p.1 

OAR Box 1833 

Prepped by Keeia Richards 

Document Number: 

69) FED REG VOL 55 NO 121 JUNE 

22,1990 

Docket Number: 

A-87-20 

Printed 11/14/2008 11:01:29 AM Sheet 69 of 172 
P_L 

y?-- 8-7-JL o 

Friday 

June 22, 1990 

W 1 

Part VI19 

Environmental 

Protection Agency 

40 CFR Part 82 

Protection of Stratospheric Ozone; Final 

Rule 
25812 Federal Register/Vol. 55, No. 121 / Friday, June 22, 1990 /Rule s and Regulations -. 

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ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 82 

[FRLT3790-1 ] 

Protection of Stratospheric Ozone 

AGENCY: Environmental Protection 

Agency. 

ACTION: Final rule. 

SUMMARY: Today's notice announces a 

tentative list of Article 5 Parties in 

appendix E to the final rule on 

stratospheric ozone protection (40 CFR 

part 82). An Article 5 Party is defined by 

the Montreal Protocol, the treaty that 

limits the production and consumption 

of ozone depleting chemicals, as a Party 

to the Protocol that is "a developing 

country whose annual calculated level 

(defined as the quantity of the ozone 

depleting chemical multiplied by its 

ozone depletion weight) of controlled 

substances of per capita consumption is 

less than .3 kilograms as of the date of 

the entry into force of the Protocol for 

it". Under the regulatory program for the 

protection of stratospheric ozone, 

companies that export to Article 5 

Parties may increase their production of 

controlled substances up to the limits 

stated in Article 2 of the Protocol. The 

Agency considers this a tentative list of 

Article 5 Parties. It is based on the best 

available information, but may be 

revised as more relevant information is 

received for affected countries. The 

Agency reserves the right to revise this 

appendix should additional information 

become available that indicates that 

such countries are not Article 5 Parties, 

or to add to this list as more countries 

are eligible. These countries are Mexico, 

Venezuela and Thailand. 

DATES: This final rule (appendix E) is 

effective June 22,1990. 

ADDRESSES: Comments and other 

information relevant to this rulemaking 

are maintained in Docket A-87-20 at the 

Air Docket room M-1500, First Floor, 

Waterside Mall, Environmental 

Protection Agency, 401 M Street SW., 

Washington, DC 20460. The docket may 

be inspected between 8 a.m. and 3:30 

p.m. on weekdays. As provided in 20 

CFR part 2 a reasonable fee may be 

charged for photocopying. 

FOR FURTHER INFORMATION CONTACT: 

David Lee, Regulatory and Analysis 

Branch, Global Change Division, Office 

of Atmospheric and Indoor Air 

Programs, Office of Air and Radiation, 

ANR-445, 401 M Street SW., 

Washington, DC 20460, (202) 475-7497. 

SUPPLEMENTARY INFORMATION: On 

August 12,1988, EPA promulgated a 

final rule to limit the production and 

consumption of certain 

chlorofluorocarbons (CFCs) and 

brominated compounds (halons) to 

reduce the risks of stratospheric ozone 

depletion. The-rule requires a near-term 

freeze at 1986 levels of production and 

consumption (defined as production plus 

imports minus exports) of CFC—11, 

-12 , -113, -114, and -115 based on 

their relative ozone depletion weights, 

followed by a phased reduction to 80 

percent and 50 percent of 1986 levels 

beginning in mid-1993 and mid-1998, 

respectively. It also limits production 

and consumption of Halon 1211,1301, 

and 2402 to 1986 levels beginning in 

1992. Under specified circumstances, 

limited increases in production (but not 

consumption) above these levels is 

permitted. 

This rule was promulgated under 

section 157(b) of the Clean Air Act and 

constituted the United States' 

implementation of the Montreal 

Protocol, which the United States 

ratified on April 21,1988. The final rule's 

control measures took effect when the 

Protocol entered into force on January 1, 

1989. 

The current rule implements the 

Protocol's requirements to control 

production and consumption of the 

CFCs and halons specified above by 

allocating production and consumption 

allowances to firms that produced and 

imported these chemicals in 1986, based 

on their 1988 levels of these activities. 

In addition, producers received 

potential production allowances equal 

to 10 percent of their 1986 production 

levels (15 percent in 1998 for CFCs). 

These potential production allowances 

can be converted to production 

allowances to replace exports to Article 

5 Parties. An Article 5 Party is a 

developing country who is Party to the 

Protocol and whose calculated level per 

capita consumption of these chemicals 

is less than .3 kg as of the date that the 

Protocol entered into effect for it. A 

company may also convert potential 

production allowances to production 

allowances upon receipt of production 

rights from another Party that has 

agreed to decrease its production by an 

equal amount for the purposes of 

industrial rationalization. (A Federal 

Register Notice, published on February 

13,1990 (55 FR 5007), amended the 

conditions under which this offset or • 

industrial rationalization could occur. 

Industrial rationalization is defined in 

Article 1 of the Montreal Protocol as 

"the transfer of all or a portion of the 

calculated level of production of one 

Party to another, for the purpose of 

achieving economic efficiencies or 

responding to anticipated shortfarfsTin . 

supply as a result of plant closures). 

Rulemaking for Appendix E 

On July 12,1989 the Agency proposed 

Appendix E, "Article 5 Parties" (54 FR 

29353). The Agency proposed this list 

which included the following countries: 

Egypt, Ghana, Kenya, Maldives, Mexico, 

Nigeria, Panama, Uganda, Jordan, and 

Venezuela. 

In this same notice, the Agency 

proposed an amendment that would 

amend the conditions under which a 

company could increase its production 

under the limits stated in the Protocol. 

Originally, companies operating under 

§ 82.11 could increase their production 

for exports to any Party. However, ' 

Parties, in their first meeting in Helsinki, 

Finland in May 1989, agreed that such 

increases could occur only for exports to 

Article 5 Parties, or when.two Parties 

had agreed to transfer production, 

resulting in one Party increasing its 

production while another decreases its 

production for the purposes of industrial 

rationalization. The proposal amended 

§ § 82.9 and 82.11 in order to institute the 

agreement of the Parties. 

The Agency finalized this amendment 

on February 13,1990 (55 FR 5007), but 

was unable to finalize the list of 

countries it had proposed as Article 5 

Parties due to unresolved data issues. 

Since that time the Agency has received 

additional data that allows EPA to 

better estimate per capita consumption 

for the period specified by Article 5 (the 

date that the Protocol entered into effect 

for the developing country which is, 

January 1,1989 or after). 

As the Agency stated in the February 

13 Federal Register Notice, no 

developing country Party has yet to 

submit data on its consumption of 

controlled substances as of the date the 

Protocol entered into force for it, 

January 1,1989 or later. Many countries, 

including most developing country 

Parties, have not yet complied with 

Article 7 of the Protocol that requires 

countries tq report their levels of 

production and consumption of 

controlled substances in 1986 within 

three months of becoming Parties. As a 

result, there was little or no basis at that 

time for determining whether,any 

developing country consumed controlled 

substances at an annual calculated level 

of less than .3 kilogram per capita on the 

date that the Protocol, entered into effect 

for it, and thus whether any developing 

country Party could avail itself of the 

special treatment afforded by Article 5. 

In response to a request from the 

United States, the Secretariat of the 

Protocol decided that under these 
P.4 

/ Vol 55, No. _21 / Friday, June 22, 19S0 / Rules and Regulations 

circumstances, it could not and would 

not make _ determination of which 

Parties should be considered to be 

operating under Article 5 until the 

country submits data demonstrating that 

its consumption of controlled substances 

as of the date the Protocol entered into 

force for it was less than .3 kilogram per 

capita. The Secretariat explained that a 

different approach to identification of 

Article 5 Parties would risk allowing 

higher production and consumption of 

controlled substances than the Protocol 

would otherwise allow, or make an 

incorrect assumption as to a Party's 

desire to operate under Article 5, or 

both. To remedy this situation, the 

Secretariat requested this data from all 

Parties that wish to be considered 

Article 5 Parties. 

The United States also requested 

similar data from a subset of potential 

Article 5 Parties, relying upon U.S. 

embassies within these countries to 

convey the need for these countries to 

report their Article 5 status to both the 

Secretariat and the United States. 

Based on information received to date 

from both the Secretariat and the United 

States' data request, the Agency 

believes that it is appropriate to identify 

a tentative listing of Article 5 countries 

at this time. The United States has 

expressed the need for a list of Article 5 

Parties to other Parties of the Protocol, 

and the United States believes that it 

must proceed with identification of 

these countries at this time, based on 

the best available information in order 

to allow for effective use of the potential 

production allowances permitted under 

the Protocol during the first control 

period. U.S. industry had planned to 

increase its production based on good 

faith that countries would report in a 

timely manner the provisions stated in 

the Protocol. Indeed, several companies 

exported to countries that were 

proposed as Article 5 Parties in the 

Federal _.egkte Notice published last 

July. In such cases, these countries have 

benefited from the supply of these 

chemicals, yet the U.S. producers have 

not been able to increase their 

production of these chemicals under the 

provisions of the Protocol. It is possible 

that domestic producers would not have 

exported to these countries, if they had 

known that they would be unable to 

increase their production. If such 

producers are unable to increase their 

production under the limits of the 

Protocol, it is the domestic users who 

are ultimately deprived of these 

chemicals. 

For these reasons, the Agency 

believes that it must publish a tentative 

list of Article 5 Parties. EPA is 

publishing this list today to provide 

affected companies with sufficient time 

within this control period to adjust their 

production schedules. The Agency 

obtained individual country per capita 

consumption data directly from the 

countries or from information on 1986 

consumption estimates recently received 

from the Secretariat. 

Based on this information, the Agency 

announces three countries that 

tentatively qualify as Article 5 countries. 

These countries are Mexico, Venezuela, 

and Thailand. These three countries are 

Parties to the Protocol and are 

considered by the Secretariat as 

developing countries. The Agency has 

assumed, based on the best available 

information, that their individual 

calculated level per capita consumption 

is less than .3 kilogram. EPA emphasizes 

that these countries have not yet 

reported their calculated level of per 

capita consumption for the required 

period, the date on which the Protocol 

entered into effect for these countries, 

and that the Secretariat has not yet 

declared these countries as Article 5 

Parties for this reason. However, based 

on information the Agency has recently 

received concerning these countries, 

EPA may tentatively assume that their 

per capita consumption was below .3 

kilogram at the time that the Protocol 

entered into effect for these countries. 

The Agency has received information 

from the Secretariat that Venezuela's 

calculated level per capita consumption 

was "below .3 kilograms" for 1986. 

Recent information from the United 

States' embassy ln Venezuela indicates 

that based on discussion with the 

Venezuelan Environmental Ministry, 

Venezuela's per capita consumption has 

fallen to almost .2 Kg over the past year, 

and that Venezuela considers itself on 

Article 5 Party. 

The Agency has also received 

information from the Secretariat that 

Mexico's 1988 calculated level per 

capita consumption is "well below .3 

kilograms". Recent information from the 

United States' embassy in Mexico 

confirmed that Mexico has declared 

itself an Article S Party and that 

"Mexico's controls on the use of CFCs 

and halons are much stricter than those 

under the Protocol", and implied that 

per capita consumption of these 

chemicals have dropped since 1986. 

EPA has also received information 

from the Secretariat that Thailand's per 

capita consumption of these chemicals 

is "well below .3 kg". However, the 

Secretariat warned EPA that Thailand 

has not reported all the controlled 

substances to the Secretariat. The 

Secretariat did not identify the missing 

controlled substances. The Agency has 

not yet received any communication 

from Thailand on its status as an Article 

5 Party. Companies should be aware of 

Thailand's situation before increasing 

production to replace exports to this 

country as an Article 5 Party. 

The Agency proposed Venezuela and 

Mexico as Article 5 Parties in Appendix 

E (5. FR 29353) on July 13.1989. Today's 

notice completes rulemaking for these 

countries. The Agency did not propose 

Thailand since it was not _ Party to tho 

Protocol at that time. However, the 

Agency believes that it must now 

announce Thailand as an Article S Party 

without first proposing such status 

under S U.S.C. 553(6)(B) which provides 

that an Agency may dispense with 

notice and comment for good cause on 

grounds of impracticality or contrary to 

the public interest. The Agency does not 

believe that there is sufficient time for 

industry to take advantage of the 

provisions of the Montreal Protocol by 

the end of the control period (June 30, 

1890) if the Agency were to proceed with 

notice and comment on this country. In 

addition, in the Notice of Proposed 

Rulemaking, EPA announced the criteria 

under which a country could bo 

included as an Article 5 Party. The 

Agency has exhausted all authoritative 

resources (the Secretariat of the Protocol 

and the government of Thailand) who 

would have the best knowledge of 

Thailand's status, and believes that 

notice and comment would not likely 

provide additional data for this country. 

In the future, the Agency intends to 

propose additional Article 5 Parties for 

notice and comment, and to review datu. 

if any is available, received during the 

public comment period, before final 

promulgation of their status. EPA will 

proceed accordingly when the 

Secretariat cannot "officially" declare 

Article S Party status for technical 

reasons despite data and analysis that 

indicate the country DO qualifies. 

However, if the Secretariat should 

formally designate a country as an 

Article 5 Party, the Agency would view 

the addition of that country to Appendix 

E as a purely ministerial task for which 

notice and comment was unnecessary. 

Therefore, the Agency shall at that time 

proceed to amend Appendix E through a 

technical amendment without any notice 

and comment period. 

Domestic companies that have 

exported to these three countries will 

receive "authorizations" at their request 

to increase their production under the 

limits of the Protocol. Such 

authorizations are valid for only this 

control period. 
25814 Federal Register / Vol. 55, No. 121 / Friday, June 22, 1990 / Rules and Regulations 

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However, since this designation is not 

based on consumption information for 

the specified time period, the date on 

which the Montreal Protocol entered 

into effect for the developing country, 

but on information that suggests such 

status, the Agency considers this list as 

tentative. If the Agency should learn at a 

later date that these countries are not 

Article 5 Parties (i.e., they do not appear 

on an eventual list developed by UNEP), 

the Agency shall delete these countries . 

from appendix E, and rescind any 

authorizations to increase production for 

exports to these countries. 

To date, the Agency has not received 

consumption estimates for many of the 

other developing countries that are 

Party to the Protocol, or have received 

reports that are inconsistent with 

reports to the Secretariat. The Agency 

will continue to work through its 

embassies and the Secretariat to 

determine the per capita consumption of 

controlled substances for all developing 

countries that are Party to the Protocol. 

Additional Information 

1. Executive Order 12291 

Executive Order (E.O.) 12291 requires 

the 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 cost 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 

the United States-based enterprises to 

compete with foreign based enterprises in 

domestic or export markets. 

: EPA determined that its August 12, 

1988, final rule to protect stratospheric 

ozone met with the definition of a major 

rule, and therefore prepared a regulatory 

impact analysis (RIA). Since these 

amendments do not impose any 

significant burdens as defined by E.O. 

12291, the RIA prepared for the final rule 

fulfills the executive order's requirement 

for these proposals. 

2. Paperwork Reduction Act 

The information collection 

requirements contained in the final rule 

published on August 12,1988 (53 FR 

3056) have been approved by the Office 

of Management and Budget (OMB) 

under the provisions of the Paperwork 

Reduction Act, 44 U.S.C. et seq. and 

have been assigned OMB control 

number 2080-0170. 

Send comments regarding the burden 

estimate or any other aspect of this 

collection of information, including 

suggestions for reducing the burden to 

Chief, Information Policy Branch, PM223, U.S. Environmental Protection 

Agency, 401M Street SW., Washington, 

DC 20460 and the Office of Information 

end Regulatory Affairs, Office of 

Management and Budget Paperwork 

Reduction Project (2080-0170), 

Washington, DC 20530, marked 

"Attention: Desk Officer of EPA". 

3. Regulatory.Flexibility Act *-*-

The Regulatory Flexibility Act, 5 

U.S.C. 601-612, requires that Federal 

agencies examine the impacts of their 

regulations on small entities. Under 5 

U.S.C. 604(a), whenever an agency is 

required to publish a general notice of 

proposed rulemaking, it must prepare 

and make available for public comment 

an initial regulatory flexibility analysis 

(RFA). Such an analysis is not required 

if the head of the agency certifies that a 

rule will not have, a significant number 

of small entities, pursuant to 5 U.S.C. 

605(b). EPA prepared an initial RFA in 

support of its final rule, and no 

additional RFA need be prepared for 

these amendments. 

Dated: June 15,1990. 

William K. Reilly, 

Administrator. 

List of Subjects in 40 CFR Part 82 

Stratospheric ozone. 

PART 82—PROTECTION OF 

STRATOSPHERIC OZONE 

1. The Authority citation for part 82 

continues to read as follows: 

Authority: 42 U.S.C. 7457(b). 

2. Part 82 is amended by adding 

appendix E to read as follows: 

Appendix E—Article 5 Parties 

Mexico, Venezuela, Thailand. 

[FR Doc. 90-14523 Filed 6-21-.0; 8:45 am) 

BILLING COOE 6560-SO-M