[Federal Register Volume 65, Number 229 (Tuesday, November 28, 2000)]
[Rules and Regulations]
[Pages 70795-70804]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-30109]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 82

[FRL-6906-4]
RIN 2060-AI41


Protection of Stratospheric Ozone: Incorporation of Clean Air Act 
Amendments for Reductions in Class I, Group VI Controlled Substances

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: With this action, EPA is taking direct final action on the 
accelerated phaseout regulations that govern the production, import, 
export, transformation and destruction of substances that deplete the 
ozone layer under the authority of Title VI of the Clean Air Act 
Amendments of 1990 (CAA or the Act). We are undertaking these revisions 
to implement recent changes (Oct. 21, 1998) to the CAA, which direct 
EPA to conform the U.S. methyl bromide phasedown schedule to the 
schedule for industrialized nations under the Montreal Protocol on 
Substances that Deplete the Ozone Layer (Protocol). Specifically, 
today's amendments reflect the Protocol's reductions in the production 
and consumption of class I, Group VI controlled substances (methyl 
bromide) for the 2001 calendar year and subsequent calendar years, as 
follows: beginning January 1, 2001, a 50 percent reduction in baseline 
levels; beginning January 1, 2003, a 70 percent reduction in baseline 
levels; and, beginning January 1, 2005, the complete phaseout of class 
I, Group VI controlled substances.

[[Page 70796]]


DATES: This rule will become effective on January 29, 2001 without 
further notice unless the Agency receives adverse comment by December 
28, 2000. If we receive such comment, we will publish a timely 
withdrawal in the Federal Register informing the public that this rule 
will not take effect.

ADDRESSES: Comments on this rulemaking should be submitted in duplicate 
(two copies) to: Air Docket No. A-2000-24, U.S. Environmental 
Protection Agency, 2000 Pennsylvania Ave., NW, Room M-1500, Washington, 
D.C. 20460.
    Materials relevant to this rulemaking are contained in Public 
Docket No. A-2000-24. The docket is located in room M-1500, Waterside 
Mall (Ground Floor), at the above address. The materials may be 
inspected from 8 am until 5:30 pm, Monday through Friday. We may charge 
a reasonable fee for copying docket materials.

FOR FURTHER INFORMATION CONTACT: The Stratospheric Ozone Information 
Hotline at 1-800-296-1996 between the hours of 10 am and 4 pm Eastern 
Standard Time, or Amber Moreen, U.S. Environmental Protection Agency, 
Stratospheric Protection Division (6205J), 401 M Street, S.W., 
Washington, D.C., 20460, (202) 564-9295.

SUPPLEMENTARY INFORMATION: We are revising the methyl bromide phaseout 
regulation as a direct final rule without prior proposal because we 
view these revisions, directly mandated by the statutory language 
established by Congress, as noncontroversial and anticipate no adverse 
comments. However, in the ``Proposed Rules'' section of today's Federal 
Register publication, we are publishing a separate document that will 
serve as the proposal to update the methyl bromide phaseout schedule if 
adverse comments are filed. This rule will be effective on January 29, 
2001 without further notice unless we receive adverse comment by 
December 28, 2000. If EPA receives adverse comment, we will publish a 
timely withdrawal in the Federal Register informing the public that the 
rule will not take effect. We will address all public comments in a 
subsequent final rule based on the proposed rule. We will not institute 
a second comment period on this action. Any parties interested in 
commenting on these revisions to part 82 subpart A should do so at this 
time. EPA reiterates that the phasedown and phaseout levels and dates 
are statutorily required, and that it therefore has no discretion to 
alter the schedule.
    Recognizing the expressed intent of Congress in recent changes to 
the CAA to include certain types of exemptions, the preamble to today's 
direct final rule also notifies the public of our intent to propose 
future rulemakings concerning quarantine and preshipment exemptions, as 
well as the post-phaseout critical and emergency use exemptions.

Table of Contents

I. What is the Legislative and Regulatory Background of the Phaseout 
Regulations for Ozone-Depleting Substances?
II. What is Methyl Bromide?
III. What is the Regulatory Background Relating Specifically to 
Methyl Bromide?
IV. How is EPA Phasing Out Methyl Bromide?
    a. What does the Protocol say about the phaseout of methyl 
bromide?
    b. What is the legal authority for phasing out methyl bromide?
    c. What are today's phasedown changes?
V. What Are the Additional Changes Necessary to Facilitate the New 
Phaseout Schedule?
VI. Are the Existing Regulations being Amended to Reflect the 
Critical and Emergency Use Provisions (Sec. 82.3 (Definitions) and 
Sec. 82.7)?
    a. What Exemptions Does the Montreal Protocol Provide Beginning 
in 2005?
    b. What is the Montreal Protocol authority for granting a 
critical use exemption after the phaseout?
    c. What is the CAA legal authority for implementing the critical 
use exemption?
    d. How will the U.S. incorporate the critical use exemption?
    e. What is the Protocol authority for granting an emergency use 
exemption?
    f. What is the CAA legal authority for implementing the 
emergency use exemption?
    g. How will the Decision IX/7 affect emergency agricultural uses 
in the U.S.?
VII. Will Production Allowances be Available for Export to 
Developing Countries (Sec. 82.9)?
    a. What does the Protocol say about 2001 production allowances 
for export to developing countries?
    b. How did the U.S. provide for Article 5 allowances in the CAA?
    c. What production for export to Article 5 countries will be 
allowed past 2001?
VIII. How do Today's Changes Affect the Economic Impact of the 
Phaseout?
IX. What are the Supporting Analyses?
    a. Unfunded Mandates Reform Act
    b. Regulatory Flexibility
    c. Executive Order 12866
    d. Applicability of Executive Order 13045--Children's Health 
Protection
    e. Paperwork Reduction Act
    f. Executive Order 13132 (Federalism)
    g. Executive Order 13084: Consultation and Coordination with 
Indian Tribal Governments
    h. National Technology Transfer and Advancement Act
    i. Submission to Congress and the Comptroller General

I. What Is the Legislative and Regulatory Background of the 
Phaseout Regulations for Ozone-Depleting Substances?

    The current regulatory requirements of the Stratospheric Ozone 
Protection Program that limit production and consumption of ozone-
depleting substances were promulgated by the Environmental Protection 
Agency (EPA or the Agency) in the Federal Register on December 20, 1994 
(59 FR 65478), May 10, 1995 (60 FR 24970), August 4, 1998 (63 FR 
41625), and October 5, 1998 (63 FR 53290). The regulatory program was 
originally published in the Federal Register on August 12, 1988 (53 FR 
30566), in response to the 1987 signing, by the U.S. and other 
countries, of the Montreal Protocol on Substances that Deplete the 
Ozone Layer (Protocol).\1\
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    \1\ Several revisions to the original 1988 rule were issued on 
the following dates: February 9, 1989 (54 FR 6376), April 3, 1989 
(54 FR 13502), July 5, 1989 (54 FR 28062), July 12, 1989 (54 FR 
29337), February 13, 1990 (55 FR 5005), June 15, 1990 (55 FR 24490) 
and June 22, 1990 (55 FR 25812) July 30, 1992 (57 FR 33754), and 
December 10, 1993 (58 FR 65018).
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    The requirements contained in the final rules published in the 
Federal Register on December 20, 1994 and May 10, 1995 establish an 
Allowance Program. The Allowance Program and its history are described 
in the notice of proposed rulemaking published in the Federal Register 
on November 10, 1994 (59 FR 56276). The control and the phaseout of the 
production and consumption of class I ozone-depleting substances as 
required under the Protocol and the CAA are accomplished through the 
Allowance Program.
    In developing the Allowance Program, we collected information on 
the amounts of ozone-depleting substances produced, imported, exported, 
transformed and destroyed within the U.S. for specific baseline years 
for specific chemicals. This information was used to establish the U.S. 
production and consumption ceilings for these chemicals. The data were 
also used to assign company-specific production and import rights to 
companies that were in most cases producing or importing during the 
specific year of data collection. These production or import rights are 
called ``allowances.'' Due to the complete phaseout of many of the 
ozone-depleting chemicals, the quantities of allowances granted to 
companies for those chemicals were gradually reduced and eventually 
eliminated. Production allowances and consumption allowances continue 
to exist for only one specific class I controlled ozone-depleting 
substance--methyl bromide.

[[Page 70797]]

All other production or consumption of class I controlled substances is 
prohibited under the Protocol and the CAA, but for a few narrow 
exemptions.
    In the context of the regulatory program, the use of the term 
consumption may be misleading. Consumption does not mean the ``use'' of 
a controlled substance, but rather is defined as the formula: 
production + imports--exports, of controlled substances (Article 1 of 
the Protocol and Section 601 of the CAA). Class I controlled substances 
that were produced or imported through the expenditure of allowances 
prior to their phaseout date can continue to be used by industry and 
the public after that specific chemical's phaseout under these 
regulations, unless otherwise precluded under separate regulations.
    The specific names and chemical formulas for the class I controlled 
ozone-depleting substances are in Appendix A and Appendix F in Subpart 
A of 40 CFR Part 82. The specific names and chemical formulas for the 
class II controlled ozone-depleting substances are in Appendix B and 
Appendix F in Subpart A.
    Although the regulations phased out the production and consumption 
of class I, Group II substances (halons) on January 1, 1994, and all 
other class I controlled substances (except methyl bromide) on January 
1, 1996, a very limited number of exemptions exist, consistent with 
U.S. obligations under the Protocol. The regulations allow for the 
manufacture of phased-out class I controlled substances, provided the 
substances are either transformed, or destroyed (40 CFR 82.4(b)). They 
also allow limited manufacture if the substances are (1) exported to 
countries operating under Article 5 of the Protocol or (2) produced for 
essential uses as authorized by the Protocol and the regulations. 
Limited exceptions to the ban on the import of phased-out class I 
controlled substances also exist if the substances are: (1) previously 
used, (2) imported for essential uses as authorized by the Protocol and 
the regulations, (3) imported for destruction or transformation only, 
or (4) a transhipment or a heel (a small amount of controlled substance 
remaining in a container after discharge) (40 CFR 82.4(d), 
82.13(g)(2)).

II. What Is Methyl Bromide?

    Methyl bromide is an odorless and colorless gas used in the U.S. 
and throughout the world as a fumigant. Methyl bromide, which is toxic 
to living things, is used in many different situations to control a 
variety of pests, such as: insects, weeds, pathogens, and nematodes. 
Additional characteristics and details about the uses of methyl 
bromide, as well as information on the basis for listing methyl bromide 
as a class I substance, can be found in the proposed rule published in 
the Federal Register on March 18, 1993 (58 FR 15014) and the final rule 
published in the Federal Register on December 10, 1993 (58 FR 65018). 
Updated information on methyl bromide can be found at the following 
sites of the World Wide Web: www.epa.gov/ozone/mbr/ and www.teap.org or 
by contacting the Stratospheric Ozone Protection Hotline at 1-800-296-
1996.

III. What Is the Regulatory Background Relating Specifically to 
Methyl Bromide?

    The Parties to the Protocol established a freeze in the level of 
methyl bromide production and consumption for industrialized countries 
at the 1992 Meeting in Copenhagen. The Parties agreed that each 
industrialized country's level of methyl bromide production and 
consumption in 1991 should be the baseline for establishing the freeze. 
EPA published a final rule in the Federal Register on December 10, 
1993, listing methyl bromide as a class I, Group VI controlled 
substance, freezing U.S. production and consumption at this 1991 level, 
and, in Sec. 82.7 of the rule, setting forth the percentage of baseline 
allowances for methyl bromide granted to companies in each control 
period (each calendar year) until the year 2001 (58 FR 65018). 
Consistent with the CAA requirements for newly listed class I ozone-
depleting substances, this rule established a 2001 phaseout for methyl 
bromide. In the rule published in the Federal Register on December 30, 
1993 (58 FR 69235), we established baseline methyl bromide production 
and consumption allowances for specific companies in Sec. 82.5 and 
Sec. 82.6.
    At their 1997 meeting, the Parties agreed to establish the phaseout 
schedule for methyl bromide in industrialized countries. The U.S. 
Congress followed by amending the CAA (in Oct. 1998) to direct EPA to 
promulgate regulations reflecting the Protocol phaseout date of 2005, 
with interim phasedown steps in 1999, 2001, and 2003. EPA promulgated a 
regulation that was published in the Federal Register on June 1, 1999 
(64 FR 29240), instituting the initial interim reduction of 25 percent 
in the production and import \2\ of methyl bromide for the 1999 and 
2000 control periods. Currently, we grant 75 percent of the 1991 
baseline methyl bromide allowances for each control period until 2001.
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    \2\ The formula for ``consumption'' is production + import--
export. Because ``consumption'' encompasses ``production and 
import'', consumption is included by reference.
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    We expect to publish a proposed rule adding exemptions for 
production and import of quantities of methyl bromide that are used for 
quarantine and preshipment in late 2000. That proposal may also include 
a proposed ban on trade of methyl bromide with non-Parties to the 
Protocol, as decided by the Parties in 1997.

IV. How Is EPA Phasing Out Methyl Bromide?

a. What Does the Protocol Say About the Phaseout of Methyl Bromide?

    As stated in Section I of this preamble, the U.S. was one of the 
original signatories to the Protocol. The U.S. ratified the Protocol on 
April 21, 1988. Today's amendment is designed to complete 
implementation of article 2H of the Protocol. Paragraphs 3 through 5 
establish the remaining phaseout schedule for methyl bromide:

    3. Each Party shall ensure that for the twelve-month period 
commencing on 1 January 2001, and in the twelve-month period 
thereafter, its calculated level of consumption of the controlled 
substance in Annex E does not exceed, annually, fifty percent of its 
calculated level of consumption in 1991. Each Party producing the 
substance shall, for the same periods, ensure that its calculated 
level of production of the substance does not exceed, annually, 
fifty percent of its calculated level of production in 1991 * * *
    4. Each Party shall ensure that for the twelve-month period 
commencing on 1 January 2003, and in the twelve-month period 
thereafter, its calculated level of consumption of the controlled 
substance in Annex E does not exceed, annually, thirty percent of 
its calculated level of consumption in 1991. Each Party producing 
the substance shall, for the same periods, ensure that its 
calculated level of production of the substance does not exceed, 
annually, thirty percent of its calculated level of production in 
1991 * * *
    5. Each Party shall ensure that for the twelve-month period 
commencing on 1 January 2005, and in each twelve-month period 
thereafter, its calculated level of consumption of the controlled 
substance in Annex E does not exceed zero. Each Party producing the 
substance shall, for the same periods, ensure that its calculated 
level of production of the substance does not exceed zero * * *

Thus, Article 2H establishes obligations for the U.S. to reduce and 
eventually phase out its production and import of

[[Page 70798]]

methyl bromide \3\, apart from exemptions discussed later in this 
preamble and quantities of methyl bromide used for quarantine and 
preshipment uses.
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    \3\ The formula for ``consumption'' is production + import - 
export. Because ``consumption'' encompasses ``production and 
import'', phasing out ``production and import'', in effect, also 
phases out consumption.
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b. What Is the Legal Authority for Phasing Out Methyl Bromide?

    In response to ratification of the Protocol, Congress enacted, and 
President Bush signed into law, the Clean Air Act Amendments of 1990 
(CAA or the Act) that included Title VI on Stratospheric Ozone 
Protection. As mentioned in section III of this preamble, Congress 
amended Title VI of the CAA with Section 764 of the 1999 Omnibus 
Consolidated Emergency Supplemental Appropriations Act (Public Law No. 
105-277; October 21, 1998), directing EPA to reflect in its regulations 
the Protocol's most recent phasedown schedule for methyl bromide, and 
providing authority to create certain types of exemptions.
    Today's amendments are designed to ensure that the U.S. meets its 
obligations under the Protocol and the CAA. Section 764(a) of the 1999 
Omnibus Consolidated Emergency Supplemental Appropriations Act (Public 
Law No. 105-277; October 21, 1998) requires EPA to bring the schedule 
for the phaseout of methyl bromide into accordance with the Protocol. 
Specifically, the amendments direct EPA to:

    * * * not terminate production of methyl bromide prior to 
January 1, 2005. The Administrator shall promulgate rules for 
reductions in, and terminate the production, importation, and 
consumption of, methyl bromide under a schedule that is in 
accordance with, but not more stringent than, the phaseout schedule 
of the Montreal Protocol Treaty as in effect on the date of the 
enactment of this subsection.

This language, which amends Section 604 of the CAA, adding a new 
paragraph (h), requires us to extend the timeline for the phasedown in 
Sec. 82.7 so that it is in accordance with the current phasedown 
schedule under the Protocol. Thus, we are changing the phaseout date 
from January 1, 2001 to January 1, 2005.
    EPA derives its authority for today's action from Section 604(h) of 
the Act.

c. What Are Today's Phasedown Changes?

    In accordance with the Protocol's methyl bromide phaseout schedule, 
we are changing the percentage of baseline allowances for class I, 
Group VI substances granted in Sec. 82.7. We are granting the following 
allowances to the companies listed in Sec. 82.5 and Sec. 82.6 for 
methyl bromide: 50 percent of baseline production and consumption 
allowances for 2001 and 2002; 30 percent of baseline production and 
consumption allowances for 2003 and 2004; and 0 percent of baseline 
production and consumption allowances beginning January 1, 2005.

V. What Are the Additional Changes Necessary To Facilitate the New 
Phaseout Schedule?

    Many sections of Part 82 of the current regulations contain the 
original methyl bromide phaseout date, January 1, 2001. To update the 
regulations, we are changing many instances of ``January 1, 2001,'' 
when referencing methyl bromide, to ``January 1, 2005.'' In addition, 
in adding Group VI controlled substances to 82.4(b), we are providing 
for the production of methyl bromide past the phaseout date using 
Article 5 allowances.

VI. Are the Existing Regulations Being Amended To Reflect the 
Critical and Emergency Use Provisions (Sec. 82.3 (Definitions) and 
Sec. 82.7)?

a. What Exemptions Does the Montreal Protocol Provide Beginning in 
2005?

    Because the CAA, by requiring consistency with the Montreal 
Protocol, does not allow these exemptions to be available until the 
complete phaseout in 2005, they cannot be utilized during the required 
interim phasedown period between now and December 31, 2004. Today, we 
are creating two reserved sections in the regulations, at Sec. 82.4 (v) 
for critical use exemptions and at Sec. 82.4 (w) for emergency use 
exemptions. Beyond reserving these sections, EPA is not amending Part 
82 by adding the processes for these exemptions at this time. Because 
we are not adding the processes at this time, we are not requesting 
comment on these exemptions at this time. EPA intends to publish a 
proposal for a submittal process, timing, and the procedures by which 
the U.S. government would make determinations for both exemptions in a 
future notice and comment rulemaking. Any unsolicited comments 
addressing the critical and emergency use exemptions will be addressed 
in relation to that future proposal.

b. What Is the Montreal Protocol Authority for Granting a Critical Use 
Exemption After the Phaseout?

    In recognition that substitutes may not be available by 2005 for 
certain important methyl bromide uses, the Protocol provides an 
exemption in Article 2H, paragraph 5 for critical uses.

    Each Party shall ensure that for the twelve-month period 
commencing on 1 January 2005, and in each twelve-month period 
thereafter, its calculated level of consumption of the controlled 
substance in Annex E does not exceed zero * * * This paragraph will 
apply save to the extent that the Parties decide to permit the level 
of production or consumption that is necessary to satisfy uses 
agreed by them to be critical uses.

    While not specifying which uses might be ``critical,'' the Parties 
established criteria and some procedural steps for determining whether 
a specific use should be approved as critical at their Ninth Meeting 
(1997) in Decision IX/6. Apart from quantities used for quarantine or 
preshipment, and limited production for export to Article 5 countries, 
production and import of methyl bromide are only permitted past January 
1, 2005 for those uses approved under Decisions IX/6 or IX/7.
    In Decision IX/6, the Parties agreed as follows:

    (a) That a use of methyl bromide should qualify as `critical' 
only if the nominating Party determines that:
    (i) The specific use is critical because the lack of 
availability of methyl bromide for that use would result in a 
significant market disruption; and
    (ii) There are no technically and economically feasible 
alternatives or substitutes available to the user that are 
acceptable from the standpoint of environment and health and are 
suitable to the crops and circumstances of the nomination * * *

Under paragraph 1(a), a Party nominating a specific use as being 
critical in its submission to the Protocol Parties must determine both 
that the unavailability of methyl bromide for this use would result in 
a significant market disruption and that there is a lack of acceptable 
and suitable alternatives. The Decision goes on to specify:

    (b) That production and consumption, if any, of methyl bromide 
for a critical use should be permitted only if:
    (i) All technically and economically feasible steps have been 
taken to minimize the critical use and any associated emission of 
methyl bromide;
    (ii) Methyl bromide is not available in sufficient quantity and 
quality from existing stocks of banked or recycled methyl bromide, 
also bearing in mind the developing countries' need for methyl 
bromide;
    (iii) It is demonstrated that an appropriate effort is being 
made to evaluate, commercialize and secure national regulatory 
approval of alternatives and substitutes * * * Non-Article 5 Parties 
must demonstrate that research programmes are in

[[Page 70799]]

place to develop and deploy alternatives and substitutes * * *

The above paragraph of Decision IX/6 requires that a nomination further 
demonstrate to the Parties that the use of methyl bromide is minimized, 
that methyl bromide is not available through means other than 
production, and that alternatives are actively being pursued.
    Paragraph (2) of Decision IX/6 requests the Technology and Economic 
Assessment Panel (TEAP) to evaluate the nominations according to the 
criteria in paragraphs 1(a)(ii) and 1(b). In essence, 1(a)(ii) and 1(b) 
direct TEAP to evaluate a proposed exemption according to:
    (1) The availability of, as well as efforts to find, receive 
approval of, and market, alternatives for that particular use;
    (2) Efforts to minimize use and emissions; and,
    (3) The potential for meeting that need through banked or recycled 
methyl bromide.

c. What Is the CAA Legal Authority for Implementing the Critical Use 
Exemption?

    Any critical use exemption must comply with the provisions of the 
CAA. Section 604(d)(6), added by Section 764 of the 1999 Omnibus 
Consolidated and Emergency Supplemental Appropriations Act (Public Law 
No. 105-277; October 21, 1998), states that:

    To the extent consistent with the Montreal Protocol, the 
Administrator, after notice and the opportunity for public comment, 
and after consultation with other departments or institutions of the 
Federal Government having regulatory authority related to methyl 
bromide, including the Secretary of Agriculture, may exempt the 
production, importation, and consumption of methyl bromide for 
critical uses.

With this most recent amendment to the CAA, Congress authorizes EPA to 
provide critical use exemptions. Furthermore, by requiring consistency 
with the Protocol, Congress obligates EPA to provide these exemptions 
only according to the timeframe specified in the Protocol (after 
January 1, 2005) and only (as specified in Article 2H, Paragraph 5) 
``to the extent that the Parties decide to permit the level of 
production or consumption that is necessary to satisfy uses agreed by 
them to be critical uses.''

d. How Will the U.S. Incorporate the Critical Use Exemption?

    Consistent with the Montreal Protocol and Congress's recent 
addition to the CAA, the critical use exemption cannot apply until the 
complete phaseout, in 2005. The Protocol, as explained in ``a'' and 
``b'' of this section, specifies in Paragraph 5 of Article 2H that, 
``commencing on 1 January 2005 * * * [the phaseout] will apply save to 
the extent that the Parties decide to permit the level of production or 
consumption that is necessary to satisfy uses agreed by them to be 
critical uses.'' The CAA, as described in ``b'' above, requires this 
schedule by providing the critical use exemption ``to the extent 
consistent with the Montreal Protocol.'' Thus, we are not delineating 
specifics related to this exemption in today's action. However, we 
intend to permit limited continued production for critical uses agreed 
to by the Parties to the Protocol for the period after January 2005.
    We are reserving a section of the regulation for a future 
rulemaking to incorporate the critical use provisions from the Protocol 
and the CAA into our domestic allowance program. We plan to propose in 
a future rulemaking the creation of a new class of exemptions that may 
be referred to as ``critical use allowances.'' In that future 
rulemaking, we plan to propose details related to critical use 
exemption procedures and criteria, as well as request nominations for 
critical uses needed beyond 2005. The details of the critical use 
exemption have yet to be defined. We plan to hold stakeholder meetings 
in the near future to solicit ideas in developing a proposal for the 
implementation of a streamlined critical use exemption process in 
accordance with U.S. obligations under the Protocol and consistent with 
CAA requirements.
    The economic and geographical issues that are unique to methyl 
bromide and its applications will be considered as we develop the 
details of the exemption program, including the submittal process, 
timing, and the procedures we will use in making determinations for 
this exemption. The process for obtaining a critical use exemption 
could resemble the process used for essential use exemptions for other 
Class I ozone-depleting substances like CFCs (Decision IV/25; 58 FR 
6786, 29410, 53722). However, because of the economic and geographical 
issues unique to methyl bromide and its applications, it is possible 
that the critical use exemption process could also vary significantly 
from the essential use process.

e. What Is the Protocol Authority for Granting an Emergency Use 
Exemption?

    As discussed above, the Parties also established the emergency use 
exemption for methyl bromide at their Ninth Meeting (Decision IX/7). 
Decision IX/7 allows the Parties to consume,

* * * in response to an emergency event * * * , quantities not 
exceeding 20 tonnes of methyl bromide. The Secretariat and the 
Technology and Economic Assessment Panel will evaluate the use 
according to the `critical methyl bromide use' criteria and present 
this information to the next meeting of the Parties for review and 
appropriate guidance on future such emergencies, including whether 
or not the figure of 20 tonnes is appropriate.
    As can be seen from the language of Decision IX/7, the emergency 
use exemption is essentially an abbreviated critical use process 
allowing limited consumption of methyl bromide in response to an 
emergency. Because Article 2H does not contemplate consumption for 
critical uses prior to the complete phaseout in 2005, neither the 
critical use exemption nor its abbreviated form--the emergency use 
exemption--will be available until that date. Each emergency use 
will be evaluated by the Parties after its occurrence. EPA plans to 
provide details of an emergency use process in the same future 
proposal addressing the complete critical use process.

f. What Is the CAA Legal Authority for Implementing the Emergency Use 
Exemption?

    While this exemption is not explicitly included as a separate item 
in the most recent Congressional changes to the CAA [Section 764 of the 
1999 Omnibus Consolidated Emergency Supplemental Appropriations Act 
(Public Law No. 105-277)], we believe that Congress' grant of authority 
in 604(d)(6) to exempt critical uses is sufficiently broad to cover not 
only the full critical use process but also the abbreviated form of 
this process, that is, the emergency use exemption.

g. How Will Decision IX/7 Affect Emergency Agricultural Uses in the 
U.S.?

    Because the emergency use exemption will not be available until the 
complete phaseout (2005), we are not delineating specifics related to 
this exemption in today's action. However, we intend to permit limited 
production for emergency uses beginning in 2005. To incorporate the 
Protocol's emergency use Decision into our domestic allowance program, 
we may create, through a future rulemaking, a new class of exemptions 
to be referred to as ``emergency use allowances.'' In a future 
rulemaking, we plan to propose criteria and processes for exempting and 
using methyl bromide for an emergency event after January 1, 2005.

[[Page 70800]]

VII. Will Production Allowances be Available for Export to 
Developing Countries (Sec. 82.9)?

a. What Does the Protocol Say About 2001 Production Allowances for 
Export to Developing Countries?

    The Parties believed that during the phasedown period, existing 
production facilities in industrialized countries should be able to 
supply developing countries (Parties operating under Article 5, 
paragraph 1, of the Protocol), thereby decreasing incentives for 
construction of new plants in those countries. Thus, the Protocol 
allows industrialized countries to produce limited, additional methyl 
bromide explicitly for export to developing countries during the 
phasedown in the industrialized countries. Article 2H, paragraph 5, of 
the Protocol states that,

    * * * in order to satisfy the basic domestic needs of the 
Parties operating under Paragraph 1 of Article 5, [each Party's] 
calculated level of production may, until 1 January 2002 exceed [the 
relevant] limit by up to fifteen percent of its calculated level of 
production in 1991; * * *

The Beijing adjustments that added the above text entered into force on 
July 28, 2000.

b. How Did the U.S. Provide for Article 5 Allowances in the CAA?

    Domestically, the Protocol provisions that allow limited production 
for export to Article 5 countries are reflected in section 604 of the 
CAA. The current phaseout requirements for methyl bromide appear in 
section 604(h) of the CAA, as added by Section 764 of the 1999 Omnibus 
Consolidated and Emergency Supplemental Appropriations Act (Public Law 
No. 105-277). In adding section 604(h), Congress also added a provision 
to 604(e) that specifically addresses production of methyl bromide for 
export to developing countries. This provision, section 604(e)(3), 
states that:

    * * * the Administrator may, consistent with the Protocol, 
authorize the production of limited quantities of methyl bromide, 
solely for use in developing countries that are Parties to the 
Copenhagen Amendments to the Montreal Protocol.

Thus, the CAA directs EPA to be consistent with the Protocol in 
creating Article 5 allowances. As stated in ``a'' of this section, 
Article 2H, paragraph 5 of the Protocol allows, prior to January 1, 
2002, production for export to Article 5 countries of up to 15 percent 
of the 1991 baseline. Therefore, today's amendments to the phaseout 
regulations reflect this Article 5 allowance for 2001.

c. What Production for Export to Article 5 Countries Will Be Allowed 
Past 2001?

    As explained above, the CAA specifies that we provide the 
allowances for export to Article 5 countries in accordance with the 
Protocol. The Protocol allows industrialized countries to produce 
limited, additional methyl bromide explicitly for export to developing 
countries during and after the phasedown in the industrialized 
countries.
    Article 2H, paragraph 5 of the Protocol states that from January 1, 
2002 until January 1, 2005,

* * *[the calculated level of production] may exceed [the relevant] 
limit by a quantity equal to the annual average of its production of 
the controlled substance in Annex E for basic domestic needs for the 
period 1994 to 1998 inclusive.

Furthermore, the Protocol provides a more relaxed methyl bromide 
phaseout schedule for developing countries. Article 5 countries are 
obligated to phase out methyl bromide completely by January 1, 2015. 
The difference between the methyl bromide phasedown schedule in 
developing and industrialized countries creates the possibility for 
developing countries to import methyl bromide beyond the phaseout in 
industrialized countries (i.e., past January 1, 2005). Thus, an 
allowance for export is needed past the U.S. domestic phaseout. Article 
2H, paragraph 5 bis., provides that:

    * * * commencing on 1 January 2005 and in each twelve-month 
period thereafter, [each Party's] calculated level of production of 
[methyl bromide] for the basic domestic needs of the Parties 
operating under paragraph 1 of Article 5 does not exceed eighty per 
cent of the annual average of its production of the substance for 
basic domestic needs for the period 1995 to 1998 inclusive.

    The Protocol goes on to specify in Article 2H, paragraph 5 ter. 
that:

    * * * commencing on 1 January 2015 and in each twelve-month 
period thereafter, [each Party's] calculated level of production of 
[methyl bromide] for the basic domestic needs of the Parties 
operating under paragraph 1 of Article 5 does not exceed zero.

The 1995 to 1998 average production for export to Article 5 countries 
was specified as the post-2001 baseline for production for export to 
Article 5 countries at the Eleventh Meeting of the Parties to the 
Montreal Protocol in Beijing. Because the Adjustments made in Beijing 
replace the 1991 production baseline with this new baseline, we will be 
granting allowances to produce methyl bromide for export to Article 5 
countries beyond 2001 in a rulemaking to be completed before 2002. We 
need time to ensure the technical accuracy of the Article 5 allowance 
amounts for 2002 and beyond. We plan to, as soon as possible, 
promulgate another rule laying out the allowances for export to Article 
5 countries past 2001 according to the CAA and the Protocol. From 2002 
to 2005, we plan to grant the average of the 1995 through 1998 
production for export to Article 5 countries. From 2005 to 2015, when 
the developing countries phase out methyl bromide (except for 
previously discussed exemptions), we plan to grant the current 
industrialized countries' production allowance for export to Article 5 
countries of 80% of the 1995 through 1998 average of production for 
export to Article 5 countries.
    Because we are not adding the Article 5 Allowances past 2001 at 
this time, we are not requesting comment on these allowances at this 
time. EPA intends to publish a proposal for these allowances in a 
future notice and comment rulemaking in 2001. Any unsolicited comments 
addressing Article 5 Allowances past 2001 will be addressed in relation 
to that future proposal.

VIII. How Do Today's Changes Affect the Economic Impact of the 
Phaseout?

    In preparing the final rule that established the original 2001 
phaseout date for methyl bromide (58 FR 69235), we conducted a Cost 
Effectiveness Analysis, dated September 30, 1993, under the title, 
``Part 2, The Cost and Cost-Effectiveness of the Proposed Phaseout of 
Methyl Bromide'' (Docket A-92-13, Document Number IV-A-23). In 
preparing for the initial interim 25% reduction, we conducted an 
addendum to the 1993 analysis (Docket A-92-13, Document Number II-A-
41). For today's interim and final reductions in methyl bromide 
production and import, we conducted a Regulatory Impact Analysis as an 
update to the 1993 analysis, and in addition to the 1999 addendum. This 
RIA was not used as a basis for deciding on phasedown and phaseout 
percentages and dates. Rather, the dates are dictated by the Montreal 
Protocol and the Clean Air Act Amendments of 1998. The original (1993) 
annualized cost estimate for the 2001 phaseout, adjusted to 1998 
dollars, is $159 million. The results of the updated analysis, which 
will be available in conjunction with our forthcoming proposed rule 
addressing quarantine and preshipment, are expected to indicate that 
extending the phaseout deadline will result in cost savings, when 
compared to the cost estimate for the 2001 phaseout.

[[Page 70801]]

IX. What Are the Supporting Analyses?

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 to State, local, and tribal governments, in 
the aggregate, or to 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. 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 federal mandates (under the regulatory 
provisions of the Title II of the UMRA) for the private sector. 
However, the rule implements mandates specifically and explicitly set 
forth by the Congress in section 604(h) of the CAA, as added by Section 
764 of the 1999 Omnibus Consolidated Emergency Supplemental 
Appropriations Act (Public Law No. 105-277), without the exercise of 
any policy discretion by EPA. In particular, this rule implements the 
directive in section 604(h) of the CAA to promulgate a methyl bromide 
phaseout schedule that is in accordance with the schedule under the 
Montreal Protocol. EPA has determined that this rule does not contain a 
Federal mandate that may result in expenditures of $100 million or more 
for State, local, and tribal governments, in the aggregate, or the 
private sector in any one year. Because this rule extends the current 
phaseout, the rule reduces costs. Thus, today's rule is not subject to 
the requirements of sections 202 or 205 of the UMRA.
    We determined that this rule contains no regulatory requirements 
that might significantly or uniquely affect small governments; 
therefore, we are 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.

b. Regulatory Flexibility

    EPA has determined that it is not necessary to prepare a regulatory 
flexibility analysis in connection with this final rule. EPA has also 
determined that this rule will not have a significant impact on a 
substantial number of small entities.
    For purposes of assessing the impacts of today's rule on small 
entities, small entity is defined as:
    (1) A small business that is identified by the Standard Industrial 
Classification (SIC) Code in the Table below. The size standards 
described in this section apply to all Small Business Administration 
(SBA) programs unless otherwise specified. The size standards 
themselves are expressed either in number of employees or annual 
receipts in millions of dollars, unless otherwise specified. The number 
of employees or annual receipts indicates the maximum allowed for a 
concern and its affiliates to be considered small.

------------------------------------------------------------------------
                                                                  Size
         Type of  enterprise              SIC code/ division    standard
------------------------------------------------------------------------
Industrial Organic Chemicals.........  2813...................     1,000
Wholesale Trade......................  Division F.............       100
------------------------------------------------------------------------

    (2) A small governmental jurisdiction that is a government of a 
city, county, town, school district or special district with a 
population of less than 50,000; and
    (3) A small organization that is any not-for-profit enterprise 
which is independently owned and operated and is not dominant in its 
field.
    Today's direct final rule will not impose any requirements on small 
entities, as it regulates large, multinational corporations that either 
produce, import or export class I, group VI ozone-depleting substances.

c. 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 a ``significant'' regulatory action 
as one that is likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more, 
or adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal 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 entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    Pursuant to the terms of Executive Order 12866, OMB has notified 
EPA that it considers this an ``economically significant regulatory 
action'' within the meaning of the Executive Order. EPA has submitted 
this action to OMB for review. Changes made in response to OMB 
suggestions or recommendations will be documented in the public record.

d. Applicability of Executive Order 13045--Children's Health Protection

    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 or safety risk that EPA has reason to believe may 
have a disproportionate effect on children. If the regulatory action 
meets both criteria, the Agency must evaluate the environmental health 
or safety effects of the planned rule on children, and explain why the 
planned regulation is preferable to other potentially effective and 
reasonably feasible alternatives considered by the Agency.
    EPA interprets 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.

[[Page 70802]]

This rule is not subject to Executive Order 13045 because it implements 
a Congressional directive to phase out production and import of methyl 
bromide in accordance with the schedule under the Protocol.

e. Paperwork Reduction Act

    This action does not add any information collection requirements or 
increase burden under the provisions of the Paperwork Reduction Act, 44 
U.S.C. 3501 et seq. The Office of Management and Budget (OMB) 
previously approved the information collection requirements contained 
in the final rule promulgated on May 10, 1995, and assigned OMB control 
number 2060-0170 (EPA ICR No. 1432.17).
    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.

f. Executive Order 13132 (Federalism)

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    This rule does not have federalism implications. It will not have 
substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government, as 
specified in Executive Order 13132. This rule regulates large, 
multinational corporations that either produce, import or export class 
I, group VI ozone-depleting substances. It implements mandates 
specifically and explicitly set forth by the Congress in section 604(h) 
of the CAA, as added by Section 764 of the 1999 Omnibus Consolidated 
Emergency Supplemental Appropriations Act (Public Law No. 105-277), 
without the exercise of any policy discretion by EPA. Thus, Executive 
Order 13132 does not apply to this rule.

g. 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 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 or matters 
that significantly or uniquely affect their communities.''
    Today's rule implements requirements specifically set forth by 
Congress in section 604(h) of the CAA, as added by Section 764 of the 
1999 Omnibus Consolidated Emergency Supplemental Appropriations Act 
(Public Law No. 105-277), without the exercise of any discretion by 
EPA. Accordingly, the requirements of section 3(b) of Executive Order 
13084 do not apply to this rule.

h. The National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Public Law No. 104-113, Section 12(d) (15 
U.S.C. 272 note) directs EPA to use voluntary consensus standards in 
its regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures, and business practices) that are developed or 
adopted by voluntary consensus standards bodies. The NTTAA directs EPA 
to provide Congress, through OMB, explanations when the Agency decides 
not to use available and applicable voluntary consensus standards. This 
rulemaking does not involve technical standards. Therefore, EPA did not 
consider the use of any voluntary consensus standards.

i. Submission to Congress and the Comptroller General

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This rule is a ``major rule'' as defined by 5 U.S.C. 804(2). 
This rule will be effective January 29, 2001.

List of Subjects in 40 CFR Part 82

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Chemicals, Exports, Imports, Methyl bromide, 
Ozone layer.

    Dated: November 17, 2000.
Carol M. Browner,
Administrator.

    For reasons set out in the preamble, title 40 chapter I of the Code 
of Federal Regulations is amended as follows:

PART 82--PROTECTION OF STRATOSPHERIC OZONE

    1. The authority citation for part 82 continues to read as follows:


[[Page 70803]]


    Authority: 42 U.S.C. 7414, 7601, 7671-7671q.

Subpart A--Production and Consumption Controls

    2. Section 82.4 is amended by:
    a. Revising the first sentence of paragraph (a),
    b. Revising the first sentence of paragraph (b),
    c. Revising the first sentence of paragraph (c),
    d. Revising the first sentence of paragraph (d),
    e. Removing the second sentence of paragraph (h) and adding two 
sentences in its place,
    f. Revising the first 2 sentences of paragraph (k),
    g. Adding and reserving paragraphs (v) and (w).
    The revisions and additions read as follows:


Sec. 82.4  Prohibitions.

    (a) Prior to January 1, 1996, for all Groups of class I controlled 
substances, and prior to January 1, 2005, for class I, Group VI 
controlled substances, no person may produce, at any time in any 
control period, (except that are transformed or destroyed domestically 
or by a person of another Party) in excess of the amount of unexpended 
production allowances or unexpended Article 5 allowances for that 
substance held by that person under the authority of this subpart at 
that time for that control period. * * *
    (b) Effective January 1, 1996, for any class I, Group I, Group II, 
Group III, Group IV, Group V, or Group VII controlled substances, and 
effective January 1, 2005, for any class I, Group VI controlled 
substances, no person may produce, at any time in any control period, 
(except that are transformed or destroyed domestically or by a person 
of another Party) in excess of the amount of conferred unexpended 
essential-use allowances or exemptions under this section, the amount 
of unexpended Article 5 allowances as allocated under Sec. 82.9, or the 
amount of conferred unexpended destruction and transformation credits 
as obtained under Sec. 82.9 for that substance held by that person 
under the authority of this subpart at that time for that control 
period. * * *
    (c) Prior to January 1, 1996, for all Groups of class I controlled 
substances and prior to January 1, 2005, for class I, Group VI 
controlled substances, no person may produce or (except for 
transhipments, heels or used controlled substances) import, at any time 
in any control period, (except for controlled substances that are 
transformed or destroyed) in excess of the amount of unexpended 
consumption allowances held by that person under the authority of this 
subpart at that time for that control period. * * *
    (d) Effective January 1, 1996, for any class I, Group I, Group II, 
Group III, Group IV, Group V, or Group VII controlled substances, and 
effective January 1, 2005, for any class I, Group VI controlled 
substances, no person may import (except for transhipments or heels), 
at any time in any control period, (except for controlled substances 
that are transformed or destroyed) in excess of the amount of 
unexpended essential-use allowances or exemptions as allocated under 
this section or the amount of unexpended destruction and transformation 
credits obtained under Sec. 82.9, held by that person under the 
authority of this subpart at that time for that control period. * * *
* * * * *
    (h) * * * In addition to total production permitted under paragraph 
(f) of this section, effective January 1, 2001, for class I, Group VI 
controlled substances, a person may, at any time, until January 1, 
2002, produce 15 percent of baseline production as apportioned under 
Sec. 82.5 for export to Article 5 countries. No person may, at any 
time, in any control period until January 1, 2000, produce class I, 
Group I, Group II, Group III, Group IV, and Group V controlled 
substances, and no person may, at any time until January 1, 2002, 
produce class I Group VI controlled substances for export to Article 5 
countries in excess of the Article 5 allowances allocated under 
Sec. 82.9(a). * * *
* * * * *
    (k) Prior to January 1, 1996, for all Groups of class I controlled 
substances, and prior to January 1, 2005, for class I, Group VI 
controlled substances, a person may not use production allowances to 
produce a quantity of a class I controlled substance unless that person 
holds under the authority of this subpart at the same time consumption 
allowances sufficient to cover that quantity of class I controlled 
substances nor may a person use consumption allowances to produce a 
quantity of class I controlled substances unless the person holds under 
authority of this subpart at the same time production allowances 
sufficient to cover that quantity of class I controlled substances. 
However, prior to January 1, 1996, for all class I controlled 
substances, and prior to January 1, 2005, for class I, Group VI 
controlled substances, only consumption allowances are required to 
import, with the exception of transhipments, heels and used controlled 
substances. * * *
* * * * *
    (v) Critical use exemption. [Reserved]
    (w) Emergency use exemption. [Reserved]

    3. Section 82.7 is revised to read as follows:


Sec. 82.7  Grant and phase reduction of baseline production and 
consumption allowances for class I controlled substances.

    For each control period specified in the following table, each 
person is granted the specified percentage of the baseline production 
and consumption allowances apportioned to him under Sec. 82.5 and 82.6 
of this subpart.

----------------------------------------------------------------------------------------------------------------
                                      Class I
                                     substances    Class I      Class I      Class I      Class I      Class I
                                    in groups I   substances   substances   substances   substances   substances
          Control period              and III,     in group   in group IV   in group V  in group VI    in group
                                        (In        II,  (In        (In         (In           (In       VII  (In
                                      percent)     percent)     percent)     percent)     percent)     percent)
----------------------------------------------------------------------------------------------------------------
1994..............................           25            0           50           50          100          100
1995..............................           25            0           15           30          100          100
1996..............................            0            0            0            0          100            0
1997..............................            0            0            0            0          100            0
1998..............................            0            0            0            0          100            0
1999..............................            0            0            0            0           75            0
2000..............................            0            0            0            0           75            0
2001..............................  ...........  ...........  ...........  ...........           50  ...........
2002..............................  ...........  ...........  ...........  ...........           50  ...........
2003..............................  ...........  ...........  ...........  ...........           30  ...........
2004..............................  ...........  ...........  ...........  ...........           30  ...........

[[Page 70804]]

 
2005..............................  ...........  ...........  ...........  ...........            0  ...........
----------------------------------------------------------------------------------------------------------------


    4. Section 82.9 is amended by:
    a. Revising paragraph (a)(2),
    b. Revising the first sentence of paragraph (e) introductory text,
    c. Revising paragraph (e)(1) introductory text,
    d. Revising the first sentence of paragraph (e)(2),
    e. Revising the first sentence of paragraph (e)(3).
    The revisions read as follows:


Sec. 82.9  Availability of allowances in addition to baseline 
production allowances.

    (a) * * *
    (2) 15 percent of their baseline production allowances for class I, 
Group VI controlled substances listed under Sec. 82.5 of this subpart 
for each control period ending before January 1, 2002;
* * * * *
    (e) Until January 1, 1996 for all class I controlled substances, 
except Group VI, and until January 1, 2005 for class I, Group VI, a 
person may obtain production allowances for that controlled substance 
equal to the amount of that controlled substance produced in the United 
States that was transformed or destroyed within the United States, or 
transformed or destroyed by a person of another Party, in the cases 
where production allowances were expended to produce such substance in 
the U.S. in accordance with the provisions of this paragraph. * * *
    (1) Until January 1, 1996, for all class I controlled substances, 
except Group VI, and until January 1, 2005, for class I, Group VI, a 
person must submit a request for production allowances that includes 
the following:
* * * * *
    (2) Until January 1, 1996 for all class I controlled substances, 
except Group VI, and until January 1, 2005, for class I, Group VI, the 
Administrator will review the information and documentation submitted 
under paragraph (e)(1) of this section and will assess the quantity of 
class I controlled substance that the documentation and information 
verifies was transformed or destroyed. * * *
    (3) Until January 1, 1996 for all class I controlled substances, 
except Group VI, and until January 1, 2005, for class I, Group VI, if 
the Administrator determines that the request for production allowances 
does not satisfactorily substantiate that the person transformed or 
destroyed controlled substances as claimed, or that modified allowances 
were not expended, the Administrator will issue a notice disallowing 
the request for additional production allowances. * * *
* * * * *

    5. Section 82.10 is amended by revising paragraphs (a) introductory 
text, (a)(1) introductory text, the first sentence of (b), and the 
first sentence of paragraph (c) introductory text as follows:


Sec. 82.10  Availability of consumption allowances in addition to 
baseline consumption allowances.

    (a) Until January 1, 1996 for all class I controlled substances, 
except Group VI, and until January 1, 2005, for class I, Group VI, any 
person may obtain, in accordance with the provisions of this 
subsection, consumption allowances equivalent to the level of class I 
controlled substances (other than used controlled substances or 
transhipments) that the person has exported from the United States and 
its territories to a Party (as listed in appendix C to this subpart).
    (1) Until January 1, 1996 for all class I controlled substances, 
except Group VI, and until January 1, 2005, for class I, Group VI, to 
receive consumption allowances in addition to baseline consumption 
allowances, the exporter of the class I controlled substances must 
submit to the Administrator a request for consumption allowances 
setting forth the following:
* * * * *
    (b) Until January 1, 1996, a person may obtain consumption 
allowances for a class I controlled substance (and until January 1, 
2005 for class I, Group VI) equal to the amount of a controlled 
substance either produced in, or imported into, the United States that 
was transformed or destroyed in the case where consumption allowances 
were expended to produce or import such substance in accordance with 
the provisions of this paragraph. * * *
    (c) A company may also increase its consumption allowances by 
receiving production from another Party to the Protocol for class I, 
Group I through Group V and Group VII controlled substances until 
January 1, 1996 and for class I, Group VI controlled substances until 
January 1, 2005. * * *
* * * * *
    6. Section 82.12 is amended by revising paragraphs (a)(1) 
introductory text and (b)(1) 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, 2005, for Group VI, and 
person (``transferor'') may transfer to any other person 
(``transferee'') any amount of the transferor's consumption allowances 
or production allowances, and effective 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, as follows:
* * * * *
    (b) * * *
    (1) Until January 1, 1996, for all class I controlled substances, 
except Group VI, and until January 1, 2005 for Group VI, any person 
(``convertor'') may convert consumption allowances or production 
allowances for one class I controlled substance to the same type of 
allowance for another class I controlled substance within the same 
Group as the first as listed in appendix A of this subpart, following 
the procedures described in paragraph (b)(4) of this section.
* * * * *
[FR Doc. 00-30109 Filed 11-27-00; 8:45 am]
BILLING CODE 6560-50-P