Document ID: EPA-HQ-OAR-2006-0158-0055
Agency: epa
Document Type: Rule
Title: Protection of Stratospheric Ozone: Allocation of Essential Use Allowances for Calendar Year 2006
Posted Date: 2006-10-04T12:32:20Z

[Federal Register: October 4, 2006 (Volume 71, Number 192)]
[Rules and Regulations]               
[Page 58504-58514]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04oc06-10]                         

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 82

[EPA-HQ-OAR-2006-0158; FRL-8227-4]
RIN 2060-AN29

 
Protection of Stratospheric Ozone: Allocation of Essential Use 
Allowances for Calendar Year 2006

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: With this action, EPA is allocating essential use allowances 
for import and production of class I stratospheric ozone depleting 
substances (ODSs) for calendar year 2006. Essential use allowances 
enable a person to obtain controlled class I ODSs as part of an 
exemption from the regulatory ban on the production and import of these 
chemicals that became effective as of January 1, 1996. EPA allocates 
essential use allowances for exempted production or import of a 
specific quantity of class I ODSs solely for the designated essential 
purpose. The allocations in this action total 1,002.40 metric tons (MT) 
of chlorofluorocarbons (CFCs) for use in metered dose inhalers for 
2006.

DATES: Effective Date: This final rule is effective October 4, 2006.

ADDRESSES: EPA has established a docket for this action under Docket ID 
No. EPA-HQ-OAR-2006-0158. All documents in the docket are listed on the 
http://www.regulations.gov Web site. Although listed in the index, some 

information is not publicly available, e.g., confidential business 
information or other information whose disclosure is restricted by 
statute. Certain other material, such as copyrighted material, is not 
placed on the Internet and will be publicly available only in hard copy 
form. Publicly available docket materials are available either 
electronically through http://www.regulations.gov or in hard copy at the Air 

Docket, EPA/DC, EPA West, Room B102, 1301 Constitution Ave., NW., 
Washington, DC. This Docket facility is open from 8:30 a.m. to 4:30 
p.m., Monday through Friday, excluding legal holidays. The Public 
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through 
Friday, excluding legal holidays. The telephone number for the Public 
Reading Room is (202) 566-1744, and the telephone number for the Air 
Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Kirsten Cappel of the Office of Air 
and Radiation, Stratospheric Protection Division by regular mail at the 
Environmental Protection Agency, 1200 Pennsylvania Avenue NW., (6205J) 
Washington DC 20460; telephone number: 202-343-9556; fax number: 202-
343-2338; e-mail address: cappel.kirsten@epa.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Basis for Allocating Essential Use Allowances
    A. What are essential use allowances?
    B. Under what authority does EPA allocate essential use 
allowances?
    C. What is the process for allocating essential use allowances?
II. Response to Comments
    A. EPA Should Not Allocate Essential Use Allowances
    B. The Proposed Level of Allocations Is Incorrect
    C. Consideration of Stocks of CFCs in the Allocation of 
Essential Use Allowances
    D. Comments on the Rulemaking Process and Timing
    E. EPA May Not Allocate Allowances to Companies That Fail To 
Demonstrate Research and Development of Alternatives
    F. Transition to Non-CFC Metered Dose Inhalers
III. Allocation of Essential Use Allowances for Calendar Year 2006
IV. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From 
Environmental Health Risks and Safety Risks
    H. Executive Order 13211: Actions That Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Congressional Review Act
V. Judicial Review
VI. Effective Date of this Final Rule

I. Basis for Allocating Essential Use Allowances

A. What are essential use allowances?

    Essential use allowances are allowances to produce or import 
certain ozone-depleting substances (ODSs) in the U.S. for purposes that 
have been deemed ``essential'' by the U.S. Government and by the 
Parties to the Montreal Protocol on Substances that Deplete the Ozone 
Layer (Montreal Protocol).
    The Montreal Protocol is an international agreement aimed at 
reducing and eliminating the production and consumption \1\ of ODSs. 
The elimination of production and consumption of class I ODSs is 
accomplished through adherence to phaseout schedules for specific class 
I ODSs,\2\ which include chlorofluorocarbons (CFCs), halons, carbon 
tetrachloride, and methyl chloroform. As of January 1, 1996, production 
and import of most class I ODSs were phased out in developed countries, 
including the United States.
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    \1\ ``Consumption'' is defined as the amount of a substance 
produced in the United States, plus the amount imported into the 
United States, minus the amount exported to Parties to the Montreal 
Protocol (see section 601(6) of the Clean Air Act).
    \2\ Class I ozone depleting substances are listed at 40 CFR part 
82 subpart A, appendix A.
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    However, the Montreal Protocol and the Clean Air Act provide 
exemptions that allow for the continued import and/or production of 
class I ODSs for specific uses. Under the Montreal Protocol, exemptions 
may be granted for uses that are determined by the Parties to be 
``essential.'' Decision IV/25, taken by the Parties to the Protocol in 
1992, established criteria for determining whether a specific use 
should be approved as essential, and set forth the international 
process for making determinations of essentiality. The criteria for an 
essential use, as set forth in paragraph 1 of Decision IV/25, are the 
following:

    ``(a) That a use of a controlled substance should qualify as 
`essential' only if:
    (i) It is necessary for the health, safety or is critical for 
the functioning of society (encompassing cultural and intellectual 
aspects); and
    (ii) There are no available technically and economically 
feasible alternatives or substitutes that are acceptable from the 
standpoint of environment and health;
    (b) That production and consumption, if any, of a controlled 
substance for essential uses should be permitted only if:
    (i) All economically feasible steps have been taken to minimize 
the essential use and any associated emission of the controlled 
substance; and
    (ii) The controlled substance is not available in sufficient 
quantity and quality

[[Page 58505]]

from existing stocks of banked or recycled controlled substances, 
also bearing in mind the developing countries' need for controlled 
substances.''

B. Under what authority does EPA allocate essential use allowances?

    Title VI of the Clean Air Act implements the Montreal Protocol for 
the United States. Section 604(d) of the Act authorizes EPA to allow 
the production of limited quantities of class I ODSs after the phaseout 
date for the following essential uses:
    (1) Methyl chloroform, ``solely for use in essential applications 
(such as nondestructive testing for metal fatigue and corrosion of 
existing airplane engines and airplane parts susceptible to metal 
fatigue) for which no safe and effective substitute is available.'' 
Under the Act, this exemption was available only until January 1, 2005. 
Prior to that date, EPA issued methyl chloroform allowances to the U.S. 
Space Shuttle and Titan Rocket programs.
    (2) Medical devices (as defined in section 601(8) of the Act), ``if 
such authorization is determined by the Commissioner [of the Food and 
Drug Administration], in consultation with the Administrator [of EPA] 
to be necessary for use in medical devices.'' EPA issues allowances to 
manufacturers of metered dose inhalers (MDIs), which use CFCs as 
propellant for the treatment of asthma and chronic obstructive 
pulmonary disease.
    (3) Aviation safety, for which limited quantities of halon-1211, 
halon-1301, and halon-2402 may be produced ``if the Administrator of 
the Federal Aviation Administration, in consultation with the 
Administrator [of EPA] determines that no safe and effective substitute 
has been developed and that such authorization is necessary for 
aviation safety purposes.'' Neither EPA nor the Parties have ever 
granted a request for essential use allowances for halon, because in 
most cases alternatives are available and because existing quantities 
of this substance are large enough to provide for any needs for which 
alternatives have not yet been developed.
    The Parties to the Protocol, under Decision XV/8, additionally 
allow a general exemption for laboratory and analytical uses through 
December 31, 2007. This exemption is reflected in EPA's regulations at 
40 CFR part 82, subpart A. While the Act does not specifically provide 
for this exemption, EPA has determined that an allowance for essential 
laboratory and analytical uses is allowable under the Act as a de 
minimis exemption. The de minimis exemption is addressed in EPA's final 
rule of March 13, 2001 (66 FR 14760-14770). The Parties to the Protocol 
subsequently agreed (Decision XI/15) that the general exemption does 
not apply to the following uses: Testing of oil and grease, and total 
petroleum hydrocarbons in water; testing of tar in road-paving 
materials; and forensic finger-printing. EPA incorporated this 
exemption at Appendix G to Subpart A of 40 CFR part 82 on February 11, 
2002 (67 FR 6352).

C. What is the process for allocating essential use allowances?

    The procedure set out by Decision IV/25 calls for individual 
Parties to nominate essential uses and the total amount of ODSs needed 
for those essential uses on an annual basis. The Protocol's Technology 
and Economic Assessment Panel (TEAP) evaluates the nominated essential 
uses and makes recommendations to the Protocol Parties. The Parties 
make the final decisions on whether to approve a Party's essential use 
nomination at their annual meeting. This nomination cycle occurs 
approximately two years before the year in which the allowances would 
be in effect. The allowances allocated through this final rule were 
first nominated by the United States in January 2004.
    For MDIs, EPA requests information from manufacturers about the 
number and type of MDIs they plan to produce, as well as the amount of 
CFCs necessary for production. EPA then forwards the information to the 
Food and Drug Administration (FDA), which determines the amount of CFCs 
necessary for MDIs in the coming calendar year. Based on FDA's 
determination, EPA proposes allocations to each eligible entity. Under 
the Act and the Protocol, EPA may allocate essential use allowances in 
quantities that together are below or equal to the total amount 
approved by the Parties. EPA will not allocate essential use allowances 
in amounts higher than the total approved by the Parties. For 2006, the 
Parties authorized the United States to allocate up to 1,100 metric 
tons (MT) of CFCs for essential uses. In a notice of proposed 
rulemaking published in the Federal Register on April 11, 2006 (71 FR 
18262), EPA proposed to allocate 1,002.40 MT.

II. Response to Comments

    EPA received comments from ten entities on the proposed rule. Two 
commenters, both members of the general public, did not support an 
exemption as a general matter, one commenter indicated that his company 
received too few allowances to adequately protect patient safety, four 
commenters believed that EPA allocated more allowances than were 
necessary given the presence of stocks of CFCs in the United States, 
one commenter indicated that the Agency should not increase one 
company's allocations at the expense of a second company and should 
instead increase the total levels of allocations to accommodate any 
shortfalls. Lastly, one commenter believed that there is no downside to 
allocating the maximum number of allowances possible because companies 
only expend those allowances that they need. The comments are addressed 
in more detail below.

A. EPA Should Not Allocate Essential Use Allowances

    One commenter wrote that non-CFC MDIs should be developed. This 
commenter also expressed a belief that a particular pharmaceutical 
company, Schering-Plough, should not be permitted to produce CFC MDIs 
since CFCs are banned. Additionally, this commenter feels that asthma 
would not be as serious a problem if the U.S. Government stopped 
burning national forests, parks, and wildlife areas. Another commenter 
expressed the opinion that the 1,002.40 MT of CFCs are not necessary 
for the manufacture of MDIs for the treatment of asthma and COPD. 
According to this commenter, skin cancer is not a suitable alternative 
to the lack of innovation by the companies that want to use CFCs.
    Another commenter also did not believe that Schering-Plough should 
receive an essential use allocation. The commenter stated that the 
cornerstone of the temporary essential use process is that production 
of CFCs for MDIs should be allowed only until companies are able to 
develop and bring to market adequate non-CFC alternatives for patients. 
The commenter noted that TEAP has expressed a strong concern that 
``companies continue to request essential use quantities for CFCs when 
they also manufacture HFA MDI alternatives for salbutamol,'' and that 
Schering Plough has had an approved non-CFC Albuterol MDI, 
Proventil(r), on the market for a decade. Therefore, the commenter 
believes that no legal basis exists for allocating essential use CFCs 
to Schering-Plough.
    FDA, in consultation with EPA, has determined that 1,002.40 MT of 
CFCs are necessary to meet the demand for 2006 MDI manufacturing. As 
alternatives become available, FDA will be in a position to propose 
delisting of essential uses in a manner that is protective of patient 
safety. EPA appreciates the commenter's interest in the causes of 
asthma and reiterates that

[[Page 58506]]

FDA's determination is made in accordance with protecting public 
health.
    Delisting of CFC MDIs will proceed in accordance with the 2002 FDA 
rule establishing a mechanism for removing essential uses from the list 
in 21 CFR 2.125(e), published in the Federal Register on July 24, 2002 
(67 FR 48370) (corrected at 67 FR 49396 and 67 FR 58678). Delisting of 
albuterol CFC MDIs is addressed specifically in the FDA rule published 
in the Federal Register on April 4, 2006 (70 FR 17168). Under this 
rule, CFC albuterol MDIs will no longer be essential as of the end of 
2008. In addition, FDA is in the process of examining the remaining 
essential use products to determine if and when they might no longer 
require an essential use designation. The U.S. is making substantial 
progress in the phasedown of exempted CFC production. For example, in 
2005 the Agency allocated about 1,750 MT of CFCs while in this action 
for 2006 the Agency is only allocating 1,002.40 MT of CFCs.
    Schering-Plough manufactures a product which, as of 2006, is still 
essential to the U.S. supply of albuterol MDIs for treatment of asthma 
and COPD. With regard to the comment regarding the TEAP 2005 Progress 
Report, while the TEAP did express concerns ``that companies continue 
to request essential use quantities for CFCs when they also manufacture 
[HFA] MDI alternatives for [albuterol],'' it nevertheless recommended 
an essential use exemption for the United States that included CFCs 
intended for Schering-Plough, and this exemption was approved by the 
Parties.

B. The Proposed Level of Allocations is Incorrect

    One commenter stated that unless EPA increases the essential use 
allocation for CFC propellants for Armstrong Pharmaceuticals, the only 
company with idle CFC albuterol production capacity, there will be a 
shortage of albuterol MDIs as early as June or July of 2006 because a 
European firm, IVAX, is no longer providing some 12 million units of 
albuterol inhalers to the U.S. market. Therefore, the commenter 
requested that the 2006 essential use allowances granted to Armstrong 
be increased from the proposed 147.50 MT to 347.50 MT. The commenter 
noted that Medical Technical Options Committee (MTOC) recommended that 
180 MT be added to the U.S. allocations for 2006 if CFC MDIs were not 
imported from Europe in 2006. A second commenter noted that EPA 
proposed to allocate 1,002.40 MT of CFCs for MDIs whereas the Parties 
to the Montreal Protocol authorized 1,100 MT and suggested that the 
2006 allocations could be raised to the upper limit established in the 
Decision due to the IVAX situation. This commenter indicated that 
because in the past MDI producers have only utilized the rights that 
they felt were critical to meet evolving supply/demand, there is 
limited risk associated with the full allocation of available rights 
and notes that because excess CFCs will need to be destroyed, essential 
use inventories will actually become a financial liability and 
producers will avoid overproduction of CFC MDIs and excessive purchase 
of CFC propellant.
    One commenter believes that the Agency does not fully understand 
the restrictions on the availability of stocks of CFCs and that EPA's 
inaccurate understanding of the matter led to proposed allocations that 
are too low. They believe that misleading information in the May 2005 
TEAP Progress Report on the availability for the sale of 
GlaxoSmithKline (GSK)'s excess pre-1996 CFC propellant has led FDA and 
EPA to assume that 605 MT of pre-1996 CFCs held by GSK would be 
available to all potential users even though GSK will only sell these 
CFCs to four companies that do not have a need for the material. The 
commenter also believes that in determining the size of Armstrong's 
allocation, the Agency assumed that Armstrong could obtain additional 
CFCs from Schering-Plough.
    Two commenters are of the opinion that Armstrong Pharmaceuticals' 
request for an additional 180 MT of CFCs should be denied and 
recommended that Armstrong not be granted any CFC allocations, 
including the 147.50 MT granted in the proposed rulemaking. Based on 
figures provided by Armstrong Pharmaceuticals, the commenter claims 
that Armstrong Pharmaceuticals has more than enough CFCs to serve its 
market share without receiving any allocation for 2006. To support this 
claim, the commenter stated that Armstrong Pharmaceuticals may 
manufacture as many as 6.4 million MDIs in 2006, requiring 147 MT of 
CFCs, which can be met by their stockpile of at least 195 MT of CFCs 
(based on the difference between the CFCs needed to manufacture 3.29 
million MDIs in 2005, and the amount of CFCs purchased by Armstrong in 
2005).
    One commenter indicated it believed Armstrong Pharmaceuticals made 
several inaccurate and misleading statements during the April 21, 2006 
public hearing. These include the company's assertion, to support its 
request for an increased 2006 allocation, that the European Community 
did not allocate any CFCs for the use in the production of albuterol 
MDIs, and therefore that 21.4 million imported albuterol MDIs were lost 
to the U.S. market. According to the commenter, IVAX never supplied 
more than 14 million CFC MDIs to U.S. markets. In addition, the 
commenter also stated that in late 2005, the European Commission 
allocated 180 MT of CFCs to IVAX for production of albuterol MDIs to be 
exported to the U.S. The commenter wished to correct Armstrong 
Pharmaceuticals' claim that the 605 MT of GSK's pre-1996 CFCs is only 
available to four companies that no longer require CFCs for MDIs. This 
commenter states that these companies require CFCs for the production 
of essential MDIs. A second commenter indicated that GSK did not 
provide any misleading information concerning the sale of its pre-1996 
CFC supply. A third commenter indicated that her company did have a 
need for, and purchased, CFCs from the GSK pre-1996 stockpile.
    EPA believes that the underlying premise of the essential use 
exemption program is to provide for the continued production and 
consumption of CFCs needed to ensure patient safety. EPA concurs with 
the comment that historically, companies have only used the allowances 
they needed and that production of CFCs in excess of the amount needed 
by a company would create a liability in that such material would have 
to be destroyed or used by another essential use. However, allocations 
are based on determinations of medical necessity.
    Since the October 2005 determination by FDA, fewer albuterol CFC 
MDIs have entered the market because IVAX stopped production. The 
market has also experienced an increase in the number of HFA MDIs. In 
making its determination on the amount of CFCs that are medically 
necessary, FDA looks at factors such as the number of medical device 
units required to meet patient demand and the amount of CFCs already 
owned by MDI manufacturers. FDA informs us that they have been closely 
monitoring the albuterol supply in response to spot shortages, 
particularly of albuterol CFC MDIs, in late winter and spring of 2006. 
Based on up-to-date information, there is an adequate supply of 
albuterol MDIs to meet patient needs in the U.S., as the production 
capacity for the albuterol HFA MDIs has increased substantially in the 
first half of 2006 and is expected to continue to increase. While 
albuterol HFA MDI capacity is expected to continue to increase 
throughout 2006 and beyond, FDA has not determined a

[[Page 58507]]

reduction from the proposed allocations for albuterol MDIs because the 
projections FDA has heard indicate that there will be a continuing need 
for albuterol CFC MDIs through all of 2006. FDA is also concerned that 
some of the projections are not sufficiently reliable to provide a 
basis for a determination that could result in shortages of this 
necessary drug, if expectations are not met. Therefore, EPA is not 
altering the proposed allocation of allowances in this final rule to 
either increase allocations or decrease them.
    EPA was fully aware of the terms regarding the resale of the 605 MT 
of CFCs previously owned by GSK and was provided with a copy of the 
contract. EPA shared the terms of the contract with FDA. Further, as 
EPA has stated previously, both agencies only consider amounts of 
stocks owned by a given MDI manufacturer in determining the appropriate 
level of essential use allocation. Therefore, stocks not owned by an 
MDI manufacturer and future potential commercial arrangements for the 
sale of such stocks did not affect the allocations.
    In regard to concerns about the increased cost, see section II.F of 
this preamble document on the transition to CFC alternatives.
    One commenter argued that EPA should raise the total level of 
allocations and pointed to the terms of sale of 605 MT of GSK's pre-
1996 CFC inventory as a reason to support such an action. This 
commenter argues that the terms of sale have made it difficult to 
determine both the level and distribution of CFC allocations, which 
could cause concern about how fluid the market may be at responding to 
patients' needs. The commenter further points to the potential that 
some producers involved in the CFC-to-HFA propellant transition may 
choose to redirect their production away from CFC-based products, while 
not releasing unutilized allocation rights to other producers for 
competitive reasons, thus causing further restrictions on availability 
of CFCs.
    As described above, EPA was fully aware of the restrictions on the 
resale of the 605 MT formerly owned by GSK. In light of the fact that 
none of that material may be resold to the essential use companies that 
manufacture singly moiety albuterol MDIs, the concerns of the commenter 
regarding the difficulty of determining ``both the level and 
distribution of CFC allocations'' and ``how fluid the market may be at 
responding to patients' needs'' would not apply to those companies that 
are receiving exemptions to manufacture single moiety albuterol MDIs 
because these companies are not permitted to purchase any of the 605 MT 
to which the commenter is referring. Further, the Agency looks at 
holdings of CFCs stocks on a manufacturer-by-manufacturer basis. Only 
those quantities owned by an MDI manufacturer are assessed in 
determining their overall allocation needs. Thus, if the terms of 
resale on the GSK material contributed to some difficulties in the 
fluidity of the CFC propellant market, it should have no bearing on 
meeting patient demand for MDIs since these materials are excluded from 
the Agency's assessment until they are owned by an essential use 
company.
    The commenter's second concern that companies that are 
transitioning to an HFA-based alternative will not be inclined to sell 
or otherwise make their allowances available to a company that is still 
producing a product in a CFC format is immaterial. If a company is 
increasing production of its HFA product and decreasing its CFC product 
at the same rate, there is no need for a second company to increase its 
production of CFC product since the total number of units on the market 
remains the same and is sufficient to protect patient safety.
    One commenter stated that EPA must fully consider how the CFC 
allocations will affect moieties for which there are no alternatives--
i.e., that a too-generous allocation for CFC albuterol MDIs that are 
being phased out could result in a backlash against the remaining 
essential use products, some of which do not yet have alternatives. The 
commenter noted that the 2006 allocation is significantly reduced from 
what EPA or the U.S. Government requested from the international 
community, yet albuterol comprises the majority of the allocation. To 
that end, the commenter encourages EPA to consider whether the 
allocation in the proposed rule takes into account the rapidly changing 
market for albuterol, noting that the allocation could be based on 6-
to-12-month-old information, and asks the Agency to ensure that the 
moieties that really need CFCs will have CFCs until they approach the 
reformulation stage. A second commenter concurred with this sentiment 
and expressed the opinion that it is in the best interests of patients 
and the environment if the availability of essential use CFCs is 
preserved for the production of essential MDIs for which alternatives 
are not yet available but are under development. This second commenter 
stated that recent albuterol shortages illustrate the potential 
disruption to patient care if medication is unavailable and further 
stated that this risk would be significantly exacerbated in a situation 
where non-CFC alternatives were not available. Therefore, the commenter 
recommends that, rather than allocate any volumes for Schering-Plough 
and Armstrong Pharmaceuticals, EPA hold those volumes for a possible 
emergency allocation later in the year for those companies not 
manufacturing single-moiety albuterol MDIs.
    EPA and FDA carefully consider the requirements for all essential 
uses of CFCs, including those non-albuterol MDIs that may continue to 
be essential uses beyond 2008. The domestic and international 
consideration of the essentiality of a product is technically based. 
Most of the 2006 allocation is for albuterol MDIs, consistent with both 
domestic and international technical reviews. At the time of proposal 
of the 2006 essential use rule, EPA and FDA were not aware of any 
current market conditions that would alter the CFC requirements for 
2006 essential uses. Further, as described earlier in this document, 
more recent information has not indicated that there is a significant 
change in requirements for 2006. With the coming December 2008 ban on 
the sale of single moiety albuterol CFC MDIs, EPA and FDA anticipate 
that there may be a rapidly changing market that would affect the 2007 
essential use allocation. The Agencies will monitor the situation and 
make any adjustments that are necessary in the 2007 proposed and final 
rules.
    EPA considered and rejected the commenter's suggestion that EPA 
hold allowances proposed for Schering-Plough and Armstrong 
Pharmaceuticals as an emergency reserve for non-albuterol products. EPA 
received a determination from FDA as to the volume of CFCs required for 
non-albuterol products and FDA has informed us that that those volumes, 
along with stocks held by the manufacturers, are sufficient to protect 
public health. Additional allowances are not medically necessary. Since 
allowances expire on December 31, 2006, any recommended ``emergency'' 
allowances would have to be expended by that date. As previously 
stated, there is no anticipated shortage of 2006 CFCs for non-albuterol 
uses. Lastly, comments submitted by companies that have non-albuterol 
products also indicate that the levels proposed by EPA are sufficient 
for their 2006 needs. Therefore, EPA does not believe it is necessary 
to create an emergency reserve for non-albuterol uses with 2006 
allowances.
    One commenter indicated that in granting allowances, EPA should not 
increase one company's allocation at the expense of a second company's, 
but instead any additional allocations should come from the difference

[[Page 58508]]

between the amount authorized by the Parties, 1,100 MT, and the amount 
allocated by the Agency, 1,002.40 MT. This commenter also stated that 
it is satisfied with its proposed 2006 allocation and that it 
represents the minimum amount required to meet the market demand for 
the commenter's product. A second commenter indicated satisfaction with 
its proposed allocation.
    In this action, EPA is not changing the 2006 allocations to 
individual companies, or in total, from the amounts proposed.

C. Consideration of Stocks of CFCs in the Allocation of Essential Use 
Allowances

    One commenter urged EPA to clarify that ``operational supply'' 
encompasses not only the amount of CFCs needed to meet MDI demand for a 
particular year, but also a ``safety stock.'' This commenter believes a 
stock of up to 12 months of forward demand is prudent, given that there 
is now a single supplier in the U.S. and a long lead time associated 
with revalidating an interrupted plant, and that this is consistent 
with the view of the Aerosols and Miscellaneous Uses Technical Options 
Committee (ATOC) expert panel.\3\ The commenter states that this view 
has also been adopted by the TEAP, which recommended to the Parties 
that companies be permitted to maintain a one-year safety stock of 
CFCs.\4\
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    \3\ See ``1998 Report of the Aerosols, Sterilants, Miscellaneous 
Uses, and Carbon Tetrachloride Technical Options Committee,'' pp. 
58-59.
    \4\ See ``UNEP Technology and Economic Assessment Panel April 
1998 Report'' at p. 16, sec. 1.2.4.
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    In addition, this commenter suggests that EPA take into account 
blend requirements and only count stock blended in the needed 
proportion when calculating the safety stock limit. The commenter notes 
that the pre-1996 stockpile recently made available by GlaxoSmithKline 
comprises only CFC-11 and CFC-12, but to the extent that the 
commenter's company sources its needs from that stock, it will be 
unusable if it is not supplemented by CFC-114. This commenter also 
believes that EPA should take into account a company's need to maintain 
a safety stock for each of its foreign affiliates, as no excess supply 
is maintained at European production sites or certain other affiliates. 
The commenter explained that the European Commission takes into account 
a company's global supply when determining allocations, forcing 
companies to maintain an operational supply for their European 
facilities as well as their U.S. facilities. This situation also 
results in the expenditure of two allowances for each metric ton of 
CFCs transferred from U.S. to European facilities.
    This commenter notes that the conversion of safety stock to ``just 
in time'' supply will be made as the end date for the company's 
transition becomes clearer. Given the cost of destruction and the 
``point of sale'' ban that will render the company's stockpiles of no 
use when its CFC products are deemed non-essential, this commenter 
states that it has every incentive to avoid excess stockpiles.
    In assessing the amount of new CFC production required to satisfy 
2006 essential uses, EPA and FDA applied the terms of Decision XVII/5 
including provisions on stocks of CFCs that indicate Parties should 
allocate such that manufacturers of MDIs maintain no more than a one-
year operational supply. FDA's current practice is to first calculate 
the quantity of CFCs that a manufacturer needs for MDIs in the year in 
question and then subtract from that quantity any CFC stocks owned by 
that MDI manufacturer exceeding a one-year operational supply. The 
remainder, if a positive number, is the quantity of newly produced or 
imported CFCs needed by that manufacturer. Consistent with the language 
of Decision XVII/5, FDA has informed EPA that it considers the quantity 
of CFCs owned by each manufacturer, rather than the total supplies 
owned by all entities. EPA does not read Decision XVII/5 as endorsing a 
safety stock in excess of the one-year operational supply specifically 
mentioned in the Decision.
    EPA's proposed allocation did not take the blend of CFCs into 
account in determining the size of a manufacturer's stocks and the 
ensuing amount of new CFCs required. EPA does not currently collect 
data on the specific CFCs that comprise the stocks owned by the MDI 
manufacturer. EPA agrees that it would be reasonable to take into 
account the type of CFC needed for MDI production if EPA had such data.
    Two commenters indicated that in determining a company's pre-
allocation ``operational supply,'' EPA and FDA should count all stocks 
owned or controlled by a company, including stocks at its production 
facility, in transit, on order, or stored off-site.
    FDA evaluated stocks owned by an MDI manufacturer, regardless of 
the physical location of the material, in making its determination.
    Two commenters stated that in order to effectively implement 
Decision XVII/5, FDA and EPA should evaluate the level of stockpiles 
held by companies as of the end of 2005, or as of January 2006. In 
determining how much a company needs to maintain a ``one-year 
operational supply,'' EPA and FDA should consider how much a company 
needs to serve markets during the year and maintain a reasonable safety 
reserve. The starting point for determining this amount could be the 
amount of CFCs a company used in the previous year, which could be 
modified based on the company's circumstances. They further state that 
EPA should only allocate CFCs to a company if the company's one-year 
operational supply need is greater than its pre-allocation operational 
supply. The commenter defines ``operational supply need'' as the amount 
the company needs to ``serve its markets during the current year'' plus 
a reasonable safety reserve, not to exceed 12 months. The commenter 
defines ``pre-allocation operational supply'' as all stocks owned or 
controlled by a company. Additionally, with regard to the safety net, a 
12-month level would be excessive for products with an established 
phaseout date and where the market is transitioning to non-CFC 
products. According to one of the commenters, the U.S. Reporting 
Accounting Framework reported that 1,911 MT of CFCs were ``on hand'' at 
the end of 2005. With the addition of 1,000 MT of pre-phase out CFCs 
(398.6 MT reported by the U.S. Accounting Framework and 605 MT made 
available by GSK), the commenter asserts that almost three times more 
than the 1,171 MT of CFCs used in 2005 were available for use in MDIs 
as of the end of 2005.
    A third commenter indicated that allowable operational supply 
should be determined based on the average carried over the course of a 
year, as opposed to year-end supply, which may appear excessive given 
the fact that the production of CFCs-11 and -12 occur only during 
August and this commenter receives a full year's supply at that time.
    With regard to the first two commenters' concern on the timing for 
EPA's determination, the Agency refers readers to section II.D of this 
preamble on the essential use process. EPA and FDA do not concur with 
the commenter that a safety net of 12 months is excessive for those 
products where the market is transitioning. EPA notes that the product 
in question (albuterol CFC MDI) is not set to be phased out until 
December 31, 2008. Given that the final transition date is more than a 
year away, it still makes sense to factor in a ``one-year operational 
supply'' at this time. EPA believes this comment may be more pertinent 
to 2007 and 2008, the last years of the transition.

[[Page 58509]]

    As stated above, FDA first calculates the quantity of CFCs that a 
manufacturer needs for MDIs in the year in question and then subtracts 
from that quantity any CFC stocks owned by that manufacturer in excess 
of a one-year operational supply. FDA evaluates data provided to EPA 
before and during the rulemaking process which may include stocks data 
collected midyear, as was the case for the 2006 rulemaking. Those 
stocks include all materials owned by a manufacturer. Consistent with 
the language of Decision XVII/5, FDA has informed EPA that it considers 
the quantity of CFCs owned by each MDI manufacturer, rather than the 
total supplies owned by all entities. EPA notes that some the stocks 
one of the commenters points to in the U.S. Accounting Framework are 
not owned by MDI manufacturers. EPA reminds commenters that the U.S. 
Accounting Framework captures data at the aggregate level but that 
allowance allocation determinations are company-specific.
    In determining what authorization of new production is ``necessary 
for use in medical devices'' under section 604(d)(2) of the CAA, FDA 
calculates the quantity of CFCs needed to produce an adequate supply of 
medical devices for use by patients, or other end users, in the 
relevant year. FDA does not consider the increase of a manufacturer's 
year-end stock of CFCs to be ``necessary'' for purposes of section 
604(d)(2). FDA has informed EPA that, in accordance with this reading 
of section 604(d)(2) of the CAA, FDA will not make a determination that 
any newly produced CFCs are needed, if the resulting allocation would 
reasonably be expected to result in the MDI manufacturer having a 
larger stock of CFCs at the end of a relevant year than it had at the 
beginning of that year. FDA has provided the following examples of its 
current method of arriving at a determination of the quantities of CFCs 
needed for a given year:
     Manufacturer A will have 100 MT of CFCs in stocks at the 
beginning of a year. 50 MT are required to produce the MDIs needed in 
that year. FDA would determine that no additional CFCs are needed 
because Manufacturer A will have a one-year supply of CFCs in stock at 
the end of the year.
     Manufacturer B will have 100 MT of CFCs in stocks at the 
beginning of a year. 150 MT are required to produce the MDIs needed in 
that year. FDA would determine that Manufacturer B's allocation should 
only be 150 MT, as determinations made by FDA are not intended to 
increase stocks of CFCs through the allocation process.
    Both examples assume that the necessary quantities of CFC-
containing MDIs remain constant. FDA has informed EPA that as the 
manufacture, and capacity for manufacture, of non-ODS alternatives, 
including albuterol HFA MDIs, increases, it takes those increases into 
consideration in making its determination under section 604(d)(2) of 
the CAA, and will continue to do so. EPA agrees that FDA's approach to 
determining the necessary quantity of newly produced or imported CFCs 
for the manufacture of essential MDIs is reasonable, appropriate, and 
consistent with relevant provisions of the Parties' Decisions, the 
Montreal Protocol, and the CAA.

D. Comments on the Rulemaking Process and Timing

    Three commenters expressed the opinion that EPA has not adequately 
supported its proposed essential use allocations for 2006 because EPA 
could not have adequately taken into account Decision XVII/5 given the 
timing of the proposed rule. Since Decision XVII/5 was adopted on 
December 16, 2005 at the 17th MOP, FDA's October 12, 2005 
recommendations to EPA could not have taken this Decision into account. 
While two draft decisions were forwarded to the 17th MOP, neither 
decision was adopted in full by the MOP, and there is no way FDA could 
have known which decision would be adopted. Therefore, when FDA made 
its recommended allocation to EPA, it could not have taken Decision 
XVII/5 into account. One of the commenters stated that, under this 
Decision, EPA and FDA are required to factor in any final shipments of 
CFCs from the now-closed Weert CFC manufacturing plant.
    EPA and FDA were aware of Decision XVII/5 at the time of 
publication of the proposal, and nothing in that decision required a 
change to the October 2005 FDA determination. Decision XVII/5(2) says: 
``That Parties * * * shall take into account pre- and post-1996 stocks 
of controlled substances as described in paragraph 1(b) of decision IV/
25, such that no more than a one-year operational supply is maintained 
by that manufacturer.'' This language is not in conflict with language 
in Decision XVI/12 from the previous year which states that Parties 
``should give due consideration to existing stocks * * * of banked or 
recycled controlled substances as described in paragraph 1(b) of 
decision IV/25, with the objective of maintaining no more than one 
year's operational supply.'' FDA's determination did pre-date Decision 
XVII/5, however, it is consistent with Decision XVII/5 as well as 
Decision XVI/12. Decision XVII/5 contains two details that Decision 
XVI/12 did not: It refers to stocks at the MDI manufacturing level and 
clarifies that both pre- and post-1996 stocks should be taken into 
account. FDA has informed EPA that in making their determination they 
took both pre-1996 and post-1996 stocks at the MDI manufacturing level 
into account. Even at the time Decision XVI/12 was taken, the U.S. 
Government articulated to Parties that the U.S. believed the terms on 
stocks in the Decision would be applied at the individual company 
level. The more recent Decision indicated other Parties' concurrence 
with this approach by specifically including the phrase ``by that 
manufacturer.'' Thus, the decision taken in December 2005 did not have 
a substantive impact on FDA's determination made in October 2005.
    Four commenters expressed the opinion that EPA did not adequately 
support its proposed essential use allocations for 2006 because EPA 
based the proposed 2006 allocations on outdated information. The 
commenters stated that FDA provided its determination to EPA on October 
12, 2005, prior to several significant developments. Two of these 
commenters believe that EPA and FDA should take into account increases 
in HFA manufacturing, as well as the uptake of HFA products that began 
in January 2006 and that has increased from 3 percent to 10 percent of 
the overall albuterol market. One commenter stated that EPA and FDA 
should also consider the albuterol shortages that occurred in early 
2006.
    We understand concerns raised by the commenters that given the 2008 
ban on the sale of albuterol CFC MDIs, the market may be rapidly 
shifting and a snapshot of data six to twelve months prior to an 
allocation may not represent actual essential needs. In response, EPA 
notes that the purpose of a comment period is to bring new information 
and opinions to the Agency's attention and that EPA does look at data 
that comes to us during the comment period.
    While the Agency makes every reasonable effort to use best 
available data, it is also reasonable to create a process for data 
gathering and establish a cut off for new information. For example, it 
would be impossible for EPA to review and consider new data that comes 
to us the day a rule is signed.
    Although there is an established process for gathering information, 
the Agency does make every reasonable effort to use newer data when 
feasible.

[[Page 58510]]

For example, EPA does evaluate new information that comes to the Agency 
during the comment period. In the April 11, 2006, proposed rule, the 
Agency stated ``[t]he amounts listed in this proposal are subject to 
additional review by EPA and FDA if new information demonstrates that 
the proposed allocations are either too high or too low.''
    On the specific matter of revising the allocations in this rule 
based on more recent stock data, the Agency has data on stock holdings 
as of the end of 2005 and mid-2006 which is more recent data than was 
available at the time of publication of the proposed rule. However, 
these data do not indicate that the October 2005 FDA determination 
should be revised. Information on individual stock holdings is in the 
confidential portion of the docket for this rulemaking.
    One commenter stated that EPA based its proposed 2006 CFC essential 
use allocations on information on the number of MDI units produced 
during 2004 and anticipated to be produced during 2005, which was 
obtained from CFC MDI manufacturers via CAA section 114 letters. The 
commenter notes that actual 2005 information is now available both from 
companies themselves via section 114 requests and from public sources 
such as IMS data. The commenter also believes that FDA's 
recommendations to EPA regarding the 2006 essential use allocations 
were based on outdated and insufficient information. The commenter 
notes that since FDA's recommended allocation levels were sent to EPA 
in a letter dated October 12, 2005, FDA did not have complete 2005 
production data at hand on which to base its conclusions. Further, any 
data that FDA used regarding stockpiles prior to the end of the 
calendar year would have been incomplete, since manufacturers 
replenished their CFC stockpiles from October through December 2005.
    The commenter stated that EPA's reliance on outdated data is not in 
line with the well-established administrative law principle that ``an 
agency must examine relevant data'' in making its determinations and 
that failure to do this ``either is arbitrary decision making or at 
least prevents a court from finding it non-arbitrary.'' With respect to 
EPA's proposed 2006 allocations, according to the commenter, the most 
pertinent data are from 2005, and the use of 2004 data cannot be 
justified. Thus, based on administrative law standards, the commenter 
believes that EPA will have acted in an arbitrary and capricious 
fashion by not using more recent and relevant data. The commenter 
recommends, therefore, that EPA send new Section 114 letters to 
manufacturers requesting current information and that FDA use this 
information to prepare a new determination of recommended allocations 
for 2006.
    EPA uses a well-established rulemaking process which includes a 
timeline for collection of data, development of a proposed rule, 
consideration of comments, and issuance of a final rule. As stated 
above, EPA agrees that the Agency should use best available data but 
notes that a reasonable cut off for new information is required in any 
process. Therefore, best available data in this circumstance may be the 
information available as of the development of the proposal, as 
supplemented by public comments and information generated by regulatory 
reporting requirements in time for consideration during the development 
of the final rule. For the past ten years of the essential use program, 
the Agency has based proposed allocations largely on data obtained 
during the year prior to the allocation.
    EPA does evaluate new information that comes to the Agency during 
the comment period and through periodic reports from regulated 
entities. New information on stock holdings and HFA MDI market 
penetration has been made available to EPA and FDA and the October 2005 
FDA determination is still appropriate given this new information. The 
Agency further notes that it placed the 2005 accounting framework 
(which includes actual use data for 2005) in the public docket for this 
proposed rulemaking and relied on it in developing the rule.
    In the October 2005 letter to EPA, FDA stated that its 
determination of the amount of CFCs necessary for production of 
essential MDIs is lower than the total amount requested by 
manufacturers, and in reaching this estimate, FDA took into account the 
manufacturers' production of MDIs that used CFCs as a propellant in 
2004, the manufacturers' estimated production in 2005 and 2006, the 
manufacturers' current stockpile levels, and the presence on the market 
of two albuterol MDIs that do not use CFCs. The letter also informed 
EPA that FDA based its determination for 2006 on an estimate of the 
quantity of MDIs using CFCs as a propellant that would be necessary for 
manufacturers to maintain a 12-month stockpile, consistent with 
paragraph 3 of Decision XVI/12.
    In making allocations, government experts examine projected MDI 
manufacturing demand for the year in question. One important element in 
arriving at an estimate of projected demand is to examine information 
on past demand and production. If EPA or FDA were to see use data in 
2005 that was a significant departure from use in the preceding years, 
such data would be of interest to the agencies and could lead to a 
different conclusion. There was no 2005 data provided to the EPA that 
indicate a rapid change in the marketplace beyond the amounts offset by 
the IVAX production shortfall and therefore no need for FDA to revise 
its October 2005 determination.
    One commenter noted that EPA proposed the amount recommended by FDA 
without revisions. This commenter urged EPA to revise FDA's recommended 
allocations to take into account more recent stocks data in determining 
the 2006 allocations. In a similar context, the commenter also states 
that EPA and FDA did not apply the terms of Decision XVII/5 at the time 
of allocation. The commenter notes that Protocol decisions are part of 
Protocol law and are also U.S. law for purposes of essential use 
allocations.
    The commenter's paraphrase of CAA section 604(d)(2) reverses the 
EPA and FDA roles. The statute says that EPA ``shall authorize,'' to 
the extent consistent with the Montreal Protocol, if FDA, in 
consultation with EPA, determines such authorization to be necessary. 
Thus, FDA plays the primary role in the determination, although 
consultation must (and does) occur. Pursuant to the statutory language, 
EPA does evaluate whether the essential use allowances are consistent 
with the Montreal Protocol prior to issuing a proposed or final rule. 
The allowances contained in this final rule are fully consistent with 
the Protocol and Decisions of the Parties. In addition, as explained 
above, EPA concurs with FDA's interpretation and application of the 
phrase ``one-year operational supply'' as used in Decision XVII/5. In 
regard to the legal status of decisions of the Parties, EPA refers 
readers to the recent DC Circuit opinion in NRDC v. EPA, D.C. Cir. No. 
04-1438 (August 29, 2006), as well as to the discussion of the matter 
in EPA's ``Supplemental Brief for the Respondent,'' filed in that same 
case. These documents are available in the docket for this action.
    One commenter noted that neither FDA nor EPA has explained how they 
propose to define and implement the key terms in Decision XVII/5. 
According to the commenter, the lack of definitions in the proposed 
rulemaking is not only counter to EPA's obligation to provide notice 
and opportunity for the public to comment, but also means that each 
company will apply its own definition.

[[Page 58511]]

The commenter asserted that EPA's failure to define terms in the 
proposed rule is not in line with well-established requirements for 
notice and comment under the Administrative Procedures Act. The 
commenter also stated that there is no record in the docket to support 
EPA's claim in the proposed rule that it has ``confirmed with FDA that 
this determination is consistent with Decision XVII/5 * * *'' and that 
neither agency has provided any information on the methodology used to 
determine that the allocations were in conformity with the Decision.
    In reaching its determination, FDA used the plain meaning of the 
phrase ``one-year operational supply.'' A company's ``one-year 
operational supply'' is the amount needed to supply that company's 
manufacturing operations for one year. One commenter provided a helpful 
refinement of this concept by pointing out that its operations require 
a blend of CFCs -11, -12, and -114, and that the presence of only one 
or two of these compounds does not constitute an operational supply. 
This comment suggests that the use of the phrase in the proposed rule 
was sufficiently clear to put commenters on notice of FDA's 
interpretation. Because the Agency used the plain meaning of the words 
``one-year operational supply'' there was no need to propose a 
definition for public comment.
    One commenter urged EPA to consider making essential use allowance 
allocations earlier in the year in order to minimize the logistical 
challenges posed in manufacturing essential MDIs. Since CFC-114 is 
produced throughout the year, this commenter could make use of its 
allowances if they were awarded sooner. A second commenter noted that 
the domestic ruling on essential use allowances for 2006 has been 
delayed due to extended consideration in the Montreal Protocol 
negotiation. As a result, the commenter stated the opinion that it is 
essential that domestic implementation occur at the earliest date to 
allow for production planning and execution to meet this year's CFC MDI 
producer needs.
    EPA makes every effort to allocate allowances in a timely manner 
but is affected by factors beyond its control, including the timing of 
Decisions and the length of the regulatory process itself. A final 
decision for 2006 allocations was only taken in December 2005.

E. EPA May Not Allocate Allowances to Companies That Fail To 
Demonstrate Research and Development of Alternatives

    One commenter stated that EPA should not allocate essential use 
CFCs to companies that have not fully complied with Decision VIII/10 by 
clearly establishing that they are undertaking efforts to develop non-
CFC alternatives. The commenter does not believe that Armstrong 
Pharmaceuticals' research and development program is adequate to 
achieve results by the December 31, 2008 phaseout deadline. To that 
end, the commenter recommends that EPA use its section 114 authority to 
investigate the resource commitment and level of effort of any research 
and development effort by Armstrong Pharmaceuticals. Unless EPA and FDA 
conclude that Armstrong's research and development program has a 
realistic chance of success by December 31, 2008, this commenter 
believes that Armstrong should be denied an essential use exemption in 
2006 on this basis.
    The Agency agrees that companies should undertake research efforts 
to demonstrate a commitment to eliminate the need for an exemption, but 
disagrees with the premise that such efforts must be completed by 
December 31, 2008. Finally, EPA refers readers to the extensive 
discussion on this matter in the 2005 final allocation rule (70 FR 
49838-9) and to a 2002 Federal Register notice that addresses this 
topic (67 FR 6355).

F. Transition to Non-CFC Metered Dose Inhalers

    Two commenters expressed concern that the allocations may have 
negative effects on the transition to non-CFC MDIs. One of these 
commenters recommended that EPA and FDA consider how CFC allocations at 
this end stage might affect transition at the patient level. According 
to this commenter, the proposed allocations for 2006 could result in a 
transition period as long as 30 months in which both CFC and HFA 
albuterol have a substantial market share. Both commenters stated that 
a mixed market of CFC and HFA MDIs could have negative health effects 
on patients. For example, physicians might not know which product their 
patients are using and patients also may be confused, which could 
result in adverse health outcomes (e.g., since HFA inhalers may feel 
different than the CFC one, patients may overuse the HFA device). Both 
commenters also believe that mixed signals from EPA and FDA about 
albuterol and new HFA technology could cause confusion and uncertainty. 
As a result, one of the commenters believes there could be a backlash 
against the MDI transition, if not about ozone layer protection in 
general. In light of these factors, one commenter expressed the opinion 
that the 2006 allocations should send a message consistent with what 
has been occurring in the market place. Therefore, the commenter urged 
EPA and FDA to reevaluate the proposed allocation of 700 MT for CFC 
albuterol MDIs (including 147.7 MT allocated to one company, which 
according to the commenter is more than twice that company's one-year 
operational supply) so that those allocations do not impede the 
transition to non-CFC MDIs.
    Another commenter stated that a near-term, achievable transition 
date in 2005 or early 2006 would have sent a strong message to 
manufacturers, the medical community, and patients, providing a 
catalyst for the planning needed to transition to non-CFC MDIs. In 
addition, given the albuterol shortages reported in early 2006, this 
commenter stated that the continued and expanded availability of HFA 
MDIs is critical to ensuring that additional shortages do not occur and 
that the transition is as seamless as possible for patients.
    Both commenters urged EPA and FDA to use the allocation tool to 
promote a smooth transition during the end stage of the albuterol 
transition, in which HFA manufacturers are completing the scale-up of 
their production capacity. One commenter expressed the opinion that 
facilitating an orderly and transparent transition is consistent with 
EPA's authority and affirmative legal responsibility under the Clean 
Air Act to implement the Montreal Protocol. The commenters state that 
by limiting CFCs to only those uses that are necessary, EPA and FDA 
would enhance the likelihood of a smooth transition in several ways, 
which include sending a signal that the U.S. is serious about 
facilitating a transition away from CFC MDIs; reinforcing the idea that 
the transition offers positive opportunities for patients and 
physicians to improve medical outcomes; introducing further certainty 
about when HFA MDI supplies will be adequate; and preventing the market 
from sliding back into CFC albuterol, as this would engender confusion 
and risks to patient health.
    FDA previously conducted an extensive regulatory process to 
determine when albuterol MDIs would no longer be considered essential 
uses, evaluating the factors raised by the commenters above. FDA 
concluded in that rulemaking that albuterol CFC MDIs

[[Page 58512]]

would no longer be essential at the end of 2008. As of 2006, however, 
CFC albuterol MDIs continue to appear on FDA's list of essential MDIs 
and FDA has determined that limited production of new CFCs is necessary 
to protect patient safety in 2006. Despite the continued need for CFC 
albuterol MDIs, EPA would note that the transition to CFC-free 
albuterol MDIs is well underway and the number of HFA MDIs on the 
market today is evidence of that fact.

III. Allocation of Essential Use Allowances for Calendar Year 2006

    With this action, EPA is allocating essential use allowances for 
calendar year 2006 to the entities listed in Table 1. These allowances 
are for the production or import of the specified quantity of class I 
controlled substances solely for the specified essential use.

        Table 1.--Essential Use Allowances for Calendar Year 2006
------------------------------------------------------------------------
                                                           2006 Quantity
              Company                     Chemical         (metric tons)
------------------------------------------------------------------------
 (i) Metered Dose Inhalers (for oral inhalation) for Treatment of Asthma
                and Chronic Obstructive Pulmonary Disease
------------------------------------------------------------------------
Armstrong Pharmaceuticals.........  CFC-11 or CFC-12 or           147.50
                                     CFC-114.
Boehringer Ingelheim                CFC-11 or CFC-12 or           116.50
 Pharmaceuticals.                    CFC-114.
Inyx (Aventis)....................  CFC-11 or CFC-12 or           106.40
                                     CFC-114.
Schering-Plough Corporation.......  CFC-11 or CFC-12 or           556.00
                                     CFC-114.
3M Pharmaceuticals................  CFC-11 or CFC-12 or             0.00
                                     CFC-114.
Wyeth.............................  CFC-11 or CFC-12 or            76.00
                                     CFC-114.
------------------------------------------------------------------------

IV. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this 
action is a ``significant regulatory action'' because it raises novel 
legal or policy issues. Accordingly, EPA submitted this action to the 
Office of Management and Budget (OMB) for review under Executive Order 
12866 and any changes made in response to OMB recommendations have been 
documented in the docket for this action.
    EPA prepared an analysis of the potential costs and benefits 
related to this action. This analysis is contained in the Agency's 
Regulatory Impact Analysis (RIA) for the entire Title VI phaseout 
program (U.S. Environmental Protection Agency, ``Regulatory Impact 
Analysis: Compliance with Section 604 of the Clean Air Act for the 
Phaseout of Ozone Depleting Chemicals,'' July 1992). A copy of the 
analysis is available in the docket for this action and the analysis is 
briefly summarized here. The RIA examined the projected economic costs 
of a complete phaseout of consumption of ozone-depleting substances, as 
well as the projected benefits of phased reductions in total emissions 
of CFCs and other ozone-depleting substances, including essential use 
CFCs used for metered dose inhalers.

B. Paperwork Reduction Act

    This action does not impose any new information collection burden. 
The recordkeeping and reporting requirements included in this action 
are already included in an existing information collection burden and 
this action does not make any changes that would affect the burden. 
However, the Office of Management and Budget (OMB) has previously 
approved the information collection requirements contained in the 
existing regulations at 40 CFR 82.8(a) under the provisions of the 
Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and has assigned OMB 
control number 2060-0170, EPA ICR number 1432.25. A copy of the OMB 
approved Information Collection Request (ICR) may be obtained from 
Susan Auby, Collection Strategies Division; U.S. Environmental 
Protection Agency (2822T); 1200 Pennsylvania Ave., NW., Washington, DC 
20460 or by calling (202) 566-1672.
    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 in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act

    EPA has determined that it is not necessary to prepare a regulatory 
flexibility analysis in connection with today's final rule. EPA has 
also determined that this rule will not have a significant economic 
impact on a substantial number of small entities. For purposes of 
assessing the impact of today's final rule on small entities, small 
entities are defined as: (1) Pharmaceutical preparations manufacturing 
businesses (NAICS code 325412) that have less than 750 employees; (2) a 
small governmental jurisdiction that is a government of a city, county, 
town, school district or special district with a population of less 
than 50,000; and (3) a small organization that is any not-for-profit 
enterprise that is independently owned and operated and is not dominant 
in its field.
    After considering the economic impacts of today's final rule on 
small entities, EPA has concluded that this action will not have a 
significant economic impact on a substantial number of small entities. 
In determining whether a rule has a significant economic impact on a 
substantial number of small entities, the impact of concern is any 
significant adverse economic impact on small entities, since the 
primary purpose of the regulatory flexibility analyses is to identify 
and address regulatory alternatives ``which minimize any significant 
economic impact of the proposed rule on small entities.'' 5 U.S.C. 
Sections 603 and 604. Thus, an agency may conclude that a rule will

[[Page 58513]]

not have a significant economic impact on a substantial number of small 
entities if the rule relieves regulatory burden, or otherwise has a 
positive economic effect on all of the small entities subject to the 
rule. This rule provides an otherwise unavailable benefit to those 
companies that are receiving essential use allowances. We have 
therefore concluded that this final rule will relieve regulatory burden 
for all small entities.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local, and tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year.
    Before promulgating an EPA rule for which a written statement is 
needed, section 205 of the UMRA generally requires EPA to identify and 
consider a reasonable number of regulatory alternatives and adopt the 
least costly, most cost-effective, or least burdensome alternative that 
achieves the objectives of the rule. The provisions of section 205 do 
not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows EPA to adopt an alternative other than the least 
costly, most cost-effective, or least burdensome alternative, if the 
Administrator publishes with the final rule an explanation why that 
alternative was not adopted.
    Before EPA establishes any regulatory requirements that may 
significantly or uniquely affect small governments, including tribal 
governments, it must have developed a small government agency plan 
under section 203 of the UMRA. The plan must provide for notifying 
potentially affected small governments, enabling officials of affected 
small governments to have meaningful and timely input in the 
development of EPA regulatory proposals with significant Federal 
intergovernmental mandates, and informing, educating, and advising 
small governments on compliance with the regulatory requirements.
    Today's rule contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) for State, local, or tribal 
governments or the private sector, since it merely provides exemptions 
from the 1996 phaseout of class I ODSs. Similarly, EPA has determined 
that this rule contains no regulatory requirements that might 
significantly or uniquely affect small governments, because this rule 
merely allocates essential use exemptions to entities as an exemption 
to the ban on production and import of class I ODSs.

E. Executive Order 13132: Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    This final rule does not have federalism implications. It will not 
have substantial direct effects on the States, on the relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government, 
as specified in Executive Order 13132. Thus, Executive Order 13132 does 
not apply to this rule.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by tribal officials in the development of regulatory 
policies that have tribal implications.'' This final rule does not have 
tribal implications, as specified in Executive Order 13175. Today's 
rule affects only the companies that requested essential use 
allowances. Thus, Executive Order 13175 does not apply to this rule.

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

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

H. Executive Order 13211: Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This rule is not subject to Executive Order 13211, Actions 
Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use (66 FR 28355, May 22, 2001) because it is not 
likely to have a significant adverse effect on the supply, 
distribution, or use of energy. The rule affects only the 
pharmaceutical companies that requested essential use allowances.

I. National Technology Transfer and Advancement Act

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

J. Congressional Review Act

    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

[[Page 58514]]

copy of the rule, to each House of the Congress and to the Comptroller 
General of the United States. Therefore, EPA will submit a report 
containing this rule and other required information to the U.S. Senate, 
the U.S. House of Representatives, and the Comptroller General of the 
United States prior to publication of the rule in the Federal Register. 
This rule is not a ``major rule'' as defined by 5 U.S.C. 804(2). This 
rule will be effective October 4, 2006.

V. Judicial Review

    Under section 307(b)(1) of the Act, EPA finds that these 
regulations are of national applicability. Accordingly, judicial review 
of the action is available only by the filing of a petition for review 
in the United States Court of Appeals for the District of Columbia 
Circuit within sixty days of publication of the action in the Federal 
Register. Under section 307(b)(2), the requirements of this rule may 
not be challenged later in judicial proceedings brought to enforce 
those requirements.

VI. Effective Date of This Final Rule

    Section 553(d) of the Administrative Procedures Act (APA) generally 
provides that rules may not take effect earlier than 30 days after they 
are published in the Federal Register. Today's final rule is issued 
under section 307(d) of the CAA, which states, ``The provisions of 
section 553 through 557 * * * of Title 5 shall not, except as expressly 
provided in this subsection, apply to actions to which this subsection 
applies.'' Thus, section 553(d) of the APA does not apply to this rule. 
EPA nevertheless is acting consistently with the policies underlying 
APA section 553(d) in making this rule effective October 4, 2006. APA 
section 553(d) provides an exception for any action that grants or 
recognizes an exemption or relieves a restriction. Because today's 
action grants an exemption to the phaseout of production and 
consumption of CFCs, EPA is making this action effective immediately to 
ensure continued availability of CFCs for medical devices.

List of Subjects in 40 CFR Part 82

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

    Dated: September 27, 2006.
Stephen L. Johnson,
Administrator.

0
40 CFR part 82 is amended as follows:

PART 82--PROTECTION OF STRATOSPHERIC OZONE

0
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

0
2. Section 82.8 is amended by revising the table in paragraph (a) to 
read as follows:

Sec.  82.8  Grants of essential use allowances and critical use 
allowances.

    (a) * * *

        Table I.--Essential Use Allowances for Calendar Year 2006
------------------------------------------------------------------------
                                                           2006 Quantity
              Company                     Chemical         (metric tons)
------------------------------------------------------------------------
 (i) Metered Dose Inhalers (for oral inhalation) for Treatment of Asthma
                and Chronic Obstructive Pulmonary Disease
------------------------------------------------------------------------
Armstrong Pharmaceuticals.........  CFC-11 or CFC-12 or           147.50
                                     CFC-114.
Boehringer Ingelheim                CFC-11 or CFC-12 or           116.50
 Pharmaceuticals.                    CFC-114.
Inyx (Aventis)....................  CFC-11 or CFC-12 or           106.4
                                     CFC-114.
Schering-Plough Corporation.......  CFC-11 or CFC-12 or           556.00
                                     CFC-114.
3M Pharmaceuticals................  CFC-11 or CFC-12 or             0.0
                                     CFC-114.
Wyeth.............................  CFC-11 or CFC-12 or            76.0
                                     CFC-114.
------------------------------------------------------------------------

* * * * *

[FR Doc. E6-16372 Filed 10-3-06; 8:45 am]

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