Vol. 57 No. 147 Thursday, July 30, 1992 p 33754 (Rule)
1/5857
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 82
[FRL-4158-2]
Protection of Stratospheric Ozone
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
SUMMARY: With this action, EPA promulgates stratospheric ozone
protection regulations (40 CFR part 82) required under title
VI of the Clean Air Act Amendments of 1990, Public Law 101-549.
Today's action promulgates regulations implementing the 1992
and later requirements of section 604, as well as the related
provisions of sections 603, 607 and 616, in a manner consistent
with the United States' continuing obligations under the Montreal
Protocol on Substances that Deplete the Ozone Layer as revised.
Through this action, EPA (1) Apportions baseline allowances
to produce or import ozone depleting substances to companies
that produced or imported certain ozone depleting substances
in the baseline years; (2) allocates decreasing amounts of those
allowances to the companies according to the phaseout schedule
prescribed by section 604; (3) applies an 18-month cap from
July 1, 1991, to December 31, 1992, on production and consumption
as required under the Protocol; (4) permits transfers of allowances
provided the transferor's remaining allowances are reduced by
the amount it transferred plus one percent of the amount
transferred;
(5) permits production in excess of the amount authorized by
the original allocation of allowances in order to supply developing
countries that are operating under Article 5 of the Protocol,
so long as producers provide adequate assurances that the
production
supplied to the developing country will not be reexported; (6)
permits transfers of allowable production with other Protocol
Parties under certain conditions; (7) changes procedures to
facilitate the transformation of carbon tetrachloride without
requiring extensive trading of allowances; (8) imposes minimal
reporting and recordkeeping requirements, including those needed
to include several newly regulated chemicals in the phaseout
programs, as well as recordkeeping and reporting requirements
by companies that transform carbon tetrachloride; and (9) requires
that companies that produced controlled substances as by-products
and did not destroy them with maximum available control technology
(MACT) in 1989 but did not report their production in response
to the section 114 information request in the November 26, 1990
Federal Register supply EPA with this information within 45
days of the publication of this document.
EFFECTIVE DATE: January 1, 1992.
ADDRESSES: Materials relevant to this rulemaking are contained
in Air Docket No. A-91-50. The docket is located at U.S.
Environmental
Protection Agency (LE-131), 401 M Street, SW., Washington, DC
20460 in room M-1500, First Floor Waterside Mall and is open
from 8:30 a.m. until noon and from 1:30 p.m. until 3:30 p.m.
Monday through Friday. A reasonable fee may be charged by EPA
for copying docket materials.
FOR FURTHER INFORMATION CONTACT: Martha Dye, Stratospheric Ozone
Protection Branch, Global Change Division, Office of Atmospheric
and Indoor Air Programs, Office of Air and Radiation, 6202J,
401 M Street, SW., Washington, DC 20460, (202) 233-9093.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
A. Overview of the Ozone Depletion Problem
B. Scientific Evidence of Ozone Depletion
C. Past Efforts to Control Ozone Depleting Substances
1. Vienna Convention and 1987 Montreal Protocol
2. 1988 Final Rule
a. Overview
b. Baseline Allowances
c. Interrelationship of Consumption and Production Allowances
d. Additional Allowances
e. Reporting Requirements
3. 1990 Revision of Montreal Protocol
4. The Clean Air Act Amendments of 1990
5. Temporary Final Rule
II. Statutory Authority
III. September 30, 1991 Proposal
IV. Summary of Changes to Proposed Rule
A. Definitions
1. Importer
2. Production
a. Exemption for Immediately-Destroyed By-Products that are
Controlled Substances
b. Used and Entirely Consumed (Except for Trace Quantities)
3. Transformation-Distinction Between Transformation and
Destruction
B. Baseline Allowances
1. Class II Baseline
2. Selection of Baseline Year and Baseline Allowances for
Chemicals Added Later
3. Method of Calculation of Baseline Allowances
C. Implementation of Exemptions to the Phaseout
1. Exemption for Immediately-Destroyed By-Products that are
Controlled Substances
a. The Exemption
b. First Come, First Served Policy and Interplay with the
Montreal Protocol
c. Definition of Maximum Available Control Technology
d. Criteria for Determining if Controlled Substances are
Unavoidable,
Coincidental By-Products
e. Interpretation of "Immediately Contained and Destroyed
by the Producer"
(i) Immediately Contained and Destroyed
(ii) Destruction By the Producer: On-Site versus Off-Site
f. Extension of the Exemption
2. Exemption for De Minimis By-Product Production of Controlled
Substances in Groups I-III
3. Other Exemptions
a. Halons
b. Methyl Chloroform
c. Analytical and Research Purposes
D. Basic Prohibitions
1. Compliance
2. Consumption Limits
E. General Stringency of Regulations and Phaseout Schedule
F. Recordkeeping and Reporting Requirements
1. Daily Production Records
2. Class II Reporting
G. Exchanges
1. Domestic Trading-Environmental Offset
a. Offset Amount
b. Intra-Company Trading
c. Transformer Trading
2. International Trades
a. The Proposal
b. Trades from the U.S. to other Montreal Protocol Parties
c. Trades to the U.S. from other Montreal Protocol Parties
H. Obtaining Additional Allowances-Transformation
1. Carbon Tetrachloride Transformation
a. Summary of today's Final Rule
b. The Proposal
c. Proposed System versus 1991 System
d. Allowances for the Production of Feedstocks
e. Written Contracts and Commitments to Transform
f. Year-End Problem
g. Liability if Production for Feedstock Exceeds Transformation
h. Provision for the Export of Carbon Tetrachloride
i. Recordkeeping and Reporting for the Carbon Tetrachloride
Transformation System
2. Transformation of Other Controlled Substances
3. Provision for the Import of Feedstock Carbon Tetrachloride
4. Transformation in Foreign Countries
I. Obtaining Additional Allowances-Exports
1. Proof that Exports to Article 5 Countries are not Reexported
2. Exports to Non-Party Complying Nations
J. Comments on the Impact of the Action
V. Section-by-Section Description
A. Authority Citation
B. Section 82.1-Purpose and Scope
C. Section 82.2-Effective Date
D. Section 82.3-Definitions
E. Section 82.4-Prohibitions
F. Sections 82.5 and 82.6-Apportionment of Baseline Production
and Consumption Allowances
G. Section 82.7-Granting and Phased Reduction of Allowances
for Class I Controlled Substances
H. Section 82.8-Grant and Phased Reduction of Allowances for
Class II Controlled Substances
I. Section 82.9-Availability of Additional Production Allowances
J. Section 82.10 Availability of Additional Consumption Allowances
K. Section 82.11 Exports to Article 5 Parties
L. Section 82.12 Exchanges
M. Section 82.13 Recordkeeping and Reporting
1. Producers
a. Daily Recordkeeping
b. Production Reports
2. Importers
a. Daily Recordkeeping
b. Import Reports
3. Exporters
4. Transformers
5. Class II Controlled Substances
VI. Impact of Action
VII. Additional Information
A. Executive Order 12291
B. Regulatory Flexibility Act
C. Paperwork Reduction Act
I. Background
A. Overview of the Ozone Depletion Problem
Stratospheric ozone shields the earth's surface from dangerous
ultraviolet (UV-B) radiation. In response to growing scientific
evidence, a national and international consensus has developed
that certain human-made halocarbons deplete stratospheric ozone.
To the extent depletion occurs, it is believed that penetration
of UV-B radiation will increase, resulting in potential health
and environmental harm including increased incidence of certain
skin cancers and cataracts, suppression of the immune system,
damage to crops and aquatic organisms, increased formation of
ground-level ozone, and increased weathering of outdoor plastics.
Different chlorine- and bromine-containing substances vary
in their potential to deplete stratospheric ozone. The fully
halogenated chlorofluorocarbons (CFCs), halons, and carbon
tetrachloride,
for example, are such stable molecules that they reach the
stratosphere
largely intact and only there are degraded by high energy solar
radiation. The chlorine or bromine from these chemicals is then
released in forms (or chemical precursors of forms) which are
extremely effective in depleting ozone. In contrast, methyl
chloroform has a substantially shorter atmospheric lifetime
but is used in such large quantities that it too contributes
significantly to total atmospheric chlorine levels.
Hydrochlorofluorocarbons
(HCFCs) also have relatively short atmospheric lifetimes and
are only beginning to be introduced as substitutes for fully
halogenated CFCs. Future use of HCFCs must be carefully evaluated
on the basis of both their potential volumes and their atmospheric
lifetimes. The relative ability of a substance to contribute
to ozone depletion is its "ozone depletion potential."
B. Scientific Evidence of Ozone Depletion
The initial hypothesis linking CFCs and depletion of the
stratospheric ozone layer was published in 1974. A paper by
research scientists Molina and Rowland suggested that industrial
halocarbons could react in the stratosphere and destroy
stratospheric
ozone.
Between 1974 and 1987, the scientific community made remarkable
advances in understanding atmospheric processes affecting
stratospheric
ozone. In response to this growing threat, the international
community negotiated the Montreal Protocol, which limited the
production and consumption of a narrow set of ozone depleting
substances.
Significant ozone loss was first reported over Antarctica
in 1985. In 1987, an international team of scientists collected
and analyzed evidence linking the Antarctic ozone hole to ozone
depleting chemicals. This report also suggested that some depletion
of global ozone levels had already occurred (Ozone Trends Panel
Report: Executive Summary, 1988). In response, the Parties to
the Protocol agreed to accelerate the assessment process required
under Article 6 of the Protocol. The results of the initial
Protocol assessment were issued in 1989 and further heightened
concern that chlorine- and bromine-containing substances had
already led to a greater depletion of stratospheric ozone than
had been expected.
This scientific assessment resulted in a call to strengthen
national and international controls on ozone depleting chemicals.
Adjustments adopted by the Parties to the Protocol in June of
1990 and Amendments to the Clean Air Act signed into law in
November 1990 require a full phaseout of the most significant
ozone depleting chemicals by the turn of the century.
The process of scientific review has continued since the
1989 Protocol assessments. In April 1991 the Executive Summary
of the second assessment report was issued. This report stated
that ozone depletion has occurred in the summertime over northern
mid-latitudes. This new information will be examined in the
context of possible further amendments to the Protocol in 1992
and in reference to a petition for a faster phaseout of controlled
substances that EPA received under section 606 of the Clean
Air Act on December 3, 1991 from the Natural Resources Defense
Council, Friends of the Earth and the Environmental Defense
Fund.
C. Past Efforts to Control Ozone Depleting Substances
1. Vienna Convention and 1987 Montreal Protocol
Recognizing the global nature of this issue, EPA participated
in negotiations organized by the United Nations Environment
Programme (UNEP) to develop an international agreement to protect
the ozone layer. These negotiations successfully concluded with
the signing of the Vienna Convention in 1985 and the signing
of the original Montreal Protocol in 1987. Currently, 81 nations
representing over 90 percent of the world's consumption of CFCs
and halons are Parties to the Protocol (see appendix C to subpart
A of 40 CFR part 82).
The 1987 Protocol required nations who join to restrict their
production and consumption (defined as production plus imports
minus exports of bulk chemicals) of CFC-11, CFC-12, CFC-113,
CFC-114, and CFC-115 and halons 1211, 1301 and 2402. It did
not regulate specific uses or emissions of these "controlled
substances," but limited their production and importation instead.
It also did not place limits on each of the substances, but
instead grouped the substances (i.e., the CFCs listed above
were placed in Group I and the halons were placed in Group II),
and placed separate limits on the total ozone depletion potential
(ODP) of each group. The Protocol thus allowed a nation to change
the mix of controlled substances within each group that it produced
and consumed, so long as the total ODP of the mix did not exceed
the specified limits. The phrase "calculated level" was used
to refer to this weighting of controlled substances based on
their relative ODP.
As originally drafted, the Protocol called for annual production
and consumption of the five most ozone depleting CFCs (i.e.,
Group I substances) and halons (i.e., Group II substances) to
be frozen at 1986 levels beginning July 1, 1989 and January
1, 1992, respectively, and for CFCs to be reduced to 50 percent
of 1986 levels by 1998. It also allowed for limited increases
in production beyond the caps described above for the purposes
of supplying developing country Parties that are operating under
Article 5 of the Protocol or trading allowable levels of production
("industrial rationalization") between Parties. In addition,
the Protocol provided that after January 1, 1993 only exports
to Parties would be subtracted from a Party's consumption, and
it banned imports of controlled substances from nations which
neither join nor comply with the Protocol.
2. 1988 Final Rule
a. Overview. EPA promulgated regulations implementing the
requirements of the 1987 Protocol through a system of tradeable
allowances. The Agency ensured compliance with the Protocol
by creating production and consumption allowances equal to the
quantity of production and consumption allowed under the Protocol.
The Protocol's separate treatment of Group I and Group II
controlled
substances was reflected in separate allowances for each group
of substances. Similarly, the Protocol's application of limits
to the ODP of the groups of controlled substances ("calculated
level") was carried over into the definition of allowances.
Thus, allowances were specified in terms of a calculated level
of a particular group of controlled substances, so that holders
of allowances could select any mix of controlled substances
within each group, provided that the total calculated level
of the mix did not exceed the calculated levels of the allowances
held.
b. Baseline allowances. EPA apportioned allowances to producers
and importers of controlled substances based on their 1986 levels
of production and imports. It then allocated percentages of
the allowances according to the reduction schedule specified
in the Protocol. For example, for the control periods during
which CFC production and consumption were to be frozen at 1986
levels, EPA allocated 100 percent of baseline allowances.
c. Interrelationship of Consumption and Production Allowances.
To reflect the interrelationship of the production and consumption
limits, the Agency provided that a producer needed both production
and consumption allowances to produce these chemicals (since
production counted against both production and consumption limits),
while importers needed only consumption allowances to import
(since imports counted only against consumption).
To illustrate, a company that intended to manufacture a
controlled
substance had to have sufficient production allowances for the
group of controlled substances to which the particular substance
belongs in order to cover its level of production. Furthermore,
since production is also included in the calculation of
consumption,
that company must also have had at least the same number of
consumption allowances in order to produce the same controlled
substances. For example, prior to producing one kilogram of
CFC-12, a company must have had both a one-kilogram production
allowance for Group I substances and a one-kilogram consumption
allowance for the same group of substances. In producing that
one kilogram, the company expended both the production allowance
and consumption allowance.
A company could import controlled substances with consumption
allowances alone, since imports were included in the definition
of consumption but not of production. Like the producer, however,
the importer had to hold prior to importing sufficient consumption
allowances specific to the group of controlled substances to
which the substance being imported belongs. Once the import
occurred, the consumption allowances needed to cover the import
were expended.
Exporters of controlled substances were not required to obtain
allowances in order to export. Through the export of a controlled
substance, a company decreased the volume of controlled substance
available for consumption in the United States. Consequently,
if certain conditions were met, an exporter could obtain additional
consumption allowances from EPA after the controlled substances
had been exported to a Party to the Montreal Protocol (see
Additional
Allowances). To obtain additional allowances, the company had
to verify to the EPA that the export had occurred. EPA then
granted additional allowances equal to the calculated level
of the export.
The following specific examples further illustrate the
interrelationships
between these allowances:
1. A producer had 20 kilograms of Group I (CFCs) production
allowances and 15 kilograms of Group I consumption allowances.
Since both production allowances and consumption allowances
were needed to produce, a producer could make only 15 kilograms
of Group I substances, expending the 15 of its 20 production
allowances and all of its 15 consumption allowances in the process.
However, if the producer then exported 5 kilograms of Group
I substances to a Party nation, it could receive 5 additional
Group I consumption allowances from EPA upon proof of export.
With the additional 5 Group I consumption allowances, the company
could produce 5 more kilograms of Group I substances, expending
its remaining 5 Group I production allowances and the 5 additional
consumption allowances.
2. An importer had Group I consumption allowances equal to
20 kilograms. The importer imported 20 kilograms of Group I
substances using the 20 kilograms of consumption allowances,
and then repackaged 10 kilograms for re-export. Once these 10
kilograms had been exported, the importer could report the export
to EPA and request additional allowances. Upon proof of export
the company would receive 10 additional Group I consumption
allowances.
Under EPA's 1988 rule, once any allowance was used to produce
or import a controlled substance, that allowance was "expended"
and could not be used again. In addition, allowances were only
valid for the control period for which they were issued. Consistent
with the twelve-month control requirements contained in the
Protocol, allowances could never be carried over to the next
control period.
d. Additional allowances. EPA's final rule also provided
for granting additional allowances under certain circumstances.
Exporters could receive additional consumption allowances for
controlled substances exported to any nation before January
1, 1993 or to any other Protocol Party beginning January 1,
1993. Producers could receive additional production allowances
for exporting controlled substances to developing country Parties
to the Protocol or upon the transfer of production rights from
another Party to the Protocol. In accordance with the regulations,
allowances could also be obtained through trading.
e. Reporting requirements. To monitor industry's compliance
with the production and consumption limits, EPA also required
that producers and importers maintain records of their activities
and report their production and import levels every quarter.
Since the original rule was promulgated in 1988, minor revisions
have been issued on 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).
3. 1990 Revision of Montreal Protocol
As noted earlier, the Protocol's 1989 scientific assessment
confirmed that stratospheric ozone was being depleted more quickly
than originally believed. In response to the assessment, the
Parties decided at their June 1990 meeting in London to completely
phaseout by January 1, 2000, the CFCs and halons already subject
to the Protocol's control requirements and carbon tetrachloride
and the "other" fully halogenated CFCs not originally regulated
by the Protocol. They also agreed to phaseout methyl chloroform
by 2005. In addition, the Parties decided to shift from July-
through-June control periods to calendar-year control periods,
beginning with the 1993 control period. They provided for an
18-month transitional control period from July 1, 1991, to December
31, 1992, during which Parties would be obligated to limit their
production and consumption of the already regulated CFCs and
halons to 150 percent of baseline levels.
The changes in reduction requirements applicable to the already
regulated CFCs and halons were made as "adjustments" to the
Protocol and so became binding on the Parties six months after
the receipt of formal notification under the terms of the Protocol.
The 1990 adjustments accordingly took effect on March 7, 1991.
The addition of carbon tetrachloride, methyl chloroform and
the other CFCs was adopted as an "amendment" to the Protocol,
which will take effect 90 days after 20 Protocol Parties ratify
the Amendments. Under the Protocol, amendments bind only the
Parties that ratify them. The U.S. has ratified the amendments.
As a result, a nation that is a Party for purposes of the
originally
regulated CFCs and halons would not be a Party for purposes
of carbon tetrachloride, methyl chloroform and the other CFCs
until it has ratified the Amendments.
To encourage all nations to ratify or at least comply with
the Protocol and the London Amendments, the Parties also adopted
additional trade sanctions against nations that fail to join
or comply with all or part of the Protocol. Article 4 originally
required that Parties ban imports of controlled substances from
non-Parties. Amendments to Article 4 require that Parties also
ban exports of controlled substances to non-Parties and defines
non-Parties for purposes of Article 4 as including, with respect
to a particular controlled substance, a nation that has not
agreed to be bound by the control measures in effect for that
substance. Under amended Article 4, a nation that is a Party
only for the original controlled substances will not be able
to import the newly regulated controlled substances from other
Parties or export the newly regulated controlled substances
to other Parties beginning January 1, 1993.
The issue of what Parties are operating under Article 5 of
the Protocol was addressed by the Parties, as well. Article
5 permits any developing country whose consumption of the original
controlled substances is less than 0.3 kilograms per capita
when it joins the Protocol to delay its compliance with the
Protocol's control measures by ten years. The Parties originally
delayed designating Article 5 nations on the basis that many
countries had not submitted data showing that they were under
the 0.3 kilogram cap. At their meeting in Nairobi in June, 1991,
however, the Parties agreed on a list of Article 5 countries.
4. The Clean Air Act Amendments of 1990
Shortly after the Protocol Parties' London meeting, the United
States Congress passed the Clean Air Act Amendments of 1990.
The restrictions on production and consumption of ozone depleting
substances found in title VI of the Clean Air Act are similar
to those in the London Amendments, although interim targets
are more stringent and the phaseout of methyl chloroform occurs
earlier.
The Amendments to the Act also require EPA to promulgate
regulations to ensure the "lowest achievable levels" of emissions
in all use sectors, to ban nonessential products, to approve
the use of safe substitutes only, and to mandate warning labels.
Today's notice promulgates limits on production and consumption
and is one of several regulations that will implement the
Amendments'
title VI provisions.
5. Temporary Final Rule
On March 6, 1991 (56 FR 9518), EPA published temporary
regulations
to implement the 1991 limits on the production and consumption
of ozone depleting chemicals required by section 604 of the
Act. The regulations took effect on January 1, 1991, and were
to remain in effect only during 1991. Today's regulations pertain
to all control periods beginning with the 1992 calendar year.
The temporary final rule revised EPA's regulations implementing
the Montreal Protocol as needed to implement the 1991 production
and consumption limits under section 604 in a manner consistent
with the United States' obligations under the Protocol.
II. Statutory Authority
Title VI of the Clean Air Act as amended in 1990 provides
for the phaseout of ozone depleting substances through provisions
contained in several sections. Section 602 directs EPA to issue
within 60 days after enactment of the 1990 Amendments two lists
of ozone depleting chemicals. One list is to include the chemicals
already regulated under the Protocol and EPA's regulations (i.e.,
the five CFCs and three halons), as well as the chemicals to
be regulated under the revised Protocol (i.e., all other fully
halogenated CFCs, carbon tetrachloride and methyl chloroform)
and their isomers (except 1,1,2-trichloroethane, an isomer of
methyl chloroform). The chemicals on that list are collectively
called "class I" substances. The second list is to include all
the HCFCs and their isomers; these chemicals are referred to
as "class II" substances. For each of the chemicals listed,
EPA must also assign an ozone depletion potential, a chlorine
or bromine loading potential, an atmospheric lifetime and, within
one year after enactment, a global warming potential (the relative
ability of a controlled substance to contribute to global warming).
EPA published the required initial listing notice, including
ODPs, on January 22, 1991 (56 FR 2420).
Section 603 directs EPA to amend its regulations to implement
new requirements regarding monitoring and reporting of class
I and class II substances. Included in this section are
requirements
for industry reports on production, import, and export levels
of class I and class II substances and periodic EPA reports
to Congress on specified industry activities, atmospheric
conditions,
and the status of substitute technology.
Section 604(a) makes it unlawful for any person to produce
any class I substance in an annual quantity greater than the
specified percentages of the quantity of the substance produced
by that person in the baseline year. (Section 601(2) defines
baseline year as 1986 for the already regulated chemicals and
1989 for the newly regulated chemicals.) The provision is self
effectuating. The first control period in the reduction schedule
began on January 1, 1991, and ran through the end of 1991. Section
604(a) requires in the first control period a freeze on carbon
tetrachloride and methyl chloroform at 1989 production levels
and a 15 percent reduction for all remaining class I substances.
Section 604(c) calls for EPA to promulgate within ten months
after enactment regulations to implement the production controls
described above and to "insure" that United States consumption
of the class I chemicals is reduced on the same schedule as
production. Section 601(b) defines consumption as production
plus imports minus exports to nations which are Parties to the
Montreal Protocol.
Section 607 requires EPA to promulgate within ten months
after enactment rules "providing for issuance of allowances"
for production and consumption of class I and II substances
and governing the transfer of such allowances. The transfer
rules are to require that each trade result in less overall
production or consumption than would have occurred absent the
trade.
Section 604(e) authorizes EPA to permit, after notice and
opportunity for comment, production in excess of the limits
for export to, and use in, developing countries that are operating
under Article 5 of the Protocol. Like the Protocol, section
604(e) provides that such excess production must be solely for
the purpose of supplying the basic domestic needs of such
countries.
Section 616 requires EPA to promulgate, within two years
after enactment, regulations authorizing trades of allowable
production with other Parties to the Protocol. The regulations
are to require, among other things, that trades do not result
in more production than would have otherwise occurred.
Finally, section 614(b) addresses the relationship between
the statute and the Protocol, stating that "in the case of conflict
between any provision of this title and any provision of the
Montreal Protocol, the more stringent provision shall govern."
It also provides that the title "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."
III. September 30, 1991 Proposal
In a Federal Register notice published on September 30, 1991,
the Agency published proposed regulations for the implementation
of the phaseout of ozone depleting substances as required by
title VI of the Clean Air Act for 1992 and later. The notice
included the proposed implementation of the requirements of
section 604 of the Act as well as of the related provisions
of sections 603, 607, and 616 in a manner consistent with the
United States' continuing obligations under the Montreal Protocol.
A detailed description of those provisions, the issues they
raise, and EPA's proposed implementation of them may be found
in the NPRM at 45 FR 49548.
Among the more significant issues addressed in the proposal
was the reduction schedule for production and consumption of
ozone depleting substances. The Act sets forth a phaseout schedule
for the regulated chemicals. For 1992, production and consumption
of CFCs and halons are limited to 80 percent of baseline levels,
methyl chloroform is frozen at baseline levels and carbon
tetrachloride
is reduced to 90 percent of baseline levels. The limits on the
production and consumption of ozone depleting chemicals are
gradually reduced until 2000 (2002 for methyl chloroform), when
the chemicals are to be phased out.
An additional cap on production and consumption to ensure
compliance with the Protocol's somewhat different requirements
was also proposed. As explained above, the temporary final rule
shifted the control period to coincide with the calendar year,
as required by the 1990 Amendments to the Clean Air Act. EPA
proposed to safeguard against non-compliance with the Protocol's
150 percent cap for July 1991 through December 1992 by prohibiting
any company from exceeding more than 150 percent of its baseline
production and consumption of Group I (CFCs) substances from
July 1, 1991 through December 31, 1992, except to the extent
the company has received allowances authorizing additional
production
or consumption through intercompany trading, exports to Parties,
and transfers of allowable production from other Parties. This
prohibition is in addition to the prohibition against any person
exceeding the allowances allocated to that person for the calendar-
year control period established pursuant to section 604(a) of
the Clean Air Act.
In the NPRM, EPA also proposed revisions to the trading
provisions
of the stratospheric ozone protection regulations as required
under title VI. Section 607 of the Act requires that any trade
between chemicals or companies result in less overall production
or consumption than would have occurred absent the trade. In
the notice the Agency proposed to permit transfers of allowances
provided the transferor's remaining allowances are reduced by
the amount it transferred plus one percent of the amount
transferred.
A one-percent offset was proposed as an amount large enough
to provide a net environmental benefit without discouraging
trading necessary to meet market demands.
Exports to Article 5 Parties were also addressed by the proposed
regulations. Section 604 of the Act permits production in excess
of the amount otherwise allowed in order to supply the basic
domestic needs of developing countries that are operating under
Article 5 of the Protocol. In the NPRM, the Agency proposed
to implement this provision by requiring that producers provide
adequate assurances that the production supplied to a developing
country will not be re-exported.
The Agency also proposed to permit increases or decreases
in production through transfers of allowable production with
other Protocol Parties under certain conditions. Section 616
authorizes EPA to issue regulations providing for trades of
allowable production with other Protocol Parties. If EPA approves
a trade to another Party, it must revise the "production limits
for the United States" such that the revised limits are the
lesser of (a) the maximum production that the country is allowed
under the Protocol minus the amount transferred, (b) the maximum
production that is allowed under the country's applicable domestic
law minus the amount transferred or (c) the average of the
country's
actual national production level for the three years prior to
the transfer minus the production allowances transferred. In
the case of a transfer to the United States, it was proposed
that the principal diplomatic representative in the transferring
country's embassy attest that the transferring country has revised
its production limits in a similar manner.
In the NPRM, a change to the approach to granting additional
allowances for transforming ozone depleting substances was proposed
for carbon tetrachloride. Since over 81 percent of the carbon
tetrachloride produced in this country is used to produce CFCs,
the original system of approving additional allowances only
after a chemical has been transformed is less workable for carbon
tetrachloride. The proposed scheme provided allowances "up-front"
prior to transformation, thus avoiding an unnecessarily burdensome
stop-start production cycle.
IV. Summary of Changes to Proposed Rule
A. Definitions
1. Importer
The Agency proposed the following definition of "importer:"
"the importer of record listed on U.S. Customs Service Form
7501 or 7512 for imported controlled substances." This definition
is identical to that used in the past in 40 CFR part 82 (53
FR 30566), with the addition of the words "or 7512."
Comments received on the definition of importer stated that
the importer of record should not be the party required to possess
consumption allowances. These commenters were concerned that
shipping agents and customs brokers who routinely put up Customs
bonds for other companies are often listed as the importer of
record, and therefore would be held responsible for the import
of controlled substances in which they have no economic interest.
The commenters maintained that the existing regulations are
in this way unfair and virtually impossible for brokers to comply
with. As a result, they suggested that the definition of importer
for purposes of compliance during the control period be the
same as that used for purposes of granting baseline allowances,
or "the first United States owner who is a supplier to or a
member of the domestic industry that uses the controlled
substances."
The Agency previously considered using this definition for
enforcement purposes and rejected it (see 53 FR 18803 and 53
FR 30583). The Agency agrees that limiting the definition of
importer to the importer of record could cause brokers to be
held liable for imports of controlled substances although they
were not granted baseline consumption allowances. However, as
discussed in previous rulemakings (e.g., 53 FR 18803 and 53
FR 30583), the Agency must choose a definition that will make
compliance monitoring administratively feasible. In general,
requiring the importer of record to be the party that holds
the consumption allowances has proved to be effective for
compliance-
monitoring purposes, as it allows the Agency to rely on data
gathered from Customs entry summary forms to verify importer
quarterly reports and to identify imports for which consumption
allowances were not expended. EPA also does not believe that
its definition of import puts Customs brokers or shipping agents
in an impossible position. As several companies have demonstrated,
one way to deal with the definition is for companies that have
an economic interest in imported controlled substances and thus
were granted baseline consumption allowances to ensure that
they are designated as the importer of record on the entry summary
form. Customs brokers and shipping agents can similarly require
that the holder of allowances be designated the importer of
record or that the needed allowances be transferred to them
by the time the import occurs. In spite of the large volume
of trade that brokers may handle, they remain responsible for
the content of material that crosses the border into the United
States under their bond. Clearly, many regulations ban the import
of certain products or materials and brokers must be sure that
the material they are importing is not prohibited. In the same
way, they are responsible for ensuring that controlled substances
under this subpart are not imported without the proper
authorization.
One of the commenters also noted that the definition of importer
is inconsistent with the definition of that term in a recent
regulation promulgated by the Internal Revenue Service (IRS).
The Agency, however, need not define importer in a manner
consistent
with IRS regulations, if, as is the case here, a different
definition
is more suitable to EPA's regulatory purposes.
Upon examining the definition of importer and its relation
to Customs practices, the Agency determined that several different
forms may be used when importing material into the United States.
For example, Customs Form 3461 may be used for low value shipments
in place of Form 7501. In order to guarantee that any person
bringing controlled substances into the United States is subject
to the import restrictions, which is and has been the objective
of these restrictions, the Agency has determined that the
definition
of importer should read "the importer of record listed on U.S.
Customs Service forms for imported controlled substances."
2. Production
a. Exemption for immediately-destroyed by-products that are
controlled substances. The Agency proposed that carbon
tetrachloride
that is produced as a coincidental, unavoidable by-product (CUBP)
of a manufacturing process and then immediately contained and
destroyed be exempted from regulation under this subpart. This
proposal was based on language in the Joint Explanatory Statement
of the Committee of Conference that accompanied the Clean Air
Act Amendments. The Agency requested comment on several issues
relating to the definition of a (CUBP), immediate containment
and destruction, and maximum available control technologies.
One commenter believed that this exemption should take the
form of an alteration in the definition of production under
the regulations. This company maintained that by restructuring
the regulations in this manner, the inadvertent manufacture
of a controlled substance immediately contained and destroyed
is exempt from the definition of production rather than from
the control of production.
The Agency, however, does not believe that it is appropriate
to exempt CUBP production of Groups IV and V controlled substances
from the definition of production. The Agency believes that
it is more appropriate to include this exemption in 82.4,
Prohibitions,
than under 82.3, Definitions, because the exemption is not
permanent and categorical, but rather is subject to case-by-
case annual review by the Agency. CUBP production of controlled
substances in Groups IV and V is therefore exempted from the
production restrictions in today's regulations. This exemption
is discussed in more detail below as part of the discussion
of exemptions to the phaseout.
Another commenter argued that carbon tetrachloride that is
used for explosion prevention in the manufacture of chlorine
and subsequently destroyed should be exempted from the definition
of production because it is essential for human safety.
The Agency does not believe that this use of carbon
tetrachloride
falls within the parameters of the CUBP exemption described
in the Joint Explanatory Statement of the Committee of Conference
on the 1990 Clean Air Act Amendments, because it does not involve
the inadvertent manufacture of a controlled substance. Although
the Protocol allows for controlled substances to be excluded
from production if they are destroyed using destruction methods
approved by the Parties, the Clean Air Act does not contain
such an exclusion and the Joint Explanatory Statement specifically
states that the Protocol's exclusion does not apply under domestic
law except where the destroyed material is CUBP.
b. Used and entirely consumed (Except for Trace Quantities).
The definition of production in the statute and in the proposed
regulations excludes from production "the manufacture of a
substance
that is used and entirely consumed (except for trace quantities)
in the manufacture of other chemicals." In the NPRM, the Agency
suggested that although the parenthetical phrase "except for
trace quantities" does not appear in the Montreal Protocol
definition,
it is implicit because it is a law of chemistry that no chemical
can ever be entirely consumed in the manufacture of another
chemical. Thus, EPA found that the addition of the phrase in
the regulations is warranted and not incongruous with the Protocol.
The only comment the Agency received on this point agreed
that the exception for trace amounts is implicit in the Montreal
Protocol's exclusion from "production" for amounts "entirely
used as a feedstock in the manufacture of other chemicals."
3. Transformation-Distinction Between Transformation and
Destruction
In the NPRM, the Agency discussed the difference between
transformation and destruction. Essentially, the proposed
definition
of transformation was the use and entire consumption of a chemical
in a process that produces another commercially useful chemical.
The proposed definition of destruction was any process that
results in the "expiration" of the chemical without any
commercially
useful end product being produced.
One company commented that defining "transformation" as a
process that produces a commercial product that is sold, or
an intermediate substance that is used in further manufacture
limits transformation to only those processes where a commercial
product is the direct product of the transformation reaction.
This company stated that such a limitation would unnecessarily
restrict commercial manufacturing use of controlled substances
since, in many commercial processes, a controlled substance
is used and entirely consumed but is not transformed into a
commercial product (e.g., use of controlled substances as reaction
inhibitors, solvents, or inert direct coolants). The same company
argued that the proposed definition would force some processes
where controlled substance use is essential to shut down. It
contended that even where substitute chemicals are available,
large sums of money would be spent on process retrofits without
environmental benefit.
The commenter gave as an example of a process which it believed
would not meet the proposed definition of transformation a process
in which (1) The reaction process results in a commercial product
or intermediate substance that could not otherwise be produced
without the presence of the ozone depleting chemical; (2) the
ozone depleting chemical is entirely consumed in the production
process via a combustion reaction that transforms the controlled
substance to a non-controlled substance; (3) the combustion
device is a necessary and integral part of the commercial process
where the ozone depleting chemical is used; (4) there is no
storage of the ozone depleting substance between the use in
the production of the commercial product and the controlled
substance combustion because they are both parts of the same
production process; (5) these operations cannot be characterized
as a Resource Conservation and Recovery Act (RCRA) waste
destruction
operation; and (6) the ozone depleting chemical is generally
burned as part of a process to vent steam and is not a solid
waste as defined by RCRA. The commenter noted that although
the process described above did not result in the transformation
of the ozone depleting substance into a commercial product,
it does meet the strict requirement that the substance be used
and entirely consumed. Furthermore, the commenter stated, there
is no practical difference between processes where the controlled
substance is transformed directly to a commercial product and
those where the ozone depleting chemical is used to produce
a commercial product and is then transformed to a noncommercial
chemical.
The Agency's definition of transformation would not necessarily
exclude the process described above. EPA is aware of several
transformation situations in which the manufacturing process
requires that the controlled substance be broken down or chemically
changed, without the ozone depleting substance actually forming
part of the intended commercial product. One example is the
use of carbon tetrachloride as a chlorine source for rejuvenating
the catalyst in certain refinery or isomerization processes.
In these cases, although the gasoline or iso-butane being produced
does not contain the reaction products of carbon tetrachloride,
the carbon tetrachloride was transformed to produce chlorine
atoms which were commercially useful when they rejuvenated the
catalyst. Thus, EPA's proposed definition of transformation
does not require that the reaction products become part of a
saleable product.
In order for a process in which the reaction products do
not become part of a saleable product to satisfy the definition
of transformation, the following must be true. It must be essential
for the manufacturing process that the controlled substance
be broken down, and it must be physically impossible to recover
the ozone depleting chemical after its use and still have it
serve its purpose in the process. If it is not essential for
the manufacturing process that the controlled substance be broken
down, the "expiration" of the controlled substance is incidental
and would most likely be as the result of destruction. The
controlled
substance is clearly not being incorporated into a commercially
useful chemical. If it is physically possible to recover the
ozone depleting chemical after it has served its purpose in
the process, then it is not being transformed in the process
and is only expiring in a separate, destruction step. If it
is essential that the material be broken down, and as a result
it is not recoverable, the process probably qualifies as
transformation,
as long as the actual reaction that is taking place clearly
results in a commercially useful intermediary as one step in
the manufacturing process. If it is not essential for the
manufacturing
process that the controlled substance be broken down, i.e.,
it is recoverable after performing its function in the process,
it is probably not being transformed. This would be true if
the material served as a solvent in the process, even if it
were fed directly into an incinerator after completing its
function.
The Agency cannot allow the definition of transformation
to include manufacturing processes where controlled substances
are used and then moved directly into an incinerator after use.
Clearly, the purpose of the incinerator is simply to destroy
the material. This is true even if the incinerator is attached
to a vent in order to capture and destroy volatile emissions.
If the Agency were to include these processes in the definition
of transformation, a company using an ozone-depletor as a solvent
could simply send the waste solvent directly to an incinerator
and claim it as transformation. The Protocol, however,
distinguishes
between transformation of controlled substances in the production
of another commercial chemical and destruction. As explained
above, the Agency believes the key questions for determining
whether a substance has been transformed is whether the substance
has undergone a change in chemical composition in order to become
a commercial product or intermediary as a necessary step in
a production process. The Agency is providing exemptions in
this rulemaking for production of controlled substances that
are by-products of manufacturing processes, and is participating
in a working group established by the Parties that is exploring
issues related specifically to destruction.
One company supported the definition adopted by the Agency
for transformation. Two other commenters, however, maintained
that the definition of "transform" refers to manufacture of
other chemicals "for commercial purposes", and that the regulations
should clarify that commercial purposes means for sale by producers
or for use by producers that would otherwise have to purchase
it.
As a general rule, the phrase "commercial purposes" would
have the meaning the commenters suggest. However, in the catalyst-
rejuvenation case discussed above, the chlorine atoms that activate
the catalyst could not necessarily be sold or purchased in that
form, and so although the product of the transformation is
commercially
useful, it could not otherwise have been sold or purchased.
Thus EPA has decided not to restrict "commercial purposes" (as
suggested by the commenters) to sale or use in place of purchased
material.
One commenter asserted that the definition of transformation
should be clarified because there are situations where both
transformation and destruction occur in the same process (i.e.,
transformation where the controlled substance "expires" in the
manufacture of another commercial chemical, and destruction
where the "expiration" of the controlled substance results in
the creation of another chemical which is a waste product).
They maintained that this situation meets the exclusion from
the definition of "production" since the controlled substance
is essential to the reaction (in very small amounts relative
to the commercial chemical), but is not itself incorporated
into the molecules of the commercial chemical. In assisting
the reaction, the controlled substance is broken into simpler
compounds that are waste products. According to this company,
the chemical is thus used and entirely consumed (except for
trace quantities) in the manufacture of other chemicals, and
meets the definition of transformation even if the actual atoms
of the controlled substance end up as waste products after
assisting
the reaction. This commenter suggested that EPA either clarify
the definition of transformation to include this type of process
or expand the definition of transformation itself.
The Agency believes that the process described by this commenter
would qualify as transformation. The key point in the above
description is that "in assisting the reaction, the controlled
substance is broken into simpler compounds." If it is necessary
for the ozone depleting chemical to be broken down in order
to serve its purpose in the reactor, it is being transformed.
This again differs from the situation where the ozone depleting
substance serves its purpose, remains intact, and only as a
separate step is destroyed.
One commenter was generally in agreement with EPA's proposed
distinction between transformation and destruction, and believed
that specific processes including thermal oxidizers and halogen
acid furnaces should be identified as transformation.
In applying the "commercial purposes" test to these processes,
the Agency concludes that halogen acid furnaces would qualify
as transformation because the resulting halogen acid is used
or sold and not disposed of as a waste. Thermal oxidizers, however,
would not qualify because the product of the controlled substance
being broken down is not another chemical, but simply energy.
In no way is the controlled substance being chemically changed
to become a commercially useful chemical; the substance is
destroyed
in order to produce heat.
In summary, a controlled substance is transformed if it is
used and entirely consumed (except for trace quantities) in
the manufacture of other chemicals. The "other chemicals"
manufactured
must be commercially useful. This includes uses in manufacturing
processes and is not limited to commercial sale. Processes where
the atoms that make up the controlled substance are rearranged
to form only a waste product are destruction processes, not
transformation.
B. Baseline Allowances
1. Class II Baseline
The Agency proposed to reserve the baselines for class II
chemicals, because under 605 the phaseout of those chemicals
does not begin until 2015, and it will take some time for the
market to determine what representative production levels for
these substances would be. This proposal was supported by
commenters.
2. Selection of Baseline Year and Baseline Allowances for Chemicals
Added Later
In the NPRM, the Agency requested suggestions regarding the
appropriate method for determining the baseline year and allowances
for new chemicals to be added to the class I list of ozone
depleting
substances. The allocation of such allowances is subject to
the provisions of sections 604 and 607 of the Clean Air Act.
One company responded with a suggestion on how to calculate
the baseline allowances for CHF2Br (Halon 1201, or
bromodifluoromethane),
a chemical that EPA intends to add to the list of ozone depleting
substances and a potential substitute for Halons 1211 and 1301.
The suggested approach for this particular substance will be
discussed in the proposal to list Halon 1201 as a class I chemical
and allocate baseline production and consumption levels for
this chemical.
Since no other comments were received on the method for
determining
the baseline year and allowances, the Agency will continue to
evaluate each substance on a case-by-case basis in order to
determine a representative baseline year.
3. Method of Calculation of Baseline Allowances
EPA proposed baseline allowances for the Class I substances
based on each company's production and consumption of each of
the substances in the baseline year. Information on baseline-
year activities was gathered under two information requests.
The first request, dated December 14, 1987 (52 FR 47486), collected
information on the amount of Group I and II controlled substances
that firms had produced, imported or exported in 1986. More
recently, the same information was requested for Groups III
through V (other CFCs, carbon tetrachloride, and methyl chloroform)
on November 26, 1990 (55 FR 49116). The Agency calculated a
company's baseline production of a controlled substance by
subtracting
from the amount manufactured the amount of that company's product
that was transformed or used as a feedstock in the baseline
year. Consumption was calculated in a similar fashion, adding
imports to the calculated production and subtracting baseline-
year exports attributed to the company. A correction factor
was applied to all baseline calculations to account for exported
and transformed material that could not be attributed to a
particular
producer or importer.
Two companies commented that after the regulations are adopted,
companies should be given an opportunity to challenge the baseline
allowances and verify correct computation. In addition, these
corporations believed that problems were created by the 1991
temporary final regulations because EPA collected information
before defining key terms. These companies maintained that EPA
should consider re-examining data in light of new definitions
and reviewing data in cases in which definitions have changed.
Another commenter also maintained that EPA may need to examine
the process used to set baseline allowances for carbon
tetrachloride,
especially if it changes the method of applying production and
consumption limits for that chemical.
The Agency has already given an opportunity for companies
to challenge the baseline allowances by including them in the
NPRM, and a lengthy description of the calculation method was
provided to all involved. Although issues such as destruction
versus transformation have required clarification in this
rulemaking,
the Agency has recalculated the allowances to account for the
changes in the definitions. The Agency received the additional
information that was needed to make the changes since the
publication
of the proposal. The only issue concerning which the Agency
may need additional information is that of controlled substances
produced as by-products. As discussed below, the Agency is
requesting
the necessary information.
Comments from two companies mentioned that baseline allowances
should reflect the percentage of a company's baseline-year
production
that will not be exported or transformed. These companies asserted
that with the proposed EPA system, inventories can make baseline
numbers artificially low or high. One company offered an
alternative
approach that would rely on emissive uses to set baseline
allowances
for heavily transformed substances.
EPA recognizes that the effect of subtracting 1989 exports
and transformations from 1989 production and imports is not
the same as calculating the actual amount of 1989 production
and imports that were not and will not be exported or transformed.
The Agency submits that it would be impossible to trace each
molecule of 1989 controlled substances to ascertain its ultimate
use or destination when there had been no requirement at that
time to track the fate of the compound. In addition, it is possible
that some amounts of controlled substances produced in 1989
will yet be transformed or exported at some future date. Again,
it is not possible for EPA to determine the fate of all 1989
production. As a result, 1989 transformation and exports were
used as a reasonable approximation.
The emissive uses approach would necessitate a supplementary
survey of users that would cause a significant delay in the
implementation of the provisions of the Act. Furthermore, the
suggested method would depart from the Clean Air Act requirements
by changing its most basic definitions, whereas the current
method's assumptions are consistent with those definitions while
making certain mathematical approximations in order to render
its requirements achievable. EPA notes, moreover, that the Agency
has calculated allowances in this manner beginning with the
original phaseout regulations in 1988, and has reported U.S.
baseline-year levels to the Protocol Secretariat using these
calculations.
One company maintained that because of business cycles and
economic factors, the same amount of carbon tetrachloride is
not produced and used every year. As a result, the assumption
that current-year transformations equal the amount of current-
year production eventually transformed does not hold true. This
company presented an example of two companies that produced
the same amount of carbon tetrachloride in the baseline year,
with the same amount eventually exported and transformed but
a different amount sold to emissive uses. The example showed
that inventories distort the numbers to create identical baselines
for the two companies.
Another example mentioned by the same company shows how a
producer that did not sell to emissive users in 1989 could receive
baseline allowances, unlike another producer that did sell to
emissive users. This situation could occur if the first company's
sales for non-emissive uses were not transformed until 1990,
and the second company had a high level of inventory at the
end of 1988 that was sold or exported in 1989. The commenter
stated that the results, as shown by these examples, are unfair
and inconsistent with the goal of the Clean Air Act to eliminate
emissive uses of ozone depleting substances.
These examples show that inventory can indeed affect the
calculation of the baseline. However, as discussed above, it
would be administratively burdensome and in many cases impossible
to actually trace the fate of 1989 production. The new method
of tracking carbon tetrachloride transformation as discussed
below should remove any compliance difficulties that producers
of this controlled substance for feedstock experienced during
calendar year 1991 arising from idiosyncrasies of the carbon
tetrachloride market in 1989.
One company commented that the Clean Air Act does not require
EPA to use the proposed baseline calculation method, and that
this method is inconsistent with the Act's definition of
production.
The company pointed out that the definition excludes only the
amount transformed from the amount produced, as opposed to
excluding
the transformation of controlled substances that may have been
produced in the previous year.
As noted earlier, the Agency has concluded that only the
amount of each chemical transformed in the baseline year can
be accurately ascertained and that calculating baseline allowances
on this basis is consistent with the definition of production.
As stated above, it would not be possible to trace later
transformation
of 1989-produced controlled substances. A simplifying assumption
was necessarily made that the amount of previous-year production
transformed in 1989 would be similar to the amount of 1989
production
transformed in 1990. Although the Agency recognizes that business
may fluctuate from year to year, the proposed approach is readily
calculated and consistent with the relevant definitions.
One company remarked that EPA has changed allowance allocations
from 1991 without stating so in the preamble, or explaining
why the change was made. This company believed that the regulations
should clarify that the allocations do not apply to 1991.
In the preamble to the NPRM, EPA discussed the calculations
that caused a change in the baseline allowances between March
6, 1991 and this rulemaking. Some changes were made because
of new information on companies' activities in the baseline
year. Another change resulted from the distribution of two
companies'
negative Group IV consumption allowances over the rest of the
companies receiving consumption allowances for carbon
tetrachloride.
These companies' baseline-year consumption was negative because
the amount of carbon tetrachloride produced by them that was
exported and transformed during 1989 was greater than the amount
of carbon tetrachloride that they produced and imported during
1989. The resulting changes of the baseline allowances are not
effective for 1991, as stated in the section of today's rule
on Effective Date.
Another commenter maintained that re-allocation of the negative
consumption is not needed in order to satisfy the Clean Air
Act, which the commenter asserted sets limits on a per-person
basis depending on the person's baseline-year production and
consumption. Therefore, the company asserted that the allocation
of the negative amounts should be deferred until Montreal Protocol
provisions for carbon tetrachloride go into effect in 1995.
In response, the Agency notes that section 604(c) requires
EPA "to promulgate regulations to insure that the consumption
of class I substances in the United States is phased out" on
the same schedule as is applicable to the production of class
I substances (emphasis added). While section 604(a) defines
production limits in terms of a percentage of a company's baseline-
year production, section 604(c) requires EPA to define consumption
limits that will insure that United States' consumption as a
whole is subject to the same percentage reduction. Section 607
provides that allowances be granted in a manner consistent with
the applicable reductions prescribed by section 604. Thus,
consumption
allowances must be allocated in such a way that the total number
of allowances granted equals total allowable U.S. consumption.
For the aggregate number of consumption allowances to reflect
U.S. consumption in the baseline year, the "negative" consumption
accrued by some companies in the baseline year must be taken
into account in this rulemaking.
Another comment explained one situation where a customer
sought allowances for transformations, and EPA ruled the customer's
process to be destruction. If this company were treated as a
transformer in computing the 1989 baseline allowances, other
companies' allocations would be too low. This commenter maintained
that there is no check on EPA since the information upon which
the allowances are based is not made available to the public.
The Agency is familiar with the case to which the commenter
refers, and responds that in any case for which a company's
designation may have changed, the baseline allowances have been
adjusted accordingly. Many of the companies submitting baseline
information filed claims of confidentiality, and, as such, the
Agency cannot at this time make the information available to
the public. EPA believes, however, that producers of controlled
substances that wish to check the information submitted by their
customers could do so by contacting those companies. EPA has
provided companies with detailed spreadsheets describing exactly
how their allowance allocations were affected by second-party
reports.
One suggestion was made that EPA should resurvey customers
after it issues final regulations in order to rectify potential
problems. This company believed that a resurvey would not be
a major impediment because it needs to be done in any event
to make sure the feedstock numbers are correct.
EPA has examined the information collected on transformation
and believes that the data set is consistent with the definitions
set forth in this rulemaking. In addition, the comment period
allowed companies the opportunity to submit additional data
for EPA to revise their baseline numbers if they found them
to be inaccurate in the proposed rule. Since the additional
information resulting from refined definitions was submitted
after the proposed rule was published, baseline numbers have
changed slightly from those published in the proposed rule.
The Agency does not anticipate that these changes will cause
affected firms any difficulty in complying with today's
regulations.
C. Implementation of Exemptions to the Phaseout
1. Exemption for Immediately-Destroyed By-Products That Are
Controlled Substances
a. The exemption. EPA proposed that carbon tetrachloride
that is a coincidental, unavoidable by-product (CUBP) of a
manufacturing
process that is immediately contained and destroyed by the producer
using maximum available control technology be exempted from
the limits on production of controlled substances. This exemption
was based on statements made in the Joint Explanatory Statement
of the Committee of Conference of the 1990 Clean Air Act
Amendments,
indicating that EPA should grant such exemptions on a case-by-
case basis. The proposal stated that requests for such an exemption
would be considered on a case-by-case basis, and if the exemption
were not granted, the Agency would grant the requesting company
baseline allowances (subject to the phaseout) based on the
company's
production of the chemical as a by-product in 1989.
One company supported EPA's observation in the NPRM that
it would be unworkable to control companies that coincidentally
produce and then destroy carbon tetrachloride through the proposed
allowance system. Another company commented that EPA should
exempt destroyed coincidentally-produced carbon tetrachloride
and not provide allowances to its producers since the allowance
system would not work in the long term because all of this
production
would then have to be phased out. This company contended that
providing allowances could lead to the shutdown of facilities
producing non-controlled substances.
In response to this comment, the Agency clarifies that it
would only allot baseline allowances to by-product producers
in situations where it could not grant an exemption. This would
occur in cases where the chemical was produced intentionally,
where as a by-product it was not destroyed with an appropriate
destruction technique, or if the Protocol restrictions on carbon
tetrachloride took effect before approved destruction techniques
were defined. EPA notes that in such cases, having baseline
allowances that are being phased down would stimulate the producer
to arrange for the transformation of the chemical, or seek out
an approved method of destroying the chemical, thus preventing
damage to the ozone layer caused by its release. To ensure that
all destruction technologies are considered by the Parties for
approval, the Agency is actively participating in a UNEP working
group on destruction technologies.
If companies eligible for this exemption have previously
reported carbon tetrachloride by-product generation as production
for the determination of their baseline, they should include
that information with their request for the exemption. If the
exemption is granted, their baseline will be reduced accordingly.
Another company suggested an amendment to the recordkeeping
requirements in 82.13(l) as follows: (1) If the Administrator's
designated representative finds, based on the submitted
information,
that the carbon tetrachloride for which the exemption from the
definition of "produced" is sought is an unavoidable, coincidental
by-product of the production of another chemical and that MACT
will be used to destroy it, he or she will exempt this manufacture
from the definition of "produced."
The Agency does not agree that the exemption should take
the form of an exclusion from the definition of production,
because such a categorical exclusion from production would be
inconsistent with the Joint Explanatory Statement of the Committee
of Conference which is the basis for providing the exemption.
The Agency believes that in light of the Joint Explanatory
Statement
it is more appropriate to exempt companies from the production
limits on a case-by-case basis.
b. First come, first served policy and interplay with the
Montreal Protocol. The proposal included the provision that
exemptions for carbon tetrachloride that is CUBP be granted
only up to the level of the U.S. production limit for carbon
tetrachloride under the Montreal Protocol. The definition of
production under the Montreal Protocol includes an exemption
for material that has been destroyed by technologies approved
by the Parties, but as of this writing no technologies have
been so approved. As a result, there is a cap on the total amount
of exemptions that could be given, set by the difference between
the Protocol limits and total U.S. production and consumption.
EPA proposed that the exemptions be granted on a first come,
first served basis.
A number of companies pointed out that control of carbon
tetrachloride under the Montreal Protocol does not begin until
1995, and thus there is no Protocol cap on the amount of exemptions
that can be granted until 1995. The Agency agrees and will grant
unlimited exemptions until 1995. In 1995, if destruction techniques
are not yet approved by the Parties, EPA will be unable to grant
any further exemptions.
Another commenter stated that EPA should allow for the exclusion
subsequent to 1995 since the Montreal Protocol includes an
exclusion
for destroyed controlled substances and the Clean Air Act
conference
report allows for such exclusion. Moreover, this company maintained
that exclusion is appropriate because destroyed ozone depleting
substances do not damage the ozone layer.
EPA cannot grant exemptions from Protocol limits, and thus
from Clean Air Act limits, that are not sanctioned by the Montreal
Protocol. The Clean Air Act Amendments specifically state that
in situations where the Act and the Protocol are in conflict,
the more stringent of the two should govern. Although the Montreal
Protocol does allow for exemptions for destroyed controlled
substances, it only allows them to the extent that the destruction
technology has been approved by the Parties. To date, no
technologies
have been approved. Again, the Agency is working to assist the
Parties in determining acceptable destruction technologies.
The Agency notes that the exclusion for destroyed CUBPs discussed
in the Joint Explanatory Statement of the Committee of Conference
is more limited than the potential exclusion for destruction
allowed under the Protocol. Therefore, even for control period
prior to 1995, the Agency is permitting only a narrow exemption
for destroyed CUBPs.
One company believed that EPA should re-open the matter for
public comment well in advance of 1995 because exclusions will
not be permitted starting in 1995, possibly forcing expensive
alterations of production processes and costs not factored into
the Regulatory Impact Analysis (RIA) before that date. Another
commenter maintained that if an exemption for destruction is
not allowed, companies that coincidentally produce and then
destroy carbon tetrachloride would be forced eventually to alter
their production processes at great cost and without measurable
benefit to the environment.
EPA agrees that this could be an undesirable outcome if the
Parties do agree on approved destruction technologies before
1995. The Agency anticipates that these technologies will be
defined by that date.
One commenter stated that Congress and EPA did not mean to
restructure the chemical industry (i.e., preclude the manufacture
of non-controlled substances that create carbon tetrachloride
as a coincidental by-product) when they approved the phaseout.
The Agency recognizes the importance of the exclusion provision
and intends to grant exemptions for inadvertent production to
the greatest extent allowed by the statute and the international
treaty.
The Agency is educating the Parties on this subject and will
explore whether the Montreal Protocol should be amended to deal
with this issue.
c. Definition of maximum available control technology. The
Agency requested comment in the NPRM on how to define "maximum
available control technology" (MACT), as used in the Clean Air
Act Conference Report to describe the appropriate destruction
technique for the purposes of granting a CUBP exemption. EPA
suggested that for carbon tetrachloride, current RCRA requirements
for the incineration of carbon tetrachloride as a hazardous
waste would be an appropriate definition of MACT. Regulations
under RCRA require in most cases that carbon tetrachloride be
treated as a hazardous waste. The typical treatment method would
be combustion in an incinerator, boiler or industrial furnace
that has a 99.99 percent destruction or removal efficiency rating
(40 CFR 264.343(a), 40 CFR 266.104).
One commenter stated that defining MACT on the basis of RCRA
requirements is appropriate, but that EPA should consider expanding
the definition to allow the use of a vent incinerator with 98
percent efficiency for several years, because it is the best
technology reasonably available in certain process operations.
Although the use of a vent incinerator with 98 percent
destruction
efficiency may be allowable under other EPA regulations when
carbon tetrachloride is not classified as a hazardous waste,
the Agency believes that it is not sufficient for obtaining
a CUBP exemption under the stratospheric ozone protection program.
Congress in its Joint Explanatory Statement specified that maximum
available control technology be used to destroy CUBP, and RCRA-
permitted combustion devices with 99.99 percent efficiency are
available. Requiring the maximum, as opposed to the reasonably,
available control technologies also fits with the goal of the
EPA stratospheric ozone protection regulations and title VI,
which is to minimize emissions of ozone depleting substances
that lead to atmospheric harm.
One company asserted that the MACT definition should be made
to include any destruction technologies approved by the Parties
of the Montreal Protocol. Another company stated that the
definition
of MACT should be consistent with the standards that will be
established pursuant to section 112 of the Act, but that the
definition should focus on specific compounds rather than on
categories of sources. This commenter also stated that although
RCRA standards for incineration of carbon tetrachloride would
probably prevail, the Agency should allow for the consideration
of other techniques that are equally or more efficient and cost
effective.
The Agency agrees that destruction techniques that are as
efficient as the RCRA combustion requirements for carbon
tetrachloride
should also qualify for the exemption. To the extent that any
emissions standards under section 112 of the Clean Air Act require
the use of technologies that have a destruction efficiency equal
to or greater than 99.99 percent, EPA will consider them to
be sufficient for the granting of the exemption for carbon
tetrachloride
produced as a by-product. When the Parties to the Protocol complete
their analysis of destruction techniques, EPA will evaluate
these to determine if they reflect MACT. As noted previously,
the Clean Air Act exemption for destroyed controlled substances
is narrower than the Protocol's potential exemption, and thus
it does not necessarily follow that destruction techniques approved
by the Parties will meet the MACT criterion for the destruction
exemption under the Act.
Another company agrees that incineration with an efficiency
of 99.99 percent should qualify as MACT for the destruction
of carbon tetrachloride, but that a more inclusive definition
including alternative technologies should be considered. This
commenter stated that EPA should establish procedures to allow
for the demonstration of treatment and destruction techniques
with removal efficiencies that are equivalent to an incinerator
permitted under RCRA.
EPA will consider each exemption request on a case-by-case
basis, allowing for the possibility of other efficient destruction
procedures with 99.99 percent efficiency in addition to combustion.
For alternative destruction technologies, however, the requester
must provide adequate documentation for the Agency to be able
to make a determination that the destruction efficiency of the
technique is at least 99.99 percent.
d. Criteria for determining if controlled substances are
unavoidable, coincidental by-products. Two commenters suggested
definitions of a coincidental, unavoidable by-product (CUBP),
stating that a product is a CUBP if it is unintentionally
manufactured
in the course of manufacturing another product. One example
provided was that carbon tetrachloride would be a CUBP of a
production process if the amount of carbon tetrachloride produced
could not be varied independently of the intended product (i.e.,
the quantity of a CUBP manufactured varies proportionately with
the production of the intended product, and ceases when the
intended product's production is stopped). Similarly, these
companies asserted that if carbon tetrachloride is not manufactured
for commercial purposes (i.e., sale or use in place of carbon
tetrachloride that otherwise would be purchased), then it is
a CUBP.
The Agency believes that requiring both the commercial test
and the dependent-variable test is appropriate for determining
if a substance is a coincidental, unavoidable by-product.
One company observed that identifying individual chemical
processes that result in the CUBP of carbon tetrachloride would
not be practical. Another company stated that a number of
chlorination
processes could result in the coincidental generation of small
amounts of carbon tetrachloride that, under the proposed regulatory
scheme, would be prohibited. As an example, this company noted
that the chlorination of a municipality's drinking water supply
could result in the formation of many organic chemicals such
as carbon tetrachloride or other controlled substances.
The Agency does not have sufficient information to identify
at this time all the chemical processes that result in the
production
of controlled substances as by-products. To the extent they
are numerous, the Agency is concerned about their contribution
to ozone depletion and believes that until more is known, this
type of production should be subject to phaseout requirements
unless the CUBP substances are destroyed by appropriate destruction
techniques, in which case an exemption could be granted. In
any case, companies that produced controlled substances as by-
products and did not destroy them with MACT in 1989 should have
reported their production in response to the section 114
information
request in the November 26, 1990 Federal Register. Those companies
that did not must supply EPA with this information within 45
days of the publication of this notice. Baseline production
and consumption allowances will then be calculated for them
by EPA. As producers of controlled substances, companies in
this situation are subject to the phaseout provisions until
such time as they begin providing for the destruction or
transformation
of their carbon tetrachloride production in accordance with
the regulations promulgated today.
The Agency recognizes that very small quantities of carbon
tetrachloride may be formed in water treatment plants if a
municipality
has chlorinated its water, but it does not believe that carbon
tetrachloride so formed is covered by the definition of production.
Chlorination does not involve "production" of a controlled
substance
even as a coincidental unavoidable by-product of a manufacturing
process, since chlorination is not typically considered
manufacturing.
A specific exemption from the regulations is thus not necessary
for the chlorination of water.
One commenter acknowledged that EPA correctly recognized
that carbon tetrachloride can be a CUBP in the production of
methylene chloride and methyl chloroform. In addition, this
company wrote that carbon tetrachloride can be a CUBP in the
high temperature, catalytic trimerization of cyanogen chloride
to cyanuric chloride, which is a feedstock for numerous valuable
chemicals.
Although the Agency has not developed an exhaustive list
of chemical processes that create controlled substances as by-
products, all of the above-mentioned processes would qualify
for the exemption if they meet the commercial test and the
dependent-
variable test laid out in the definition of a CUBP.
e. Interpretation of "immediately contained and destroyed
by the producer"-(i) Immediately contained and destroyed. EPA
proposed that the phrase "immediately contained and destroyed"
as used in the Joint Explanatory Statement be defined to allow
for a 90-day storage period before destruction is required.
This requirement would be similar to RCRA restrictions on the
storage of hazardous waste prior to destruction.
Two commenters mentioned that the 90-day period is reasonable,
but stated that where there is a shortage of incineration capacity
a longer period should be allowed if the material is stored
in RCRA-permitted tanks. These companies maintained that this
exception may be necessary to make best use of MACT without
over-building incinerators. This is particularly true of the
period from 1995 to 1997 when MACT for eliminating CUBP carbon
tetrachloride may not yet be widely available, but production
allowances are reduced to 15 percent of the baseline. Moreover,
one company asserted that the 90-day period should refer to
the time that the carbon tetrachloride may remain at the producer's
site before it must be shipped off-site for destruction (assuming
that it is not destroyed on-site); and that at the destruction
site it may be stored as long as necessary in accordance with
RCRA. This company maintained that the 90-day period should
refer to the time allowed until destruction or shipment to a
destruction facility, and that the producer should not be held
responsible for delays in off-site incinerator destruction.
Another company discussed an example of CUBP carbon
tetrachloride
that was not listed as hazardous waste and thus would not be
subject to RCRA requirements for storage/destruction. The commenter
stated that the Agency should allow at least 15 months for the
material's eventual destruction and not limit the storage period
to 90 days.
The Agency is concerned primarily that the controlled substance
not be released to the atmosphere. This concern is largely
alleviated
if the CUBP is contained immediately after it was produced or
left the reactor. As long as the material is contained, the
actual time of destruction is less crucial. Indeed, the Joint
Explanatory Statement arguably reflects such an approach, as
"immediately" clearly modifies "contained" but does not necessarily
modify "destroyed."
The Agency will thus grant a CUBP exemption if a company
can show that it can adequately contain the chemical and that
it has made definite provisions for its destruction. Although
under these regulations there is no specific time period during
which the destruction must take place, companies will of course
still be subject to the RCRA limits to the extent that the material
is a hazardous waste (e.g., 90 days for a non-RCRA-permitted
generator or 180 days for a small quantity generator) and must
provide documentation that they are in compliance with the relevant
statute(s) (RCRA, Clean Air Act, Clean Water Act) when applying
for the exemption, by providing EPA with copies of permits,
manifests, exemptions, or other official documents.
One company stated that the term "immediately contained"
should refer to the capture and containment of carbon tetrachloride
after it is removed from the process in which it is inadvertently
generated. This company maintained that although in general
the 90-day period would be appropriate, for continuous, closed-
loop processes, this criterion is meaningless. The company
suggested
that in these instances, the continuous purge of the closed-
loop process should also be considered immediately contained
and destroyed.
The Agency agrees that such a process would be eligible for
a CUBP exemption if the material is completely contained at
all times, and the destruction device removes the chemical with
at least 99.99 percent efficiency. This treatment of closed-
loop processes is consistent with the definition of solid waste
under RCRA (40 CFR part 261), which exempts materials reprocessed
in closed-loop systems.
One company maintained that an adequate time must be allotted
for the storage and destruction of the coincidentally produced
by-product. This company stated that if a 90-day time limit
were imposed, it should not begin to elapse until a reasonable
quantity (e.g., 1,000 lbs) had been collected and packaged for
safe transport to the destruction facility. The small quantity
of carbon tetrachloride produced daily may not be enough for
economical destruction. This company suggested that the time
limit would commence after 1,000 pounds had been collected.
Again, insofar as the company is operating in compliance
with applicable statutes (e.g., CAA, RCRA, CWA), containment
is complete, and an appropriate destruction strategy is planned,
these regulations allow the storage of approved CUBP material
until an adequate quantity has been accumulated for destruction.
Companies should include in their request for exemption a
description
of their handling of the CUBP an estimation of the amount
accumulated
and the period of time for which it is stored.
(ii) Destruction by the producer: On-site versus off-site.
In the proposal, the Agency also discussed the meaning of
"immediately
contained and destroyed by the producer" from the standpoint
of where the destruction must occur. EPA suggested that small
generators of carbon tetrachloride might currently ship their
waste off-site and requested comment on whether the phrase could
be interpreted to permit both off-site and on-site destruction.
Several commenters maintained that EPA should permit off-
site destruction or contracting with another firm for destruction
because in some cases adequate incineration capacity is not
available on-site, and it would be unfair to require that each
producer have an incinerator. These comments also stated that
if transport and destruction of carbon tetrachloride are conducted
in a manner consistent with RCRA, it should be sufficient for
title VI as well, and that EPA should clarify that "destroyed
by the producer" is not being interpreted restrictively. One
company noted that there may be many small generators who require
incineration off-site. Another company agreed that off-site
incineration should be allowed in light of the difficulty of
burning or incinerating halogenated hydrocarbons and the difficulty
of constructing new incinerators. This company maintained that
as long as the release of carbon tetrachloride is controlled
and the material is destroyed by a technology meeting the level
of destruction efficiency identified in the applicable RCRA
regulation, it should not matter whether such destruction occurs
on-site or off-site.
The Agency has determined that there would be no measurable
environmental benefit to restricting the exemption to on-site
destruction by the producer itself. Furthermore, the Joint
Explanatory
Statement does not necessarily require that the producer destroy
the chemical itself, but only that it be responsible for its
destruction. Since carbon tetrachloride emissions and treatment
are already tracked under RCRA, allowing the material to be
destroyed off-site does not entail a loss of accountability.
EPA has determined that if the manufacturer can show that it
has made provisions for sufficiently efficient destruction of
the carbon tetrachloride (off-site, on-site, or through a
contractor)
it will be eligible for the exemption.
One commenter stated that since the carbon tetrachloride
is produced as a result of a chemical manufacturing operation,
EPA should require that it be destroyed on-site and under strictly
controlled conditions. This company contended that to send the
carbon tetrachloride off-site, considering that it has no
commercial
value, would constitute an unnecessary exposure to the general
public of its harmful properties
EPA currently regulates carbon tetrachloride waste generation,
transport, and treatment under RCRA. The regulations under this
statute give standards for each handler of the carbon tetrachloride
and require that safeguards be taken in order to avoid unnecessary
exposure to the general public. In the absence of any claims
that these precautions are inadequate to protect the public
welfare, the Agency finds that it would be inappropriate to
make any further restrictions in this rulemaking. Thus by-product
carbon tetrachloride produced and destroyed on-site or off-site
is eligible for consideration for an exemption.
f. Extension of the exemption. In the NPRM, the Agency requested
comment on what other controlled substances should be considered
for exemptions in addition to carbon tetrachloride.
One company suggested that the destroyed-CUBP exemption be
allowed for methyl chloroform as well. It was estimated that
three percent of the 1987 methyl chloroform production was
destroyed
by incineration, and that as the availability of control equipment
increases, methyl chloroform incineration will also increase.
Since methyl chloroform is currently produced as a CUBP in
several production processes and is frequently destroyed, the
Agency is allowing an exemption for coincidentally produced,
incinerated methyl chloroform as well. The same destruction
techniques are available for methyl chloroform and carbon
tetrachloride,
neither of which contain fluorine or bromine that can attack
the refractive materials in incinerators, and RCRA standards
for destruction of methyl chloroform that is a hazardous waste
are the same as those for destruction of carbon tetrachloride.
All the standards discussed above for determining whether or
not a particular case qualifies for an exemption will apply
for methyl chloroform, as well as carbon tetrachloride.
The Agency recognizes that Montreal Protocol controls take
effect for methyl chloroform in 1993, and that Clean Air Act
requirements are more stringent than the Protocol controls until
1995. The Agency is not promulgating a system for distributing
exemptions during these control periods at this time. If no
more methyl chloroform is destroyed during the 1993 and 1994
control period than is the case now (about three percent), the
gap between the Montreal Protocol limit (100 percent of the
baseline) and the Clean Air Act limit (90 percent of the baseline)
should be more than enough to allow all companies with qualifying
processes to be exempted. If, in 1992, requests for exemptions
greatly exceed expectations and total more than ten percent
of production in the baseline year, EPA will propose a method
for distribution of exemptions for destroyed-CUBP methyl chloroform
in a separate notice. As for 1995 and beyond, the Agency believes
that appropriate destruction techniques will have been defined
by 1995, when Montreal Protocol controls and Clean Air Act controls
coincide. If the Parties do not define appropriate destruction
techniques by 1995, however, the Agency will no longer grant
exemptions at that time.
Several commenters also suggested that other controlled
substances
produced as by-products be exempted. Another commenter asserted
that any listed compound that meets the exemption criteria should
be provided the exemption. Another company wrote that the
definition
of coincidentally-produced material should include other compounds
in addition to carbon tetrachloride because during the manufacture
of halons and other halocarbons, for instance, certain CFCs
may be produced in small quantities as by-products.
Since CFC and halon production is currently restricted under
the Montreal Protocol, and these substances can be destroyed
only with difficulty and under special circumstances, the Agency
will not at this time grant exemptions for them. Although
destruction
techniques have been identified, destruction facilities are
not widely available for these substances, due to their tendency
to corrode incinerator walls, and the Agency does not believe
that it is appropriate to approve exemptions for their destruction
prior to the Protocol Parties' designation of approved destruction
techniques. When the Parties to the Protocol complete their
analysis of destruction techniques, EPA will again examine the
issue of granting the exemption for all controlled substances
that are incidentally produced and destroyed by the techniques
approved by the Parties.
2. Exemptions for De Minimis By-Product Production of Controlled
Substances in Groups I-III
One company commented that the Agency has insufficient
information
relating to the incidental generation of controlled substances
and is focusing only on the companies producing these materials
as mainstream products in its proposal to exempt incidental,
destroyed carbon tetrachloride. The commenter noted that a number
of chlorination processes could result in the coincidental
generation
of small amounts of carbon tetrachloride. These processes would
be prohibited by EPA's proposed regulations (e.g. a municipality
chlorinating its drinking water supply). This company maintained
that this is not a reasonable position for CUBPs generated as
part of manufacturing or chlorination processes and stated that
the Agency should obtain information concerning the environmental
impacts of halogen chemistry in order to fashion a rational
program to exclude from the regulations such de minimis generation
until it is shown to pose an environmental problem. The suggestion
was made in this comment that the Agency should investigate
the unintended impacts of its regulations beyond the ozone
depleting
compound producing industry.
The Agency agrees that an exemption for de minimis by-product
production whether or not it is destroyed could potentially
be warranted in order to efficiently implement the phaseout.
However, EPA has insufficient information on the subject at
this time and thus will be requesting information from the
regulated
community in an upcoming Federal Register notice. The Agency
has determined that additional study will be necessary to determine
whether de minimis generation should be exempt from the phaseout.
Persons that produce controlled substances in Group I, II or
III as by-products of manufacturing processes will be required
to provide information on the processes and the quantities of
by-products being produced. In addition, companies that have
fugitive emissions of any of the class I substances will be
asked to report the annual amount that is emitted from each
of their plants. For those companies that have this type of
manufacturing process but that did not report it as production
under the November 26, 1990 information request and thus have
no allowances to cover their production, the Agency requests
that this data be submitted as soon as possible so that allowances
may be allotted or the issue may be otherwise resolved.
A suggestion was made by one company that the Agency should
allow some de minimis generation of CFCs during the production
of HCFCs and HFCs, such as a one-percent de minimis level in
the production stream for exclusion from the scope of the
regulations.
Another company commented that a by-product that is not destroyed
after production, or sold as feedstock and transformed, should
be subject to the production phaseout.
The Agency is considering such an exemption from the phaseout
for controlled substances in Groups I, II, and III that are
produced as coincidental, unavoidable by-products of a
manufacturing
process. However, the Agency must investigate appropriate
technologies
and appropriate de minimis levels and the environmental impact
of de minimis production for these groups of chemicals before
a final decision can be reached. Persons that possess relevant
information on this subject will be asked to submit it in an
upcoming Federal Register notice.
3. Other Exemptions
In the NPRM, EPA requested comment on how some of the exemptions
provided for in the Clean Air Act, but not in the Montreal
Protocol,
could be implemented in the future. The Agency noted, however,
that under the exemption provisions themselves as well as section
614(b), it could not implement these exemptions unless and until
it could do so in a way that was consistent with the Protocol.
Since the Protocol does not yet permit these exemptions from
its requirements, the Agency may not implement them, except
to the extent that the Clean Air Act's limits are more stringent
than the Protocol's. In such cases, the Clean Air Act creates
a margin in which exemptions could be granted without running
afoul of the Protocol. Even within this "compliance margin,"
the Agency is not making provisions for granting the exemptions
because they are not warranted at this time, given the likely
availability of the controlled substances under the Clean Air
Act limits in at least the near term. The Agency is particularly
hesitant to grant exemptions that are not currently vital since
the Parties to the Protocol have not yet made provision for
such exemptions. Furthermore, The Agency believes that these
exemptions will for the most part not be needed until the time
that the U.S. approaches the phaseout date. A summary and analysis
of the comments received on the need for and implementation
of the exemptions follows.
a. Halons. Section 604(g)(1) allows the Administrator to
grant limited exemptions from the percentage reduction requirements
for certain halons for purposes of fire suppression or explosion
prevention where no safe and effective substitute has been
developed.
Paragraph (3) of that subsection also allows a limited exemption
from the phaseout for halons needed for the same purposes in
association with energy production on the North Slope of Alaska.
On the issue of implementing the exemptions to the extent
that differences in the stringency between the Clean Air Act
and the Protocol allow, one company commented that there is
no guarantee that halon demand and production will continue
to remain below allowable levels. It stated that, because there
is no national halon recycling or banking infrastructure and
no known substitute for Halon 1301 in situations requiring the
inertion of an occupied enclosed space for explosion prevention,
demand could require new halon production in amounts greater
than those allowed by the interim reduction requirements.
The Agency has monitored halon production, and to date,
production
is well below the allowed amount. In addition, halon demand
is expected to decrease over the next few years as companies
adopt alternative fire protection methods or chemical substitutes
and as a bank for the storage and recycling of halons is
established.
Another company commented that it is inappropriate to prohibit
halon production exemptions in association with domestic crude
oil or natural gas production on the North Slope of Alaska because
the Parties have yet to agree to any such exemptions after the
phaseout year. Two companies suggested that EPA should convene
a STOPAC (Stratospheric Ozone Protection Advisory Committee)
subcommittee of users and manufacturers to advise EPA on how
exemptions should be implemented and maintained that EPA should
acknowledge that the exemptions contained in the Clean Air Act
may be applicable if at some future date the Parties amend the
Protocol such that both it and the Clean Air Act are consistent.
In response, the Agency notes that it is not in any way
eliminating
the possibility of future exemptions, but at present does not
believe that they are warranted, given the likely continued
availability of controlled substances under Clean Air Act limits.
For this reason, EPA believes that it would be premature to
convene a STOPAC meeting on exemption implementation at this
time.
b. Methyl chloroform. Section 604(d)(1) provides for another
exemption specifically for essential uses of methyl chloroform,
for which no safe and effective substitute is available.
One commenter asserted that methyl chloroform is an important
transitional substance because of its low ODP and believed that
when it is used as a replacement for CFCs it should be considered
for exemption from the phaseout.
The Agency is required to phaseout methyl chloroform according
to a specified schedule under the Clean Air Act and the Montreal
Protocol, and substitution for CFCs could not be construed to
be an "essential use" per se. EPA concurs with another commenter's
view that exemptions should be left open until the availability
of methyl chloroform is far more constrained and until the Parties
have agreed on whether they are appropriate and if so in what
applications.
c. Analytical and research purposes. One commenter requested
an exemption for the use of carbon tetrachloride and CFCs for
analytical and research purposes. This company maintained that
they are unable to purchase carbon tetrachloride due to the
current production and consumption limits. This company distributes
carbon tetrachloride in small packages to laboratories for chemical
analytical purposes and research, uses that are considered
emissive.
The comment provided the following example: Carbon tetrachloride
and other CFCs are necessary as standards in testing for trace
levels of contamination in drinking water, and no alternative
products can be used to prepare standard solutions for this
application. This comment proposes an exemption of the continued
manufacture and use of these chemicals for use as analytical
reagents in small quantities.
The Agency believes that such exemptions are not currently
necessary, given the continued availability of production and
consumption allowances for the ozone depleting chemicals. Since
these research and analytical uses require only small quantities
of the chemical, exemptions from the phaseout should not be
needed to satisfy laboratory needs at this time. Since production
and consumption of carbon tetrachloride is currently limited,
but has yet to be completely phased out, EPA does not believe
that companies should experience difficulties in locating suppliers
of small quantities of the material.
D. Basic Prohibitions
1. Compliance
The September 30, 1991 proposal included a section on basic
prohibitions (82.4), which stipulated that no person may produce
controlled substances at any time during any control period
in excess of the amount of unexpended production allowances
held by that person at that time, and that no person may produce
or import controlled substances at any time during any control
period in excess of the amount of unexpended consumption allowances
held by that person at that time. For all the controlled substances
except carbon tetrachloride, these requirements are identical
to those that were originally promulgated in the August 12,
1988 rule limiting the production and consumption of CFCs and
halons.
Two companies commented that the final regulations should
apply production and consumption limits annually, rather than
daily. These companies maintained that the Clean Air Act Amendments
and the Montreal Protocol both provide for annual limits, and,
therefore, that EPA has no statutory authority to require that
companies have allowances before they produce or import instead
of having sufficient allowances at the end of the control period
to cover their total production and imports for the period.
The Agency does not agree that it lacks authority to require
persons to possess allowances before they may produce or import
ozone-depleting substances. While 604's limits may be enforced
on an end-of-year basis only as the commenters suggest, the
statute itself does not require that they be so enforced. Section
604(b) calls on EPA to issue regulations implementing the phaseout
in accordance with that and other applicable sections of the
statute. Section 607(a) provides for issuance of allowances,
as the Agency had done in its original phaseout regulations,
and section 614(b) provides that Title VI provisions are to
be construed in a manner that does not abrogate the U.S.
obligations
under the Protocol. In its original rule, the Agency required
persons to hold allowances before they produced or imported
to minimize the potential for exceedances that could cause the
U.S. to exceed its Protocol limits. While the Protocol's limits
were (and remain) annual, EPA judged that requiring allowances
to be held at the time a person produced or imported was a
worthwhile
precaution against U.S. noncompliance with the Protocol. Nothing
in title VI or its legislative history suggests that Congress
disagreed with or intended to change the Agency's approach to
implementing reductions in ozone-depleting substances. Indeed,
Congress' adoption of EPA's allowance system suggests its
satisfaction
with EPA's approach to implementing the Protocol. If Congress
had meant to prohibit EPA from requiring allowances to be held
"up-front," surely it would have specified such a change to
EPA's program.
Two companies asserted that the proposed rule, even if within
the Agency's authority, represents overregulation and reflects
an unfounded distrust of controlled substance producers. They
commented that a daily test constitutes excessive interference
in business practices and places an enormous accounting burden
on producers without benefit to EPA or the environment. One
company maintained that daily accounting creates problems for
ozone depleting chemical producers that sell their products
for export or transformation and expect to receive production
and consumption allowances in the future as the result of such
uses.
The Agency disagrees with these comments. As stated above,
requiring compliance by requiring the holding of allowances
prior to production and consumption is appropriate in view of
the U.S. obligations under the Montreal Protocol. Moreover,
neither EPA nor producers of the original controlled substances
have had difficulties with this system in the past.
This compliance mechanism is also necessary for EPA to track
allowances throughout the control period in order to ascertain
whether trades can be carried out without endangering compliance.
Since companies can trade allowances at any time during a control
period, the Agency must be aware of their compliance status
in order to ensure that the trade will not result in a company's
expending more allowances than it holds.
In general, the commenters on this subject appeared to be
concerned with recouping allowances expended in the production
of controlled substances for export or transformation. To the
extent that the system for the tracking of carbon tetrachloride
will no longer require this cycling of allowances, as described
later, EPA believes that companies should have little difficulty
remaining in compliance with the regulations.
One company stated that EPA would be able to assess compliance
or stop drastic non-compliance without imposing a daily test.
This company suggested that the Agency use quarterly reports
to assess compliance and, if a company exceeds its allowances
during a given quarter, require the company to submit evidence
(such as its customers' IRS Certifications) that it would be
able to retrieve enough allowances by the year's end.
EPA believes that the requirement for quarterly reports as
well as the requirement for companies to have allowances before
they produce or import are both necessary to ensure compliance
with the production and consumption limits. In addition, the
suggested control system would make it impossible for the Agency
to monitor trading of allowances during the course of each quarter.
Consequently, the Agency is continuing to follow the system
established in the 1988 regulations and is requiring that companies
keep records on a daily basis and report quarterly and that
companies hold adequate unexpended allowances to cover their
activities.
2. Consumption Limits
The proposed regulations required that companies that import
controlled substances must hold consumption allowances, and
may not import controlled substances in amounts that exceed
their level of unexpended consumption allowances at any time.
A controlled substance is imported at such time that it enters
U.S. territory, with the exception of Maquiladora transactions
where controlled substances of U.S. origin are imported into
Mexico in-bond and then re-imported into the U.S. The regulations
apply to any bulk quantity of the listed chemicals, including
recycled material or that intended for recycling.
One company commented that, from a policy perspective, it
is inappropriate to require a party to use consumption allowances
for the import of used controlled substances that will be recycled.
According to the company, it should be apparent that any quantity
of used controlled substance that is recycled will be used in
place of new production, thereby reducing controlled substance
production. The same company maintained that the siting of
recycling
facilities should not be artificially affected by the need to
use consumption allowances for imports. This company stated
that this issue will be important in later phases of the phaseout
when it is likely that the quantity of consumption allowances
will not be sufficient to allow for both production of virgin
material and for import of used controlled substances for
reclamation.
An alternative approach suggested by this company would be to
allow used controlled substances to be transported across national
boundaries for the purposes of reclamation without counting
them towards the recipient country's consumption limit.
The Agency first notes that there is no assurance that recycled
controlled substances will be used in place of new production.
Indeed, the Agency expects that as the phaseout progresses,
recycled substances will be used as a supplement to new production.
In any event, the Protocol requires that imports of used controlled
substances be included in the calculation of consumption, because
of the practical difficulty of distinguishing between used and
new substances. Exempting imports of controlled substances from
applicable consumption limits would create a strong incentive
to mislabel new controlled substances as used. Moreover, EPA
does not believe that the expenditure of consumption allowances
for imports of used controlled substances for recycling constitutes
a disincentive or an obstacle to recycling. The domestic use
and recycling of controlled substances is not restricted under
these regulations and consumption allowances are not required
to recycle controlled substances. Only used or recycled material
crossing international borders is affected by the availability
of consumption allowances. However, if this material is then
re-exported, consumption allowances expended for the imports
may be recovered upon export of the material through a request
for additional consumption allowances. Thus, there may be no
net loss in consumption allowances. Even under the phaseout,
controlled substances could still be imported as long as at
least an equal amount is exported (annual consumption must equal
zero). To the extent that the suggestion is that material would
leave the country, be recycled, and returned (or vice versa)
this should not be a problem.
E. General Stringency of Regulations and Phaseout Schedule
The Agency proposed the phaseout schedule Congress set forth
in the Act. In the NPRM, EPA noted that recent scientific evidence
suggested a need to accelerate the phaseout schedule. The Agency
explained, however, that the tight statutory deadline to which
this rulemaking is subject did not permit the Agency to consider
such an acceleration within the scope of the rulemaking.
One commenter stated that the rules should be formulated
to be as stringent as possible in eliminating the production
of controlled substances and preventing their emission to the
atmosphere, and that there are too many provisions in the proposal
for companies to increase their production allowances and not
enough incentives for companies to reduce the world market of
ozone depleting chemicals. The commenter urgently recommended
revisions to the rule to accelerate the phaseout and to broaden
the list of ozone depleting chemicals.
For the reasons cited above, today's regulations implement
the phaseout schedule specified by the Clean Air Act. The Agency
notes, though, that the production of ozone depleting chemicals
is being further decreased due to the effects of the excise
tax implemented by the IRS. Currently no companies are increasing
their production of ozone-depletors and significant efforts
are underway to find substitutes. However, as new scientific
and technology developments occur, and in response to petitions
received under the Clean Air Act Section 606, EPA will reassess
the schedules contained in this rule. As mentioned previously,
the Agency is currently evaluating one such petition, received
on December 3, 1991.
F. Recordkeeping and Reporting Requirements
1. Daily Production Records
The proposed regulations require producers to keep dated
production records. One commenter claimed that daily mass balancing
is unworkable because although daily production records exist,
they contain only rough measurements. This company maintained
that monthly rather than daily documentation should be used
for mass balancing. This is because it takes several days for
material to be completely processed and only then can it be
measured for the purpose of a mass balance. In addition, this
company asserted that improving the daily accounting would cost
hundreds of thousands of dollars per plant, and still would
not be as accurate as monthly documentation.
This comment is similar to comments received in response
to the NPRM implementing the Montreal Protocol in 1987. At that
time EPA determined that daily recordkeeping is important and
that it is common business practice to keep daily records. Based
on its review of data submitted by producers, EPA believes that
current methods of daily recordkeeping will be sufficient to
satisfy the requirements. Daily mass balancing is not required.
The Agency recognizes that daily records may consist of rough
measurements and as such are generally used by inspectors, not
for a direct mass balance, but primarily as a check when
discrepancies
in other records are found.
2. Class II Reporting
The Agency proposed that, as required by the Clean Air Act,
producers, importers, and exporters of Class II chemicals report
their activities to the Agency on an annual basis.
One company's comments expressed support for quarterly Class
I reports and annual Class II reports. Moreover, the company
believed that the Agency should maintain all reports of HCFC
activity in confidence until such time as it has established
baseline levels for each of the producers.
The Agency follows the procedures outlined in 40 CFR subpart
2 when companies submit information with a confidentiality claim.
Unless a specific finding is made that the information is not
entitled to confidential treatment, the Agency will maintain
it as such until disclosure is needed to carry out a Clean Air
Act provision, including section 607 which requires the
establishment
of baselines. Aggregate production and consumption information
on the HCFCs will be submitted to the Protocol secretariat at
UNEP in fulfillment of EPA's reporting requirements to that
body under the Montreal Protocol once the amendments enter into
force.
G. Exchanges
1. Domestic Trading-Environmental Offset
a. Offset amount. Section 607 of the Clean Air Act provides
for trading of allowances between chemicals in the same group.
It requires, however, that any trade must "result in greater
total reductions in production in each year of class I and class
II substances than would occur in that year in the absence of
such transactions." In the NPRM, the Agency proposed an
implementation
strategy for this environmental offset. EPA argued that it could
not predict what would have occurred in the absence of the trade,
and proposed that the assumption be made that all allowances
available would be used in the absence of the trade. Based on
this assumption, the required offset could be calculated every
time a trade occurred, by subtracting a certain percentage of
the amount of the trade from the transferor's unexpended
allowances.
EPA proposed that this percentage be based on the level of
measurement
error that companies would likely build into their compliance
margin and upon the level of environmental benefit resulting
from the offset, and arrived at a one-percent offset, although
comment was requested on offset amounts of 0.1 percent and on
two percent.
A number of commenters maintained that EPA had taken a
satisfactory
approach to the offset requirement by presuming reasonably that
companies would have used allowances being transferred if a
trade did not occur. An industry group noted that the evaluation
of whether allowances would have been used in the absence of
trades would have been highly subjective, even in the case of
plant-closings, because a company may have kept its plant open
if it had known that it could not trade its allowances.
One company commented that EPA should review the impact of
the one-percent offset on the ability of the producing companies
to supply both the needs of the U.S. and those of its trading
partners. According to this company, as the phaseout schedules
take effect and less virgin material is available to service
the needs of the U.S., the Agency may need to revisit its decision.
The Agency believes that a one-percent offset will not cause
any shortages or difficulties in supplying the country's needs
for ozone depleting chemicals. If at some future date the offset
becomes a significant problem, the Agency can revisit the issue.
The same industry group commented that the analysis on the
margin of error in the NPRM was not relevant to the calculation
of an appropriate environmental offset. The Agency had stated
that the offset amount should be related to the measurement
error present in companies' production estimations. The commenter
stated that the margin of error moves rather than disappears
when allowances are transferred, and thus the level of the offset
does not need to be related to the level of measurement error.
EPA's concern was that if the percentage selected for the
environmental offset were smaller than companies' actual production
measurement error, there could be no guarantee that the trades
would result in lower overall production. The Agency agrees
that to a large extent, the margin of error would move with
a transfer of allowances, since a cushion for measurement error
would have to be maintained and production would be reduced
accordingly. For example, if a company had 200 production
allowances
(authorizing 200 kg of production), and had a production
measurement
error of one percent, the company would probably not plan to
produce more than 198ñ1.98 kg of controlled substances. If the
company traded away 100 allowances with a one-percent offset,
it would only have 99 allowances left, and would likely only
produce 98ñ0.98 kg. The receiving company would similarly
produce
only 99ñ0.99 kg, so the total production would only reach
197ñ1.97
kg; the environmental offset would have effectively reduced
total production by one kilogram. At the same time, the Agency
notes that permitting allowances to be traded increases the
value of any compliance cushion that companies build in and
thus creates an incentive to share it. Overall, however, the
Agency believes that regardless of particular companies'
measurement
errors, a one-percent offset will be sufficient to ensure an
overall production reduction as a result of allowance transfers.
The group accepted EPA's conclusion that the offset should
be at least 0.1 percent in order to satisfy the statutory
requirement.
Another commenter also agreed that 0.1 percent is quantifiable
and enforceable and commented that one percent is excessive
and unnecessary. The industry group stated that a one-percent
offset is more than sufficient to satisfy statutory requirements,
but that the greater the percentage, the more trading will be
discouraged.
None of the commenters presented compelling evidence that
a one-percent offset would be damaging to industry or to trading,
however. Therefore, the Agency does not believe that a reduction
of the proposed one-percent offset is warranted. EPA analysis
shows that one percent is an appropriate number to ensure a
measurable environmental benefit while not harming business
unnecessarily.
Several commenters endorsed the proposed one-percent offset
factor, and believed that higher offset penalties will only
discourage and hinder trading between chemicals, thereby resulting
in less efficient utilization of production facilities and in
increased costs to the economy.
The Agency agrees that an offset larger than one percent
would be likely to discourage trading and could be harmful to
small businesses. For this reason, it is adopting the proposed
offset factor of one percent.
Two companies stated that although EPA explained in the preamble
to the proposed regulations that a single trade between parties
and chemicals should only be subject to one offset, the proposed
regulations were unclear on this point. This company suggested
that the language in 82.12 be clarified to remove any doubt.
The Agency has added language to 82.12 clarifying this point.
It has also added language to specify that only trades of
consumption
and production allowances are subject to the offset. As discussed
in the NPRM, trades of "authorizations to convert" or "potential
production allowances" are not subject to the offset.
b. Intra-company trading. One comment stated that EPA should
make it clear that the offset does not apply to intra-company
transfers, citing section 607(c) of the Clean Air Act, which
refers to trades between "2 or more persons."
The Agency notes that section 607(a) requires that the Agency
promulgate rules for trading that "shall insure that the
transactions
under the authority of this section will result in greater total
reductions in the production in each year of class I and class
II substances than would occur in that year in the absence of
such transactions." Among the transactions authorized under
this section are interpollutant transfers (section 607(b)) which
permit allowances for one type of controlled substance to be
exchanged for another type within the same group. These are
the types of trades that would occur within a company as well
as between companies. Although section 607(a)'s general statement
could be interpreted to allow other methods of calculating the
offset than set forth in section 607(c), using two different
offset systems for trades between different companies and trades
within the same company would be unnecessarily complex. Since
both types of trades must be subject to an offset, the Agency
finds that it is most logical to use the same offset for both.
Another company commented that where a trade occurs within
the same corporate organization, domestically or internationally,
it should not be necessary for a company to obtain advance
authorization
of the trade. This company asserted that the administration
of this requirement would be burdensome on EPA and industry.
Moreover, since the same company is on both sides of the trade,
it is fully responsible for compliance and thus there is no
need for EPA to pre-approve a company's production schedule.
The company maintained that quarterly reports should be adequate.
The Agency does not agree that requiring EPA notification
of intra-company trades is administratively burdensome. The
number of such trades will be small. For the NPRM, the Agency
analyzed of the trades of chemical-specific allowances that
would have been necessary in the first control period, and found
that fewer than five trades would have been needed for a large
ozone depleting substance producer. In addition, the Agency's
past experience with the ozone depleting chemical industry
indicates
that production plans do not change from day to day. Thus, the
number of trades during the year is not expected to be large.
The Agency notes that only towards the end of the control period,
when allowances are being used up, would intra-company trading
activity be likely to pick up. Even then, EPA believes its
experience
with trades and its commitment to communicate objections to
trades within three days of receipt will ensure that trades
late in the control period will be processed quickly.
The same commenter stated that requiring Agency pre-approval
of each shift in the mix of chemicals produced by a single company
is wasteful of resources and does little to accomplish improved
compliance with the Clean Air Act and the Montreal Protocol.
If U.S. treaty obligations were not at stake, EPA non-objection
might not be regarded by EPA as worthwhile. As a leader in the
phaseout of ozone-depleting substances and with the existence
of an international agreement, however, EPA believes it must
take extra care that compliance is achieved. In this context,
the Agency disagrees that the requirement to notify EPA prior
to intra-company trades does little to improve prospects for
compliance with the Clean Air Act and the Montreal Protocol.
Since companies may trade allowances at any time during the
control period, the Agency must be aware at all times of the
number of allowances held by each company. For example, if a
company internally traded all its allowances from CFC-114 to
CFC-115 and then proposed to trade CFC-115 allowances to another
company, EPA would not know that the company has CFC-115 allowances
to trade and would object to the trade. Likewise, if the company
did not have any CFC-114 allowances left, yet proposed to trade
them, the Agency would not object to the trade and the second
company could produce CFC-114 without there being any actual
allowances to cover the production. In this way, compliance
with the Montreal Protocol and the Clean Air Act would be
endangered.
The Agency also notes that EPA has only three business days
in which to object to a trade, and thus companies would not
be hindered by a paperwork bottleneck that could hinder the
implementation of production plans.
c. Transformer trading. One commenter maintained that the
proposed rule subjecting feedstock purchasers to the "offset"
requirement when allowances necessary for the purchase of
feedstocks
are traded is unlawful and serves no legitimate purpose. This
company also stated that the non-manufacturing feedstock users
would be forced to compete in the market for increasingly scarce
allowances. This company noted that each time a feedstock purchaser
attempted to exchange his regenerated allowances with a
manufacturer
in order to facilitate the purchase of additional feedstocks
it would be subject to a one-percent reduction. After 20 such
cycles in one control period, the purchaser's allowances would
be reduced by 17 percent. If product use expands, which may
occur, the effect of repetitively applied offsets combined with
diminishing allowances would create a shortage of allowances
and feedstock. One of the most disturbing effects, according
to this company, is that new feedstock uses, such as for CFC
substitutes, would never be launched. Furthermore, this company
commented that feedstock purchasers would gradually suffocate
from lack of supply, while feedstock manufacturers would be
awash with excess feedstock material.
The Agency agrees that placing an offset on trades, the purpose
of which is to replenish allowances expended in feedstock
production,
is not mandated by the Act. Section 607 requires that allowance
trades result in lower production than otherwise would have
occurred. Under current market conditions, transformers receive
allowances and trade them back to feedstock producers on the
basis that the chemical originally produced was used as a
feedstock,
and, therefore, does not count as production. In that way,
allowances
expended to produce substances later transformed are only
temporarily
expended. As such, the "trade" of these allowances is simply
an allowance reimbursement.
The same commenter asserted that the offset applied to
transformers
is classically anti-competitive in that it requires feedstock
users to compete for diminishing supplies, thus driving the
market price up unnecessarily and bestowing further advantage
on those who manufacture their own feedstocks. This
anti-competitive
and economically damaging spiral of prices is not intended or
sanctioned by the legislation and is sufficient reason, standing
alone, to adopt an alternative regulatory scheme, according
to this company. The commenter stated that the language employed
in section 607 shows that the drafters did not envision that
offsets would be required for trades by non-producers. This
commenter argued that since all allowances expire at the end
of the control period, this language can logically only apply
to those with who are allocated baseline allowances, and not
purchasers who only have allowances they have acquired.
Although EPA doubts that the potentially catastrophic
consequences
predicted by this commenter would actually take place in the
event that an offset were placed on allowance transfers from
transformers to producers, it concedes that this would not be
a desired result of the Act. As explained earlier, the Agency
believes it appropriate not to apply the offset to transfers
of production and consumption allowances from transformers to
producers. The Agency however does not agree that all trades
by non-producers should be exempt from the offset. Although
section 607(c) states specifically that "the transferor of such
allowances will be subject, under such rules, to an enforceable
and quantifiable reduction in annual production," subsection
(d) states that "the rules under this section shall also provide
for the issuance of consumption allowances in accordance with
the requirements of this title and for the trading of such
allowances
in the same manner as is applicable under this section to the
trading of production allowances" (emphasis added). EPA interprets
this language to mean that transferors of consumption allowances
should be subject to a reduction in annual consumption. For
this reason, the Agency is only exempting traders of allowances
from the offset in cases where it is clear that the purpose
of the trade is to reimburse a producing or importing company
for allowances expended in the production or import of feedstock
material or material that is later exported. All other trades
of production and consumption allowances are subject to a one-
percent offset.
2. International Trades
a. The proposal. Section 616 of the Clean Air Act provides
that trades of production between Parties to the Protocol also
be subject to specific conditions. "Consistent with the Montreal
Protocol, the United States may engage in transfers with other
Parties to the Protocol under the following conditions:
(1) The United States may transfer production allowances
to another Party if, at the time of such transfer, the
Administrator
establishes revised production limits for the United States
such that the aggregate national United States production permitted
under the revised production limits equals the lesser of (A)
The maximum production level permitted for the substance or
substances concerned in the transfer year under the Protocol
minus the production allowances transferred, (B) the maximum
production level permitted for the substance or substances
concerned
in the transfer year under applicable domestic law minus the
production allowances transferred, or (C) the average of the
actual national production level of the substance or substances
concerned for the three years prior to the transfer minus the
production allowances transferred.
(2) The United States may acquire production allowances from
another Party if, at the time of such transfer, the Administrator
finds that the other Party has revised its domestic production
limits in the same manner as provided with respect to transfers
by the United States in subsection (a)."
Under section 616, then, trades of allowable production between
the U.S. and a Protocol Party cannot result in an increase in
production over what would have occurred in the absence of the
trade. In the case of a trade to a U.S. company, the trading
Party must agree to reduce its production to the extent prescribed
by section 616. In the case of a U.S. company trading production
to other Parties, the U.S. must likewise reduce its production.
The Agency considered various methods of reducing overall
U.S. production as called for in trades from U.S. companies
to companies abroad, but proposed that the only fair way of
distributing the offset would be to decrease the transferor's
balance of production allowances by the amount required under
section 616. Thus, the formula for calculating the transferor's
revised production limit would be "the lesser of. (i) The
unexpended
production allowances held by the person * * * minus the amount
transferred; or (ii) the unexpended production allowances held
by the person * * * minus the amount by which the U.S. average
annual production for the three years prior to the transfer
is less than the United States' production allowable under this
Part minus the amount transferred."
b. Trades from the U.S. to other Montreal Protocol parties.
One commenter stated that although the proposal for intra-company
international trades would appear to be workable under today's
market conditions, as the phaseout moves forward and substitutes
are developed, the formula will become unworkable. This is because
the three-year average would be very low due to the rapid adoption
of substitutes in some end uses and to the recent economic slowdown
which has led to reduced demand for ozone depleting chemicals.
The commenting company provided an example of how applying the
offset could lead to severely diminished supplies of controlled
substances in the U.S. If the U.S. were producing and consuming
controlled substances at about 50 percent of its allowable levels,
and that allowable level was 80 percent of baseline levels,
the commenter claimed that a company transferring ten percent
of its production rights to another country would severely restrict
future production (i.e., only 80 percent minus 50 percent minus
ten percent of the company's limits).
The Agency acknowledges that the U.S. production of some
of the controlled substances has been well below allowable levels
and agrees that implementation of section 616 could result in
a severe curtailment of future production if a company were
to transfer away its baseline production rights under the kind
of scenario described above. The Agency notes, however, that
under its proposed approach to implementing section 616, a trade
could only take place if the U.S. transferor had enough allowances
to permit the reduction in actual U.S. production to be reflected
in the transferor's adjusted allowance balance. In short, using
the example given above, the transferor would have to have
allowances
equal to at least 30 percent of U.S. baseline production for
it to trade its allowances abroad. In this way, any resulting
curtailment in production would be for the transferor to absorb
and would not directly affect other companies' ability to produce.
EPA also points out that if the U.S. were already operating
well below its allowable production in a future control period,
it would not need the full amount of allowable production during
that control period and trades of allowances would not necessarily
result in such severe cutbacks at least for that period. In
any event, regardless of the effect on future production, the
Act clearly requires these adjustments to the U.S. production
limit and the need to make such adjustments should be considered
by those contemplating trades.
The same commenter stated that under the Agency's proposal,
no company other than itself may be able to transfer production
rights because the potential shortfall in national production
could easily exceed the total production allowances held by
any other producer. The company suggested as trades will become
increasingly necessary under the phaseout, and that it would
be uneconomical and bad policy for the U.S. to undertake a program
that would effectively prohibit international trades.
One company also maintained that the first company requesting
a transfer to another Party would be disproportionately penalized
by having to absorb the entire national difference between the
allowable production quantity and the three-year average of
actual annual production.
The Agency agrees that its proposal could have the effect
of unfairly limiting the availability of trading and that such
a result should be avoided. The Agency has thus changed its
requirement so that if more than one company trades production
of a controlled substance to another Party or Parties, they
will equitably share the burden of absorbing any shortfall in
national production. Thus, the allowance balance of the company
to trade first would be reduced by the full amount of its trade
plus the difference between the allowable production and the
three-year national average. If another company were then to
trade away its production allowances for the same controlled
substance, the first company would recoup part of what it lost
and the second company's allowance balance would be reduced.
The exact percentage of the required reduction levied on each
company would be proportional to the amount of each company's
trade. Since allowances are calculated in kilograms, the offset
would also be determined in kilograms.
According to several commenters, the implementation of this
requirement of the Clean Air Act as proposed would act as a
severe disincentive to early cutbacks beyond those required
by the Montreal Protocol, and would have a "chilling effect"
on the free market's distribution of production of controlled
substances throughout the world. They also contended that EPA's
proposal regarding transfers to other Protocol Parties could
be onerous and unworkable as it would seriously discourage any
company from entering into a transfer with another Party.
The Agency believes that the commenters' problem is with
the terms of section 616 itself, not with the Agency's manner
of implementing it. That section clearly calls for U.S. production
to be reduced not only by the amount being transferred but by
any shortfall between U.S. actual and allowable production.
Congress called for the required reduction to be calculated
this way in order to ensure that the production being transferred
was not production that would have otherwise gone unused, thereby
sparing the ozone layer that amount of potential depletion.
The Agency, required to implement the Clean Air Act requirements,
has simply codified the most equitable method of distributing
the effect of this requirement.
The same commenters suggested that EPA take under advisement
and further consider its proposed approach to section 616, and
not finalize it with the rest of the rule. The Agency notes,
however, that until it implements section 616, no trades of
production with Protocol Parties could be undertaken. The
regulations
that were effective in 1991 expired at the end of that year.
Section 616 sets forth the basis on which EPA may allow
international
trades. In the absence of regulations implementing that provision,
there could be no trades. As noted above, while section 616
may make international trades less attractive, EPA has no choice
but to implement its requirements.
The Agency has altered its approach to section 616 in this
fina1 regulation in response to comments to make it more equitable
and less burdensome on any individual firm. As the Act is very
specific on this point, EPA does not believe that postponing
this section's implementation would lead to a more satisfactory
solution.
c. Trades to the U.S. from other Montreal Protocol parties.
Section 616 also allows for transfers of production from other
countries to the United States. If the Party nation agrees to
reduce its production limit according to the provisions set
forth in the Act, the U.S. may increase its production by the
amount transferred.
One commenter asserted that transfers of methyl chloroform
and carbon tetrachloride production from Parties do not make
sense because other countries do not have limits yet. This company
commented that EPA should clarify this point, and declare that
a statement to UNEP proving a country's reduction in production
would be sufficient to satisfy the Clean Air Act.
While section 616 appears to presume the existence of Protocol
limits on the controlled substances being transferred, EPA does
not believe that Protocol limits need exist for it to apply
and be applied. The purpose of section 616 is to permit the
U.S. to transfer production to or from other Parties so long
as the total actual production of the U.S. and the Party engaged
in the transfer does not increase. Before Protocol limits apply,
the same purpose can still be served so long as the Party engaged
in the transfer has placed or will place limits on the controlled
substances being transferred and revises or sets those limits
to reflect the adjustment required by section 616.
Section 616(a) provides that the transferring Party adjust
its production level based on its allowable production under
the Protocol, its allowable production under domestic law or
its average annual production for the three years prior to the
transfer. Before Protocol limits take effect, then, adjustments
can be calculated based on domestic limits or average production
levels. What is essential, though, is that the adjustment be
binding on the transferring Party. If it has domestic limits,
it must reduce them by the amount transferred. If it has no
limits, it must establish limits equal to the average of its
actual production in the last three years less the amount
transferred.
For EPA to approve transfers of controlled substances, including
those that are not yet subject to Protocol limits, the transferee
must submit to the Agency a signed document from the principal
diplomatic representative in the transferring nation's embassy
in the United States stating that the appropriate authority
within the nation has revised or established production limits
as described. The Agency submits that in cases where the compounds
involved in the trade are not yet regulated under the Montreal
Protocol, no purpose is served by sending a statement to UNEP
that the country has reduced its production.
An industry group commented that it is unrealistic to expect
other countries to revise their production limits as required
by section 616 if the resulting limits were more stringent than
the applicable Protocol limits. It argued that the Agency should
not place the burden of negotiating lower national production
limits on the U.S. company seeking the transfer and maintained
that if the Agency did not act on a government-to-government
basis to negotiate production reductions, no allowance trades
from other countries could be carried out. Unless the Agency
took part in negotiations, the group stated, allowances would
flow only away from the U.S., resulting in lower U.S. employment
and balance of trade without environmental gain.
The Agency does not believe that it is the U.S. government's
place to negotiate with foreign governments on behalf of U.S.
companies that wish to receive production rights from other
nations. The Act is clear in requiring that the government of
a Party restrict its production if a U.S. company is to receive
production from that Party. If a foreign company wishes to transfer
production rights, it must work with its government to achieve
national reductions in production. Although the U.S. will continue
to act on an international level to encourage nations to join
the Protocol and phaseout ozone depleting substances, the Agency
will act as an agent for U.S. firms wishing to carry out allowance
transfers.
In addition, the Agency does not agree that this provision
of the regulations will result in a one-way transfer of allowances
away from the U.S. with negative economic consequences. Under
the regulations, before trades of production from the U.S. can
occur, EPA may evaluate the economic ramifications and, in cases
where negative consequences are anticipated, disapprove the
transfer.
H. Obtaining Additional Allowances-Transformation
1. Carbon Tetrachloride Transformation
a. Summary of today's final rule. EPA decided to change the
provisions for the tracking of carbon tetrachloride production
and transformation from those proposed in the September 30,
1991 notice in light of the comments received during the rulemaking
proceeding. Under today's regulations, any company that produces
carbon tetrachloride to be used as feedstock may do so without
expending production and consumption allowances under certain
conditions. In order for the company to avoid the prohibition
against producing without allowances, however, the same amount
of material it reports to EPA as "production for feedstock use"
in a control period must be transformed by the end of the first
quarter of the next control period. No "transformation allowances"
or up-front commitments will be necessary for companies to produce
carbon tetrachloride for feedstock. Instead, recordkeeping and
reporting requirements needed to make this added flexibility
for producers of carbon tetrachloride and feedstock users possibly
have been promulgated.
b. The proposal. The Agency proposed a new system of
"transformation"
allowances for the production of carbon tetrachloride to be
used as a feedstock. Under the system in effect in 1991, producers
of carbon tetrachloride, like the producers of the other controlled
substances, were not allowed to produce the chemical unless
they had adequate production and consumption allowances to cover
their production. After the chemical was transformed, the
transforming
company would be eligible to receive additional production and
consumption allowances that could then be used to further produce
or import additional carbon tetrachloride. Since a large percentage
of the carbon tetrachloride produced is transformed, however,
and two of the producing companies received no baseline consumption
allowances, the 1991 system proved cumbersome and generated
a large amount of paperwork while creating a stop-start production
cycle.
The proposed system would provide for the allocation of
allowances
before the actual transformation occurred, upon the producer's
proving to the Agency's satisfaction that it had sales commitments
with companies that promised to transform the carbon tetrachloride
received. Producers could use these transformation allowances
to produce carbon tetrachloride for feedstock use within the
same control period. Transformers would report their activities
quarterly. Any amount of carbon tetrachloride produced pursuant
to transformation allowances and not transformed by year-end
would be considered a violation of the regulations.
c. Proposed system versus 1991 system. The Agency requested
comment on the proposed system as well as the 1991 system. Two
commenters commended EPA for developing a new approach, but
said that the proposed system would not solve some problems
of the 1991 system and would exacerbate other problems. Another
commenter remarked that the proposed system would be an improvement
from the current system in that would solve the problems of
stop-start production and of requiring producers to have allowances
before producing carbon tetrachloride for exempt uses (in 2000).
However, according to this company, the proposed scheme still
had several flaws, which are discussed in more detail below.
In preparing the final regulations, the Agency has taken
these comments into account, and altered the proposed
transformation
allowance system so that it will work more smoothly while
maintaining
an effective compliance monitoring mechanism.
d. Allowances for the production of feedstocks. Two companies
asserted that since the manufacture of controlled substances
used for feedstock is not deemed production under EPA's
regulations,
no allowances of any kind should be required to manufacture
carbon tetrachloride for that purpose. One company commented
that the word "production" found in the Protocol and the Act
does not include the manufacture of controlled substances that
are wholly used and consumed in the manufacture of other
substances,
and thus that EPA's proposed regulations unjustifiably and without
authority would prohibit the sale of controlled substances for
feedstock purposes except to the extent permitted by existing
production and consumption allowances. One commenter also contended
that EPA's interpretation of production denies the plain and
ordinary meaning of the words contained in the statute, cannot
be reconciled with other parts of the statute, and is neither
required nor suggested by the Montreal Protocol. According to
this company, since the effect of EPA's interpretation is to
place a restriction on trade in these chemicals that is not
authorized or required by the Statue or the Protocol, the Agency's
position is unlawful. One comment indicated that it would be
less disruptive of business to interpret the feedstock exclusion
as covering the current year's production that has been or will
be used as feedstock, requiring only a certification that the
material will be transformed eventually.
The Agency continues to believe that the Clean Air Act and
Protocol definitions of production may be read to include any
amount of feedstock chemical manufactured until it actually
is transformed. The Clean Air Act, after all, excludes from
production those controlled substances that are "used and entirely
consumed" in the manufacture of other chemicals (emphasis added).
At the same time, EPA concedes that the use of the past tense
does not necessarily connote that the substance must have been
used and consumed before it may be excluded from production.
There are strong policy reasons for interpreting production
as the Agency has in the past, to ensure that controlled substances
are not produced in amounts greater than the Protocol and Clean
Air Act allow and then not transformed.
In the case of controlled substances largely used as feedstocks,
however, EPA's past interpretation can be unwieldy to implement.
To address this concern, the Agency believes that it is permissible
to interpret the definition of production in such a way that
any chemical transformed at any point in time is never deemed
"produced" within the context of the Protocol and Act. For reasons
discussed in the following sections, EPA has determined that
the allocation of transformation allowances for the production
of carbon tetrachloride as feedstock (a system premised on the
first interpretation) would not provide significant compliance
monitoring advantages, while it would increase industry's and
EPA's administrative burden. Consequently, this rulemaking provides
that companies may produce carbon tetrachloride for feedstock
use without expending allowances.
One commenter stated that within the same company, EPA excludes
the transformed chemical from production, and there is no
compelling
reason for treating transformation by other companies differently.
The Agency's response is that prior to today's rule, all
production, including feedstock production required the expenditure
of consumption and production allowances and was not excluded
directly from production. The commenter is most likely referring
to the Agency's suggested format for the producer's quarterly
report, which is simplified by netting out the amount transformed
during that quarter from the amount produced during that quarter
(the regulations promulgated today do not change this reporting
system for internal transformation). It has been under past
rulemakings and continues to be prohibited, however, to produce
controlled substances for feedstock use without expending
production
and consumption allowances to cover that production, so in-house
transformation is treated the same as second-party transformation.
This rulemaking alters that system for carbon tetrachloride
only.
One commenter also remarked that with few producers and
transformers
involved, enforcement would be just as easy for second party
transformation as for producer transformation. Therefore, according
to the commenter, the two systems should be treated in the same
manner, as Congress intended.
To date, however, the Agency has identified at least 30
companies
that transform carbon tetrachloride, in addition to six companies
that produce it as well. The tracking of second party
transformation
thus is not as simple as tracking internal producer feedstock
use. Therefore, the Agency is placing specific controls on
producing
and transforming companies to ensure compliance, which are outlined
below.
e. Written contracts and commitments to transform. One company
and an industry group commented that the proposed requirement
for written fixed-amount contracts before transformation allowances
could be granted would alter current business practices. In
addition, they stated that sending each new purchase order to
EPA would involve considerable paperwork without corresponding
benefits. These commenters were also concerned that the production
limits would still be exceeded if customers do not take the
amount of carbon tetrachloride ordered or do not transform it
by the year-end.
These commenters maintained that elements of EPA's proposed
requirements do not take account of everyday business practices,
as contracts are often only for estimated amounts. These three
companies stated that the proposed system would prevent production
without advance orders, which would make the production process
slow to respond to immediate or emergency needs.
Responding to these concerns, the Agency has removed the
requirement that a producer obtain up-front commitments from
purchasers to transform carbon tetrachloride. Since EPA is not
establishing a system based upon the provision of "up-front"
allowances for carbon tetrachloride, EPA does not believe it
is necessary to require producers to obtain the up-front
commitments,
the purpose of which (as explained in the NPRM) would be to
determine the precise amount of carbon tetrachloride intended
for transformation so that the appropriate amount of allowances
could be granted. Instead, a producer must report every quarter
its sales of carbon tetrachloride to each feedstock-user and
provide the IRS certificates of the customers involved. The
certificate shows the customer's intent to transform and
substantiates
the producer's claim that its feedstock production in excess
of its production allowances will be transformed. Thus, industry
will have more flexibility in responding to emergency orders,
while EPA will still have adequate assurance that the carbon
tetrachloride will be transformed.
f. Year-end problem. Several commenters expressed concern
about the provision in the proposed rule that all of the carbon
tetrachloride produced pursuant to transformation allowances
for one control period must be transformed within the same control
period or be counted as production. This provision stemmed from
the Agency's interpretation of production as excluding the quantity
manufactured and already used as a feedstock, but including
any quantity manufactured and not yet used as a feedstock, even
if that is its intended use. This means that at year-end, any
inventory of the chemical remaining (even if intended for
transformation)
would be counted as production. The proposed system would be
advantageous for compliance monitoring because it would assure
that transformation occurs before additional allowances are
granted. However, in light of these comments and its experience
implementing carbon tetrachloride controls in 1991, EPA believes
that the disruptive effects of this approach outweigh the
compliance
monitoring advantages in the case of carbon tetrachloride. The
broader interpretation of production discussed earlier, allowing
the amount of chemical transformed after the control period
in which it was produced (not just within the same year) to
be excluded from production, avoids the problem of year-end
shutdown. In order to avoid plant shut-downs at year end, the
Agency has decided that carbon tetrachloride transformed by
the end of the first quarter in the control period following
the control period in which it was produced may be excluded
from the previous control period's production. Producers will
be required to report production separately from production-
for-transformation, for which no allowances will be expended.
The effect of these rules will be the same as dividing the carbon
tetrachloride manufactured into "produced" and "transformed"
quantities.
The final regulations allow for two types of carryovers.
First, a three-month grace period for transformation after the
end of the control period in which it was produced is established.
Second, the producing company must show only that an amount
equivalent to the amount it produced during the control period
without the expenditure of production and consumption allowances
for that control period was transformed. This means that production
from one control period that is transformed at the beginning
of the following control period could count towards the amount
that must be transformed during the current period. For those
companies that do not have baseline consumption allowances,
this second type of carryover could provide them with a needed
cushion. For all companies, the carryover period will provide
flexibility needed to deal with the unpredictable instances
of untransformed inventory.
One company maintained that by 1996 it will have the capability
to transform carbon tetrachloride produced as by-product with
a superior, environmentally sound technology. This company proposes
that EPA allow coincidentally produced carbon tetrachloride
to be stored in 1995 and 1996. The commenter noted that this
would not violate the Clean Air Act and Montreal Protocol because
production for feedstock is not production.
If the Agency were to allow indefinite storage of production-
for-feedstock, it would not be able to effectively monitor
companies'
compliance. Even if a company's production far exceeded its
internal or its customers' transformation, it could always claim
that the material was intended for future transformation. The
Agency has determined that there must be some transformation
cutoff date in order to ensure compliance with the Act and
Protocol.
The Agency considered all of the carryover time periods
suggested
by commenters, ranging from 30 days to one year, and selected
three months, or one quarter, as the most workable. Although
some commenters indicated that any carryover from one year's
production could be completely transformed by the end of the
following January, a carryover period equal to one quarter reduces
the reporting burden on companies by allowing them to provide
information on the transformation in the first quarterly report.
Six-month and one-year grace periods were rejected as being
unnecessarily long, since previous-year compliance could not
be determined until much later, in the case of the one-year
grace period, up to 14 months after the end of the relevant
control period.
Under the one-quarter carryover system, every transformer
of carbon tetrachloride must report each quarter the amounts
of carbon tetrachloride it has transformed. Each quarter, every
producer will report its production intended for transformation
and its non-feedstock production, and provide sales data and
IRS certificates for each customer to which feedstock production
was sold. After the end of the first quarter of the following
control period, EPA will compute a mass balance. Compliance
would be monitored for 1992 as follows: Amount Transformed in
'92 + Amount Transformed in first quarter of '93 must be >=
Amount
Produced-for-Transformation in '92.
The next year, the mass balance will be calculated as follows:
Amount Transformed in '93 - Amount Transformed in first quarter
'93 that was attributed to '92 produced + Amount Transformed
in first quarter of '94 must be >= the Amount Produced for
Transformation
in '93.
Under this system, companies may allot a certain amount of
first quarter transformation to justify previous-year production
for-feedstock uses. Any amount of first quarter transformation
that exceeds what is needed to cover previous-year production
will count towards transformation of feedstock production in
the same year. All second, third and fourth quarter transformation
will be attributed to production in the same year, along with
as much of the next year's first quarter transformation as is
necessary. Companies will be out of compliance if their first
quarter transformation is not large enough to account for the
previous year's remaining production-for-transformation.
An industry group inquired what would happen if a transformer
starts a control period with inventory and ends the year with
an untransformed inventory. For example, would a portion of
any transformation that took place be allocated to the preexisting
inventory and thus not be counted toward the current year's
production? This commenter also asked what would happen if a
transformation occurred early in the control period before carbon
tetrachloride was actually purchased during that control period.
Under the feedstock tracking system, no transformation will
be allotted to specific sources. A transformer beginning a year
with inventory and ending the year with inventory does not present
a problem because the amount transformed in that year could
still be precisely calculated and matched against the producers'
feedstock production. As a result, it does not matter if
transformation
of past-year purchases occurs, as this type of carryover is
allowable if the total amount transformed in one control period
plus the following carryover period minus the previous year's
carryover is equal to or less than the amount produced in that
year for feedstock.
One commenter maintained that transformation documentation
should be based upon changes in bulk inventory, and not be tied
to carbon tetrachloride in a specific shipment. This company
stated that material received in bulk (e.g., by tank truck or
rail car) would not be stored by discrete shipment, but would
be combined in a single storage tank or battery of tanks.
The tracking system promulgated in this regulation allows
for treatment of transformation reporting in a manner similar
to the reporting of production, based on inventories, shipments
and other pertinent information. The system thus avoids the
problems of tracking the fate of individual shipments in a
continuous
manufacturing process.
g. Liability if production for feedstock exceeds transformation.
Under the proposed rule, a carbon tetrachloride producer that
produced no more than its transformation allowances permitted
would still be liable if the carbon tetrachloride produced pursuant
to the transformation allowances was not transformed in the
same control period as it was produced. Several commenters objected
that producers should not be held liable for the failure of
purchasers who agreed to transform the production to do so.
They maintained that as long as a carbon tetrachloride producer
does not exceed its production allowances, the Agency should
consider it in compliance.
In the final rule, the Agency has maintained the basic tenet
of this aspect of its proposal-that producers remain ultimately
liable for production not transformed. Under this rule, a company
that produces without allowances a given quantity of carbon
tetrachloride for feedstock use during a control period must
ensure that at least that amount has been transformed by the
end of the first quarter of the next control period. Any amount
that is not transformed will be counted as production and
production
and consumption allowances will be deemed to have been expended.
To the extent that a company's total production, including that
not transformed, does not exceed its production and consumption
allowances, it will be in compliance with the regulations. To
the extent that its total production does exceed its allowances,
it will be in violation.
The Agency has placed liability on the producer because the
Act restricts production, not transformation. The specter of
potential liability gives producers an incentive to ensure that
their customers' claims that the carbon tetrachloride will be
transformed are fulfilled. Since it is the producer who takes
the first step in deciding whether or not to produce the chemical,
and assures the Agency that this production will be transformed,
it is clearly the producer's responsibility to see that the
transformation is in fact carried out. Such liability is not
only required by the statute, but also assures the protection
of the environment. At the same time, producers may enter into
contracts with transforming companies that contain clauses
providing
that the transforming companies will compensate the producer
for any financial consequences of liability.
Several commenters maintained that EPA has the authority
to hold customers liable because of its authority to limit
production
and transformation. One company contended that if the customer's
action causes the carbon tetrachloride to be classified as
production,
then the customer becomes the de facto producer and as such
is liable. Another commenter stated that if the Agency does
not believe it has this authority, it could still place liability
on transformers by granting transformation allowances only to
companies that have signed a liability statement.
The Agency believes at this time that even if it has the
legal authority to place liability on transformers, this would
not be an effective way of ensuring compliance. As noted earlier,
the number of transformers far exceeds the number of producers,
and the monitoring of transformers thus presents greater
difficulties
than does the monitoring of producers.
One commenter remarked that for cases of failure to transform
due to "Acts of God," there should be a provision allowing EPA
to issue an enforceable consent order requiring the customer
to transform or destroy the carbon tetrachloride within 180
days. If a customer does not comply, EPA should fine the customer
and arrange for the destruction at the customer's expense.
The Agency is providing a 90-day grace period in which a
producer and transformer can arrange for transformation of
untransformed
inventory, whether it is due to "Acts of God" or any other cause.
If the material is not transformed within the first quarter
after year-end, the Agency will take enforcement action and
collect fines from the producer of the chemical. Producers may
pass fines and costs onto their customers as they see fit through
contract provisions.
Another company commented that the proposed liability system
ensures that transformation will take place. This company suggested
that compliance will be effected through normal contract procedures
since the EPA is clearly placing the burden on the producers.
Therefore, producers will establish adequate contract and other
control mechanisms to assure that the transformation occurs
because they would be exposed to substantial noncompliance
penalties.
By contrast another company responded to the Agency's suggestion
in the NPRM that producers could use provisions for liquidated
damages in contracts in order to avoid the costs of fines for
transformers' failure to transform. They stated that liquidated
damages provisions are inadequate for two reasons: (1) a customer
would not sign the contract, and (2) damages might be uncollectible
(i.e., in the case of bankruptcy, the security interest would
not cover the fines, and other creditors would be harmed). A
supplementary comment added that it is not commercially realistic
to believe that a company would agree to manufacture carbon
tetrachloride even though it would be held liable if the purchaser
did not transform the chemical. This company commented that
there is no reason why the onus of the prohibitions cannot focus
on the buyer.
The Agency believes that if a customer were already certifying
on IRS certificates that it would transform the material and
it could not obtain carbon tetrachloride without signing a contract
containing the provisions discussed above, then it would not
be difficult to reach an agreement on liquidated damages in
cases of failure to transform. The Agency also submits that
the risk that a customer will declare bankruptcy or otherwise
default, is a risk normally encountered and that if a producer
perceives the risk to be too high, it would not be prudent to
continue selling feedstock to that customer. Producing companies,
in addition to making responsible decisions about to whom to
sell the material, could make provisions for transforming the
remaining material at another company's or one of their own
plants. Thus, liquidated damages provisions should prove to
be an effective method by which producers can ensure that their
customers are financially accountable for failure to transform.
In sum, the Agency continues to believe its proposed liability
system will be the most effective in ensuring compliance. Although
the Agency is not requiring fixed contracts between producers
and transformers, it is likely that producers will arrange for
these types of agreements in order to guard against being penalized
for untransformed material.
One commenter asked which producer would be penalized if
a customer of two producers failed to transform within the control
period. Under the scheme for carbon tetrachloride transformation
promulgated in this rulemaking, transformers are required to
report exactly how much carbon tetrachloride from each producer
was transformed in each quarter. In cases where product from
several producers is mixed in tanks, the governing assumption
for whose carbon tetrachloride was transformed first would be
"first in, first out" (FIFO), unless the transformer indicates
that it plans to use an alternate method. This method is widely-
used in industry and has in the past been the basis of some
companies' distinction between imported and domestically-produced
material that is mixed before sale to transformers. Thus if
a transformer received a shipment from one producer on the first
of the month, and a shipment from another producer on the fifteenth
of the month, the assumption would be that the first producer's
material was transformed first. In this way, it could be determined
to whom any untransformed material should be attributed. If
a transformer does not wish to use the FIFO method, the company
should submit a description of the alternate calculation method
and a justification as to why FIFO is not satisfactory prior
to submitting its first quarter report. The Agency will either
approve or disapprove the request for the use of an alternate
method, based on whether it can be reconciled with other
transformers'
calculation methods and FIFO.
Although today's rule makes the producer liable in cases
where feedstock production exceeds transformed amounts during
the five-quarter period, EPA will continue to monitor the
effectiveness
of relying solely on this compliance mechanism. If the Agency
determines in the future that transforming companies are acting
in bad faith by failing to transform, it will consider proposing
regulations making transformers also liable pursuant to its
statutory authority under section 615 of the Act. That section
grants EPA broad authority to regulate practices or activities
(such as failing to transform) that may reasonably be anticipated
to contribute to ozone depletion and endanger public health
or welfare.
h. Provision for the export of carbon tetrachloride. Two
commenters remarked that elements of the proposed rule could
eliminate their ability to produce for export because they cannot
produce without consumption allowances. The commenters stated
that two producers, including one of the commenters, have zero
consumption allowances. That company commented that if the proposed
system is adopted, it should be expanded to provide special
export allowances under rules analogous to the rules for obtaining
transformation allowances.
For exports, the Agency will use a process similar to that
set up in 1991 for companies that needed up-front allowances
in order to produce for transformation. Production of carbon
tetrachloride for export does not present the same problems
as production for transformation, as only a small percentage
of the carbon tetrachloride manufactured in the U.S. is exported.
Nevertheless, EPA recognizes the need for a mechanism for companies
that did not receive baseline consumption allowances to enable
them to produce and then export. These companies will be granted
consumption allowances each year, equal to their production
allowances for that year in order to produce for export. Companies
must hold at least this number of consumption allowances at
the end of the control period; they will receive consumption
allowances equal to the number they expended to produce upon
exporting their production. The Agency will allow companies
to continue to process paperwork demonstrating that exports
took place in the proper control period for up to 45 days after
the end of the control period.
i. Recordkeeping and reporting for the carbon tetrachloride
transformation system. Recordkeeping and reporting requirements
have been changed from the proposal to be consistent with the
carbon tetrachloride transformation system adopted here. Producers
will be required to keep on-site records of:
The type of information required under the 1991 rules;
and
Sales of material (invoices) to transformers.
Producers will also have to file quarterly reports registering:
The same type of information required under the 1991 rules,
with "production" including only carbon tetrachloride manufactured
and not intended for transformation;
The amount of "feedstock production" (carbon tetrachloride
manufactured and intended for transformation);
The amount of feedstock production sold to each transforming
company; and
IRS certificates for each transformer.
Transformers will be required to keep on-site records of:
The same type of information required under the 1991 rules
for companies that request additional allowances for the use
of a controlled substance as feedstock;
All purchases of carbon tetrachloride for feedstock;
Shipments received and the date and quantity of material
received;
The source of all purchases and shipments; and
Quarter-start inventories of carbon tetrachloride.
Transformers will also have to file quarterly reports including:
A list of producers or importers from whom material was
purchased; and
The amount of each producer's or importer's material that
was transformed during that quarter. If material from several
producers or importers was mixed, the transformer should use
the first in, first out (FIFO) method for determining whose
production was transformed, unless the Agency has approved an
alternate method for that company.
2. Transformation of Other Controlled Substances
One company commented that producers of methyl chloroform
should also be allowed to exclude methyl chloroform that is
transformed from production because in the future the use of
methyl chloroform as a feedstock will increase. It presented
the example of the production of HCFCs, which in 1995 may run
into the same problems of allowance recycling delays and year-
end problems as are experienced currently for carbon tetrachloride.
EPA recognizes that as the phaseout progresses, it may be
appropriate to expand the carbon tetrachloride transformation
system to other chemicals and to exports. To date, however,
the burden of allowance cycling for chemicals other than carbon
tetrachloride has not been large enough to warrant expanding
the transformation system, which provides less assurance that
production for feedstock purposes is actually transformed.
Another company remarked that it and a number of other companies
use controlled substances as manufacturing feedstocks, including
for HFCs being developed as CFC substitutes, and that their
need for such feedstocks is expected to increase in the future.
According to this commenter, these companies would be placed
at an unnecessary and unauthorized competitive disadvantage
simply because they buy, instead of make, their feedstock
chemicals.
It asserted that the proposed rules would place a "choke-hold"
on companies that must purchase controlled substance feedstocks
and products made with them, giving an enormous advantage to
manufacturers who produce their own feedstocks. The commenter
maintained that this aspect of the proposal was unnecessary
to protect the ozone layer, and was not authorized or required
by the Clean Air Act. Moreover, this company argued that the
differential treatment of second-party transformers significantly
injure the U.S. and individual companies. It added that at the
conclusion of the phaseout period it would no longer be possible
to purchase controlled substance feedstocks (except for carbon
tetrachloride) because there would be no more allowances. Moreover,
this company maintained that in the interim, supplies would
be scarce and prices would be unnecessarily high, without
environmental
benefit.
The Agency has been monitoring allowance cycling for second-
party feedstock use of CFC feedstocks since July of 1989 and
has yet to encounter any situation where companies had difficulties
purchasing feedstock chemicals because of a "choke-hold" on
allowances. Indeed, to date there has been a surplus of allowances
at the end of each control period. Again, as the phaseout begins
to take effect, this situation could change. The Agency prefers,
however, to continue with the current system, which has been
effective and has not presented problems for chemicals other
than carbon tetrachloride, until it is determined that the carbon
tetrachloride transformation system as promulgated in these
regulations is effective and can reasonably ensure compliance
with international production and consumption limits. At that
time, the Agency will reconsider switching other controlled
substances over to this control system. It is not the Agency's
intention to disadvantage second-party transformers or to stifle
the production of CFC substitutes. The commenter has presented
no compelling evidence that this is currently taking place.
3. Provision for the Import of Feedstock Carbon Tetrachloride
One company asserted that under the 1991 and proposed rules,
importation of controlled substances for feedstock use can only
be accomplished by expending consumption allowances, which will
become unavailable in 2000. In the interim, this company maintained
that transfers of allowable production between Parties (to permit
greater domestic production of controlled substances for feedstock
use) would be subject to an even greater offset than that applied
in the case of domestic transfers. As certain feedstock materials
needed for industry are in short supply (e.g., Halon 2402),
the company inquired as to why American industry should be denied
the opportunity to import these feedstocks.
This comment raises several issues. The first is how the
import of feedstock substances should be treated. The Agency
has provided that companies that wish to import carbon
tetrachloride
for feedstock use do not need to expend consumption allowances.
In this way the import of carbon tetrachloride feedstocks is
treated in the same manner as the production of the same. The
offset for inter-Party trading of allowable production should
not directly affect importation of controlled substances. Second,
other controlled substances (such as Halon 2402) are not being
considered for this type of treatment currently for the reasons
discussed above. However, if at a later date the Agency were
to establish a similar system for the other controlled substances
as well, provision would also be made for imported feedstocks
and of these substances.
4. Transformation in Foreign Countries
One commenter maintained that after a Party transfers to
the U.S. some amount of its allowable production, U.S. companies
should be able to get production and consumption (or
transformation)
allowances for exporting the actual production that results
when the exports are used as feedstocks in other countries upon
submitting proof of export, transformation, and the importer's
intended use.
EPA at this time cannot grant additional allowances for,
or exempt from production limits, controlled substances that
are manufactured for transformation abroad. The Parties to the
Protocol have specifically addressed this issue and decided
that the country in which the transformation takes place should
be able to exclude from its limits the amount transformed. (See
55 FR 24491 June 15, 1990.) Moreover, the Agency could not inspect
transformation facilities in other countries, and, therefore,
would not be able to enforce production limits adequately.
I. Obtaining Additional Allowances-Exports
I. Proof That Exports to Article 5 Countries are Not Reexported
The Clean Air Act allows producing companies to increase
their production by up to ten percent of their baseline for
the purpose of supplying the basic domestic needs of developing
countries operating under Article 5 of the Montreal Protocol.
The Agency's proposed method of tracking this production is
to create potential production allowances equal to ten percent
of each company's baseline that can be converted into actual
production allowances if companies can prove that they have
exported to Article 5 countries for the purposes of supplying
their basic domestic needs. The Agency proposed to define "basic
domestic needs" as the parties have thus far defined it. This
definition presumes that controlled substances supplied to
developing
countries are used for basic domestic needs to the extent that
they are not re-exported in bulk form. The Agency proposed that
companies that wish to convert potential production allowances
to production allowances submit to EPA documentation verifying
that the export has occurred, as well as proof that the material
will not be re-exported. As proposed, the documentation could
be in the form of a contract providing for liquidated damages
equal to the resale price of the chemical in the event the
provision
not to re-export is breached or could reflect other means to
guarantee that the goods would not be re-exported. The Agency
requested comments on other forms this proof could take.
One company asserted that re-export should be allowed if
it can be demonstrated that re-export is to serve the basic
domestic needs of another Article 5 country and also that one
test of basic domestic needs could be the fact that there is
greater economic value in re-exportation than in internal use.
This company stated that to dictate otherwise would disrupt
free market forces.
The Agency responds that under the Protocol and section 614
of the Act it does not have the authority to broaden the definition
of basic domestic needs as suggested. The Parties clearly indicated
in the discussions accompanying the London Amendments that basic
domestic needs are not defined to include bulk re-export of
any kind.
The same commenter also suggested an alternative scheme for
determining basic domestic needs under which EPA would determine
the percentage of imports by each Article 5 country that typically
is re-exported, and apply this factor to the U.S. exports in
order to determine how many authorizations to convert should
be given.
EPA does not believe that basing authorizations to convert
on past re-exportation statistics would guarantee that countries
would not re-export controlled substances in the future. In
addition, the Agency finds that determining the re-export rates
of all 43 Article 5 countries would be administratively and
financially burdensome. This is particularly apparent in light
of the fact that the Protocol's Secretariat, which has already
requested these data, has not been able to fully determine past
export rates for the developing countries.
The Agency is thus finalizing its proposed system, which
allows companies to request only additional consumption allowances
for exports to Parties that are not operating under Article
5, but allows companies that export to Article 5 countries that
have submitted appropriate documentation to receive both
consumption
allowances and authorizations to convert potential production
allowances.
2. Exports to Non-Party Complying Nations
The same company commented that the Agency should allow exports
to nations that are not Parties to the Protocol but are complying
with its terms to be subtracted from consumption.
Under the Protocol, the Agency may grant additional allowances
for exports to non-Party complying nations if they have been
identified as such by the Protocol Parties. To date, no non-
Party countries have been identified as complying. As countries
identified, the Agency will begin granting additional allowances
for exports to these countries.
J. Comments on the Impact of the Action
The Agency prepared a Regulatory Impact Analysis (RIA) for
this regulation. It discusses the costs and benefits of the
action, including benefits resulting from a decrease in ozone
depletion. The RIA also contains an analysis of companies' average
burden for fulfilling the recordkeeping and reporting requirements.
Two commenters wrote that the RIA was flawed, particularly
the sections linking ozone depletion to adverse human health
effects. They suggested that the RIA be submitted to the Science
Advisory Board for review and comment.
In 1988, the Agency prepared an extensive risk assessment
which served as the basis for its original regulations implementing
the provisions of the Montreal Protocol. This document included
detailed information about the adverse human health effects
associated with excess UV-B radiation and ozone depletion. This
information was reviewed by the Science Advisory Board and forms
much of the basis for the current RIA.
One company also stated that the industry burden estimated
for the recordkeeping and reporting requirements was too small.
The Agency believes, however, that although the estimate may
be too low or too high for any one company, it accurately
represents
the average number of hours that would be spent by an affected
industry entity to fulfill the requirements of this regulation.
V. Section-by-Section Description
A. Authority Citation
The statutory sections implemented by the regulations are
sections 603, 604, 605, 607 and 616 of the Clean Air Act as
amended by the Clean Air Act Amendments of 1990 (42 U.S.C. 7671
et seq.).
B. Section 82.1-Purpose and Scope
This section states that the purpose of the regulations is
to implement the Montreal Protocol and sections 603, 604, 605,
607 and 616 of the Clean Air Act.
C. Section 82.2-Effective Date
As proposed, January 1, 1992 is the effective date of these
regulations. EPA has determined that it is necessary to maintain
the January 1, 1992 effective date even though that will result
in these regulations having a retroactive effective date because
that effective date is necessary to avoid a period in which
there are no regulations containing production and consumption
restrictions in force. The temporary final rule promulgated
by EPA was effective January 1, 1991 and established requirements
only for the 1991 control period, which ended December 31, 1991.
Thus, unless the regulations promulgated with this notice go
into effect on January 1, 1992, there would have been a period
running from December 31, 1991 until their effective date during
which no regulations would have been effective. This would present
a serious danger of being out of compliance with the Montreal
Protocol, as no consumption limits would be in place during
that period. Furthermore, it would mean that the Clean Air Act's
production limits for 1992, which are self-effectuating, would
have been in place without any implementing regulations, a
situation
that would create uncertainties with respect to producers'
compliance
with the production limits. (EPA determined that it was necessary
to promulgate the temporary final rule concerning the 1991 control
period with retroactive effect for similar reasons. See 56 FR
9518 (March 6, 1991).)
EPA does not believe that in the weeks between January 1,
and today, any company has produced or imported in excess of
the limits established by today's rule. All affected companies
were notified of the upcoming regulations, were able to review
the proposal and in general were made aware of the production
and consumption restrictions through the requirements of the
temporary final rule in 1991. The Agency contacted these companies
by mail and sent each one a copy of the temporary final
regulations,
the subsequent NPRM, and the direct final amendment to the
temporary
final rule, published on December 30, 1991. The changes that
have been made here to the proposal do not include any requirements
that are more stringent than those in the proposed rule.
Accordingly,
the retroactive nature of the regulations should not pose a
problem for the regulated community. For the reasons given in
the temporary final rule regarding its retroactive effective
date, including the fact that it is highly unlikely that any
company would have exceeded its allocation of allowances for
the whole year in the short period since January, EPA does not
believe that any member of the regulated community will be placed
out of compliance with the regulations as a result of their
retroactive effect.
A savings clause has been included in the regulations so
that enforcement action can continue to be taken for violations
of the requirements of the temporary final rule.
D. Section 82.3-Definitions
Several definitions are revised to conform to the definitions
set forth in section 601 of the Clean Air Act. In particular,
the terms "import" and "production" are changed to conform to
their section 601 counterparts, and "control period" is redefined
to include the calendar-year period specified in this section.
Several other refinements of definitions are included as well.
"Production" includes spills that may occur, as discussed
in a previous rulemaking on spills promulgated by the Agency
(55 FR 24490).
The proposed regulatory language concerning the exemption
from the definition of import for Maquiladora transactions has
been modified to reflect more accurately the nature of Maquiladora
arrangements. Consequently, instead of providing an exemption
for imports "from Mexico by companies operating under the
Maquiladora
Accord," the new regulatory language provides an exemption for
"[b]ringing controlled substances into the U.S. from Mexico
where the controlled substance had been admitted into Mexico
in-bond and was of U.S. origin." The new language better reflects
the reality of the arrangement, which is that controlled substances
crossing the border from the U.S. into Mexico "inbond" (i.e.,
under a bond insuring that the controlled substances will remain
in Mexico only on a temporary basis) will be returned to the
U.S. For the purposes of this regulation, therefore, the Agency
will not require those persons importing controlled substances
from a facility in Mexico operating under a Maquiladora arrangement
to expend consumption allowances nor will the Agency grant
allowances
for an export to such a facility. The Agency believes that because
allowances are expended when such controlled substances are
initially produced in the United States, compliance with the
Montreal Protocol will not be adversely affected by this exemption.
Section 601(7) does not define "importer." For the purposes
of these regulations the Agency defines an importer as the person
listed as the importer of record on U.S. Customs Service forms
for the import of a controlled substance into the United States.
The Amendments also do not define "export" or "exporter."
EPA is retaining its current regulatory definitions of these
terms.
EPA is also retaining its definition of "controlled substance."
This definition, which is based on its Protocol counterpart
and includes elaboration adopted by the Parties, distinguishes
between bulk chemicals, which are regulated, and products, which
are not regulated under section 604. "Controlled substance"
means any substance listed in appendix A to this part, whether
existing alone or in a mixture, but excluding any such substance
or mixture that is in a manufactured product other than a container
used for the transportation or storage of the substance or mixture.
Any amount of a listed substance that is not part of a use system
containing the substance is a controlled substance. If a listed
substance or mixture must first be transferred from a bulk
container
to another container, vessel, or piece of equipment in order
to realize its intended use, the listed substance or mixture
is a controlled substance.
All of the above revisions to the definitions are being adopted
as proposed, with the exception of the definition of importer.
Several alterations have been made to the proposed definitions
of calculated level, production and transformation for
clarification
purposes. Since the transformation allowance system is not being
adopted, the definition of transformation allowances has been
dropped. Definitions of CUBP and MACT have been added. The CUBP
definition incorporates the commercial test and the dependent-
variable test discussed above, and the MACT definition includes
a requirement for 99.99 percent destruction efficiency.
E. Section 82.4-Prohibitions
In this section, EPA prohibits persons from producing or
importing controlled substances in excess of the production
allowances and consumption allowances they hold, with the exception
of the production of carbon tetrachloride for feedstock and
CUBP carbon tetrachloride and methyl chloroform. In addition,
this section prohibits persons from producing or importing more
than 150 percent of their baseline levels of Group I chemicals
between July 1, 1991, and December 31, 1992, except to the extent
they have obtained additional allowances by exporting to Parties
in general or Article 5 countries in particular, by transforming
Group I substances, or by obtaining allowable production from
another Protocol Party during the same period. This added
restriction
on Group I chemicals ensures that the United States continues
to meet its obligations under the Montreal Protocol. Companies
are also prohibited from importing controlled substances in
Groups I and II from non-Party countries.
Exemptions from the production and consumption restrictions
have been added here as discussed above. These include the
exemption
for the production of carbon tetrachloride for feedstock that
is transformed by the end of the first quarter of the next control
period and the exemption for immediately contained and destroyed
CUBP production of controlled substances in Groups IV and V.
Companies that wish to qualify for the exemption for immediately
contained and destroyed CUBP production of carbon tetrachloride
and methyl chloroform must submit the following information
to EPA within 45 days after the beginning of the control period
(except in 1992, when the information should be submitted 45
days after the publication of this notice):
-The name and address of the plant at which the CUBP production
takes place, and the name and telephone number of a contact
person;
-A description of the process of which the chemical is a by-
product;
-The name of the primary chemical produced in the process;
-A description of the destruction technology to be used, including
documentation showing that it has a destruction efficiency
of at least 99.99 percent;
-An estimate of the annual production and subsequent destruction
of the controlled substance;
-Documentation describing the handling of the material and showing
that all procedures are consistent with regulations under
RCRA or other applicable rules; and
-A statement of whether the process and destruction method was
being used in 1989 and whether the amounts manufactured were
included as "production" in reports submitted for use in EPA's
baseline calculation.
This information is similar to that appearing in the proposed
rule, with the addition of that relating to the 99.99 percent
requirement, other regulations, and how the process was treated
in baseline-year reports. In addition, these companies are required
to keep on-site dated records of the quantity of the CUBP carbon
tetrachloride and methyl chloroform produced at the facility,
as well as dated records of the quantity of the CUBP controlled
substance destroyed at the facility or shipped from there to
an off-site destruction facility.
This section also specifies the equation that the Agency
will use to calculate each company's compliance in the production
of carbon tetrachloride for feedstock.
F. Sections 82.5 and 82.6-Apportionment of Baseline Production
and Consumption Allowances
In these sections, EPA is promulgating each company's baseline
production and consumption allowances for each chemical within
the five groups of class I substances. The Agency is reserving
the apportionment of allowances for class II substances as
proposed.
EPA's method for baseline calculation remains unaltered from
the proposal. As noted in the NPRM, to establish baseline
allowances
for the groups of newly regulated chemicals, EPA obtained
information
on and documentation of companies' 1989 production, import,
and export of these chemicals through a request issued under
section 114 of the Act. Because section 601(11) excludes from
the definition of production the amount of a chemical used and
entirely consumed (except for trace quantities) in the production
of another chemical, the Agency also requested companies that
had consumed or transformed the regulated chemicals as feedstock
in the manufacture of another chemical to supply information
documenting the transformation. Based on this information, the
Agency calculated companies' baseline production and consumption
allowances for the groups of newly regulated chemicals specified
by section 602 (i.e., Group III-the newly regulated CFCs; Group
IV-carbon tetrachloride; and Group V-methyl chloroform).
Baseline production allowances were calculated by excluding
from the amount of the newly regulated chemicals produced in
1989 the amount of those chemicals transformed in the same year.
The Agency attempted to trace every discrete amount of a chemical
that had been transformed to the producer of that discrete amount
of chemical and exclude that amount from the producer's baseline
allowances. In some cases, however, EPA was unable to track
the chemical transformed to its original producer. To account
for these unassignable amounts of transformed chemicals, EPA
applied a correction factor to distribute these amounts among
producers of the relevant chemicals based on their respective
market shares.
The Agency believes that this is a fair way of allocating
transformation amounts to the producers of these chemicals,
with the larger producers receiving the larger share of the
documented, but unassignable, transformation amounts. This approach
is also consistent with that taken by the Agency in a previous
rulemaking apportioning baseline allowances. In that rulemaking,
EPA decided that documented, but unassignable, exports of the
regulated CFCs and halons should be allocated to producers based
on their relative market share. As a result, larger producers
had their consumption allowances decreased more than smaller
producers.
EPA determined each company's consumption allowances by
performing
the consumption equation for each company based on that company's
documented production, imports, and exports. For the chemicals
for which the Agency is establishing baseline allowances in
this rule, EPA was able, in most cases, to track all exports
back to the exported chemicals' producers. However, it was also
necessary to allocate unassignable exports to producers in a
manner similar to the method used to allocate unassignable
transformation
amounts to producers. As discussed above, consumption amounts
that were negative for two companies were also distributed across
companies receiving consumption allowances through use of a
correction factor. In addition, since the Protocol as construed
by the Parties and EPA's rule do not count imports transformed
in the manufacture of other substances against applicable
consumption
limits, the Agency has not counted baseline-year imports
transformed
in the manufacture of other substances in calculating baseline
consumption allowances. (See 55 FR 24491; June 15, 1990.)
In developing chemical-specific allowances for Groups I and
II controlled substances for today's rulemaking, the Agency
reviewed the original data submitted in compliance with the
section 114 information request promulgated in 1987. In today's
rule, producers are receiving chemical-specific production
allowances
based on what they had reported as production in 1986, excluding
any production that was used and consumed as a feedstock for
another chemical. Producers and importers of these chemicals
are receiving chemical-specific consumption allowances based
on their reported production, imports, and exports of these
chemicals. The Agency is further adjusting individual consumption
allowances within these two groups to take account of the
unattributed
exports. Chemical-specific, unattributed exports were apportioned
to each consumption allowance holder based on the percentage
share of the market that producer and/or importer held for that
chemical.
Since allowances are no longer allotted on a group basis,
they are promulgated here in units of unweighted kilograms,
instead of by calculated level, as was used in the past. Although
the ODP weights of the controlled substances are still relevant
for allowance transfers, actual production and consumption limits
now apply separately to each chemical and thus the concept of
calculated level is no longer necessary for the purpose of
allotting
baseline allowances.
Although the baseline calculation method has remained unchanged
from that proposed in the September 30, 1991 notice, actual
numbers for Groups III, IV and V have changed slightly. These
differences are due to the Agency's allowing companies to continue
to submit baseline information through the comment period as
well as refining the definitions of transformation and destruction.
The changes result in baselines that more accurately reflect
actual production and consumption in 1989.
G. Section 82.7-Granting and Phased Reduction of Allowances
for Class I Controlled Substances
This section allocates percentages of baseline allowances
for Group I, Group II, Group III, Group IV, and Group V controlled
substances for all control periods until the year 2000 and beyond
according to the schedule presented in section 604. Baseline
production and consumption allowances are chemical-specific.
This section is being promulgated as proposed.
H. Section 82.8-Grant and Phased Reduction of Allowances for
Class II Controlled Substances
This section is reserved in this rulemaking.
I. Section 82.9-Availability of Additional Production Allowances
This section provides that persons with baseline production
allowances for any controlled substance be granted potential
production allowances equal to ten percent of their baseline
allowances for that chemical for each year from 1992 through
1999, and 15 percent for each year from 2000 through 2010 (with
adjustments for methyl chloroform). Potential production allowances
may be converted to production allowances with proof of export
to a developing country that is operating under Article 5 of
the Protocol, as specified under 82.11. This paragraph is being
adopted unchanged from the proposal.
A company can also increase or decrease its production
allowances
by trading with another Party to the Protocol under the provisions
of section 616. The Agency has adopted proposed regulations
under 82.9(b)(2) as final.
For trades to another Party, the submission must include
the identity and address of the person seeking approval of the
trade, the identity of the Party, the names and telephone numbers
of contact persons for the person and for the Party, and the
chemical and level of production being transferred. The trading
company's production limit will be reduced according to the
formula as proposed, except that if more than one company trades
production to a Party in the same control period, the total
offset amount will be recalculated and divided between the
companies
based on the ratio of the amount of their trades. Thus, the
first company to trade will see an increase in its balance of
allowances if a second company trades within the same control
period.
For trades to the United States, similar information is required
with the addition that the transferring Party must submit a
document from that nation's embassy in the United States stating
that it has revised its production limits according to the
conditions
stated in section 616.
EPA will review trades from and to other Montreal Protocol
Parties on a one control period, one time trade basis, as well
as permanent trades between Parties for the remaining control
periods.
When a Party to the Protocol trades production for the remaining
control periods to a company within the United States, the Agency
will modify the U.S. company's production allowances to reflect
the additional allowances received in trade. For the remaining
control periods, the Agency will reduce that companies allowances
by the required Clean Air Act schedules, adjusting the traded
allowances by a ratio that accounts for the percentage reduction
required by that control period relative to the percentage
reduction
required in the control period in which the trade was received.
This is required to ensure that companies reduce their production
according to the percentage reductions required under the Clean
Air Act, and that total production is phased out by the turn
of the century.
In addition, should a U.S. company trade all of its production
for the remaining control periods to a Party of the Protocol,
that company's zero production for the remaining years will
not enter into any calculation of the past three year average
if additional trades by other companies occur at a later date.
EPA believes that other companies which may eventually trade
should not be disadvantaged by the permanent trade of all trades
of another company.
However, the Agency will include in the three year average
calculation, any production of controlled substances by a company
that had traded on a one time basis some production rights during
that control period.
Finally, companies may receive additional production allowances
for transforming Group I, II, III or V chemicals. To obtain
additional production allowances for the transformation of these
chemicals, a person must submit a request for production allowances
that includes the identity and address of the person; the name
and quantity of the controlled substance used and entirely consumed
in the manufacture of another chemical; a copy of the invoice
or receipt documenting the sale from the producer of the chemical
to the person; and the name, quantity, and verification of the
commercial use of the resulting chemical. The Agency uses this
information to confirm that the chemical was indeed transformed,
and that production allowances were expended in the production
of the chemical. If the transformed chemical was imported, the
company cannot receive additional production allowances, since
only domestic consumption allowances were expended in bringing
the chemical into the country.
J. Section 82.10 Availability of Additional Consumption Allowances
Companies can receive additional consumption allowances for
exports to Parties. Companies requesting additional consumption
allowances must submit the following information: The identities
and the addresses of the exporter and the recipient of the export;
the Exporter's Identification Number (EIN) listed on the United
States Census Export Declaration form; the names and telephone
numbers of contact persons for the exporter and the recipient;
the quantity and type of controlled substance; the source of
the controlled substance and the date purchased; the date on
which and the port from which the controlled substance was exported
from the United States or its territories; the country to which
the controlled substances were exported; the bill of lading
and the invoice indicating the net quantity of controlled substance
and date shipped and documenting the sale of the controlled
substance to the purchaser; and the harmonized tariff number
(or "commodity code") of the goods exported.
This information will be used by EPA to verify that the export
actually occurred and to prepare end-of-year reports required
by the Montreal Protocol. The Agency will review the information
expeditiously and issue a notice granting additional consumption
allowances to the exporter if all the submitted information
indicates that the export actually occurred.
In this rule, the Agency has added a provision for producing
companies that do not have baseline consumption allowances for
Group IV that wish to produce for export. A limited number of
consumption allowances will be granted to the producing company
up front, equal to the level of their baseline production
allowances
for that year. At the end of the control period, the producer
must have obtained at least that same quantity of consumption
allowances and hold them unexpended in order to be in compliance.
Companies can also receive additional consumption allowances
for the transformation of a controlled substance (other than
carbon tetrachloride). Any application for additional production
allowances for the transformation of a controlled substance
will be treated as an application for additional consumption
allowances. This section is being adopted as proposed.
K. Section 82.11 Exports to Article 5 Parties
Companies may obtain authorization to convert potential
production
allowances to production allowances by exporting controlled
substances to developing countries that are operating under
Article 5 of the Montreal Protocol.
The proof required by EPA in order to grant authorization
to convert potential production allowances for exports to Article
5 countries is the same as that required for a request for
additional
consumption allowances for exports to Parties. However, the
exporter must also adequately demonstrate that the export has
not been and will not be re-exported in bulk form by submitting
a copy of a contract specifying that the material cannot be
re-exported and requiring payment of damages if it is re-exported.
This information will be used by EPA to verify that the export
did indeed occur and to prepare end-of-year reports required
by the Montreal Protocol. The Agency will review the information
expeditiously and issue a notice granting authorization to convert
potential production allowances to the exporter if all the
submitted
information indicates that the export did indeed occur and the
material will not be re-exported. This section is also being
adopted without alteration from the proposal.
L. Section 82.12 Exchanges
Companies must submit requests for inter-pollutant and inter-
company allowance trades to EPA that include the identities
and addresses of the transferor and the transferee; the names
and telephone numbers of contact persons for the transferor
and for the transferee; the type and amount of allowances being
transferred; the amount of the one-percent offset applied to
the unweighted amount traded that will be deducted from the
transferor's allowance balance (except for trades of potential
production allowances, authorizations to convert, or trades
from transformers to producers or importers for the purpose
of allowance reimbursement); and the amount of unexpended
allowances
or authorizations for that chemical that the transferor holds
as of the date the claim is submitted to EPA. The Agency uses
this information to verify that sufficient allowances exist
for the trade. The Agency will issue a "No Objection Notice"
within three working days if EPA does not object to the trade.
If EPA does deny the trade, the transferee will have ten working
days to appeal the decision.
This section has been slightly altered from the proposal.
Specifically, language has been added stating that the offset
does not apply for trades of production and consumption allowances
from transformers to producers for purposes of allowance
reimbursement.
Trades of potential production allowances and authorizations
to convert are also not subject to the offset requirement. In
addition, language has been added clarifying that in the case
of an inter-pollutant/inter-company trade, the offset only applies
once.
M. Section 82.13 Recordkeeping and Reporting
1. Producers
a. Daily recordkeeping. Producers are required to maintain
dated records of the quantity of the class I controlled substances
produced at each facility, including the dated records of the
quantity of any carbon tetrachloride produced for feedstock
use, the quantity of controlled substances used as feedstocks
in the manufacture of controlled substances and in the manufacture
of non-controlled substances, and the quantity of any virgin,
used or recycled controlled substances introduced into the
production
process of new controlled substances. They are also required
to keep records of the feedstock materials consumed in producing
the regulated chemicals at each facility and records documenting
the sale of carbon tetrachloride for feedstock use (invoices,
bills of lading, etc.). EPA requires records of feedstocks consumed
so that the Agency can approximate the quantity of controlled
substances produced by monitoring the materials consumed. Records
of shipments of controlled substances from each facility must
be maintained as well. EPA believes that this requirement will
aid the Agency in verifying production. Finally, EPA requires
that all spills or releases of 100 pounds or more be recorded,
including the date of occurrence and the estimated quantity
of the controlled substance released. These amounts should be
included in production totals for reporting purposes.
EPA believes that current methods of recordkeeping will
generally
be sufficient to satisfy the recordkeeping requirements. EPA
is aware that some producers may not make daily production
estimates
over weekends, and that production may not be measured directly,
but may be determined from records of consumption, shipments,
and inventories. For the purpose of verifying that these accounting
procedures are acceptable, EPA is requiring that producers who
have not previously done so submit within 120 days of publication
of this final rule a report detailing how production is measured
on a regular basis and how its methods are to be used to determine
quarterly production figures in kilograms.
b. Production reports. EPA also requires that producers report
on a quarterly basis, within 45 days after the end of the quarter.
The Clean Air Act specifies that controls be on a calendar-year
basis and thus EPA cannot allow compliance to be determined
based on a company's fiscal period to the extent that it is
different from the specified control period. However, if the
first and last quarterly reports are adjusted to coincide with
the beginning and end of the control period, the interim quarterly
reports may be based on a fiscal quarter, provided EPA determines
that a company's fiscal quarters follow the calendar quarters
closely enough so as not to complicate its review of records.
Since one purpose of these reports is to provide EPA with
information to verify production, EPA requires that producers
submit the following information: summaries of quarterly production
of the controlled substances (for carbon tetrachloride separating
out production and manufacture-for-feedstock), specifying the
quantity used and consumed as feedstock for controlled and non-
controlled substances; summaries of total quarterly and control
period to date production levels each class I controlled substance;
and the producer's total expended and unexpended consumption
allowances, expended and unexpended production allowances,
potential
production allowances, and authorization to convert potential
production allowances to production allowances, as of the end
of the quarter. In addition, firms must report the total shipments
of each controlled substance from that plant in the quarter.
For companies that produce carbon tetrachloride for feedstock
use, the proposal has been altered to add a required reporting
of amounts sold to each transforming company during the quarter,
and the provision of IRS certificates showing that the purchaser
intends to transform the material.
2. Importers
a. Daily recordkeeping. EPA is requiring the same import
records as were contained in its previous regulations (56 FR
9518) and in the proposal, with the addition of requirements
for importers of carbon tetrachloride to be used as feedstock.
The rule requires that importers maintain daily records of the
following: The quantity of virgin, used, and recycled controlled
substances brought into the United States; the date and port
of entry into the United States or its territories; the country
from which the imported controlled substances were exported;
and the port of exit. In addition, importers must record the
commodity code and the importer number for each shipment and
keep the following documentation to verify imports: The bill
of lading and the invoice and United States Customs Entry Summary
Form. This information will allow EPA to verify shipments against
United States Census reports during compliance checks and
investigations
of potential violations. Retention of the bill of lading and
the invoice is necessary to provide EPA with an independent
check on quantities imported, separate from Census and Customs
data.
Companies importing carbon tetrachloride for feedstock use
must keep records documenting the sale of the material to
transforming
companies.
b. Import reports. EPA requires that importers, like producers,
file quarterly reports within 45 days of the end of the quarter.
Importers may receive shipments at several ports throughout
the country and thus may need 45 days to collect and summarize
information and report accurate quantities. Also since several
importers are also producers, it is helpful for the reporting
period for importers to be consistent with the 45-day reporting
period for producers. Again, EPA cannot allow compliance to
be determined based on a company's fiscal period to the extent
that it is different from the specified control period. However,
if the first and last quarterly reports are adjusted to coincide
with the beginning and end of the control period, the interim
quarterly reports may be based on a fiscal quarter, provided
EPA determines that a company's fiscal quarters follow the calendar
quarters closely enough so as not to complicate record review.
These reports must include the following: The quantity of
controlled substances that are imported in that quarter, the
level of each controlled substance imported for the quarter
and the total for the control period, and the total quantity
of expended and unexpended consumption allowances the importer
holds at the end of the quarter. The importer must also provide
a summary of the import activities that shall include the quantity
of each import as recorded on the Entry Summary Form to the
United States Customs Service, the date and port of entry into
the United States or its territories, the country from which
the imported controlled substances were imported, the port of
exit, and the name and address from whom additional information
can be obtained. In addition, the commodity code and the importer
number must be provided to assist with comparison and verification
of importer records with United States Census and Customs records.
Finally, the Agency requires that importers, when reporting
controlled substances contained in mixtures, state what percentage
of the mixture consists of controlled substances. These
requirements
have been adopted as proposed.
The Agency, in implementing the previous rules, determined
that exporters must report the residual amounts (heels) of
controlled
substances that remain in isotanks or canisters or other shipping
containers that are returned to the United States as imports.
Companies are entitled to receive, and do so when they request
them, additional allowances for the full weight of their export.
Therefore, as a matter of consistency the Agency must require
companies to report the controlled substances that return in
the form of heels as imports. These companies must have and
expend consumption allowances in the import process. Thus,
exporters
who intend to return heels must possess allowances before the
heels are returned and report heel imports quarterly.
Reporting requirements have been added for companies that
import carbon tetrachloride for feedstock use. These companies
must report the amount of carbon tetrachloride imported for
feedstock use and the amounts sold during that quarter to
transforming
companies. IRS certificates for those companies must accompany
the quarterly report.
3. Exporters
EPA is requiring the same reporting and recordkeeping
requirements
for exporters as were contained in its previous regulations
(56 FR 9518) and the proposal. Exports for which additional
consumption allowances were not requested or for which the request
was denied must be reported within 45 days after the end of
the year. EPA requires this information to comply with the Montreal
Protocol only and, therefore, does not believe that more frequent
reporting is necessary. Since consumption allowances are not
being granted for these exports, periodic monitoring and
independent
verification is not needed. Consequently, these exporters need
only report at the end of the control period.
For these exports EPA requires that the following be submitted:
Name and address of the exporter and recipient of the exports,
the exporter's Employer Identification Number (EIN), the type
and quantity of controlled substances exported and the percentage
that is recycled or used, and the date and port from which the
exports were shipped. The commodity code is also required because
it allows EPA to verify these shipments. A final reporting
requirement
includes the date and source from whom the exported controlled
substances were purchased.
4. Transformers
Companies that use any of the class I controlled substances
in Groups I, II, III or V as feedstock and request additional
allowances under 82.9 and 82.10 of EPA's regulations and companies
that transform carbon tetrachloride must maintain the following
records on site: Dated records of the quantity of controlled
substance used and entirely consumed in the manufacture of another
chemical; copies of the invoices or receipts documenting the
sale from the producer or importer of the controlled substance
to the person; dated records of the names, commercial use, and
quantities of the resulting chemicals; and dated records of
shipments to the purchasers of the resulting chemicals. These
requirements are being adopted as proposed.
Recordkeeping requirements have been added for carbon
tetrachloride
transformers, including dated records of all shipments received
and records of amounts of carbon tetrachloride in inventory
at the beginning of each quarter.
Companies that transform carbon tetrachloride must report
their activities quarterly, within 45 days after the end of
the quarter. Such companies must provide the amount of carbon
tetrachloride purchased from each producer and transformed during
that quarter. The report should include the name and address
of the producing and transforming company and the name and
telephone
number of the contact person at each company. Also provided
should be the address of the facility at which the transformation
took place, the name of the chemical produced as a result of
the transformation, and the verification of its commercial use.
This requirement is being altered slightly from the proposal
to match the requirements under 82.9 for requests for additional
allowances for the use of controlled substances as feedstock.
5. Class II Controlled Substances
For class II controlled substances, companies who produced,
imported, or exported a class II substance must file an annual
report within 45 days after the end of the calendar year, stating
the amount of each substance that such person produced, imported,
and exported during that year. Each such report shall be signed
and attested by a responsible officer of the company. This
requirement
is being adopted as proposed.
VI. Impact of Action
The Agency has prepared a Regulatory Impact Analysis that
evaluates the costs and benefits of phasing out class I chemicals.
The costs and benefits of the phaseout were estimated by
comparing the percentage of ozone depletion that would occur
in the future if the phaseout were implemented to various
scenarios,
including a projected baseline that would occur in the absence
of any regulation, the ozone depletion that would occur with
the original 1987 Montreal Protocol limits, and the ozone depletion
that would occur under the limits outlined in the London Amendments
to the Montreal Protocol and in the amended Clean Air Act.
The RIA used two projections to estimate ozone depletion.
The primary method is a parameterization based on a one dimensional
model, which has been used in previous EPA analyses of the
stratosphere,
and is taken from Connell (1986). This model translates emissions
of the class I and II chemicals into chlorine loadings, and
transforms these loadings into estimates of depletion relative
to ozone concentrations in 1970. This first projection does
not take into account any depletion that may have occurred prior
to 1988.
To account for the observed depletion prior to 1988, the
Agency developed a second projection using an adjusted version
of the one dimensional parameterized model. In this model, an
adjustment factor was applied so that historical emission data,
when entered into the model, predicted the observed estimated
level of ozone depletion prior to 1988. For this adjustment,
the Agency assumed that the average ozone trend over the latitudes
30ø N-64ø N was representative of the global change in
column
ozone, and that the trend is due to decreases in stratospheric
chlorine. The model was further adjusted to account for the
seasonal level of UV-B expected when ozone depletion occurs.
The RIA provides results based on both model projections.
The major health benefits of these regulations are attributable
to avoided effects of exposure to ultraviolet radiation. The
major environmental effects are based on studies that found
decreased crop and fish harvests associated with increased
ultraviolet
radiation. Decreased stratospheric ozone is also expected to
lead to increased tropospheric ozone, which can also reduce
crop yields, and lead to rapid deterioration of polymers. There
are uncertainties related to the links between increased use
of the substances and ozone depletion, as well as between decreases
in stratospheric ozone and increases in UV-B radiation and their
effects on human health and the environment.
A phaseout significantly reduces the rate of depletion of
stratospheric ozone. Indeed, the atmospheric models indicate
that ozone concentrations will return to historic levels in
the middle of the next century under certain scenarios. However,
it should be noted that these models have been shown to
underpredict
the level of ozone depletion in the past, and the two projections
do not account for the most recent observation that ozone
concentrations
have decreased by three to five percent over the last decade
in the northern mid-latitudes.
The health effects due to ozone depletion are generated from
estimated dose-response relationships. These dose-response
relationships
have large uncertainties related to the type of population
affected,
and variability in the studies providing the data. A second
human health benefit of ozone depleting compound regulation
is reduced incidence of cataracts. The estimated increase in
cataracts is roughly 0.5 percent for each percent increase in
UV-B.
The quantifiable environmental benefits in the United States
due to CFC, halon, methyl chloroform, and carbon tetrachloride
regulation, although small when compared to the value of the
avoided cancer benefits, are also substantial. Increases in
ultra-violet radiation have been shown to affect crop yield
and crop quality adversely. Again, the Agency emphasizes that
these benefit estimates are based on limited data containing
many assumptions. However, they do provide an order of magnitude
estimate of the likely benefits to preserving the ozone layer.
Social costs of reducing CFC, halon, and methyl chloroform
use through regulation were estimated by examining the costs
of alternative technologies and materials for producing CFC,
halon, and methyl chloroform based products. Social costs are
the additional amount of resources required to produce an
equivalent
amount of goods and services for consumers. Regulation also
transfers income from consumers of class I based products to
other sectors of society. The economic model calculated the
costs that society would incur to meet the production targets
of the Clean Air Act, based on available or future control
technologies.
The economic model generally selected those control options
that were either already being used by industry, or were the
least costly options available, thus minimizing the cost to
society. Once selected, the model totalled the social costs
and transfer payments needed each year to meet the reduction
targets of the Clean Air Act.
The costs of these regulations are expected to depend on
the speed at which specific user industries and the economy
as a whole adopts techniques to reduce the use of ozone depleting
compounds, and on the potential for these technologies to achieve
the reductions required. Transfer payments generated by ozone
depleting substance regulation are significant, particularly
in the initial years of regulation. Cost estimates are also
subject to considerable uncertainty because they are sensitive
to technical innovation, and future energy and chemical costs.
To estimate costs and benefits distributed over time, the
Agency applied several discount rates to various phaseout
scenarios.
The Agency applied discount rates of two, four, and ten percent
to gauge their impact on social costs and benefits. The two
and four percent discount rates represent possible estimates
of the "consumption rate of interest," where two percent has
been used and accepted by the Agency in previous analyses on
the impact of regulations restricting the production and
consumption
of ozone-depleting substances. The ten percent discount rate
represents the "real pre-tax rate of return on private investments"
and is required by the Office of Management and Budget's 1972
circular A-94. The RIA discusses further the choice of the various
discount rates and the circumstances under which each could
most appropriately be used. The Agency believes that the two
and ten percent discount rates may currently represent the
outerbound
estimates of the appropriate rate.
The following table summarizes the net incremental benefits
in billions of 1985 dollars (between the London Amendments and
the Clean Air Act Phaseout Scenarios) of the regulation at the
three different discount rates using the two different modelling
projections. The London Amendments provide the following net
incremental benefits over the 1997 Montreal Protocol: For the
unadjusted model-$226 billion to $887.6 billion at a two percent
discount rate, $35.8 billion to $145.3 billion at a four percent
discount rate, and $-0.6 to $2.2 billion at ten percent; for
the adjusted model-$352.7 billion to $1,362 billion at two percent,
$57.3 billion to $222.4 billion at four percent, and $0.1 billion
to $4.2 billion at ten percent.
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
³ Discount
³ Net
Model ³ rate (%)
³ incremental
³
³ benefits
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
³
³
Unadjusted .................................... ³ 2
³ 1.0-6.5
³ 4
³ (0.2)-1.3
³ 10
³ (0.3)-(0.2)
Adjusted (assuming a weighted average ozone ³ 2
³ 1.6-8.5
depletion of approximately one percent). ³
³
³ 4
³ 0.0-2.1
³ 10
³ (0.3)-(0.1)
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
The Agency is also developing a third projection of ozone
depletion that includes the most recent ozone depletion
calculations
determined by NASA, using an initial depletion amount of 3.38
percent in 1989. The value of benefits to people born before
2075 exceed the control costs through 2075 using discount rates
of two, four, and ten percent when the most current ozone depletion
measurements are accounted for. Using the two percent discount
rate, the net incremental benefits using the re-adjusted model
are expected to range between 13.0 and 50.2 billions of 1985
dollars, with the results at the four percent rate ranging between
3.6 and 4.1 billion and the calculation at ten percent showing
net incremental benefits from 0.1 to 1.2 billions of 1985 dollars.
VII. Additional Information
A. Executive Order 12291
Executive Order (E.O.) 12291 requires preparation of a
Regulatory
Impact Analysis for major rules, defined by the order as those
likely to result in:
(1) An annual effect on the economy of $100 million or more;
(2) A major increase in costs or prices for consumers,
individual
industries, Federal, State or local government agencies, or
geographic industries; or
(3) Significant adverse effects on competition, employment,
investment, productivity, innovation, or on the ability of United
States-based industry to compete with foreign based enterprises
in domestic or export markets.
EPA has determined that these regulations meet the criteria
of a major rule. The Agency estimates that annual industry costs
will exceed $100 million. A regulatory impact analysis has been
prepared to analyze these costs and has been submitted to the
Office of Management and Budget for review.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., requires
that federal agencies examine the impacts of regulations on
small entities. Under 5 U.S.C. 601(a), whenever an agency is
required to publish a general notice of rulemaking, it must
prepare and make available a regulatory flexibility analysis
(RFA).
The Agency originally published an RFA to accompany the August
12, 1988 final rule (53 FR 30566) that placed the initial limits
on the production and consumption of CFCs and halons. The RFA
concluded that of the industries affected by regulation of CFCs
and halons only some segments of the foam blowing industry were
potentially at risk. In contrast to almost all the other users
of these chemicals, CFCs are a large percentage of the final
costs for the foam industry.
Different sectors of the foam industry are likely to be affected
differently. Indeed, the August 12 rule discussed how several
foam sectors were already moving away from CFCs. Foam food
packagers
have shifted out of CFCs to HCFC-22 or other alternatives.
Similarly,
the industry sector that makes flexible molded foam has moved
out of CFCs with minimal disruption, while the extruded polystyrene
board-stock industry intends to eliminate the use of CFC-12
in the near future.
In updating this analysis to examine the other foam sectors,
as well as those sectors using carbon tetrachloride and methyl
chloroform, the Agency did re-examine the effect of increased
price on several foam segments-polyurethane-sprayed and molded
foam and foam insulation and board-stock. The insulating foam
industry is investigating the use of HCFC-141b or a blend of
HCFC-141b and HCFC-123. To the extent that these substitutes
are determined to be technically and economically viable, the
longer term impact on these firms will be minimized. The industry
is actively pursuing these options and is currently waiting
for the results of toxicity studies required for its use of
these chemicals.
Based on the analysis contained in the RFA, EPA does not
believe that any foam industry segment will be substantially
harmed over the long term, and that recent development of
alternative
blowing agents for use in these sectors indicate the
competitiveness
of this industry. Sectors using carbon tetrachloride and methyl
chloroform are unaffected. In the applications where they are
most commonly used, the value of the end product is not
significantly
related to the price of the chemicals, since they are used only
in small volumes. Thus the final costs of industry will not
be significantly affected by these regulations.
Under section 605 of the Regulatory Flexibility Act, 5 U.S.C.
605, I certify that the regulation promulgated in this document
will not have a significant impact on a substantial number of
small entities.
C. Paperwork Reduction Act
As required by 35.04 of the Paperwork Reduction Act, 44
U.D.C. 3501 et seq., EPA submitted an information collection
request to the Office of Management and Budget for review. The
recordkeeping and reporting requirements contained in this
rulemaking
were approved by the Office of Management and Budget under control
number 2060-0170.
Industry reporting burden for this collection is estimated
in the following table. It includes the time needed to comply
with EPA's reporting and compliance monitoring requirements
as well as that used for the completion of voluntary reports
and requests under this rule.
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
³
Respondent burden per occurrence
³
Respondent
ÃÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
activities ³ Frequency ³ Producer ³
Frequency ³ Importer ³ Frequency ³ Exporter
³ Frequency ³ Transformer
³ ³ hours ³
³ hours ³ ³ hours ³
³ hours
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
³ ³ ³
³ ³ ³ ³
³
Conduct transfer ³ 1 ³ 8 ³
1 ³ 8 ³ 4 ³ 8 ³
0 ³ 0
transactions. ³ ³ ³
³ ³ ³ ³
³
Obtain additional ³ 0 ³ 0 ³
0 ³ 0 ³ 4 ³ 21 ³
0 ³ 0
allowances ³ ³ ³
³ ³ ³ ³
³
through exports. ³ ³ ³
³ ³ ³ ³
³
Convert potential ³ 0 ³ 0 ³
0 ³ 0 ³ 1 ³ 42 ³
0 ³ 0
allowances ³ ³ ³
³ ³ ³ ³
³
through exports. ³ ³ ³
³ ³ ³ ³
³
Convert potential ³ 1 ³ 82 ³
0 ³ 0 ³ 0 ³ 0 ³
0 ³ 0
allowances by ³ ³ ³
³ ³ ³ ³
³
receiving ³ ³ ³
³ ³ ³ ³
³
allowances from ³ ³ ³
³ ³ ³ ³
³
Party countries. ³ ³ ³
³ ³ ³ ³
³
Receive additional ³ 0 ³ 0 ³
0 ³ 0 ³ 0 ³ 0 ³
12 ³ 42
allowances for ³ ³ ³
³ ³ ³ ³
³
transforming. ³ ³ ³
³ ³ ³ ³
³
Comply with ³ 4 ³ 88 ³
4 ³ 60 ³ 4 ³ 60 ³
4 ³ 32
reporting and ³ ³ ³
³ ³ ³ ³
³
compliance ³ ³ ³
³ ³ ³ ³
³
monitoring ³ ³ ³
³ ³ ³ ³
³
requirements. ³ ³ ³
³ ³ ³ ³
³
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
Send comments regarding this burden estimate or any other
aspect of this collection of information, including suggestions
for reducing the burden, to Chief, Information Policy Branch,
PM-223y, U.S. Environmental Protection Agency, 401 M St., SW.,
Washington, DC 20460; and to Paperwork Reduction Project, Office
of Information and Regulatory Affairs, Office of Management
and Budget, Washington, DC 20503.
List of Subjects in 40 CFR Part 82
Administrative practice and procedure, Air pollution, Chemicals,
Chlorofluorocarbons, Clean Air Act Amendments of 1990, Exports,
Imports, Recordkeeping and reporting requirements, Stratospheric
ozone layer.
Dated: July 17, 1992.
William K. Reilly,
Administrator.
Title 40, Code of Federal Regulations, part 82, is amended
as follows:
PART 82-PROTECTION OF STRATOSPHERIC OZONE
1. The authority citation for part 82 continues to read as
follows:
Authority: 42 U.S.C. 7414, 7601, 7671-7671q.
2. Sections 82.14 and 82.20 are removed. Sections 82.1 through
82.13 are designated as subpart A and revised. Appendices A
through C and E to part 82 are redesignated as appendices A
through C and E to subpart A and revised, and appendix D to
part 82 which is currently reserved is redesignated as appendix
D to subpart A and reserved. The revised text is set forth below.
Subpart A-Production and Consumption Controls
Sec.
82.1 Purpose and scope.
82.2 Effective date.
82.3 Definitions.
82.4 Prohibitions.
82.5 Apportionment of baseline production allowances.
82.6 Apportionment of baseline consumption allowances.
82.7 Grant and phased reduction of baseline production and
consumption
allowances for class I controlled substances.
82.8 Grant and freeze of baseline production and consumption
allowances for class II controlled substances. [Reserved]
82.9 Availability of production allowances in addition to baseline
production allowances.
82.10 Availability of consumption allowances in addition to
baseline consumption allowances.
82.11 Exports to Article 5 Parties.
82.12 Transfers.
82.13 Record-keeping and reporting requirements.
Appendix A to subpart A-Class I Controlled Substances
Appendix B to subpart A-Class II Controlled Substances
Appendix C to subpart A-Parties to the Montreal Protocol
Appendix D to subpart A-Nations Complying with, but not Party
to, the Protocol [Reserved]
Appendix E to subpart A-Article 5 Parties
Subpart A-Production and Consumption Controls
82.1 Purpose and scope.
(a) The purpose of these regulations is to implement the
Montreal Protocol on Substances that Deplete the Ozone Layer
and sections 603, 604, 605, 607 and 616 of the Clean Air Act
as amended by the Clean Air Act Amendments of 1990, Public Law
101-549. The Protocol and section 604 impose limits on the
production
and consumption (defined as production plus imports minus exports)
of certain ozone depleting chemicals, according to specified
schedules. The Protocol also requires each nation that becomes
a Party to the agreement to impose certain restrictions on trade
in ozone depleting substances with non-Parties.
(b) This rule applies to any individual, corporate, or
governmental
entity that produces, transforms, imports, or exports controlled
substances.
82.2 Effective date.
(a) The regulations under this subpart take effect January
1, 1992.
(b) The regulations under this part that were effective prior
to January 1, 1992 are saved for purposes of enforcing the
provisions
that were applicable prior to January 1, 1992.
82.3 Definitions.
As used in this subpart, the term:
(a) Administrator means the Administrator of the Environmental
Protection Agency or his authorized representative.
(b) Baseline consumption allowances means the consumption
allowances apportioned under 82.6 of this subpart.
(c) Baseline production allowances means the production
allowances
apportioned under 82.5 of this subpart.
(d) Calculated level means the weighted amount of a controlled
substance determined by multiplying the amount (in kilograms)
of the controlled substance by that substance's ozone depletion
weight listed in appendix A or appendix B to this subpart.
(e) Class I refers to the controlled substances listed in
appendix A to this subpart.
(f) Class II refers to the controlled substances listed in
appendix B to this subpart.
(g) Consumption allowances means the privileges granted by
this subpart to produce and import class I controlled substances;
however, consumption allowances may be used to produce class
I controlled substances only in conjunction with production
allowances. A person's consumption allowances are the total
of the allowances he obtains under 82.7 of this subpart (baseline
allowances for class I controlled substances) and 82.10 of
this subpart (additional consumption allowances), as may be
modified under 82.12 of this subpart (transfer of allowances).
(h) Control period means the period from January 1, 1992
through December 31, 1992, and each twelve-month period from
January 1 through December 31, thereafter.
(i) Controlled substance means any substance listed in appendix
A or appendix B to this subpart, whether existing alone or in
a mixture, but excluding any such substance or mixture that
is in a manufactured product other than a container used for
the transportation or storage of the substance or mixture. Any
amount of a listed substance which is not part of a use system
containing the substance is a controlled substance. If a listed
substance or mixture must first be transferred from a bulk
container
to another container, vessel, or piece of equipment in order
to realize its intended use, the listed substance or mixture
is a controlled substance. Controlled substances are divided
into two classes, class I and class II. Class I substances are
further divided into five groups, Group I, Group II, Group III,
Group IV and Group V, as set forth in appendix A to this subpart.
(j) CUBP means a coincidental unavoidable byproduct of a
manufacturing process that is immediately contained and destroyed
by the producer using MACT. A substance is CUBP if-
(1) The quantity of the substance generated by the manufacturing
process cannot be varied independently of the intended product,
varies proportionately with the production of the intended product,
and ceases when the intended product's production is stopped;
and
(2) It is not manufactured for commercial purposes, including
for sale or use in place of substances that otherwise would
be purchased.
(k) Export means the transport of virgin, used, or recycled
controlled substances from inside the United States or its
territories
to persons outside the United States or its territories, excluding
United States military bases and ships for on-board use.
(l) Exporter means the person who contracts to sell controlled
substances for export or transfers controlled substances to
his affiliate in another country.
(m) Facility means any process equipment (e.g., reactor,
distillation column) used to convert raw materials or feedstock
chemicals into controlled substances or consume controlled
substances
in the production of other chemicals.
(n) Import means to land on, bring into, or introduce into,
or attempt to land on, bring into, or introduce into any place
subject to the jurisdiction of the United States whether or
not such landing, bringing, or introduction constitutes an
importation
within the meaning of the customs laws of the United States,
with the following exemptions:
(1) Off-loading used or excess controlled substances from
a ship during servicing and
(2) Bringing controlled substances into the U.S. from Mexico
where the controlled substance had been admitted into Mexico
in bond and was of U.S. origin.
(o) Importer means the importer of record listed on U.S.
Customs Service forms for imported controlled substances.
(p) MACT means, with respect to the destruction of CUBP,
maximum available control technology having a destruction
efficiency
of no less than 99.99%.
(q) Montreal Protocol means the Montreal Protocol on Substances
that Deplete the Ozone Layer, a protocol to the Vienna Convention
for the Protection of the Ozone Layer, including adjustments
adopted by the Parties thereto and amendments that have entered
into force.
(r) Nations complying with, but not joining, the Protocol
means any nation listed in appendix D to this subpart.
(s) Party means any nation that is a Party to the Montreal
Protocol and listed in appendix C to this subpart.
(t) Person means any individual or legal entity, including
an individual, corporation, partnership, association, State,
municipality, political subdivision of a State, Indian tribe;
any agency, department, or instrumentality of the United States;
and any officer, agent, or employee thereof.
(u) Plant means one or more facilities at the same location
owned by or under common control of the same person.
(v) Potential production allowances means the production
allowances obtained under 82.9(a) of this subpart.
(w) Production means the manufacture of a substance from
any raw material or feedstock chemical, but does not include:
(1) The manufacture of a substance that is used and entirely
consumed (except for trace quantities) in the manufacture of
other chemicals or
(2) The reuse or recycling of a substance.
Production includes spilled or vented controlled substances
equal to or in excess of one hundred pounds per event.
(x) Production allowances means the privileges granted by
this subpart to produce controlled substances; however, production
allowances may be used to produce controlled substances only
in conjunction with consumption allowances. A person's production
allowances are the total of the allowances he obtains under
82.7 of this subpart (baseline allowances for class I controlled
substances) and 82.9(a), (b), and (c) of this subpart (additional
production allowances) as may be modified under 82.12 of this
subpart (transfer of allowances).
(y) Transform means to use and entirely consume (except for
trace quantities) a controlled substance in the manufacture
of other chemicals for commercial purposes.
(z) Unexpended consumption allowances means consumption
allowances
that have not been used. At any time in any control period a
person's unexpended consumption allowances are the total of
the level of consumption allowances he has authorization under
this subpart to hold at that time for that control period, minus
the level of controlled substances that the person has produced
or imported in that control period until that time.
(aa) Unexpended production allowances means production
allowances
that have not been used. At any time in any control period a
person's unexpended production allowances are the total of the
level of production allowances he has authorization under this
subpart to hold at that time for that control period, minus
the level of controlled substances that the person has produced
in that control period until that time.
82.4 Prohibitions.
(a) No person may produce, at any time in any control period,
any class I controlled substance (except for
(1) Group lV controlled substances that are transformed by
the end of the first quarter of the following control period,
as determined in accordance with paragraph (f) of this section,
or
(2) Group IV and V controlled substances for which the person
has obtained an exemption in accordance with paragraph (e) of
this section) in excess of the amount of unexpended production
allowances for that substance held by that person under the
authority of this subpart at that time for that control period.
In no event may any person produce in the period from July 1,
1991 through December 31, 1992 a total calculated level of Group
I controlled substances in excess of 150 percent of that person's
baseline production allowances for Group I substances plus any
additional production allowances for Group I controlled substances
that the person obtained under 82.9 and 82.12 of this subpart
during this same period. Every kilogram of excess production
constitutes a separate violation of this regulation.
(b) No person may produce or import, at any time in any control
period, any class I controlled substance (except for
(1) Group IV controlled substances that are transformed by
the end of the first quarter of the following control period
as determined in accordance with paragraph (f) of this section,
or
(2) Group IV and Group V controlled substances for which
the person has obtained an exemption in accordance with paragraph
(e) of this section) 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. In no event may any person
produce or import in the period from July 1, 1991 through December
31, 1992 a calculated level of Group I controlled substances
in excess of 150 percent of that person's baseline consumption
allowances plus any consumption allowances for Group I controlled
substances that the person obtained under 82.10 and 82.12
of this subpart during this same period. Every kilogram of excess
production or importation constitutes a separate violation of
this regulation.
(c) A person may not use production allowances to produce
a quantity of class I controlled substances (with the exceptions
set forth in paragraph (a) of this section) unless he or she
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 (with the same
exceptions
noted above) unless the person holds under authority of this
subpart at the same time production allowances sufficient to
cover that quantity of class I controlled substances. However,
only consumption allowances are required to import class I
controlled
substances (except for Group IV controlled substances that are
transformed by the end of the first quarter of the control period
following that in which the substance was imported).
(d) No person may import any quantity of Group I or Group
II controlled substances from any nation not listed in Appendix
C to this subpart (Parties to the Montreal Protocol) unless
that nation is listed in appendix D to this subpart (Nations
Complying with, But Not Party to, the Protocol). Every kilogram
of controlled substances imported in contravention of this
regulation
constitutes a separate violation of this regulation.
(e) Any person may obtain, in accordance with the provisions
of this paragraph, an exemption from the prohibitions set forth
in paragraphs (a) and (b) of this section for CUBP Group IV
and Group V controlled substances.
(1) A person must submit within 45 days after the beginning
of each control period (or by September 14, 1992, for the 1992
control period) during which the person will produce CUBP Group
IV and Group V a petition that includes the following:
(i) The identity and address of the person;
(ii) The name and telephone number of a contact person;
(iii) A description of the process of which the class I
controlled
substance is a by-product and the name of the CUBP produced;
(iv) The name of the primary chemical produced in the process;
(v) A description of the destruction technology to be used,
including documentation showing that it has a destruction
efficiency
of at least 99.99 percent;
(vi) An estimate of the annual amount of production and
subsequent
destruction of the CUBP controlled substance;
(vii) A description of the handling of the material and a
showing that all procedures are consistent with regulations
under RCRA or other applicable rules; and
(viii) A statement of whether the process and destruction
methods were being used in the baseline year and whether the
amounts manufactured were included as "production" in reports
submitted for use in the calculation of baseline allowances.
(2) The Administrator will review the information and
documentation
submitted under paragraph (e)(1) of this section and will issue
the person a notice granting the exemption for that amount or
portion of Group IV or Group V substance that the Administrator
determines is CUBP, provided the request satisfactorily
demonstrates
that the person's destruction technology is MACT and that the
CUBP is handled in a manner consistent with other applicable
law and regulations.
(3) If the Administrator determines that the request does
not establish that the substances are CUBP or that the destruction
technology is MACT and the CUBP is not handled in a manner
consistent
with other applicable law and regulations, the Administrator
will issue a note disallowing the request for the exemption.
(4) The Administrator will adjust the person's baseline
allowances
if necessary based on the information submitted under paragraph
(e)(1) of this section.
(f) Upon receipt of each person's first quarterly report
as required under 82.13 of this subpart, the Administrator
will calculate the following quantities for each person that
produced Group IV controlled substances for feedstock in the
previous control period:
(1) The amount of the person's production transformed in
the previous control period;
(2) The amount of the person's production transformed in
the first quarter of the previous control period attributable
to the person's production in the control period previous to
that;
(3) The amount of the person's production transformed in
the first quarter of the current control period; and
(4) The amount that the person produced for transformation
in the previous year.
If the Administrator finds that the quantity calculated in
paragraph (f)(4) of this section is greater than the sum of
the quantities calculated in paragraphs (f)(1) and (f)(3) of
this section minus the quantity calculated in paragraph (f)(2)
of this section, each kilogram by which the quantity calculated
in paragraph (f)(4) of this section is greater, constitutes
a separate violation.
82.5 Apportionment of baseline production allowances.
Persons who produced controlled substances in Group I or
Group II in 1986 are apportioned baseline production allowances
as set forth in paragraphs (a) and (b) of this section. Persons
who produced controlled substances in Group III, IV, or V in
1989 are apportioned baseline production allowances as set forth
in paragraphs (c), (d), and (e) of this section. Persons who
produced class II controlled substances are apportioned baseline
production allowances as set forth in paragraph (f) of this
section.
(a) For Group I controlled substances:
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
Controlled ³ Person
³ Allowances
substance ³
³ (kg)
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
³
³
CFC-11 ....... ³ Allied-Signal, Inc ........................
³ 23,082,358
³ E.I. DuPont de Nemours & Co
............... ³ 33,830,000
³ Elf Atochem, N.A ..........................
³ 21,821,500
³ Laroche Chemicals .........................
³ 12,856,364
CFC-12 ....... ³ Allied-Signal, Inc ........................
³ 35,699,776
³ E.I. DuPont de Nemours & Co
............... ³ 64,849,000
³ Elf Atochem, N.A ..........................
³ 31,089,807
³ Laroche Chemicals .........................
³ 15,330,909
CFC-113 ...... ³ Allied-Signal, lnc ........................
³ 21,788,896
³ E.I. DuPont de Nemours & Co
............... ³ 58,553,000
CFC-114 ...... ³ Allied-Signal, Inc ........................
³ 1,488,569
³ E.I. DuPont de Nemours & Co
............... ³ 4,194,000
CFC-115 ...... ³ E.I. Dupont de Nemours & Co
............... ³ 4,176,000
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
(b) For Group II controlled substances:
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
Controlled ³ Person
³ Allowances
substance ³
³ (kg)
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
³
³
Halon-1211 ... ³ Great Lakes Chemical Corp .................
³ 826,487
³ ICI Americas, Inc .........................
³ 2,135,484
Halon-1301 ... ³ E.I. DuPont de Nemours & Co
............... ³ 3,220,000
³ Great Lakes Chemical Corp .................
³ 1,766,850
Halon-2402 ... ³ ...........................................
³
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
(c) For Group III controlled substances:
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
Controlled ³ Person
³ Allowances
substance ³
³ (kg)
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
³
³
CFC-13 ....... ³ Allied-Signal, Inc ........................
³ 127,125
³ E.I. DuPont de Nemours & Co
............... ³ 187,831
³ Elf Atochem, N.A ..........................
³ 3,992
³ Great Lakes Chemical Corp .................
³ 56,381
³ Laroche Chemicals .........................
³ 29,025
CFC-111 ...... ³ ...........................................
³
CFC-112 ...... ³ ...........................................
³
CFC-211 ...... ³ E.I. Dupont de Nemours & Co
............... ³ 11
CFC-212 ...... ³ E.I. Dupont de Nemours & Co
............... ³ 11
CFC-213 ...... ³ E.I. Dupont de Nemours & Co
............... ³ 11
CFC-214 ...... ³ E.I. DuPont de Nemours & Co
............... ³ 11
CFC-215 ...... ³ E.I. DuPont de Nemours & Co
............... ³ 511
³ Halocarbon Products Corp ..................
³ 1,270
CFC-216 ...... ³ E.I. DuPont de Nemours & Co
............... ³ 170,574
CFC-217 ...... ³ E.I. Dupont de Nemours & Co
............... ³ 511
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
(d) For Group IV controlled substances:
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
Controlled ³ Person
³ Allowances
substance ³
³ (kg)
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
³
³
CCl4 ......... ³ Akzo Chemicals, Inc .......................
³ 7,873,615
³ Degussa Corporation .......................
³ 26,546
³ Dow Chemical Company, USA .................
³ 18,987,747
³ E.I. DuPont de Nemours & Co
............... ³ 9,099
³ Hanlin Chemicals-WV, Inc ..................
³ 219,616
³ ICI Americas, Inc .........................
³ 853,714
³ Occidental Chemical Corp ..................
³ 1,059,358
³ Vulcan Chemicals ..........................
³ 21,931,987
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
(e) For Group V controlled substances:
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
Controlled ³ Person
³ Allowances
substance ³
³ (kg)
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
³
³
Methyl ³ Dow Chemical Company, USA .................
³ 168,030,117
Chloroform. ³
³
³ E.I. DuPont de Nemours & Co
............... ³ 2
³ PPG Industries, Inc .......................
³ 57,450,719
³ Vulcan Chemicals ..........................
³ 89,689,064
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
(f) For class II controlled substances:
(Reserved)
82.6 Apportionment of baseline consumption allowances.
Persons who produced, imported, or produced and imported
controlled substances in Group I or Group II in 1986 are
apportioned
chemical-specific baseline consumption allowances as set forth
in paragraphs (a) and (b) of this section. Persons who produced,
imported, or produced and imported controlled substances in
Group III, Group IV, or Group V in 1989 are apportioned chemical-
specific baseline consumption allowances as set forth in paragraphs
(c), (d) and (e) of this section. Persons who produced, imported,
or produced and imported class II chemicals are apportioned
chemical-specific baseline consumption allowances set forth
in paragraph (f) of this section.
(a) For Group I controlled substances:
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
Controlled ³ Person
³ Allowances
substance ³
³ (kg)
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
³
³
CFC-11 ....... ³ Allied-Signal, Inc ........................
³ 22,683,833
³ E.I. DuPont de Nemours & Co
............... ³ 32,054,283
³ Elf Atochem, N.A ..........................
³ 21,740,194
³ Hoechst Celanese Corporation ..............
³ 185,396
³ ICI Americas, Inc .........................
³ 1,673,436
³ Kali-Chemie Corporation ...................
³ 82,500
³ Laroche Chemicals .........................
³ 12,695,726
³ National Refrigerants, Inc ................
³ 693,707
³ Refricentro, Inc ..........................
³ 160,697
³ Sumitomo Corporation of America ...........
³ 5,800
CFC-12 ....... ³ Allied-Signal, Inc ........................
³ 35,236,397
³ E.I. Dupont de Nemours & Co
............... ³ 61,098,726
³ Elf Atochem, N.A ..........................
³ 32,403,869
³ Hoechst Celanese Corporation ..............
³ 138,865
³ ICI Americas, Inc .........................
³ 1,264,980
³ Kali-Chemie Corporation ...................
³ 355,440
³ Laroche Chemicals .........................
³ 15,281,553
³ National Refrigerants, Inc ................
³ 2,375,384
³ Refricentro, Inc ..........................
³ 242,526
CFC-1113 ..... ³ Allied-Signal, Inc ........................
³ 18,241,928
³ E.I. Dupont de Nemours & Co
............... ³ 49,602,858
³ Elf Atochem, N.A ..........................
³ 244,908
³ Holchem ...................................
³ 265,199
³ ICI Americas, Inc .........................
³ 2,399,700
³ Refricentro, Inc ..........................
³ 37,385
³ Sumitomo Corporation of America ...........
³ 280,163
CFC-114 ...... ³ Allied-Signal, lnc ........................
³ 1,429,582
³ E.I. Dupont de Nemours & Co
............... ³ 3,686,103
³ Elf Atochem, N.A ..........................
³ 22,880
³ ICI Americas, Inc .........................
³ 32,930
CFC-115 ...... ³ E.I. DuPont de Nemours & Co
............... ³ 2,764,109
³ Elf Atochem, N.A ..........................
³ 633,007
³ Hoechst Celanese Corporation ..............
³ 8,893
³ ICI Americas, Inc .........................
³ 2,366,351
³ Laroche Chemicals .........................
³ 135,520
³ Refricentro, lnc ..........................
³ 27,337
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
(b) For Group II controlled substances:
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
Controlled ³ Person
³ Allowances
substance ³
³ (kg)
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
³
³
Halon-1211 ...... ³ Elf Atochem, N.A ........................
³ 411,292
³ Great Lakes Chemical Corp ...............
³ 772,775
³ ICI Americas, Inc .......................
³ 2,116,641
³ Kali-Chemie Corporation .................
³ 330,000
Halon-1301 ...... ³ E.I. DuPont de Nemours & Co
............. ³ 2,772,917
³ Elf Atochem, N.A ........................
³ 89,255
³ Great Lakes Chemical Corp. ..............
³ 1,744,132
³ Kali-Chemie Corporation .................
³ 54,380
Halon-2402 ...... ³ Ausimont ................................
³ 34,400
³ Great Lakes Chemical Corp ...............
³ 15,900
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
(c) For Group III controlled substances:
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
Controlled ³ Person
³ Allowances
substance ³
³ (kg)
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
³
³
CFC-13 .......... ³ Allied-Signal, Inc ......................
³ 127,124
³ E.I. DuPont de Nemours & Co
............. ³ 158,508
³ Elf Atochem, N.A ........................
³ 3,992
³ Great Lakes Chemical Corp ...............
³ 56,239
³ ICI Americas, Inc .......................
³ 5,855
³ Laroche Chemicals .......................
³ 29,025
³ National Refrigerants, Inc ..............
³ 16,665
CFC-111 ³
³
CFC-112 ......... ³ Sumitomo Corporation of America .........
³ 5,912
³ TG (USA) Corporation ....................
³ 9,253
CFC-211 ......... ³ E.I. DuPont de Nemours & Co
............. ³ 11
CFC-212 ......... ³ E.I. DuPont de Nemours & Co
............. ³ 11
CFC-213 ......... ³ E.I. DuPont de Nemours & Co
............. ³ 11
CFC-214 ......... ³ E.I. DuPont de Nemours & Co
............. ³ 11
CFC-215 ......... ³ E.I. DuPont de Nemours & Co
............. ³ 511
³ Halocarbon Products Corp ................
³ 1,270
CFC-216 ......... ³ E.I. DuPont de Nemours & Co
............. ³ 170,574
CFC-217 ......... ³ E.I. Dupont de Nemours & Co
............. ³ 511
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
(d) For Group IV controlled substances:
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
Controlled ³ Person
³ Allowances
substance ³
³ (kg)
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
³
³
CCl4 ............ ³ Crescent Chemical Co ....................
³ 56
³ Degussa Corporation .....................
³ 12,466
³ Dow Chemical Company, USA ...............
³ 8,170,561
³ E.I. DuPont de Nemours & Co
............. ³ 26,537
³ Elf Atochem, N.A ........................
³ 41
³ Hanlin Chemicals-WV, Inc ................
³ 103,133
³ Hoechst Celanese Corporation ............
³ 3
³ ICC Chemical Corp .......................
³ 1,173,723
³ ICI Americas, Inc .......................
³ 855,466
³ Occidental Chemical Corp ................
³ 497,478
³ Sumitomo Corporation of America .........
³ 9
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
(e) For Group V controlled substances:
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
Controlled ³ Person
³ Allowances
substance ³
³ (kg)
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
³
³
Methyl Chloroform ³ 3V Chemical Corp ........................
³ 3,528
³ Actex, Inc ..............................
³ 50,171
³ Atochem North America ...................
³ 74,355
³ Dow Chemical Company, USA ...............
³ 125,200,200
³ E.I. DuPont de Nemours & Co
............. ³ 2
³ IBM .....................................
³ 2,026
³ ICI Americas, Inc .......................
³ 14,179,850
³ Laidlaw .................................
³ 420,207
³ PPG Industries ..........................
³ 45,254,115
³ Sumitomo ................................
³ 1,954
³ TG (USA) Corporation ....................
³ 7,073
³ Unitor Ships Service, Inc ...............
³ 14,746
³ Vulcan Chemicals ........................
³ 70,765,072
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
(f) For class II controlled substances: (Reserved)
82.7 Grant and phased reduction of baseline production and
consumption allowances for class I controlled substances.
For each control period specified in the following table,
each person is granted the specified percentage of the baseline
production and consumption allowances apportioned to him under
82.5 and 82.6 of this subpart.
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
³ ³
³ Other class
Date ³ Group IV (% ³ Group V
(%) ³ I
³ ) ³
³ substances
³ ³
³ %
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
³ ³
³
1992 ............................ ³ 90 ³
100 ³ 80
1993 ............................ ³ 80 ³
90 ³ 75
1994 ............................ ³ 70 ³
85 ³ 65
1995 ............................ ³ 15 ³
70 ³ 50
1996 ............................ ³ 15 ³
50 ³ 40
1997 ............................ ³ 15 ³
50 ³ 15
1998 ............................ ³ 15 ³
50 ³ 15
1999 ............................ ³ 15 ³
50 ³ 15
2000 ............................ ³ 0 ³
20 ³ 0
2001 ............................ ³ 0 ³
20 ³ 0
2002 and each year thereafter ... ³ 0 ³
0 ³ 0
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
82.8 Grant and freeze of baseline production and consumption
allowances for class II controlled substances. [Reserved]
82.9 Availability of production allowances in addition to
baseline production allowances.
(a) Every person apportioned baseline production allowances
for class I controlled substances under 82.5(a) of this subpart
is also granted potential production allowances equal to:
(1) 10 percent of his apportionment under 82.5 of this subpart
for each control period ending before January 1, 2000; and
(2) 15 percent of his apportionment under 82.5 of this subpart
for each control period beginning after December 31, 1999 and
ending before January 1, 2011 (January 1, 2013 in the case of
methyl chloroform).
A person may convert potential production allowances, either
granted under this paragraph or obtained under 82.12 (transfer
of allowances), to production allowances only to the extent
authorized by the Administrator under 82.11 of this subpart
(Exports to Article 5 Parties). A person may obtain authorizations
to convert potential production allowances to production allowances
by requesting issuance of a notice under 82.11 of this subpart
or by completing a transfer of authorizations under 82.12 of
this subpart.
(b) A company may also increase or decrease its production
allowances by trading with another Party to the Protocol. A
nation listed in appendix C to this subpart (Parties to the
Montreal Protocol) must agree either to transfer to the person
some amount of production that the nation is permitted under
the Montreal Protocol or to receive from the person some amount
of production that the person is permitted under this subpart.
(1) For trades from a Party, the person must obtain from
the principal diplomatic representative in that nation's embassy
in the United States a signed document stating that the appropriate
authority within that nation has established or revised production
limits for the nation to equal the lesser of the maximum production
that the nation is allowed under the Protocol minus the amount
transferred, the maximum production that is allowed under the
nation's applicable domestic law minus the amount transferred,
or the average of the nation's actual national production level
for the three years prior to the transfer minus the production
allowances transferred. The person must submit to the Administrator
a transfer request that includes a true copy of this document
and that sets forth the following:
(i) The identity and address of the person;
(ii) The identity of the Party;
(iii) The names and telephone numbers of contact persons
for the person and for the Party;
(iv) The chemical type and level of production being
transferred;
and
(v) The control period(s) to which the transfer applies.
(2) For trades to a Party, a person must submit a transfer
request that sets forth the following:
(i) The identity and address of the person;
(ii) The identity of the Party;
(iii) The names and telephone numbers of contact persons
for the person and for the Party;
(iv) The chemical type and level of allowable production
to be transferred; and
(v) The control period(s) to which the transfer applies.
(3) After receiving a transfer request that meets the
requirements
of paragraph (b)(2) of this section, the Administrator may,
at his discretion, consider the following factors in deciding
whether to approve such a transfer:
(i) Possible creation of economic hardship;
(ii) Possible effects on trade;
(iii) Potential environmental implications; and
(iv) The total amount of unexpended production allowances
held by United States entities.
(4) The Administrator will issue the person a notice either
granting or deducting production allowances and specifying the
control periods to which the transfer applies, provided that
the request meets the requirement of paragraph (b)(1) of this
section for trades from Parties and paragraphs (b)(2) of this
section for trades to Parties, unless the Administrator has
decided to disapprove the trade under paragraph (b)(3) of this
section for trades to Parties. For a trade from a Party, the
Administrator will issue a notice that revises the production
allowances held by the person to equal the unexpended production
allowances held by the person under this subpart plus the level
of allowable production transferred from the Party. For a trade
to a Party, the Administrator will issue a notice that revises
the production limit for the person to equal the lesser of:
(i) The unexpended production allowances held by the person
under this subpart minus the amount transferred; or
(ii) The unexpended production allowances held by the person
under this subpart minus the amount by which the United States
average annual production of the controlled substance being
traded for the three years prior to the transfer is less than
the total allowable production allowable for that substance
under this subpart minus the amount transferred.
The change in production allowances will be effective on
the date that the notice is issued.
(5) If after one person obtains approval for a trade of
allowable
production of a controlled substance to a Party, one or more
other persons obtain approval for trades involving the same
controlled substance and the same control period, the Administrator
will issue notices revising the production limits for each of
the other persons trading that controlled substance in that
control period to equal the lesser of:
(i) The unexpended production allowances held by the person
under this subpart minus the amount transferred; or
(ii) The unexpended production allowances held by the person
under this subpart minus (the amount by which the United States
average annual production of the controlled substance being
traded for the three years prior to the transfer is less than
the total allowable production for that substance under this
subpart) multiplied by the amount transferred divided by (the
total amount transferred by all the other persons trading the
same controlled substance in the same control period) minus
the amount transferred by that person.
The Administrator will also issue a notice revising the production
limit for each person who previously obtained approval of a
trade of that substance in that control period to equal the
unexpended production allowances held by the person under this
subpart plus the amount by which the United States average annual
production of the controlled substance being traded for the
three years prior to the transfer is less than the total allowable
production under this subpart multiplied by the amount transferred
by that person divided by (the amount transferred by all of
the persons that have traded that controlled substance in that
control period). The change in production allowances will be
effective on the date that the notice is issued.
(c) A person who does not produce a controlled substance
in Group I, II, III or V may obtain production allowances for
that controlled substance equal to the amount of that controlled
substance produced in the United States that the person transforms
in accordance with the provisions of this paragraph. A request
for production allowances under this section will be considered
a request for consumption allowances under 82.10(b) of this
subpart.
(1) A person must submit a request for production allowances
that includes the following:
(i) The identity and address of the person;
(ii) The name, quantity, and level of class I controlled
substance transformed;
(iii) A copy of the invoice or receipt documenting the sale
of the class I controlled substance to the person;
(iv) The name of the person from whom the class I controlled
substances were purchased; and
(v) The name, quantity, and verification of the commercial
use of the resulting chemical.
(2) The Administrator will review the information and
documentation
submitted under paragraph (c)(1) of this section and will assess
the quantity of class I controlled substance that the documentation
and information verifies was transformed. The Administrator
will issue the person production allowances equivalent to the
controlled substances that the Administrator determined were
transformed. The grant of allowances will be effective on the
date that the notice is issued.
(3) If the Administrator determines that the request for
production allowances does not satisfactorily substantiate that
the person transformed controlled substances as claimed, the
Administrator will issue a notice disallowing the request for
additional production allowances. Within ten working days after
receipt of notification, the Party may file a notice of appeal,
with supporting reasons, with the Administrator. The Administrator
may affirm the disallowance or grant an allowance, as he finds
appropriate in light of the available evidence.
82.10 Availability of consumption allowances in addition to
baseline consumption allowances.
(a) Any person may obtain, in accordance with the provisions
of this paragraph, consumption allowances equivalent to the
level of class I controlled substances that the person has exported
from the United States and its territories to any nation listed
in Appendix C to this subpart (Parties to the Montreal Protocol).
The consumption allowance granted under this section will be
valid only during the control period in which the exports departed
the United States or its territories.
(1) The exporter of the class I controlled substances must
submit to the Administrator a request for consumption allowances
setting forth the following:
(i) The identities and addresses of the exporter and the
recipient of the exports;
(ii) The exporter's Employer Identification Number;
(iii) The names and telephone numbers of contact persons
for the exporter and the recipient;
(iv) The quantity and type of controlled substances exported,
and what percentage, if any, of the controlled substances are
recycled or used;
(v) The source of the controlled substance and the date
purchased;
(vi) The date on which and the port from which the controlled
substances were exported from the United States or its territories;
(vii) The country to which the controlled substances were
exported;
(viii) The bill of lading and the invoice indicating the
net quantity of controlled substances shipped and documenting
the sale of the controlled substances to the purchaser; and
(ix) The commodity code of the controlled substance exported.
(2) The Administrator will review the information and
documentation
submitted under paragraph (a)(1) of this section, and will assess
the quantity of controlled substances that the documentation
verifies was exported. The Administrator will issue the exporter
consumption allowances equivalent to the level of controlled
substances that the Administrator determined was exported. The
grant of the consumption allowances will be effective on the
date the notice is issued.
(b) A person who does not produce a class I controlled substance
in Group I, II, III or V may obtain consumption allowances for
that controlled substance equal to the level of a controlled
substance either produced in or imported into the United States
that the person transformed in accordance with the provisions
of this paragraph.
(1) A person must submit a request for consumption allowances
that includes the following:
(i) The identity and address of the person;
(ii) The name and quantity of controlled substance used and
entirely consumed in the manufacture of another chemical;
(iii) A copy of the invoice or receipt documenting the sale
of the controlled substance to the person; and
(iv) The name, quantity, and verification of the commercial
use of the resulting chemical.
(2) The Administrator will review the information and
documentation
submitted under paragraph (b)(l) of this section and will assess
the quantity of controlled substance that the documentation
and information verifies was transformed. The Administrator
will issue to the person consumption allowances equivalent to
the level of controlled substances that the Administrator
determined
was transformed. The grant of allowances will be effective on
the date that the notice is issued.
(3) If the Administrator determines that the request for
consumption allowances does not satisfactorily substantiate
that the person transformed controlled substances as claimed,
the Administrator will issue a notice disallowing the request
for additional consumption allowances. Within ten working days
after receipt of notification, the Party may file a notice of
appeal, with supporting reasons, with the Director, Office of
Atmospheric and Indoor Air Programs, Office of Air and Radiation.
The Director may affirm or vacate the disallowance. If no appeal
is taken by the tenth day after notification, the disallowance
will be final on that day.
(c) On the first day of each control period the Agency will
grant consumption allowances to any person that produced and
exported a Group IV controlled substance in the baseline year
and that was not granted baseline consumption allowances under
82.5 of this subpart.
(1) The number of consumption allowances any such person
will be granted for each control period will be equal to the
number of production allowances granted to that person under
82.7 for that control period.
(2) Any person granted allowances under this paragraph must
hold the same number of unexpended consumption allowances for
the control period for which the allowances were granted by
February 15 of the following control period. Every kilogram
by which the person's unexpended consumption allowances fall
short of the amount the person was granted under this paragraph
constitutes a separate violation.
82.11 Exports to Article 5 Parties.
In accordance with the provisions of this section, any person
may obtain authorizations to convert potential production
allowances
to production allowances by exporting class I controlled substances
to nations listed in appendix E to this subpart (Article 5
Parties).
Authorizations obtained under this section will be valid only
during the control period in which the controlled substance
departed the United States or its territories. A request for
authorizations under this section will be considered a request
for consumption allowances under 82.10 of this subpart as well.
(a) The exporter must submit to the Administrator a request
for authority to convert potential production allowance to
production
allowances. That request must set forth the following:
(1) The identities and addresses of the exporter and the
recipient of the exports;
(2) The exporter's Employee Identification Number;
(3) The names and telephone numbers of contact persons for
the exporter and for the recipient;
(4) The quantity and the type of controlled substances exported,
its source and date purchased, and what percentage, if any,
of the controlled substances are recycled or used;
(5) The date on which and the port from which the controlled
substances were exported from the United States or its territories;
(6) The country to which the controlled substances were
exported;
(7) A copy of the bill of lading and invoice indicating the
net quantity shipped and documenting the sale of the controlled
substances to the recipient;
(8) The commodity code of the controlled substance exported;
and
(9) A copy of the contract covering the sale of the controlled
substances to the recipient that contains provisions forbidding
the reexport of the controlled substance in bulk form and
subjecting
the recipient or any transferee of the recipient to liquidated
damages equal to the resale price of the controlled substances
if they are reexported in bulk form.
(b) The Administrator will review the information and
documentation
submitted under paragraph (a) of this section, and assess the
quantity of controlled substances that the documentation verifies
were exported to an Article 5 Party. Based on that assessment,
the Administrator will issue the exporter a notice authorizing
the conversion of a specified quantity of potential production
allowances to production allowances in a specified control year,
and granting consumption allowances in the same amount for the
same control year. The authorizations may be used to convert
potential production allowances to production allowances as
soon as the date on which the notice is issued.
82.12 Transfers.
(a) Inter-company transfers. Any person ("transferor") may
transfer to any other person ("transferee") any amount of the
transferor's consumption allowances, production allowances,
potential production allowances, or authorizations to convert
potential production allowances to production allowances, as
follows:
(1) The transferor must submit to the Administrator a transfer
claim setting forth the following:
(i) The identities and addresses of the transferor and the
transferee;
(ii) The name and telephone numbers of contact persons for
the transferor and the transferee;
(iii) The type of allowances or authorizations being
transferred,
including the names of the controlled substances for which
allowances
are to be transferred;
(iv) The group of controlled substances to which the allowances
or authorizations being transferred pertains;
(v) The amount of allowances or authorizations being
transferred;
(vi) The control period(s) for which the allowances or
authorizations
are being transferred;
(vii) The amount of unexpended allowances or authorizations
of the type and for the control period being transferred that
the transferor holds under authority of this subpart as of the
date the claim is submitted to EPA; and
(viii) A statement of whether the trade is for the purpose
of reimbursing a producer or importer for allowances expended
in the production or import of transformed controlled substances;
and
(ix) The amount of the one-percent offset applied to the
unweighted amount traded that will be deducted from the
transferor's
allowance balance (except for trades of potential production
allowances, authorizations to convert, or trades from transformers
to producers or importers for the purpose of allowance
reimbursement).
(2) The Administrator will determine whether the records
maintained by EPA, taking into account any previous transfers
and any production, imports or exports of controlled substances
reported by the transferor, indicate that the transferor possesses,
as of the date the transfer claim is processed, unexpended
allowances
or authorizations sufficient to cover the transfer claim (i.e.,
the amount to be transferred plus, in the case of transferors
of production or consumption allowances), one percent of that
amount). Within three working days of receiving a complete transfer
claim, the Administrator will take action to notify the transferor
and transferee as follows:
(i) If EPA's records show that the transferor has sufficient
unexpended allowances or authorizations to cover the transfer
claim or if review of available information is insufficient
to make a determination, the Administrator will issue a notice
indicating that EPA does not object to the transfer and will
reduce the transferor's balance of unexpended allowances or
authorizations by the amount to be transferred plus, in the
case of transfers of production or consumption allowances, one
percent of that amount. When EPA issues a no objection notice,
the transferor and the transferee may proceed with the transfer.
However, if EPA ultimately finds that the transferor did not
have sufficient unexpended allowances or authorizations to cover
the claim, the transferor and transferee will be held liable
for any violations of the regulations of this subpart that occur
as a result of, or in conjunction with, the improper transfer.
(ii) If EPA's records show that the transferor has insufficient
unexpended allowances or authorizations to cover the transfer
claim, or that the transferor has failed to respond to one or
more Agency requests to supply information needed to make a
determination, the Administrator will issue a notice disallowing
the transfer. Within 10 working days after receipt of notification,
either party may file a notice of appeal, with supporting reasons,
with the Administrator. The Administrator may affirm or vacate
the disallowance. If no appeal is taken by the tenth working
day after notification, the disallowance shall be final on that
day.
(3) In the event that the Administrator does not respond
to a transfer claim within the three working days specified
in paragraph (b)(2) of this section, the transferor and transferee
may proceed with the transfer. EPA will reduce the transferor's
balance of unexpended allowances or authorizations by the amount
to be transferred plus, in the case of transfers of production
or consumption allowances, one percent of that amount. However,
if EPA ultimately finds that the transferor did not have sufficient
unexpended allowances or authorizations to cover the claim,
the transferor and transferee will be held liable for any
violations
of the regulations of this subpart that occur as a result of,
or in conjunction with, the improper transfer.
(b) Inter-pollutant conversions. Any person ("convertor")
may convert consumption allowances, production allowances,
potential
production allowances, or authorizations to convert potential
production allowances to production allowances for one class
I controlled substance to the same type of allowance for another
class I controlled substance within the group of controlled
substances as the first as follows:
(1) The convertor must submit to the Administrator a conversion
claim setting forth the following:
(i) The identity and address of the convertor;
(ii) The name and telephone number of a contact person for
the convertor;
(iii) The type of allowances or authorizations being converted,
including the names of the controlled substances for which
allowances
are to be converted;
(iv) The group of controlled substances to which the allowances
or authorizations being converted pertains;
(v) The amount and type of allowances to be converted;
(vi) The amount of allowances to be subtracted from the
convertor's
unexpended allowances for the first controlled substance, to
be equal to 101 percent of the amount of allowances converted
(except for conversions of authorizations to convert potential
production allowances and conversions of potential production
allowances);
(vii) The amount of allowances or authorizations to be added
to the convertor's unexpended allowances or authorizations for
the second controlled substance, to be equal to the amount of
allowances for the first controlled substance being converted
multiplied by the quotient of the ozone depletion factor of
the first controlled substance divided by the ozone depletion
factor of the second controlled substance, as listed in appendix
A to this subpart.
(viii) The control period(s) for which the allowances or
authorizations are being converted; and
(ix) The amount of unexpended allowances or authorizations
of the type and for the control period being converted that
the convertor holds under authority of this subpart as of the
date the claim is submitted to EPA.
(2) The Administrator will determine whether the records
maintained by EPA, taking into account any previous conversions,
any transfers, and any production, imports, or exports of
controlled
substances reported by the convertor, indicate that the convertor
possesses, as of the date the conversion claim is processed,
unexpended allowances or authorizations sufficient to cover
the conversion claim (i.e., the amount to be converted plus,
in the case of conversions of production or consumption allowances,
one percent of that amount). Within three working days of receiving
a complete conversion claim, the Administrator will take action
to notify the convertor as follows:
(i) If EPA's records show that the convertor has sufficient
unexpended allowances or authorizations to cover the conversion
claim or if review of available information is insufficient
to make a determination, the Administrator will issue a notice
indicating that EPA does not object to the conversion and will
reduce the convertor's balance of unexpended allowances or
authorizations
by the amount to be converted plus, in the case of conversions
of production or consumption allowances, one percent of that
amount. When EPA issues a no objection notice, the convertor
may proceed with the conversion. However, if EPA ultimately
finds that the convertor did not have sufficient unexpended
allowances or authorizations to cover the claim, the convertor
will be held liable for any violations of the regulations of
this subpart that occur as a result of, or in conjunction with,
the improper conversion.
(ii) If EPA's records show that the convertor has insufficient
unexpended allowances or authorizations to cover the conversion
claim, or that the convertor has failed to respond to one or
more Agency requests to supply information needed to make a
determination, the Administrator will issue a notice disallowing
the conversion. Within 10 working days after receipt of
notification,
the convertor may file a notice of appeal, with supporting reasons,
with the Administrator. The Administrator may affirm or vacate
the disallowance. If no appeal is taken by the tenth working
day after notification, the disallowance shall be final on that
day.
(3) In the event that the Administrator does not respond
to a conversion claim within the three working days specified
in paragraph (b)(2) of this section, the convertor may proceed
with the conversion. EPA will reduce the convertor's balance
of unexpended allowances by the amount to be converted plus,
in the case of conversions of production or consumption allowances,
one percent of that amount. However, if EPA ultimately finds
that the convertor did not have sufficient unexpended allowances
or authorizations to cover the claims, the convertor will be
held liable for any violations of the regulations of this subpart
that occur as a result of, or in conjunction with, the improper
conversion.
(c) Inter-company transfers and Inter-pollutant conversions.
If a person requests an inter-company transfer and an inter-
pollutant conversion simultaneously, the amount subtracted from
the convertor-transferor's unexpended allowances for the first
controlled substance will be equal to 101 percent of the amount
of allowances converted and transferred in the case of transfer-
conversions of production or consumption allowances.
82.13 Record-keeping and reporting requirements.
(a) Unless otherwise specified, the record-keeping and reporting
requirements set forth in this section take effect on January
1, 1992.
(b) Reports and records required by this section may be used
for purposes of compliance determinations. These requirements
are not intended as a limitation on the use of other evidence
admissible under the Federal Rules of Evidence.
(c) Unless otherwise specified, reports required by this
section must be mailed to the Administrator within 45 days of
the end of the applicable reporting period.
(d) Records and copies of reports required by this section
must be retained for three years.
(e) In reports required by this section, quantities of
controlled
substances must be stated in terms of kilograms.
(f) Every person ("producer") who will produce class I
controlled
substances during a control period must comply with the following
record-keeping and reporting requirements:
(1) Within 120 days of July 30, 1992, or within 120 days
of the date the producer first produces a class I controlled
substance, whichever is later, every producer that has not already
done so must submit to the Administrator a report describing:
(i) The method by which the producer in practice measures
daily quantities of class I controlled substances produced;
(ii) Conversion factors by which the daily records as currently
maintained can be converted into kilograms of controlled substances
produced, including any constants or assumptions used in making
those calculations (e.g., tank specifications, ambient temperature
or pressure, density of the controlled substance);
(iii) Internal accounting procedures for determining plant-
wide production;
(iv) The quantity of any fugitive losses accounted for in
the production figures; and
(v) The estimated percent efficiency of the production process
for the controlled substance.
Within 60 days of any change in the measurement procedures or
the information specified in the above report, the producer
must submit a report specifying the revised data or procedures
to the Administrator.
(2) Every person that produced class I controlled substances
as by-products and did not destroy them with MACT in 1989 but
did not report this production in response to previous information
request must supply EPA with the information previously requested
on or before September 14, 1992.
(3) Every producer must maintain the following:
(i) Dated records of the quantity of each of the class I
controlled substances produced at each facility;
(ii) Dated records of the quantity of Group IV class I
controlled
substances produced for feedstock use at each facility;
(iii) Dated records of the quantity of class I controlled
substances used as feedstocks in the manufacture of controlled
substances and in the manufacture of non-controlled substances
and any class I controlled substance introduced into the production
process of the same controlled substance at each facility;
(iv) Dated records identifying the quantity of each chemical
not a controlled substance produced within each facility also
producing one or more class I controlled substances;
(v) Dated records of the quantity of raw materials and feedstock
chemicals used at each facility for the production of controlled
substances;
(vi) Dated records of the shipments of class I controlled
substances produced at each plant;
(vii) The quantity of class I controlled substances, the
date received, and names and addresses of the source of recyclable
or recoverable materials containing class I controlled substances
which are recovered at each plant;
(viii) Records of the date, the class I controlled substance,
and the estimated quantity of any spill or release of a class
I controlled substance that equals or exceeds 100 pounds; and
(ix) Dated records documenting the sale of Group IV controlled
substances for feedstock.
(4) For each quarter, each producer must provide the
Administrator
with a report containing the following information:
(i) The production by plant in that quarter of each class
I controlled substance, specifying the quantity of any class
I controlled substance used for feedstock purposes for controlled
and noncontrolled substances for each plant and totaled by class
I controlled substance for all plants owned by the producer;
(ii) The amount of production for feedstock of Group IV
controlled
substances, by plant;
(iii) The levels of production (expended allowances) for
all class I controlled substances for each plant and totaled
for all plants for that quarter and totaled for the control
period to date;
(iv) From each plant, the total shipments of each class I
controlled substance produced at that plant in the quarter;
(v) The producer's total of expended and unexpended consumption
allowances, potential production allowances, production allowances,
and authorizations to convert potential production allowances
to production allowances, as of the end of that quarter;
(vi) The quantity, the date received, and names and addresses
of the source of recyclable or recoverable materials containing
the class I controlled substance which are recovered at each
plant;
(vii) The amount of Group IV controlled substances sold to
each person for feedstock during the quarter; and
(viii) Internal Revenue Service Certificates showing that
the purchaser of Group IV controlled substances for feedstock
use intends to transform the Group IV controlled substances.
(5) For any person who fails to maintain the records required
by this paragraph, or to submit the report required by this
paragraph, the Administrator may assume that the person has
produced at full capacity during the period for which records
were not kept, for purposes of determining whether the person
has violated the prohibitions at 82.4 of this subpart.
(g) Importers of class I controlled substances during a control
period must comply with the following record-keeping and reporting
requirements:
(1) Any importer must maintain the following records:
(i) The quantity of each class I controlled substance imported,
either alone or in mixtures, including the percentage of the
mixture which consists of class I controlled substances;
(ii) The date on which the controlled substances were imported;
(iii) The port of entry through which the controlled substances
passed;
(iv) The country from which the imported controlled substances
were imported;
(v) The port of exit;
(vi) The commodity code for the controlled substances shipped;
(vii) The importer number for the shipment;
(viii) A copy of the bill of lading for the import;
(ix) The invoice for the import;
(x) The U.S. Customs Entry Summary Form; and
(xi) Dated records documenting the sale of Group IV controlled
substances for feedstock.
(2) For each quarter, every importer must submit to the
Administrator
a report containing the following information:
(i) Summaries of the records required in paragraphs (g)(1)
(i) through (vii) of this section for the previous quarter;
(ii) The total quantity imported in kilograms of each class
I controlled substance for that quarter;
(iii) The levels of import (expended consumption allowances)
of class I controlled substances for that quarter and totaled
by chemical for the control-period-to-date; and
(iv) The importer's total sum of expended and unexpended
consumption allowances by chemical as of the end of that quarter;
(v) The amount of Group IV controlled substances imported
for feedstock during the quarter;
(vi) The amount of Group IV controlled substances sold to
each person for feedstock during the quarter; and
(vii) Internal Revenue Service Certificates showing that
the purchaser of Group IV controlled substances for feedstock
use intends to transform the Group IV controlled substances.
(h) For any exports of class I controlled substances not
reported under 82.10 of this subpart (additional consumption
allowances) or 82.11 of this subpart (Exports to Parties),
the exporter who exported the class I controlled substances
must submit to the Administrator the following information within
45 days after the end of the control period in which the unreported
exports left the United States:
(1) The names and addresses of the exporter and the recipient
of the exports;
(2) The exporter's Employee Identification Number;
(3) The type and quantity of class I controlled substances
exported and what percentage, if any, of the controlled substances
are recycled or used;
(4) The date on which and the port from which the controlled
substances were exported from the United States or its territories;
(5) The country to which the controlled substances were
exported;
and
(6) The commodity code of the controlled substance shipped.
(i) Every person who has requested additional production
allowances under 82.9(c) of this subpart or consumption allowances
under 82.10(c) of this subpart or who transforms Group IV
controlled
substances not produced by him or her must maintain the following:
(1) Dated records of the quantity and level of controlled
substance used and entirely consumed in the manufacture of another
chemical;
(2) Copies of the invoices or receipts documenting the sale
of the controlled substance to the person;
(3) Dated records of the names, commercial use, and quantities
of the resulting chemical(s);
(4) Dated records of shipments to purchasers of the resulting
chemical(s);
(5) For transformers of Group IV controlled substances, dated
records of all shipments of Group IV controlled substances received
and the identity of the producer or importer of the Group IV
controlled substances; and
(6) For transformers of Group IV controlled substances, dated
records inventories of Group IV controlled substances at each
plant on the first day of each quarter.
(j) For every quarter, within 45 days after the end of the
quarter, every person who transforms Group IV chemicals not
produced by him or her must report the following:
(1) The name and address of the person and the name and
telephone
number of a contact person;
(2) The names and addresses of the persons that produced
or imported the Group IV controlled substances that he or she
has purchased and transformed and the name and telephone number
of a contact person;
(3) The address of the facility at which the transformation
took place;
(4) The name of the chemical produced as a result of the
transformation and the verification of its commercial use; and
(5) By source in paragraph (j)(2) of this section, the amounts
of Group IV controlled substances transformed by the person.
(k) For every control period, every person receiving an
exemption
for CUBP controlled substances in Groups IV and V must maintain
the following information on site:
(1) Dated records of the quantity of the CUBP carbon
tetrachloride
and methyl chloroform produced at the facility; and
(2) Dated records of the quantity of the CUBP controlled
substance destroyed at the facility or shipped from there to
an off-site destruction facility.
(l) Every person who produces, imports, or exports class
II chemicals must report its annual level of production, imports,
and exports of these chemicals within 45 days of the end of
each control period.
Appendix A to Subpart A-Class I Controlled Substances
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÂÄÄÄÄÄÄÄÄÄÄÄ
³ Ozone
Controlled substance
³ deplet
³ ion
³ weight
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÅÄÄÄÄÄÄÄÄÄÄÄ
³
A. Group I
³
³
CFCl3-Trichlorofluoromethane (CFC-11)............................
³ 1.0
CCl2F2-Dichlorodifluoromethane (CFC-12)..........................
³ 1.0
CCl2F-CClF2-Trichlorotrifluoroethane (CFC-113)...................
³ 0.8
CF2Cl-Cclf2-Dichlorotetrafluoroethane (CFC-114)..................
³ 1.0
CClF2-CF3-(Mono) chloropentafluoroethane (CFC-115) ..............
³ 0.6
All isomers of the above chemicals
³
B. Group II
³
³
CF2BrCl-Bromochlorodifluoromethane (halon 1211)..................
³ 3.0
CF3Br-Bromotrifluoromethane (halon 1301).........................
³ 10.0
C2F4Br2-Dibromotetrafluoroethane (halon 2402)....................
³ 6.0
All isomers of the above chemicals
³
C. Group III
³
³
CF3Cl-Chlorotrifluoromethane (CFC-13)............................
³ 1.0
C2FCl5 (CFC-111).................................................
³ 1.0
C2F2Cl4-(CFC-112)................................................
³ 1.0
C3FCl7-(CFC-211).................................................
³ 1.0
C3F2Cl6-(CFC-212)................................................
³ 1.0
C3F3Cl5-(CFC-213)................................................
³ 1.0
C3F4Cl4-(CFC-214)................................................
³ 1.0
C3F5Cl3-(CFC-215)................................................
³ 1.0
C3F6Cl2-(CFC-216)................................................
³ 1.0
C3F7Cl-(CFC-217).................................................
³ 1.0
All isomers of the above chemicals
³
D. Group IV
³
³
CCI4-Carbon Tetrachloride .......................................
³ 1.1
E. Group V
³
³
C2H3Cl3-1,1,1-Trichloroethane (Methyl chloroform)................
³ .1
All isomers of the above chemical, except for 1,1,2-
³
trichloroethane.
³
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÁÄÄÄÄÄÄÄÄÄÄÄ
Appendix B to Subpart A-Class II Controlled Substances
CHFCl2-Dichlorofluoromethane
(HCFC-21)..........................................................
({1})
CHF2Cl-Chlorodifluoromethane
(HCFC-22)..........................................................
0.05
CH2FCl-Chlorofluoromethane
(HCFC-31)..........................................................
({1})
C2HFCl4-
(HCFC-121).........................................................
({1})
C2HF2Cl3
(HCFC-122).........................................................
({1})
C2HF3Cl2-
(HCFC-123).........................................................
0.02
C2HF4Cl-
(HCFC-124).........................................................
0.02
C2H2FCl3-
(HCFC-131).........................................................
({1})
C2H2F2Cl2-
(HCFC-132b)........................................................
({1})
C2H2F3Cl-
(HCFC-133a)........................................................
({1})
C2H3FCl2-
(HCFC-141b)........................................................
0.12
C2H3F2Cl-
(HCFC-142b)........................................................
0.06
C3HFCl6-
(HCFC-221).........................................................
({1})
C3HF2Cl5-
(HCFC-222).........................................................
({1})
C3HF3Cl4-
(HCFC-223).........................................................
({1})
C3HF4Cl3-
(HCFC-224).........................................................
({1})
C3HF5Cl2-
(HCFC-225ca).......................................................
({1})
(HCFC-225cb).......................................................
({1})
C3HF6Cl-
(HCFC-226).........................................................
({1})
C3H2FCl5-
(HCFC-231).........................................................
({1})
C3H2F2Cl4-
(HCFC-232).........................................................
({1})
C3H2F3Cl3-
(HCFC-233).........................................................
({1})
C3H2F4Cl2-
(HCFC-234).........................................................
({1})
C3H2F5Cl-
(HCFC-235).........................................................
({1})
C3H3FCl4-
(HCFC-241).........................................................
({1})
C3H3F2Cl3-
(HCFC-242).........................................................
({1})
C3H3F3Cl2-
(HCFC-243).........................................................
({1})
C3H3F4Cl-
(HCFC-244).........................................................
({1})
C3H4FCl3-
(HCFC-251).........................................................
({1})
C3H4F2Cl2-
(HCFC-252).........................................................
({1})
C3H4F3Cl-
(HCFC-253).........................................................
({1})
C3H5FCl2-
(HCFC-261).........................................................
({1})
C3H5F2Cl-
(HCFC-262).........................................................
({1})
C3H6FCl-
(HCFC-271).........................................................
({1})
All isomers of the above chemicals
.................................. ({1})
{1}Reserved.
Appendix C to Subpart A-Parties to the Montreal Protocol
Parties to the Montreal Protocol: Argentina, Australia, Austria,
Bahrain, Bangladesh, Belgium, Botswana (3/3/92), Brazil, Bulgaria,
Burkina Faso, Byelorussian Soviet Socialist Republic, Cameroon,
Canada, Chile, China, Costa Rica, Cyprus (8/26/92), Czechoslovakia,
Denmark, Ecuador, Egypt, European Economic Community, Fiji,
Finland, France, Gambia, Germany, Ghana, Greece, Guatemala,
Guinea (9/23/92), Hungary, Iceland, India (9/17/92), Indonesia
(9/24/92), Iran, Ireland, Israel (9/28/92), Italy, Japan, Jordan,
Kenya, Libyan Arab Jamahiriya, Liechtenstein, Luxembourg, Malawi,
Malaysia, Maldives, Malta, Mexico, Netherlands, New Zealand,
Nigeria, Norway, Panama, Philippines, Poland, Portugal, Republic
of Korea (5/27/92), Russian Federation, Singapore, South Africa,
Spain, Sri Lanka, Sweden, Switzerland, Syrian Arab Republic,
Thailand, Togo, Trinidad and Tobago, Tunisia, Turkey, Uganda,
Ukrainian Soviet Socialist Republic, United Arab Emirates, United
Kingdom, United States of America, Uruguay, Venezuela, Yugoslavia,
Zambia.
Appendix D to Subpart A-Nations Complying With, But Not Parties
to, the Protocol [reserved]
Appendix E to Subpart A-Article 5 Parties
Argentina, Bangladesh, Botswana (3/3/92), Brazil, Burkina
Faso, Cameroon, Chile, China, Costa Rica, Cyprus (8/26/92),
Ecuador, Egypt, Fiji, Gambia, Ghana, Guatemala, Guinea (9/23/92),
India (9/23/92), Indonesia (9/24/92), Iran, Jordan, Kenya, Libyan
Arab Jamahiriya, Malawi, Malaysia, Maldives, Mexico, Nigeria,
Panama, Philippines, Republic of Korea (5/27/92), Sri Lanka,
Syrian Arab Republic, Thailand, Togo, Trinidad and Tobago, Tunisia,
Turkey, Uganda, Uruguay, Venezuela, Yugoslavia, Zambia.
[FR Doc. 92-17661 Filed 7-29-92; 8:45 am]
BILLING CODE 6560-50-M
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