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# OAR Box 1833 Prepped by Keeia Richards



## Document

Number: 

# 73 ) FE D RE G VO L 5 3 N O 10 0 MA Y 24,198 8

Docket Number: 

# A-87-2 0

Printed 11/14/200811:01:29 AM Sheet 73 of 172P. 2

^ 

# Afv-^ c

Tuesda y Ma y 24 , 198 8



# Par t Y 

# Environmenta l Protectio n Agenc

y
4 0 CF R Part 8 2 Stratospheri c Ozon e Protection ; Apportionmen t o f Baselin e Consumptio n an d Productio n Rights ; Propose d Rul eP. 3

1880 0 Federa l Registe r / Vol

. 53 , No

. 10 0 /

Tuesday , Ma y 24 , 198 8 / Propose dRule s
ENVIRONMENTA L PROTECTIO N AGENC Y
4 0 CF R Par

t 8 2 f FR L 3378-4 ] Stratospheri c Ozon e Protection ; Apportionmen t o f Baselin e Consumptio n an d Productio n Right s AGENCY : Environmenta l Protectio n Agenc y (EPA)

. ACTION : Propose drule

. SUMMARY : O n Decembe r 14,1987 , EP

A publishe din th e Federa l Registe r tw o notice s relate dto stratospheri c ozon e protection

. On e notic e (5 2 F R47489) propose dregulation s t o implemen t th e Montrea l Protoco l o n Substance s tha t Deplete th e Ozon e Layer

(th e Protocol) , whic h require s ratifyin g nation s t o limi t thei r productio n an dconsumptio n o f certai n ozone-depletin g substance s accordin g t o aspecifie dschedule

. Th e proposa l se t

fort h anumbe r

o f regulator y option s fo

r implementin g th e Protocol' s limits , an d state dtha t EPA' s preferre doptio n wa s t o allocat e "rights " equa l to th e quantity o

f allowabl e productio n an dconsumptio n fo r firm s tha t produce dan dimporte dthes e substance s i n 1986 , th e baselin e year specifie db y th e Protocol

. It als o describe dth e us e o

f auctions , regulatory fee s an d technolog y control s a s alternativ e approache s t o implementin g th e Protocol

. Th e othe r notic e (5 2 F

R47486 ) promulgate dafina

l rul e (4 0 CF R82.20 ) requirin g firm s t o report

to th e Agenc y th e amount

o f certai n ozone-depletin g substance s the y ha dproduced , importe d o r exporte din 1986

. EP

A neede dthi s informatio n to establis h abaselin e agains t whic h Unite dState s complianc e wit h th e Protoco l woul db e measure d an dto apportio n to firm s baselin e productio n an d consumptio n rights , shoul dth e Agenc y decid e to emplo y tha t approac h t o implementin g th e Protocol

. EP A i s require db y cour

t orde r t o tak e fina l actio n o n it s propose drul e b y Augus t 1,1988

. It i s no t considerin g th e publi c comment s receive do n it s December 1 4 notice

. Whil e n o fina

l decisio n o n aregulatory approac h ha s ye t bee n reached , thi s notic e propose s apportionment s o

f baselin e right s whic h woul db e issue di

f th e Agency' s fina

l regulatio n employ s th e propose d allocate dquot aapproach. DATES : A publi c hearin g o n th e propose d rul e publishe dtoda y wil l b e hel don Jun e 7,1988 ; i

f an y intereste dpart y notifie s EP

A before tha t

dat e tha t i t wishe s to presen t

ora l testimony

. T o reques t apubli c hearin g o r

to learn whethe r

an dwher e apubli c hearin g wil l occur , cal l th e contac t

perso n liste d below

. Writte n comment s o n thi s propose d rul e mus t b e submitte dt o th e locatio n liste dbelo w b y Jun e 23,1988

. I f apubli c hearin g i s held , informatio n necessar y to rebu t o r supplemen t

ora l testimon y ma

y b e submitte dunti l Jun e 23,1988

. ADDRESS : Writte n comment s shoul db e sen t t o Docke t

A-87-20 , Centra l Docke t Section , Sout

h Conferenc e Room4 , EPA , 40 1 M Street , SW. , Washington , D C 20460

. Th e docke t

may b e inspecte d betwee n 8:0

0 a.m
. an d4 p.m
. o n weekdays

. A s provide di n 40 CF RPart 2 , areasonabl e fee may b e charge dfo r photocopying

. T o expedit e review , i t i s als o requeste dtha t

aduplicat e cop y o

f writte n comment s b e sen t t o Davi dLee a t th e addres s liste dbelow

. FO RFURTHE RINFORMATIO N CONTACT : Davi dLee , Offic e o

f Progra m Development , Offic e o

f Air an d Radiatio n (ANR-445), ' EPA , 40 1 M Street , SW. , Washington , D C 20460

. Telephon e (202 ) 475-7497

. SUPPLEMENTAR Y INFORMATION : A

. Backgroun d Thi s proposa l supplement s EPA' s December 14,198 7 notic e proposin g t o implemen t

th e Montrea l Protocol' s limit s o n productio n an dconsumptio n o f certai n ozone-depletin g substances

. A s note dabove , th e Decembe r 1 4 notic e propose dto implemen t

th e Protocol' s limit s b y apportionin g baselin e productio n an dconsumptio n "rights " to producer s an dimporter s o f th e controlle dsubstance s an db y freezin g o r reducin g thes e right s accordin g t o th e schedul e specifie di n th e Protocol

. B y means o f th e fina l rul e als o publishe do n December 14,1987 , EP

A obtaine dth e dat ai t neede dto determin e firms ' baselin e apportionments

. Thi s notic e propose s thos e apportionment s s o tha t i f th e Agenc y decide s to adop t it s propose dallocate dquot aapproach , th e -apportionment s ma

y b e include din th e fina l rul e du e o n Augus t

1,1988

. A s th e Decembe r

1 4 proposa l describe s i n detail , th e Montrea l Protoco l i s a n internationa l agreemen t whic h 2 4 nations , includin g th e Unite d States , signe dlas t

September

. Sinc e then , five more nation s hav e signe dth e Protocol , an d th e Unite dState s an d Mexic o hav e ratifie dit

. Th e Protoco l wil l ente r int o forc e on January 1,1989 , i f b y tha t dat e 1 1 nation s o r

regional economi c integratio n organization s representin g a t

leas t two-third s o

f - estimate d198 6 global consumptio n o f th e controlle dchemical s hav e ratifie di t an dth e Vienn aConventio n fo r th e Protectio n o

f th e Ozon e Layer

ha s entere dint o force

. I f thes e condition s hav e no t bee n fulfilledb y January 1 , 1989 , th e Protoco l wil l ente r int o forc e o n th e ninetieth da y followin g th e dat e o n whic h th e condition s hav e bee n fulfilled

. Th e Montrea l Protoco l limit s th e productio n an dconsumptio n (define da s productio n plu s import s minu s exports ) o f certai n chlorofluorocarbon s (CFCs ) ("Grou p I chemicals" ) an dhalon s ("Group I I chemicals")

. Assumin g th e Protoco l enter s int o forc e o n January 1 , 1989 , productio n an dconsumptio n o f Group I chemical s woul db e frozen at 198 6 level s beginnin g July 1,1989 , an d woul db e reduce dfro

m198 6 level s b y 2

0 an d5 0 percen t

beginnin g Jul

y 1,1993 , an dJul y 1,1998 , respectively

. Group I I chemical s woul db e frozen a t 198 6 level s beginnin g o n January 1,1992

. (The Protocol' s regulatory schedul e i s describe di n detai l in th e December 1 4 notice. ) T o establis h th e Unite dStates ' 198 6 baselin e productio n an dconsumptio n levels , EP A promulgate dunde r

section s 11 4 an d157(b ) o

f th e Clean Air

Act , 4 2 U.S.C

. 741 4 an d7457(b) , th e fina l rul e requirin g companie s t o report thei r 198 6 production , import s an dexport s o f Group I an dGroup I

I chemical s i n 1986

. EP A ha s reviewe dan daggregate dthi s informatio n an dforwarde da preliminary estimat e o

f th e Unite d States ' 198 6 productio n o

f Group I chemical s combine dan dGroup I I chemical s combine dt o th e Unite d Nation s Environmen t

Programme (UNEP) , unde r

whos e auspice s th e Montrea l Protoco l wa s negotiated

. Unite dState s complianc e wit h th e Protocol' s contro l requirement s wil l b e measure dagains t

thes e baselin e levels

. Afte r thi s rulemakin g i s completed , th e Agenc y wil l provid e UNE P wit h afina l estimat e o

f Unite dState s 198 6 productio n an d consumptio n o f eac h o f th e group s o

f controlle dsubstances

. Th e Decembe r

1 4 notic e o

f propose d rulemakin g outline dsevera l option s fo r implementin g th e Protocol' s contro l requirements

. Th e firs t

optio n describe d wa s th e allocate dquot asystem

. A s note dabove , unde r

tha t syste m producer s an dimporter s woul db e allocate dproductio n an dconsumptio n "rights " base do n thei r

198 6 production , impor t and/o r export levels

. Exporter s woul dno t require , an dthu s no t

receive , right s t o continu e exporting , sinc e th e Protoco l doe s no t

limi t export s o

f thes e chemicals

. (However , exporter s woul d b e require dt o report

to EP A th e amoun t o f controlle dsubstance s the y export. ) The-othe r implementin g scheme s outline din th e notic e require dEP A to eithe r auctio n productio n an dP. 4

Federa l Registe r

/ Vol

. 53 , No

. 10 0 /

Tuesday , Ma y 24 , 198 8 / Propose dRule s consumptio n rights, se t

aproduction / impor t fee on th e chemicals , o r

impos e ban s an dcontrol s o n thei r us e o r emissions

. Anothe r

optio n combine da n allocate dquot asyste mwit h aselec t se t o f comman dan dcontro l requirements

. Althoug h EP

A presente dfive possibl e options , th e Agenc y state din th e notic e it s belie f tha t th e allocate dquot aoptio n i s th e mos t

viabl e schem e fo

r implementin g th e Montrea l Protocol

. It als o announce dit s plan s t o propos e apportionment s o

f baselin e right s in tim e fo r fina l apportionment s to b e include di n th e Augus t

1,198 8 fina

l rul e i n th e even t

tha t th e allocate dquot a syste mi s th e approac h employed

. B

. Propose dApportionmen t o f Right s 1. Apportionment

Formulas Excep t a s note dbelow , EP

A calculate dth e propose dbaselin e productio n an dconsumptio n right s i n th e manne r

outline di n th e December 1 4 proposal

. (Se e propose d40 CF R82. 5 an d 82.6. ) Sinc e th e Protoco l use s 198 6 productio n a s abaseline , EP A apportione dproduction rights to Unite d State s producer s base don thei r 198 6 productio n levels

. Eac h producer' s right s wer e calculate din thre e steps

. First , consisten t wit h EPA' s propose d definitio n o

f productio n a s excluding "th e manufactur e o

f controlle d substance s tha t

ar e use dan dentirel y consume di n th e productio n o f othe r chemicals " (propose d40 CF R82.3(q)) , th e producer' s productio n leve l o f eac h controlle dchemical wa s reduce db y th e amoun t o f tha t chemical s o consumed

. Second , th e producer' s adjuste d productio n o

f eac h controlle dchemical wa s multiplie db y tha t

chemical' s propose dozon e depletio n weight a s se t fort h i n Appendi x A o

f th e December

1 4 proposa l to arriv e a t

a"calculate dlevel " o f production

. Finally , th e resultin g calculate dlevel s wer e adde dtogethe r fo r Group I chemical s an dfo r Group II chemicals

. Firm s tha t

produce d chemical s i n both Group I an dGroup I I wer e thu s apportione dseparat e productio n right s fo

r Group I an dGroup I I chemicals

. I

n addition , th e right s wer e apportione din term s o

f "calculate d levels, " o r tota l allowabl e ozon e depletio n potential , s o tha t aproduce r coul dalte r

th e mix o f chemical s i t produce dwithi n eac h group , a s lon g a s th e tota l ozon e depletio n potential o f it s productio n di dno t

excee dtha t

allowe d b y th e right s i t

held

. EP A calculate dth e propose dbaselin e consumption rights i n asimilar manner
. A s note dabove , th e Protoco l use s 198 6 consumptio n a s abaselin e an ddefine s consumptio n a s productio n plu s import s minu s exports

. I

n it s December

1 4 notice , EP A propose dto implement

th e Protocol' s consumptio n limi t b y apportionin g consumptio n right s equa l to th e Unite dStates ' 198 6 leve l o f productio n an dimports , les s it s 198 6 leve l o f exports

. Specifically , EP

A propose dto apportio n to importer s consumptio n right s equa l t o th e calculate dleve l o

f thei r 198 6 imports , an dt o producer s right s equa l t o th e calculate dleve l o

f thei r 198 6 productio n multiplie db y th e followin g correctio n facto r to accoun t

fo r exports :
[(U.S
. 198 6 production)—(U.S
. 198 6 exports) )

(U.S
. 198 8 production ) Th e Agenc y state dit s belie f tha t producers ' consumptio n right s shoul db e reduce dto reflec t

export s becaus e producer s generall y hav e bee n th e majo r exporter s o

f controlle dsubstances

. I n thei r comment s o n th e Decembe r 1 4 proposal , severa l firm s too k issu e wit h EPA' s apportionmen t

formul afo

r consumptio n rights

. Som

e state dtha t

th e calculatio n o

f consumptio n right s fo

r importers , a s wel l a s fo

r producers , shoul dtak e accoun t

o f exports , sinc e producer s wer e no t

responsibl e fo

r al l 198 6 exports

. The y als o objecte dto EPA' s us e o

f acorrectio n factdr

to reduc e ever

y producer' s consumptio n right s t o accoun t

fo r exports

. Us e o

f th e correctio n facto r

woul deffectively attribut e t o eac h produce r ashar e o f tota l export s proportiona l t o it s shar e o f th e productio n market , regardles s o f whethe r an dho w much tha t

produce r ha dactuall y exported

. Th e commenter s suggeste dtha t

EP A instea dcalculat e eac h firm' s consumptio n right s b y subtractin g eac h firm' s 198 6 export s fro mit s 198 6 productio n o r

imports

. EPA' s propose dformul afo r apportionin g consumptio n right s wa s base din par t

o n assumption s tha t importer s di dno t

als o export

an dtha t th e informatio n neede dto.trac e export s to aspecifi c exporte r

woul dno t

b e available

. However , EP

A learne dfro

m th e response s to it s Decembe r 1 4 fina l rul e bot h tha t some importer s als o exported , an dth e amoun t eac h produce r an dimporter

directl y exporte din 1986

. Sinc e th e Agenc y agree s tha t consumptio n right s ar e more fairly calculate db y attributin g t o both producer s and

importer s th e amoun t the y actually exporte din 1986 , EP A ha s revise dit s apportionmen t

formul aalon g th e line s suggeste dabov e an d calculate dpropose dconsumptio n right s i n th e followin g manner
. Eac h importer' s consumptio n right s wer e determine db y subtractin g fro mth e volume o f eac h controlle dchemical i t importe din 198 6 th e amoun t o f tha t chemical i t

exporte di

n 198 8 (EPA' s record s indicat e tha t

importer s exporte d only th e chemical(s ) the y imported) ; multiplyin g th e adjuste dimpor t leve l fo r eac h chemical b y tha t

chemical' s ozon e depletio n weight ; an daddin g togethe r th e resultin g calculate dlevel s fo r Grou p I chemical s an dfo

r Group I I chemicals

. Eac h producer' s consumptio n right s wer e determine din muc

h th e sam e manner , wit

h productio n level s substitute dfo

r impor t levels , bu t

anothe r ste p wa s required

. Whil e producer s an d importer s wer e responsibl e fo r mos t o f th e Unite dStates ' 198 6 exports , independen t

exporter s mad e u p roughl y 3 5 percen t o f th e CF C marke t an dfive percen t o f th e halo n market

. Take n together , thes e firms purchase dfro m ever y Unite dState s producer , bu t the y di dnot , an di

n many case s coul dnot , provid e precise , documente d informatio n a s to wha t

quantity o

f thei r 198 6 export s wa s supplie db y whic h producer

. EPA , i

n turn , ha dneithe r

th e resource s no r

tim e unde r th e court

ordere drulemakin g schedul e t o trac k dow n an dsubstantiat e th e sourc e o f ever y export

. Indeed , tha t

tas k ma y no t b e possible , sinc e some firm s purchase d fro mmiddleme n instea do

f producers , an dfirm s purchasin g fro

mmore than on e sourc e ma

y no t b e abl e t o tel l ho w much o f whic h producer' s chemical s i t exporte din 1986

. I

n an y event , wit

h th e availabl e informatio n EP

A coul dnot accuratel y o r

verifiabl y attribut e t

o specifi c producer s th e chemical s shippe dabroa db y independen t exporters , Given thi s situation , th e Agenc y foun d i t reasonabl e to attribut e thes e export s to th e producer s in proportio n to thei r respectiv e level s o

f 198 6 production

. EP A accomplishe dthi s b y multiplyin g eac h producer' s 198 6 productio n by —

(U.S
. 198 6 production—unattribute d portio n o f U.S
. 198 6 exports ) U.S

. 1986 productio n

an dthe n subtractin g that

producer' s 198 6 direc t

exports

. EP

A develope d separat e correctio n factor s fo r Grou p I an dGrou p I I chemicals , an deac h variabl e in th e correctio n factor s wa s expresse di

n term s o f acalculate dlevel , o r tota l ozon e depletio n potential

. Th e ne t effec t o f th e correctio n factor s wa sP. 5



### Federa l Registe r

/ Vol

. 53 , No

. 10

0 / Tuesday , May 24 , 198 8 / Propose dRule s

t o reduc e eac h producer' s consumptio n right s b y ashar e o f

th e unattribute d export s i n proportio n t o it s 198 6 production

. Fo r

producer s tha t

wer e als o importer s i n 1986 , EP A calculate dthei r consumptio n right s usin g asingl e ' equatio n tha t

combine dth e equation s applicabl e t o importer s an dproducers

. Th e Decembe r

1 4 proposa l include d regulator y languag e describin g ho w EP A woul dcalculat e baselin e productio n an d consumptio n rights

. Thi s notic e propose s no t

onl y asomewha t

differen t approac h t o calculatin g baselin e consumptio n rights, bu t als o th e specifi c apportionment s t o b e inserte da t propose d§ § 82.5(a)-{b ) an d 82.6(a)-(b)

. I f EP A adopt s th e allocate dquot a approac h an dthu s take s fina l actio n o n thes e propose dapportionments , ther e wil l b e n o nee dt o includ e revise d regulator y languag e describin g ho w th e Agenc y arrive d a t

th e apportionments

. Thus , EP A propose s t o simpl y delet e th e regulator y languag e i n § § 82. 5 an d82. 6 describin g ho w EP A determine dth e apportionment s i n th e even t th e Agenc y promulgate s th e apportionments

. 2. Definitions Severa l othe r

issue s relevan t

t o apportionin g baselin e productio n an d consumptio n right s hav e bee n raise di n respons e t o th e Decembe r 1 4 fina l rul e an dcomment s o n th e Decembe r 1 4 propose drule , an da t

a n internationa l meetin g t o develo p aharmonize dsyste m fo r reportin g dat ao n production , import s an dexport s o f

substance s controlle db y th e Protocol

. Th e latte r

meetin g wa s attende db y technica l expert s fromth e Unite dState s an dothe r signatorie s t o th e Protoco l an dtoo k

plac e i n Marc h o f thi s yea r i n Nairobi , Kenya

. EP A ha s considere dth e response s t o it s rul e an d th e recommendation s o f th e technica l expert s i n analyzin g thes e issue s an d ha s base dit s propose dapportionment s o n th e resolution s o f

thos e issue s tha t

i t propose s here

. a
. Definitio n o f

"Controlle dSubstance " Th e Montrea l Protoco l an dEPA' s propose drul e implementin g th e Protoco l limi t th e productio n an dconsumptio n o f "controlle dsubstances. " Consisten t wit h th e Protocol , § 82.3(g ) o f th e propose drul e define s acontrolle d substanc e a s "an y substanc e liste di n Appendi x A t o thi s part , whethe r existin g alon e o r

i n amixture , bu t excludin g an y suc h substanc e o r mixtur e tha t i s i n amanufacture dproduc t othe r tha n acontaine r

use dfo r th e transportatio n o r

storag e o f

di e substanc e listed " Th e inten t o f th e Protoco l drafter s an dEP A wa s t o defin e controlle dsubstanc e t o includ e onl y liste dsubstance s i n bul k forman dt o exclud e liste dsubstance s containe di n

product s suc h a s refrigerator s an dai r conditioners

. Whil e th e definitio n abov e woul dclearl y includ e larg e tan k ca r shipment s o f

liste dsubstances , severa l firm s questione dwhethe r an dwhic h smal l container s o f

liste dsubstance s woul dals o b e included

. I n discussin g wha t

shoul dcoun t

a s a controlle dsubstanc e fo r expor t purposes , on e commente r suggeste dtha t controlle dsubstanc e b e define dt o includ e onl y liste dsubstance s tha t ha d no t bee n use do r

prepare dfo r

aspecifi c use , an dt o exclud e ra w chemical s t o whic h an y valu e ha dbee n added

. EP A doe s no t believe , however , tha t thi s definitio n adequatel y distinguishe s bul k substance s fro msubstance s i n products ; simpl y transferrin g aliste dsubstanc e fro mon e bi g storag e containe r t o man y smalle r storag e container s ma y ad d valu e t o th e substance , bu t th e substanc e ma y stil l b e considere di n bul k forma s oppose dt o containe di n a product

. Th e grou p o f

technica l expert s tha t me t i n Nairob i recommende dtha t th e definitio n o f

controlle dsubstance s b e clarifie da s follows : "An y amoun t o f a [listed ] substanc e o r

amixtur e o f

[listed ] substance s whic h i s no t par t o f aus e syste mcontainin g th e substanc e i s a controlle dsubstanc e an dno t aproduc t containin g acontrolle dsubstanc e fo r th e purpos e o f

th e Protocol

. I

f a[listed ] substanc e o r

mixtur e mus t

firs t b e transferre dfro mabul k containe r

t o anothe r container , vesse l o r

piec e o f equipmen t

i n orde r t o realiz e it s intende duse , th e firs t

containe r

i s i n fac t utilize donl y fo r

storag e and/o r transpor t an dth e [listed ] substanc e o r mixtur e i s considere d[in ] bul k [formo r acontrolle dsubstance ] an dno t a product " S o clarified , th e definitio n o f controlle dsubstance s woul dencompas s liste dsubstance s i n tank s o n boar d ships , rai l tan k

cars , roa dtankers , cylinder s an ddrums , sinc e chemical s ar e generall y transferre dfro mthes e type s o f container s t o othe r

container s o r int o machine s whic h utiliz e them

. I n suc h case s th e eventua l us e o f th e chemical s i s independen t o f th e container

. Conversely , i f

th e mer e dispensin g o f th e liste dsubstanc e fro mo r circulatio n o f th e substanc e i n acontaine r constitute s th e intende dus e o f th e substance , the n th e liste dsubstanc e i n tha t containe r

i s itsel f par t o f aus e syste man dtherefor e woul dno t b e a controlle dsubstanc e fo r Protoco l purposes
. Fo r

example , liste d substance s i n refrigerators , ai r conditioner s o r

fir e extinguisher s woul d no t b e covere db y th e clarifie ddefinitio n o f controlle dsubstances

. Liste dsubstance s i n a n installe do r to

be-installe dcontaine r

fro mwhic h th e substanc e i s o r

woul db e use ddirectl y woul dals o fal l outsid e th e clarifie d definitio n o f

acontrolle dsubstance

. However , liste dsubstance s i n dispensin g container s tha t ar e no t an d wil l no t b e installe do r

use da s par t

o f a

- us e syste mo r

applicatio n woul db e considere dcontrolle dsubstances , becaus e thei r

us e i s independen t

o f th e dispensin g container

. T o illustrat e thi s distinction , liste dsubstance s i n container s use dt o recharg e refrigerator s o r ai r conditioner s ar e no t

ordinaril y installe di n th e refrigerato r o r ai r conditione r

and , unles s the y ar e installed , woul db e covere db y th e clarifie ddefinitio n o f

controlle d substance

. Liste dsubstance s transporte di n container s tha t serv e a s reservoir s fo r

electronic s equipment , o n th e othe r hand , ar e installe da s par t o f th e product , an dtherefor e woul db e exclude dfro mth e definitio n o f controlle dsubstance

. EP A believe s tha t

th e clarificatio n recommende db y th e technica l expert s grou p capture s th e distinctio n betwee n liste dsubstance s i n bul k forman dliste d substance s i n product s tha t th e Protocol' s drafter s sough t t o make

. Th e Agenc y als o believe s tha t clarifyin g th e definitio n o f

controlle dsubstance s a s th e technica l expert s sugges t woul d facilitat e implementatio n o f th e Protoco l an dEPA' s propose dregulations

. EP A therefor e propose s tha t th e definitio n o f controlle dsubstanc e i n it s propose d regulation s a t

§ 82.3(g ) b e revise dt o reflec t th e clarificatio n state dabove

. EP A applie dthi s propose d clarificatio n i n determinin g th e 198 6 level s o f firms' import s an dexport s o f controlle dsubstances

. However , i n th e cas e o f smal l ounc e container s o f CFC

113 , EP A wa s no t

alway s abl e t o determin e whethe r

o r no t th e chemica l wa s par t o f aus e system

. Smal l container s o f

CFC-11 3 ar e mostl y use d fo r direc t cleanin g o f

electronics , an ds o woul db e considere daus e syste man d no t acontrolle dsubstance

. Wher e EP A coul dno t determin e th e us e t o whic h container s wer e put , i t

assume dtha t container s les s tha n agallo n i n siz e wer e use dfo r

direc t cleanin g an dtha t container s o f

agallo n o r

mor e wer e use d fo r storage , makin g th e chemica l the y containe da"controlle dsubstance. " Thi s assumptio n appeare dreasonabl e i n ligh t o f di e informatio n EP A ha dcollecte do n th e typica l us e o f

tiiese containers

. A s th e foregoin g discussio n illustrates , determinin g whethe r

aliste dsubstanc e i s acontrolle dsubstanc e ca n b e difficul tP. 6

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Tuesday , Ma y 24 , 198 8 / Propose dRule s

i n certai n cases , eve n usin g th e definitio n a s clarifie dabove

. EP A ha s spen t muc h tim e an deffor t

makin g thos e determination s fo r

th e purpos e o f apportionin g rights ; hoWever , th e Agenc y i s concerne dabou t havin g t o mak e thes e determination s o n a n ongoin g basi s i n orde r

t o implemen t

th e rule , i f promulgated

. EP A i s thu s considerin g developin g som e "rule s o f thumb " (e.g. , th e CFC-11 3 "on e gallo n rule" ) t o distinguis h fo r complianc e monitorin g purpose s controlle d substance s fro mliste dsubstance s i n products

. EP A request s commen t o n th e suggeste dclarificatio n o f th e definitio n o f controlle dsubstanc e an dinvite s suggestion s fo r

alternativ e definitions

. I t als o request s comment s o n it s propose d approac h t o applyin g th e clarifie d definitio n t o smal l container s o f CFC

113 , an dsuggestion s fo r appropriat e mean s o f simplifyin g th e applicatio n o f th e definitio n fo r

complianc e monitorin g purposes
. b

. Definitio n o f

Importe r

an dExporte r (1 ) Importer. Comment s accompanyin g th e 198 6 impor t report s tha t EP A receive di n respons e t o it s Decembe r

1 4 fina l rul e raise dth e issu e o f wh o i s a n importer

. A s explaine dabove , EPA' s Decembe r 1 4 propose drul e calle dfo r consumptio n right s t o b e apportione dt o importer s a s wel l a s producers , base do n th e formula s previousl y discussed

. I n th e fina l rule , EP A define dimporter s a s person s "wh o transporte dth e chemical s liste da s § 82.20(b ) fro moutsid e th e Unite dState s o r

it s territorie s t o person s withi n th e Unite dState s o r it s territories[,] " an drequire dimporter s t o repor t thei r 198 6 impor t

volumes

. Fo r th e mos t part , import s reporte db y firm s i n respons e t o th e Decembe r 1 4 rule , an dthu s consumptio n right s claime db y firms , di dno t overlap

. I n severa l cases , however , th e sam e shipment s o f

chemical s wer e reporte d b y bot h thei r

Unite dState s purchase r an dth e Unite dState s subsidiar y o f th e foreig n compan y tha t

produce dthem

. Th e Unite dState s purchase r i n som e instance s ha dnegotiate dth e sal e o f th e chemical s wit h th e foreig n company , althoug h i t

purchase dthe mfro mth e Unite dState s subsidiary

. I n addition , a t leas t on e firmha dsupplie dth e tank s i n whic h th e chemical s wer e transported

. However , i n ever y case , th e Unite d State s subsidiar y o f

th e foreig n produce r wa s th e shipment' s "importe r o f record, " aUnite dState s Custom s Servic e ter m meanin g th e firmresponsibl e fo r impor t dutie s an dguaranteein g tha t th e importe dgoo dmeet s al l federa l law s an dregulations

. O n it s face , EPA' s definitio n o f importe r doe s no t

resolv e wh o shoul db e apportione dconsumptio n right s fo r import s claime db y bot h th e Unite d State s purchase r

an dth e Unite dState s subsidiar y o f

th e foreig n producers

. Th e Unite dState s subsidiar y coul db e sai d t o hav e transporte dth e chemical s int o th e Unite dState s becaus e i t wa s legall y responsibl e fo r

passin g the mthroug h Customs ; th e Unite dState s purchaser , o n th e othe r

hand , cause dthe mt o b e transporte db y purchasin g the man di n a t leas t on e cas e assiste di n thei r transpor t b y supplyin g th e containers

. Mos t o f th e import s reporte dt o EP A wer e claime db y th e shipments ' "importe r

o f record. " Indeed , a t

leas t on e o f th e Unite dState s purchaser s involve di n th e competin g claim s wa s th e importe r

o f recor dfo r

othe r shipment s tha t

i t directl y purchase d fro mforeig n producers , an da t leas t on e o f th e Unite dState s subsidiarie s wa s als o a n importe r

o f recor dwit h respec t t o shipment s purchase db y othe r companie s tha t

di dnot clai mth e import s themselves

. I n afe w cases , however , th e import s wer e claime dno t b y thei r importe r

o f record , bu t

b y thei r Unite dState s purchaser

. Th e importer s o r recor di n thes e case s wer e apparentl y merel y shippin g agent s o r custom s broker s tha t

wer e neithe r

supplier s to , no r member s of

, th e Unite dState s use r industry ; i n an y event , the y neithe r reporte dth e import s no r claime dright s fo r them

. On e commente r

suggeste dtha t

EP A defin e importe r

t o b e th e firs t

Unite d State s owne r

wh o i s asupplie r

t o o r a membe r o f th e domesti c industr y tha t use s th e controlle dchemicals

. Accordin g t o th e report s an drecord s EP A receive di n respons e t o th e fina l rule , th e importe r

o f recor di n mos t case s fit s th e suggeste ddefinition ; tha t is , th e importe r

o f recor dwa s th e firs t Unite dState s owne r

wh o wa s eithe r

a supplie r t o o r amembe r

o f th e domesti c use r industry

. Th e importe r o f recor d doe s no t fi t th e definitio n i n onl y tw o situations

. On e involve s aUnite dState s produce r wh o purchase dimport s fro m it s foreign-base dsiste r

corporation ; th e importe r o f recor dfo r

th e transaction s wa s ashippin g compan y tha t coul dno t b e considere dasupplie r t o o r amembe r o f th e domesti c use r

industry

. Th e othe r situatio n involve s aUnite dState s purchase r

wh o receive dimport s fro ma foreig n producer ; th e importe r o f recor d wa s agai n ashippin g compan y tha t 0 coul dno t b e considere dasupplie r t o o r membe r o f th e domesti c use r

industry

. I n bot h cases , th e Unite dState s purchase r

meet s th e suggeste ddefinitio n o f importer

. EP A believe s tha t th e suggeste d definitio n appropriatel y resolve s th e competin g claim s a t

issu e her e fo r severa l reasons
. First , a s applie di t i s consisten t

wit h th e definitio n se t

forth i n th e final rule

. Applicatio n o f th e suggeste ddefinitio n woul dresul t i n th e importe r o f recor do r

th e Unite dState s purchase r

o f th e shipmen t

bein g considere dth e importer ; i t wa s note d earlie r tha t bot h entitie s coul db e considere dt o hav e "transported " th e chemical s int o th e Unite dState s a s th e originall y propose ddefinitio n required

. Second , th e suggeste ddefinitio n i s consisten t

wit h EPA' s propose d regulator y strateg y o f

allocatin g quota s t o th e controlle dchemica l industry

. Unde r th e suggeste ddefinitio n onl y member s o f

tha t industr y woul dreceiv e rights

. Third , th e suggeste ddefinitio n provide s a n objective , reasonabl e basi s fo r decidin g th e fe w case s wher e import s ar e claime db y bot h th e Unite d State s purchase r

tha t i s no t th e importe r o f recor dan dth e foreig n producer' s Unite dState s subsidiar y tha t i s th e importe r o f record

. Unde r

th e definition , th e first Unite dState s owne r

get s credi t fo r th e impor t

an di s thu s apportione d consumptio n rights

. A s note dabove , th e firs t Unite dState s owne r

i n thes e case s i s di e importe r

o f record

. I t

make s sens e t o conside r

a s th e importe r

o f chemica l shipment s th e firs t

Unite dState s owne r o f tha t shipment , particularl y whe n tha t owne r wa s responsibl e fo r

obtainin g th e shipments ' lega l entr y int o th e Unite d States

. Moreover , i n mos t cases , shipment s claime db y importer s o f recor dwh o wer e differen t fro mth e Unite dState s purchaser s wer e not als o claime db y th e Unite dState s purchasers

. Thi s suggest s tha t i t i s reasonabl e t o resolv e th e competin g claim s describe dabov e i n favo r o f th e importer s o f

record

. Fo r

thes e reasons , EP A propose s t o supplemen t i t definitio n o f

importe r a s suggeste d above , an dapportio n consumptio n right s accordingly

. Th e Agenc y request s comment s o n thi s issue

. A relate dissu e i s whethe r thi s revise d definitio n o f

importe r shoul dals o b e use di n th e contex t

o f enforcin g th e propose drule' s prohibitio n agains t importin g controlle dchemical s withou t consumptio n right s (see § 82.4(b))

. EP A i s concerne dtha t

a s a n ongoin g matter , i t ma y b e administrativel y difficult t o determin e wh o i s th e firs t Unite dState s owne r an dwh o i s asupplier

. A requiremen t

tha t ashipment' s importe r o f recor dhol dth e consumptio n right s authorizin g th e shipmen t woul db e easie r t o implement

. A possibl e drawbac k

t o thi s approac h i s tha t th eP. 7

1880 4 Federa l Registe r / Vol

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. 10 0 /

Tuesday , Ma y 24 , 198 8 / Propose dRule s requiremen t

woul dappl y to shippin g agent s tha t

ar e importer s o

f record , eve n though shippin g agent s woul db e unlikel y t o b e independentl y awar e o f th e requirement

. However , di e buye r o r selle r o f th e controlle dchemical s bein g shippe dwoul dprobabl y kno w o f th e requiremen t

an dwoul dhav e a n incentiv e to infor

mdi e shippe r

to ensur e tha t th e import

gain s legal entr y int o th e Unite dStates

. Th e Agenc y welcome s suggestion s o n ho w t o resolv e thi s issue , an dcommen t

o n whethe r

"importer " fo

r th e purpos e o f

apportionin g consumptio n rights mus t

b e define d consistentl y wit

h "importer " fo

r th e purpos e o f enforcin g th e impor

t prohibition

. (2 ) Exporter. EP

A require dexporter s to report thei r 198 6 export s s o tha t

th e Agenc y coul ddetermin e 198 6 Unite d State s consumptio n an dcalculat e consumptio n right s o n tha t basis

. Sinc e th e propose drul e doe s no t require , an d thu s doe s no t

apportion , rights to shi p controlle dsubstance s abroad , th e issu e o f ho w to defin e exporte r

i s no t raise din th e contex t

o f apportionin g baselin e rights

. However , unde r

th e propose d rule , exporter s wil l b e require dt o report thei r export s t o EP

A {see § 82.13 ) an d wil l obtai n consumptio n right s an d authorizatio n to convert

potentia l productio n right s t o productio n right s fo r thos e export s (se e § § 82.1 0 an d82.11)

. Thre e commentor s state dtha t th e propose drul e di dno t

mak e clear

wh o EP A woul dconside r

t o b e th e exporter

. Tw o o f th e commentor s suggeste dtha t th e fir mresponsibl e fo

r th e export

prio r to shippin g b e considere dth e exporter

. Th e othe r commento r

suggeste dtha t

th e fir mtha t enter s int o th e contrac t

with a foreign compan y fo

r sal e of th e controlle dchemical s b e considere dth e exporter

. EP A agree s with th e premis e o f thes e comment s tha t

a n agen t wh o merel y processe s th e necessar y export form s and/o r transport s di e chemical s o n behal f o f th e manufacture r

o r repackage r

no t b e considere dth e exporter

. A shippin g agen t i n unlikel y t o b e awar e o

f th e requiremen t

tha t export s b e reporte dt o EPA , an di s unlikel y t o hav e a n interes t i n th e consumptio n rights tha t

may b e obtaine dupo n proo f

o f expor t an dthu s th e incentiv e t o report

. Th e Agenc y propose s tha t

th e exporte r

b e define d fo r purpose s o

f th e propose drul e a s th e perso n o r compan y tha t

enter s int o a contrac t to sel l controlle dchemical s to a perso n o r compan y locate doutsid e th e Unite dState s fo

r us e outsid e th e Unite d States

. EP A believe s person s o r

firm s meetin g thi s definitio n woul db e likel y to kno w o f

th e reportin g requirement s an drespon dt o th e incentiv e to ear n consumptio n right s tha t

th e propose d rul e wa s suppose dt o create

. Th e Agenc y request s commen t o n thi s issue

. c
. Whe n aShipmen t

Become s a n Expor

t I n th e Decembe r

1 4 proposal , EP

A too k th e positio n tha t

a n export

mus t arriv e i n Ui

e recipien t

countr y before i t woul db e counte da s a n expor t an d additiona l consumptio n right s awarded

. EP A wa s concerne dtha t

export s shippe dtowar dth e en dof acontro l perio dcoul dstil l b e "a t

sea " whe n th e contro l perio dended , s o tiiat n o Protoco l part y woul dhav e to coun t th e receip t

o f th e shipmen t

agains t it s consumptio n limit

. Severa l commenter s disagree dwit h thi s position , statin g tha t

i t woul d seriousl y hamstrin g industry' s ability t o export lat e i n acontro l period

. The y als o pointe dou t

tha t whil e n o part y might hav e t o accoun t

fo r th e end-of-control

perio dexport s i n th e contro l perio dthe y wer e shipped , some part y woul dhav e t o coun t the magains t

it s consumptio n limi t fo r th e followin g contro l perio dwhe n the y arrived

. A s aresult , t o th e exten t th e parties ' combine dproductio n wa s abov e th e tota l limi t

se t b y th e Protoco l in on e contro l perio d{wit h enoug h productio n exporte da t

th e en do f th e contro l perio dt o sta y withi n eac h party' s consumptio n limit) , th e parties ' combine dproductio n woul dhav e t o b e belo w th e limi t

se t b y th e Protoco l i n th e followin g contro l period

. Th e group o

f technica l advisor s agree dtha t

ashipmen t

become s a n export upo n departur e fromon e countr y an da n impor

t upo n arriva l i n anothe r country

. However , i t

recommende dtha t issu e b e further

examine da t

th e nex t workin g sessio n i n th e fall

. EP A propose s tha t

a t leas t for purpose s of

apportionin g consumptio n rights , ashipmen t

shoul db e considere d an export upo n it s departur e fromth e country

. N o firmreportin g t o EP A ha d sufficien t documentatio n o

f whe n 198 6 export s arrive di n th e receivin g country , an dsom e commenter s state dtha t i t i s i n fac t difficul t t o ascertai n whe n shipment s arrive

. Sinc e export s reduc e a parry' s consumptio n baseline , if al l partie s report

al l o f thei r export s fo

r 1986 , total'consumptio n b y al l partie s wil l be , i f anything , lowe r

tha n if partie s di dno t repor t export s unles s the y arrive di n th e receivin g country i n 1986

. EP A thu s believe s tha t

i t i s reasonabl e i n calculatin g consumptio n right s t o coun t al l 198 6 exports

. M Als o raise dwa s th e issu e o f whethe r shipment s t o Unite dState s military base s on foreig n soi l an dt o ship s a t se a shoul db e counte da s exports

. EP A believe s tha t

bot h type s o f shipment s shoul dnot b e counte da s exports

. Th e ide abehin dth e Protocol' s consumptio n ca p i s t o limi t

ever y nation' s tota l us e o f controlle dsubstances ; us e b y th e Unite d State s military eve n whe n statione d abroa dshoul dthus coun t

a s par t o f th e Unite dStates ' consumption

. Shipment s to ship s a t

sea , i f claime da s export s b y th e shippin g country , ar e unlikel y to b e claime da s import s b y an y country ; unles s som e country count s the n agains t thei r consumptio n limit , the

determinatio n o f

globa l consumptio n woul db e inflated

. Sinc e i t i s easie r t o determin e th e country fro

mwhic h th e chemical s wer e shippe dtha n th e country whic h benefit s fro mthei r us e abroa dship , EP

A propose s not

t o clai m a s export s Unite dState s shipment s t o ship s a t sea
. d

. Definitio n o f

Productio n (1 ) Treatment

of Recycled Substances. Th e Protoco l define s productio n o f controlle dsubstance s a s "th e amoun t o f controlle dsubstance s produc e minu s th e amoun t destroye db y technologie s t o b e approve db y th e Parties. " At th e Nairob i meetin g o f technica l experts , severa l countrie s voice dconcer n tha t th e Protocol' s definitio n coul db e rea dt o cove r productio n tha t

mixe s recycle d wit h virgi n controlle dsubstances

. Som e countrie s tha t

d o no t produc e controlle d substance s [and

. unde r

di e Protocol , wil l no t b e permitte dt o produc e controlle d substance s excep t

unde r limite d circumstances ) ar e intereste di n establishin g recycling^program s with producin g countries

. Unde r suc h a program , nonproducin g countrie s woul d shi p thei r use dcontrolle dsubstance s t o producin g countrie s for

recycling

. However , th e recyclin g proces s entail s mixin g recycle dcontrolle dsubstance s wit h virgi n substances

. Th e nonproducin g countrie s ar e concerne d tha t ifth e fina

l mixtur e o

f recycle dan d virgi n controlle dsubstance s count s agains t th e producin g countries ' productio n limit , producin g countrie s woul dno t b e intereste di n participatin g i n large-scal e recyclin g programs
. T o addres s thes e countries ' concerns , th e technica l expert s group recommende dtha t

th e Protocol' s definitio n o

f productio n b e amende dt o includ e th e followin g concept : Productio n fo r

purpose s o f

th e Montrea l Protoco l equals tota l production , includin g reprocesse dan dvirgi n chemicals , minu s purchase s of controlle dsubstance s fo

r purpose s of recycling

. Export s an dimport s o f use d o r recycle dcontrolle dchemicals , o n th e othe r hand , woul db e treate di n th e sam e wa y a s trad e i n virgi n o r ne w controlle dchemicals

.P. 8

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Tuesday , Ma y 24 , 198 8 / Propose dRule s
EP A believe s tha t

th e definitio n o

f productio n i n it s December 1 4 propose d rul e accomplishe s wha t

th e technica l expert s group recommended

. Propose d § 82.3(q ) define s productio n o

f controlle dsubstance s a s "th e manufactur e o

f acontrolle dsubstanc e fro mara w materia l o r

feedstoc k chemical ; however , productio n doe s no t includ e th e manufactur e o f controlle d substance s tha t

ar e use dan dentirel y consume din th e productio n o f othe r chemicals. " Th e latte r

hal f of th e definitio n doe s not

cove r th e cas e o

f recycle dcontrolle dsubstances

. I t addresse s th e situatio n wher e controlle d substance s ar e use donly t o make othe r chemicals , no t

wher e controlle d substance s ar e firs t

use dfo r some othe r purpos e an dthe n recovere dfo r recycling

. Th e firs t hal f o f th e definition , however , effectively exclude s recycle d controlle dsubstance s fromproduction

. Us e o f th e term s "ra w material " an d "feedstoc k

chemical " denote s tha t

onl y virgi n productio n o r

th e virgi n portio n o

f amixture o

f virgi n an drecycle d controlle dsubstance s count s a s production

. Consequently , UnitedState s producer s coul dmix use dcontrolle d substance s fro

man y sourc e wit

h thei r virgi n productio n withou t

th e use d substance s countin g agains t thei r productio n limits

. Further , EPA' s propose dsyste mo f consumptio n rights woul dmak e participatio n i n recyclin g program s wit h othe r countrie s potentiall y attractive , eve n i f recycle dmixture s o

f controlle d substance s ar e counte da s virgi n controlle dsubstance s i n measurin g import s an dexports , a s th e technica l expert s group recommends

. Wer e tha t recommendatio n adopte db y th e Protoco l parties , unde r

EPA' s propose d rul e Unite dState s producer s woul dhav e to expen dconsumptio n right s t o impor t an duse dcontrolle dsubstances , bu t the y woul dear n additiona l consumptio n right s upo n exportin g th e mixtur e o f recycle dan dvirgi n production

. Sinc e bot h th e use dan dvirgi n portion s o f th e recycle dmixtur e woul db e counte da s exports , th e consumptio n right s producer s earne dwoul db e equa l t o th e calculate dleve l o

f th e tota l mixture

. Thus , Unite dState s producer s coul d replac e th e consumptio n right s the y woul dexpen dparticipatin g i n a recyclin g programwith othe r countrie's

. EP A believe s tha t

th e definitio n o

f productio n an dth e syste mo f productio n an dconsumptio n right s tha t i t ha s propose dadequatel y addres s th e concern s o

f th e nonproducin g nations

. Th e Agenc y therefor e doe s no t believ e it s definitio n o

f productio n require s revisio n t o exclud e recycle dcontrolle d substances , a s suggeste db y th e technica l expert s group
. Comment on thi s issu e i s requested

. (2 ) Transformation of

Chemical Intermediaries. Anothe r

issu e concernin g th e definitio n o f productio n wa s raise da t

th e Nairob i meetin g o

f technica l expert s an db y acommente r
. on EPA' s propose drule

. Th e technica l expert s group propose dtha t reporte d productio n exclud e controlle d substance s use da s intermediarie s i n th e productio n o

f othe r controlle d substance s o r

entirel y transforme dint o non-controlle dsubstances

. However , th e group di dno t

exten dth e exclusio n to controlle dsubstance s tha t ar e exporte dfro

mon e Part y t o anothe r before the y ar e transformed , becaus e verifyin g th e fate o

f thes e export s an d adjustin g both nations ' production , impor t an dexport

level s to reflec t

th e transformatio n woul db e administrativel y difficult

. A s note dabove , EPA' s propose d definitio n o

f productio n exclude s "th e manufactur e o

f controlle dsubstance s tha t ar e use dan dentirel y consume din th e productio n o

f othe r chemicals. " Althoug h thi s exclusio n use s th e term "consume, " i t

ha s th e sam e meanin g a s that propose db y th e technica l expert s group
. Th e Agenc y agree s tha t verificatio n an daccountin g problem s make i t unwis e t o exten dth e exclusio n to controlle dsubstance s tha t ar e exporte dbefore the y ar e transformed

. Th e abov e definitio n o

f productio n woul dals o allo w aproduce r t o subtrac t fromit s productio n th e quantit y o f controlle dsubstance s i t

produce dtha t wa s use d(b y i t

o r othe r U.S

. companies ) fo r feedstoc k purposes
. Producer s coul d onl y tak e credi t

fo r controlle d substance s tha t

ar e use da s feedstock s withi n th e sam e contro l perio dtha t the y ar e produced

. However , trackin g o f controlle dsubstance s betwee n producers , includin g th e dat e an dsourc e o f productio n an dfeedstoc k consumption , coul db e comple x an d woul drequir e producer s to kee p record s an dreport s no t

include di n th e December 1 4 proposal

. Therefore , EP A i s proposin g t o amen dth e definitio n o f productio n s o a s to restric t th e us e o f credi t fo r feedstoc k controlle d substance s t o feedstock s use dan d produce db y th e sam e producer

. EP A request s comment

o n thi s issue

. 3. Veracity

of Data Th e December

1 4 fina l rul e require d firm s to submi t

documentatio n t o verif

y th e production , impor

t an dexport

level s the y reported

. Producer s wer e required t o submi t 198 6 interna l report s tha t recorde dproductio n volumes

. EP A use d thes e report s t o verif y th e 198 6 productio n level s reported

. Importer s wer e requeste dto submi t

Unite dState s Custom s Entr

y Summar y Forms , whic h lis t th e ite man dquantit y bein g imported.-fo r

eac h shipmen t

reported

. EP A apportione dconsumptio n rights onl y fo r thos e import s documente db y a n Entr y Summar y Form

. Exporter s wer e asked4 o submi t Unite dState s Censu s Expor t Declaratio n Forms , invoice s o r bill s o f lading

. Sinc e unde r

th e propose drul e exporter s ar e no t

require dto hold , an d thu s ar e no t

allocated , right s t o export , documentatio n sufficien

t to attribut e eac h shipmen t

to asingl e exporte r

(e.g. , th e exporte r

o f record ) wa s no t

required

. Rather , EP

A believe dtha t documentatio n wa s neede donl y to determin e whethe r

an dho w muc h o

f th e controlle dsubstanc e wa s exporte dan d whethe r ther e wa s duplicativ e reportin g o f exports ; proo f

o f sal e t o aforeig n entit y wa s sufficient

t o mak e thos e determinations

. 4. Confidentiality

Issues Mos t firm s tha t

submitte dthei r

198 6 production , impor

t an dexport

level s to EP A i n respons e t o th e Decembe r 1 4 fina l rul e claime dth e dat aa s confidential busines s informatio n (CBI)

. EP A ha s no t ye t rule don thos e claims , bu t production , impor

t an dexport

level s ar e th e typ e o

f informatio n tha t

ma y b e entitle dt o confidential treatment

. Th e Agenc y ha s treate dth e informatio n claime dCBI a s confidentia l in accordanc e wii h it s busines s confidentiality regulation s a t 4 0 CF R Part 2 , Subpart

B , an ds o ha s no t

place d i t i n th e publi c docke t

fo r thi s rulemaking

. i n th e cas e o

f some firms , publicatio n o f th e firm' s propose dan dfina l apportionment s ma

y itsel f arguabl y releas e informatio n claime dCBI

. However , EP

A believe s tha t

publicatio n o f company-specifi c apportionment s i s necessar y fo

r an y fina l allocation s t o hav e legal effect

an dfo r EPA' s propose d regulatory schem e fo

r protectin g stratospheri c ozon e t o b e legall y sufficient

. Th e Agenc y therefor e consider s tha t

publicatio n o

f th e allocations , eve n i

f tha t discloses CBI, i s authorize db y th e Clean Air Ac t an d EP A regulation s governin g th e releas e o f CBI , an dha s s o notifie daffecte d companies

. Sectio n 114(c ) o

f th e Clean Air

Ac t provide s tha t

CB I obtaine dunde r

th e Ac t ma y b e disclose d"whe n relevan t in an y proceedin g unde r

thi s Act. " EPA' s procedura l rul e governin g releas e o f CBI unde r th e Clean Ai r

Ac t define s "proceeding " t o includ e "an yP. 9

1880 6 Federa l Registe r / Vol

. 53 , No

. 10 0 /

Tuesday , Ma y 24 , 198 8 / Propose dRule s
rulemakin g * * * conducte db y EP A unde r th e Act * * *. " 40 CF

R2.301(a)(4)

. Th e regulation s a t

40 CF R2.301(g)(2

) further provid e tha t

EP A may releas e CB I i n connectio n wit

h aproceedin g after affecte dbusinesse s hav e bee n informe dtha t

th e Agenc y i s considerin g makin g th e informatio n availabl e to th e publi c an dhav e bee n afforde da reasonabl e opportunity t o comment

. If , after considerin g an y comment s received , th e Agenc y decide s t o releas e th e information , affecte dbusinesse s ar e give n a t leas t five day s notic e prio r

t o th e informatio n bein g mad e public

. EP A believe s tha t

th e propose d apportionment s ar e clearl y relevant , an d indee dessential , t o th e stratospheri c ozon e rulemaking

. Unde r

sectio n 157(b) o f th e Act , EP

A mus t promulgat e control s o f ozone-depletin g substance s by regulation. EPA' s propose drul e woul dus e th e apportione dproductio n an dconsumptio n right s a s th e mechanis mfo

r controllin g th e ozone
depletin g substance s specifie db y th e Montrea l Protocol ; unde r

th e rule , companie s woul db e prohibite dfro m producin g o r

importin g more o

f th e specifie dchemical s tha n the y hav e productio n o r

consumptio n right s to cover
. Th e rul e woul dallo w companie s t o marke t thei r allocate dright s an d obtai n additiona l productio n an d consumptio n right s unde r

certai n circumstances , bu t

th e allocation s woul dremai n th e startin g poin t in determinin g th e limi t

o f an y company' s allowabl e productio n an dimport o f these , substances

. •> Sectio n 307(d)(1)(H) o

f th e Ac t i n turn require s EP

A t o promulgat e regulation s unde r sectio n 157(b ) i n accordanc e wit h th e procedura l requirement s se t fort h a t sectio n 307(d)(2)-(6)

. Thos e requirement s includ e publicatio n o f a notic e i n th e Federa

l Registe r settin g ou t th e propose drul e an dprovidin g a statemen t o f th e proposal' s basi s an d purpose
. Th e statemen t

o f basi s an d purpos e mus t

itsel f includ e " asummar

y o f th e factua l dat ao n whic h th e propose drul e i s based. " Th e fina l rul e mus t als o b e publishe din th e Federa l Register , accompanie db y astatemen t o f basi s an dpurpose
. Publicatio n o

f company-Specifi c propose dan dfina

l apportionments , then , i s centrall y relevan t t o th e stratospheri c ozon e rulemakin g an di n fac t require dt o assur e tha t

th e rulemakin g i s bindin g o n tha t issue

. Th e apportionment s ar e th e cornerston e o f EPA' s propose dregulatory strateg y fo r protectin g stratospheri c ozone
. A s the y ar e allocate db y th e propose drul e i n keepin g with th e Protocol' s contro l schedule , th e apportionment s define d fo r eac h 198 6 produce r

an dimporte r

th e limit s o f productio n and/o r

impor t withi n whic h tha t

fir mmus t stay , unles s th e fir mbuys , sell s o r

otherwis e obtain s additiona l productio n o r

consumptio n rights i n accordanc e with th e regulations

. Thos e apportionment s mus t b e mad e bindin g b y thei r

promulgatio n a s regulations , s o tha t

th e limit s the y defin e ar e enforceable

. " A s require db y it s regulations , EP A gav e producer s an dimporter s t o who m productio n and/o r

consumptio n right s woul db e apportione dnotic e o f it s inten t t o publis h propose dapportionments

. A numbe r o f firm s proteste dth e planne d publication , bu t

after reviewin g thei r comment s EP

A stil l conclude dtha t publicatio n o

f th e allocation s wa s relevan t an dnecessar y t o th e stratospheri c ozon e rulemaking

. EP A thu s gav e al l o

f th e affecte dfirm s th e require dfive day s notic e before publishin g thi s Federa

l Registe r notice

. EPA' s decisio n t o publis h th e company-specifi c allocation s i s no t intende dt o se t

broa dpreceden t

fo r th e releas e o f aregulate dindustry' s productio n data

. Th e propose d stratospheri c ozon e rul e i s virtuall y uniqu e i n it s approac h t o controllin g emission s b y directl y cappin g productio n o

f th e pollutan t

an dthus i n th e attendan t

nee dt o mak e publi c company-specifi c productio n information

. I

f i n future rulemaking s EP A i s presente dwith acomparabl e regulatory situation , th e Agenc y wil l conside r whethe r suc h informatio n mus t b e disclose do n acase-by-cas e basis

. It shoul db e note dtha t

CB I issue s wil l als o aris e i n relatio n t o th e regulatio n t o th e record s an dreport s tha t EP A wil l requir e firm s to kee p t o monito r complianc e with th e rule , i f adopted

. Thos e record s an dexport s wil l necessaril y reflec t

production , impor

t an dexport

data , a s wel l a s busines s transactions , al l o

f whic h firms wil l likel y clai ma s CBI

. However , i f non e o f thos e report s o r

record s i s publicl y accessible , n o publi c oversigh t o f EPA' s enforcemen t

efforts , no r

citize n suit s t o enforc e th e regulation' s requirement s (a s permitte db y sectio n 304(a ) o f th e Act) , wil l b e possible

. Th e Agenc y question s whethe r i t i s authorize dt o mak e publicl y availabl e th e record s an dreport s tha t may b e require dfo

r complianc e monitorin g purposes
. EP

A regulation s implementin g sectio n 11 4 o

f th e Clean Ai r

Ac t permi t CBI t o b e release donl y i

f relevan t to a "proceeding, " whic h i s define dt o includ e "an y rulemaking , adjudicatio n o r licensin g conducte db y EP A unde r th e Ac t * * *. " Th e stratospheri c ozon e rulemakin g obviousl y meet s th e regulations ' definitio n o f "proceeding, " bu t publi c monitorin g o

f EPA' s enforcemen t

effort s o r industry' s complianc e with th e promulgate drul e may not

. A citize n sui t

i s clearl y "a n adjudication, " bu t

i t i s doubtfu l citizen s coul dbrin g sui t

withou t prio r acces s t o th e monitorin g data , sinc e Rul e 1 1 o f th e Federa l Rule s o

f Civi l Procedur e require s tha t

th e perso n bringin g sui t hav e areasonabl e basi s i n fac t an dla w fo r hi s claim

. Ye

t unti l th e sui t

i s commenced , ther e i s arguabl y n o proceedin g fo

r whic h releas e o

f CB I i s authorized

. EP

A i s continuin g to asses s whethe r i t ha s legal authorit y t o releas e an y o f th e monitorin g record s o r report s tha t ma y b e require dan dseek s comment o n thi s issue

. 5. Apportionments Base do n th e formula s an ddefinition s discusse dabov e an dth e dat areceive d in respons e t o th e December 1 4 fina l rule , EP A arrive da t

apportionment s fo

r Unite dState s producer s an dimporter s o f controlle dchemicals

. Th e propose d apportionment s ar e liste di n th e appendi x t o thi s notice. Alread y publi c informatio n substantiall y corroborate s th e sum o f th e productio n an dconsumptio n right s EP A ha s propose dto apportio n fo r Group I chemicals , o r

CFCs

. Th e Internationa l Trad e Commissio n (ITC ) collect s dat ao n CFC-1 1 an d-12 , whic h accordin g t o EPA' s dat atogethe r represente d77

percen t o f th e Unite d State s tota l CF

C productio n i n 1986

. Becaus e thes e tw o CFC s hav e ozon e depletio n weight s o

f 1.0, whic h i s a s hig h o r higher tha n th e othe r

controlle dCFCs , the y represen t

asimila r o r somewhat higher proportio n o

f th e tota l apportione dright s fo

r Group I chemicals

. Fo r

CFC-11 , ITC reporte d tha t Unite dState s 198 6 productio n wa s 91,580,00 0 kilogram s (Kg) , whic h i s les s tha n on e percen t

belo w th e combine d volume o f thi s chemical reportedt o EP A b y al l producers

. Fo r

CFC-12 , th e ITC reporte dUnite dState s 198 6 productio n o f 146,188,00

0 Kg , whic h i s approximatel y 0. 5 percen t lowe r tha n th e combine dproductio n reporte dt o EPA

. Thes e insignifican t

difference s i n reporte dproductio n volume s may b e attributabl e t o differing reportin g periods ; th e ITC figure s ar e fo r th e compan y fiscal year , whil e EPA' s figure s ar e fo r th e calenda r

year
. In an y event , th e virtual agreemen t

betwee n EPA' s an dITC' s figure s confir

mth e productio n volume s o f CFC-1 1 an d-1 2 reporte dt o EPA , an dlargel y corroborate s th e sum o f th e apportionment s propose dfo r Group I chemica l productio n rights

.P.1 0



### Federa l Registe r /

Vol

. 53 , No

. 10

0 / Tuesday , Ma

y 24 , 198 8 /

Propose dRule s 1880 7

Th e impor t

componen t

o f th e su mo f th e consumptio n right s apportione dfo r Grou p I chemical s i s similarl y corroborate db y Unite dState s Censu s burea u data

. CFC-1 1 an d-1 2 ar e togethe r 7 2 percen t

o f tota l Unite d State s import s o f

CFCs

. Fo r

1986 , th e Censu s Burea u figure s fo r combine d import s o f

CFC-1 1 an d-1 2 ar e 600,00 0 kilogram s o r

3 percen t

greate r tha n th e combine dimport s o f

thos e chemical s reporte dt o EPA

. Th e smal l differenc e i n th e tw o set s o f

figure s i s agai n probabl y attributabl e t o difference s i n reportin g periods , an di n an y even t work s t o th e desadvantag e o f

thos e receivin g consumptio n rights , sinc e th e Censu s Bureau' s highe r

figure s woul dsuppor t th e apportionmen t

o f mor e consumptio n right s tha n EPA' s figure s support

. Th e dat areporte dt o EP A o n halo n productio n an dimpor t

wa s als o consisten t

wit h IT C an dCensu s Burea u information

. Fo r

reportin g purposes , IT C an dth e Censu s Burea u grou p th e halon s controlle db y th e Montrea l Protoco l wit h othe r brominate dan dhalogenate d hydrocarbons

. Thei r

figure s o n productio n an dimpor t

o f thi s categor y o f chemical s shoul db e an dar e large r tha n tha t reporte dt o EPA

. C
. Additiona l Informatio n 1. Executive Order

12291 Executiv e Orde r

(E.O. ) 1229 1 require s th e preparatio n o f

aregulator y impac t analysi s fo r

majo r rules , define db y th e orde r a s thos e likel y t o resul t in : (1 ) A n annua l effec t

o n th e econom y o f $10 0 millio n o r

more ; (2 ) A majo r

increas e i n cost s o r

price s fo r consumers , individua l industries , Federal , State , o r

loca l governmen t agencies , o r

geographi c industries ; o r (3 ) Significan t advers e effect s o n competition , employment , investment , productivity , innovation , o r o n th e abilit y o f Unite dStates-base d enterprise s t o compet e wit h foreign

base denterprise s i n domesti c o r expor t markets

. EP A determine dtha t

it s Decembe r

1 4 proposa l me t

th e definitio n o f

amajo r rul e unde r

E.O

. 12291 , an dtherefor e prepare daregulator y impac t analysi s (RIA)

. Sinc e thi s proposa l onl y supplement s th e Decembe r 1 4 propose d rul e an ddoe s no t

impos e an y additiona l burdens , th e RI A prepare dfo r th e Decembe r

1 4 proposa l fulfill s th e executiv e order' s requiremen t fo r thi s proposal

. 2. Regulatory Flexibility Act Th e Regulator y Flexibilit y Act , 5 U.S.C

. 601-612 , requires tha t federa l agencie s examin e th e impact s o f thei r regulation s o n smal l entities

. Unde r 5 U.S.C

. 604(a) , wheneve r a n agenc y i s require dt o publis h agenera l notic e o f propose drulemaking , i t mus t prepar e an dmak e availabl e fo r publi c commen t a n initia l regulator y flexibilit y analysi s (RFA)

. Suc h a n analysi s i s no t require d i f th e hea do f

a n agenc y certifie s tha t a rul e wil l no t

hav e asignifican t

economi c impac t o n asubstantia l numbe r o f smal l entities , pursuan t

t o 5 U.S.C

. 605(b)

. EP A prepare da n initia l RF A i n suppor t o f it s propose drule , an dn o additiona l RF A nee db e prepare dfo r

thi s supplementa l proposal

. Dated : Ma

y 19,1988

. Le e M

. Thomas , Administrator. Appendi x

Perso n
Apportionmen t o f Baselin e Productio n Right s Grou p I—Controlle d Substances : Racon , In c Kaise rChemical s Pennwal t Corporatio n Allie d Signal , In c E.I

. d u Pon t d e Nemours 4 Com

pany , In c Grou p II—Controlle d Substances : E.I

. d u Pon t D e Nemours 4 Com

pany , In c Grea t lake s Chemica l Corporation

. IC I Americas , In c Apportionmen t o t Baselin e consumptio n Right s Grou p I—Controlle d Substances : Racon , In c Kaise rChemical s Pennwal t Corporatio n Allied-Signal , In c E.I

. D u Pon t d e Nemours & Com

pany , In c Atochem , In c IGLO O Products , In c Pharmachem , In c Sumitom o Corporatio n o l America

. Hoechs t Ceianes e Corporatio n Refricentro , In c Kali-Chemi e Corporatio n Nationa l Refrigerants , In c IC I Americas , In c Holchem , In c Grou p II—Controlle d Substances : E.I

. d u Pon t Nemours 4 Company , In c Grea t Lake s Chemica l Corpora

tion IC I Americas , In c Ausimon t USA , In c Atochem , In c Kali-Chemi e Corporatio n Calculate d leve l (kilograms )

785,06 8 187,27 3 126,23 9 701,82 0 152,213,20 0 200,00 0 ,147,96 1 ,406,452

13 , 27 , 38 , 74 , 139, 1 , 479,11 1 561,60 2 257,84 0 063,62 1 S10.35 5 479,96 8 183,27 0 28,60 2 229,93 0 329,59 7 420,93 1 437,94 0 ,069.09 1 ,310,91 7 212,15 9

27,731,06 7 ,759,868 ,347,80 0 206,40 0 126,42 7 533,80 0

[F RDoc

. 88-1171 0 File d5-23-88 ; 8:4 5 am | BILLIN G COD E 6560-50- M