P.1 

OAR Box 1153 

Prepped by Candice Davis 

Document Number: 

10) FED REG PROTECTION OF OZONE 

6/15/90 

Docket Number: 

A-87-20 

Printed 5/9/2008 11:25:59 AM Sheet 10 of 60 
P.2 

A-87-20 

Friday 

June 15, 1990 

es a 

Environmental 

Protection Agency 

40 CFR Part 82 

Protection of Stratospheric Ozone; Final 

Rule 
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24490 Federal Register / Vol. 55, No. 116 / Friday, June 15, 1990 / Rules and Regulations 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 82 

[FHL-3716-2] 

Protection of Stratospheric Ozone 

AGENCY: Environmental Protection 

Agency. 

ACTION: Final amendment to the final 

rule. 

SUMMARY: Today's notice amends EPA's 

August 12,1988 rule (40 CFR part 82) 

implementing the Montreal Protocol on 

Substances That Deplete the Ozone 

Layer, a treaty to limit the production 

and consumption of chlorofluorocarbons 

and halons. This amendment conforms 

EPA's rule with agreements reached by 

the Parties to the Montreal Protocol 

concerning the implementation of the 

Protocol. This amendment expands the 

definition of exports to include used and 

recycled controlled substances, grants 

additional allowances to any person 

who uses controlled substances as a 

feedstock for other substances, and 

requires producers to maintain records 

of spills or other releases above a de 

minimis level and include these as part 

of production. 

The Agency proposed these 

amendments on July 12,1989 (54 FR 

29353). At that time, EPA also proposed 

an amendment that allowed producers 

of these chemicals to increase their 

production for the purposes of 

"industrial rationalization" and 

suspended § 82.11 of 40 CFR part 82 that 

allowed the United States limited 

increases in its production of controlled 

substances for exports to Parties. The 

Agency published the amendment 

concerning industrial rationalization on 

February 13,1990 (55 FR 5007). 

During its public comment period, 

EPA received comments concerning 

these amendments from eight companies 

and organizations: four chemical 

producers (Racon, Pennwalt, AlliedSignal, and Du Pont); three user 

companies (Vulcan, Ausimont and 

Halocarbon); and one industry 

association (Halogenated Solvents 

Industry Alliance (HSIA)). 

EFFECTIVE DATE: June 15,1990. 

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 St. SW., Washington. 

DC 20460. (202) 475-7497. 

SUPPLEMENTARY INFORMATION: On 

August 12,1980, 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 ozbne 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 productionand 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 of January 1, 

1989. 

The 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 1986 

levels of these activities. Producers 

received potential production 

allowances equal to 10 percent of their 

1986 production levels (15 percent in 

1998 for CFCs). These potential 

production allowances could be 

converted to production allowances to 

replace exports to developing country 

Parties whose per capita consumption of 

these chemicals is less than .3 kg, or 

upon receipt of production rights from 

another Party that has agreed to 

decrease its production by an equal 

amount. 

Today the Agency amends several 

sections of this final rule. These 

amendments are based on agreements 

concerning implementation of the 

Montreal Protocol reached by nations 

that are Parties to the Protocol at their 

first meeting in Helsinki. Finland, during 

the week of May 1,1989. 

The Export of Used or Recycled 

Controlled Substances 

The first amendment concerns the 

final rule's definition of exports. In the 

final rule published in August 1988, EPA 

excluded recycled and used control 

substances

 from the definition of 

exports excluded exports of such 

substances from the reporting 

requirements, and precluded exporting 

companies from claiming additional 

consumption allowances under § 82.10 

and authorization to convert under 

§ 82.11 for exports of such substances. 

The Agency was concerned at that time 

that defining exports to include recycled 

and used controlled substances along 

with virgin controlled substances would 

risk U.S; noncompliance with the 

Protocol. Since the Agency's rule 

defined production to exclude recycled 

controlled substanees, firms could have 

recycled those substances without 

expending production and consumption 

allowances. However, with exports 

defined to include recycled substances, 

when firms exported the recycled 

substances, they could apply for 

authorization to convert potential 

production allowances equal to the 

amount of the recycled substances 

exported. Thus, as a result of exporting 

recycled substances for which no 

production and consumption allowances 

were expended, firms would realize a 

net increase in production allowances 

(up to the 10 or 15 percent limit on 

potential production allowances) and 

consumption allowances. They could 

then use these additional allowances to 

produce or import and sell domestically 

controlled substances in excess of the 

amount of the initial allocations 

authorized; 

In this amendment, the Agency 

expands the definition of exports to 

include recycled or used controlled 

substances in accordance with the 

agreement reached by the Parties in 

Helsinki. The Parties' agreement on the 

definition of exports allows such 

countries to export their used controlled 

substances and then reimport the 

reprocessed or recycled controlled 

substance, expending consumption 

allowances received for exporting the 

chemicals. The Parties stated that 

recycling is an important control option 

to limit the production of additional 

controlled substances and should be 

encouraged wherever possible. Minutes 

to the meeting (Report of the Parties to 

the Montreal Protocol on the Work of 

their First Meeting, May 4,1989), state in 

section II, 11, H, that "importers and 

exporters of bulk used controlled 

substances should be treated and 

recorded in the same manner as virgin 

controlled substances and included in 

the calculation of a Party's consumption 

limits". The Agency believes that the 

U.S. domestic program should be 

consistent with the internationally 

accepted definitions reached by 

agreement of the Parties. In this case, 

the expanded definition of exports 

benefits domestic recycling companies 
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Federal Register / Vol. 55, No. 116 / Friday, June 15, 1990 / Rules and Regulations 24491 

that intend to trade in used and recycled 

controlled substances. 

The Agency further believes that 

defining exports under the U.S. rule to 

include recycled or used controlled 

substances will have no adverse effect 

on stratospheric ozone levels. 

Controlled substances produced, 

recycled and exported all in the same 

control period will not yield a net 

increase in consumption allowances 

since consumption allowances were 

expended and recouped in the same 

control period. Controlled substances 

produced, recycled and exported in 

different control periods will also not 

affect the ozone layer. A controlled 

substance eventually recycled could 

have been released or emitted during 

the control period when it was produced 

and when consumption allowances were 

expended for it. Instead, recycling 

results in the consumption or use (in the 

sense of emission) of a substance being 

transferred from the period it was 

produced to the period it was exported. 

Thus, the net effect on the environment 

would be zero ' since all that occurred 

was an inter-temporal transfer of 

consumption (or emissions) from one 

control period to another. Since the 

change will have no adverse 

environmental«effect, and since the 

Parties to the Protocol have agreed to 

this definition of exports, the Agency 

expands the definition of exports in its 

rule to include used or recycled 

controlled substances. 

Two companies commented on the 

proposed amendment to expand the 

definition of exports to include 

controlled substances that are either 

used or recycled. Vulcan wrote that the 

amendment is unclear as to whether or 

not EPA proposed that recycled and 

used CFCs would be counted against a 

company's consumption allowances. 

The respondent stated that Parties to the 

Protocol intended that recycled CFCs 

should not be counted against a 

country's consumption allowance and 

that, therefore, EPA should reflect 

that intent in its final rule. 

The amendment establishes that 

recycled and used CFCs are treated in 

the same manner as virgin CFCs for 

purposes of calculating a company's 

level of consumption allowances. In 

short, recycled and used controlled 

substances that a company imports are 

counted against that company'3 

consumption allov/ances, while recycled 

and used controlled substances that a 

company exports are the basis for 

1

 There is a chance for increased production up to 

tha 10 percent cap, for the export of used or 

recycled controlled substances produced prior to 

July 1.1989. 

obtaining consumption allowances from 

EPA. Used controlled substances that 

are recovered within the United States 

and then recycled domestically are not 

affected by this rule. 

Allied-Signal commented that only 50 

percent of used CFCs imported into the 

United States can be recycled into reusable CFCs. Such a discrepancy would 

discourage U.S. recyclers from importing 

used materials, and thus hinder other 

countries in their recycling of controlled 

substances. Allied-Signal suggested that 

an importer of used controlled 

substances should need consumption 

allowances equivalent to only one-half 

of the calculated level of used CFCs to 

import used controlled substances. 

However, EPA has received no 

documentation supporting the claim that 

only 50 percent of used CFCs can be 

recycled. The percentage of the 

controlled substance reclaimed depends 

on the quality of the used controlled 

substance and the process used for 

reclamation or distillation. 

Allowances for the Consumption of 

Controlled Substances as Feedstock 

The Agency also amends the final rule 

to allow persons who consume or 

transform purchased controlled 

substances as feedstock for other 

substances to claim consumption and 

production allowances equal to the 

allowances expended for the production 

or importation of the consumed or 

transformed controlled substance. 

Previously, only persons who produce 

and consume the controlled substance in 

the production of other substances could 

exempt the amount of consumed 

controlled substances from the 

production and consumption limits set 

by the final rule. 

The Agency stated in its final rule 

published on August 12,1988, that 

tracking controlled substances produced 

and transformed by different persons 

would be administratively burdensome 

and present verification problems for 

compliance or enforcement proceedings. 

Furthermore, the Agency could not 

resolve at the time whether the person 

who produced the controlled substance 

or the person who transformed the 

controlled substance should receive the 

credit. This issue wa3 even more 

difficult to resolve where 

transformations involve controlled 

substances produced in another country. 

In March 1988, technical advisors to the 

Protocol meeting in Nairobi could not 

agree on which country should be 

granted credits in the case of 

transformation of feedstocks traded 

between countries. 

At their meeting in Helsinki in May of 

1989, the Parties resolved this issue and 

agreed that a Party could exclude from 

its limits any controlled substance, 

either imported or manufactured 

domestically, that the Party entirely uses 

as feedstock. Minutes to the meeting 

(Report of the Parties on the Work of 

their First Meeting, May 4,1989), state in 

Paragraph 58 that it is the Parties' 

understanding "that controlled 

substances used as chemical feedstocks 

in the manufacture of other chemicals 

should be excluded from the calculation 

of 'controlled substances produced'." 

Due to this agreement, the Agency 

amends the final rule to allow 

companies that use controlled 

substances as feedstock to claim 

allowances equal to the allowances 

expended to import or to produce these 

substances, regardless of who originally 

produced or imported the controlled 

substance. A company that imports or 

purchases from an importer could 

request consumption allowances to 

replace the consumption allowances 

that were expended for the import of 

consumed controlled substances. A 

company that purchases controlled 

substances from a producer could 

request both production and 

consumption allowances to replace 

those allowances expended in the 

production of the consumed controlled 

substances. 

The final rule already provides that 

producers of controlled substances may 

subtract from their production and 

consumption the calculated level of 

controlled substances produced by that 

company that are consumed as 

feedstocks by that company. In 

accordance with the decision that 

purchasers of controlled substances 

receive allowances for controlled 

substances that are consumed, the 

Agency will allow a producer of 

controlled substances who consumes 

controlled substances produced by a 

different person to subtract that level of 

controlled substance from its calculated 

levels of production and consumption. 

The Agency understands that 

consumption of a feedstock requires the 

alteration of the molecular structure of 

the controlled substance resulting in a 

different chemical. This will disallow 

claims of consumption in which a 

controlled substance is merely blended 

with other substances resulting in a 

stable mixture of the original controlled 

substance with other substances. 

Vulcan and the Halogenated Solvents 

Industry Alliance supported the 

proposed amendment to allow credit for 

controlled substances which are 

consumed in the production of other 

substances. 
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24492 Federal Register / Vol. 55, No. 116 / Friday, June 15, 1990 / Rules an d Regulations 

Two companies commented on the 

administrative burden of complying with 

the proposed regulation. Both 

Halocarbon (directly and through legal 

counsel) and Ausimont commented that 

EPA's proposed rule regarding the 

transformation of controlled substances 

was "cumbersome" because a company 

must transform the controlled substance 

before it is granted additional 

allowances. Halocarbon stated that the 

Protocol does not require any elaborate 

application and documentation 

procedure of such a transformation. 

Both companies requested that EPA 

grant additional allowances prior to the 

actual consumption of the controlled 

substances. Halocarbon requested that 

it receive the treatment that is believed 

was accorded to producers, that is, that 

producers need not consume controlled 

substances before exempting their 

production from the regulatory limits. 

In response, the Agency states that in 

the case of producers and nonproducers, 

credit for transformation is available 

only after the transformation has 

occurred, not prior to the 

transformation. The Agency believes 

that the environment would be at risk if 

credit for transformation were extended 

prior to the transformation since 

transformation might not occur after all. 

Halocarbon noted that EPA could 

inspect plants on a routine basis to 

ensure compliance, but the Agency 

notes that if a violation does occur it 

may be difficult to remedy the 

environmental effects. For this reason, 

EPA insists that transformation occur 

before the Agency will grant production 

and/or consumption allowances to the 

transforming company. 

Furthermore, the Agency notes that 

this administrative approach of granting 

allowances after transformation is 

consistent with other procedures for 

granting additional allowances. 

Exporters must prove to EPA that an 

export of controlled substances has 

occurred before the Agency will grant 

additional consumption allowances 

under 40 CFR 82.10 and additional 

production allowances under 40 CFR 

82.11. Contrary to Halocarbon's 

comments, producers can exempt the 

production of controlled substances 

from their reported production only after 

the transformation ha3 occurred under 

40 CFR 82.3 and 82.13. 

Ausimont and Halocarbon wrote that 

a company that does not have an initial 

quota from which to draw must pay a 

high price to obtain allowances 

(assuming such allowances are 

available for trade), while Halocarbon 

further stated that producing companies 

would not be willing to sell CFCs for 

transformation unless they were given 

additional allowances in advance. Both 

Ausimont and Halocarbon suggested 

that the proposed amendment provide 

for some kind of transformation 

allowances allocated initially to 

companies that intend to transform 

controlled substances. 

The Agency believes that industry's 

comments do not reflect the likely 

dynamics of the market. There is no 

reason to believe that producers would 

not sell controlled substances for 

transformation purposes without first 

being provided additional allowances, 

but would sell controlled substances for 

other purposes without being provided 

such allowances. In a free market 

producers are most likely to sell 

controlled substances to whomever will 

pay the market-clearing price, regardless 

of their intended use for the chemicals. 

Indeed, given that transformation will 

yield additional production allowances, 

producers and transformers could 

establish a contractual relationship 

whereby the transforming company 

would agree to transfer allowances to 

the producer obtained for the 

transformation in exchange for a below 

market price for the controlled 

substance to be transformed. If 

companies are unable to establish such 

a relationship, then transforming 

companies may initially need to pay the 

market price for controlled substances. 

However, once the transformers have 

consumed these chemicals and obtained 

allowances from EPA, the companies 

could sell the allowances to producers, 

recouping part of the purchase price of 

the CFCs. In fact, once a company 

obtains allowances for transformation, 

the company may trade these 

allowances to any importer or producer 

in exchange for controlled substances. 

Both respondents commented that 

even if the company can find another 

company willing to sell or trade, there 

remains a timing problem in that the 

company would have to complete 

buying domestically or importing, 

transforming and applying for additional 

allowances, all within the same control 

period. 

The Agency emphasizes that the 

timing and procedure for purchasing and 

transforming controlled substances and 

the subsequent submission of the 

request for allowances to EPA and their 

trade are business decisions, and that 

the rule provides some flexibility for 

industry to plan their production 

schedules accordingly. The Agency will 

grant additional allowances for 

transformation only for the control 

period in which transformation occurs. 

Indeed, companies may find this limiting 

if they intend to transform controlled 

substances during the last days of the 

control period when there is insufficient 

time to request, receive and trade 

allowances to replace those consumed 

chemicals. However, the rule allows 

companies to purchase controlled 

substances in one control period that 

could be transformed in the next control 

period. In this scenario, the Agency 

would grant additional allowances in 

the second contrp.1 period for 

transformed controlled substances 

produced in the first. The Agency 

believes that companies could plan 

accordingly to ensure sufficient time to 

obtain additional allowances to replace 

those controlled substances consumed 

in the production of other chemicals. 

Exporters who desire additional 

consumption allowances under 40 CFR 

82.10 also face the same timing problem. 

Halocarbon and Ausimont further 

commented that the proposed 

amendment would inhibit or even 

prohibit the use of CFC feedstocks to 

make CFC substitutes by non-producers 

of CFCs. Commenters were concerned 

that producers who are developing 

substitutes may exclude other 

manufacturers from this market by 

depriving competing companies from 

controlled substance feedstocks. 

However, die Agency is not aware of 

how the rule will inhibit the use of CFC 

feedstock to make CFC substitutes by 

non-producers. If the commenters 

believe that producers will deny 

feedstock to non-producers to prevent 

competition, the Agency notes that such 

a situation would exist absent this rule 

regarding credit for transformation of 

controlled substances. 

Both companies proposed procedures 

to grant allowances prior to 

transformation. Halocarbon 

recommended that CFCs produced for 

feedstock use be excluded from the 

allocated production quotas for 

controlled substances. Specifically. 

Halocarbon proposed that a user of 

CFCs for feedstocks apply to EPA for a 

document certifying that it may 

purchase controlled substances which 

will not count against a producer's 

allowances. Halocarbon suggests Uiat 

EPA accept applications from nonproducing feedstock users for 

"authority" to buy limited quantities of 

controlled substances "outside of 

allocations." The amount would be 

specified by EPA as "an acceptable de 

minimis" (Halocarbon recommends a de 

minimis level of two million kilograms). 

Ausimont suggested that such 

transformation allowances would be 

issued to a specific company based on 

information of intended transformation, 
P.6 

would be non-transferable, and would 

be renewed annually. Producers or 

importers could then apply to EPA for 

transformation credits once 

transformers had bought controlled 

substances from them with 

transformation allowances. 

The Agency again states that it cannot 

grant allowances to companies for 

controlled substances to be transformed 

at a later date. Such an approach'would 

be administratively impractical; how, for 

instance, would the Agency determine 

whether any particular company should 

be granted allowances to buy controlled 

substances "outside allocation" and in 

what amounts? It is not clear that the 

Agency could or should rely on a 

company's historical transformation rate 

or production plans to grant such 

authority; use of historical rates could 

preclude new entrants in the market and 

hot reflect current demand, and 

production plans do not provide 

assurances that what is produced will 

all be sold. As noted above, granting 

credit before transformation occurred 

would be inconsistent with other 

provisions of the rule granting 

allowances and increases the likelihood 

of potential violation of die Montreal 

Protocol. 

Halocarbon questioned the need for 

the Agency to define the transformation 

component of the definition of 

production to cover only controlled 

substances that have been wholly used 

and consumed. While Halocarbon 

recognized the importance of preventing 

overproduction under the Protocol, 

Halocarbon suggested that this is not 

adequate justification for the definition, 

based upon EPA's "ample investigative 

and enforcement powers." 

The Agency believes the prevention of 

any meaningful risk of overproduction to 

be more than sufficient justification for 

the amendment. In addition, it would be 

administratively cumbersome to grant 

pre-transformation allowances, and then 

audit transformers to assure that 

transformation occurred. 

In another proposed application 

scheme, Halocarbon recommended that 

companies file a document which gives 

a prototype disclosure of its repetitive 

process, eliminating numerous repetitive 

filings which are duplicative in all 

respects except dates and amounts. 

Although the Agency believes that such 

a document providing a prototype 

disclosure of its repetitive process is one 

alternative, EPA believes that the 

required information is not excessive, 

and that the affected company can 

easily generate duplicative filings using 

word processors. 

Halocarbon also commented that the 

proposal failed to specify the period 

during which the EPA must act on 

requests for allowances and to provide 

an appeal process similar to the one 

required under 40 CFR 82.12 for 

transfers. In response, the Agency 

intends to process such reports promptly 

upon their receipt. However, the Agency 

emphasizes that the review of transfer 

requests under § 82.12 and the review of 

a request for additional allowances are 

not the same. To review transfer 

requests under §82.12, the Agency 

reviews internal EPA records to 

determine any outstanding compliance 

issues and whether sufficient 

allowances exist. To approve additional 

allowances whether for transformation 

or for exports, the Agency must review 

business documents that may,be 

incomplete or incorrect, or. may have 

numerous transactions. Such review 

does require substantial time if tliere are 

meaningful problems with the 

submission. However, the Agency 

believes that an appeal process may 

benefit companies who are denied 

allowances for compliance issues, and 

the Agency has established such a. 

process. 

If the Agency initially disallows a . 

request for allowances for the 

transformation of controlled substances, 

the disallowance may be appealed to 

the Director, Office of Atmospheric and 

Indoor Air Programs, Office of Air and 

Radiation, within 10 days of the 

disallowance. 

Spills and Ventings 

In establishing die baseline for the 

allocation of the 1986 production 

allowances, die Agency requested diat 

companies report Uieir production levels 

for 1986. Since the Protocol sets limits on 

production (and consumption) as a 

means of limiting stratospheric ozone 

depletion, die Agency intended diat 

production data include all controlled 

substances produced, whedier sold or 

spilled/vented. Bodi spilled and sold 

controlled substances has equal impacts 

on ozone depletion. At least one 

company confirmed with EPA before 

submitting its report that production 

data should include spills. 

However, EPA has since learned that 

some producers did not include spills in 

dieir reported production levels, instead 

counting only that production actually 

sold plus change in inventories. These 

companies have commented in this 

rulemaking lhat since they received no 

production allowance for their 1986 

spills, they should not have spills 

counted against diem in the future. 

First, it should be noted that die 

Agency distinguishes between spills or 

ventings and fugitive emissions. The 

final guidance document for the 

stratospheric ozone protection program 

defines fugitive emissions as "emissions 

that occur in the ordinary course of the 

production process as a result of leaks 

from flanges or valves." It is not the 

intent of EPA to include such emissions 

as spills. As noted by one producer, 

fugitive emission release estimates are 

based on the best engineering practices 

available and are difficult to quantify 

accurately. Because such emission, 

releases ar_e..very small in volume and 

impractical to quantify, EPA decided 

that they need not be reported. 

EPA regrets tiiat several companies 

failed to include spilled controlled 

substances in their reported 1986 

production volumes as noted in tiieir 

comments. The dictionary definition of 

"production" is diat which is made or 

the total output of a company or 

industry; the definition does'not exclude 

from production that which is not sold. 

Moreover, given tiie Protocol's approach 

of limiting emissions of controlled 

substances by limiting production (as 

well as consumption), the need for 

reported production to include both sold 

and spilled substances could and should 

have been inferred. 

EPA has decided against reopening 

companies' reported 1986 production 

levels to allow companies that failed to 

report spills to obtain an increase in 

their production allowances. The 

Agency afforded companies ample 

opportunity between its December 1937 

request for production data and its 

August 1988 final rule allocating 

production allowances to provide 

complete and accurate data on which to 

base their production allowance 

allocations. In addition, the United 

States has already complied with Article 

7 of the Protocol which required that 

each Party report its total 1988 

production to the Protocol Secretariat by 

April 1989, and it is not clear that the 

United States could change its report in 

order to increase its allowable 

production after the first control period 

(July 1,1989 to June 30,1990) has begun. 

At the same time, EPA cannot permit 

these companies to exclude spills from 

their reported production in the future. 

As noted above, spilled controlled 

substances are no different from sold 

controlled substances in their ability to 

deplete ozone. Excluding spills could 

result in the U.S. exceeding its 

allocation under the Protocol, and 

thereby jeopardize compliance with the 

Protocol. The Agency recognizes that 

producers have an economic incentive 

to minimize the number and volume of 

spills. However, excluding spills from 

reported production could allow 

producers who produced in excess of 
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24494 Federal Register / Vol. 55, No. 116 / Friday, June 15, 1990 / Rules and Regulations -

their production limits to reduce 

reported production by venting or 

spilling the excess amounts. 

EPA, however, has decided not to 

require reporting of de minimis spills, 

i.e., that level of spills that under routine 

operating procedures cannot be detected 

in time to avoid and that cannot, as a 

result, be accurately quantified. The 

Agency has set the de minimis level of 

release at 100 pounds (45 kilograms) per 

spill. This de minimis level is based on 

information received from public 

comments and by independent EPA 

data. This information indicates that 

minor leaks can be reasonably 

inspected and resolved prior to the 

release of 100 pounds of controlled 

substance. Additionally, data received 

by EPA indicates that producers can 

readily measure and record quantities of 

controlled substances spilled or released 

to at least 100 pounds (in fact, some data 

indicates the ability to estimate 

quantities released down to less than 10 

pounds). The selection of a 100 pound 

de-minimis level effectively exempts 

spills which EPA would consider to be 

ordinary leaks for the purposes of this 

regulation. 

The Agency notes the wide range of 

de minimis levels suggested by 

respondents. One producer suggested a 

de minimis level of 3,000 pounds, stating 

that their current reported production 

already reflected losses under this 

amount. Others suggested a de minimis 

level of 5,000 pounds for an episodic 

spill over a 24-hour period based on the 

recordkeeping requirement under 

Comprehensive Environmental 

Response Compensation Liability Act 

(CERCLA) for Reportable Quantities. 

The Agency believes, however, that the 

approach taken to de minimis spills 

under CERCLA is not relevant to this 

rule. The de minimis level of 5,000 

pounds set under the Superfund Program 

was based on such chemical properties 

as toxicity, carcinogenicity, and 

reactivity, but not on ozone depletion 

potential. While releases of 5,000 

pounds per day may not pose a 

significant toxicity hazard, it may be 

significant in terms of ozone depletion. 

Under such a level, one company could 

spill, in theory, a calculated level of up 

to 828,321 kilograms of controlled 

substances over a single control period 

without it counting toward their 

production. However no company 

seeking a profit would presently allow 

this kind of spill rate to persist. 

EPA does, however, acknowledge that 

ventings or spills of greater than 100 

pounds may occur infrequently at well 

operated plants as a result of 

overpressurized equipment. Therefore, 

EPA will excuse two ventings or spills of 

controlled substances per plant over the 

de-minimis level of 100 pounds, for a 

given control period, if these individual 

ventings or spills are less than 1000 

pounds each. The EPA has based this 

production exemption on information 

reported by one large producing plant 

that indicated that spills greater than 

100 pounds were infrequent and most 

likely average less than two a year, and 

that spills greater than 1000 pounds 

were rare. In addition, this exempted 

volume represents much less than 1 

percent of each producer's annual 

production. 

Thus, based upon the available 

evidence in the rulemaking record, a deminimis level is set at 100 pounds (45 

kilograms) per spill. As clarified by 

amendment of the recordkeeping 

requirements at § 82.13, all spills or 

releases over 100 pounds must be 

recorded. EPA, by amendment to the 

definition of production, is clarifying 

that spills or ventings over this 100 

pounds de-minimis level will count 

against allowable production (and 

therefore consumption). However, as 

specified in the amended definition of 

production, each production plant is 

allowed two separate ventings or spills 

of less than 1000 pounds each, in each 

given control period, which will not be 

counted as production. 

Destruction 

Finally, companies commented on 

destruction technologies for controlled 

substances. Vulcan wrote that EPA 

should consider amending the regulation 

to incorporate the destruction of 

controlled substances by the facility 

producing a controlled substance. The 

respondent stated that incineration 

would be applicable technology for the 

destruction of CFCs. The Haiogenated 

Solvents Industry Alliance also 

commented on the incineration of CFCs 

and suggested that EPA encourage 

credit for destroyed controlled 

substances. 

In response, the Agency notes under 

the Protocol that the Parties must 

approve destruction technologies before 

a Party may claim credit for destroying 

controlled substances. The Parties to the 

Montreal Protocol have not as yet 

decided on the nature of destruction 

technology. The Agency must thus await 

the decisions of the Parties. 

Final Amendment 

Today EPA modifies four sections of 

the final regulation. The Agency amends 

§ 82.3(h) which defines the exports of 

controlled substances. The final rule is 

amended to include recycled and used 

control substances in the definition of 

requirements, and pennit exporting 

companies to claim additional 

consumption allowances under S 82.10 

and authorization to convert under 

§ 82.11 for exports of such substances. 

Section 82.10(a) was also modified to 

delete the phrase "(other than recycled 

or used controlled substances)". The 

deletion of this phase provides 

consistent regulatory language 

throughout the rule to allow exporters to 

claim consumption allowances for the 

export of used or recycled controlled 

substances. 

Since exports during the current 

control period prior to this amendment 

may meet the conditions of this 

amendment, EPA will grant additional 

consumption allowances for past 

exports of used or recycled controlled 

substances. The Agency believes that 

firms that have met the conditions of 

today's amendment should be permitted, 

as otiier Parties' firms already have, 

additional consumption allowances 

under the terms of the Protocol. 

The Agency also amends the final rule 

to allow persons who consume or 

transform purchased controlled 

substances as feedstock for other 

substances to claim an allowance credit 

equal to the allowances expended for 

the production or importation of the 

transformed controlled substances 

(§§ 82.9(e) and 82.10(c)). 

Persons that use and fully consume 

controlled substances as feedstock can 

claim allowance credits equal to the 

allowances that were expended to either 

import or produce these substances, 

regardless of who originally produced or 

imported the controlled substance. To 

receive these allowances, a person must 

report the name, quantity and calculated 

level of controlled substance entirely 

consumed in the manufacture of another 

substance, the name of the resulting 

product of the transformation, the 

quantity of the product transformed, and 

indicate that the product is used 

commercially. The person must also 

submit a copy of the invoice or receipt 

documenting the purchase of the 

controlled substances that were 

transformed and such other information 

as may be necessary to trace the origin 

of the controlled substance. The Agency 

requires such information to determine 

whether production and consumption 

allowances were expended for the 

domestic use of the controlled 

substance, and to verify that the 

controlled substance was transformed 

into another substance rather than 

destroyed. Persons who do request 

additional consumption and production 

allowances must maintain dated records 

of the type and quantity of the 
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Fswfiesol Rsgisteir / Vol 55, No. 118 / Friday, June 15, 1990 / Rules and Regulation's 

controlled substance transformed, the 

quantity of ihe resulting product, and 

any shipping records that verify, the sale 

of the resulting product (§ 82.13(h)). 

After reviewing this information, the 

Agency will issue st notice granting 

additional consumption allowances for 

consumed controlled substances that 

were imported, or additional production . 

and consumption allowances for 

consumption of controlled substances 

that were produced domestically. 

Granted allowances will equal tiie 

calculated level of the controlled 

substance entirely consumed, and will 

only be valid for the control period in 

which the consumption occurred. Such 

allowances will entitle the holder to 

either produce or import additional 

controlled substances arid may be 

traded to other persons under 40 CFR 

62.12. Due to comments requesting an 

appeal process for disallowed requests 

for additional allowances for 

transformation, the Agency has included 

a 10-day appeal procedure by which 

companies can petition the Director of 

the Office of Atmospheric and Indoor 

Air Programs to reconsider the 

disallowance. 

An additional recordkeeping 

requirement for spills equal to or greater 

than 100 pounds is required under 

§ 82.13(f)(2)(vii). The definition of 

production in % 62-3 is amended to 

include these spills; however, the 

industry may exempt two separate spills 

or ventings, each under 1000 pounds, 

from reporting production at each plant 

The current wording of the 

recordkeeping and reporting 

requirements at % 82.13 (f)(2)(h) and 

(f)(3)(i) is ahead? broad enough to apply 

to all producers, whether or not the 

controlled substance used as feedstock 

was manufactured by that person. 

Therefore, in order to qualify for credit 

for the consumption of feedstocks. -

producers need to keep the records and 

make the reports required by 

g 82.13(f)(2)(ii} and g 82.13(f)(3)(i) as 

well as g 82.13(h). 

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 

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 the United States-based 

enterprises to compete with foreign 

based enterprises ht 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 amendments. 

2. Papsmork SedusctioKS Act 

Changes to the information 

requirements as amended in today's 

notice have been submitted for approval 

to the Office of Management and Budget 

(OMB) under the Paperwork Reduction 

Act, 44 U.S.C. 3501 et seq. An 

Information Collection Request 

document has been prepared by EPA 

(ICR No. 1432.04) and a copy may be 

obtained by writing Sandy Farmer, 

Information Policy Branch; EPA; 401M 

St. SW. (PM-223); Washington. DC 20460 

or by calling (202) 382-2468. 

Public reporting burden for this 

collection of information Is estimated to 

increase an average of 3 hours per 

response, including time for reviewing 

instructions, searching existing data 

sources, gathering and maintaining the 

data needed, and completing and 

reviewing the collection of information. 

Send comments regarding the burden 

estimate or any other aspect of this 

collection of information, including 

suggestions for reducing this burden to 

Chief, Information PoKcy Branch, PM223, US. Environmental Protection 

Agency, 401M St SW, Washington, DC 

20460; and to the Office of Information 

and Regulatory Affairs, Paperwork 

Reduction Project (2080-0170), Office of 

Management and Budget, Washington, 

DC 20503, marked "Attention: Desk 

Officer for EPA." 

8. Regulatory Flexibility Act 

The Regulatory Flexibility Act, 5 

U.S.C. 801-812. 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 economic 

impact on a substantial 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 was 

prepared for these amendments. 

Dated: June 7,1980. 

WSHani CC RefflBy, 

Administrator. 

For reasons set forth in the preamble, 

the Agency proposes to amend 40 CFR 

part 82 as follows: 

1. The authority citation for part 82 

continues to read as follows: 

Authority: 42 U5.C 7457(b). 

2. Amend § 82.3 to revise paragraphs 

(h) and (s) to read as follows: 

§82.3 Dsflnttions. 

ft • o o o o 

(h) 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. 

O O O O 0 

(s) Production means the manufacture 

* * * by the same person of other 

chemicals. Production includes spilling 

or venting of controlled substances 

equal to or in excess of one hundred 

pounds per event; however each 

production plant is allowed two spills or 

ventings of less than 1000 pounds, 

within a given control period. 

0 <, _> o _> 

3. Section 82.0 is amended by adding 

paragraph (e) to read as follows: 

§ 82.S AwaiJatolUiy at productteft 

allowancoo In addition to (baseline 

production allowances. 

0 O 0 O. O 

(e) A person who does not produce 

controlled substances may obtain 

production allowances equal to the 

calculated level of controlled substances 

produced fn the United States that the 

person used and entirely consumed in 

the manufacture of other chemicals 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 g 82.10(c). 

(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 calculated 

level of controlled substance used and 

entirely consumed in the manufacture of 

another chemical; 

(iii) A copy of the invoice or receipt 

documenting the sale from the producer 

of the controlled substance to the 

person; and 
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24496 Federal Register / Vol. 55, No. 116 / Friday, June 15, 1990 / Rules and Regulations 

(iv) The name, quantity and 

verification of the commercial use of the 

resulting chemical. 

(2) The Administrator's designated 

representative will review the 

information and documentation 

submitted under paragraph (1) of this 

section, and will assess the quantity of 

controlled substance that the 

documentation and information verifies 

were used and entirely consumed in the 

manufacture of other chemicals. The 

Administrator's designated 

representative will issue the person 

production allowances equivalent to the 

calculated level of controlled substances 

that the Administrator's designated 

representative determined were 

consumed. The grant of allowances will 

be effective on the date that the notice is 

issued. 

(3) If the Administrator's designated 

representative determines that the 

request for production allowances does 

not satisfactorily meet the requirements 

stated in paragraph (e) of this section, 

the Administrator's designated 

representative will issue a note 

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 the 

disallowance or grant an allowance, as 

he finds appropriate in light of the 

available evidence. 

4. Amend § 82.10 by revising 

paragraph (a) and adding paragraph (c) 

to read as follows: 

§ 82.10 Availability of consumption 

allowances In addition to baseline 

consumption allowances. 

(a) Except as limited by paragraph (b) 

of this section, any person may obtain, 

in accordance with the provisions of this 

subsection, consumption allowances 

equivalent to the calculated level of 

controlled substances that the person 

has exported from the United States and 

its territories. 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. 

**** * 

(c) A person who does not produce 

controlled substances may obtain 

consumption allowances equal to the 

calculated level of a controlled 

substance either produced in or -

imported into the United States that the 

person used and entirely consumed in 

the manufacture of other chemicals 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, quantity and calculated 

level of controlled substance used and 

entirely consumed in the manufacture of 

another chemical; 

(iii) A copy of the invoice or receipt 

documenting the sale from the producer 

or importer of the controlled substance 

to the person; 

(iv) The name, quantity and 

verification of the commercial use of the 

resulting chemical. 

(2) The Administrator's designated 

representative will review the 

information and documentation 

submitted under paragraph (c) of this 

section, and will assess the quantity of 

controlled substance that the 

documentation and information verifies 

were used and entirely consumed in the 

manufacture of other chemicals. The 

Administrator's designated 

representative will issue the person 

consumption allowances equivalent to 

the calculated level of controlled 

substances that the Administrator's 

designated representative determined 

were consumed. The grant of 

allowances will be effective on the date 

that the notice is issued. 

(3) If the Administrator's designated 

representative determines that the 

request for consumption allowances 

does not satisfactorily meet the 

requirements stated in paragraph (c) of 

this section, the Administrator's 

designated representative will issue a 

note 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 tentivday after notification, 

the disallowance will be final on that 

day. 

5. Amend { 82.13 by adding 

paragraphs (f)(2) (vii) and (h) to read as 

follows: 

{ 82.13 Recordkeeping and reporting 

requirements. 

* • , •• * • * • 

m-v* r • 

(2) • • / 

(Vii) Records of the date, the 

controlled substance, and the estimated 

. quantity of any spill or release of a 

controlled substance that equals or 

exceeds 100 pounds. 

(h) Every person who has requested 

additional production allowances under 

§ 82.9(e) or consumption allowances 

under $ 82.10(c), or producers who 

purchase controlled substances used or 

consumed as feedstock for other 

substances must maintain the following: 

(1) dated records of the quantity and 

calculated level of controlled substance 

used and entirely consumed in the 

manufacture of another chemical; 

(2) copies of the invoices or receipts 

documenting the sale from the producer 

or importer of the controlled substance 

to the person; 

(3) dated records of the names, 

commercial use and quantities of the 

resulting chemical(s); and . 

(4) dated records of shipments to 

purchasers of the resulting chemical(s). 

[FR Doc. 90-13849 Filed 6-14-90; 8:45 am] 

WLUNO CODt 8560-SO-M