Document ID: EPA-HQ-OAR-2003-0230-0107
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2004-08-18T04:00Z

­
1­
Regulatory
Impact
Analysis
Protecting
Stratospheric
Ozone:
Process
for
Exempting
Critical
Uses
from
the
Phaseout
of
Methyl
Bromide
(
SAN
4535)

U.
S.
Environmental
Protection
Agency
Office
of
Air
and
Radiation
Global
Programs
Division
1200
Pennsylvania
Avenue,
NW
(
6205J)
Washington,
D.
C.
20460
Docket
Number
A­
2000­
24
­
2­
Regulatory
Impact
Analysis
Framework
for
the
Methyl
Bromide
Critical
Use
Exemption
(
CUE)

Introduction
Attached
is
the
economic
impact
analysis
(
EIA)
prepared
for
EPA
on
the
proposed
rulemaking
that
would
create
the
critical
use
exemption
(
CUE)
and
describe
the
framework
for
how
the
exemption
program
would
operate.

In
the
proposed
rule
EPA
seeks
to
balance
several
different
goals.
These
goals
include
designing
a
system
that
is
simple
and
minimizes
the
administrative
burden
of
the
regulation,

ensures
transparent
compliance
with
the
Montreal
Protocol
on
Substances
that
Deplete
the
Ozone
Layer
(
Protocol)
and,
promotes
the
most
economic
efficient
distribution
of
methyl
bromide
while
still
maintaining
fairness
to
those
who
applied
for
a
critical
use
exemption.
EPA
believes
that
we
have
achieved
a
successful
balance
of
simplicity,
transparency,
fairness,
and
efficiency
in
the
proposal.

Background
EPA
outlined
three
basic
implementation
options
for
the
exemption
program
which
were
then
analyzed
in
the
EIA.
EPA
held
six
stakeholder
workshops
over
the
summer
of
2003
to
explain
the
various
options
being
developed
and
to
solicit
input
from
stakeholders
on
these
options.
The
three
basic
options
are
as
follows:

Option
1:
An
upstream
cap
and
trade
allowance
system
which
would
give
critical
use
allowances
to
producers
and
importers
of
methyl
bromide.
This
allowance
system
would
enable
allowance
holders
to
trade
their
allowances
with
one
­
3­
another.
Allowances
may
be
expended
in
order
to
produce
or
import
critical
use
methyl
bromide.

Option
2:
An
upstream
cap
and
trade
system
with
a
downstream
permit
trading
system.
This
system
would
additionally
distribute
permits
to
end
users
of
methyl
bromide
and
allow
those
permit
holders
to
trade
permits
with
one
another.
The
holder
of
a
permit
could
exchange
his/
her
permit
to
buy
1
kg
of
methyl
bromide.

Option
3:
An
upstream
cap
and
trade
system
with
a
downstream
permit
trading
system
where
the
permits
are
initially
obtained
through
an
auction.

EPA
received
extensive
feedback
from
the
regulated
community
regarding
the
viability
of
each
of
these
options.
As
a
result
of
feedback,
EPA
realized
that
an
auction
would
be
an
impractical
solution
in
this
user
community.
As
a
result,
the
EIA
provides
a
more
in­
depth
analysis
of
the
first
two
options
than
it
does
of
the
last.

Major
Findings
in
the
EIA
The
EIA
seeks
to
describe
the
impact
of
the
proposed
regulations
which
amend
the
existing
phaseout
requirements
for
methyl
bromide
production
and
consumption
(
consumption
is
defined
as
production
plus
imports
minus
exports).
The
existing
regulations
call
for
a
complete
elimination
of
methyl
bromide
production
and
import
as
of
January
1,
2005,
except
for
quarantine
and
preshipment
(
QPS)
applications.
Therefore,
it
is
important
to
note
that
any
change
in
the
existing
regulations
that
allow
for
continued
production
and
import
of
methyl
bromide
is
deregulatory
in
nature
and
confers
an
economic
compliance
benefit
to
industry.
­
4­
The
estimated
negative
costs
(
i.
e.
reduced
costs
resulting
from
the
de­
regulatory
creation
of
the
exemption)
for
industry
are
approximately
$
19
million
to
$
31
million
on
an
annual
basis
and
$
380
million
to
$
600
million
on
a
Net
Present
Value
basis
depending
on
the
particular
option
and
discount
value
analyzed
(
EIA,
p.
126).
These
reduced
costs
are
quite
dramatic
owing
to
the
high
value
of
methyl
bromide
for
crop
production
and
agriculture
related
activities.

The
approach
used
in
the
EIA
to
derive
the
negative
costs,
or
cost
savings,
associated
with
the
proposed
action
are
as
follows.
First,
the
EIA
examines
the
original
cost
projections
provided
with
the
current
regulations
which
were
developed
in
2000.
These
original
projections
were
developed
using
the
phaseout
model,
an
engineering
type
approach
(
bottom
up
analysis)
that
drew
data
from
the
literature
on
the
costs
of
alternatives
to
methyl
bromide
and
the
comparative
yields
obtained.
The
EIA,
updated
the
phaseout
model
with
more
recent
data
from
newly
published
studies
and
from
the
critical
use
exemption
applications.
Then
using
the
updated
data
points,
the
EIA
looked
at
what
the
costs
may
be
under
the
proposed
exemption.
The
negative
cost
results
are
given
in
the
paragraph
above
and
in
the
table
below.

Table
I:
Annualized
and
Net
Present
Value
of
Private
Sector
Compliance
Costs
Discount
Rate
Annualized
Costs
Net
Present
Value
Costs
Sector
Specific
Approach
Illustrative
Universal
Approach
Sector
Specific
Approach
Illustrative
Universal
Approach
3%
­$
19.5
million
­$
21.9
million
­$
616.6
million
­$
695.6
million
7%
­$
26.8
million
­$
31.3
million
­$
382.7
million
­$
446.8
million
The
de­
regulatory
benefit
to
industry
varies
depending
on
the
discount
rate
used
and
the
approach
selected.
There
are
two
factors
which
affect
the
costs
of
compliance;
they
are
the
size
of
the
cap
(
i.
e.
the
amount
of
critical
use
methyl
bromide
exempted)
and
how
the
cap
is
­
5­
constrained
(
i.
e.
if
there
is
one
"
universal"
amount
of
methyl
bromide
made
available
to
all
approved
critical
users
or
if
there
is
a
sub­
cap
for
each
sector/
commodity
group).
Both
of
these
variables
are
likely
to
be
determined
by
a
consensus
decision
taken
by
the
Parties
to
the
Montreal
Protocol
when
they
authorize
the
critical
use
exemptions.

In
the
absence
of
perfect
knowledge,
some
basic
assumptions
are
used
in
the
EIA.
The
EIA
assumes
that
the
amount
of
critical
use
methyl
bromide
made
available
is
39%
of
U.
S.

baseline
consumption
in
2005,
37%
in
2006
through
2010,
and
then
decreases
5%
per
year
until
it
reaches
zero
in
2018.
EPA
used
these
numbers
purely
for
analytical
purposes
and
does
not
presuppose
the
outcome
of
any
decisions
to
be
taken
by
the
Parties
to
the
Protocol
who
are
the
final
arbiters
on
the
amount
of
material
to
be
exempt
in
a
given
year.
In
addition,
we
assume
that
all
material
produced
in
a
given
year
is
used
in
that
same
year
(
no
stockpiles)
and
that
no
new
acreage
comes
into
production
(
no
growth).

The
nature
of
the
cap
is
a
question
of
keen
interest
to
regulated
entities
and
to
policy
analysts.
Regulated
entities
spent
considerable
time
and
money
to
prepare
applications
that
they
submitted
to
EPA.
These
entities
would
like
some
assurance
that
at
least
a
minimum
amount
of
methyl
bromide
will
be
guaranteed
to
their
sector
and
thus,
they
favor
a
sector
specific
approach
despite
the
fact
the
total
compliance
costs
(
the
de­
regulatory
benefits)
for
the
industry
overall
would
be
lower
under
a
universal
approach.
Policy
analysts
may
tend
to
prefer
a
universal
approach
because
more
cost
savings
are
achieved
by
allowing
methyl
bromide
to
go
to
the
user
with
the
highest
value
use
across
sectors.

The
phaseout
model
relies
on
an
engineering
approach
and
is
not
an
economic
model
well
­
6­
suited
to
predict
the
distribution
of
methyl
bromide
under
a
universal
approach.
Therefore,
EPA
assumed
that
under
a
universal
approach,
80%
of
the
total
available
amount
of
methyl
bromide
would
go
to
the
two
largest
groups
of
end
users,
tomatoes
and
strawberries.
Eighty
percent
was
used
to
reflect
the
total
amount
of
material
originally
requested
by
these
applicants,
an
amount
which
these
applicants
still
maintain
is
truly
critically
needed.
At
a
7%
discount
rate,
the
total
compliance
costs
savings
are
$
27
million
under
a
sector
specific
approach
and
$
31
million
under
the
illustrative
universal
approach,
which
means
that
end
users
save
an
additional
$
4
million
annually
under
the
universal
approach.

A
paper
written
by
Kim
et
al.,
attached
to
the
EIA
as
appendix
C,
looks
at
the
cost
of
compliance
when
comparing
tradeable
permits
among
end
users
to
non­
tradeable
permits
(
command
and
control).
According
to
Kim,
the
costs
of
compliance
under
command
and
control
are
between
$
55
million
and
$
177
million
depending
on
how
the
initial
allocation
is
made.
If
trading
is
allowed,
compliance
costs
could
be
reduced
to
as
low
as
$
55
million
to
$
35
million
depending
on
the
type
of
cap
in
place
(
i.
e.
universal
or
sector
specific).
It
is
important
to
note
that
EPA
is
not
considering
a
command
and
control
approach
under
any
of
the
frameworks
analyzed
in
the
EIA.

The
EIA
addresses
the
question
of
whether
or
not
a
framework
option
that
would
create
either
an
upstream
cap
and
trade
system
(
option
1)
or
a
downstream
tradeable
permit
system
(
option
2)
is
more
economically
efficient.
The
EIA
concluded
that
in
fact
the
framework
has
little
impact
on
the
efficiency
of
compliance
costs
per
se
and
that
such
costs
are
impacted
more
by
the
size
of
the
cap
and
constraints
on
the
cap
as
identified
in
the
preceding
paragraphs.
Under
both
options,
methyl
bromide
is
ultimately
purchased
by
the
user
of
methyl
bromide
with
the
highest
­
7­
willingness
to
pay.
The
main
driver
of
efficiency
is
whether
or
not
methyl
bromide
goes
to
the
highest
value
use
within
a
commodity
sector
or
if
it
goes
to
the
use
with
the
highest
value
across
sectors.
According
to
chapter
5
of
the
EIA,
however,
there
are
some
factors
that
could
affect
whether
or
not
the
options
produce
the
same
result
in
terms
of
consumption
of
methyl
bromide
by
end
users
and
in
control
costs,
namely
how
smoothly
the
market
functions
under
either
option.

If
one
option
leads
to
a
market
that
is
sticky,
the
end
result
will
be
a
less
than
optimal
distribution
of
methyl
bromide
and
thus
higher
control
costs
for
industry
overall.
Some
factors
that
may
lead
to
sticky
markets
under
option
one
are
the
existence
of
preferential
historic
relationships
between
suppliers
of
methyl
bromide
and
well
organized
end­
users.
This
preferential
relationship
may
lead
to
methyl
bromide
being
sold
to
a
user
who
is
not
necessarily
the
user
willing
to
pay
the
most.
These
preferential
historic
relationships
have
been
maintained
since
1999
when
the
existing
regulations
began
reduction
steps
in
the
production
and
consumption
of
methyl
bromide.
Under
option
two,
in
order
to
achieve
a
smooth
market,
permit
prices
must
be
known
by
buyers
and
sellers,
transaction
costs
must
be
low,
prices
adjust
to
clear
the
market,
and
buyers
and
sellers
take
full
advantage
of
opportunities
to
reduce
compliance
costs
by
trading
(
Ellerman
2000,
as
cited
in
EIA).
Clearly,
complications
with
these
market
characteristics
may
arise
under
option
two.
For
example,
many
of
the
end
users
are
smaller
entities
or
entities
who
do
not
necessarily
have
full
time
environmental
compliance
managers.
Therefore,
they
may
be
unable
to
spend
the
necessary
time
and
effort
to
fully
research
factors
such
as
permit
prices
and
who
has
permits
available.
The
size
of
transaction
costs
is
not
well
understood
and
the
higher
the
transaction
costs
the
lower
the
expected
participation
from
end
users,
particularly
small
businesses.
In
addition,
the
lack
of
predictability
from
year
to
year
under
the
exemption
is
another
­
8­
factor
that
may
cause
market
stickiness
as
the
number
of
permits
available
and
the
price
of
permits
will
change
on
an
annual
basis.
Finally,
to
the
extent
that
methyl
bromide
costs
are
perceived
as
small
relative
to
other
production
inputs,
some
users
may
not
find
it
necessary
to
spend
the
resources
needed
to
research
the
information
required
to
make
profit
maximizing
decisions
regarding
the
use
of
methyl
bromide
relative
to
substitutes.

Under
option
1,
critical
use
methyl
bromide
may
be
universally
available
or
available
based
on
end
use.
In
other
words,
if
the
U.
S.
receives
an
authorization
for
9,000
metric
tonnes
(
mt)
to
distribute
universally,
a
tomato
farmer
may
purchase
an
amount
of
methyl
bromide
and
draw
down
the
9,000
mt
supply.
However,
if
the
Parties
authorize
9,000
mt
for
the
U.
S.
but
only
allow
1,000
mt
to
be
used
on
tomato
production,
then
the
farmers
purchase
their
methyl
bromide,
they
could
draw
down
only
the
1,000
mt
supply.
The
tomato
farmer's
decision
to
buy
methyl
bromide
does
not
impact
the
remaining
supply
for
other
users
such
as
the
strawberry
farmer
next
door
under
a
sector
specific
scenario,
hence
the
perception
that
such
a
system
is
more
fair
to
the
end
user
groups
who
applied
to
EPA
for
an
exemption.

Under
option
2,
the
supply
would
function
in
an
identical
fashion.
However,
since
users
are
given
permits
and
since
a
permit
would
be
required
in
order
to
buy
methyl
bromide,
end
users
are
actually
given
an
item
of
intrinsic
value.
This
way,
the
end
user
who
doesn't
use
methyl
bromide
is
actually
compensated
because
she
can
sell
her
permit
to
another
entity
that
may
need
the
methyl
bromide
more.
This
transfer
allows
end
users
to
capture
some
surplus
value
that
theoretically
could
be
used
to
finance
the
transition
to
alternatives
and
would
render
moot
concerns
about
universal
vs.
sector
specific
approaches.
It
is
difficult
to
calculate
the
potential
magnitude
of
these
transfers,
however,
without
having
a
basis
to
estimate
the
future
price
of
a
­
9­
permit.

While
option
2
is
better
than
option
one
in
compensating
end
users
who
give
up
their
"
rights"
to
methyl
bromide,
the
drawback
to
option
2
is
the
additional
complexity
in
both
administering
the
system
and
in
complying
with
the
system.
The
EIA
estimates
that
the
administrative
burden
for
the
regulated
community
and
EPA
under
options
1
and
2
as
follows:

Table
2:
Administrative
Burden
of
Options
1
and
2
EPA
Burden
Industry
Burden
Option
One
$
25
k
(
annual)
$
15
k
(
one
time)
$
2,200
k(
annual)
$
86
k
(
one
time)

Option
Two
$
2,100
k
(
annual)
$
53
k
(
one
time)
$
6,400
k
(
annual)
$
2,000
k
(
one
time)

source:
EIA
pages
102
and
117
The
burden
estimated
in
the
EIA
for
option
one
is
$
25,000
annually
for
EPA
and
$
2.1
million
annually
for
industry.
The
burden
for
option
two
is
substantially
higher
at
$
2.2
million
annually
for
EPA
and
$
6.4
million
for
industry.

EPA
estimates
that
there
are
more
than
2,000
end
users
of
methyl
bromide
who
have
applied
for
an
exemption.
Most
of
the
exemption
requests
were
provided
to
EPA
by
groups
of
like
users.
In
fact,
no
one
knows
exactly
how
many
users
of
methyl
bromide
there
are
in
the
U.
S.

today,
nor
which
exact
entities
actually
applied;
we
only
know
the
conditions
for
which
an
exemption
was
nominated
and
may
be
granted
and
used.
In
2000,
EPA
met
with
representatives
from
industry
about
the
CUE
application
and
indicted
a
preference
for
farm
level
data.
Other
pesticide
exemption
programs
run
by
EPA,
notably
the
Section
18
emergency
exemption
program,
only
require
sector
or
commodity
level
data.
After
extensive
industry
consultation,
EPA
ultimately
decided
to
only
require
aggregate
data
due
to
the
burden
involved.
Thus,
EPA
does
not
­
10­
have
the
basic
information
available
to
make
individual
entity
level
disbursements
of
permits.
To
collect
and
analyze
such
data
for
the
number
of
entities
involved
would
place
a
significant
new
burden
on
the
regulated
community.

The
extra
burden
of
option
two
compared
to
option
one
is
significant
for
the
government
as
well.
Under
option
two,
the
government
would
be
directly
regulating
thousands
more
entities
than
under
option
one.
The
EPA
would
require
additional
data
submissions
from
each
of
those
entities
and,
once
received,
would
begin
the
highly
resource
intensive,
and
undoubtedly
controversial
process
of
analyzing
and
determining
a
baseline
for
each
entity.
It
would
likely
take
two
years
to
establish
the
baselines
and
resolve
any
appeals
that
would
arise
which
would
mean
that
end
users
would
not
have
permits
available
to
them
in
the
first
one
to
two
years
of
the
exemption
program
even
if
this
were
the
proposed
option.
If
the
U.
S.
were
to
receive
all
of
the
exempted
material
requested
under
this
exemption,
EPA
would
distribute
almost
10
million
permits.
To
manage
this
many
permits
and
to
facilitate
easy
trading
of
these
permits
among
end
users,
EPA
would
undoubtedly
need
to
create
a
customized
electronic
permit
tracking
system,

similar
to
the
one
used
in
the
acid
rain
trading
program.
A
system
of
this
complexity
would
conservatively
cost
EPA
approximately
$
500,000
and
would
require
a
dedicated
FTE
to
manage.

In
contrast,
the
entire
ozone
protection
program
has
one
person
that
manages
the
reporting
of
all
the
chemicals
we
regulate,
not
one
person
for
each
exemption
for
each
chemical.

The
Proposed
Option
After
considering
the
above
analysis,
EPA
developed
a
proposal
that
is
a
hybrid
approach.

This
option
maintains
administrative
simplicity
but
also
allows
for
end
users
to
capture
some
portion
of
the
transfers.
­
11­
EPA
proposes
in
the
accompanying
rulemaking,
to
create
a
framework
using
option
one
as
the
basis
for
distributing
allowances
and
creating
reporting
requirements.
It
is
essentially
an
upstream
system.
However,
it
allows
end
users
to
reserve
quantities
of
CUE
methyl
bromide
and
to
sell
their
reservations
to
another
approved
critical
user.
This
secondary
market
would
allow
end
users
to
capture
some
of
the
surplus
if
they
believed
the
revenues
they
could
receive
from
selling
their
methyl
bromide
rights
and
producing
their
crop
with
an
alternative
exceeds
the
value
of
retaining
the
methyl
bromide
for
production
of
their
crop.

Permits
are
used
in
environmental
policy
making
to
simulate
a
market.
For
example,

permits
are
used
in
the
acid
rain
program
in
order
to
create
a
value
for
a
non­
tangible
waste
product,
sulfur
dioxide.
In
the
case
of
methyl
bromide,
however,
there
is
already
a
well
functioning
market,
making
a
permit
system
redundant
so
long
as
the
regulation
clearly
articulates
how
end
users
could
legally
conduct
such
transactions.
In
relying
on
the
market
instead
of
on
permits,
the
administrative
burden
for
industry
and
EPA
is
substantially
reduced
because
the
most
resource
intensive
activity
for
both
the
Agency
and
the
end
users,
baseline
determination,
is
eliminated.

EPA
also
ensures
transparent
compliance
with
Protocol
obligations
by
proposing
an
upstream
system.
Since
there
are
few
regulated
entities,
it
is
easy
to
track
on
a
quarterly
basis
whether
or
not
the
U.
S.
is
under
the
Montreal
Protocol
cap.
These
entities
are
currently
regulated
by
EPA
in
the
same
manner
under
the
phaseout.
They
find
this
system
straightforward
with
minimal
burden.

EPA
proposes
to
allow
end
users
to
make
reservations
for
methyl
bromide
using
an
electronic
reservation
system
(
ERS).
The
ERS
allows
users
to
obtain
and
sell
rights
to
critical
use
­
12­
material
and
allows
EPA
to
track
the
use
of
critical
use
methyl
bromide
on
a
quarterly
basis.

The
ERS
is
a
simplified
version
of
the
permit
tracking
system
that
tracks
the
volume
of
exempted
material
available
in
the
marketplace
on
a
quarterly
basis.
The
ERS
is
able
to
track
amounts
of
methyl
bromide
used
in
a
given
commodity
or
end
use
and
provides
transparent
information
to
end
users
about
the
amount
of
exempted
material
available
for
use
in
their
sector.

At
the
beginning
of
the
year,
EPA
will
populate
the
ERS
with
the
total
amount
of
exempted
methyl
bromide
available
for
each
sector.
Then
end
users,
or
an
entity
working
on
their
behalf
such
as
a
custom
applicator,
may
reserve
a
quantity
of
methyl
bromide
in
the
system.
The
reservation
will
generate
a
self
certification
form
which
may
be
printed
out,
signed,
and
sent
to
the
supplier.
On
a
quarterly
basis,
the
entity
that
entered
the
original
reservation
would
have
to
close
out
the
reservation
by
indicating
if
the
reserved
amount
was
used,
cancelled,
refunded,
or
available
for
sale
on
the
secondary
market.
A
similar
system
is
already
in
place
for
the
management
of
Telone,
a
significant
alternative
to
methyl
bromide,
in
California.
The
proposed
methyl
bromide
CUE
system
is
different
from
the
Telone
tracking
system
because
the
proposed
system
does
not
require
real
time
tracking
and
allows
users
more
time
to
close
out
their
reservations.
Additionally,
the
proposed
system
allows
end
users
to
make
reservations
themselves
without
having
to
rely
on
a
supplier
to
make
a
reservation
for
them,
thus
providing
additional
market
power
to
those
end
users
willing
to
accept
quarterly
tracking
obligation.
However,
it
allows
end
user
to
opt
out
of
this
obligation
and
instead
rely
on
their
supplier
for
such
activities.

One
policy
issue
not
addressed
by
the
option
proposed
nor
by
options
one
and
two
is
the
issue
of
windfall
profits
or
non­
social
cost
transfers
to
producers
and
importers.
A
policy
solution
to
address
windfall
profits
would
include
an
excise
tax
or
an
auction
of
permits
to
end
users.
In
­
13­
addition,
a
system
where
permits
are
given
to
users
downstream
and
then
sold
by
the
users
to
producers
and
importers
to
allow
for
the
production
or
import
of
methyl
bromide,
would
also
impact
windfall
profits.
The
later
framework
option
was
recently
suggested
to
EPA
and
EPA
will
seek
comment
on
this
option
in
the
proposed
rulemaking.
EPA
did
not
propose
this
option
because
of
concerns
raised
by
producers
and
users
that
the
supply
of
methyl
bromide
must
be
created
with
minimal
interference.
Producers
argue
that
they
need
a
certain
amount
of
time
for
their
planning
horizon
to
make
production
decisions.

Under
other
parts
of
the
phaseout
program,
the
U.
S.
Treasury
Department
has
statutory
authority
to
implement
an
excise
tax
on
specified
ozone
depleting
substances
(
ODS).
Such
taxes
prevent
producers
from
amassing
large
stockpiles
of
ODS.
They
also
reduce
windfall
profits
since
the
price
of
the
ODS
to
the
end
user
was
already
high
due
to
the
tax
thus
minimizing
a
suppliers'
ability
to
further
increase
the
price.
The
Treasury
Department
does
not
have
statutory
authority
to
tax
methyl
bromide.
For
more
information
on
the
history
of
taxing
ozone
depleting
substances
please
see
"
Taxing
Pollution"
an
article
by
J.
Andrew
Hoerner
in
WRI's
publication
Ozone
Protection
in
the
United
States:
Elements
of
Success.

It
is
unclear
to
EPA
what
the
ultimate
price
of
methyl
bromide
might
be
since
we
know
relatively
little
about
the
demand
elasticity
for
methyl
bromide
fumigation
in
the
various
end
use
categories.
Unless
a
tax
is
set
at
a
point
that
equals
the
difference
between
the
baseline
price
and
the
maximum
amount
that
users
are
willing
to
pay,
the
methyl
bromide
suppliers
would
still
be
able
to
charge
some
incremental
profit
as
a
result
of
the
scarcity
created
by
the
phaseout
and
subsequent
regulations.
In
addition,
some
in
the
regulated
community
argue
that
the
non­
social
cost
transfer
issue
is
not
as
significant
as
it
might
initially
seem.
They
argue
that
EPA
is
eliminating
their
ability
to
derive
a
profit
from
methyl
bromide
in
perpetuity
and
that
temporary
profits
are
compensation
for
the
future
loss.

Further
details
regarding
the
de­
regulatory
benefits
of
the
proposed
critical
use
exemption
­
14­
are
discussions
on
the
relative
merits
of
the
two
main
options
are
available
in
the
attached
EIA.