[Federal Register Volume 65, Number 195 (Friday, October 6, 2000)]
[Proposed Rules]
[Pages 59783-59791]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-25745]



[[Page 59783]]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 82

[FRL-6881-8]
RIN 2060-AJ33


Protection of Stratospheric Ozone: Allocation of Essential Use 
Allowances for Calendar Year 2001

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of proposed rulemaking.

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SUMMARY: With this action, EPA is proposing to allocate essential-use 
allowances for stratospheric ozone depleting substances for the year 
2001 control period. EPA allocates essential use allowances to an 
applicant for exempted production or import of a specific quantity of 
class I ozone depleting substances (ODS) solely for the designated 
essential purpose. Essential use allowances permit a person to obtain 
controlled ODS as an exemption to the January 1, 1996 regulatory phase-
out of production and import of these substances. Today, EPA is 
proposing essential-use allowances (EUAs) for the production and/or 
import of ODSs for use in medical devices and for use in the Space 
Shuttle Rockets and Titan Rockets for calendar year 2001. EPA is also 
proposing a regulatory change which would allow EUAs for CFCs to be 
transferred among essential use recipients.

DATES: Written comments on this proposed rule must be received on or 
before November 6, 2000, unless a public hearing is requested. Comments 
must then be received on or before 30 days following the public 
hearing. Any party requesting a public hearing must notify the 
Stratospheric Ozone Protection Hotline listed below by 5 p.m. Eastern 
Standard Time on October 16, 2000. If a hearing is held, EPA will 
publish a document in the Federal Register announcing the hearing 
information. Inquiries regarding a public hearing should be directed to 
the Stratospheric Ozone Protection Hotline at 1-800-269-1996.

ADDRESSES: Comments on this rulemaking should be submitted to: Erin 
Birgfeld, Essential Use Program Manager, U.S. Environmental Protection 
Agency (6205J), 1200 Pennsylvania Avenue, NW., Washington, DC 20460. 
All comments will be filed in EPA Air docket number A-93-39. Comments 
that contain business confidential information should be submitted in 
two versions, one clearly marked ``Public'' to be filed in the docket, 
and the other marked ``Confidential'' to be reviewed by authorized 
government personnel only.
    Materials relevant to this rulemaking are contained in Docket No. 
A-93-39. The Docket is located in Waterside Mall Room M-1500, 401 M 
Street, SW., Washington, DC 20460. The materials may be inspected from 
8 a.m. until 4 p.m. Monday through Friday. A reasonable fee may be 
charged by EPA for copying docket materials.

FOR FURTHER INFORMATION CONTACT: The Stratospheric Ozone Protection 
Hotline at 1-800-296-1996 or Erin Birgfeld, U.S. Environmental 
Protection Agency, Stratospheric Protection Division, Office of 
Atmospheric Programs, 6205J, 1200 Pennsylvania Avenue, Washington, DC 
20460; 202-564-9079.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
II. Allocation Process for CFCs for Use in Medical Devices for the 
Year 2001
III. Allocation of Essential Use Allowances for Calendar Year 2001
IV. Proposed Changes to 82.12 Allowing Transfer of EUAs for CFCs 
Among Essential Use Allowance Holders
V. Administrative Requirements

I. Background

    The Montreal Protocol on Substances that Deplete the Ozone Layer 
(Protocol) is the international agreement to reduce and eventually 
eliminate production and consumption of all stratospheric ozone 
depleting substances. (``Consumption'' is defined as the amount of a 
substance produced in the United States, plus the amount imported, 
minus the amount exported to Parties to the Montreal Protocol.) The 
elimination of production and consumption is accomplished through 
adherence to phase-out schedules for the production and consumption of 
specific ODSs including chlorofluorocarbons (CFCs), halons, carbon 
tetrachloride, methyl chloroform, hydrochlorofluorocarbons, and methyl 
bromide. As of January 1996, production and import of class I ODSs were 
phased out in all developed countries, including the United States. 
However, the Protocol and the Clean Air Act (CAA or Act) provide 
exemptions which allow for the continued import and/or production of 
class I ODS for specific uses. Under the Montreal Protocol, exemptions 
are granted for uses that are determined by the Parties to be 
``essential.'' Decision IV/25, taken in 1992, established criteria for 
determining whether a specific use should be approved as essential, and 
set forth the international process for making determinations of 
essentiality. The criteria for an essential use as set forth in 
Decision IV/25 are the following:
    ``(1) that a use of a controlled substance should qualify as 
`essential' only if:
    (i) it is necessary for the health, safety or is critical for the 
functioning of society (encompassing cultural and intellectual 
aspects); and
    (ii) there are no available technically and economically feasible 
alternatives or substitutes that are acceptable from the standpoint of 
environment and health;
    (2) that production and consumption, if any, of a controlled 
substance for essential uses should be permitted only if:
    (i) all economically feasible steps have been taken to minimize the 
essential use and any associated emission of the controlled substance; 
and
    (ii) the controlled substance is not available in sufficient 
quantity and quality from existing stocks of banked or recycled 
controlled substances, also bearing in mind the developing countries' 
need for controlled substances.''
    The procedure set out by Decision IV/25 first calls for individual 
Parties to nominate essential uses. The Protocol's Technology and 
Economic Assessment Panel (TEAP or the Panel) evaluates the nominated 
essential uses and makes recommendations to the Protocol Parties. The 
Parties make the final decisions on essential use nominations at their 
annual meeting.
    The CAA provides exemptions to the phase-out of class I ODSs for 
which these controlled substances may continue to be produced and/or 
imported. EPA is responsible for allocating essential use allowances at 
the domestic level through rulemaking in accordance with provisions in 
the CAA. Today's action proposes to allocate essential use allowances 
for the use of CFCs in metered dose inhalers (MDIs), and methyl 
chloroform for use in the Space Shuttle and Titan Rocket solid rocket 
motor assemblies for calendar year 2001. Today's action also proposes 
changes to regulations at 40 CFR 82.12 which would allow transfer of 
CFC allowances among MDI manufacturers that hold EUAs.

What Was the International Procedure for Approving Essential Use 
Exemptions for the Year 2001?

    The international process for nominating and approving essential 
use allowances for the year 2001 occurred in the same way as in prior 
years. The companies in Table III submitted

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applications either on their own or as a part of the International 
Pharmaceutical Aerosol Consortium (IPAC) requesting class I controlled 
substances for essential uses in response to the August 10,1998 Federal 
Register notice (63 FR 42629). Their applications requested exemptions 
for the production and import of specific quantities of certain class I 
controlled substances after the phase-out, and provided information in 
accordance with the criteria set forth in Decision IV/25 of the 
Protocol and the procedures outlined in the ``1997 Handbook on 
Essential Use Nominations.'' EPA reviewed the applications and 
nominated these uses to the Protocol Secretariat for consideration by 
the Technical and Economic Assessment Panel (TEAP) and its Technical 
Options Committees (TOCs). MDI producers requested a total of 3,101 
metric tons of CFCs for use in 2001. The Parties to the Montreal 
Protocol approved this amount as essential for the U.S. for 2001 at the 
Eleventh Meeting in 1999 (Decision XI/14). On September 15, 1999, EPA 
issued another notice requesting applications for essential use 
allowances for the year 2001 and beyond (64 FR 50083). No company 
requested a supplemental amount of CFCs for the year 2001 at that time.

How Does the Clean Air Act Authorize Essential Use Allowances?

    The CAA provides standing exemptions to the phase-out of class I 
ODSs found at section 604(d) of the Act. With today's action, EPA is 
proposing to implement the exemption at 604(d)(2) of the Act which 
states that notwithstanding the phase-out, EPA shall, to the extent 
consistent with the Montreal Protocol, authorize production of limited 
quantities of class I ODSs for use in medical devices, if FDA, in 
consultation with EPA, determines that such production is necessary for 
use in medical devices. The term ``medical device'' is defined in 
section 601(8) of the Clean Air Act as follows:

[A]ny device (as defined in the Federal Food, Drug, and Cosmetic Act 
(21 U.S.C. 321)), diagnostic product, drug (as defined in the 
Federal Food, Drug, and Cosmetic Act), and drug delivery system--
    (A) if such device, product, drug, or drug delivery system 
utilizes a class I or class II substance for which no safe and 
effective alternative has been developed, and where necessary, 
approved by the Commissioner [of FDA]; and
    (B) if such device, product, drug, or drug delivery system, has, 
after notice and opportunity for public comment, been approved and 
determined to be essential by the Commissioner [of FDA] in 
consultation with the Administrator [of EPA].

    The preamble to FDA's September 1, 1999, notice of proposed 
rulemaking on essential use determinations (64 FR 47735) discusses 
FDA's approach to determining whether ``safe and effective 
alternative[s]'' have been developed. It states that ``A non-CFC 
product simply having the same active moiety as a CFC product is only 
one factor to be considered. Other factors, such as whether the non-CFC 
product has the same route of administration, the same indication, and 
can be used with approximately the same level of convenience, are 
important considerations. Additionally, FDA must consider whether 
patients who medically need the CFC product are adequately served by 
the non-CFC product. FDA's approval of a non-CFC product is a 
determination that the product is safe and effective, but it is not a 
determination that the product is a safe and effective alternative for 
any other product. That requires a separate and distinct analysis.'' 
Although FDA has approved one CFC-free MDI for market, it has not yet 
determined that any non-CFC product is a safe and effective alternative 
to any CFC MDI. Accordingly, part (A) of the definition of medical 
device has not affected today's proposed allocation.
    With respect to part (B) of the definition of medical device 
(section 601(8)(B)), and in particular the use of the word 
``essential'' in that part of the definition, EPA is relying on current 
FDA regulations (21 CFR 2.125) which contain a list of categories of 
CFC-containing medical devices, as that term is used in the CAA, that 
FDA, in consultation with EPA, has found to be essential. This list 
includes, among others, metered-dose steroids, metered-dose adrenergic 
bronchodilators, metered-dose cromolyn sodium, metered-dose ipratropium 
bromide, and metered-dose nedocromil sodium; all drugs for oral 
inhalation in humans for the treatment of asthma and chronic 
obstructive pulmonary disease. The companies for which EPA is proposing 
to grant essential use allowances produce CFC MDIs that fall within one 
of these categories. Thus, the products for which EPA is proposing to 
grant essential use allowances are ``determined to be essential'' by 
FDA.
    Also with respect to part (B) of the definition of ``medical 
device'', EPA and FDA considered how to interpret the language 
regarding approval by FDA of the ``device, product, drug, or drug 
delivery system.'' The complete phrase reads as follows: ``if such 
device, product, drug, or drug delivery system, has, after notice and 
opportunity for public comment, been approved and determined to be 
essential by the Commissioner in consultation with the Administrator.'' 
EPA and FDA determined that in light of the surrounding language, this 
phrase refers to FDA's approval of an essential use, and not the 
approval of the specific product in question through approval of the 
New Drug Application (NDA) or Abbreviated New Drug Application (ANDA) 
for that product. Since approval of an NDA or ANDA under the Food, 
Drug, and Cosmetic Act (FDCA) involves unilateral action by FDA without 
notice-and-comment rulemaking or consultation with EPA, it is 
reasonable to conclude that section 601(8)(B) does not refer to 
approval of an NDA or ANDA under the FDCA. Therefore, FDA and EPA read 
section 601(8)(B) to refer to FDA's approval of an essential use which 
does require notice-and comment rulemaking in consultation with EPA. 
This means that an MDI is ``approved and determined to be essential'' 
if the MDI is included within the list of categories of CFC-MDIs on 
FDA's essential use list. All of the MDIs for which we are proposing to 
allocate CFCs today meet this qualification.
    With this action EPA is also proposing to allocate methyl 
chloroform (MCF) for use in solid rocket motor assemblies. Because the 
original phase-out date of methyl chloroform is 2002, EPA is not 
required to implement the exemption at 604(d)(1) until that time. 
Instead, EPA is proposing to allocate methyl chloroform under the 
authority of the original phase-out schedule at section 604(a) which 
provides that MCF may be produced at up to 20 percent of the baseline. 
EPA is proposing to allocate a total of 60.1 metric tons of MCF, an 
amount well below 20% of the MCF baseline production allowance of 
315,169 metric tons (defined at 40 CFR 82.6).

II. Allocation Process for CFCs for Use in Medical Devices for the 
Year 2001

How Were the Essential Use Allowances for Medical Devices Determined 
for the Year 2001?

    As explained above, section 604(d)(2) of the Act provides that EPA 
shall authorize production and import of limited quantities of class I 
substances for use in medical devices if FDA, in consultation with EPA, 
determines such authorization to be necessary. The following is a step-
by-step list of actions EPA and FDA have taken thus far to implement 
the exemption for medical devices under the Act.
    1. EPA worked closely with FDA to define what information would be

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required from companies in order that FDA in consultation with EPA 
could make a determination on the amount of CFCs necessary for use in 
MDIs. EPA and FDA determined that the following data were needed to 
make a decision on the amount of CFCs necessary for use in MDIs for 
2001:
    <bullet> The specific MDI products to be produced in 2001
    <bullet> The number of units each product produced each year since 
1996
    <bullet> Number of units produced in the first quarter of 2000
    <bullet> Number of units anticipated to be produced in 2001
    <bullet> Gross target fill weight per unit (grams)
    <bullet> Total amount of CFC to be contained in product for 2001 
(metric tons)
    <bullet> Additional amounts of CFCs necessary for production of 
MDIs
    <bullet> Total CFC request per product for 2001
    2. On May 24, 2000, EPA sent letters to MDI manufacturers 
requesting the information outlined in paragraph 1. EPA also requested 
information on the amount of CFCs held in inventory as of January 1, 
2000. The letters that EPA sent each company are available for review 
in the docket. The company's responses however, are considered 
confidential business information and are not publicly available. 
Tables I and II are reproductions of the reporting forms EPA asked 
companies to fill out in response to our letters requesting information 
under section 114 of the Act (114 letters).

                                            Table I.--Year 2001 Essential Use Allocation: CFC Reporting Form
--------------------------------------------------------------------------------------------------------------------------------------------------------
                   A                        B          C          D          E          F           G           H          I           J           K
                Product                 Number of  Number of  Number of  Number of  Number of   Number of     Gross    Total CFC   Additional    Total
                                          Units      Units      Units      Units      Units       Units       Target     to be       amount     request
                                         produced   produced   produced   produced   produced  anticipated     fill    contained   necessary      per
                                        from 1/1/  from 1/1/  from 1/1/  from 1/1/  from 1/1/     to be       weight       in         for       product
                                        96 to 12/  97 to 12/  98 to 12/  99 to 12/   00 to 3/  produced in   per unit   product   production    for 2001
                                          31/96      31/97      31/98      31/99      31/00        2001     (grams) \   for 2001      \3\         \4\
                                                                                                                1\      (metric
                                                                                                                       tons) \2\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Example Product.......................  1,112,569  1,010,526  1,215,452  1,327,456    352,101    1,500,000         22      30.42         5.20     35.62
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ If significant numbers of different canister sizes are produced, this target fill number should either be the weighted average for that product
  (i.e., the sum of the gross target fill times the percentage of canisters produced in that size divided by the total number of canisters) or each size
  may be contained in a separate row of the report.
\2\ Column I= (Column G) (Column H).
\3\ Provide details regarding your additional amount needed, e.g., canisters produced but not distributed, CFCs lost in processing, CFCs remaining at
  end of batch run, CFCs used in line cleaning.
\4\ Total request per product for 2001 (metric tons) = Sum of Columns I+J.
 
 Note: The data presented in columns B through E will be compared to data provided in annual reports to FDA. Any significant differences in these
  numbers should be explained in detail.


                                   Table II.--Year 2000 CFC Stockpile Analysis
----------------------------------------------------------------------------------------------------------------
                                                                             On January 1,
                                     On 1/1/2000:     On 1/1/2000: Total    2000: Amount of    Total quantity of
                                     Quantity (in        quantity (in      chemical produced   chemical acquired
            Chemical                metric tons) of     metric tons) of    prior to January       using 1999
                                  chemical stored at  chemical available      1, 1996 \6\        essential use
                                     your facility      to your company    available to your      allowances
                                                              \5\               company
----------------------------------------------------------------------------------------------------------------
CFC-11
CFC-12
CFC-114
----------------------------------------------------------------------------------------------------------------
\5\ This includes amounts stored at your facility, other facilities, or an order with the chemical
  manufacturers.
\6\ This amount refers to your company's stockpile (on 1/1/2000) of CFCs produced prior to the 1996 ban on
  import and production.

    3. In a letter to FDA, dated August 3, 2000, Paul Stolpman, 
Director of EPA's Office of Atmospheric Programs, requested that FDA 
provide EPA with a determination regarding the amount of CFCs necessary 
for use in MDIs for calendar year 2001. We attached the information 
provided in response to 114 letters from MDI manufacturers for FDA's 
review. FDA verified the data against the annual reports companies file 
with FDA, and used the information from the companies' response to our 
section 114 letters as a basis for their determination.
    4. On September 6, 2000, FDA Commissioner Jane Henney sent a letter 
to EPA with the FDA determination on the amount of CFCs necessary for 
use in MDIs for calendar year 2001. The quantity of CFCs to be 
allocated for production of MDIs in this proposed rule reflect FDA's 
determination made in consultation with EPA.
    5. In accordance with the determinations made by FDA, in 
consultation with EPA, specified in their letter of September 6, 2000, 
today's proposal would allocate a total of 3098.67 metric tons of CFCs 
for use in MDIs for calendar year 2001.
    6. EPA plans to issue a final allocation rule by the end of the 
calendar year to provide adequate time for companies to replenish their 
supply of CFCs for MDI production in the year 2001.

How Were the Decisions on the Amounts of EUAs for CFCs for Each 
Company Made?

    FDA states in their letter to EPA that ``* * * we have examined the 
information you obtained from individual sponsors regarding their 
historical and intended use of CFCs in specific products. We compared 
this information to the information filed with us by sponsors in 
previous annual reports. In listing the amounts we believe to be 
necessary for use in medical devices, we referred to this information, 
eliminated any double-counting we found, considered changes in the 
prevalence of asthma and COPD, and eliminated allocations for uses not

[[Page 59786]]

considered essential by the parties to the Montreal Protocol, even if 
those uses are currently listed in our regulation at 21 CFR 2.125(e).''
    In response to EPA's request for information under section 114 of 
the Act, two companies stated that they required CFCs to produce the 
same products leading to double counting and an inflated request of 
CFCs to manufacture these particular MDI products. This is because one 
company is a New Drug Application (NDA) holder who produces some of its 
own products, and the other is a contract filler for the NDA holder who 
produces the remainder of the NDA holder's products. At the time we 
gathered information via 114 letters, the companies had not reached an 
agreement on the amount of MDIs to be produced by the contract filler 
and the amount to be produced by the NDA holder. With this action, EPA 
is proposing to allocate CFCs to these two companies in the amount 
requested by the NDA holder. Because we are also proposing to allow 
EUAs to be transferrable, the NDA holder will have the opportunity to 
transfer some of its EUAs to the contract filler if necessary. This 
transfer can be accomplished by adhering to the requirements in the 
regulations at 40 CFR 82.12 which will be explained in detail in 
section IV. In the event that the change to 40 CFR 82.12 proposed in 
this rule which allow the transfer of EUAs is not finalized, EPA and 
FDA will consult with the both contract filler and the NDA holder to 
determine the proper allocation. Please note that EPA and FDA took into 
account that the contract filler also manufactures products for yet 
another company along with its own brand of MDIs and allocated the 
entire amount requested to manufacture these other MDI products.

Can the Allocation Listed in This Proposed Rulemaking Be Changed in the 
Final Rule?

    The allocation amounts listed in this proposal are subject to 
additional review by EPA and FDA if new information demonstrates that 
the allocations are either too high or too low. Commenters requesting 
increases or decreases of EUAs should provide detailed information 
supporting their claim for additional or fewer CFCs. Any company that 
determines that they no longer need the full amount allocated under 
this proposal should notify EPA of the actual amount needed. Please 
note that EPA is only authorized to allocate a total of 3,101 metric 
tons of CFC, the amount requested by U.S. pharmaceutical companies and 
subsequently approved by the Parties to the Montreal Protocol for 2001.

III. Allocation of Essential Use Allowances for Calendar Year 2001

What Is EPA's Proposed Essential Use Allocation for Calendar Year 2001?

    EPA is proposing to allocate essential use allowances for the year 
2001 control period to entities listed in Table III for exempted 
production or import of the specific quantity of class I controlled 
substances solely for the specified essential use. The proposed 
allocation of CFCs for use in MDIs reflects the determination on the 
amount of CFCs ``necessary'' as specified under section 604(d)(2) of 
the Act.

      TABLE III.--Essential Use Allocation for Calendar Year 2000
------------------------------------------------------------------------
                                                             Quantity
              Company                     Chemical         (metric tons)
------------------------------------------------------------------------
 (i) Metered Dose Inhalers (for oral inhalation) for Treatment of Asthma
       and Chronic Obstructive Pulmonary Disease (in metric tons)
------------------------------------------------------------------------
Medeva, Armstrong Pharmaceuticals   CFC-11 or CFC-12 or           189.00
 Inc..                               CFC-114.
Boehringer Ingelheim                CFC-11 or CFC-12 or           258.00
 Pharmaceuticals.                    CFC-114.
Glaxo Wellcome Inc................  CFC-11 or CFC-12 or           858.10
                                     CFC-114.
Aventis Pharmaceuticals (formerly   CFC-11 or CFC-12 or           190.00
 RPR).                               CFC-114.
3M Pharmaceuticals................  CFC-11 or CFC-12 or           384.87
                                     CFC-114.
Sidmak Laboratories/Medisol         CFC-11 or CFC-12 or           192.20
 Laboratories, Inc..                 CFC-114.
Schering Corporation..............  CFC-11 or CFC-12 or          1025.20
                                     CFC-114.
Sciarra Laboratories, Inc.........  CFC-11 or CFC-12 or             1.30
                                     CFC-114.
------------------------------------------------------------------------
(ii) Cleaning, Bonding and Surface Activation Applications for the Space
                    Shuttle Rockets and Titan Rockets
------------------------------------------------------------------------
 National Aeronautics and Space     Methyl Chloroform...            56.7
 Administration (NASA)/Thiokol
 Rocket.
United States Air Force/Titan       Methyl Chloroform...             3.4
 Rocket.
------------------------------------------------------------------------

Why Is EPA Allocating CFC-11, CFC-12, and CFC-114 in the Aggregate to 
Each Company?

    EPA is allocating essential-use allowances for CFC-11, CFC-12, and 
CFC-114 in the aggregate in accordance with Decision X/6 of the Parties 
to the Montreal Protocol which states that ``the quantities approved 
under paragraph 2 above and all future approvals are for total CFC 
volumes with flexibility between CFCs within each group.'' Allocating 
CFCs for MDI manufacture in the aggregate instead of on a compound-by-
compound basis adds flexibility to the regulation without causing 
additional damage to the stratospheric ozone layer since CFC-11, CFC-12 
and CFC-114 all have the same ozone depleting potential of 1.0.

Why Is EPA No Longer Allocating EUAs to the International 
Pharmaceutical Aerosol Consortium (IPAC) as a Whole, But Instead 
Allocating on a Company-by-Company Basis?

    In the past, EPA allocated EUAs to IPAC as a whole and then sent 
letters to each of its member companies notifying them of their 
particular allocation. This inevitably resulted in minor delays in 
informing IPAC member companies of their allocations. This year, EPA is 
allocating EUAs on a company-by-company basis in order to inform the 
IPAC member companies directly of their specific allocations. Thus it 
will be clear to each company, including the IPAC members, the 
quantities that are being proposed for each company allowing all 
companies opportunity to comment on their individual allocations.

What Is EPA's Method for Allocating Methyl Chloroform (MCF) for Use in 
Solid Rocket Motors?

    With this action, EPA is proposing to allocate 60.1 metric tons of 
MCF for use in solid rocket motors, the same amount allocated in the 
years 1999 and 2000. Please note that with this action EPA is proposing 
to allocate MCF in an amount

[[Page 59787]]

lower than would be consistent with Decision X/6 taken at the Tenth 
meeting of the Parties to the Protocol because EPA believes that doing 
so would allocate MCF in excess of the necessary amount.
    Decision X/6 states that `` * * * the remaining quantity of methyl 
chloroform authorized for the United States at previous meetings of the 
Parties be made available for use in manufacturing solid rocket motors 
until such time as the 1999-2001 quantity of 176.4 tons (17.6 ODP-
weighted tons) allowance is depleted, or until such time as safe 
alternatives are implemented for remaining essential uses.'' According 
to the EPA tracking system, the total amount of MCF produced or 
imported by U.S. essential use recipients in 1999 was just 12 metric 
tons indicating that the transition away from MCF is progressing faster 
than anticipated, and that allocating the unused portion of MCF in its 
entirety would be excessive. EPA believes that allocating the same 
amount allocated in 2000, 60.1 metric tons of MCF, provides a 
sufficient amount for use in solid rocket motors for the year 2001. 
Please note that in future allocations essential use allowance holders 
for MCF will still have access to MCF until the 1999-2001 quantity of 
176.4 metric tons is depleted or until this use is no longer considered 
essential.
    In the event that commenters provide sufficient reasons as to why 
EPA should allocate MCF in an amount consistent with Decision X/6, for 
example, EPA would allocate MCF according to the following equation:

The amount of MCF approved by the Parties for essential uses for 1999-
2001 -2  x  The amount of MCF imported or produced by U.S. essential 
use holders in 1999=Allocation for 2001 (i.e., 176.4 metric tons -2  x  
12 metric tons=152.4 metric tons).

    Since the amount of MCF acquired in the year 2000 is not yet known, 
the equation assumes that essential use holders will acquire the same 
amount of MCF in 2000 as they had in 1999 and provides the best 
possible approximation of the quantity of MCF that should be allocated 
if EPA is persuaded to allocate MCF in the amount consistent with 
Decision X/6.

What Reporting Requirements Relate to the Essential Uses of Ozone 
Depleting Substances?

    Any person obtaining class I controlled substances after the phase-
out under the essential use exemptions in today's action is subject to 
all the restrictions and requirements in other sections of 40 CFR part 
82, subpart A. Holders of essential-use allowances or persons obtaining 
class I controlled substances under the essential-use exemptions must 
comply with the record keeping and reporting requirements in 40 CFR 
82.13. Instructions and forms for reporting are found in the Guidance 
Document for the Stratospheric Ozone Protection Program after January 
1, 1996. This document can be obtained by contacting the Stratospheric 
Ozone Protection Hotline at (800) 296-1996 between 10:00 am and 4:00 pm 
Eastern Standard Time.
    It should be noted that under 40 CFR 82.3 and 82.4 (63 FR 41626, 
August 4, 1998), entities receiving essential-use allowances must be 
the importer of record for quantities of CFCs brought into the United 
States. This requires that the essential-use allowance holder be listed 
as the importer of record on Customs Form 7501. As a result, the 
essential-use allowance holder who imports quantities of class I 
controlled substances is responsible for submitting both an Importer 
Quarterly Report and an Essential-Use Holder Quarterly Report.

IV. Proposed Changes to 82.12 Allowing Transfer of EUAs for CFCs 
Among Essential Use Allowance Holders

    With this document EPA is proposing to add essential use allowances 
to the list of allowances that can be transferred under 40 CFR 82.12. 
This change will enable essential use holders to transfer EUAs for CFCs 
to other essential use holders for the production of essential MDIs. 
EPA believes that allowing EUAs to be transferred among essential use 
allowance holders incorporates flexibility into the current regulations 
without increasing the amount of ODSs allocated.

Why Is EPA Proposing To Allow EUAs To Be Transferred Among EUA Holders?

    Each year EPA requests applications from pharmaceutical companies 
for essential use allowances for use in MDIs. EPA analyzes these 
applications and uses them as the basis for the U.S. nomination for 
essential use allowances at the Meeting of the Parties to the Montreal 
Protocol which occurs two years prior to the year in which EUAs are 
allocated to companies. Because it can be difficult to forecast the 
amount of CFCs required for MDI production two years in advance, the 
Parties provide an opportunity for countries to request a supplemental 
amount of essential use allowances in the year following the initial 
request. This system allows companies two opportunities to request 
essential use allowances for the same year, ensuring that if the 
initial request is not sufficient, there is a mechanism to increase the 
allocation for that year. Essential use applicants had the option of 
requesting supplemental CFCs for 2001 in September 15, 1999, in 
response to the EPA document (64 FR 50083). No applicant elected to 
supplement their request for the year 2001 at that time.
    Even in the absence of applications for supplemental CFCs from 
pharmaceutical companies, EPA and FDA consulted in March of this year 
to determine whether the total allocation of 3,101 metric tons would be 
sufficient to produce MDIs for the U.S. market. EPA and FDA determined, 
based on the amount of CFCs used for MDI production in previous years, 
that 3,101 metric tons would be sufficient to supply the MDI market as 
a whole while accounting for the projected increase in demand for MDIs. 
However, EPA and FDA noted that individual companies may have increased 
market growth compared to others and would therefore need additional 
CFCs. Because of the inherent uncertainty in allocating specific 
amounts of CFCs to individual companies engaged in a dynamic market, 
EPA is proposing that EUAs for CFCs become transferable among EUA 
holders. This will ensure that companies have the opportunity to access 
CFCs beyond the amount allocated to them in the year 2001 and beyond, 
and can better respond to market shifts that may occur.

Will I Be Able To Transfer EUAs for CFCs to Anyone I Want?

    No, EUAs for CFCs would only be transferable among those companies 
that have applied for and received EUAs for the year 2001. In addition, 
companies must certify in writing to EPA that the EUAs will only be 
used in the production of essential medical devices as defined in the 
Food, Drug and Cosmetic Act at 21 CFR 2.125 and considered essential by 
the Parties to the Protocol.

If EUAs for CFCs Are Transferable, Can They Be Transferred From Year to 
Year?

    No, EUAs would not be transferable from year to year. Any EUAs for 
CFCs not expended in 2001 will expire at the end of 2001.

Is There a Penalty for Transferring EUAs?

    Yes. The CAA at section 607(a) states that rules governing transfer 
of allowances for the production of class I and class II substances `` 
* * * shall insure that the transactions under the

[[Page 59788]]

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.'' In 
compliance with this section, current regulations at 40 CFR 82.12 
governing transfers of production and consumption allowances require 
one percent of the traded amount to be deducted from the transferor's 
unexpended allowances. EPA is proposing to amend the regulation so that 
in the case of EUA transfers, one tenth of one percent of the amount 
traded would be deducted from the transferor's account. EPA believes 
that given the relatively small amount of EUAs available for use in 
MDIs, and that providing sufficient EUAs for MDIs is critically 
important for protecting public health, deducting one percent of the 
amount of EUAs to be traded would be too high a penalty and may create 
a barrier against transferring EUAs freely. EPA believes that reducing 
the amount deducted from the transferor's account, would overcome this 
potential barrier. Therefore, with today's action EPA is proposing 
changes to regulations at Sec. 82.12 to require that in the case of 
transferring EUAs, one tenth of one percent in excess of the amount 
traded would be deducted from the transferor's account.

How Can I Transfer EUAs From My Company to Another?

    In order to complete a transfer of EUAs for CFCs from one essential 
use allowance holder to another, the transferor would have to submit to 
the Administrator a letter with the information requested in 40 CFR 
82.12(a)(1). Under the regulations at 40 CFR 82.12 the transferor must 
submit to the Administrator a transfer claim with the following 
information:

    1. The identities and addresses of the transferor and 
transferee.
    2. The names and telephone numbers of contact persons for both 
the transferor and transferee.
    3. The type of allowances being transferred, which in this case 
would always be essential use allowances.
    4. The group of controlled substances being transferred, which 
would always be Group I.
    5. The amount of allowances being transferred in kilograms.
    6. The control period for which the allowances are being 
transferred (e.g. calendar year 2001).
    7. The amount of unexpended essential use allowances for the 
current control period.
    8. The amount of the 0.1% offset applied to the unweighted 
amount traded that will be deducted from the transferor's allowance 
balance.

    Guidance documents and a sample letter which outlines the necessary 
information that a transferor must submit to EPA will be available 
through the Stratospheric Ozone Hotline at 1-800-296-1996.
    As outlined in Sec. 82.12, EPA will determine according to records 
maintained by the EPA ODS tracking system whether the transferor 
possesses as of the date of the transfer claim, unexpended allowances 
sufficient to cover the transfer claim (i.e., the amount to be 
transferred plus one tenth of one percent of that amount). Within three 
working days of receiving a complete transfer claim, EPA will notify 
the transferor and transferee if the transferor has sufficient 
unexpended allowances to confer the transfer claim, and will issue a 
notice indicating that EPA does not object to the transfer. EPA will 
then reduce the transferor's balance of essential use allowances by the 
amount to be transferred plus one tenth of one percent of that amount. 
When EPA issues a no objection notice, the transferor and the 
transferee may proceed with the transfer.
    If EPA's records show that the transferor has insufficient 
unexpended allowances 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, EPA will issue a 
notice disallowing the transfer. Within 10 working days after receipt 
of notifications, either party may file a notice of appeal, with 
supporting reasons, to EPA, in which case EPA may either 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. (The 
transferor and transferee will be held liable in accordance with Title 
I, section 113 of the Act for any violations that occur as a result of 
an improper transfer.) In the event that EPA does not respond to a 
transfer claim within three working days of receipt of the completed 
claim, the transferor and transferee may proceed with the transfer and 
EPA will reduce the transferor's balance accordingly.

V. Administrative Requirements

A. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector.
    Under section 202 of the UMRA, EPA generally must prepare a written 
statement, including a cost-benefit analysis, for proposed and final 
rules with ``Federal mandates'' that may result in expenditures by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more in any one year. Before 
promulgating an EPA rule for which a written statement is needed, 
section 205 of the UMRA generally requires EPA to identify and consider 
a reasonable number of regulatory alternatives and adopt the least 
costly, most cost-effective or least burdensome alternative that 
achieves the objectives of the rule. The provisions of section 205 do 
not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows EPA to adopt an alternative other than the least 
costly, most cost-effective or least burdensome alternative if the 
Administrator publishes with the final rule an explanation why that 
alternative was not adopted. Section 204 of the UMRA requires the 
Agency to develop a process to allow elected state, local, and tribal 
government officials to provide input in the development of any 
proposal containing a significant Federal intergovernmental mandate.
    Before EPA establishes any regulatory requirements that may 
significantly or uniquely affect small governments, including tribal 
governments, it must have developed under section 203 of the UMRA a 
small government agency plan. The plan must provide for notifying 
potentially affected small governments, enabling officials of affected 
small governments to have meaningful and timely input in the 
development of EPA regulatory proposals with significant Federal 
intergovernmental mandates, and informing, educating, and advising 
small governments on compliance with the regulatory requirements.
    Today's rule contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) for State, local, or tribal 
governments or the private sector. Because this rule imposes no 
enforceable duty on any State, local or tribal government it is not 
subject to the requirements of sections 202 and 205 of the UMRA. EPA 
has also determined that this rule contains no regulatory requirements 
that might significantly or uniquely affect small governments; 
therefore, EPA is not required to develop a plan with regard to small 
governments under section 203. Finally, because this rule does not 
contain a significant intergovernmental mandate, the Agency is not 
required to develop a process to obtain input from elected state, 
local, and tribal officials under section 204.

[[Page 59789]]

B. Executive Order 12866

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the 
Agency must determine whether this regulatory action is Significant and 
therefore subject to OMB review and the requirements of the Executive 
Order. The Order defines Significant regulatory action as one that is 
likely to result in a rule that may:

    (1) Have an annual effect on the economy of $100 million or 
more, or adversely affect in a material way the economy, a sector of 
the economy, productivity, competition, jobs, the environment, 
public health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with 
an action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlement, 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order. It has been determined by OMB and EPA that this 
action is not a Significant regulatory action under the terms of 
Executive Order 12866 and is therefore not subject to OMB review 
under the Executive Order.

C. Paperwork Reduction Act (PRA)

    This action does not impose any new information collection burden 
as defined by the PRA. The Office of Management and Budget's (OMB's) 
draft guidance on PRA states that a rule is exempt from OMB review if 
it ``explicitly applies to nine or fewer persons''. Since the reporting 
requirements in this rule are not of general applicability, and apply 
only to the eight entities receiving EUAs for CFCs only if a company 
decides to transfer EUAs to another essential use holder, we believe 
that this rule is exempt from the requirement of submitting an 
Information Collection Request and undergoing OMB review.
    However, the Office of Management and Budget (OMB) has previously 
approved the information collection requirements contained in the 
existing regulations at 40 CFR 82.12 which set forth the process for 
inter-company transfers of consumption allowances under the provisions 
of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and has assigned 
OMB control number 2060-0170 (EPA ICR No.1432.17). Copies of the ICR 
document(s) may be obtained from Sandy Farmer, by mail at the Office of 
Environmental Information, Collection Strategies Division; U.S. 
Environmental Protection Agency (2822); 1200 Pennsylvania Ave., NW, 
Washington, DC 20460, by email at <a href="/cdn-cgi/l/email-protection#573136253a322579243639332e1732273679303821"><span class="__cf_email__" data-cfemail="b6d0d7c4dbd3c498c5d7d8d2cff6d3c6d798d1d9c0">[email protected]</span></a>, or by calling 
(202) 260-2740. A copy may also be downloaded off the internet at 
http://www.epa.gov/icr. Include the ICR and/or OMB number in any 
correspondence.
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a Federal agency. This includes the time 
needed to review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transmit or otherwise disclose the information.
    An Agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations are listed in 40 CFR part 9 and 48 CFR Chapter 15.

D. Executive Order 13084: Consultation and Coordination With Indian 
Tribal Governments

    Under Executive Order 13084, EPA may not issue a regulation that is 
not required by statute, that significantly or uniquely affects the 
communities of Indian tribal governments, and that imposes substantial 
direct compliance costs on those communities, unless the Federal 
government provides the funds necessary to pay the direct compliance 
costs incurred by the tribal governments, or EPA consults with those 
governments. If EPA complies by consulting, Executive Order 13084 
requires EPA to provide to the Office of Management and Budget, in a 
separately identified section of the preamble to the rule, a 
description of the extent of EPA's prior consultation with 
representatives of affected tribal governments, a summary of the nature 
of their concerns, and a statement supporting the need to issue the 
regulation. In addition, Executive Order 13084 requires EPA to develop 
an effective process permitting elected officials and other 
representatives of Indian tribal governments to provide meaningful and 
timely input in the development of regulatory policies on matters that 
significantly or uniquely affect their communities.'' Today's rule does 
not significantly or uniquely affect the communities of Indian tribal 
governments. Accordingly, the requirements of section 3(b) of Executive 
Order 13084 do not apply to this rule.

E. Regulatory Flexibility

    After considering the economic impacts of today's proposed rule on 
small entities, EPA has determined that it is not necessary to prepare 
a regulatory flexibility analysis in connection with this rule. EPA has 
also determined that this action will not have a significant economic 
impact on a substantial number of small entities. This rule does not 
have a significant impact on a substantial number of small entities. 
The only entities that are directly affected by this allocation are 
those to which CFCs and other ODSs are being allocated. There are only 
ten entities which are affected by this rulemaking (see table 1 above). 
This rule does not have an adverse economic impact on any entity 
because it grants exceptions to a pre-existing ban.

F. Applicability of Executive Order 13045: Protection of Children From 
Environmental Health Risks and Safety Risks

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

G. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 
note) directs EPA to use voluntary consensus

[[Page 59790]]

standards in this regulatory activities unless to do so would be 
inconsistent with applicable law or otherwise impractical. Voluntary 
consensus standards are technical standards (e.g., materials 
specifications, test methods, sampling procedures, and business 
practices) that are developed or adopted by voluntary consensus 
standards bodies. The NTTAA directs EPA to provide Congress, through 
OMB, explanations when the Agency decides not to use available and 
applicable voluntary consensus standards. This rule does not involve 
technical standards. Therefore, EPA did not consider the use of any 
voluntary consensus standards.

H. Executive Order 13132 (Federalism)

    Executive Order 13132, entitled ``Federalism'' (64 FR 432255, 
August 10, 1999), requires EPA to develop an accountable process to 
ensure ``meaningful and timely input by State and local officials in 
the development of regulatory policies that have federalism 
implications.'' ``Policies that have federalism implications'' is 
defined in the Executive Order to include regulations that have 
``substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government.'' Under 
Executive Order 13132, EPA may not issue a regulation that has 
federalism implications, that imposes substantial direct compliance 
costs, and that is not required by State and local governments, or EPA 
consults with State and local officials early in the process of 
developing the proposed regulation. EPA also may not issue a regulation 
that has federalism implications and theat preempts State law unless 
the Agency consults with State and local officials early in the process 
of developing the proposed regulation.
    If EPA complies by consulting, Executive Order 13132 requires EPA 
to provide the Office of Management and Budget (OMB), in a separately 
identified section of the preamble to the rule, a federalism summary 
impact statement (FSIS). The FSIS must include a description of the 
extent of EPA's prior consultation with State and local officials, a 
summary of the nature of their concerns and the agency's position 
supporting the need to issue the regulation, and a statement of the 
extent to which the concerns of State and local officials have been 
met. Also, when EPA transmits a draft final rule with federalism 
implications to OMB for review pursuant to Executive Order 12866, EPA 
must include a certification from the agency's Federalism Official 
stating that EPA has met the requirements of Executive Order 13132 in a 
meaningful and timely manner. This rule will not have substantial 
direct effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government, as specified 
in Executive Order 13132. This rule will affect only the ability of 
private entities and the national government to request production of 
controlled ozone-depleting substances. Thus, the requirements of 
section 6 of the Executive Order do not apply to this rule.

List of Subjects in 40 CFR Part 82

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

    Dated: September 29, 2000.
Carol M. Browner,
Administrator.
    40 CFR Part 82 is proposed to be 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.

Subpart A--Production and Consumption Controls

    2. Section 82.4 is amended by revising the table in paragraph 
(t)(2) to read as follows:


Sec. 82.4  Prohibitions.

* * * * *
    (t) * * *
    (2) * * *

        Table I.--Essential Use Allocation for Calendar Year 2000
------------------------------------------------------------------------
                                                             Quantity
              Company                     Chemical         (metric tons)
------------------------------------------------------------------------
 (i) Metered Dose Inhalers (for oral inhalation) for Treatment of Asthma
       and Chronic Obstructive Pulmonary Disease (in metric tons)
------------------------------------------------------------------------
Medeva Americas, Inc..............  CFC-11 or CFC-12 or           189.00
                                     CFC-114.
Boehringer Ingelheim..............  CFC-11 or CFC-12 or           258.00
                                     CFC-114.
Glaxo Wellcome....................  CFC-11 or CFC-12 or           858.10
                                     CFC-114.
Aventis...........................  CFC-11 or CFC-12 or           190.00
                                     CFC-114.
3M Pharmaceuticals................  CFC-11 or CFC-12 or           384.87
                                     CFC-114.
Sidmak Laboratories, Inc..........  CFC-11 or CFC-12 or           192.20
                                     CFC-114.
Schering Corporation..............  CFC-11 or CFC-12 or          1025.20
                                     CFC-114.
Sciarra Laboratories, Inc.........  CFC-11 or CFC-12 or              1.3
                                     CFC-114.
------------------------------------------------------------------------
(ii) Cleaning, Bonding and Surface Activation Applications for the Space
                    Shuttle Rockets and Titan Rockets
------------------------------------------------------------------------
National Aeronautics and Space      Methyl Chloroform...            56.7
 Administration (NASA)/Thiokol
 Rocket.
United States Air Force/Titan       Methyl Chloroform...             3.4
 Rocket.
------------------------------------------------------------------------

Sec. 82.12  [Amended]

* * * * *
    3. Section 82.12 is amended by revising paragraphs (a) (1) 
introductory text, (a)(1)(i)(H), (a)(1)(ii) introductory text, 
(a)(1)(ii)(A), and (a)(1)(iii) to read as follows:


Sec. 82.12  Transfers.

    (a) * * *
    (1) Until January 1, 1996, for all class I controlled substances, 
except for Group VI, and until January 1, 2001, for Group VI, any 
person (``transferor'') may transfer to any other person 
(``transferee'') any amount of the transferor's consumption allowances 
or production allowances, and effective

[[Page 59791]]

January 1, 1995, for all class I controlled substances any person 
(``transferor'') may transfer to any other person (``transferee'') any 
amount of the transferor's Article 5 allowances, and after January 1, 
2001 any essential use allowance holder (``transferor'') may transfer 
essential use allowances for CFCs to any other essential use allowance 
holder for CFCs (``transferee'') solely for the production of essential 
products (defined at 21 CFR 2.125) as follows:
    (i) * * *
    (H) The amount of the one percent offset applied to the unweighted 
amount traded that will be deducted from the transferor's production or 
consumption allowance balance (except for trades from transformers and 
destroyers to producers or importers for the purpose of allowance 
reimbursement) In the case of transferring essential use allowances, 
the amount of one tenth of one percent of the amount traded will be 
deducted from the transferor's allowance balance.
    (ii) The Administrator will determine whether the records 
maintained by EPA, taking into account any previous transfers and any 
production, allowable imports and exports of controlled substances 
reported by the transferor, indicate that the transferor possesses, as 
of the date the transfer claim is processed, unexpended allowances 
sufficient to cover the transfer claim (i.e., the amount to be 
transferred plus, in the case of transferors of essential use 
allowances, one tenth of one percent of that amount, and 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:
    (A) If EPA's records show that the transferor has sufficient 
unexpended allowances to cover the transfer claim, 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 by 
the amount to be transferred plus, in the case of transfers of 
production or consumption allowances, one percent of that amount, or in 
the case of transfers of essential use allowances, one tenth of 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 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.
* * * * *
    (iii) In the event that the Administrator does not respond to a 
transfer claim within the three working days specified in paragraph 
(a)(1)(ii) of this section, the transferor and transferee may proceed 
with the transfer. EPA will reduce the transferor's balance of 
unexpended allowances by the amount to be transferred plus, in the case 
of transfers of production or consumption allowances, one percent of 
that amount, or in the case of essential use allowances, one tenth of 
one percent of that amount. However, if EPA ultimately finds that the 
transferor did not have sufficient unexpended allowances 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.
* * * * *

[FR Doc. 00-25745 Filed 10-5-00; 8:45 am]
BILLING CODE 6560-50-U


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