[Federal Register Volume 69, Number 116 (Thursday, June 17, 2004)]
[Proposed Rules]
[Pages 34034-34041]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-13681]



  Federal Register / Vol. 69, No. 116 / Thursday, June 17, 2004 / 
Proposed Rules  

[[Page 34034]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 82

[OAR-2003-0130; FRL-7774-2]


Protection of Stratospheric Ozone: Allowance System for 
Controlling HCFC Production, Import and Export

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing this action to conform its regulations 
governing the trade of certain ozone depleting substances with the 
Montreal Protocol and to correct a drafting error. We are proposing 
minor adjustments to domestic regulations to ensure that those 
complying with the U.S. regulations are also complying with the terms 
of the Montreal Protocol. Elsewhere in today's Federal Register EPA has 
also issued today a Direct Final Rule.

DATES: Comments must be received on or before July 19, 2004. If 
requested by July 2, 2004 a hearing will be held on July 19, 2004 and 
the comment period will be extended until August 2, 2004.

ADDRESSES: Submit your comments, identified by EDocket ID No. OAR-2003-
0130 (Legacy docket A-98-33) by one of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the on-line instructions for submitting comments.
     Agency Web site: http://www.epa.gov/edocket. EDOCKET, 
EPA's electronic public docket and comment system, is EPA's preferred 
method for receiving comments. Follow the on-line instructions for 
submitting comments.
     Fax comments to (202) 566-1741.
     Mail/Hand delivery: Submit comments to Air and Radiation 
Docket at EPA West, 1301 Constitution Avenue NW., Room B108, Mail Code 
6102T, Washington, DC 20460, Phone: (202) 566-1742.
    Instructions: Direct your comments to Docket ID No. OAR-2003-0130. 
The historical docket for this rulemaking is A-98-33. EPA's policy is 
that all comments received will be included in the public docket 
without change and may be made available online at http://www.epa.gov/edocket, including any personal information provided, unless the 
comment includes information claimed to be Confidential Business 
Information (CBI) or other information whose disclosure is restricted 
by statute. Do not submit information that you consider to be CBI or 
otherwise protected through EDOCKET, regulations.gov, or e-mail. The 
EPA EDOCKET and the Federal regulations.gov Web sites are ``anonymous 
access'' systems, which means EPA will not know your identity or 
contact information unless you provide it in the body of your comment. 
If you send an e-mail comment directly to EPA without going through 
EDOCKET or regulations.gov, your e-mail address will be automatically 
captured and included as part of the comment that is placed in the 
public docket and made available on the Internet. If you submit an 
electronic comment, EPA recommends that you include your name and other 
contact information in the body of your comment and with any disk or 
CD-ROM you submit. If EPA cannot read your comment due to technical 
difficulties and cannot contact you for clarification, EPA may not be 
able to consider your comment. Electronic files should avoid the use of 
special characters, any form of encryption, and be free of any defects 
or viruses. For additional information about EPA's public docket visit 
EDOCKET on-line or see the Federal Register of May 31, 2002 (67 FR 
38102).
    Docket: All documents in the docket are listed in the EDOCKET index 
at http://www.epa.gov/edocket. Although listed in the index, some 
information is not publicly available, i.e., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, is not placed on the Internet and will be 
publicly available only in hard copy form. Publicly available docket 
materials are available either electronically in EDOCKET or in hard 
copy at the Air and Radiation Docket EPA/DC, EPA West, Room B102, 1301 
Constitution Ave., NW., Washington, DC. The Public Reading Room is open 
from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal 
holidays. The telephone number for the Public Reading Room is (202) 
566-1744, and the telephone number for the Air Docket is (202) 566-
1742.

FOR FURTHER INFORMATION CONTACT: Cindy Newberg, EPA, Global Programs 
Division, Office of Atmospheric Programs, Office of Air and Radiation 
(6205J), 1200 Pennsylvania Avenue, NW., Washington, DC 20460, (202) 
343-9729.

SUPPLEMENTARY INFORMATION: (1) Under the Montreal Protocol on 
Substances that Deplete the Ozone Layer (Protocol), as amended, the 
U.S. and other industrialized countries that are Parties to the 
Protocol have agreed to limit production and consumption of 
hydrochlorofluorocarbons (HCFCs) and to phase out consumption in a 
step-wise fashion over time, culminating in a complete phaseout in 
2030. The Parties to the Montreal Protocol met November 10-14, 2003 in 
Nairobi, Kenya where they discussed and agreed to Decision XV/3. As a 
Party to the Protocol, the United States was represented at that 
meeting, participated in the discussions, and agreed with the resulting 
Decision XV/3. Upon review of the current domestic regulations in 
relation to Decision XV/3, EPA identified discrepancies between the 
Decision and EPA's regulations. Therefore, Decision XV/3 led to this 
action aimed at promulgating minor adjustments to the regulations 
issued January 21, 2003 (68 FR 2820) to ensure that those complying 
with the U.S. regulations are also complying with the terms of the 
Montreal Protocol.
    EPA views this as a noncontroversial action and anticipates no 
adverse comment. Therefore, in today's Federal Register, we are 
publishing a separate Direct Final rulemaking to revise the trade 
restrictions provisions. This direct final rule will be effective on 
August 16, 2004 without further notice unless we receive adverse 
comment by July 19, 2004. If EPA receives adverse comment, we will 
publish a timely withdrawal in the Federal Register informing the 
public that the rule will not take effect. If necessary, we will 
consider and address all public comments in any subsequent final rule 
based on this proposed rule. We will not institute a second comment 
period on this action. Any parties interested in commenting must do so 
at this time.
    (2) Abbreviations and Acronyms Used in This Document:

Act--Clean Air Act Amendments of 1990
ANPRM--Advance Notice of Proposed Rulemaking
Article 2 countries--industrialized countries who are not parties 
operating under paragraph 1 of Article 5 of the Montreal Protocol
Article 5 countries--developing countries who satisfy certain 
conditions laid out in paragraph 1 of Article 5 of the Montreal 
Protocol
CAA--Clean Air Act Amendments of 1990
cap--limitation in level of production or consumption
CFC--chlorofluorocarbon
CFR--Code of Federal Regulations
EPA--Environmental Protection Agency
FDA--Food and Drug Administration
FR--Federal Register
HCFC--hydrochlorofluorocarbon
NASA--National Aeronautics and Space Administration

[[Page 34035]]

NODA--Notice of Data Availability
NPRM--Notice of Proposed Rulemaking
ODP--ozone depletion potential (CFR 40, part 82)
ODS--ozone-depleting substance
Party--States and regional economic integration organizations that have 
consented to be bound by the Montreal Protocol on Substances that 
Deplete the Ozone Layer
Protocol--Montreal Protocol on Substances that Deplete the Ozone Layer
SBREFA--Small Business Regulatory Enforcement Fairness Act
SNAP--Significant New Alternatives Policy
UNEP--United Nations Environment Programme
U.S.--United States

    (3) Tips for Preparing Your Comments. When submitting comments, 
remember to:
     Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
     Follow directions--The agency may ask you to respond to 
specific questions or organize comments by referencing a Code of 
Federal Regulations (CFR) part or section number.
     Explain why you agree or disagree; suggest alternatives 
and substitute language for your requested changes.
     Describe any assumptions and provide any technical 
information and/or data that you used.
     If you estimate potential costs or burdens, explain how 
you arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
     Provide specific examples to illustrate your concerns, and 
suggest alternatives.
     Explain your views as clearly as possible, avoiding the 
use of profanity or personal threats.
     Make sure to submit your comments by the comment period 
deadline identified.

Table of Contents

I. Regulated Entities
II. Background
III. Proposed Action
    A. Incorporation of Decision XV/3: Obligations of Parties to the 
Beijing Amendments under Article 4 of the Montreal Protocol with 
respect to hydrochlorofluorcarbons
    1. Trade with States that have ratified the Copenhagen and 
Beijing Amendments or have shown their intention to ratify, accede, 
accept, or approve
    2. Article 5 Parties
    B. Correction to References to Appendices
V. Administrative Requirements
    A. Executive Order 12866
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination with 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children from 
Environmental Health & Safety Risks
    H. Executive Order 13211: Actions that Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer Advancement Act

I. Regulated Entities

    The HCFC allowance allocation system will affect the following 
categories:

----------------------------------------------------------------------------------------------------------------
                  Category                     NAICS code       SIC code       Examples of regulated  entities
----------------------------------------------------------------------------------------------------------------
Chlorofluorocarbon gas manufacturing.......          325120            2869  Chlorodifluoromethane
                                                                              manufacturers;
                                             ..............  ..............  Dichlorofluoroethane manufacturers;
                                             ..............  ..............  Chlorodifluoroethane manufacturers.
--------------------------------------------
Chlorofluorocarbon gas importers...........          325120            2869  Chlorodifluoromethane importers;
                                             ..............  ..............  Dichlorofluoroethane importers;
                                             ..............  ..............  Chlorodifluoroethane importers.
--------------------------------------------
Chlorofluorocarbon gas exporters...........          325120            2869  Chlorodifluoromethane exporters;
                                             ..............  ..............  Dichlorofluoroethane exporters;
                                             ..............  ..............  Chlorodifluoroethane exporters.
--------------------------------------------
Polystyrene Foam Products Manufacturing....          326140            3086  Plastics Foam Products (Polystyrene
                                                                              Foam Products).
--------------------------------------------
Urethane and Other Foam Products (Except             326150            3086  Insulation and cushioning, foam
 Polystyrene) Manufacturing.                                                  plastics (except polystyrene)
                                                                              manufacturing.
----------------------------------------------------------------------------------------------------------------

    This 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 this table could also be affected. To determine whether 
your facility, company, business organization, or other entity is 
regulated by this action, you should carefully examine these 
regulations. If you have questions regarding the applicability of this 
action to a particular entity, consult the person listed in the FOR 
FURTHER INFORMATION CONTACT section.

II. Background

    In 1990, as part of a resolution on ozone-depleting substances, the 
Parties to the Protocol identified HCFCs as transitional substitutes 
for CFCs and other more destructive ozone-depleting substances (ODSs). 
In 1992, the Parties negotiated amendments to the Protocol (the 
``Copenhagen Amendment'') that created a detailed phaseout schedule for 
HCFCs, with a cap on consumption for Article 2 (industrialized) 
countries like the U.S. The Protocol defines consumption as production 
plus imports minus exports. The consumption cap is derived from the 
formula of 2.8 percent of the Party's CFC consumption in 1989, plus the 
Party's consumption of HCFCs in 1989. Based on this formula, the 
consumption cap for the U.S. is 15,240 ODP-weighted metric tonnes, 
effective January 1, 1996.
    In the Copenhagen Amendments, the Parties created a schedule with 
graduated reductions and the eventual phaseout of the consumption of 
HCFCs. The schedule calls for a 35 percent reduction of the cap in 
2004, followed by a 65 percent reduction in 2010, a 90 percent 
reduction in 2015, a 99.5 percent reduction in 2020, and a total 
phaseout in 2030. As a party to the Copenhagen Amendment (the U.S. 
deposited its instrument of ratification on March 2, 1994), the U.S. 
must comply with this phaseout schedule under the Protocol.

[[Page 34036]]

    In 1999, the Parties negotiated another amendment to the Protocol 
(the Beijing Amendment''), where they agreed to a cap on HCFC 
production for industrialized countries, effective January 1, 2004. 
This cap was derived from the average of the Party's consumption cap 
(2.8 percent of the Party's CFC consumption in 1989, plus the Party's 
HCFC consumption 1989) and the result of the same formula for 
production (2.8 percent of the Party's CFC production in 1989, plus the 
Party's HCFC production in 1989). This formula results in a U.S. 
production cap of 15,537 ODP-weighted metric tonnes. Since the U.S. 
subsequently joined the Beijing Amendment (the U.S. deposited its 
instrument of ratification on October 1, 2003) EPA has promulgated 
regulations that are consistent with that production cap as authorized 
by section 606 of the CAA.
    In addition, Parties to the Beijing Amendment agree that under the 
Beijing Amendment, beginning in January 1, 2004, they will ban HCFC 
imports from and exports to ``any State not party to this Protocol.'' 
These amendments are reflected in Article 4 of the Protocol in 
paragraphs 1 quin. and 2 quin.
    As a party to the Beijing Amendment, the U.S. therefore, has an 
obligation from January 1, 2004 to ban trade in HCFCs with respect to 
``any State not party to this Protocol.'' The Protocol defines this 
phrase (Article 4(9)) to include any State or regional economic 
integration organization (of which the European Community is the only 
present example) that has not agreed to be bound by the control 
measures in effect for HCFCs.
    To implement the Protocol, as amended by the Copenhagen and Beijing 
Amendments, EPA established an allowance system to control the U.S. 
consumption of HCFCs and published the implementing regulations in the 
Federal Register on January 21, 2003 (68 FR 2820). The HCFC allowance 
system is part of EPA's program to reduce the emissions of ODSs to 
protect the stratospheric ozone layer. These regulations also included 
a provision, section 82.15(e), to implement the ban on trade with 
states not a Party to the Protocol. EPA interpreted Article 4 of the 
Protocol to ban imports from and exports to countries that had not 
ratified the amendments to the Protocol containing control measure for 
HCFCs relevant to that country (e.g., for countries that produce HCFCs 
they needed to be a Party to Beijing, but for countries that only 
consume, but do not produce HCFCs, they needed to be Party to 
Copenhagen).

III. Proposed Action

A. Incorporation of Decision XV/3: Obligations of Parties to the 
Beijing Amendments Under Article 4 of the Montreal Protocol With 
Respect to Hydrochlorofuorcarbons

    The Parties to the Montreal Protocol met November 10-14, 2003 in 
Nairobi, Kenya where they discussed and agreed to Decision XV/3. The 
Decision was necessary because different Parties to the Beijing 
Amendment, including the U.S., were adopting differing and conflicting 
interpretations of the term ``state not Party to this Protocol: 
Domestically and in ways that would have created great uncertainty and 
confusion within the regulated community with respect to which states 
trade was allowed under Article 4. As a Party to the Protocol, 
including both the Copenhagen and Beijing amendments, the United States 
was represented at that meeting, participated in the discussions, and 
agreed with the resulting Decision XV/3. Upon review of the current 
domestic regulations in relation to Decision XV/3, EPA identified 
discrepancies between the Decision and EPA's regulations. Therefore, 
Decision XV/3 led to this action aimed at promulgating minor 
adjustments to the regulations issued January 21, 2003 (68 FR 2820) to 
ensure that those complying with the U.S. regulations are also 
complying with the terms of the Montreal Protocol. What follows is a 
review of Decision XV/3 and a discussion of what changes are being made 
to the current regulations through this action.
    Decision XV/3 reads as follows:
    Affirming that it is operating by consensus,
    Reaffirming the obligation to control consumption of 
hydrochlorofluorocarbons by the Parties to the amendment adopted by the 
Fourth Meeting of the Parties to the Montreal Protocol at Copenhagen on 
25 November 1992 (the ``Copenhagen Amendment''),
    Reaffirming the obligation to control production of 
hydrochlorofluorocarbons by the Parties to the amendment adopted by the 
Eleventh Meeting of the Parties to the Montreal Protocol at Beijing on 
3 December 1999 (the ``Beijing Amendment''),
    Strongly urging all States not yet party to the Copenhagen or 
Beijing Amendments to ratify, accede to or accept them as soon as 
possible,
    Recalling that, as of 1 January 2004, the Parties to the Beijing 
Amendment have accepted obligations under Article 4, paragraph 1 quin., 
and paragraph 2 quin., of the Protocol to ban the import and export of 
the controlled substances in group 1 of Annex C 
(hydrochlorofluorocarbons) from any ``State not a party to this 
Protocol,''
    Noting that Article 4, paragraph 9 of the Protocol provides that 
``for the purposes of this Article, the term ``State not party to this 
Protocol'' shall include, with respect to a particular controlled 
substance, a State or regional economic integration organization that 
has not agreed to be bound the control measures in effect for that 
substance,''
    Acknowledging that the meaning of the term ``State not party to 
this Protocol'' may be subject to differing interpretation with respect 
to hydrochlorofluorocarbons by Parties to the Beijing Amendment, given 
that control measures for the consumption of hydrochlorofluorocarbons 
were introduced in the Copenhagen Amendment while control measures for 
the production of hydrochlorofluorocarbons were introduced in the 
Beijing Amendment,
    Acknowledging also that, for those Parties operating under Article 
5, paragraph 1, of the Protocol no control measures for the consumption 
of production of hydrochlorofluorocarbons will be in effect under 
either the Copenhagen or Beijing Amendments until 2016,
    Desiring to decide in that context on a practice in the application 
of Article 4, paragraph 9 of the Protocol by establishing by consensus 
a single interpretation of the term ``State not party to this 
Protocol,'' to be applied by Parties to the Beijing Amendment for the 
purpose of trade in hydrochlorofluorocarbons under Article 4 of the 
Protocol,
    Expecting Parties to the Beijing Amendment to import or export 
hydrochlorofluorocarbons in ways that do not result in the importation 
of exportation of hydrochlorofluorocarbons to any ``State not party to 
this Protocol'' as that term is interpreted herein, recognizing the 
need to assess the fulfillment of that expectation,
    1. That the Parties to the Beijing Amendment will determine their 
obligations to ban the import and export of controlled substances in 
group I of Annex C (hydrochlorofluorocarbons) with respect to States 
and regional economic organizations that are not parties to the Beijing 
Amendment by January 1, 2004 in accordance with the following:
    (a) The term ``State not party to this Protocol'' in Article 4, 
paragraph 9 does not apply to those States operating under Article 5, 
paragraph 1, of the Protocol until January 1, 2016 when, in

[[Page 34037]]

accordance with the Copenhagen and Beijing Amendments, 
hydrochlorofluorocarbon production and consumption control measures 
will be in effect for States that operate under Article 5, paragraph 1, 
of the Protocol;
    (b) The term ``State not party to this Protocol'' includes all 
other States and regional economic integration organizations that have 
not agreed to be bound by the Copenhagen and Beijing Amendments;
    (c) Recognizing, however, the practical difficulties imposed by the 
timing associated with the adoption of the foregoing interpretation of 
the term ``State not party to this Protocol,'' paragraph 1 (b) shall 
apply unless such a State has by 31 March 2004:

    (i) Notified the Secretariat that it intends to ratify, accede 
or accept the Beijing Amendment as soon as possible;
    (ii) Certified that it is in full compliance with Articles 2, 2A 
to 2G and Article 4 of the Protocol, as amended by the Copenhagen 
Amendment;
    (iii) Submitted data on (i) and (ii) above to the Secretariat, 
to be updated on 31 March 2005,

in which case that State shall fall outside the definition of ``State 
not party to this Protocol'' until the conclusion of the Seventeenth 
Meeting of the Parties;
    2. That the Secretariat shall transmit data received under 
paragraph 1(c) above to the Implementation Committee and the Parties;
    3. That the Parties shall consider the implementation and operation 
of the foregoing decision at the Sixteenth Meeting of the Parties, in 
particular taking into account any comments on the data submitted by 
States by 31 March 2004 under paragraph 1(c) above that the 
Implementation Committee may make.
    This Decision differs from the corresponding U.S. requirements 
promulgated at 40 CFR part 82, subpart A. The Parties' recent agreement 
to Decision XV/3 permits trade in HCFCs when the criteria stated in the 
Decision have been met. The current regulations also provide for trade 
in HCFCs; however, the criteria in Decision XV/3 are different from the 
current criteria at 40 CFR part 82, subpart A.
    Sec.  82.15(e) reads:
    (e) Trade with Parties. Effective January 1, 2004, no person may 
import or export any quantity of a class II controlled substance listed 
in Appendix A to this subpart, from or to any foreign state that is not 
listed as a Party either:
    (1) In Appendix L of this subpart and also listed in Appendix C, 
Annex 1 of the Protocol as having ratified the Beijing Amendments, or
    (2) In Appendix C, Annex 1 of the Protocol as having ratified 
Copenhagen Amendments but not listed in Appendix L of this subpart, or
    (3) In Appendix C, Annex 2 of the Protocol, as being a foreign 
state complying with the Beijing Amendments if the foreign state is 
listed in Appendix L of this subpart, or as being a foreign state 
complying with Copenhagen Amendments if the foreign state is not listed 
in Appendix L of this subpart.
    This NPRM proposes to modify the current regulations to eliminate 
the inconsistencies with Decision XV/3. In addition, as set forth 
below, this action proposes corrections to drafting errors discovered 
after the Final Rule was published in the Federal Register in January 
21, 2003. As a result, the revised regulations will permit trades 
consistent with the requirements decided by the Parties and in 
accordance with the terms of Decision XV/3.
    Under section 614(b) of the Clean Air Act, Title VI of the Act 
``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.'' 42 
U.S.C. 7671m(b). Furthermore, with respect to trade restrictions, this 
provision specifically states that ``[n]othing in this subchapter shall 
be construed, interpreted, or applied to affect the authority or 
responsibility of the Administrator to implement Article 4 of the 
Montreal Protocol with other appropriate agencies.'' Finally, section 
614(b) of the Act provides that ``[i]n case of a conflict between any 
provision of this subchapter [Title VI] and any provision of the 
Montreal Protocol, the more stringent provision shall govern.'' 
Accordingly, EPA may not promulgate regulations under the Clean Air Act 
that authorize trade of HCFCs with nations not authorized under Article 
4 and Decision XV/3 of the Montreal Protocol. In addition, EPA does not 
wish to impose trade restrictions more stringent than those required 
under the Protocol.
    EPA considers Decisions of the Parties, as well as the text of the 
Protocol itself, when applying section 614(b). Under customary 
international law, as codified in the 1969 Vienna Convention on the Law 
of Treaties (8 International Legal Materials 679 (1969)) both the 
treaty text and the practice of the parties in interpreting that text 
form the basis for its interpretation. Although the United States is 
not a party to the 1969 Convention, it has regarded it since 1971 as 
``the authoritative guide to current treaty law and practice.'' See 
Secretary of State William D. Rodgers to President Richard Nixon, 
October 18, 1971, 92nd Cong., 1st Sess., Exec. L (November 22, 1971). 
Specifically, Article 31(1) of the Vienna Convention 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 light of its object and purpose.'' Article 31(3) goes on 
to provide that ``[t]here shall be taken into account, together with 
the context: (a) Any subsequent agreement between the parties regarding 
the interpretation of the treaty or the application of its provisions; 
(b) any subsequent practice in the application of the treaty which 
establishes the agreement of the parties regarding its 
interpretation.'' Decision XV/3 constitutes a subsequent consensus 
agreement among the Parties to the Montreal Protocol, including the 
United States, regarding the interpretation and application of the 
trade restriction provision in Article 4 of the Protocol. Decision XV/3 
also constitutes subsequent practice in the application of the Montreal 
Protocol by the Parties to it, including the United States. Thus, EPA 
intends to conform its regulations on trade restrictions with Decision 
XV/3.
1. Trade With States That Have Ratified the Copenhagen and Beijing 
Amendments or Have Shown Their Intention To Ratify, Accede, Accept, or 
Approve
    Section 82.15(e)(2) permits trade with non-producing countries that 
have ratified the Copenhagen Amendments. However, Decision XV/3 is more 
restrictive than the current EPA promulgated regulations. According to 
Decision XV/3 starting on January 1, 2004, notwithstanding the ability 
to trade with States operating under Article 5(1) of the Protocol, U.S. 
companies cannot trade HCFCs with any State not operating under Article 
5(1) of the Protocol that has not agreed to be bound by (ratified) the 
Copenhagen and Beijing Amendments, unless that State has fulfilled the 
requirements under paragraphs 1(c)(i) through (iii) of Decision XV/3 
and submitted the information to the Ozone Secretariat by March 31, 
2004. In accordance with this Decision, it would be a violation of the 
Protocol to trade HCFCs with a non-Article 5(1) Party that has not 
ratified both the Copenhagen and Beijing Amendments, unless the State 
has provided the relevant

[[Page 34038]]

information listed in paragraphs (c)(i) through (iii) of Decision XV/3 
to the Ozone Secretariat by March 31, 2004. Therefore, as a Party to 
the Protocol and a participant in the discussions that resulted in 
Decision XV/3, EPA believes it is necessary to amend the regulations to 
be consistent with the Decision.
    In addition, under EPA's current interpretation of Sec.  
82.15(e)(3) (correcting for the absence of the referenced Appendix C to 
the Protocol as set forth below), this regulation permitted trade with 
any party determined by EPA to be in compliance with relevant amendment 
to the Protocol and listed by EPA in Appendix C of 40 CFR part 82, 
subpart A. However, before trade with such nations is permitted, 
Decision XV/3 requires such parties to submit notification, 
certification, and data to the Ozone Secretariat in accordance with 
paragraphs (1)(c)(i)-(iii) of the Decision. As a Party to the Protocol 
and a participant in the discussions that resulted in Decision XV/3, 
EPA must amend its regulations to reflect these additional requirements 
of the Decision.
    EPA recognizes that the process to ratify amendments to the 
Protocol can be lengthy and cumbersome. Further, often countries make 
their intention to ratify amendments and begin to comply with the terms 
of the amendments in advance of actual ratification. The criteria 
established by Decision XV/3 (c)(i) through(iii) provide an appropriate 
mechanism for the Ozone Secretariat and EPA to ensure compliance with 
the terms of the amendments in advance of ratification of the 
amendments by those States.
    Through this action, EPA is proposing to amend Sec.  82.15(e) to 
permit trade with non-Article 5(1) Parties that have not ratified both 
the Copenhagen and Beijing Amendments, if the States have provided the 
relevant information listed in paragraphs (c)(i) through (iii) of 
Decision XV/3 to the Ozone Secretariat by March 31, 2004.
    The Ozone Secretariat has agreed to collect the necessary 
documentation required by Decision XV/3(c) and will publish the list of 
countries that met the March 31, 2004 deadline. At this time, the Ozone 
Secretariat is maintaining a list of countries that have submitted the 
required data on its Web site: http://www.unep.org/ozone/index.asp, 
Obligations of Parties to the Beijing Amendment under Article 4 of the 
Montreal Protocol with Respect to Hydrochlorofluorocarbons (HCFCs). To 
ensure that the regulated community, the Agency and all interested 
parties are referencing the most accurate and complete list of Parties 
complying with Decision XV/3(c), EPA recommends referring to Ozone 
Secretariat's list. However, to further simplify implementation, 
through this action, EPA is adding to Appendix C of subpart A of 40 CFR 
part 82, Annex 3, titled Nations that are Parties to the Montreal 
Protocol that have not yet ratified all applicable Amendments to the 
Protocol but have Notified the Ozone Secretariat and Properly Submitted 
Supporting Documentation in Accordance with the Requirements of 
Decision XV/3. This list of Parties that will appear in Annex 3 to 
Appendix C is consistent with the most recent information provided to 
the EPA by the Ozone Secretariat. It is intended to mirror the Ozone 
Secretariat's document. The reader is informed that the list maintained 
by the Ozone Secretariat may be used to supplement the Annex since the 
Ozone Secretariat's list may include additional States that complied 
with the Decision and met the deadline. EPA consults with the Ozone 
Secretariat regularly and therefore believes that only a select number 
of additional States may be added to the Ozone Secretariat's list, but 
noting this potential, EPA believes its own Annex may need to be 
supplemented from time to time. EPA plans to use other non-regulatory 
outreach means to alert the regulated entities of any States that have 
been included on the Ozone Secretariat's list but do not appear in 
Annex 3. Further, the Agency plans to appropriately revise Annex 3 to 
Appendix C through a subsequent notice.
    As a result of these changes to subpart A to incorporate Decision 
XV/3, EPA is also proposing to eliminate Appendix L to Subpart A. The 
Ozone Secretariat's list and Annex 3 to Appendix C of this subpart 
provides the reader with sufficient guidance to ensure that Parties 
have submitted data in accordance with Decision XV/3(c); therefore, 
Appendix L to part 82, subpart A--Parties to the Montreal Protocol that 
Have Reported Production of HCFCs Since 1996 in Accordance with Article 
7, paragraph 3 of the Montreal Protocol is no longer needed. 
Eliminating Appendix L will limit the potential for misinterpretation. 
Thus, through this action, EPA is proposing to remove Appendix L from 
subpart A.
    EPA requests comment on amending Sec.  82.15(e), Appendix C to this 
subpart and eliminating Appendix L to conform with the Decision XV/3 of 
the Parties to the Montreal Protocol.
2. Article 5 Parties
    Parties to the Montreal Protocol that are operating under Article 
5(1) have been given a different schedule for phasing out their 
production and consumption of ozone-depleting substances, than those 
that are not listed under Article 5(1). EPA would like to clarify that 
in accordance with the Protocol, Parties to the Protocol that operate 
under Article 5(1) may continue to trade in HCFCs with other Parties as 
long as they continue to meet the appropriate obligations under the 
Protocol and its amendments, until the date for phasing out HCFC 
consumption and production by Article 5(1) countries has been reached. 
Under Article 5 (1) of the Protocol no control measures for the 
consumption or production of HCFCs will be in effect under either the 
Copenhagen or Beijing Amendments until 2016. Therefore, through this 
action, EPA is proposing to amend Sec.  82.15(e) appropriately.
    EPA is also proposing to add to Appendix C of this subpart Annex 4: 
Nations that are Parties to the Montreal Protocol and are operating 
under Article 5(1) as of June 17, 2004. The proposed Annex 4 is a list 
of nations that are operating under Article 5(1) of the Montreal 
Protocol. Including this annex in the subpart will assist regulated 
entities complying with the regulations by providing a list of nations 
operating under Article 5(1) in the regulatory text. While this 
information will be valuable, the Agency notes that the list is dated 
June 17, 2004. Additional Nations may agree to the terms of the 
Montreal Protocol, become a Party to the treaty, and qualify to operate 
under these provisions after this list appears in the Federal Register, 
and thus will not be included in Annex 4. Therefore, while including 
this Annex in this subpart is useful and will benefit the regulated 
entities, this annex is not intended to be the sole and complete 
catalogue of Article (5)(1) nations.
    Through this action, EPA is proposing to add Annex 4: Nations that 
are Parties to the Montreal Protocol and are operating under Article 
5(1) as of June 17, 2004 to Appendix C of subpart A.
    EPA requests comment on amending the Sec.  82.15(e) to clarify that 
trade with Article (5)(1) countries may continue in accordance with the 
terms of this Subpart and the Montreal Protocol. Further, EPA requests 
comment on adding Annex 4 to Appendix C of this subpart to assist 
regulated entities complying with these trade restrictions.

B. Corrections to the References to Appendices

    Appendix C of 40 CFR part 82, subpart A provides information on 
ratification, accession, acceptance, and approval of the Montreal 
Protocol, London amendment, Copenhagen Amendment, Montreal Amendment 
and

[[Page 34039]]

the Beijing Amendment. Section 82.15(e) was intended to cite this 
Appendix. However, the language at Sec.  82.15(e) contains drafting 
errors and refers instead to Appendix C of the Montreal Protocol. There 
is no Appendix C to the Montreal Protocol. In the absence of an 
Appendix C to the Protocol, EPA interprets Sec.  82.15(e) to refer to 
Appendix C of subpart A. While the Agency has made this interpretation 
known through letters to regulated entities, a change to the 
regulations is necessary to ensure that all interested parties are able 
to correctly interpret the regulations. Therefore, through this action, 
EPA proposes to amend Sec.  82.15(e) to ensure that all references are 
to Appendix C of subpart A of 40 CFR part 82.
    With the promulgation of this action, Appendix C of subpart A will 
have four separate sections (annexes). Currently, the CFR includes the 
2 sections: Appendix C to Subpart A:--Parties to the Montreal Protocol 
(As of June 14, 2002) and Annex 2: Annex 2 to Subpart A--Nations 
Complying with, But Not Parties to, the Protocol. This action proposes 
adding the following sections: Annex 3: Nations that are Parties to the 
Montreal Protocol that have not yet ratified all applicable Amendments 
to the Protocol but have Notified the Ozone Secretariat and Properly 
Submitted Supporting Documentation in Accordance with the Requirements 
of Decision XV/3 and Annex 4: Nations that are Parties to the Montreal 
Protocol and are operating under Article 5(1) as of June 17, 2004. To 
further clarify that Appendix C has four distinct sections, through 
this action, EPA is proposing to amend the titles of each section to 
include ``Appendix C'' in each and to label the sections as ``Annex 
1,'' ``Annex 2,'' ``Annex 3,'' and `` Annex 4'' respectively. Thus the 
proposed revised titles will be:

--Appendix C to Subpart A, Annex 1--Parties to the Montreal Protocol, 
As Amended by the Beijing Amendment (As of June 14, 2002)
--Appendix C to Subpart A, Annex 2--Nations Complying with, But Not 
Parties to, the Protocol
--Appendix C to Subpart A, Annex 3--Nations that are Parties to the 
Montreal Protocol that have not yet ratified all applicable Amendments 
to the Protocol but have Notified the Ozone Secretariat and Properly 
Submitted Supporting Documentation in Accordance with the Requirements 
of Decision XV/3.
-- Appendix C to Subpart A, Annex 4--Nations that are Parties to the 
Montreal Protocol and are operating under Article 5(1) as of June 17, 
2004.
    EPA requests comment on these changes to Appendix C of 40 CFR part 
82, subpart A.

IV. Administrative Requirements

A. Executive Order 12866: Regulatory Planning and Review

    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 a ``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 government 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 or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    EPA does not believe that this rule is a ``significant regulatory 
action'' within the meaning of the Executive Order. EPA requests 
comment on this determination.

B. Paperwork Reduction Act

    This action does not propose any new information collection burden. 
However, the Office of Management and Budget (OMB) has previously 
approved the information collection requirements contained in the 
existing regulations under the provisions of the Paperwork Reduction 
Act, 44 U.S.C. 3501 et seq. and has assigned OMB control number 2060-
0170 (EPA ICR No. 1432.21). A copy of the OMB approved Information 
Collection Request (ICR) may be obtained from The Collection Strategies 
Division; U.S. Environmental Protection Agency (2822T); 1200 
Pennsylvania Ave., NW., Washington, DC 20460 or by calling (202) 566-
1672. 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; 
search data sources; complete and review the 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 in 40 CFR 
are listed in 40 CFR part 9.

C. Regulatory Flexibility Act (RFA), as Amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et 
seq.

    The RFA generally requires an Agency to prepare a regulatory 
flexibility analysis of any rule subject to notice and comment 
rulemaking requirements under the Administrative Procedure Act or any 
other statute unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
Small entities include small businesses, small organizations, and small 
government jurisdictions.
    For the purposes of assessing the impacts of today's proposed rule 
on small entities, small entity is defined as: (1) A small business 
that is identified by the North American Industry Classification System 
(NAICS) Code 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.

[[Page 34040]]



----------------------------------------------------------------------------------------------------------------
                                                                                                    NAICS small
                                                                                                   business size
                                                                                                   standard  (in
                           Category                                NAICS code        SIC code        number of
                                                                                                   employees or
                                                                                                    millions of
                                                                                                     dollars)
----------------------------------------------------------------------------------------------------------------
1. Chemical and Allied Products, NEC..........................          424690             5169              100
2. Chlorofluorocarbon gas exporters...........................          325120             2869              100
----------------------------------------------------------------------------------------------------------------

    After considering the economic impacts of this proposed rule on 
small entities, EPA certifies that this action will not have a 
significant economic impact on a substantial number of small entities. 
This proposed rule will not impose any requirements on small entities. 
None of the entities affected by this rule are considered small as 
defined by the NAICS Code listed above. EPA requests comments on this 
determination.

D. 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 
government 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 by State, local and tribal governments, in 
the aggregate, or by the private sector, of $100 million or more in any 
one year. If a written statement is required under section 202, 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, unless the Agency explains why 
this alternative is not selected or the selection of this alternative 
is inconsistent with law.
    Section 203 of the UMRA requires the Agency to establish a plan for 
obtaining input from and informing, educating, and advising any small 
governments that may be significantly or uniquely affected by the rule. 
Section 204 of the UMRA requires the Agency to develop a process to 
allow elected State, local, and tribal government officials to provide 
input in the development of any proposal containing a significant 
Federal intergovernmental mandate.
    EPA has determined that this proposed rule does not contain a 
Federal mandate that may result in expenditures of $100 million or more 
by State, local and tribal governments, in the aggregate, or by the 
private sector, in any one year. The provisions in this proposed rule 
fulfill the obligations of the United States under the international 
treaty, The Montreal Protocol on Substances that Deplete the Ozone 
Layer, as well as those requirements set forth by Congress in the Clean 
Air Act. Viewed as a whole, all of today's proposed amendments do not 
create a Federal mandate resulting in costs of $100 million or more in 
any one year for State, local and tribal governments, in the aggregate, 
or for the private sector. Thus, today's proposed rule is not subject 
to the requirements of sections 202 and 205 of the UMRA. EPA has also 
determined that this proposal contains no regulatory requirements that 
might significantly or uniquely affect small governments; therefore, 
EPA is not required to develop a plan with regard to small governments 
under section 203. Finally, because this proposal does not contain a 
significant intergovernmental mandate, the Agency is not required to 
develop a process to obtain input from elected State, local, and tribal 
officials under section 204. EPA requests comments regarding these 
determinations.

E. 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.''
    Under section 6 of Executive Order 13132, EPA may not issue a 
regulation that has federalism implications, that imposes substantial 
direct compliance costs, and that is not required by statute, unless 
the Federal government provides the funds necessary to pay the direct 
compliance costs incurred by State and local governments, or EPA 
consults with State and local officials early in the process of 
developing the regulation. EPA also may not issue a regulation that has 
federalism implications and that preempts State law, unless the Agency 
consults with State and local officials early in the process of 
developing the regulation.
    This proposed rule does not have federalism implications. It will 
not 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, 
as specified in Executive Order 13132. Today's proposal is expected to 
primarily affect importers and exporters of HCFCs. Thus, the 
requirements of section 6 of the Executive Order do not apply. EPA 
requests comment regarding this determination.

F. 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 proposed rule does not 
have tribal implications, as specified in Executive Order 13175. 
Today's proposal does not significantly or uniquely affect the 
communities of Indian tribal governments. It does not impose any 
enforceable duties on communities of Indian tribal governments. Thus, 
Executive Order 13175 does not apply to this rule. EPA requests comment 
on this determination.

G. Applicability of Executive Order 13045: Protection of Children From 
Environmental Health & Safety Risks

    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

[[Page 34041]]

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 E.O. 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 is not such a rule, and therefore E.O. 
13045 does not apply. This proposed rule is not subject to E.O. 13045 
because it implements specific trade measures adopted under the 
Montreal Protocol and required by section 614 of the CAA. EPA requests 
comment on this determination.

H. Executive Order 13211: Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This proposed 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 a significant regulatory action under 
Executive Order 12866.

I. 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 
proposed rulemaking does not involve technical standards. Therefore, 
EPA did not consider the use of any voluntary consensus standards.

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: June 10, 2004.
Michael O. Leavitt,
Administrator.
[FR Doc. 04-13681 Filed 6-16-04; 8:45 am]
BILLING CODE 6560-50-P