collection requirements for this action have an 
estimated reporting burden averaging 1.38 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. The estimate includes the time needed to 
comply with EPA's reporting requirements, as well as that used for the 
completion of reports.
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a Federal agency. This includes the time 
needed to review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
and transmit or otherwise disclose the information.
    An Agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations are listed in 40 CFR part 9 and 48 CFR chapter 15.

----------------------------------------------------------------------------------------------------------------
                                      No. of        Responses/         Total         Hours per
       Collection activity          respondents     respondent       responses       response       Total hours
----------------------------------------------------------------------------------------------------------------
Producers & Importers Report....               4               4              16               1              16
Exporters Report................               2               4               8               8              64
Applicator Certification........              15               6              90             0.5              45
Distributor Report..............              15               4              60               4             240
Commodity Owner, Shipper or                  500              10             500               1             500
 Agent Record keeping...........
                                 -----------------
    Total burden hrs............  ..............  ..............  ..............  ..............             865
----------------------------------------------------------------------------------------------------------------


[[Page 251]]

F. Executive Order 13132 (Federalism)

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    This rule does not have federalism implications. It will not have 
substantial direct effects on the States, on the relationship between 
the national governmental and the States, or on the distribution of 
power and responsibilities among the various levels of government, as 
specified in Executive Order 13132. This rule does not in any way 
restrict States from continuing to operate their plant, animal, 
environmental, health or stored product protection programs associated 
with quarantine and preshipment applications. Thus, Executive Order 
13132 does not apply to this rule.

G. Executive Order 13175 (Consultation and Coordination With Indian 
Tribal Governments)

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249 (November 9, 2000)), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by tribal officials in the development of regulatory 
policies that have tribal implications.'' This final rule does not have 
tribal implications, as specified in Executive Order 13175. There is no 
enforceable mandate imposed on tribal governments within this 
regulation. Thus, Executive Order 13175 does not apply to this rule.

H. The National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 
note) directs EPA to use voluntary consensus standards in its 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g. materials specifications, test methods, 
sampling procedures, and business practices) that are developed or 
adopted by voluntary consensus standards bodies. The NTTAA directs EPA 
to provide Congress, through OMB, explanations when the Agency decides 
not to use available and applicable voluntary consensus standards. This 
rulemaking does not involve technical standards. Therefore, EPA did not 
consider the use of any voluntary consensus standards.

I. Executive Order 13211 (Energy Effects)

    This rule is not a ``significant energy action'' as defined in 
Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 
28355, May 22, 2001) because it is not likely to have a significant 
adverse effect on the supply, distribution, or use of energy. Further, 
we have concluded that this rule is not likely to have any adverse 
energy effects.

XI. Congressional Review

A. Submission to Congress and the Comptroller General

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
that rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This rule is not a major rule as defined by 5 U.S.C. 804(2). 
This rule will be effective January 1, 2003.

List of Subjects in 40 CFR Part 82

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Chemicals, Exports, Imports, Reporting and 
recordkeeping requirements.

    Dated: December 23, 2002.
Christine Todd Whitman,
Administrator.

    For reasons set out in the preamble, title 40 chapter I of the Code 
of Federal Regulations is amended as follows:

PART 82--PROTECTION OF STRATOSPHERIC OZONE

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

    Authority: 42 U.S.C. 7414, 7601, 7671-7671q.

Subpart A--Production and Consumption Controls

    2. Section 82.3 is amended by adding new definitions in 
alphabetical order for the terms, ``Applicator,'' ``Commodity Owner, 
Shipper or their Agent,'' ``Distributor of methyl bromide,'' 
``Preshipment applications,'' and ``Quarantine applications.''


Sec.  82.3  Definitions.

    As used in this subpart, the term:
    Applicator means the person who applies methyl bromide.
* * * * *
    Commodity Owner, Shipper or their Agent means the person requesting 
that an applicator use methyl bromide for quarantine or preshipment 
applications.
* * * * *
    Distributor of methyl bromide means the person directly selling a 
class I, Group VI controlled substance to an applicator.
* * * * *
    Preshipment applications, with respect to class I, Group VI 
controlled substances, are those non-quarantine applications applied 
within 21 days prior to export to meet the official requirements of the 
importing country or existing official requirements of the exporting 
country. Official requirements are those which are performed by, or 
authorized by, a national plant, animal, environmental, health or 
stored product authority.
* * * * *
    Quarantine applications, with respect to class I, Group VI 
controlled substances, are treatments to prevent the introduction, 
establishment and/or spread of quarantine pests (including diseases), 
or to ensure their official control, where: (1) Official control is 
that performed by, or authorized by, a national (including state, 
tribal or local) plant, animal or environmental protection or health 
authority; (2) quarantine pests are pests of potential importance to 
the areas endangered thereby and not yet present there, or present but 
not widely distributed and being officially controlled. This definition 
excludes treatments of commodities not entering or leaving the United 
States or any State (or political subdivision thereof).
* * * * *
    3. Section 82.4 is amended by redesignating paragraphs (a) as 
(a)(1) and republishing the text, adding (a)(2), redesignating 
paragraphs (c) as (c)(1) and republishing the text, adding (c)(2),

[[Page 252]]

redesignating (k) as (k)(1) and republishing the text, and adding 
(k)(2) as follows:


Sec.  82.4  Prohibitions.

    (a)(1) Prior to January 1, 1996, for all Groups of class I 
controlled substances, and prior to January 1, 2005, for class I, Group 
VI controlled substances, no person may produce, at any time in any 
control period, (except that are transformed or destroyed domestically 
or by a person of another Party) 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.
    (2) Effective January 1, 2003, production of class I, Group VI 
controlled substances is not subject to the prohibitions in paragraph 
(a)(1) of this section if it is solely for quarantine or preshipment 
applications as defined in this subpart.
* * * * *
    (c)(1) Prior to January 1, 1996, for all Groups of class I 
controlled substances, and prior to January 1, 2005, for class I, Group 
VI controlled substances, no person may produce or (except for 
transhipments, heels or used controlled substances) import, at any time 
in any control period, (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, heels or used 
controlled substances) constitutes a separate violation of this 
subpart.
    (2) Effective January 1, 2003, production and import of class I, 
Group VI controlled substances is not subject to the prohibitions in 
paragraph(c)(1) of this section if it is solely for quarantine or 
preshipment applications as defined in this subpart.
* * * * *
    (k)(1) Prior to January 1, 1996, for all Groups of class I 
controlled substances, and prior to January 1, 2005, for class I, Group 
VI controlled substances, 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, prior to January 1, 1996, for all class I controlled 
substances, and prior to January 1, 2005, for class I, Group VI 
controlled substances, only consumption allowances are required to 
import, with the exception of transhipments, heels, and used controlled 
substances. Effective January 1, 1996, for all Groups of class I 
controlled substances, except Group VI, only essential-use allowances 
or exemptions are required to import class I controlled substances, 
with the exception of transhipments, heels and used controlled 
substances.
    (2) Notwithstanding paragraph (k)(1) of this section, effective 
January 1, 2003, for class I, Group VI controlled substances, 
consumption allowances are not required to import quantities solely for 
quarantine or preshipment applications as defined in this subpart.
* * * * *

    4. Section 82.13 is amended by:
    a. Adding paragraphs (f)(2)(xvii) through (f)(2)(xix), and 
(f)(3)(xiii) through (f)(3)(xv),
    b. Adding paragraphs (g)(1)(xvii) through (g)(1)(xix), and 
(g)(4)(xv) through (g)(4)(xvii),
    c. Revising paragraph (h),
    d. Adding paragraphs (aa), (bb), and (cc).
    The revisions and additions read as follows:


Sec.  82.13  Recordkeeping and reporting requirements.

* * * * *
    (f) * * *
    (2) * * *
    (xvii) For class I, Group VI controlled substances, dated records 
of the quantity of controlled substances produced for quarantine and 
preshipment applications and quantity sold for quarantine and 
preshipment applications;
    (xviii) Written certifications that quantities of class I, Group VI 
controlled substances produced solely for quarantine and preshipment 
applications were purchased by distributors or applicators to be used 
only for quarantine and preshipment applications in accordance with the 
definitions in this subpart; and
    (xix) Written verifications from a U.S. purchaser that class I, 
Group VI controlled substances produced solely for quarantine and 
preshipment applications, if exported, will be exported solely for 
quarantine and preshipment applications upon receipt of a certification 
in accordance with the definitions of this subpart and requirements in 
paragraph (h) of this section.
    (3) * * *
    (xiii) The amount of class I, Group VI controlled substances sold 
or transferred during the quarter to a person other than the producer 
solely for quarantine and preshipment applications;
    (xiv) A list of the quantities of class I, Group VI controlled 
substances produced by the producer and exported by the producer and/or 
by other U.S. companies, to a Party to the Protocol that will be used 
solely for quarantine and preshipment applications and therefore were 
not produced expending production or consumption allowances; and
    (xv) For quarantine and preshipment applications of class I, Group 
VI controlled substances in the United States or by a person of another 
Party, one copy of a certification that the material will be used only 
for quarantine and preshipment applications in accordance with the 
definitions in this subpart from each recipient of the material and a 
list of additional quantities shipped to that same person for the 
quarter.
* * * * *
    (g) * * *
    (1) * * *
    (xvii) For class I, Group VI controlled substances, dated records 
of the quantity of controlled substances imported for quarantine and 
preshipment applications and quantity sold for quarantine and 
preshipment applications;
    (xviii) Written certifications that quantities of class I, Group VI 
controlled substances imported solely for quarantine and preshipment 
applications were purchased by distributors or applicators to be used 
only for quarantine and preshipment applications in accordance with the 
definitions in this subpart; and
    (xix) Written verifications from a U.S. purchaser that class I, 
Group VI controlled substances imported solely for quarantine and 
preshipment applications, if exported, will be exported solely for 
quarantine and preshipment applications upon receipt of a certification 
in accordance with the definitions of this Subpart and requirements in 
paragraph (h) of this section.
* * * * *
    (4) * * *
    (xv) The amount of class I, Group VI controlled substance sold or 
transferred during the quarter to a person other than the importer 
solely for quarantine and preshipment applications;

[[Page 253]]

    (xvi) A list of the quantities of class I, Group VI controlled 
substances exported by the importer and or by other U.S. companies, to 
a Party to the Protocol that will be used solely for quarantine and 
preshipment applications and therefore were not imported expending 
consumption allowances; and
    (xvii) For quarantine and preshipment applications of class I, 
Group VI controlled substances in the United States or by a person of 
another Party, one copy of a certification that the material will be 
used only for quarantine and preshipment applications in accordance 
with the definitions in this subpart from each recipient of the 
material and a list of additional quantities shipped to that same 
person for the quarter.
    (h) Reporting Requirements--Exporters.
    (1) For any exports of class I controlled substances (except Group 
VI) not reported under Sec.  82.10 of this subpart (additional 
consumption allowances), or under paragraph (f)(3) of this section 
(reporting for producers of controlled substances), the exporter who 
exported a class I controlled substance (except Group VI) 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:
    (i) The names and addresses of the exporter and the recipient of 
the exports;
    (ii) The exporter's Employee Identification Number;
    (iii) The type and quantity of each controlled substance exported 
and what percentage, if any, of the controlled substance is used, 
recycled or reclaimed;
    (iv) The date on which, and the port from which, the controlled 
substances were exported from the United States or its territories;
    (v) The country to which the controlled substances were exported;
    (vi) The amount exported to each Article 5 country;
    (vii) The commodity code of the controlled substance shipped; and
    (viii) The invoice or sales agreement containing language similar 
to the Internal Revenue Service Certificate that the purchaser or 
recipient of imported controlled substances intends to transform those 
substances, or destruction verifications (as in paragraph(k) of this 
section) showing that the purchaser or recipient intends to destroy the 
controlled substances.
    (2) For any exports of class I, Group VI controlled substances not 
reported under Sec.  82.10 of this subpart (additional consumption 
allowances), or under paragraph (f)(3) of this section (reporting for 
producers of controlled substances), the exporter who exported a class 
I, Group VI controlled substance must submit to the Administrator the 
following information within 45 days after the end of each quarter in 
which the unreported exports left the United States:
    (i) The names and addresses of the exporter and the recipient of 
the exports;
    (ii) The exporter's Employee Identification Number;
    (iii) The type and quantity of each controlled substance exported 
and what percentage, if any, of the controlled substance is used, 
recycled or reclaimed;
    (iv) The date on which, and the port from which, the controlled 
substances were exported from the United States or its territories;
    (v) The country to which the controlled substances were exported;
    (vi) The amount exported to each Article 5 country;
    (vii) The commodity code of the controlled substance shipped; and
    (viii) The invoice or sales agreement containing language similar 
to the Internal Revenue Service Certificate that the purchaser or 
recipient of imported controlled substances intends to transform those 
substances, the destruction verifications (as in paragraph (k) of this 
section) showing that the purchaser or recipient intends to destroy the 
controlled substances, or the certification that the purchaser or 
recipient and the eventual applicator will only use the material for 
quarantine and preshipment applications in accordance with the 
definitions in this subpart.
* * * * *
    (aa) Every distributor of methyl bromide (class I, Group VI 
controlled substances) who purchases or receives a quantity produced or 
imported solely for quarantine or preshipment applications under the 
exemptions in this subpart must comply with recordkeeping and reporting 
requirements specified in this paragraph (aa) of this section.
    (1) Every distributor of methyl bromide must certify to the 
producer or importer that quantities received that were produced or 
imported solely for quarantine and preshipment applications under the 
exemptions in this subpart will be used only for quarantine 
applications or preshipment applications in accordance with the 
definitions in this subpart.
    (2) Every distributor of a quantity of methyl bromide that was 
produced or imported solely for quarantine or preshipment applications 
under the exemptions in this subpart must receive from an applicator a 
certification of the quantity of class I, Group VI controlled 
substances ordered, prior to delivery of the quantity, stating that the 
quantity will be used solely for quarantine or preshipment applications 
in accordance with definitions in this subpart.
    (3) Every distributor of methyl bromide who receives a 
certification from an applicator that the quantity ordered and 
delivered will be used solely for quarantine and preshipment 
applications in accordance with definitions in this subpart must 
maintain the certifications as records for 3 years.
    (4) Every distributor of methyl bromide who receives a 
certification from an applicator that the quantity ordered and 
delivered will be used solely for quarantine and preshipment 
applications in accordance with definitions in this subpart must report 
to the Administrator within 45 days after the end of each quarter, the 
total quantity delivered for which certifications were received that 
stated the class I, Group VI controlled substance would be used solely 
for quarantine and preshipment applications in accordance with 
definitions in this Subpart.
    (bb) Every applicator of class I, Group VI controlled substances 
who purchases or receives a quantity produced or imported solely for 
quarantine and preshipment applications under the exemptions in this 
subpart must comply with recordkeeping and reporting requirements 
specified in this paragraph (bb) of this section.
    (1) Recordkeeping--Applicators. Every applicator of class I, Group 
VI controlled substances produced or imported solely for quarantine and 
preshipment applications under the exemptions of this subpart must 
maintain, for every application, a document from the commodity owner, 
shipper or their agent requesting the use of class I, Group VI 
controlled substances citing the regulatory requirement that justifies 
its use in accordance with definitions in this subpart. These documents 
shall be retained for 3 years.
    (2) Reporting--Applicators. Every applicator of class I, Group VI 
controlled substances who purchases or receives a quantity of class I, 
Group VI controlled substance that was produced or imported solely for 
quarantine and preshipment applications under the exemptions in this 
subpart shall provide the distributor of the methyl bromide, prior to 
shipment of the class I, Group

[[Page 254]]

VI controlled substance, with a certification that the quantity of 
controlled substances will be used only for quarantine and preshipment 
applications as defined in this subpart.
    (cc) Every commodity owner, shipper or their agent requesting an 
applicator to use a quantity of class I, Group VI controlled substance 
that was produced or imported solely for quarantine and preshipment 
applications under the exemptions of this subpart must maintain a 
record for 3 years, for each request, certifying knowledge of the 
requirements associated with the exemption for quarantine and 
preshipment applications in this subpart and citing the regulatory 
requirement that justifies the use of the class I, Group VI controlled 
substance in accordance with definitions in this subpart. The record 
must include the following statement: ``I certify knowledge of the 
requirements associated with the exempted quarantine and preshipment 
applications published in 40 CFR part 82, including the requirement 
that this letter cite the treatments or official controls for 
quarantine applications or the official requirements for preshipment 
requirements.''

[FR Doc. 02-32986 Filed 12-31-02; 8:45 am]
BILLING CODE 6560-50-P