[Federal Register Volume 63, Number 149 (Tuesday, August 4, 1998)]
[Rules and Regulations]
[Pages 41626-41651]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20150]



[[Page 41625]]

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Part II





Environmental Protection Agency





_______________________________________________________________________



40 CFR Part 82



Protection of Stratospheric Ozone: Reconsideration of Petition Criteria 
and Incorporation of Montreal Protocol Decisions; Direct Final Rule and 
Proposed Rule

Federal Register / Vol. 63, No. 149 / Tuesday, August 4, 1998 / Rules 
and Regulations

[[Page 41626]]



ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 82

[FRL-6129-2]
RIN 2060-AG48


Protection of Stratospheric Ozone: Reconsideration of Petition 
Criteria and Incorporation of Montreal Protocol Decisions

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: With this action, EPA is revising the accelerated phaseout 
regulation that governs the production, import, export, transformation 
and destruction of substances that deplete the ozone layer under the 
authority of Sections 602, 604, 605, 606, and 614 of Title VI of the 
Clean Air Act Amendments of 1990 (CAA or the Act). Today's amendments 
reflect changes in U.S. obligations under the Montreal Protocol on 
Substances that Deplete the Ozone Layer (Protocol) due to recent 
amendments and decisions by signatory countries to this international 
agreement. Additionally, in response to a petition submitted to EPA, 
the Agency is removing the requirement in the petition process for 
imports of used class I controlled substances that a person must 
certify knowledge of tax liability. Other amendments are designed to 
ease the burden on affected companies while continuing to ensure 
compliance with Title VI of the CAA and meet U.S. obligations under the 
Protocol.

DATES: This rule will become effective October 5, 1998 without further 
notice unless the Agency receives relevant adverse comment by September 
3, 1998. Should the agency receive such comments, it will publish a 
timely withdrawal informing the public that this rule will not take 
effect. If a public hearing is requested, the comment period will end 
30 days after the date of the public hearing, in which case, EPA will 
publish a document in the Federal Register announcing the hearing 
information and the extended comment period.

ADDRESSES: Comments on this rulemaking should be submitted in duplicate 
(two copies) to: Air Docket No. A-92-13, U.S. Environmental Protection 
Agency, 401 M Street, SW, Room M-1500, Washington, DC 20460. Inquiries 
regarding a public hearing should be directed to the Stratospheric 
Ozone Protection Hotline at 1-800-269-1996.
    Materials relevant to this rulemaking are contained in Docket No. 
A-92-13. The Docket is located in room M-1500, First Floor, Waterside 
Mall at the address above. The materials may be inspected from 8 a.m. 
until 4 p.m. Monday through Friday. A reasonable fee may be charged by 
EPA for copying docket materials.

FOR FURTHER INFORMATION CONTACT: Tom Land, U.S. Environmental 
Protection Agency, Stratospheric Protection Division, Office of 
Atmospheric Programs, 6205J, 401 M Street, SW., Washington, DC 20460, 
202-564-9185.

SUPPLEMENTARY INFORMATION: The EPA is revising the accelerated phaseout 
regulation as a direct final rule without prior proposal because the 
Agency views these revisions as noncontroversial and anticipates no 
relevant adverse comments. The EPA is also publishing a companion 
proposed rule to this direct final rule in this issue of the Federal 
Register to serve as the proposal should adverse comments be filed on 
provisions of the direct final rule. Should the Agency receive relevant 
adverse comment on the direct final rule, it will publish a timely 
withdrawal informing the public that the rule will not take effect. The 
EPA will not institute a second comment period on this rule. Any 
parties interested in commenting on these revisions to 40 CFR part 82, 
subpart A should do so at this time.
    Relevant adverse comment will be addressed in a subsequent final 
rulemaking document.

Table of Contents

I. Background
II. Revisions to the Stratospheric Ozone Protection Program
    A. Amendments to Sec. 82.3--Definitions
    1. Adding a Definition for the Term ``Confer'' that Pertains to 
Essential-Use Allowances
    2. Adding Destruction Technologies to the List of Those Approved 
in the Definition of Destruction
    3. Simplifying the Definition of ``Importer''
    4. Adding a Definition for the Phrase ``Source Facility'' that 
Pertains to the Petition Process for Imports of Used Controlled 
Substances
    5. Clarifying the Definition of Transhipment
    B. Amendments to Sec. 82.4--Prohibitions
    1. Licensing System for Imports and Exports of Listed Controlled 
Substances--both Newly Manufactured and Previously Used
    2. Control of Exported Products that Rely on Class I Controlled 
Substances for their Continuing Functioning to Article 5 Parties
    3. Prohibit Imports and Exports of HBFCs from or to Non-Parties 
to the Protocol
    4. Application Process for Exemptions to the HCFC Phaseout for 
Specific National Security Uses
    5. Simplify Procedure for Apportioning Essential-Use Allowances 
and Essential-Use Exemptions through a Notice
    6. Prohibit Import of Class I Controlled Substances for 
Essential-Uses Except by Companies Allocated Essential-Use 
Allowances
    C. Amendments to Sec. 82.9--Availability of Production 
Allowances in Addition to Baseline Production Allowances
    1. Clarification of Increases or Decreases of Article 5 
Allowances due to International Transfers
    D. Amendments to Sec. 82.12--Transfers
    1. Increases or Decreases of Essential-Use Allowances due to 
Emergency International Transfers
    E. Amendments to Sec. 82.13--Recordkeeping and Reporting 
Requirements
    1. Removal of Producer Requirement to Report the Quantity of 
Used Material Received that Contains Recycled or Reclaimed 
Controlled Substances
    2. Add to the Producer Recordkeeping and Reporting Requirements 
the Need to Maintain and Submit a Certification that a Quantity of 
Class I Controlled Substance will be used as a Process Agent.
    3. Clarify the Need for Letters that Confer Essential-Use 
Allowances and Destruction and Transformation Credits to Producers 
and that these Letters be Submitted with Producer's Quarterly 
Reports
    4. Changes to the Petition Process for Importing Used Class I 
Controlled Substances
    a. Clarification that a Petition to Import Used Class I 
Controlled Substances is Submitted for One Individual Shipment
    b. Changing the de minimis Quantity for an Individual Shipment 
for which a Person is Required to Submit a Petition to Import Used 
Class I Controlled Substances
    c. Revised and Expanded Information Requirements for a Petition 
to Import Used Class I Controlled Substances
    d. Removal of the Information Requirement regarding the Tax for 
People Petitioning to Import Used Class I Controlled Substances
    e. Clarification of the Timing for EPA Review of a Petition
    f. Clarification of Reasons for Disallowing Petitions to Import 
Used Class I Controlled Substances
    g. Requirement that the Petition and the Non-Objection Letter 
from EPA for the Import of Used Class I Controlled Substances 
Accompany the Shipment through U.S. Customs Clearance
    5. Requirement that Importers of Controlled Substances and Used 
Controlled Substances use the Harmonized Commodity Codes in this 
Regulation in completing Customs Entry Documents
    6. Modify the Requirement for a Sales Contract that Certifies 
Exported Controlled Substances will be Transformed or Destroyed

[[Page 41627]]

    7. Applying the Recordkeeping and Reporting Requirements to 
Material obtained from Importers as well as Producers for a Person 
that Transforms or Destroys Class I Controlled Substances
    8. Changes to the Recordkeeping and Reporting Requirements for 
Entities Allocated Essential-Use Allowances
    9. Changes to the Reporting Requirement for Distributors of 
Laboratory Supplies under the Global Laboratory Essential Use 
Exemption
III. Miscellaneous Additional Changes
IV. Summary of Supporting Analysis
    A. Unfunded Mandates Reform Act
    B. Regulatory Flexibility
    C. Executive Order 12866
    D. Applicability of E.O. 13045--Children's Health Protection
    E. Paperwork Reduction Act
    F. Executive Order 12875
    G. Submission to Congress and the General Accounting Office

I. Background

    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 May 10, 1995 (60 
FR 24970) and on December 20, 1994 (59 FR 65478). The regulatory 
program was originally published in the Federal Register on August 12, 
1988 (53 FR 30566), in response to the 1987 signing of the Montreal 
Protocol on Substances that Deplete the Ozone Layer 
(Protocol).<SUP>1</SUP> The U.S. was one of the original signatories to 
the 1987 Montreal Protocol and the U.S. ratified the Protocol on April 
4, 1988. Congress then 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. Today's actions amend the 
existing EPA regulations published under Sections 604, 605, 606 and 614 
of the CAA governing the production and consumption of ozone-depleting 
substances. Today's amendments are designed to ensure the U.S. meets 
its obligations under the Protocol and the CAA.
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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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    EPA derives its authority for today's action from sections 602, 
604, 605, 606, and 614 of the CAA. Many of today's changes are made to 
reflect adjustments or amendments to the Protocol or decisions taken by 
the Parties to the Protocol at their meetings from 1995 through 1997. 
EPA is acting in accordance with section 614 of the CAA in amending the 
regulations to reflect these changes. Section 614 of the CAA states 
that Title VI of the Act ``shall be construed, interpreted, and applied 
as a supplement to the terms and conditions of the Montreal Protocol, 
as provided in Article 2, paragraph 11 thereof, and shall not be 
construed, interpreted, or applied to abrogate the responsibilities of 
obligations of the United States to implement fully the provisions of 
the Montreal Protocol. In the case of conflict between any provision of 
[Title VI of the CAA] and any provision of the Montreal Protocol, the 
more stringent provision shall govern.'' Section 606 of the CAA allows 
EPA to accelerate the phaseout schedules found in sections 604 and 605 
of the Act.
    Today's action adjusts the regulatory framework promulgated under 
section 606, while retaining the accelerated phaseout dates. The 
changes in today's action are made to close loopholes in existing 
regulatory language, to ease the burden on the regulated community, to 
clarify existing requirements and to lessen EPA's administrative burden 
in implementing the Allowance Program (the Program).
    The requirements contained in the final rules published in the 
Federal Register on May 10, 1995 and December 20, 1994 establish an 
Allowance Program. The Program and its history are described in the 
notice of proposed rulemaking (NPRM) published in the Federal Register 
on November 10, 1994 (59 FR 56276). The control and the phaseout of 
production and consumption of ozone-depleting substances as required 
under the Protocol and CAA are accomplished through the Allowance 
Program.
    In developing the Allowance Program, EPA collected information on 
the amounts of ozone-depleting substances produced, imported, exported, 
transformed and destroyed within the United States 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 production allowances and consumption 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. 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 production plus 
imports minus export 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 controlled ozone-
depleting substances in the Groups of class I controlled 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 (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 listed under Article 5 of the Protocol, (2) produced for 
essential uses as authorized by the Protocol and the regulations, or 
(3) produced with destruction or transformation credits. (40 CFR 82.4 
(b))
    The regulations allow import of phased-out class I controlled 
substances provided the sources are either transformed or destroyed. 
(40 CFR 82.4(d)) 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, or (3) a transhipment or a heel. (40 CFR 
82.4(d))

[[Page 41628]]

II. Revisions to the Stratospheric Ozone Protection Program

A. Amendments to Sec. 82.3--Definitions

1. Adding a Definition for the Term ``Confer'' That Pertains to 
Essential-Use Allowances
    EPA is adding a definition for the term ``confer'' to reflect 
wording already in the current regulatory text as published in the 
Federal Register on May 10, 1995 (60 FR 24970). Section 82.4(b) 
currently includes references to ``conferred unexpended essential-use 
allowances'' and ``conferred unexpended destruction and transformation 
credits.'' The preamble to the final rule published in the Federal 
Register on May 10, 1995 described how the holder of essential-use 
allowances could confer those unexpended essential-use allowances to a 
producer or importer. (60 FR at 24976.) The preamble to the May 10, 
1995 final rule also described how the holder of destruction and 
transformation credits could confer the right to produce or import 
under the credits to a producer or importer. (60 FR at 24973-24974.) 
EPA is adding a definition to Sec. 82.3 that ``confer means to shift 
the rights obtained under Sec. 82.4(t) for essential-use allowances 
from the holder of the unexpended essential-use allowance to a person 
for the production of a specified controlled substance, or to shift the 
rights obtained under Sec. 82.9(f) for destruction and transformation 
credits from the holder of the unexpended destruction and 
transformation credits to a person for the production of a specified 
controlled substance.''
2. Adding Destruction Technologies to the List of Those Approved in the 
Definition of Destruction
    EPA is adding two new approved destruction processes to the list of 
technologies currently appearing in the regulation under the definition 
of destruction (60 FR 24970, 24987; 40 CFR 82.3). The Parties to the 
Montreal Protocol at the Seventh Meeting in 1995 decided to include 
radio frequency plasma destruction in the list of approved 
technologies. The Protocol's Technology and Economic Assessment Panel 
(TEAP) reviewed test results from the technology's operation and 
verified that radio frequency plasma destruction meets the suggested 
minimum emission standards approved by the Parties (Decision IV/11). 
EPA believes that the technical review and recommendation by the TEAP 
of radio frequency plasma destruction and the subsequent approval by 
the Parties to the Protocol warrants today's inclusion of the 
technology in the list of approved destruction processes found under 
the definition of destruction in Sec. 82.3 (60 FR 24970).
    EPA is also adding, solely for the destruction of foams, the 
limited inclusion of municipal solid waste incinerators in the list of 
approved technologies in the definition of destruction currently found 
in Sec. 82.3 of the regulation (60 FR 24970, 24987). The Parties to the 
Montreal Protocol at the Fifth Meeting in 1993 decided to include 
municipal solid waste incinerators in the list of approved 
technologies, but only for the destruction of foams containing ozone-
depleting substances. The TEAP reviewed the test results from the 
operation of municipal solid waste incinerators for the destruction of 
foams that contain ozone-depleting substances and verified that the 
technology meets the suggested minimum emission standards approved by 
the Parties at the Fourth Meeting (Decision IV/11). EPA believes that 
the technical review and recommendation by the TEAP of municipal solid 
waste incinerators for the destruction of foams that contain ozone-
depleting substances and the subsequent approval by the Parties to the 
Protocol warrants today's inclusion of the technology in the list of 
approved destruction technologies found under the definition of 
destruction in Sec. 82.3 (60 FR 24970, 24987).
3. Simplifying the Definition of ``Importer''
    EPA is simplifying the definition of ``importer'' for enforcement 
purposes. Over the past few years, EPA has worked with an inter-agency 
taskforce of other Federal Agencies to enforce against the illegal 
import of banned class I controlled substances. Members of the inter-
agency taskforce include EPA, the Department of Justice, the U.S. 
Customs Service, the Internal Revenue Service, the Department of State, 
and other interested agencies. Enforcement personnel from taskforce 
agencies have discovered difficulties in working with the definition of 
importer listed in the May 10, 1995 final rule (60 FR 24988) in 
building cases against illegal importers due to ambiguities about who 
ultimately is responsible. Thus, enforcement officials from EPA and 
other taskforce agencies suggested that EPA simplify the definition of 
the term ``importer'' to eliminate ambiguities and to make it easier to 
enforce. EPA is simplifying the definition of ``importer'' to be ``the 
importer of record listed on U.S. Customs Service forms for imported 
controlled substances, used controlled substances or controlled 
products.''
4. Adding a Definition for the Phrase ``Source Facility'' That Pertains 
to the Petition Process for Imports of Used Controlled Substances
    EPA is adding a definition to Sec. 82.3 for the term ``source 
facility.'' The term ``source'' was included in the regulatory text of 
Sec. 82.13(g)(2)(iii) regarding petitions to import used class I 
controlled substances but was not defined in Sec. 82.3 of the final 
rule published in the Federal Register on May 10, 1995 (60 FR 24970). 
As explained in the preamble to the May 10, 1995 final rule, the intent 
of the petition process is to allow EPA to independently verify whether 
a class I controlled substance is, in fact, previously used. EPA 
established the petition process because quantities of class I 
controlled substances were entering the U.S. mis-identified as ``used'' 
when they were, in fact, newly produced ozone-depleting chemicals. 
Under the Protocol, trade in previously used controlled substances is 
permitted even after the phaseout dates. To independently verify that a 
quantity of class I controlled substance was previously used, EPA needs 
detailed information about the source facility from which the material 
was recovered. EPA discovered that companies petitioning to import used 
class I controlled substances under the current requirements need 
clarification of the term ``source facility'' so that they can submit 
complete information to allow independent verification. In distributing 
information about the petition process, EPA has clarified that source 
facility means the exact location from which a used controlled 
substance was recovered from a piece of equipment, including the name 
of the company responsible for, or owning the location, a contact 
person at the location, the mailing address for that specific location, 
as well as a phone number and a fax number for the contact person at 
the location. In choosing this definition for the term ``source 
facility,'' EPA considered whether it was sufficiently clear for a 
person wishing to submit a petition to import used class I controlled 
substances as well as for EPA to independently verify that the quantity 
of material cited in the petition was, in fact, previously used.
5. Clarifying the Definition of Transhipment
    In today's action, EPA would like to clarify the definition of 
``transhipment'' of controlled substances and make the distinction 
between a transhipment and

[[Page 41629]]

an import that is subsequently re-exported. The first discussion of 
transhipment appeared in the proposed rulemaking published in the 
Federal Register on March 18, 1993 (58 FR 15014, 15044). The March 18, 
1993 proposed rulemaking raised the issue of transhipments pursuant to 
Decision IV/14 of the Fourth Meeting of the Parties, which addressed 
transhipments of bulk substances from the country of origin, through a 
third country, to the country of final destination. Decision IV/14 of 
the Parties to the Protocol clarifies that transhipments are not 
included in the third country's calculation of consumption. Recall that 
consumption means production plus imports minus exports.
    The December 10, 1993 final rulemaking defined ``transhipment'' as 
``the continuous shipment of a controlled substance from a foreign 
state of origin through the United States or its territories to a 
second foreign state of final destination.'' (58 FR 65018, 65064). The 
clarifying phrase ``as long as the shipment does not enter into United 
States jurisdiction'' was added on May 10, 1995 (60 FR 24970, 24983).
    Re-packaging a shipment that is passing through the United States 
would make it an import and a subsequent export under the provisions of 
the Montreal Protocol. Such a shipment would count toward the United 
States' calculation of its level of consumption. As an Article 2 
country under the Montreal Protocol, the United States is obligated to 
have a calculated level of consumption equal to zero for all class I 
controlled substances (except those substances in Group VI, like methyl 
bromide, which are on a different phaseout schedule). Any re-packaging 
of shipments of class I controlled substances moving through the United 
States could therefore be a violation of the United States' obligations 
under the Protocol. Thus, EPA is adopting a definition of transhipment 
that does not permit a shipment to be re-packaged. The current 
definition distinguishes between a transhipment and a shipment that is 
imported, re-packaged and then exported, by using the phrase, 
``continuous shipment.'' A continuous shipment enters and leaves the 
United States and is not repackaged or manipulated in any manner before 
it exits for its final destination. In the context of U.S. Customs 
regulations (19 CFR Sec. 123 and Sec. 19 CFR 19), the term 
``manipulation'' has a specific meaning regarding whether a shipment is 
to be ``cleaned, sorted, repacked or otherwise changed in condition'' 
as it travels in transit through United States jurisdiction. In today's 
action, EPA is stating that a transhipment as defined under this 
Subpart cannot be re-packaged, sorted, or otherwise changed in 
condition.
    In conjunction with the clarification of the definition of 
transhipment proposed in the Federal Register on November 20, 1994 (59 
FR 56276), EPA discussed re-packaging of controlled substances during 
transhipments. The discussion was prompted by concerns of a company 
that brings large quantities of a controlled substance in tank ships 
that are unloaded to on-shore tanks in the United States. The 
quantities of controlled substance put into these on-shore tanks are 
loaded directly onto other ships bound for foreign destinations. EPA 
does not consider the unloading of a controlled substance from a tank 
ship directly into a large receiving tank for eventual re-loading onto 
another tank ship to be re-packaging. When the controlled substance is 
directly unloaded from a ship into an on-shore tank and then directly 
loaded from that same tank onto a different ship the package for the 
controlled substance does not change while it is within the United 
States jurisdiction, and therefore is not re-packaged. In contrast, 
when a controlled substance is unloaded from a ship onto a dock in the 
United States in, for example, a 1-ton ISO tank and the controlled 
substance is transferred from the 1-ton ISO tank to either smaller or 
larger containers, it is considered to be re-packaged. EPA does not 
consider the transfer of controlled substances between ships in U.S. 
ports to be re-packaging.
    EPA is continuing to exempt transhipments from the limits and 
requirements set forth in the prohibitions of Sec. 82.4. Transhipments 
do not include imports where any form of re-packaging occurs for a 
shipment of controlled substance as it moves through the United States 
or its territories before it is exported to a foreign country. In the 
final rule published in the Federal Register on May 10, 1995, EPA 
decided against broadening the definition of transhipment to allow re-
packaging. EPA believes that re-packaging of controlled substances 
coming from a foreign state of origin, moving through the United States 
or its territories, bound for a final destination in another foreign 
state renders the controlled substance an import for purposes of the 
Montreal Protocol. Today's action clarifies the meaning of the 
definition of transhipment vis-a-vis re-packaging and corrects the 
grammar in the current definition to read, ``transhipment means the 
continuous shipment of a controlled substance from a foreign state of 
origin through the United States or its territories to a second foreign 
state of final destination, as long as the shipment does not enter into 
United States jurisdiction. A transhipment, as it moves through the 
United States or its territories, cannot be re-packaged, sorted or 
otherwise changed in condition.''

B. Amendments to Sec. 82.4--Prohibitions

1. Licensing Imports and Exports of Listed Controlled Substances--Both 
Newly Manufactured and Previously Used
    EPA believes that current regulatory requirements can be used to 
satisfy the United States' obligation to establish a licensing system 
for imports and exports of new and used controlled substances, in 
accordance with a recent amendment to the Montreal Protocol. At the 
Ninth Meeting of the Parties to the Protocol (1997, Montreal), the 
Parties agreed to amend Article 4, with the addition of section B. 
Paragraph 1 of Article 4B reads: ``Each Party shall, by 1 January 2000 
or within three months of the date of entry into force of this Article 
for it, whichever is the later, establish and implement a system for 
licensing the import and export of new, used, recycled and reclaimed 
controlled substances in Annexes A, B, C and E.'' Under paragraph 3 of 
Article 4B, each Party is obligated to report to the Ozone Secretariat 
``within three months of the date of introducing its licensing 
system.''
    EPA wishes to address this change to Article 4B to ensure 
compliance with the Protocol and the CAA. Section 614(b) of the CAA 
states, ``[t]his title as added by the Clean Air Act Amendments of 1990 
shall be construed, interpreted, and applied as a supplement to the 
terms and conditions of the Montreal Protocol, as provided in Article 
2, paragraph 11 thereof, and shall not be construed, interpreted, or 
applied to abrogate the responsibilities of obligations of the United 
States to implement fully the provisions of the Montreal Protocol.'' 
Thus, today's discussion of the U.S. licensing system is relevant to 
ensuring compliance with both the Protocol and Title VI of the CAA.
    Under the current regulatory framework, only companies with one of 
several types of licenses are allowed to import or export controlled 
substances and used controlled substances not exempted under 
Sec. 82.4(d), and (h) of the final rule published in the Federal 
Register on May 10, 1995 (60 FR 24970). EPA will consider holders of 
all type of

[[Page 41630]]

allowances, credits or non-objection notices to be holders of licenses 
in accordance with U.S. obligations under the Protocol. The types of 
allowances that will be considered licenses include production and 
consumption allowances, Article 5 allowances and essential-use 
allowances. The specifics of what EPA will consider as licenses and 
other types of imports and exports exempted from licensing are 
discussed below. Other systems EPA considered for licensing imports and 
exports of controlled substances are also described below.
    In implementing various provisions of the Montreal Protocol and 
Title VI of the CAA, EPA currently requires certain types of licenses 
to import or export class I controlled substances. Imports of class I 
controlled substances (except Group VI substances) are currently 
banned, but for exemptions and exceptions contained in Sec. 82.4 of the 
final rule published in the Federal Register on May 10, 1995. The 
exemptions in this rule (40 CFR Part 60 Subpart A) are permitted under 
the Protocol and the CAA.
    Companies allocated production and consumption allowances in 
Secs. 82.5 and 82.6 of the May 10, 1995 final rule for class I, Group 
VI controlled substances (i.e., methyl bromide) will be considered 
holders of licenses (in the form of allowances) for the import and 
export of this specific class I controlled substance. Companies granted 
essential-use allowances under the provisions of section 82.4(t) will 
also be considered holders of licenses to import a restricted quantity 
of the specific class I controlled substance(s) during the specified 
control period. Likewise, a person obtaining a non-objection notice in 
response to a petition to import used class I controlled substances in 
accordance with Sec. 82.4(j) and Sec. 82.13(g)(2) and (3) will be 
considered the holder of a shipment-specific import license.
    The current regulations, published in the Federal Register on May 
10, 1995 (60 FR 24970), have few restrictions on exports. The current 
regulations limit the quantity of class I controlled substances a 
company can produce for export to Article 5 countries through the 
allocation in Sec. 82.9 of Article 5 allowances. Therefore, companies 
allocated Article 5 allowances in Sec. 82.9 will be considered to be 
holders of licenses to export. In addition, Sec. 82.4(k) of the current 
rule (Sec. 82.4(l) of today's amendments) prohibits a person from 
exporting a class I, Group I or Group II controlled substance to a 
foreign state that is a non-Party to the Protocol. This section also 
prohibits the export of class I, Group III, IV, or V substances to a 
foreign state not party to the 1990 amendments to the Protocol. In Part 
II.B.4 and Part II.B.5 below, EPA is adding a prohibition on exports of 
class I, Group VII controlled substances to non-Parties in accordance 
with amendments to the Protocol agreed to in Vienna in 1995.
    For class II controlled substances (HCFCs), in accordance with the 
amendment agreed to by the Parties to the Protocol in 1997, EPA will 
consider importers and exporters who submit quarterly reports as 
currently required in Sec. 82.13(n) of Subpart A to be the holders of 
import and export licenses. EPA is adopting this approach for class II 
controlled substances as a temporary measure. The Agency will soon 
publish an Advance Notice of Proposed Rulemaking (ANPRM) that will 
describe potential control measures for ensuring U.S. consumption of 
class II controlled substances remains under the cap established under 
Article 2F of the Protocol. The ANPRM will describe options being 
considered for establishing an allowance system to control production, 
import and export of class II controlled substances. At the time EPA 
establishes controls through allowances, to limit U.S. consumption of 
class II controlled substances, the allowances will be considered 
licenses for imports and exports.
    In developing today's rule, EPA considered other licensing systems, 
including one that would require a company to request a license prior 
to importing class I controlled substances, including those for 
exempted purposes, such as transformation, destruction, and heels. In 
addition, EPA considered a parallel licensing system for exports that 
would require a company to request a license prior to exporting class I 
controlled substances for exempted purposes, such as transformation or 
destruction. EPA believes that the 1997 amendment to Article 4 of the 
Protocol that requires a ``system for licensing the import and export 
of new, used, recycled and reclaimed controlled substances'' does not 
extend to controlled substances destroyed by approved technologies or 
used as feedstocks, since these amounts are not included in the 
definitions of production or consumption under the Protocol. EPA's 
consideration of other licensing systems included: a shipment-by-
shipment approach, a quarterly approach, a yearly approach, a quantity 
specific approach, and a non-quantity specific approach. EPA decided 
not to adopt these alternative licensing systems in order to minimize 
burden on the regulated community and conserve Agency resources.
    EPA's decision to treat existing requirements as a licensing system 
in no way relieves a person importing and exporting controlled 
substances or used controlled substances from the existing 
recordkeeping and reporting requirements in Secs. 82.9 through 82.13.
2. Control of Exported Products That Rely on Class I Controlled 
Substances for Their Continuing Functioning to Article 5 Parties
    EPA is amending the regulation to control the export of products 
that rely on class I controlled substances for their continuing 
functioning to Article 5 Parties, in accordance with Decision IX/9 
agreed to by the Parties to the Protocol at the 9th Meeting in Montreal 
in 1997. Decision IX/9 ``recommend[s] to non-Article 5 Parties to adopt 
appropriate measures to control, in cooperation with the importing 
Article 5 Parties, the export of used products and equipment, other 
than personal effects, whose continuing functioning relies on supply of 
substances listed in Annexes A and B of the Montreal Protocol [CFCs, 
halons, carbon tetrachloride, and methyl chloroform].''
    Decision IX/9 was taken by the Parties to the Protocol in 
recognition of the concern expressed by Article 5 Parties that CFC-
technologies, and other technologies relying on class I controlled 
substances for their continuing functioning, are decommissioned in 
Article 2 Parties and ``dumped'' into their markets. Article 5 Parties 
have until 2010 to complete their phaseout of production and 
consumption of class I controlled substances (except Group VI 
substances). This phaseout date for Article 5 Parties is ten (10) years 
after the phaseout date originally established for non-Article 5 
Parties at the 1990 Meeting of the Parties (London Amendments). Since 
1990, the non-Article 5 Parties have agreed to accelerate their 
phaseout date for class I controlled substances (except Group VI 
substances).
    Due to the existence of alternative technologies, some Article 5 
Parties view products that rely on class I controlled substances for 
their continuing functioning as being obsolete. Some Article 5 Parties 
say exports from industrialized nations of products that rely on class 
I controlled substances foster continued dependence on these substances 
and retard their transition to non-ODS technologies. EPA supports a 
speedy transition away from class I controlled substances in Article 5 
Parties and has considered various ways in which the U.S. can support 
this transition through

[[Page 41631]]

restrictions and controls on exported products whose continuing 
functioning relies on class I controlled substances.
    EPA has considered several methods for implementing Decision IX/9 
taken by the Parties to the Protocol in 1997 at the Anniversary Meeting 
in Montreal. It should be noted that the phrase ``continuing 
functioning'' was chosen by the Parties to refer to products that need 
to be re-filled with class I controlled substances to continue to serve 
their intended purpose; the decision did not capture other products, 
such as metered-dose inhalers. In today's action, EPA is adding a 
restriction on exports of products whose continuing functioning relies 
on class I controlled substances that will be triggered when, and if, 
EPA receives a notification from an Article 5 government that the 
import of a particular type of product is restricted and the 
manufacture of that product with specified ozone-depleting substances 
is banned in that Article 5 country. The relevant agency or the 
consulate of the Article 5 Party must provide EPA with a copy of the 
national law, regulation or other administrative action creating a 
restriction on imports of products that rely on class I controlled 
substances for their continuing functioning and restricting their 
manufacture within the same country. With today's action EPA is adding 
a new Sec. 82.4(m) to establish the framework for a ban on the export 
of products whose continuing functioning relies on class I controlled 
substances. Upon receipt of an official document from the government of 
an Article 5 Party, EPA will publish a notice in the Federal Register 
triggering the specific ban on all exports from the United States of 
products that rely on class I controlled substances for their 
continuing functioning to the specific Article 5 Party. The specific 
Article 5 Party will be listed in Appendix J to Subpart A.
    In addition, EPA is considering the creation of a licensing system 
for U.S. exports of products whose continuing functioning relies on 
class I controlled substances. A licensing system would be used to 
monitor exports of products from the U.S. to Article 5 countries as an 
additional control measure that would work in parallel with the ban 
described above.
3. Prohibit Imports and Exports of HBFCs From or to Non-Parties To the 
Protocol
    EPA is amending the existing regulation to prohibit the import or 
export of hydrobromofluorocarbons (HBFCs) (class I, Group VII 
controlled substances) from or to a foreign state that is not a Party 
to the 1992 Copenhagen Amendments to the Montreal Protocol. In today's 
action, EPA is adding Sec. 82.4(l)(3) to ban trade in HBFCs with non-
Parties to the Copenhagen Amendments to ensure the United States meets 
its obligations under the Protocol. HBFCs are very uncommon substances 
and EPA has no record of U.S. trade in these class I controlled 
substances. Article 4, paragraph 1 ter of the Protocol bans the import 
of HBFCs from any country not a Party to the Copenhagen Amendments. 
Article 4, paragraph 2 ter of the Protocol bans exports of HBFCs to any 
Party that has not ratified the Copenhagen Amendments.
    The current regulation (60 FR 24970; 40 CFR 82.4(k)(1)) prohibits 
the import and export of class I, Group I or Group II controlled 
substances from or to foreign states not Parties to the Montreal 
Protocol (1987). In addition, the current regulation (60 FR 24970; 40 
CFR 82.4(k)(2)) prohibits the import and export of class I, Group III, 
Group IV, and Group V controlled substances from or to foreign states 
not Parties to the London Amendments (1990). These bans on imports from 
and exports to non-Parties reflect an agreed strategy by signatory 
countries for encouraging ratification of the Montreal Protocol and 
each successive package of amendments.
4. Application Process for Exemptions to the HCFC Phaseout for Specific 
National Security Uses
    In today's action, EPA is creating a very limited exemption to the 
U.S. accelerated phaseout dates for class II controlled substances, 
known collectively as hydrochlorofluorocarbons (HCFCs). EPA believes 
U.S. government national security interests have vital needs for 
specific, small quantities of HCFC-141b beyond the phaseout dates 
contained in Sec. 82.4(l) and(m) of the final rule published in the 
Federal Register on May 10, 1995 (60 FR 24970). EPA is creating an 
exemption to the accelerated phaseout of the production and import of 
HCFC-141b for national security purposes. EPA believes that the new 
Sec. 82.4(u)(3) will not adversely affect compliance with the 
provisions of the Clean Air Act Amendments of 1990 or the U.S. 
obligations under the Montreal Protocol as amended.
    A person seeking an exemption for the production and import of 
HCFCs for national security purposes under Sec. 82.4(u)(3) must apply 
for the exemption under Sec. 82.9. Today's action includes a 
streamlined application and review process under Sec. 82.9(g) for 
national security allowances. The application process requires a U.S. 
government entity with a national security interest to submit the 
following information to EPA: (a) name and address of national security 
entity; name of contact person and phone and fax numbers and e-mail 
address; (b) quantity (in kilograms) of HCFC-141b needed for the 
control period for the national security interest; (c) a description of 
the national security interest met by the use of HCFC-141b; (d) a 
technical description of the use of HCFC-141b; (e) a technical 
description of why alternatives and substitutes are not sufficient or 
suitable to eliminate the national security use of HCFC-141b; and (f) a 
detailed analysis showing why stockpiled, recovered or recycled 
quantities are deemed to be technically and economically infeasible for 
use.
    EPA will review the application in order to determine whether to 
grant national security allowances for the specific quantity of HCFC-
141b for the control period. If more information is needed, EPA will 
contact the applicant and specify the needed information. EPA will 
retain the right to disallow the national security allowances based on 
information received regarding, inter alia, fraud, misrepresentation, 
inconsistency with Articles and Decisions under the Montreal Protocol, 
inconsistency with the intent of the Clean Air Act Amendments of 1990, 
or other reasons related to human health and the environment.
    EPA considered other approaches to a national security exemption 
for the production and import of HCFCs. EPA considered whether the 
exemption should be specific for one, or two, or all of the HCFCs 
(e.g., specific exemptions only for 141b, 22, or 142b for national 
security purposes.) To date, EPA has received only specific requests 
for national security exemptions for 141b. Therefore, EPA believes 
there is no need for a broader exemption and accordingly is limiting 
the exemption to HCFC-141b.
    EPA is also establishing a specific application period ending 
December 1, 1999. By limiting the time frame for accepting 
applications, EPA is providing a strong incentive for U.S. government 
entities with national security interests to review their HCFC-141b 
needs and conduct long-term planning. By limiting the time frame for 
the review of applications, EPA would also be reducing the Agency's 
long-term burden to continually review claims of national security 
interest.
    EPA considered conducting a one-time period of review of petitions 
for national security allowances to be

[[Page 41632]]

finalized by publication of a notice with a list of acceptable and 
unacceptable national security exemptions to the class II phaseout 
dates. EPA decided not to adopt this approach because the Agency 
expects very few applications for national security allowances for 
class II controlled substances.
    Another option in the implementation of an exemption for the 
production and import of HCFCs beyond the accelerated phaseout would be 
a limit on the total quantity of any HCFC that one U.S. government 
entity could request and obtain in a control period. Finally, EPA could 
limit the number of control periods for which a U.S. government entity 
with national security interests may apply for an HCFC exemption. EPA 
did not adopt these options to limit the quantity of material or the 
control periods because the Agency expects the numbers of requests and 
the quantities to be very small.
    The Agency is creating an exemption process for the continued 
production or import of HCFC-141b up to January 1, 2030, for 
applications related to national security in cases where stockpiled, 
recovered or recycled quantities are deemed to be technically and 
economically infeasible for use. Upon request by a Federal Government 
Agency, the Administrator may grant authorization for production or 
import of a specified quantity, for a specified period of time. Only 
agencies of the Federal Government can request production or import 
quantities under this exception. Thus, companies and other 
organizations that are contractors, grantees or otherwise service 
providers for the Federal Government must first secure approval and 
endorsement through the Agency which requires products made with or 
containing HCFCs. Approval for production or import does not imply or 
mandate production; each user must locate a willing supplier and 
negotiate supply. It should be noted that under CAA section 605(b)(1), 
beginning January 1, 2015, it will be unlawful for any person to 
produce any class II substance in excess of baseline production levels.
    The Agency believes technically feasible and economically viable 
alternatives will be available for all commercial and the vast majority 
of non-commercial uses of HCFCs prior to their phaseout dates. However, 
there may be specialized uses where stockpiled, recovered, or recycled 
quantities are technically inadequate or economically not viable. At 
this time, the only foreseeable use of this authorization is for 
ballistic insulation foam used for space exploration and possibly 
cleaning applications for oxygen generators in the military.
    Section 605 of the Clean Air Act contains certain constraints on 
use, production, and consumption of HCFCs. This exemption is limited by 
these constraints. For example, under CAA section 605(a), effective 
January 1, 2015, no person may introduce into interstate commerce or 
use any virgin class II substance unless the substance is either used 
and entirely consumed (except for trace quantities) in the production 
of other chemicals, or the substance is used as a refrigerant in 
appliances manufactured prior to January 1, 2020. In addition, CAA 
section 605(b)(2) prohibits production of class II substances on or 
after January 1, 2030. Finally, EPA will not authorize quantities of 
HCFCs under the national security exemption that would cause the United 
States to exceed the HCFC consumption cap as agreed under the Montreal 
Protocol.
5. Simplify Procedure for Apportioning Essential-Use Allowances
    EPA is simplifying the yearly process for apportioning essential-
use allowances to U.S. companies. With today's action, EPA is creating 
a mechanism to allocate essential-use allowances for future control 
periods beginning in 1999 by a letter from the Agency to each person 
nominated by the United States to the Secretariat of the Montreal 
Protocol for an essential use exemption. After allocating the 
essential-use allowances, EPA will publish a Federal Register notice 
containing a summary of the allocations.
    In establishing the process for exempting essential uses from the 
phaseout, EPA published a proposed rule in the Federal Register on 
November 10, 1994 (59 FR 56276) and then published the final rule on 
May 10, 1995 (60 FR 24970). These rules discussed the essential-use 
exemption process and allocated essential-use allowances for 1996 and 
1997. EPA published a rule allocating essential use allowances for 1998 
on January 28, 1998 (63 FR 4359). Given the need for quick action in 
allocating allowances, EPA is simplifying the process for allocating 
essential-use allowances for each control period by issuing allowances 
by letter, followed by a notice summarizing the allocations.
    Given the extensive review prior to authorization by the Parties to 
the Protocol, EPA believes the allocation of essential-use allowances 
through rulemaking is unnecessary.
    In discussing the essential-use process in the preamble to the 
November 10, 1994 proposed rule (59 FR 56276, 56282-56283), EPA 
described the steps necessary to submit an application domestically. In 
the same passage, EPA discussed the procedure that the U.S. government 
follows in nominating uses to the Parties to the Protocol. Before the 
U.S. makes a nomination to the Parties for an essential-use exemption, 
EPA and other relevant government agencies carefully review 
applications in light of the criteria established in Decision IV/25 and 
subsequent Decisions of the Parties to the Protocol that govern 
essential uses. The U.S. takes great pains to ensure that each 
nomination submitted to the Parties reflects a truly essential need for 
a phased-out controlled substance. The Parties carefully consider the 
review and recommendations of the Montreal Protocol's Technical and 
Economic Assessment Panel (TEAP) and its Technical Options Committees 
(TOCs) before authorizing the production of controlled substances for 
essential uses beyond the phaseout dates. With today's action, EPA is 
announcing its intent to allocate the total quantity of essential-use 
authorizations for the calendar year that were approved by the Parties.
6. Prohibit Import of Class I Controlled Substances for Essential-Uses 
Except by Companies Allocated Essential-Use Allowances
    EPA is prohibiting the import of class I controlled substances for 
essential uses by any person that is not allocated essential-use 
allowances. EPA is making this change to ensure that the import is 
actually used for the allocated essential use, to simplify the 
recordkeeping and reporting procedures for U.S. companies and to ease 
the administrative burden of tracking imports of exempted quantities by 
the Federal government. Today's amendment changes the current 
regulations regarding the ability to confer essential-use allowances 
for imports. The current regulations (60 FR 24970; 40 CFR 82.4(e), 
Sec. 82.13(g)(1)(xvi)) allow holders of essential-use allowances to 
confer to another U.S. company the rights to import quantities of 
phased-out class I controlled substances. With today's action, EPA is 
requiring that U.S. entities allocated essential-use allowances be the 
actual importers of class I controlled substances. EPA believes that 
U.S. companies allocated essential-use allowances can work with customs 
brokers to ensure that their company is listed as the importer of 
record on U.S. Customs Service entry documents. By eliminating the 
option of conferring essential-use allowances to import class I 
controlled substances EPA is attempting to simplify the reporting and

[[Page 41633]]

recordkeeping requirements in Sec. 82.13 of the final rule and ease the 
U.S. government's task of tracking imports.
    In an effort to combat illegal imports of class I controlled 
substances, EPA joined forces with many Federal agencies to create an 
inter-agency taskforce. As the supply of ozone-depleting substances has 
declined, the residual demand has prompted the development of a black 
market for phased-out ozone-depleting substances. In 1995, the U.S. 
Customs Service began assisting EPA in monitoring imports of ozone-
depleting substances. U.S. Customs Service inspectors now call EPA to 
confirm that any import of class I controlled substances is exempted 
under one of the special provisions in Sec. 82.4 of the regulation, 
such as essential uses. EPA believes that confirming, tracking and 
cross-checking imports of class I controlled substances for essential 
uses will be easier if the actual holder of the essential-use allowance 
is listed as the importer of record or consignee on the U.S. Customs 
Service entry document (Customs form 7501). In addition, EPA believes 
that recordkeeping and reporting requirements will be simplified for 
U.S. companies if the holder of the essential-use allowances is 
responsible for submitting the importer's quarterly report.

C. Amendments to Sec. 82.9--Availability of Production Allowances in 
Addition to Baseline Production Allowances

1. Clarification of Increases or Decreases of Article 5 Allowances Due 
to International Transfers
    EPA is clarifying the regulations regarding trades of Article 5 
allowances. To address the confusion about the permissibility of trades 
of Article 5 allowances and because trades are allowed under the 
provisions of the Montreal Protocol, EPA is removing the phrase ``Until 
January 1, 1996'' from Sec. 82.9(c) and adding the phrase ``or Article 
5 allowances'' in the first sentence after ``production allowances.''
    The regulatory text published in the Federal Register on May 10, 
1995 is silent regarding trades of Article 5 allowances with other 
Parties to the Montreal Protocol. However, at the time of publication, 
EPA wrote in the preamble its interpretation of the Montreal Protocol 
stating, ``With today's action, EPA permits inter-pollutant and inter-
company transfers of Article 5 allowances as proposed but is not 
permitting inter-Party trades. The Agency determined that inter-Party 
trades of Article 5 allowances would violate the provision of the 
Protocol that specifically allows additional production by each Party 
for export to Article 5 countries.'' (60 FR 24980)
    EPA subsequently learned that the Parties to the Protocol do in 
fact permit inter-Party trades of Article 5 production. The United 
Nations Environment Programme (UNEP) document from the 1993 Bangkok 
meeting (UNEP/OzL.Pro.5/8) titled, ``Transfer of Production Rights 
under Article 2 of the Montreal Protocol'' asks the question in 
paragraph 5(a), ``Can a Party transfer to another Party its right to 
produce controlled substances to meet the basic domestic needs of the 
Parties under Article 5, paragraph 1?'' In the same UNEP document 
(UNEP/OzL.Pro.5/8), paragraph 6 responds, ``Concerning the question in 
paragraph 5(a) above , it appears that the term ``calculated level of 
production' contained in paragraph 5 of Article 2 includes production 
to meet the basic domestic needs of the Parties operating under Article 
5, paragraph 1. Therefore, a Party can transfer to another Party its 
right to produce to meet the basic domestic needs of the Parties 
operating under Article 5, paragraph 1.'' Based on the text in the 
Montreal Protocol document (UNEP/OzL.Pro.5/8), EPA is clarifying that 
inter-Party trades of Article 5 allowances are permissible.

D. Amendments to Sec. 82.12--Transfers

1. Increases or Decreases of Essential-Use Allowances Due to Emergency 
International Transfers
    EPA is amending the current regulation to allow the transfer of MDI 
essential-use authorizations to or from other Parties under limited 
situations to reflect Decision IX/20 taken by the Parties at the 1997 
Ninth Meeting in Montreal. Decision IX/20 allows the transfer of 
essential-use authorizations for CFCs for MDIs between Parties without 
prior review at a Meeting of the Parties only in emergency situations 
only if specific conditions are met. There is only one precedent for 
the transfer of MDI essential-use authorizations between two Parties. 
In this one case, New Zealand submitted a request to transfer 
previously approved MDI essential-use authorizations to Australia. New 
Zealand requested the transfer because of the planned closure of its 
MDI production facility and an agreement with Australia that the MDIs 
would be manufactured in Australia and shipped to New Zealand. New 
Zealand's request was submitted with sufficient time prior to the 
Meeting of the Parties for the TEAP to review and make a recommendation 
regarding the transfer. The Parties to the Protocol approved the 
transfer of New Zealand's essential-use allowances for CFCs for MDIs to 
Australia. Today's action reflects the creation of a safety valve for 
emergency cases in which a transfer of essential-use authorizations 
from one Party to another would need to occur without opportunity for 
prior review and approval of a Meeting of the Parties. Today's action 
and Decision IX/20 allow an emergency transfer with the Parties to the 
Protocol approving the action after-the-fact.
    Decision IX/20 taken at the Ninth Meeting of the Parties allows the 
transfer of essential-use allowances for CFCs for MDIs between two 
countries without prior approval by the Parties only in emergency 
situations and under very specific conditions. If any specific 
condition is not met, the transfer may not occur. Decision IX/20 states 
that: ``in an emergency situation,'' the transfer of essential-use 
authorizations may be allowed by the Ozone Secretariat, in consultation 
with the Technology and Economic Assessment Panel, if the following 
conditions are met: ``(a) the transfer applies only up to the maximum 
level that has previously been authorized for the calendar year in 
which the next Meeting of the Parties is to be held, (b) both Parties 
involved agree to the transfer, (c) the aggregate annual level of 
authorizations for all Parties for essential uses of MDIs does not 
increase as a result of the transfer, and (d) the transfer or receipt 
is reported by each Party involved on the essential-use quantity 
accounting format approved by the Eighth Meeting of Parties by 
paragraph 9 of decision VIII/9.''
    During the discussion of Decision IX/20, the Parties clarified that 
the intent of the phrase ``in an emergency situation,'' was to allow a 
safety provision for the supply of CFCs for MDIs if there is a 
disaster, such as a fire at the only MDI manufacturing facility within 
a country. Thus, EPA will approve transfers of essential-use 
authorizations only if the emergency situation is the result of a 
catastrophic natural event or war. A request to transfer essential-use 
allowances due to poor planning or management will not be considered an 
emergency situation for purposes of today's amendment. Furthermore, an 
emergency situation must also be shown to seriously threaten the 
treatment of patients with asthma or chronic obstructive pulmonary 
disease (COPD) within one of the countries in the proposed transfer.
    With today's action, EPA will not allow the transfer of essential-
use allowances from one U.S. company to

[[Page 41634]]

another company within the United States. EPA believes that information 
on the U.S. MDI market indicates domestic essential-use allowances are 
distributed in a manner that will allow for continued treatment of 
patients with asthma and COPD in the event of an interruption of supply 
of CFCs or a problem with manufacturing at one facility or one company. 
EPA's analysis indicates a measure of redundancy in the domestic market 
to respond to such contingencies.
    The procedures for transferring essential-use authorizations prior 
to the meeting of the Parties to address an emergency situation require 
a company to submit a very detailed description of the emergency and an 
analysis demonstrating the serious impact the emergency will have on 
patients. A U.S. holder of essential-use allowances for CFCs for MDIs 
or a U.S. manufacturer of MDIs identified through prior arrangement 
with a foreign manufacturer of MDIs may submit a request for approval 
to EPA regarding an emergency situation that requires the transfer of 
essential-use authorizations. The information to be submitted in a 
request for an emergency transfer of essential-use allowances is listed 
in Section 82.12(a)(3). The request must certify the accuracy of the 
information submitted and fully document the emergency situation that 
was created by a catastrophic natural event or war, including, where 
appropriate, submission of photos, reports from local, state or Federal 
authorities, or a report from an independent auditor. In a case when 
the emergency situation exists in a foreign state the request must 
include a letter from the foreign environmental ministry and a letter 
from the foreign health ministry verifying the emergency situation and 
the serious threat the emergency situation poses for the treatment of 
patients with asthma and COPD in that country. Submission of a request 
to transfer essential-use authorizations for CFCs for MDIs does not 
guarantee EPA's approval of or agreement with the requested transfer. 
Rather, EPA will review the information provided and use it to 
independently verify that the emergency situation exists and that the 
emergency situation seriously threatens the health and treatment of 
patients with asthma or COPD.
    In reviewing a request for an emergency transfer of essential-use 
authorizations for CFCs for MDIs, EPA may consider the following 
factors:
    (1) Information sufficient to make a determination regarding 
whether the situation is an emergency due to a catastrophic natural 
event or war; (2) possible serious threats to the treatment of patients 
with asthma and COPD; (3) possible creation of economic hardship; (4) 
possible effects on trade; (5) potential environmental implications; 
and (6) the total amount of unexpended essential-use allowances held by 
United States entities.
    After a review of these factors in consultation with other agencies 
of the U.S. Federal government, a notice will be issued through the 
U.S. Department of State, to the UNEP Ozone Secretariat, either 
agreeing or disagreeing with the transfer of essential-use 
authorizations and specifying the control period to which the transfer 
applies. For an approved trade from a Party, EPA will issue a notice 
that revises the essential-use allowances held by the person for the 
control period in question to equal the unexpended essential-use 
allowances held by the person under Subpart A plus the amount of 
essential-use authorizations transferred from the Party. For an 
approved trade to a Party, EPA will issue a notice that revises the 
essential-use allowances held by the person to equal the unexpended 
essential-use allowances held by the person under Subpart A minus the 
amount of essential-use authorizations transferred to the Party for the 
specific control period.

E. Amendments to Sec. 82.13--Recordkeeping and Reporting Requirements

1. Removal of Producer Requirement To Report the Quantity of Used 
Material Received That Contains Recycled or Reclaimed Controlled 
Substances
    EPA is removing the reporting requirement under Sec. 82.13(f)(3)(v) 
that asks producers of class I controlled substances to report on ``the 
quantity of used material received containing controlled substances 
that are recycled or reclaimed.'' Because of the phaseout, EPA believes 
most producers either closed their facilities or drastically reduced 
their business in class I ozone-depleting substances (except Group VI 
substances). Class I controlled substances used as refrigerants are 
controlled under authority of Section 608 of the CAA in the regulations 
published under 40 CFR Part 82, Subpart F. Reclaimers of refrigerants 
are required to be EPA-certified under section 82.164 and required to 
report information about their reclamation process annually under 
section 82.166. U.S. producers of class I controlled substances are, in 
general, not accepting recycled or reclaimed material because class I 
controlled substances are being recycled and reclaimed by special 
facilities that handle refrigerants or re-process wastes. Today's 
action eliminates the reporting requirement in 82.13(f)(3)(v) because 
EPA tracks the reclamation of refrigerants under the 608 regulations 
and producers are no longer accepting used controlled substances after 
the phaseout of class I controlled substances.
2. Add to the Producer Recordkeeping and Reporting Requirements the 
Need To Maintain and Submit a Certification That a Quantity of Class I 
Controlled Substance Will Be Used as a Process Agent
    EPA is adding the requirement that producers of class I controlled 
substances maintain a record obtained from purchasers certifying the 
purchasers' intent to use the cited quantity as a process agent in 
accordance with the current definition of controlled substance in 
Section 82.3. EPA is requiring that the purchaser certify that it will 
use the total quantity of purchased class I controlled substance as a 
process agent in accordance with the definition of controlled substance 
in the final rule published in the Federal Register on May 10, 1995 (60 
FR 24970). EPA is also requiring that producers submit the 
certifications received with their quarterly reports.
    EPA is adding today's recordkeeping and reporting requirement for 
process agents due to a change in the treatment of process agents under 
the Montreal Protocol. Since 1996, the Parties to the Protocol have 
agreed to treat process agents in the same manner as feedstocks, that 
is, the same as controlled substances that are transformed. In 
accordance with Decisions VI/10 and VII/10, since the phaseout of class 
I controlled substances, the production of these substances for use as 
a process agent has been treated as transformation for purposes of 
recordkeeping and reporting under this regulation. At the Ninth Meeting 
of the Parties in 1997, the Parties did not extend beyond the 1998 
control period the treatment of process agents in a manner similar to 
feedstocks.
    When the Parties to the Protocol decided not to extend the 
treatment of process agents in a manner similar to feedstocks, the 
treatment of process agents reverted to an earlier decision by the 
Parties. Decision VI/12, taken by the Parties in 1992, clarifies the 
definition of controlled substances and states that ``insignificant 
quantities of controlled substances originating from inadvertent or 
coincidental production during a manufacturing process, from unreacted 
feedstock, or from their use as process

[[Page 41635]]

agents which are present in chemical substances as trace impurities, or 
that are emitted during production manufacture or handling, shall be 
considered not to be covered by the definition of a controlled 
substance contained in paragraph 4 of Article 1 of the Montreal 
Protocol.'' Decision IV/12 is reflected in the current definition of 
controlled substances in Section 82.3 as published in the Federal 
Register on May 10, 1995. Thus, the production of controlled substances 
for use as a process agent is not included in the definition of 
controlled substances in the regulation.
    A very small number of manufacturing processes in the U.S. use a 
class I controlled substance as a process agent. In almost every case, 
the manufacturing process uses carbon tetrachloride to control or 
maintain a chemical reaction. Many companies have submitted a 
description of their manufacturing process to EPA, asking if their 
process would be considered a process agent use of a class I controlled 
substance. In such cases, a producer of a class I controlled substance 
can rely on the letter from EPA to determine if the purchaser can 
purchase the material as a process agent. If a producer of a class I 
controlled substance is unsure about whether the manufacturing process 
of a potential new purchaser qualifies as a process agent use, the 
producer should refer the purchaser to EPA for a determination.
3. Clarify the Need for Letters That Confer Essential-Use Allowances 
and Destruction and Transformation Credits to Producers and That These 
Letters Be Submitted With Producer's Quarterly Reports
    EPA is issuing a clarification of existing requirements. EPA is 
clarifying that holders of essential-use allowances that place orders 
for class I controlled substances must confer essential-use allowances 
to the producer in order to receive the material. EPA is also 
clarifying that the letter that confers the essential-use allowances 
must certify that the quantity of class I controlled substance is being 
purchased solely for the specified essential use and will not be resold 
or used in any other manufacturing process. Similarly, laboratory 
customers that place orders for class I controlled substances must 
certify that the quantity of class I controlled substance is being 
purchased solely for laboratory applications and will not be resold or 
used in manufacturing. Distributors of laboratory supplies that place 
orders for class I controlled substances must certify that the 
controlled substances were purchased for sale to laboratory customers 
who make the above certifications.
    EPA is clarifying that producers must submit to the Agency a copy 
of letters that confer any essential-use allowances or destruction and 
transformation credits. Under the current reporting requirements found 
in Sec. 82.13(f)(3)(xi) and (xii) of the final rule published in the 
Federal Register on May 10, 1995 (60 FR 24970), producers must submit 
``a list of essential-use allowance holders * * * from whom orders were 
placed'' as well as ``the certifications from essential-use allowance 
holders.'' Under the current reporting requirements at 
Sec. 82.13(f)(3)(iv), producers must submit data on the number of 
expended and unexpended essential-use allowances and destruction and 
transformation credits conferred to them for each quarter.
    In 1996 and 1997, few producers and importers submitted letters 
from purchasers conferring essential-use allowances or certifying that 
the controlled substances were purchased solely for the specified 
essential uses. With today's action, EPA is clarifying that holders of 
essential-use allowances must write a letter conferring the essential 
use allowances to the producer, and that this letter must certify that 
material is purchased solely for the specified essential-use and will 
not be resold or used in any other manufacturing process. Laboratory 
customers that place orders for class I controlled substances must 
certify that the quantity of class I controlled substance is being 
purchased solely for laboratory applications and will not be resold or 
used in manufacturing. Distributors of laboratory supplies must certify 
that the material is purchased solely for sale to laboratory customers 
who certify that the substances will only be used for laboratory 
applications and will not be resold or used in manufacturing.
    As explained in Section II.B.8. above, EPA is prohibiting holders 
of essential-use allowances from conferring the right to import, and 
instead, requiring them to become the actual importer of phased-out 
class I controlled substance. EPA is also requiring that distributors 
of laboratory supplies follow the same procedures and, as they have 
done since 1996, act as the importer of the quantity of phased-out 
class I controlled substance that is exempted under the essential-use 
provisions for laboratory and analytical uses.
    EPA is clarifying an existing requirement that copies of letters 
that confer essential-use allowances and that certify that the material 
is purchased solely for the specified essential use be included with 
the producer's quarterly reports to EPA.
4. Changes to the Petition Process for Importing Used Class I 
Controlled Substances
    EPA is changing the petition process for imports of used class I 
controlled substances. Today's changes clarify existing requirements. 
In addition, some of the amendments are designed to give EPA greater 
ability to ensure imports are, in fact, used controlled substances 
(i.e., not newly produced substances).
    The original reason the Parties to the Protocol agreed to permit 
international trade in previously used ozone-depleting substances 
beyond the Protocol's control regimes was to ease the transition to 
alternatives. In addition, the Parties believed that allowing trade in 
quantities of already existing used material would offset the need for 
new production globally. EPA believes that, in many cases, the opposite 
may be occurring. The diminishing supplies and hence rising prices of 
class I controlled substances in the U.S., combined with continued 
production of virgin material in Article 5 countries, creates an 
opportunity for such large financial gain that, instead of offsetting 
new production, it is likely that trade in used controlled substances 
is fostering new production. Evidence increasingly indicates that new 
production overseas is being clandestinely diverted to the U.S. and 
other non-Article 5 countries as exports of ``used'' material. To the 
extent that the petition process unwittingly encourages mislabelling or 
adulteration of new production overseas, and the submission of false 
information, it undermines the Parties' original intention in 
permitting trades of used ozone-depleting substances.
    Although today's amendments simply tighten the existing 
requirements, EPA is also considering a complete ban on imports of used 
class I controlled substances. EPA is considering an import ban on used 
class I controlled substances because of the enormous burden, both in 
logistics and in resources, to independently verify the information in 
petitions to guarantee that shipments are, in fact, previously used 
controlled substances. Without physically inspecting each site from 
which a class I controlled substance is recovered from equipment, EPA 
is making decisions based on the documents and information provided by 
petitioners. EPA is also considering a ban on imports of specific used 
controlled substances instead of a

[[Page 41636]]

comprehensive ban on all used class I controlled substances.
    EPA believes that, in some cases, the petition requirements 
published in the May 10, 1995 final rule (60 FR 24970; 40 CFR 
Sec. 82.13(g)(2)) have been misunderstood. EPA hopes today's 
clarifications will reduce the number of times EPA objects to a 
petition and then objects to re-submissions of the same petition due to 
insufficient information before finally approving the complete petition 
package. EPA believes that, in other cases, the petition process has 
been abused. EPA is making today's changes in the hopes that the 
provisions of the petition process can be adequately tightened to guard 
against abuses and guarantee that imported material is truly previously 
used.
    a. Clarification that a Petition to Import Used Class I Controlled 
Substances is Submitted for Each Individual Shipment. EPA would like to 
clarify that a petition to import used class I controlled substances 
may only be submitted on a shipment by shipment basis. EPA is not 
changing the current requirement with this action but clarifying the 
existing requirement in Sec. 82.13(g)(2). The information in a petition 
and the quantity a person wishes to import into the United States must 
be limited to a specific shipment and a single U.S. Customs entry. If 
an importer cannot arrange for the entire quantity to be shipped as one 
entry through U.S. Customs, the importer is required to submit more 
than one petition for the quantity in each individual Customs entry.
    b. Changing the de minimis Quantity for an Individual Shipment for 
which a Person is Required to Submit a Petition to Import Used Class I 
Controlled Substances. EPA is reducing the de minimis amount for an 
individual shipment for which a person is required to submit a petition 
to import used class I controlled substances. Section 81.13(g)(2) of 
the final rule published in the Federal Register on May 10, 1995, 
requires a person to submit a petition to import used class I 
controlled substances ``for each individual shipment over 150 pounds.'' 
A de minimis amount of 150 pounds was established in the May 10, 1995 
final rule to allow companies to import small samples of material so 
they could run laboratory analyses and determine if reclamation would 
be physically possible and economically justifiable before importing a 
large tank. EPA has since learned that samples of class I controlled 
substances are generally taken from large tanks in special cylinders 
that generally weigh less than 2 pounds. EPA is therefore setting the 
de minimis quantity at five (5) pounds. EPA is setting the de minimis 
quantity at five pounds in order to avoid the unnecessary import of 
class I controlled substances. EPA believes that a quantity of 150 
pounds is much larger than necessary to meet laboratory analysis needs. 
A de minimis level of five pounds allows a company to take three 
samples from a large ISO-tank for laboratory analysis and send those 
samples to a testing facility in the U.S. without being subject to the 
petition requirements. In developing today's amendments, EPA also 
considered requiring that a person who wishes to import any quantity of 
used class I controlled substance, regardless of the size, be required 
to submit a petition, thereby eliminating the de minimis level 
altogether. EPA decided not to eliminate the de minimis level 
altogether in order to minimize burden on the regulated community and 
conserve Agency resources.
    c. Revised and Expanded Information Requirements for a Petition to 
Import Used Class I Controlled Substances. EPA is amending the 
regulation to include a more comprehensive and detailed list of 
information that will be required for petitions to import used class I 
controlled substances. Most of these changes are intended to make the 
current regulatory text more explicit regarding the type of information 
that EPA needs to independently verify, above all, the previous use of 
the controlled substance. Today's action adds a requirement under 
Sec. 82.13(g)(2) that contact information for the entire chain of 
custody of the used controlled substance be provided in the petition. 
For example, EPA is stating that a petition include complete contact 
information for: every source facility from which the used controlled 
substance was recovered, every company that collected the material from 
the equipment, every previous owner of the material, and every company 
that will be exporting the used controlled substance.
    EPA is also requiring that a petition to import used class I 
controlled substances include dated documents indicating the time the 
material was put into the equipment. EPA is requiring that the petition 
to import used class I controlled substances include the name, make and 
model number of the equipment from which the material was removed. The 
current text under Sec. 82.13(g)(2)(vi) requires a petition to provide 
the ``intended use'' of the controlled substance. Today's amendment 
calls for, in addition to the intended use, a copy of a contract for 
the purchase of the controlled substance. In light of efforts by 
Parties to the Protocol to implement a licensing system for exports as 
well as imports, EPA is requiring that the petition provide an export 
license from the appropriate government agency in the country of 
export.
    d. Removal of the Information Requirement regarding the 
Certification of Tax Liability for Used Class I Controlled Substances 
from the Petition.  EPA is removing the requirement in Sec. 82.13(g)(2) 
(viii) of the current rule from the list of information to be included 
with a petition to import used class I controlled substances. This 
provision required an importer to certify that the purchaser of the 
used, recycled or reclaimed substance ``is liable for the payment of 
the tax.'' See 60 FR 24970 (May 10, 1995). EPA published a stay of this 
provision on January 31, 1996 (61 FR 3316), and published an extension 
of the stay on June 11, 1996 (61 FR 29485). EPA believes that this 
provision failed to establish a clear and comprehensive reference to 
Internal Revenue Service (IRS) tax requirements that the Agency could 
implement effectively. EPA believes it is more appropriate to defer 
interpretation of regulatory requirements regarding excise taxes for 
ozone-depleting chemicals to the Internal Revenue Service (IRS), the 
Federal agency given authority for these taxes under the Omnibus Budget 
Reconciliation Act of 1989, the Omnibus Budget Reconciliation Act of 
1990 and the Energy Policy Act of 1992. EPA understands from the IRS 
that there is an excise tax on bulk shipments of used class I 
controlled substances, used class I controlled substances, products 
containing class I controlled substances and products made with but not 
containing class I controlled substances. However, EPA requests that 
all questions regarding the excise taxes on ozone-depleting chemicals 
be directed to the Internal Revenue Service.
    e. Timing for EPA Review of a Petition. EPA is clarifying and 
amending the current regulatory language in Sec. 82.13(g)(2) and (3) 
published in the Federal Register on May 10, 1995, regarding the timing 
for EPA's review of petitions to import used class I controlled 
substances. First, EPA is extending the current 15 working-day time 
limit within which EPA must respond to a petition. Given the large 
number of petitions being submitted (182 in 1997), combined with the 
fact that EPA will likely require more time to independently verify the 
additional information required with today's notice, EPA is extending 
the current time limit for the review of a petition from 15 to 40 
working days. Second,

[[Page 41637]]

EPA is clarifying that the time for review begins on the working day 
after EPA's Stratospheric Protection Division actually receives the 
petition.
    EPA included a time limit for the review of a petition to import 
used class I controlled substances in the May 10, 1995 final rule (61 
FR 24970) in an attempt to reduce regulatory burden. In the May 10, 
1995 final rule, EPA made approval of a petition automatic if, after 15 
working days, the person who submitted the petition had not received a 
notification from EPA. Through experience and the unforeseen volume of 
incoming petitions, EPA learned that the 15 working-day time limit was 
too short a period for EPA to conduct a thorough review and automatic 
approvals were occurring of petitions that the Agency would not have 
otherwise approved. Today's action is designed to correct the issue of 
too short a time period for the review of petitions leading to 
automatic approvals of petitions that would not otherwise be approved.
    EPA considered many other time frames for the review of petitions 
to import used class I controlled substances, including a complete 
elimination of any time limit for EPA's review of a petition. EPA 
considered time frames for the review of a petition to import used 
class I controlled substances from the current 15 working-days to as 
long as 180 working-days. EPA also considered whether to include an 
automatic approval provision with any of these time limits. EPA decided 
that a 40-day time frame with no automatic approval would allow the 
Agency to balance the goals of responsiveness to legitimate requests 
and thoroughness in identifying abuses of the petition process.
    f. Clarification of Reasons for Issuing an Objection Notice to a 
Petition to Import Used Class I Controlled Substances. EPA is amending 
the list of reasons for which the Agency may disallow a petition to 
import used class I controlled substances. Section 82.4(i) of the 
regulation published in the Federal Register on May 10, 1995, requires 
a person to comply with the petition procedures in Sec. 82.13(g)(2) and 
(3). The current regulation in Sec. 82.13(g)(3) states that, ``if the 
Administrator determines that the information is insufficient, or there 
is reason to disallow the import, the Administrator will issue an 
objection notice.'' EPA is adding a more detailed list of the reasons 
for disallowing an import of used class I controlled substances.
    As explained in the preamble of the May 10, 1995 final rule, EPA 
attempts to independently verify the information contained in a 
petition to import used class I controlled substances, with special 
attention given to confirming the prior use of the material. EPA's 
effort to confirm the information in a petition is conducted with 
support from other government agencies that are members of the inter-
agency taskforce combating illegal imports of ozone-depleting 
substances. Since 1994, EPA has worked with the inter-agency taskforce 
members who include the Department of Justice, the Internal Revenue 
Service, the Customs Service, the State Department, and the Department 
of Defense. In the two years of implementing the petition process, EPA 
has received a variety of petitions to import used class I controlled 
substances. Many of the petitions provide insufficient information or 
provide information that EPA has reason to doubt is sufficient to 
confirm that the material is, in fact, previously used. EPA also 
learned during two years of reviewing petitions that other agencies 
sometimes have important insights regarding the specific information 
listed in a petition.
    EPA is amending its list of reasons for which the Agency might 
issue an objection notice to a petition to import used class I 
controlled substances.
    The first reason for disallowing a petition is a clarification of 
the current regulatory text, which says that the petition must provide 
the information required in Sec. 82.13(g)(2) and that insufficient 
information or what appears to be insufficient information in response 
to these requirements is a basis for disallowing a petition.
    The second reason for disallowing a petition is if the Agency 
determines that the petition contains, or is believed to contain, false 
or misleading information.
    EPA may issue objection notices for petitions to import used 
controlled substances that are contrary to provisions of the Vienna 
Convention on Substances that Deplete the Ozone Layer, the Montreal 
Protocol and its amendments and decisions, and the non-compliance 
procedures outlined and instituted by the Implementation Committee of 
the Montreal Protocol. Section 614(b) of the CAA states that in the 
case of conflict between the CAA and the Montreal Protocol, the more 
stringent provision shall govern. Thus, EPA may, and will, object to 
any petition submitted to EPA that contains information about a 
transaction that is recognized to be contrary to the provisions of the 
Convention and the Protocol, including its amendments and decisions.
    With today's action EPA may disallow a petition if the appropriate 
government agency in the exporting country has not agreed to issue an 
export license for the individual shipment of used controlled substance 
that is cited in the petition.
    EPA may disallow petitions due to official statements made by 
foreign governments. EPA believes that foreign governments may make 
official statements either to the United States or to the Parties to 
the Montreal Protocol that would warrant an objection notice to a 
petition to import used controlled substances from that country. 
Certain countries have stated to the Implementation Committee of the 
Montreal Protocol that they are no longer allowing exports of used 
controlled substances. If a country states that it is no longer 
allowing exports or if it reports that it has not granted any export 
licenses EPA will treat this as grounds for issuing an objection notice 
for a petition to import from that country.
    EPA may also issue an objection notice for a petition when the 
Agency receives information indicating that a person listed in the 
petition is willing to produce false or misleading information 
regarding transactions in ozone-depleting substances. In the past, EPA 
has received information from other U.S. government agencies, from 
other petitioners, from non-governmental organizations and from foreign 
governments that have implicated companies or individuals in activities 
designed to mislead government authorities about activities related to 
ozone-depleting substances.
    Another reason for disallowing a petition is the receipt by the 
Administrator of information regarding activities contrary to EPA 
regulations by any individual or company listed in a petition. 
Activities contrary to EPA regulations, that have been reported to EPA 
or discovered by EPA personnel and that are related to ozone-depleting 
substances include, but are not limited to, un-certified recovery, un-
certified reclamation, reclamation that does not meet the required 
specifications, improper labeling, diverted transhipment, mis-
identification during import, forgery of EPA documents, and fraudulent 
claims regarding these activities. EPA may disallow a petition if the 
Agency receives information that any person or company listed in the 
petition is involved in an activity that is a potential violation of an 
EPA regulation.
    EPA will not grant petitions to import used class I controlled 
substances if it is determined that, for the current control period, 
the U.S. demand for the specific controlled substance can be satisfied 
from domestic stockpiles and

[[Page 41638]]

from recycling and reclamation programs for existing quantities in 
domestic equipment. If such a determination is made, EPA would view 
further importation of quantities of that specific used class I 
controlled substances to be unwarranted. Furthermore, EPA decided that 
conditions established for disbursing monies to specific country 
projects by the Executive Committee of the Montreal Protocol's 
Multilateral Fund may be a basis for objecting to petitions. EPA 
believes no used controlled class I substances should be imported from 
countries where reclamation capacity, for that specific controlled 
substance, has been or is being installed through assistance of the 
Multilateral Fund. The United States contributes approximately one 
fourth of all funds going to the Multilateral Fund, the general purpose 
of which is to assist countries operating under Article 5(1) of the 
Protocol to make the transition away from ozone-depleting substances; 
and a transition policy includes the development of reclamation 
facilities in order to optimize the use of existing ozone-depleting 
substances so as to avoid unnecessary production of virgin materials. 
Thus, EPA views the importation of used class I controlled substances 
from countries where reclamation capacity has been supported by the 
Multilateral Fund to run counter to U.S. interest, and counter to the 
aims of a global phaseout strategy.
    With today's actions, EPA is clarifying and expanding the list of 
reasons for objecting to a petition to give the Agency greater leverage 
in its efforts to ensure that trade in previously used material is 
consistent with the CAA and is in accordance with U.S. obligations 
under the Protocol.
    g. Requirement that the Petition and the Non-Objection Letter from 
EPA for the Import of Used Class I Controlled Substances Accompany the 
Shipment through U.S. Customs Clearance. EPA is adding a requirement 
that the petition and the non-objection notice from EPA approving the 
import of a used class I controlled substance accompany each shipment 
through U.S. Customs. In the preamble to the final rule published in 
the Federal Register on May 10, 1995, EPA suggested that the petition 
and EPA approval letter accompany the shipment of used class I 
controlled substances through U.S. Customs. However, EPA did not make 
this a requirement in the regulatory language. Today EPA is adding this 
requirement to Sec. 82.13(g) such that all importers of used class I 
controlled substances must provide these documents to bring a shipment 
into the United States. EPA believes that presenting the petition and 
EPA-approval letter with a shipment will facilitate the clearance 
through U.S. Customs.
5. Requirement That Importers of Controlled Substances and Used 
Controlled Substances Use the Harmonized Commodity Codes Specified in 
This Regulation in Completing Customs Entry Documents
    EPA is requiring that importers of controlled substances and used 
controlled substances file Customs entry documents (Form 7501) 
containing the specified Harmonized Tariff Schedule numbers listed in 
the new Appendix K to 40 CFR Part 82, Subpart A. Monitoring compliance 
with the regulatory requirements under this accelerated phaseout rule 
will be facilitated by consistency in the Harmonized Tariff Codes used 
on Customs entry forms. The regulations of the U.S. Customs Service 
require importers to properly identify the contents of a shipment, 
including the use of the proper commodity code number from the 
Harmonized Tariff Schedule. EPA cross-checks and monitors imports and 
exports of controlled substances and used controlled substances by 
reviewing information from the U.S. Customs Service. Both EPA and 
Customs believe a consistent list of numbers from the Harmonized Tariff 
Schedule will ease tracking, reporting, and compliance monitoring of 
the ozone-depleting substance phaseout program.
6. Modify the Requirement for a Sales Contract That Certifies Exported 
Controlled Substances Will Be Transformed or Destroyed
    The current regulations state that exporters of class I controlled 
substances must submit to EPA a sales contract certifying that the 
exported controlled substances will be transformed or destroyed. (40 
CFR 82.13(h)(8)) EPA is changing the requirement in Sec. 82.13(h)(8) to 
a requirement similar to the current requirement for importers in 
Sec. 82.13(g)(3)(xii). The new requirement requires exporters to submit 
an invoice or sales agreement that includes language similar to the IRS 
certificate for transformation or the destruction verification for 
exports of class I controlled substances to Article 5 Parties to the 
Protocol (developing countries).
7. Applying the Recordkeeping and Reporting Requirements to Material 
Obtained From Importers as Well as Producers for a Person Who 
Transforms or Destroys Class I Controlled Substances
    EPA is extending the recordkeeping and reporting requirement for 
persons involved in second-party transformation and second-party 
destruction of class I controlled substances, to the quantities they 
themselves did not import.
    EPA is adding a requirement that persons keep records if they 
transform or destroy class I controlled substances that they did not 
import. The current regulatory text in Sec. 82.13(i) requires a person 
to keep these records only if they did not produce the transformed or 
destroyed class I controlled substance.
    With today's action, EPA is also adding to Sec. 82.13(m) a 
requirement that persons report to EPA the names and quantities of 
class I controlled substances they transform or destroy when they 
submit an IRS certificate of intent to transform or a destruction 
verification to an importer. The current regulatory text in 
Sec. 82.13(m) requires persons to report within 45 days of the end of 
the control period the quantities of class I controlled substances they 
transform or destroy for which they submitted an IRS certificate of 
intent to transform or a destruction verification to a producer. EPA is 
now making the recordkeeping and reporting requirements apply equally 
whether the person who transforms or destroys the substances obtains 
them from a producer or an importer.
8. Changes to the Recordkeeping and Reporting Requirements for Entities 
Allocated Essential-Use Allowances
    EPA is changing the recordkeeping and reporting requirements for 
entities allocated essential-use allowances in accordance with a 
decision taken by the Parties to the Protocol at the Eighth Meeting in 
1996. Decision VIII/9 approved a new reporting format for the 
quantities of production and consumption of controlled substances 
obtained by Parties under the essential-use authorizations. This 
accounting framework, included in annex IV of the document entitled 
``Report of the Eighth Meeting of the Parties to the Montreal Protocol 
on Substances That Deplete the Ozone Layer'' (UNEP/OzL.Pro.8/12), is 
designed to assist the Parties in, among other things, monitoring the 
amount of controlled substances acquired through production or through 
import under essential-use authorizations.
    EPA is adopting the exact format approved by the Parties to the 
Protocol

[[Page 41639]]

as an adjustment to the quarterly reporting requirements for each 
company allocated essential-use allowances. Under today's action, each 
company receiving a letter from EPA that allocates essential-use 
allowances for a control period will be required to submit the 
information in the Protocol's accounting framework for each quarter. 
Much of the information required in the Protocol accounting framework 
is currently required under Sec. 82.13(u) of the rule published in the 
Federal Register on May 10, 1995.
    The Protocol accounting framework for essential uses is designed to 
assist the Parties in determining whether quantities of controlled 
substances claimed for essential uses are actually being produced or 
imported. EPA wishes to ensure that quantities of phased-out controlled 
substances that the United States nominates to the Parties as being 
essential are fully justified. EPA believes today's requirement that 
companies holding essential-use allowances complete the Protocol 
accounting framework will ultimately help the United States in making 
credible nominations for future years. The accounting framework should 
make more apparent the quantity of phased-out controlled substance that 
each company obtains by expending its essential-use allowances and the 
amount of that material each company then uses in a given year for 
accomplishing the specifically designated essential use. To more 
accurately track the use of CFCs obtained under the essential-use 
exemption, today's requirement requires submission of data on the 
number of units of each specific product manufactured in a control 
period. A company exhibiting a pattern of holding unexpended essential-
use allowances at the end of control periods, or a company exhibiting a 
pattern of holding quantities of controlled substances obtained with 
expended essential-use allowances that are not incorporated into the 
designated end product during that same control period, may indicate 
over-inflated requests for quantities of phased-out controlled 
substances. The United States government does not want the appearance 
of overinflated requests to jeopardize future approval by the Parties 
of requests for essential-use quantities for controlled substances.
    The essential-use procedures developed internationally and 
domestically are designed to strictly control and limit exceptions to 
the production and consumption phaseout of ozone-depleting substances 
while at the same time encouraging a transition to a complete phaseout. 
EPA believes that, in accordance with the intent of the Decisions taken 
by the Parties to the Protocol, each kilogram of a controlled substance 
authorized after the phaseout must be justified as being essential. The 
U.S. government, and EPA in particular, is committed to working with 
U.S. companies to continue to obtain the justified quantities of 
phased-out controlled substances for essential uses.
9. Changes to the Reporting Requirement for Distributors of Laboratory 
Supplies Under the Global Laboratory Essential-Use Exemption
    EPA is making several changes and additions to the current 
Sec. 82.13(v) to ease the reporting burden for companies supplying 
class I controlled substances under the laboratory essential-use 
exemption. EPA will require that companies distributing laboratory 
supplies in accordance with the global essential-use exemption in the 
current Sec. 82.4(r) (82.4(t) in these amendments), and Appendix G to 
Subpart A, maintain as records the certifications from each laboratory 
customer for each class I controlled substance ordered in a control 
period. EPA will not, however, require that distributors of laboratory 
supplies submit the certifications with each quarterly report. Under 
today's amendments, distributors of laboratory supplies will continue 
to receive certifications from labs that class I controlled substances 
are being purchased solely for laboratory and analytical purposes and 
are not being used for manufacturing and will not be resold. The 
distributor of laboratory supplies will continue to collect the 
certifications but will not be required to forward them to EPA. The 
distributor of laboratory supplies will continue to report each quarter 
the total quantity of each class I controlled substance sold to each 
customer under the global essential-use exemption (new Sec. 82.13(x)). 
Similarly, the distributor will continue to report each quarter the 
quantity of each such substance received from each producer or importer 
(new Sec. 82.13(v)). The total quantity reported will reflect the 
quantity of each class I controlled substance ordered by all 
laboratories during the quarter. Each of the labs ordering a class I 
controlled substance will have submitted to the distributor, for the 
distributor to maintain in accordance with recordkeeping requirements, 
a one-time-per-year certification as in Sec. 82.13(w) of the rule 
published in the Federal Register on May 10, 1995 (new Sec. 82.13(y)).
    EPA is collecting information on the total quantity of class I 
controlled substances produced and imported under the global laboratory 
essential-use exemption in order to meet reporting obligations under 
the Protocol. In addition, EPA is collecting information on the total 
quantity of class I controlled substances sold to labs in order to meet 
reporting obligations under the Protocol. EPA believes these 
obligations under the Protocol can be met through today's changes while 
at the same time reducing the reporting burden for distributors of 
laboratory supplies.
    With today's action, EPA is permitting companies only distributing 
class I controlled substances as reference standards for calibrating 
laboratory equipment to request an extension of the reporting 
requirement (new Sec. 82.13(z)). EPA is providing that companies 
distributing reference standards of class I controlled substances may 
write a letter to the Agency requesting to file annual rather than 
quarterly reports. The quantities of class I controlled substances 
contained in a reference standard for calibrating laboratory analytical 
equipment, such as a gas chromatograph, are typically thousandths or 
ten thousandths of a kilogram. EPA is creating a process for replacing 
the quarterly reporting requirement with an annual reporting 
requirement for companies that only sell laboratory reference 
standards, because the total quantity of a class I controlled substance 
sold by such companies under the global essential-use exemption during 
a year will often be less than a kilogram. EPA is creating this process 
for lengthening the reporting period for companies that only sell 
reference standards of class I controlled substances to ease the 
overall reporting burden.
    Today's changes are designed to reduce the overall reporting burden 
without creating opportunities for abuse of the essential-use exemption 
for laboratory and analytical purposes. EPA wishes to note that today's 
action does not change the packaging and purity requirements found in 
Appendix G for class I controlled substances distributed for laboratory 
and analytical purposes under the global essential-use exemption.

III. Miscellaneous Additional Changes

    Included with today's revisions are miscellaneous corrections and 
minor changes, such as the inclusion of a specific address in the 
definition for ``Administrator'' in Sec. 82.3. The rule also includes 
corrections in Sec. 82.9(a) regarding Article 5 allowances available to 
those producers listed in Sec. 82.5 and in accordance with the Montreal 
Protocol. This rule re-publishes an updated Appendix C to Subpart A,

[[Page 41640]]

listing Parties to the Montreal Protocol and its amendments. Also 
included are the new Appendix J and Appendix K to Subpart A.

IV. Summary of Supporting Analysis

A. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. 
L. 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local and tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures by State, local and tribal governments, in 
the aggregate, or by the private sector, of $100 million or more in any 
one year. If a written statement is required under section 202, 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, unless the Agency explains why 
this alternative is not selected or the selection of this alternative 
is inconsistent with law.
    Section 203 of the UMRA requires the Agency to establish a plan for 
obtaining input from and informing, educating, and advising any small 
governments that may be significantly or uniquely affected by the rule. 
Section 204 of the UMRA requires the Agency to develop a process to 
allow elected state, local, and tribal government officials to provide 
input in the development of any proposal containing a significant 
Federal intergovernmental mandate.
    EPA has determined that this rule does not contain a Federal 
mandate that may result in expenditures of $100 million or more by 
State, local and tribal governments, in the aggregate, or by the 
private sector, in any one year. Most of the provisions in today's rule 
fulfill the obligations of the United States under the international 
treaty, The Montreal Protocol on Substances that Deplete the Ozone 
Layer, as well as those requirements specifically set forth by Congress 
in sections 604, 606 and 614 of the Clean Air Act Amendments of 1990. 
The remainder merely serve to clarify existing regulatory text and 
therefore impose no new additional enforceable duties on governmental 
entities or the private sector. The majority of the amendments do not 
create significant additional costs for either the public or the 
private sector because they address various implementation issues 
without major changes in policy. Viewed as a whole, all of today's 
amendments do not create a Federal mandate resulting in costs of $100 
million or more in any one year for State, local and tribal 
governments, in the aggregate, or for the private sector. Thus, today's 
rule is not subject to the requirements of sections 202 and 205 of the 
UMRA. EPA has also determined that this rule contains no regulatory 
requirements that might significantly or uniquely affect small 
governments; therefore, EPA is not required to develop a plan with 
regard to small governments under section 203. Finally, because this 
proposal 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

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to conduct a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements unless the agency certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities. Small entities include small 
businesses, small not-for-profit enterprises, and small governmental 
jurisdictions.
    The Agency performed an initial screening analysis and determined 
that this regulation does not have a significant economic impact on a 
substantial number of small entities. EPA characterized the regulated 
community by identifying the SIC codes of the companies affected by 
this rule. The Agency determined that the members of the regulated 
community affected by today's rule are generally not small businesses. 
Small governments and small not-for-profit organizations are not 
subject to the provisions of today's rule. The provisions in the 
accelerated phaseout rule and today's action regulate large, 
multinational corporations that either produce, import, export, 
transform or destroy ozone-depleting chemicals controlled by this rule. 
To the extent that today's actions affect entities other than large, 
multinational corporations, there are few that are small entities and 
the economic impact is negligible. Thus, today's rule will not have a 
significant economic impact on a substantial number of small entities. 
The rule includes changes to recordkeeping or reporting requirements. 
Those changes included in today's rule that increase reporting burden 
only apply to large companies (pharmaceutical companies holding 
essential-use allowances). In general, for small entities, the changes 
in today's action reduce reporting and recordkeeping.
    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 economic impact 
on a substantial number of small entities.

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.
    It has been determined by EPA and OMB that this rule is not a 
``significant regulatory action'' within the meaning of the Executive 
Order.

D. Applicability of E.O. 13045 Children's Health Protection

    This rule is not subject to E.O. 13045, entitled ``Protection of 
Children from Environmental Health Risks and Safety Risks'' (62 FR 
19885, April 23, 1997), because it does not involve decisions on 
environmental health risks or safety risks that may disproportionately 
affect children.

E. Paperwork Reduction Act

    The revised information collection requirements in these amendments 
have been submitted for approval to OMB under the Paperwork Reduction 
Act, 44 U.S.C. 3501 et seq. An Information Collection Request (ICR) 
document has been prepared by EPA (ICR No. 1432.17) and a copy may be 
obtained from Sandy Farmer by mail at OPPE Regulatory Information 
Division; U.S. Environmental Protection Agency (2137); 401 M St., SW., 
Washington, DC

[[Page 41641]]

20460, by email at <a href="/cdn-cgi/l/email-protection#472126352a223569342629233e072237262a262e2b6922372669202831"><span class="__cf_email__" data-cfemail="721413001f17005c01131c160b321702131f131b1e5c1702135c151d04">[email protected]</span></a>, or by calling (202) 
260-2740. A copy may also be downloaded off the internet at <a href="http://
www.epa.gov/icr">http://
www.epa.gov/icr</a>. The additional information requirements in these 
amendments are not effective until OMB approves them.
    The information collection under this rule is authorized under 
sections 603(b) and 114 of the Clean Air Act Amendments of 1990 (CAA). 
This information collection is conducted to meet U.S. obligations under 
Article 7, Reporting Requirements, of the Montreal Protocol on 
Substances that Deplete the Ozone Layer (Protocol); and to carry out 
the requirements of Title VI of the CAA, including sections 603 and 
614.
    The reporting requirements included in the amendments to the 
current rule are designed to:
    (1) Ensure compliance with the restrictions on production, import 
and export of controlled ozone-depleting substances after the phaseout 
of class I substances (except methyl bromide) after January 1, 1996;
    (2) Allow exempted production and import for certain essential uses 
and the consequent tracking of that production and import;
    (3) Address industry and Federal concerns regarding the illegal 
import of mislabelled used controlled substances that are claimed to be 
undercutting U.S. markets;
    (4) Respond to industry comments on the functioning of the program 
to streamline reporting and eliminate administrative inefficiencies;
    (5) Satisfy U.S. obligations under the international treaty, the 
Montreal Protocol on Substances that Deplete the Ozone Layer 
(Protocol), to report data under Article 7;
    (6) Fulfill statutory obligations under Section 603(b) of Title VI 
of the Clean Air Act Amendments of 1990 (CAA) for reporting and 
monitoring;
    (7) Provide information to report to Congress on the production, 
use and consumption of class I and class II controlled substances as 
statutorily required in Section 603(d) of Title VI of the CAA.
    EPA informs respondents that they may assert claims of business 
confidentiality for any of the information they submit. Information 
claimed confidential will be treated in accordance with the procedures 
for handling information claimed as confidential under 40 CFR Part 2, 
Subpart B, and will be disclosed only if EPA determines that the 
information is not entitled to confidential treatment. If no claim of 
confidentiality is asserted when the information is received by EPA, it 
may be made available to the public without further notice to the 
respondents (40 CFR 2.203).
    The information collection requirements for this action have an 
estimated reporting burden averaging 23.3 hours per response. This 
estimate includes time for reviewing instructions, searching existing 
data sources, gathering and maintaining the data needed and completing 
the collection of information.
    The estimate includes the time needed to comply with EPA's 
reporting requirements, as well as that used for the completion of the 
reports under the amended regulations.

----------------------------------------------------------------------------------------------------------------
                                                  Number of    Responses/     Total      Hours per              
              Collection activity                respondents   respondent   responses     response   Total hours
----------------------------------------------------------------------------------------------------------------
Producer's Report..............................            8            4           32           16          512
Importer's Report..............................           12            4           48           16          768
Notification of Trade..........................            2            1            2            2            4
Export Report..................................           10            1           10           80          800
Lab Certification..............................         1000            1         1000            1         1000
Class II Report................................           14            4           56           16          896
Transformation & Destruction...................           15            1           15           80         1200
Essential Use Allowance Holders................           12            4           48           32         1536
Lab Suppliers..................................            4            4           16           24          384
Lab Suppliers--Reference Standards.............           10            1           10           16          160
                                                ----------------------------------------------------------------
      Total burden hrs.........................  ...........  ...........  ...........  ...........         7260
----------------------------------------------------------------------------------------------------------------

    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.
    Send comments on the Agency's need for this information, the 
accuracy of the provided burden estimates, and any suggested methods 
for minimizing respondent burden, including through the use of 
automated collection techniques to the Director, OPPE Regulatory 
Information Division; U.S. Environmental Protection Agency (2137); 401 
M St., SW; Washington, DC 20460; and to the Office of Information and 
Regulatory Affairs, Office of Management and Budget, 725 17th St., NW, 
Washington, DC 20503, marked ``Attention: Desk Officer for EPA.'' 
Include the ICR number in any correspondence.

F. Executive Order 12875

    Today's action does not impose any unfunded mandate upon any State, 
local, or tribal government; therefore, Executive Order 12875 does not 
apply to this rulemaking.

G. Submission to Congress and the General Accounting Office

    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

[[Page 41642]]

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. This rule is not a ``major rule'' as defined by 5 U.S.C. 
804(2).

List of Subjects in 40 CFR Part 82

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

    Dated: July 17, 1998.
Carol M. Browner,
Administrator.

    40 CFR part 82 is amended as follows:

PART 82--PROTECTION OF STRATOSPHERIC OZONE

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

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

Subpart A--Production and Consumption Controls

    2. Section 82.1 is revised to read as follows:


Sec. 82.1  Purpose and scope.

    (a) The purpose of the regulations in this subpart is to implement 
the Montreal Protocol on Substances that Deplete the Ozone Layer and 
sections 602, 603, 604, 605, 606, 607, 614 and 616 of the Clean Air Act 
Amendments of 1990, Public Law 101-549. The Protocol and section 604 
impose limits on the production and consumption (defined as production 
plus imports minus exports, excluding transhipments and used controlled 
substances) of certain ozone-depleting substances, according to 
specified schedules. The Protocol also requires each nation that 
becomes a Party to the agreement to impose certain restrictions on 
trade in ozone-depleting substances with non-Parties.
    (b) This subpart applies to any person that produces, transforms, 
destroys, imports or exports a controlled substance or imports or 
exports a controlled product.


Sec. 82.2  [Removed and reserved]

    3. Section 82.2 is removed and reserved.
    4. Section 82.3 is amended by adding new definitions in 
alphabetical order for the terms ``Confer'', ``Individual Shipment'', 
``Montreal Anniversary Amendments'', ``National Security Allowances'', 
``Non-Objection Notice'', and ``Source Facility'' and revising 
definitions in alphabetical order for ``Administrator'', 
``Destruction'', ``Importer'', ``Nations complying with, but not 
joining, the Protocol'', ``Transhipment'', and ``Unexpended Essential-
Use Allowances''.


Sec. 82.3  Definitions.

    As used in this subpart, the term:
    Administrator means the Administrator of the United States 
Environmental Protection Agency or his authorized representative. For 
purposes of reports and petitions, the Administrator must be written at 
the following mailing address: EPA (6205J), Stratospheric Protection 
Division, 401 M Street, SW, Washington, DC 20460.
* * * * *
    Confer means to shift the essential-use allowances obtained under 
Sec. 82.4(u) from the holder of the unexpended essential-use allowance 
to a person for the production of a specified controlled substance, or 
to shift the destruction and transformation credits obtained under 
Sec. 82.9(f) from the holder of the unexpended destruction and 
transformation credits to a person for the production of a specified 
controlled substance.
* * * * *
    Destruction means the expiration of a controlled substance to the 
destruction efficiency actually achieved, unless considered completely 
destroyed as defined in this section. Such destruction does not result 
in a commercially useful end product and uses one of the following 
controlled processes approved by the Parties to the Protocol:
    (1) Liquid injection incineration;
    (2) Reactor cracking;
    (3) Gaseous/fume oxidation;
    (4) Rotary kiln incineration;
    (5) Cement kiln;
    (6) Radio frequency plasma; or
    (7) Municipal waste incinerators only for the destruction of foams.
* * * * *
    Importer means the importer of record listed on U.S. Customs 
Service forms for imported controlled substances, used controlled 
substances or controlled products.
    Individual shipment means the kilograms of a used controlled 
substance for which a person may make one (1) U.S. Customs entry, not 
to be dis-aggregated, as identified in the non-objection letter from 
the Administrator under Sec. 82.13(g).
* * * * *
    Montreal Anniversary amendments means the Montreal Protocol, as 
amended at the Ninth Meeting of the Parties to the Montreal Protocol in 
Montreal in 1997.
    National Security allowances means the privileges granted by this 
subpart to produce or import class II controlled substances until 
January 1, 2015, as determined by the Administrator in accordance with 
Sec. 82.9(g).
    Nations complying with, but not joining, the Protocol means any 
nation listed in Appendix C, Annex 2, to this subpart.
    Non-objection notice means the privilege granted by the 
Administrator to import a specific individual shipment of used 
controlled substance in accordance with Sec. 82.13(g).
* * * * *
    Source facility means the exact location from which a used 
controlled substance was recovered from a piece of equipment, including 
the name of the company responsible for, or owning the location, a 
contact person at the location, the mailing address for that specific 
location, as well as a phone number and a fax number for the contact 
person at the location.
* * * * *
    Transhipment means the continuous shipment of a controlled 
substance, from a foreign state of origin through the United States or 
its territories, to a second foreign state of final destination, as 
long as the shipment does not enter into United States jurisdiction. A 
transhipment, as it moves through the United States or its territories, 
cannot be re-packaged, sorted or otherwise changed in condition.
* * * * *
    Unexpended essential-use allowances means essential-use allowances 
that have not been used. At any time in any control period a person's 
unexpended essential-use allowances are the total of the level of 
essential-use allowances the person has authorization under this 
subpart to hold at that time for that control period, minus the level 
of controlled substances that the person has imported or had produced 
in that control period until that time.
* * * * *
    5. Section 82.4 is amended by revising paragraphs (d), (e), by 
redesignating paragraphs (l) through (s) as (n) through (u) and 
redesignating paragraphs (f) through (k) as (g) through (l); by 
revising newly designated paragraph, (j), (t), and by adding paragraphs 
(f), (m), (l)(4), (t)(3), and (u)(3) to read as follows:


Sec. 82.4  Prohibitions.

* * * * *
    (d) Effective January 1, 1996, for any class I, Group I, Group II, 
Group III,

[[Page 41643]]

Group IV, Group V, or Group VII 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 exemption 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. Every kilogram of excess importation 
(other than transhipments or heels) constitutes a separate violation of 
this subpart.
    (e) Effective January 1, 1996, no person may place an order by 
conferring essential-use allowances for the production of the class I 
controlled substance, at any time in any control period, in excess of 
the amount of unexpended essential-use allowances, held by that person 
under the authority of this subpart at that time for that control 
period. Effective January 1, 1996, no person may import a class I 
controlled substance with essential-use allowances, at any time in any 
control period, in excess of the amount of unexpended essential-use 
allowances, held by that person under the authority of this subpart at 
that time for that control period. No person may import or place an 
order for the production of a class I controlled substance with 
essential-use allowances, at any time in any control period, other than 
for the class I controlled substance(s) for which they received 
essential-use allowances under paragraph (u) of this section. Every 
kilogram of excess production ordered in excess of the unexpended 
essential-use allowances conferred to the producer constitutes a 
separate violation of this subpart. Every kilogram of excess import in 
excess of the unexpended essential-use allowances held at that time 
constitutes a separate violation of this subpart.
    (f) Effective January 1, 1996, no person may place an order by 
conferring transformation and destruction credits for the production of 
the class I controlled substance, at any time in any control period, in 
excess of the amount of transformation and destruction credits, held by 
that person under the authority of this subpart at that time for that 
control period. Effective January 1, 1996, no person may import class I 
controlled substance, at any time in any control period, in excess of 
the amount of transformation and destruction credits, held by that 
person under the authority of this subpart at that time for that 
control period. No person may import or place an order for the 
production of a class I controlled substance with transformation and 
destruction credits, at any time in any control period, other than for 
the class I controlled substance(s) for which they received 
transformation and destruction credits as under Sec. 82.9(f). Every 
kilogram of excess production ordered in excess of the unexpended 
transformation and destruction credits conferred to the producer 
constitutes a separate violation of this subpart. Every kilogram of 
excess import in excess of the unexpended transformation and 
destruction credits held at that time constitutes a separate violation 
of this subpart.
* * * * *
    (j) Effective January 1, 1995, no person may import, at any time in 
any control period, a used class I controlled substance, without having 
received a non-objection notice from the Administrator in accordance 
with Sec. 82.13(g)(2) and (3). A person issued a non-objection notice 
for the import of an individual shipment of used controlled substances 
may not transfer or confer the right to import, and may not import any 
more than the exact quantity, in kilograms, of the used controlled 
substance cited in the non-objection notice. Every kilogram of 
importation of used controlled substance in excess of the quantity 
cited in the non-objection notice issued by the Administrator in 
accordance with Sec. 82.13(g)(2) and (3) constitutes a separate 
violation.
* * * * *
    (l) * * *
    (4) Import or export any quantity of a controlled substance listed 
in Class I, Group VII, in Appendix A to this subpart, from or to any 
foreign state not Party to the Copenhagen Amendments (as noted in 
Appendix C, Annex l, to this subpart), unless that foreign state is 
complying with the Copenhagen Amendments (as noted in Appendix C, Annex 
2, to this subpart.
    (m) Effective October 5, 1998, no person may export a controlled 
product to a Party listed in Appendix J of this subpart in any control 
period after the control period in which EPA publishes a notice in the 
Federal Register listing that Party in Appendix J of this subpart. EPA 
will publish a notice in the Federal Register that lists a Party in 
Appendix J if the Party formally presents to the U.S. a government 
document through its embassy in the United States stating that it has 
established a ban on the import of controlled products and a ban on the 
manufacture of those same controlled products.
* * * * *
    (t) Effective January 1, 1996, essential-use allowances are 
apportioned to a person under paragraph (t)(2) of this section for the 
exempted production or importation of specified class I controlled 
substances solely for the purposes listed in paragraphs (t)(1)(i) and 
(ii) of this section. Effective October 5, 1998 production and 
importation of class I controlled substances for the purposes listed in 
paragraph (t)(1)(iii) of this section are exempted as an essential use 
if conducted in accordance with requirements in Sec. 82.13(v) through 
(z) and Appendix G to subpart A.
* * * * *
    (3) Effective for the 1999 control period and thereafter, EPA will 
allocate essential-use allowances for quantities of a specific class I 
controlled substance by means of a confidential letter to each person 
nominated by the United States to the UNEP Ozone Secretariat of the 
Montreal Protocol and approved by the Parties for an essential use 
exemption for the control period in question. EPA will thereafter 
publish a notice in the Federal Register of the allocations made for 
the control period in question.
    (u) The following exemptions apply to the production and 
consumption restrictions under paragraphs (n), (o), and (p), of this 
section:
* * * * *
    (3) National security interests--A person may obtain national 
security allowances to produce HCFC-141b after January 1, 2003, as an 
exemption to paragraph (n) of this section, only for specific purposes 
deemed by the Administrator to be national security interests in 
accordance with the procedures in Sec. 82.9. A person may obtain 
national security allowances to import HCFC-141b after January 1, 2003, 
as an exemption to paragraph (o) of this section, only for specific 
purposes deemed by the Administrator to be national security interests 
in accordance with the procedures in Sec. 82.9. No person may produce 
or import a class II controlled substance under this paragraph on or 
after January 1, 2030.
    6. Section 82.9 is amended by revising the section heading and 
paragraphs, (a) and (c), and adding paragraph (g) to read as follows:


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

    (a) Every person apportioned baseline production allowances for 
class I controlled substances under Sec. 82.5 (a) through (f) of this 
subpart is also granted Article 5 allowances equal to:
    (1) 10 percent of their baseline production allowances listed for 
class I, Group I, Group III, Group IV, and Group V controlled 
substances listed under

[[Page 41644]]

Sec. 82.5 of this subpart for each control period ending before January 
1, 1996;
    (2) 10 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, 2001;
    (3) 15 percent of their baseline production allowances for class I, 
Group II controlled substances listed under Sec. 82.5 of this subpart 
for each control period beginning January 1, 1994, until January 1, 
2003;
    (4) 15 percent of their baseline production allowances for class I, 
Group I, Group III, Group IV, and Group V controlled substances listed 
under Sec. 82.5 of this subpart for each control period beginning 
January 1, 1996, until January 1, 2010; and
    (5) 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 beginning January 1, 2005, until January 1, 
2015.
* * * * *
    (c) A company may increase or decrease its production allowances or 
its Article 5 allowances by trading with another Party to the Protocol 
according to the provision under this paragraph (c). A nation listed in 
Appendix C to this subpart (Parties to the Montreal Protocol) must 
agree either to transfer to the person for the current control period 
some amount of production that the nation is permitted under the 
Montreal Protocol or to receive from the person for the current control 
period some amount of production that the person is permitted under 
this subpart. If the controlled substance is to be returned to the 
Party from whom production allowances are received, the request for 
production allowances shall also be considered a request for 
consumption allowances under Sec. 82.10(c). If the controlled substance 
is to be sold in the United States or to another Party (not the Party 
from whom the allowances are received), the U.S. company must expend 
its consumption allowances allocated under Sec. 82.6 and Sec. 82.7 in 
order to produce with the additional production allowances.
    (1) For trades from a Party, the person must obtain from the 
principal diplomatic representative in that nation's embassy in the 
United States a signed document stating that the appropriate authority 
within that nation has established or revised production limits for the 
nation to equal the lesser of the maximum production that the nation is 
allowed under the Protocol minus the amount transferred, the maximum 
production that is allowed under the nation's applicable domestic law 
minus the amount transferred, or the average of the nation's actual 
national production level for the three years prior to the transfer 
minus the production transferred. The person must submit to the 
Administrator a transfer request that includes a true copy of this 
document and that sets forth the following:
    (i) The identity and address of the person;
    (ii) The identity of the Party;
    (iii) The names and telephone numbers of contact persons for the 
person and for the Party;
    (iv) The chemical type and level of production being transferred;
    (v) The control period(s) to which the transfer applies; and
    (vi) For increased production intended for export to the Party from 
whom the allowances would be received, a signed statement of intent to 
export to the Party.
    (2) For trades to a Party, a person must submit a transfer request 
that sets forth the following:
    (i) The identity and address of the person;
    (ii) The identity of the Party;
    (iii) The names and telephone numbers of contact persons for the 
person and for the Party;
    (iv) The chemical type and level of allowable production to be 
transferred; and
    (v) The control period(s) to which the transfer applies.
    (3) After receiving a transfer request that meets the requirements 
of paragraph (c)(2) of this section, the Administrator may, at his 
discretion, consider the following factors in deciding whether to 
approve such a transfer:
    (i) Possible creation of economic hardship;
    (ii) Possible effects on trade;
    (iii) Potential environmental implications; and
    (iv) The total amount of unexpended production allowances held by 
United States entities.
    (4) The Administrator will issue the person a notice either 
granting or deducting production allowances or Article 5 allowances and 
specifying the control period to which the transfer applies, provided 
that the request meets the requirement of paragraph (c)(1) of this 
section for trades from Parties and paragraphs (c)(2) of this section 
for trades to Parties, unless the Administrator has decided to 
disapprove the trade under paragraph (c)(3) of this section for trades 
to Parties. For a trade from a Party, the Administrator will issue a 
notice that revises the allowances held by the person to equal the 
unexpended production allowances or Article 5 allowances held by the 
person under this subpart plus the level of allowable production 
transferred from the Party. For a trade to a Party, the Administrator 
will issue a notice that revises the production limit for the person to 
equal the lesser of:
    (i) The unexpended production allowances or Article 5 allowances 
held by the person under this subpart minus the amount transferred; or
    (ii) The unexpended production allowances or Article 5 allowances 
held by the person under this subpart minus the amount by which the 
United States average annual production of the controlled substance 
being traded for the three years prior to the transfer is less than the 
total allowable production allowable for that substance under this 
subpart minus the amount transferred. The change in allowances will be 
effective on the date that the notice is issued.
    (5) If after one person obtains approval for a trade of allowable 
production of a controlled substance to a Party, one or more other 
persons obtain approval for trades involving the same controlled 
substance and the same control period, the Administrator will issue 
notices revising the production limits for each of the other persons 
trading that controlled substance in that control period to equal the 
lesser of:
    (i) The unexpended production allowances or Article 5 allowances 
held by the person under this subpart minus the amount transferred; or
    (ii) The unexpended production allowances or Article 5 allowances 
held by the person under this subpart minus the amount by which the 
United States average annual production of the controlled substance 
being traded for the three years prior to the transfer is less than the 
total allowable production for that substance under this subpart 
multiplied by the amount transferred divided by the total amount 
transferred by all the other persons trading the same controlled 
substance in the same control period minus the amount transferred by 
that person.
    (iii) The Administrator will also issue a notice revising the 
production limit for each person who previously obtained approval of a 
trade of that substance in that control period to equal the unexpended 
production allowances or unexpended Article 5 allowances held by the 
person under this subpart plus the amount by which the United States 
average annual production of the controlled substance being traded for 
the three years prior to the transfer is

[[Page 41645]]

less than the total allowable production under this subpart multiplied 
by the amount transferred by that person divided by the amount 
transferred by all of the persons who have traded that controlled 
substance in that control period. The change in production allowances 
or Article 5 allowances will be effective on the date that the notice 
is issued.
* * * * *
    (g) Effective October 5, 1998, and until December 31, 1999, an 
agency, department, or instrumentality of the United States may 
petition the Administrator for national security allowances for HCFC-
141b in accordance with Sec. 82.4(v) and as an exemption to 
prohibitions in Secs. 82.4(o) through 82.4(p) by submitting the 
following:
    (1) Name and address of U.S. government national security entity; 
name of contact person and phone and fax numbers and e-mail address;
    (2) Quantity (in kilograms) of HCFC-141b needed for the control 
period for the national security interest;
    (3) A description of the national security interest met by the use 
of HCFC-141b;
    (4) A technical description of the use of HCFC-141b;
    (5) A technical description of why alternatives and substitutes are 
not sufficient to eliminate the national security use of HCFC-141b; and
    (6) A detailed analysis showing why stockpiled, recovered or 
recycled quantities are deemed to be technically and economically 
infeasible for use.
    (i) Effective October 5, 1998, the Administrator will issue an 
agency, department, or instrumentality of the United States national 
security allowances for HCFC-141b that the Administrator determines are 
necessary to national security interests based on information received 
in accordance with paragraph (g) of this section. The Administrator may 
decide not to grant national security allowances if: the national 
security interest can be met by the use of a substance other than HCFC-
141b; the national security interest can be met by the use of existing 
supplies of HCFC-141b; there is evidence of fraud or misrepresentation; 
approval of the allowances would be inconsistent with the Montreal 
Protocol or Decisions of the Parties; approval of the allowances would 
be inconsistent with the Clean Air Act Amendments of 1990; or approval 
of the allowances may reasonably be expected to endanger public health 
or welfare. The grant of national security allowances will be effective 
on the date that the notice specified in paragraph (g)(2) of this 
section is issued.
    (ii) Effective October 5, 1998, if the Administrator decides not to 
grant the request for national security allowances for any of the 
reasons stated in paragraph (g)(1) of this section, the Administrator 
will issue an objection letter disallowing the request for national 
security allowances. Within ten working days after receipt of the 
objection letter, the requestor may file a one-time petition of appeal, 
with supporting reasons, with the Administrator. The Administrator may 
affirm the disallowance or grant an allowance, as she/he finds 
appropriate in light of the available evidence. If no appeal is taken 
by the tenth day after receipt of the objection letter, the 
disallowance will be final on that day.
    7. Section 82.12 is amended by adding paragraph (a)(3) to read as 
follows:


Sec. 82.12  Transfers.

    (a) * * *
    (3) A person holding essential-use allowances for class I, Group I 
controlled substances for metered-dose inhalers (MDIs) may increase or 
decrease their essential-use allowances in an emergency situation by 
trading with another Party to the Protocol according to the provisions 
under this paragraph (a)(3). A nation listed in Appendix C to this 
subpart (Parties to the Montreal Protocol) must agree either to 
transfer to the person for a specified control period some amount of 
their essential-use authorizations for MDIs that the nation is 
permitted under the Montreal Protocol or to receive from the person for 
a specified control period some amount of essential-use allowances that 
the person is permitted under this subpart.
    (i) For trades from a Party or to a Party, the person must submit 
to the Administrator a request to revise and transfer essential-use 
authorizations that sets forth the following:
    (A) The identity and address of the person;
    (B) The identity of the Party;
    (C) The names, telephone and fax numbers of contact persons for the 
person and for the Party;
    (D) The chemical type and level of essential-use authorizations 
being transferred;
    (E) The control period(s) to which the transfer applies;
    (F) Documentation and analysis confirming the emergency situation 
due to a catastrophic natural event or war regarding the manufacture of 
MDIs, (if the situation exists in a foreign state, a signed document 
from the principal diplomatic representative in that nation's embassy 
in the United States introducing a letter from the authority within 
that foreign state responsible for health and a letter from the 
authority within that foreign state responsible for environmental 
international agreements certifying an emergency situation due to a 
catastrophic natural event or war and agreeing to a transfer of 
essential-use authorizations);
    (G) Documentation and analysis that demonstrates the emergency 
situation seriously threatens the treatment of patients with asthma or 
Chronic Obstructive Pulmonary Disease (COPD), (if the situation exists 
in a foreign state, a signed document from the principal diplomatic 
representative in that nation's embassy in the United States 
introducing a letter from the authority within that foreign state 
responsible for health and a letter from the authority within that 
foreign state responsible for environmental international agreements 
certifying an emergency situation that seriously threatens the 
treatment of patients with asthma or COPD and agreeing to a transfer of 
essential-use authorizations); and
    (H) A certification of the accuracy of the information submitted.
    (ii) After receiving a transfer request that meets the requirements 
of paragraph (a)(3) of this section, the Administrator may, at her/his 
discretion, consider the following factors in deciding whether to 
approve such a transfer:
    (A) Information sufficient to make a determination regarding 
whether the situation is an emergency due to a catastrophic natural 
event or war;
    (B) Possible serious threats to the treatment of patients with 
asthma and COPD;
    (C) Possible creation of economic hardship;
    (D) Possible effects on trade;
    (E) Potential environmental implications; and
    (F) The total amount of unexpended essential-use allowances held by 
United States entities.
    (iii) The Administrator will issue a notice to the UNEP Ozone 
Secretariat, through the U.S. Department of State, agreeing with the 
transfer of essential-use authorizations and specifying the control 
period to which the transfer applies, provided that the request meets 
the requirement of paragraph (a)(3)(i), of this section for trades from 
Parties or trades to Parties, unless the Administrator has decided to 
disapprove the trade under paragraph (a)(3)(ii) of this section. For an 
approved trade from a Party, the Administrator will issue a letter that 
revises the

[[Page 41646]]

essential-use allowances held by the person to equal the unexpended 
essential-use allowances held by the person under this subpart plus the 
amount of essential-use authorizations transferred from the Party for 
the specific control period. For an approved trade to a Party, the 
Administrator will issue a notice that revises the essential-use 
allowances held by the person to equal the unexpended essential-use 
allowances held by the person under this subpart minus the amount of 
essential-use authorizations transferred to the Party for the specific 
control period.
* * * * *
    8. Section 82.13 is amended by revising paragraphs (b), (f)(1)(iv), 
(f)(2) introductory text, (f)(2) (xiv), and (f)(2)(xvi), by adding 
(f)(2)(xvii), by removing paragraph (f)(3)(v) and redesignating 
(f)(3)(vi) through (xiii) as (f)(3)(v) through (xii), and revising 
newly designated (f)(3)(xi) through (xiii), by revising paragraphs 
(g)(1)(vii), (g)(1)(xvi), (g)(2) and the first (g)(3), by adding 
paragraph (g)(1)(xvii), by redesignating the second (g)(3) ``Reporting 
Requirements--Importers,'' as (g)(4) and revising the newly designated 
(g)(4)(iii) and (xiii), by adding paragraphs (g)(4)(xiv) and 
(g)(4)(xv), by revising paragraphs (h)(8), (i) introductory text, (m), 
(u), (v), and redesignating paragraph (w) as paragraph (y), and adding 
paragraphs (w), (x) and (z) to read as follows:


Sec. 82.13  Recordkeeping and reporting requirements.

* * * * *
    (b) Reports and records required by this section may be used for 
purposes of compliance determinations. These requirements are not 
intended as a limitation on the use of other evidence admissible under 
the Federal Rules of Evidence. Failure to provide the reports, 
petitions and records required by this section, and to certify the 
accuracy of the information in the reports, petitions and records 
required by this section, will be considered a violation of this 
subpart. False statements made in reports, petitions and records will 
be considered violations of Section 113 of the Clean Air Act.
* * * * *
    (f) * * *
    (1) * * *
    (iv) The quantity of any fugitive losses accounted for in the 
production figures; and
* * * * *
    (2) Every producer of a class I or class II controlled substance 
during a control period must maintain the following records:
* * * * *
    (xiv) Written verifications that essential-use allowances were 
conveyed to the producer for the production of specified quantities of 
a specific controlled substance that will only be used for the named 
essential-use and not resold or used in any other manufacturing 
process.
* * * * *
    (xvi) Written verifications from a U.S. purchaser that the 
controlled substance was exported to an Article 5 country in cases when 
Article 5 allowances were expended during production; and
    (xvii) Written certifications that the quantities of controlled 
substances purchased will be used as a process agent in accordance with 
the definition of controlled substance in Sec. 82.3.
* * * * *
    (3) * * *
    (xi) The certifications from essential-use allowance holders 
stating that the controlled substances were purchased solely for 
specified essential uses and will not be resold or used in any other 
manufacturing process;
    (xii) In the case of laboratory essential uses, a certification 
from distributors of laboratory supplies that controlled substances 
were purchased for sale to laboratory customers who certify that the 
substances will only be used for laboratory applications and will not 
be resold or used in manufacturing; or, if sales are made directly to 
laboratories, certifications from laboratories that the controlled 
substances will only be used for laboratory applications and will not 
be resold or used in manufacturing; and
    (xiii) The certifications from purchasers of controlled substances 
that the controlled substance will be used as a process agent in 
accordance with the definition of controlled substance in Sec. 82.3.
* * * * *
    (g) * * *
    (1) * * *
    (vii) The commodity code for the controlled substances shipped, 
which must be one of those listed in Appendix K to this subpart;
* * * * *
    (xvi) Copies of certifications that imported controlled substances 
are being purchased for essential laboratory and analytical 
applications or being purchased for eventual sale to laboratories that 
certify the controlled substances are for essential laboratory 
applications.
    (xvii) Written certifications that the quantities of controlled 
substances purchased will be used as a process agent in accordance with 
the definition of controlled substance in Sec. 82.3.
* * * * *
    (2) Petitioning--importers of used, recycled or reclaimed 
controlled substances. For each individual shipment (not to be 
aggregated) over 5 pounds of a used controlled substance as defined in 
Sec. 82.3, an importer must submit directly to the Administrator, at 
least 40 working days before the shipment is to leave the foreign port 
of export, the following information in a petition:
    (i) The name and quantity in kilograms of the used controlled 
substance to be imported;
    (ii) The name and address of the importer, the importer ID number, 
the contact person, and the phone and fax numbers;
    (iii) Name, address, contact person, phone number and fax number of 
all previous source facilities from which the used controlled substance 
was recovered;
    (iv) A detailed description of the previous use of the controlled 
substance at each source facility and dated documents indicating the 
date the material was put into the equipment at each source facility 
(material must have remained in the equipment at least 24 months prior 
to recovery to be considered previously used);
    (v) A list of the name, make and model number of the equipment from 
which the material was recovered at each source facility;
    (vi) Name, address, contact person, phone number and fax number of 
the exporter and of all persons to whom the material was transferred or 
sold after it was recovered from the source facility;
    (vii) The U.S. port of entry for the import, the expected date of 
shipment and the vessel transporting the chemical. If at the time of 
submitting a petition the importer does not know the U.S. port of 
entry, the expected date of shipment and the vessel transporting the 
chemical, and the importer receives a non-objection notice for the 
individual shipment in the petition, the importer is required to notify 
the Administrator of this information prior to the actual U.S. Customs 
entry of the individual shipment;
    (viii) A description of the intended use of the used controlled 
substance, and a copy of the contract for the purchase of the 
controlled substance that includes the name, address, contact person, 
phone number and fax number of the purchaser;
    (ix) The name, address, contact person, phone number and fax number 
of the U.S. reclamation facility, where applicable;

[[Page 41647]]

    (x) If someone at the source facility recovered the controlled 
substance from the equipment, the name and phone and fax numbers of 
that person;
    (xi) If the imported controlled substance was reclaimed in a 
foreign Party, the name, address, contact person, phone number and fax 
number of any or all foreign reclamation facility(ies) responsible for 
reclaiming the cited shipment;
    (xii) An export license from the appropriate government agency in 
the country of export and, if recovered in another country, the export 
license from the appropriate government agency in that country;
    (xiii) If the imported used controlled substance is intended to be 
sold as a refrigerant in the U.S., the name and address of the U.S. 
reclaimer who will bring the material to the standard required under 
section 608 (Sec. 82.152(g)) of the CAA, if not already reclaimed to 
those specifications; and
    (xiv) A certification of accuracy of the information submitted in 
the petition.
    (3) Starting on the first working day following receipt by the 
Administrator of a petition to import a used class I controlled 
substance, the Administrator will initiate a review of the information 
submitted under paragraph (g)(2) of this section and take action within 
40 working days to issue either an objection-notice or a non-objection 
notice for the individual shipment to the person who submitted the 
petition to import the used class I controlled substance.
    (i) For the reasons listed in this paragraph, the Administrator may 
issue an objection notice to a petition:
    (A) If the Administrator determines that the information is 
insufficient, that is, if the petition lacks or appears to lack any of 
the information required under paragraph (g)(2) of this section;
    (B) If the Administrator determines that any portion of the 
petition contains false or misleading information or has reason to 
believe that the petition contains false or misleading information;
    (C) If the importer wishes to import a used class I controlled 
substance from a country which is, for that particular controlled 
substance, out of compliance regarding its phaseout obligations under 
the Protocol or the transaction in the petition is contrary to other 
provisions in the Vienna Convention or the Montreal Protocol;
    (D) If the appropriate government agency in the exporting country 
has not agreed to issue an export license for the cited individual 
shipment of used controlled substance;
    (E) If allowing the import of the used class I controlled substance 
would run counter to the spirit of statements made by government 
officials in the country of recovery or export regarding controlled 
ozone-depleting substances;
    (F) If the Administrator has received information indicating that a 
person listed in the petition has at any time been willing to produce 
false information regarding trade in controlled substances, including 
information required by EPA or required by the appropriate government 
agency in the exporting country;
    (G) If the Administrator has received information indicating that a 
person listed in the petition is in violation of a requirement in any 
regulation published by the U.S. Environmental Protection Agency;
    (H) If the Administrator determines that, for the current control 
period, the U.S. demand for the controlled substance cited in the 
petition can be satisfied by domestic stockpiles and estimated 
recycling and reclamation of quantities contained in domestic 
equipment; or
    (I) If reclamation capacity is installed or is being installed for 
that specific controlled substance in the country of recovery or 
country of export and the capacity is funded in full or in part through 
the Multilateral Fund.
    (ii) Within ten (10) working days after receipt of the objection 
notice, the importer may re-petition the Administrator, only if the 
Administrator indicated ``insufficient information'' as the basis for 
the objection notice. If no appeal is taken by the tenth working day 
after the date on the objection notice, the objection shall become 
final. Only one appeal of re-petition will be accepted for any petition 
received by EPA.
    (iii) Any information contained in the re-petition which is 
inconsistent with the original petition must be identified and a 
description of the reason for the inconsistency must accompany the re-
petition.
    (iv) In cases where the Administrator has no reason to object to 
the petition based on the criteria listed in paragraph (g)(3)(i) of 
this section, the Administrator will issue a non-objection notice.
    (v) To pass the approved used class I controlled substances through 
U.S. Customs, the petition and the non-objection notice issued by EPA 
must accompany the shipment through U.S. Customs.
    (vi) If for some reason, following EPA's issuance of a non-
objection notice, new information is brought to EPA's attention which 
shows that the non-objection notice was issued based on false 
information, then EPA has the right to:
    (A) Revoke the non-objection notice;
    (B) Pursue all means to ensure that the controlled substance is not 
imported into the United States; and
    (C) Take appropriate enforcement actions.
    (vii) Once the Administrator issues a non-objection notice, the 
person receiving the non-objection notice is required to import the 
individual shipment of used class I controlled substance within the 
same control period as the date stamped on the non-objection notice.
    (viii) A person receiving a non-objection notice from the 
Administrator for a petition to import used class I controlled 
substances must maintain the following records:
    (A) A copy of the petition;
    (B) The EPA non-objection notice;
    (C) The bill of lading for the import; and
    (D) U.S. Customs entry documents for the import that must include 
one of the commodity codes from Appendix K to this subpart.
    (4) * * *
    (iii) The quantity of those controlled substances imported that are 
used controlled substances.
* * * * *
    (xiii) The certifications from essential-use allowance holders and 
laboratory customers stating that the controlled substances were 
purchased solely for specified essential uses and will not be resold or 
used in manufacturing; or, if sales are made directly to laboratories, 
certifications from laboratories that the controlled substances will 
only be used for laboratory applications and will not be resold or used 
in manufacturing;
    (xiv) In the case of laboratory essential uses, a certification 
from distributors of laboratory supplies that controlled substances 
were purchased for sale to laboratory customers who certify that the 
substances will only be used for laboratory applications and will not 
be resold or used in manufacturing; and
    (xv) The certifications from purchasers of controlled substances 
that the controlled substance will be used as a process agent in 
accordance with the definition of controlled substance in Sec. 82.3.
* * * * *
    (h) * * *
    (8) The invoice or sales agreement containing language similar to 
the Internal Revenue Service Certificate that the purchaser or 
recipient of imported controlled substances intends to transform those 
substances, or

[[Page 41648]]

destruction verifications (as in paragraph (k) of this section) showing 
that the purchaser or recipient intends to destroy the controlled 
substances.
    (i) Every person who has requested additional production allowances 
under Sec. 82.9(e) of this subpart or destruction and transformation 
credits under Sec. 82.9(f) of this subpart or consumption allowances 
under Sec. 82.10(b) of this subpart or who transforms or destroys class 
I controlled substances not produced or imported by that person must 
maintain the following:
* * * * *
    (m) Any person who transforms or destroys class I controlled 
substances who has submitted an IRS certificate of intent to transform 
or a destruction verification (as under paragraph (k) of this sectioin) 
to the producer or importer of the controlled substance, must report 
the names and quantities of class I controlled substances transformed 
and destroyed for each control period within 45 days of the end of such 
control period.
* * * * *
    (u) Holders of essential-use allowances--reporting. Within 30 days 
of the end of every quarter, any person allocated essential-use 
allowances through an EPA letter must submit to the Administrator a 
report containing the following information:
    (1) The quantity of each controlled substance, in kilograms, 
purchased and received from each producer and each importer during that 
quarter;
    (2) The gross quantity of each controlled substance, in kilograms, 
that was used for the essential use during that quarter (for Metered 
Dose Inhalers, this is the total quantity of each controlled substance 
that was filled into Metered Dose Inhalers canisters during the quarter 
and the quantity used in the manufacturing process that may have been 
emitted, used for cleaning, recycled or destroyed);
    (3) The quantity of each controlled substance, in kilograms, that 
was destroyed during the quarter (for Metered Dose Inhalers, the 
controlled substance was used in the manufacture of Metered Dose 
Inhalers but was not incorporated into marketable Metered Dose Inhalers 
canisters);
    (4) The quantity of each controlled substance, in kilograms, that 
was emitted during the essential-use during the quarter;
    (5) For Metered Dose Inhalers, for the fourth quarter report only, 
the quantity of each controlled substance, in kilograms, that was 
incorporated into all marketable Metered Dose Inhalers;
    (6) For Metered Dose Inhalers, for the fourth quarter report only, 
the quantity of each controlled substance, in kilograms, contained in 
Metered Dose Inhalers that were exported during the control period;
    (7) For the fourth quarter report only, the quantity of each 
controlled substance, in kilograms, held in inventory, that was 
acquired with essential use allowances in all control periods;
    (8) For the fourth quarter report only, the quantity of each 
controlled substance, in kilograms, in a stockpile that is owned by the 
company or is being held on behalf of the company under contract, and 
was produced or imported through the use of production allowances and 
consumption allowances prior to the phaseout; and
    (9) For Metered Dose Inhalers, for the fourth quarter report only, 
the total number of units of each specific product manufactured in the 
control period, (including marketable and defective units).
    (v) Any distributor of laboratory supplies receiving class I 
controlled substances under the global laboratory essential-use 
exemption for sale to laboratory customers must report quarterly the 
quantity received of each class I controlled substance from each 
producer or importer.
    (w) Any distributor of laboratory supplies who purchased controlled 
substances under the global laboratory essential-use exemption must 
maintain as records copies of certifications from laboratory customers 
provided to the distributor pursuant to paragraph (y) of this section.
    (x) Any distributor of laboratory supplies who purchased controlled 
substances under the global laboratory essential-use exemption must 
submit quarterly (except distributors following procedures in 
Sec. 82.4(z)) the quantity of each controlled substance purchased by 
each laboratory customer whose certification was previously provided to 
the distributor pursuant to paragaph (y) of this section.
* * * * *
    (z) Any distributor of laboratory supplies, who purchased class I 
controlled substances under the global laboratory essential-use 
exemption, and who only sells the class I controlled substances as 
reference standards for calibrating laboratory analytical equipment, 
may write a letter to the Administrator requesting permission to submit 
the reports required under paragraph (x) of this section annually 
rather than quarterly. The Administrator will review the request and 
issue a notification of permission to file annual reports if, in the 
Administrator's judgment, the distributor meets the requirements of 
this paragraph. Upon receipt of a notification of extension from the 
Administrator, the distributor must submit annually the quantity of 
each controlled substance purchased by each laboratory customer whose 
certification was previously provided to the distributor pursuant to 
paragraph (y) of this section.
    9. Appendix C to Subpart A is revised to read as follows:

Appendix C to Subpart A--Parties to the Montreal Protocol (as of 
February 19, 1998)

------------------------------------------------------------------------
                                  Montreal       London      Copenhagen 
         Foreign state            protocol     amendments    amendments 
------------------------------------------------------------------------
Algeria.......................      <check>       <check>   ............
Antigua and Barbuda...........      <check>       <check>       <check> 
Argentina.....................      <check>       <check>       <check> 
Australia.....................      <check>       <check>       <check> 
Austria.......................      <check>       <check>       <check> 
Azerbaijan....................      <check>       <check>       <check> 
Bahamas.......................      <check>       <check>       <check> 
Bahrain.......................      <check>       <check>       <check> 
Bangladesh....................      <check>       <check>   ............
Barbados......................      <check>       <check>       <check> 
Belarus.......................      <check>       <check>   ............
Belgium.......................      <check>       <check>       <check> 
Belize........................      <check>       <check>       <check> 
Benin.........................      <check>   ............  ............

[[Page 41649]]

                                                                        
Bolivia.......................      <check>       <check>       <check> 
Bosnia and Herzegovina........      <check>   ............  ............
Botswana......................      <check>       <check>       <check> 
Brazil........................      <check>       <check>       <check> 
Brunei Darussalam.............      <check>   ............  ............
Bulgaria......................      <check>   ............  ............
Burkina Faso..................      <check>       <check>       <check> 
Burundi.......................      <check>   ............  ............
Cameroon......................      <check>       <check>       <check> 
Canada........................      <check>       <check>       <check> 
Central African Republic......      <check>   ............  ............
Chad..........................      <check>   ............  ............
Chile.........................      <check>       <check>       <check> 
China.........................      <check>       <check>   ............
Colombia......................      <check>       <check>       <check> 
Comoros.......................      <check>       <check>   ............
Congo.........................      <check>       <check>   ............
Congo, Democratic Republic of.      <check>       <check>       <check> 
Costa Rica....................      <check>   ............  ............
Cote d'Ivoire.................      <check>       <check>   ............
Croatia.......................      <check>       <check>       <check> 
Cuba..........................      <check>   ............  ............
Cyprus........................      <check>       <check>   ............
Czech Republic................      <check>       <check>       <check> 
Denmark.......................      <check>       <check>       <check> 
Dominica......................      <check>       <check>   ............
Dominican Republic............      <check>   ............  ............
Ecuador.......................      <check>       <check>       <check> 
Egypt.........................      <check>       <check>       <check> 
El Salvador...................      <check>   ............  ............
Equatorial Guinea.............  ............  ............  ............
Estonia.......................      <check>   ............  ............
Ethiopia......................      <check>   ............  ............
European Community............      <check>       <check>       <check> 
Federated States of Micronesia      <check>   ............  ............
Fiji..........................      <check>       <check>   ............
Finland.......................      <check>       <check>       <check> 
France........................      <check>       <check>       <check> 
Gabon.........................      <check>   ............  ............
Gambia........................      <check>       <check>   ............
Georgia.......................      <check>   ............  ............
Germany.......................      <check>       <check>       <check> 
Ghana.........................      <check>       <check>   ............
Greece........................      <check>       <check>       <check> 
Greneda.......................      <check>       <check>   ............
Guatemala.....................      <check>   ............  ............
Guinea........................      <check>       <check>   ............
Guyana........................      <check>   ............  ............
Honduras......................      <check>   ............  ............
Hungary.......................      <check>       <check>       <check> 
Iceland.......................      <check>       <check>       <check> 
India.........................      <check>       <check>   ............
Indonesia.....................      <check>       <check>   ............
Iran, Islamic.................      <check>       <check>       <check> 
Ireland.......................      <check>       <check>       <check> 
Israel........................      <check>       <check>       <check> 
Italy.........................      <check>       <check>       <check> 
Jamaica.......................      <check>       <check>       <check> 
Japan.........................      <check>       <check>       <check> 
Jordan........................      <check>       <check>       <check> 
Kenya.........................      <check>       <check>       <check> 
Kiribati......................      <check>   ............  ............
Korea, Democratic People's                                              
 Republic of..................      <check>   ............  ............
Korea, Republic of............      <check>       <check>       <check> 
Kuwait........................      <check>       <check>       <check> 
Latvia........................      <check>   ............  ............
Lebanon.......................      <check>       <check>   ............
Lesotho.......................      <check>       <check>   ............
Liberia.......................      <check>       <check>       <check> 
Libyan Arab Jamahiriya........      <check>   ............  ............
Liechtenstein.................      <check>       <check>       <check> 
Lithuania.....................      <check>       <check>       <check> 

[[Page 41650]]

                                                                        
Luxembourg....................      <check>       <check>       <check> 
Madagascar....................      <check>   ............  ............
Malawi........................      <check>       <check>       <check> 
Malaysia......................      <check>       <check>       <check> 
Madives.......................      <check>       <check>   ............
Mali..........................      <check>       <check>   ............
Malta.........................      <check>       <check>   ............
Marshall Islands..............      <check>       <check>       <check> 
Mauritania....................      <check>   ............  ............
Mauritius.....................      <check>       <check>       <check> 
Mexico........................      <check>       <check>       <check> 
Modlova.......................      <check>   ............  ............
Monaco........................      <check>       <check>   ............
Mongolia......................      <check>       <check>       <check> 
Morocco.......................      <check>       <check>       <check> 
Mozambique....................      <check>       <check>       <check> 
Myanmar.......................      <check>       <check>   ............
Namibia.......................      <check>       <check>   ............
Nepal.........................      <check>       <check>   ............
Netherlands...................      <check>       <check>       <check> 
New Zealand...................      <check>       <check>       <check> 
Nicaragua.....................      <check>   ............  ............
Niger.........................      <check>       <check>   ............
Nigeria.......................      <check>   ............  ............
Norway........................      <check>       <check>       <check> 
Pakistan......................      <check>       <check>       <check> 
Panama........................      <check>       <check>       <check> 
Papua New Guinea..............      <check>       <check>   ............
Paraguay......................      <check>       <check>   ............
Peru..........................      <check>       <check>   ............
Philippines...................      <check>       <check>   ............
Poland........................      <check>       <check>       <check> 
Portugal......................      <check>       <check>   ............
Qatar.........................      <check>       <check>       <check> 
Romania.......................      <check>       <check>   ............
Russian Federation............      <check>       <check>   ............
Saint Kitts & Nevis...........      <check>   ............  ............
Saint Lucia...................      <check>   ............  ............
Saint Vincent and the                                                   
 Grenadines...................      <check>       <check>       <check> 
Samoa.........................      <check>   ............  ............
Saudi Arabia..................      <check>       <check>       <check> 
Senegal.......................      <check>       <check>   ............
Seychelles....................      <check>       <check>       <check> 
Singapore.....................      <check>       <check>   ............
Slovakia......................      <check>       <check>       <check> 
Slovenia......................      <check>       <check>   ............
Solomon Islands...............      <check>   ............  ............
South Africa..................      <check>       <check>   ............
Spain.........................      <check>       <check>       <check> 
Sri Lanka.....................      <check>       <check>       <check> 
Sudan.........................      <check>   ............  ............
Suriname......................      <check>   ............  ............
Swaziland.....................      <check>   ............  ............
Sweden........................      <check>       <check>       <check> 
Switzerland...................      <check>       <check>       <check> 
Syrian Arab Republic..........      <check>   ............  ............
Tajikistan....................      <check>       <check>   ............
Tanzania, United Republic of..      <check>       <check>   ............
Thailand......................      <check>       <check>       <check> 
The Former Yugoslav Republic                                            
 of Macedonia.................      <check>   ............  ............
Togo..........................      <check>   ............  ............
Trinidad and Tobago...........      <check>   ............  ............
Tunisia.......................      <check>       <check>       <check> 
Turkey........................      <check>       <check>       <check> 
Turkmenistan..................      <check>       <check>   ............
Tuvalu........................      <check>   ............  ............
Uganda........................      <check>       <check>   ............
Ukraine.......................      <check>       <check>   ............
United Arab Emirates..........      <check>   ............  ............
United Kingdom................      <check>       <check>       <check> 
USA...........................      <check>       <check>       <check> 
Uruguay.......................      <check>       <check>       <check> 

[[Page 41651]]

                                                                        
Uzbekistan....................      <check>   ............  ............
Vanuatu.......................      <check>       <check>       <check> 
Venezuela.....................      <check>       <check>       <check> 
Viet Nam......................      <check>       <check>       <check> 
Yemen.........................      <check>   ............  ............
Yugoslavia....................      <check>   ............  ............
Zambia........................      <check>       <check>   ............
Zimbabwe......................      <check>       <check>       <check> 
------------------------------------------------------------------------

    Note: Updated lists of Parties to the Protocol and the 
Amendments can be located at: <a href="http://www.unep.org/unep/secretar/ozone/
home.htm">www.unep.org/unep/secretar/ozone/
home.htm</a>
    10. Appendix J to Subpart A is added and reserved to read as 
follows:

Appendix J to Subpart A--Parties to the Montreal Protocol 
Classified Under Article 5(1) That Have Banned the Import of 
Controlled Products That Rely on Class I Controlled Substances for 
Their Continuing Functioning

[Reserved]

    11. Appendix K to Subpart A is added to read as follows:

Appendix K to Subpart A--Commodity Codes From the Harmonized Tariff 
Schedule for Controlled Substances and Used Controlled Substances

------------------------------------------------------------------------
                                                         Commodity code 
         Description of commodity or chemical           from harmonized 
                                                        tariff schedule 
------------------------------------------------------------------------
CFC-11...............................................       2903.41.0000
CFC-12...............................................       2903.42.0000
CFC-113..............................................       2903.43.0000
CFC-114..............................................       2903.44.0010
CFC-115..............................................       2903.44.0020
HALONS...............................................       2903.46.0000
CFC-13, CFC-111, CFC-112, CFC-211, CFC-212, CFC-213,                    
 CFC-214, CFC-215, CFC-216, CFC-217..................       2903.45.0000
HCFC-22..............................................       2903.49.9010
HCFC-21, HCFC-31, HCFC-123, HCFC-124, HCFC-133, HCFC-                   
 141b, HCFC-142b, HCFC-225...........................       2903.49.0000
OTHER, HALOGENATED...................................       2903.49.9060
MIXTURES (R-500, R-502, ETC.)........................       3824.71.0000
MIXTURES, OTHER......................................       3824.79.0000
CARBON TETRACHLORIDE.................................       2903.14.0000
METHYL CHLOROFORM....................................       2903.19.6010
METHYL BROMIDE.......................................       2903.30.1520
------------------------------------------------------------------------

[FR Doc. 98-20150 Filed 8-3-98; 8:45 am]
BILLING CODE 6560-50-P


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