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Protection of Stratospheric Ozone: Allocation of Essential-use Allowances for Calendar Year 2002; and Extension of the De Minimis Exemption for Essential Laboratory and Analytical Uses through Calendar Year 2005

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[Federal Register: February 11, 2002 (Volume 67, Number 28)]
[Rules and Regulations]
[Page 6351-6362]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11fe02-11]

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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 82
[FRL-7140-5]
RIN 2060-AJ81
 
Protection of Stratospheric Ozone: Allocation of Essential-use 
Allowances for Calendar Year 2002; and Extension of the De Minimis 
Exemption for Essential Laboratory and Analytical Uses through Calendar 
Year 2005

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 2002. Essential-use allowances 
permit a person to obtain controlled class I ODSs as an exemption to 
the January 1, 1996 regulatory phase-out of production and import of 
these chemicals. EPA allocates essential-use allowances for exempted 
production or import of a specific quantity of class I ODS solely for 
the designated essential purpose. Today EPA is finalizing the proposed 
regulations published in the Federal Register on November 1, 2001. With 
this action, EPA is allocating essential-use allowances for production 
and import of class I ODSs for use in medical devices and the Space 
Shuttle and Titan Rockets, and extending the general exemption for 
class I ODSs for use in essential laboratory and analytical 
applications through the year 2005 as consistent with the Montreal 
Protocol. EPA is also finalizing regulatory changes to ensure 
consistency with Decisions XI/15 and XII/2 of the Montreal Protocol. 
Decision XI/15 states that use of class I ODS for the testing of ``oil 
and grease,'' and ``total petroleum hydrocarbons'' in water; testing of 
tar in road-paving materials; and forensic finger printing are not 
considered essential under the exemption for laboratory and analytical 
uses beginning January 1, 2002. Decision XII/2 states that any CFC MDIs 
approved after December 31, 2000, are not essential unless the product 
meets the criteria for essentiality set out in paragraph 1(a) of 
Decision IV/25. Decision XII/2 also authorizes Parties to the Montreal 
Protocol to allow transfers of CFCs produced with essential-use 
allowances among MDI companies. Finally, EPA is adding a regulatory 
language to clarify that clarifies that it is a violation of the CAA if 
unused class I ODS produced under the authority of essential-use 
allowances or the exemption for laboratory and analytical uses are used 
in applications other than the stated essential purposes.

DATES: This final rulemaking is effective February 11, 2002.

ADDRESSES: Materials relevant to this rulemaking are contained in 
Docket No. A-93-39. The Docket is located in Waterside Mall Room M-
1500, 401 M Street, SW., Washington, DC 20460. The materials may be 
inspected from 8 a.m. until 5:30 p.m. Monday through Friday. EPA may 
charge a reasonable fee for copying docket materials.

FOR FURTHER INFORMATION CONTACT: Erin Birgfeld, U.S. Environmental 
Protection Agency, Global Programs Division, Office of Atmospheric 
Programs, 6205J, 1200 Pennsylvania Avenue, Washington, DC 20460; 202-
564-9079; or birgfeld.erin@epa.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
II. Allocation of essential-use allowances for medical devices and 
the space shuttle and Titan rockets
III. Implementation of Decision XII/2 of the Parties to the Montreal 
Protocol
IV. General laboratory exemption for class I ozone depleting 
substances
V. Clarification regarding use of material produced under essential-
use allowances for non-essential-uses
VI. Effective date for this final rule
VII. Administrative requirements
    A. Unfunded Mandates Reform Act
    B. Executive Order 12866
    C. Paperwork Reduction Act (PRA)
    D. Executive Order 13175 (Consultation and Coordination with 
Indian Tribal Governments)
    E. Regulatory Flexibility Act (RFA) as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 
U.S.C. 601 et seq.
    F. Applicability of Executive Order 13045: Protection of 
Children from Environmental Health Risks and Safety Risks
    G. National Technology Transfer and Advancement Act
    H. Executive Order 13132 (Federalism)
    I. Executive Order 13211 (Energy Effects)
VIII. Judicial Review
IX. Submittal to Congress and the General Accounting Office

I. Background

    The Montreal Protocol on Substances that Deplete the Ozone Layer 
(Protocol) is the international agreement to reduce and eventually 
eliminate production and consumption \1\ of all stratospheric ozone 
depleting substances (ODSs). The elimination of production and 
consumption is accomplished through adherence to phase-out schedules 
for production and consumption of specific class I ODSs including 
chlorofluorocarbons (CFCs), halons, carbon tetrachloride, methyl 
chloroform, hydrochlorofluorocarbons, and methyl bromide. As of January 
1996, production and import of most class I ODSs \2\ were phased out in 
developed countries including the United States. However, the Protocol 
and the Clean Air Act (CAA or Act) provide exemptions which allow for 
the continued import and/or production of class I ODS for specific 
uses. Under the Montreal Protocol, exemptions are granted for uses that 
are determined by the Parties to be ``essential.'' Decision IV/25, 
taken by the Parties 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:
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    \1\ ``Consumption'' is defined as the amount of a substance 
produced in the United States, plus the amount imported, minus the 
amount exported to Parties to the Montreal Protocol (see section 
601(6) of the Clean Air Act) essential-use Stockpiles of class I 
ODSs produced or imported prior to the 1996 phaseout can continue to 
be used for purposes not expressly banned at 40 CFR part 82.
    \2\ Class I ozone depleting substances are defined at 40 CFR 
part 82 subpart A, appendix A.
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    (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 from existing stocks of banked or recycled 
controlled substances, also bearing in mind the developing 
countries' need for controlled substances.''

II. Allocation of Essential-Use Allowances for Medical Devices and 
the Space Shuttle and Titan Rockets

    With today's action, EPA is implementing the statutory exemption 
for continued import and production of CFCs beyond the phase-out for 
use in medical devices. Section 604(d)(2) of the CAA states that 
``notwithstanding the phase-out, EPA shall, to the extent consistent 
with the Montreal Protocol,

[[Page 6353]]

authorize production of limited quantities of class I ODSs for use in 
medical devices, if FDA, in consultation with EPA, determines that such 
production is necessary for use in medical devices \3\''. In 
implementing this exemption, FDA sent EPA a letter on August 9, 2001, 
indicating the amount of CFCs each company should receive as essential-
use exemptions and their determination that a total of 3,388 metric 
tons of CFC were ``necessary'' for use in medical devices for the year 
2002 \4\. The allocations for CFCs in the proposal reflected FDA's 
determination, and were based on the assumption that the Parties would 
approve the U.S. essential-use supplemental request for the year 2002. 
The Parties did approve the U.S. supplemental request by taking 
Decision XIII/8 at their meeting in October 2001. After publication of 
the proposal, one company determined that their need for CFCs for 2002 
was less than originally anticipated, and voluntarily requested that 
EPA reduce their essential-use allowances by 356 metric tons. Thus, the 
total amount of CFCs allocated in this final rule is reduced from 3,388 
metric tons to 3,032 metric tons. There are no changes to any other 
company's essential-use allowances from the proposed rule. EPA received 
one comment on the allocation, which is discussed in the following 
section.
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    \3\ The term ``medical device'' is defined in section 601(8) of 
the Clean Air Act. For a full discussion of the definition of 
``medical device'', and how it has been interpreted and applied in 
today's rulemaking please refer to the interim final rule for the 
year 2000 allocation of essential-use allowances (65 FR 716).
    \4\ For a detailed discussion of how FDA and EPA determined the 
amount of CFCs necessary for 2002 please refer to the proposed rule 
(66 FR 55145).
---------------------------------------------------------------------------

    EPA is also allocating methyl chloroform (MCF) for use in solid 
rocket motor assemblies. Today's allocation is authorized under 
Decision X/6 of the Parties to the Protocol, and section 604(d)(1) of 
the CAA. Essential-use allowance holders should be aware that the 
exemption for MCF under the CAA expires on December 31, 2004. After 
that date, EPA will not have statutory authority to allocate essential-
use allowances for MCF. EPA did not receive comments on our proposed 
allocation for essential-use allowances for methyl chloroform.
    EPA is allocating essential-use allowances for calendar year 2002 
to entities listed in Table I for exempted production or import of the 
specific quantity of class I controlled substances solely for the 
specified essential-use.

        Table I.--Essential-Use Allocation for Calendar Year 2002
------------------------------------------------------------------------
                                                               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 CFC-          343
                                    114.
Aventis..........................  CFC-11 or CFC-12 or CFC-          150
                                    114.
Boehringer Ingelheim               CFC-11 or CFC-12 or CFC-          743
 Pharmaceuticals.                   114.
Glaxo SmithKline.................  CFC-11 or CFC-12 or CFC-          660
                                    114.
Schering-Plough Corporation......  CFC-11 or CFC-12 or CFC-          949
                                    114.
Sidmak Laboratories Inc..........  CFC-11 or CFC-12 or CFC-           67
                                    114.
3M Pharmaceuticals...............  CFC-11 or CFC-12 or CFC-          120
                                    114.
------------------------------------------------------------------------
(ii) Cleaning, Bonding and Surface Activation Applications for the Space
                    Shuttle Rockets and Titan Rockets
------------------------------------------------------------------------
National Aeronautics and Space     Methyl Chloroform.......           47
 Administration (NASA)/Thiokol
 Rocket.
United States Air Force/Titan      Methyl Chloroform.......          3.4
 Rocket.
------------------------------------------------------------------------

III. Implementation of Decision XII/2 of the Parties to the 
Montreal Protocol

A. Eligible Products

    Decision XII/2, titled ``Measures to facilitate the transition to 
chlorofluorocarbon-free metered dose inhalers,'' taken at the Meeting 
of the Parties in December 2000, has two provisions that are being 
implemented with today's action. Paragraph 2 of Decision XII/2 states 
``that any chlorofluorocarbon metered-dose inhaler product approved 
after 31 December 2000 for treatment of asthma and/or chronic 
obstructive pulmonary disease in a non-Article 5(1) Party is not an 
essential-use unless the product meets the criteria set out in 
paragraph 1(a) of Decision IV/25.''
    In the past, EPA has allocated essential-use allowances for all CFC 
MDIs containing active moieties used for the treatment of asthma and 
COPD, without distinguishing among individual products. However, 
Decision XII/2 raises the bar for MDI products approved after December 
31, 2000. In order for an MDI product in the research and development 
phase \5\ to be considered essential, the individual MDI product must 
meet the criteria in Decision IV/25 paragraph 1(a). Decision IV/25 1(a) 
states that ``use of a controlled substance should qualify as essential 
only if it is necessary for the health, safety or critical for the 
functioning of society (encompassing cultural and intellectual 
aspects); and there are no available technically and economically 
feasible alternatives or substitutes that are acceptable from the 
standpoint of environment and health.'' Based on Decision XII/2, EPA 
after consultation with FDA, has determined that CFC MDI products are 
no longer essential if they are still in research and development and 
contain active moieties already commercially available in other MDI 
products. This is because the new MDI products would not provide 
additional therapy to patients, and are not themselves necessary for 
the health, safety or functioning of society as specified by paragraph 
1(a) of Decision IV/25. Therefore, EPA is allocating essential-use 
allowances to companies only for production of CFC MDIs for the 
treatment of asthma and COPD that were approved by FDA prior to 
December 31, 2000. EPA is also amending the language at 40 CFR 
82.4(t)(1)(i) to state that EPA is only allocating essential-use 
allowances for MDI products approved by FDA before January 1, 2000. It 
is possible that EPA, after consultation with FDA, could allocate 
essential-use allowances for research and development of novel drug 
therapies that meet the criteria of paragraph 1(a) of Decision IV/25.
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    \5\ EPA is unaware of any CFC MDI product that has been approved 
by the FDA since December 31, 2000.

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[[Page 6354]]

    EPA recieved two comments regarding our decision to not allocate 
essential-use allowances for CFC MDI products that are still in the 
research and development phase. The first commenter supported EPA's 
implementation of Decision XII/2 noting that under section 614 of the 
Clean Air Act, EPA must fully implement provisions of the Montreal 
Protocol, and that under section 604(d)(2), EPA may allocate essential-
use allowances only ``to the extent such action is consistent with the 
Montreal Protocol.'' This commenter also states that implementation of 
Decision XII/2 is a good policy decision, because manufacture of MDI 
products approved after December 31, 2000 would send the wrong message 
to patients, physicians and manufacturers, encourage companies to begin 
development of new CFC MDI products, and impede companies' efforts to 
transition patients to CFC-free alternatives. Finally, the commenter 
states that any backsliding on the U.S. international commitments to 
the CFC phase-out could jeopardize future essential-use allowances for 
U.S. manufacturers.
    The second commenter states that EPA's proposal to not allocate CFC 
allowances for MDI products approved by the FDA after December 31, 2000 
prevents the development of less costly generic versions of presently 
available CFC MDIs. The commenter also states that approval of the 
proposal would not result in a decrease in CFC production and use in 
the U.S. since the reported use of CFCs for exempted MDIs has remained 
relatively constant each year even after the introduction of generic 
versions of albuterol MDIs.\6\ Finally, the commenter states that the 
CFC phase-out in MDIs should be done over a known time period with 
adequate notice given to all interested parties, and that EPA's 
proposal to no longer consider MDI products in the research and 
development phase, or those approved after December 31, 2000 amounts to 
promulgating a regulation with retroactive effect.
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    \6\ Albuterol MDIs are the only CFC MDI product where generic 
versions have been developed.
---------------------------------------------------------------------------

    As noted by the first commenter, EPA is obligated by section 614 of 
the CAA to fully implement decisions of the Montreal Protocol, except 
where the CAA contains more stringent, conflicting provisions. In 
addition, under section 604(d)(2), EPA is to authorize production of 
CFCs for use in medical devices only ``to the extent such action is 
consistent with the Montreal Protocol.'' If EPA were to continue to 
allocate essential-use allowances for MDIs that are no longer 
considered essential, the U.S. would be in violation of the Montreal 
Protocol. The effect of this would be to jeopardize not only the U.S. 
ability to obtain sufficient essential-use allowances of CFCs for life-
saving MDIs from the Parties, but could also could weaken the Protocol 
as a whole. EPA and the Parties to the Protocol have made clear over 
the years that essential-use allowances for CFCs for MDIs are not meant 
to be permanent, and that when adequate alternatives are available for 
patients that need them, EPA will no longer allocate essential-use 
allowances for the MDIs. Decision XII/2, was taken by the international 
community and supported by a broad range of patient and physician 
groups \7\ who were concerned that the U.S. engage in a transition that 
provides predictability and assurance to patients and their healthcare 
providers. EPA believes that introduction of new products that do not 
meet the criteria of paragraph 1(a) of Decision IV/25 would complicate 
the overall transition by giving a false impression to patients and 
physicians that there is no need to transition to CFC-free 
formulations.
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    \7\ The following patient and physician groups sent a letter 
dated July 7, 2000 to the Department of State, The Environmental 
Protection Agency, and the Food and Drug Administration supporting 
the ``Draft Decision by the European Community on MDIs'' which was 
subsequently titled Decision XII/2 after adoption by the Parties in 
December 2000: The American Lung Association; American Academy of 
Allergy, Asthma and Immunology; American Academy of Pediatrics; 
American Association for Respiratory Care; American College of 
Allergy; Asthma and Immunology; American Thoracic Society; Asthma 
and Allergy Foundation of America; and the Joint Council on Allergy, 
Asthma and Immunology.
---------------------------------------------------------------------------

    Finally, EPA notes that although the cut-off date for approval of 
CFC MDIs is in the past, it does not mean that this regulation is 
retroactive. EPA is not attaching any new legal consequence to any past 
action of the commenter. Nor is EPA depriving the commenter of 
something to which it had previously been entitled. Production and 
import of CFCs have been prohibited since January 1, 1996, and 
exemptions are granted according to the criteria agreed to by the 
Parties to the Protocol and consistent with the provisions of the CAA.

B. Transfers of Essential-use Allowances and ``Essential-use CFCs''

    With today's final rule, EPA is implementing paragraph 8 of 
Decision XII/2 which states that ``* * * as a means of avoiding 
unnecessary production of new chlorofluorocarbons, and provided that 
the conditions set out in paragraphs (a)-(d) of Decision IX/20 are met, 
a Party may allow a MDI company to transfer: (a) All or part of its 
essential-use authorization to another existing MDI company; or (b) 
CFCs to another MDI company provided that the transfer complies with 
national/regional license or other authorization requirements.''
    Paragraphs (a)-(d) of Decision IX/20 provide the following 
conditions for transfers between Parties: the transfer applies only up 
to the maximum level that has previously been authorized for the 
calendar year in which the next Meeting of the Parties is to be held; 
both Parties agree to the transfer; the aggregate annual level of 
authorizations for all Parties for essential-uses of MDIs does not 
increase as a result of the transfer; the transfer or receipt is 
reported by each Party involved on the essential-use quantity-
accounting format approved by the Eighth Meeting of the Parties by 
paragraph 9 of Decision VIII/9.
    EPA is implementing Decision XII/2 by finalizing a mechanism to 
allow metered dose inhaler companies to transfer essential-use 
allowances internationally and to allow transfer of essential-use 
allowances to companies that do not currently hold essential-use 
allowances from the U.S. To accomplish this, EPA is amending the 
regulations in the following manner:
    1. Amending the language at 82.12(a)(1) to allow essential-use 
allowances for CFCs to be transferred to another MDI company, and not 
just to another essential-use allowance holder. This will allow an MDI 
company that currently does not have essential-use allowances to 
receive them through a trade provided that the allowances are used to 
produce essential MDIs.
    2. Adding paragraphs 82.9(c)(1)(viii) and 82.12(a)(1)(i)(I) so that 
the transferee engaged in a transfer of essential-use allowances must 
identify the specific CFC MDI products to be manufactured using the 
essential-use allowances. This will enable EPA to confirm that these 
products are in fact ``essential''.
    3. Adding essential-use allowances to the list of allowances that 
may be traded internationally under paragraph 82.9(c). The 
international transfer of essential-use allowances would occur in the 
same manner as international transfers of Article 5 allowances and 
production allowances that are currently traded, which would ensure 
compliance with section 616 of the CAA governing international trades. 
After receiving a transfer request, the Administrator can, at her 
discretion, consider the following factors in deciding whether to 
approve a transfer:

[[Page 6355]]

     Possible creation of economic hardship;
     Possible effects on trade;
     Potential environmental implications;
     The total amount of unexpended allowances held by United 
States entities;
     Whether the essential-use allowances will be used in 
metered dose inhalers considered essential by the Parties.
    One commenter stated that two of these discretionary criteria; 
possible creation of economic hardship, and possible effects on trade, 
are not relevant to essential-use allowance transfers where volumes are 
likely to be minimal relative to economic activity and international 
trade. EPA does not agree with this comment. The Agency believes that 
it is important to ensure that the U.S. continues to be supplied with 
sufficient amounts of MDIs for patients with asthma and chronic 
obstructive pulmonary disease. If for example, a U.S. company requested 
a trade of essential-use allowances to another company who would not be 
supplying the U.S. with MDIs, this could cause a shortage of a specific 
MDI in the U.S., and potential economic hardship for MDI consumers. EPA 
believes that it is important to retain the right to deny a transfer of 
essential-use allowances if the transfer would result in a shortage of 
MDIs for the U.S. patients.
    This commenter also states that although they generally support the 
specific parameters proposed by EPA for implementing transfers, they 
are concerned that Decision XII/2's transfer provisions not override 
other standards set under Protocol decisions relating to the essential-
use process. The commenter suggests that companies receiving essential-
use allowances through a transfer should be required to submit a 
complete essential-use application (based on the 2001 TEAP Handbook on 
Essential-use Nominations) in order to demonstrate that the 
requirements set forth in Decisions VII/10 and Decision IV/25 paragraph 
1(b) are met.
    EPA believes that requiring companies to submit a complete 
essential-use application as part of their transfer request would place 
an unnecessary burden on regulated entities. EPA notes that Decision 
VIII/10 states that ``Parties not operating under Article 5 will 
request companies applying for MDI essential-use exemptions to 
demonstrate ongoing research and development of alternatives to CFC 
MDIs with all due diligence and/or collaborate with other companies in 
such efforts * * *''. While EPA does solicit this information from 
companies in their essential-use application packages, the use of the 
word ``request'' in Decision VIII/10 does not provide EPA with 
authority to deny an essential-use allowance request based on whether a 
company is involved in research and development of CFC-free 
alternatives or education alone. In fact, the information on research 
and development and education that EPA gathers as a part of the 
essential-use application process is used primarily to gauge progress 
of the U.S. transition, and has never been used to deny essential-use 
allowances for any company. Thus, EPA believes it would be 
inappropriate to require an essential-use application from companies to 
ensure that they are engaged in research and development and/or 
education since EPA cannot use this information as a basis for denying 
a transfer request. EPA could however, deny a transfer request based on 
whether the transferred allowances are to be used for essential MDIs. 
Therefore, with this final action EPA is amending the proposal by 
adding paragraphs 82.9(c)(1)(viii) and 82.12(a)(1)(i)(I) which require 
MDI companies engaged in a transfer of essential-use allowances to 
identify the specific CFC MDIs to be produced so that EPA can confirm 
that these products are ``essential''. This provision only applies if 
the transferee is a U.S. entity.
    EPA believes that the scarcity and potentially high cost of 
transferred essential-use allowances provides adequate financial 
incentives for manufacturers to minimize fugitive emissions to ensure 
that ``all economically feasible steps have been taken to minimize the 
essential-use and any associated emission of the controlled substance'' 
as required by paragraph 1(b)(i) of Decision IV/25. Therefore, EPA does 
not believe that it is necessary to require companies to submit an 
essential-use application stating how emissions are reduced in their 
particular manufacturing plant. Finally, EPA believes that paragraph 
1(b)(ii) is not relevant to transfers of essential-use allowances.
    Today, EPA is also instituting a mechanism to allow MDI companies 
to transfer CFCs already produced under the authority of essential-use 
allowances to other MDI companies, as specified by paragraph 8 of 
Decision XII/2, by finalizing the following changes to the regulations:
    1. Amending section 82.3 to define the term ``essential-use CFC.'' 
EPA proposed to define this term to mean ``the CFCs . . . produced 
under the authority of essential-use allowances and not the allowances 
themselves. Essential-use CFCs include CFCs imported or produced by 
U.S. entities under the authority of essential-use allowances for use 
in metered dose inhalers, as well as CFCs imported or produced by non-
U.S. entities under the authority of privileges granted by the Parties 
and the national authority of another country for use in metered dose 
inhalers.'' EPA received one comment stating that this definition might 
be clarified if the word ``essential'' were inserted in front of the 
phrase ``metered dose inhalers''. EPA agrees and has made the 
appropriate changes to the regulatory text.
    2. Modifying the parenthetical in paragraph 82.4(d) so that import 
of ``essential-use CFCs'' will no longer count against the U.S. MDI 
company's essential-use allowances for that year. This allows an MDI 
company to procure ``essential-use CFCs'' beyond the amount of 
essential-use allowances allocated to them in a particular control 
period if the transfer is approved by EPA.
    3. Defining the term ``essential MDIs'' in Sec. 82.3. EPA received 
one comment stating that the proposed definition would be clearer if 
the second sentence in the definition began with ``in addition''. EPA 
agrees and has incorporated this into the final definition which reads 
as follows, ``MDIs for the treatment of asthma and chronic obstructive 
pulmonary disease, approved by the FDA or by another Party's analogous 
health authority before December 31, 2000, and considered to be 
essential by the Party where the MDI product will eventually be sold. 
In addition, if the MDI product is to be sold in the U.S., the active 
moiety contained in the MDI must be listed as essential at 21 CFR 
2.125(e).''
    4. Adding paragraph (d) to the regulations at Sec. 82.12 to create 
the mechanism that EPA will use to approve transfers of essential-use 
CFCs between MDI companies in the U.S., and adding paragraph (g) to 
Sec. 82.9 to govern transfer of essential-use CFCs between U.S. 
companies and companies in other Parties.
    5. Revising definition of ``essential-use allowances'' under 
Sec. 82.3 by omitting the specific end date to the essential-use 
program. For a full discussion of the transfer mechanism for essential-
use CFCs please refer to the proposed rule (66 FR 55145).

IV. General Laboratory Exemption for Class I ODSs.

    Under Decision X/19, the Parties approved a global (i.e., general)

[[Page 6356]]

exemption for laboratory and analytical uses until December 31, 2005, 
under the conditions set out in Annex II of the report of the Sixth 
Meeting of the Parties. Decision X/19 also states that at the annual 
Meetings of the Parties, on the basis of information reported by the 
Technology and Economic Assessment Panel (TEAP), the Parties may 
``decide on any uses of controlled substances which should no longer be 
eligible under the exemption for laboratory and analytical uses and the 
date from which any such restriction should apply.'' Subsequently, the 
Parties at the Eleventh Meeting of the Parties to the Protocol took 
Decision XI/15 which eliminated the following uses from the global 
exemption for laboratory and analytical uses for controlled substances 
from the year 2002 onward:
    (a) Testing of oil and grease, and total petroleum hydrocarbons in 
water;
    (b) Testing of tar in road-paving materials; and
    (c) Forensic finger-printing.
    Today's final rule extends EPA's regulatory de minimis exemption 
for essential laboratory and analytical uses through calendar year 
2005, and amends part 82, subpart A, appendix G to define the above 
laboratory methods as non-essential pursuant to Decision XI/15. With 
this change to appendix G, production or import of class I ODSs for use 
in the laboratory methods listed above will be prohibited beginning 
January 1, 2002. Class I ODSs imported or manufactured prior to January 
1, 2002, may continue to be used in the laboratory methods listed 
above. This final rule is unchanged from the proposal regarding 
laboratory essential-use allowances.
    Please note that EPA requires testing for oil and grease, and total 
petroleum hydrocarbons as a part of its wastewater and hazardous waste 
programs. The analytical methods for measuring ``oil and grease'' 
include EPA methods 413.1, 413.2 and 418.1, which use CFC-113, and 
method 1664A, which uses n-hexane \8\. EPA received two comments from 
environmental testing laboratories stating that CFC-113 should continue 
to be allowed for EPA test methods 413.1, 413.2, and 418.1 as long as 
the CFC-113 was imported or manufactured before January 1, 2002. These 
commenters are correct. Laboratories may continue to use stockpiled 
CFC-113 that was imported or produced before January 1, 2002 or 
recycled CFC-113 as long as EPA's Office of Water and Office of Solid 
Waste continue to accept results from test methods using CFC-113.
---------------------------------------------------------------------------

    \8\ On May 14, 1999, EPA published alternative analytical 
methods for these tests that do not require using class I ODSs: 
Method 1664 Revision A: N-Hexane Extractable Material (HEM; Oil and 
Grease) and Silica Gel Treated--Hexane Extractable Material (SGR-
HEM; Nonpolar Material) by Extraction and Gravimetry. EPA 
promulgated method 9071B to replace method 9070 and incorporates 
Method 1664 for use in EPA's Resource Conservation and Recovery Act 
programs. For more information on method 1664, please reference 
EPA's Office of Water website at www.epa.gov/ost/methods/oil.html. 
For technical information regarding Resource Conservation and 
Recovery Act test methods and regulations please call the Office of 
Solid Waste Methods information and communication exchange at (703) 
821-4690. For technical information regarding testing methods 
required under the Clean Water Act, call the office of Water 
Resource Center at (202) 260-7786.
---------------------------------------------------------------------------

    Another commenter stated that EPA's Office of Solid Waste or Office 
of Water should not ever be allowed to discontinue the use of CFC-113 
in testing of oil and grease in water, stating that changing to the 
hexane method is costly, flammable, and a known health hazard that is 
putting undue burden on laboratories. EPA's Office of Water addressed 
health, safety, and cost concerns in responses to comments at 
promulgation of EPA Method 1664A on May 14, 1999 (see 64 FR 26320). EPA 
believes that the n-hexane method is a viable and effective method for 
testing oil and grease in water, and suggests that laboratories 
consider transitioning to this method in the near term since beginning 
January 1, 2002, there will be a finite amount of CFC-113 available for 
testing of oil and grease and total petroleum hydrocarbons. If 
laboratories are not prepared to utilize the n-hexane method and CFC-
113 becomes scarce, regulated entities may face being out of compliance 
with waste water permits. There is also a possibility that in the 
future the Office of Water and/or the Office of Solid Waste may remove 
test methods that use CFC-113 for testing of oil and grease and total 
petroleum hydrocarbon from their list of approved methods. Any action 
on this issue would be done through notice and comment rulemaking.
    For more information on the laboratory exemption and testing of oil 
and grease and total petroleum hydrocarbons please visit our website at 
www.epa.gov/ozone/mdi.

V. Clarification Regarding Use of Material Produced Under 
Essential-Use Allowances for Non-Essential Uses

    EPA is adding paragraph (t)(4) to Sec. 82.4 in order to clarify 
that unused class I ODSs produced under the authority of essential-use 
allowances may not be used in applications that are not essential (i.e. 
those uses not listed in paragraph 82.4 (t)(1)). The regulations at 
Sec. 82.4 establish limited exceptions to the production and import 
bans for class I ODS. The use or sale of unused class I ODS produced 
under these exceptions for other purposes would circumvent the 
production and import bans and the intent of these exceptions. We are 
concerned that laboratories might obtain class I ODSs in excess of 
their own need under the laboratory exemption with the intent of 
``recycling'' the class I ODS and re-selling it into other non-
laboratory markets at a profit. Therefore, we explicitly prohibit such 
actions in Sec. 82.4(t)(4) by stating that ``It is a violation of this 
subpart to obtain unused class I ODSs under the exemption for 
laboratory and analytical uses in excess of actual need, and to recycle 
that material for sale into other markets.''
    The intent of this provision is not to disallow laboratories from 
purchasing sufficient class I ODSs for their own use, nor is it meant 
to discourage laboratories from re-using or recycling class I ODSs that 
are legitimately used for essential laboratory methods. It is meant to 
discourage those that might exploit a potential loophole and purchase 
quantities of ODSs far in excess of what would normally be necessary 
for laboratory uses, nominally ``use'' the class I ODS, and then 
``recycle'' the material and sell it for use in non-laboratory 
applications. The prohibition at Sec. 82.4(t)(4) does not apply to 
companies that extract and recycle CFCs from MDIs that are not 
marketable since the CFCs have been introduced into a product and thus, 
are no longer considered unused ozone depleting material.
    EPA received one comment which strongly supports EPA's amendments 
to Sec. 82.4, stating that these amendments will ensure consistency 
with the transfer provisions and help to prevent circumvention of the 
essential-use exemption.

VI. Effective Date for This Final Rule

    This final rule is effective on February 11, 2002. Section 553(d) 
of the APA generally provides that rules may not take effect earlier 
than 30 days after they are published in the Federal Register. However, 
APA section 553(d) excepts from this provision any action that grants 
or recognizes an exemption or relieves a restriction. Since today's 
action grants an exemption to the phase-out of production and 
consumption of CFCs, EPA is making this action effective immediately to 
ensure continued availability of CFCs for medical devices and class I 
ODSs for essential laboratory and analytical methods.

[[Page 6357]]

VII. Administrative Requirements

A. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector.
    Under section 202 of the UMRA, EPA generally must prepare a written 
statement, including a cost-benefit analysis, for proposed and final 
rules with ``Federal mandates'' that may result in expenditures by 
State, local, and tribal governments, in the aggregate, or by 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. Section 204 of the UMRA requires the 
Agency to develop a process to allow elected state, local, and tribal 
government officials to provide input in the development of any 
proposal containing a significant Federal intergovernmental mandate.
    Before EPA establishes any regulatory requirements that may 
significantly or uniquely affect small governments, including tribal 
governments, it must have developed under section 203 of the UMRA a 
small government agency plan. The plan must provide for notifying 
potentially affected small governments, enabling officials of affected 
small governments to have meaningful and timely input in the 
development of EPA regulatory proposals with significant Federal 
intergovernmental mandates, and informing, educating, and advising 
small governments on compliance with the regulatory requirements.
    EPA has determined that this rule does not contain a Federal 
mandate that may result in expenditures of $100 million or more for 
State, local, and tribal governments, in the aggregate, or the private 
sector in any one year. This rule imposes no enforceable duty on any 
State, local or tribal government. For the private sector, it clarifies 
existing requirements and adds recordkeeping and reporting requirements 
for those who wish to participate in a voluntary program. Thus, it is 
not subject to the requirements of sections 202 and 205 of the UMRA. 
EPA has also determined that this rule contains no regulatory 
requirements that might significantly or uniquely affect small 
governments; therefore, EPA is not required to develop a plan with 
regard to small governments under section 203. Finally, because this 
rule does not contain a significant intergovernmental mandate, the 
Agency is not required to develop a process to obtain input from 
elected state, local, and tribal officials under section 204.

B. Executive Order 12866

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the 
Agency must determine whether this regulatory action is ``significant'' 
and therefore subject to OMB review and the requirements of the 
Executive Order. The Order defines ``significant regulatory action'' as 
one that is likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more, 
or adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlement, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order. It has been determined by OMB and EPA that this 
action is not a ``significant regulatory action'' under the terms of 
Executive Order 12866 and is therefore not subject to OMB review under 
the Executive Order.

C. Paperwork Reduction Act (PRA)

    The information collection requirements in this rule will be 
submitted for approval to the Office of Management and Budget (OMB) 
under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. An 
Information Collection Request (ICR) document has been prepared by EPA 
(ICR No. 2051.01) and a copy may be obtained from Sandy Farmer, 
Collection Strategies Division; U.S. Environmental Protection Agency 
(2822); 1200 Pennsylvania Ave., NW, Washington, DC 20460 or by calling 
(202) 260-2740. The information requirements are not effective until 
OMB approves them.
    The information required in today's final rule, and will be 
outlined in the ICR is mandatory under section 603(b) of the CAA which 
states that all production, import, and export of class I and class II 
ODSs must be reported to EPA. EPA is requesting information from 
transferors and transferees of essential-use CFCs to ensure the 
conditions of Decision XII/2 and section 604(d) of the Act are met, so 
that only essential MDI products will be produced using essential-use 
CFCs. The information collected will be considered confidential, and 
will only be released in the aggregate to protect individual company 
information.
    The estimated burden will be set forth in the ICR. We do not expect 
this cost and burden to be substantial since similar reporting 
requirements for transferring production, consumption, and essential-
use allowances are already in place under subpart A. Further, there are 
only a small number of MDI companies that are able to produce CFC-MDIs 
in the U.S. Thus, the number of companies engaged in transferring 
essential-use CFC will be small as well. If EPA receives adverse 
comment on the ICR, we would change the information collection 
requirement in the year 2003 allocation rule to be published later in 
2002.
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a Federal agency. This includes the time 
needed to review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transmit or otherwise disclose the information.
    An Agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations are listed in 40 CFR part 9 and 48 CFR chapter 15.

D. Executive Order 13175 (Consultation and Coordination with Indian 
Tribal Governments)

    Executive Order 13175, entitled ``Consultation and Coordination 
with

[[Page 6358]]

Indian Tribal Governments'' (59 FR 22951, November 6, 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.'' ``Policies that have tribal 
implications'' is defined in the Executive Order to include regulations 
that have ``substantial direct effects on one or more Indian tribes, on 
the relationship between the Federal government and the Indian tribes, 
or on the distribution of power and responsibilities between the 
Federal government and Indian tribes.''
    This final rule does not have tribal implications. It will not have 
substantial direct effects on tribal governments, on the relationship 
between the Federal government and Indian tribes, or on the 
distribution of power and responsibilities between the Federal 
government and Indian tribes, as specified in Executive Order 13175. 
Today's rule does not affect the communities of Indian tribal 
governments since the only entities directly affected by this rule are 
the companies that requested essential-use allowances or make use of 
the general exemption for laboratory uses. Thus, Executive Order 13175 
does not apply to this rule.

E. Regulatory Flexibility Act (RFA) as Amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et. 
seq.

    EPA has determined that it is not necessary to prepare a regulatory 
flexibility analysis in connection with this final rule. EPA has also 
determined that this rule will not have a significant economic impact 
on a substantial number of small entities. For purposes of assessing 
the impact of today's rule on small entities, small entities are 
defined as: (1) Pharmaceutical preparations manufacturing businesses 
(NAICS code 325412) that have less than 750 employees; and 
environmental testing services (NAICS code 541380) that have annual 
receipts of less than $5 million dollars (2) a small governmental 
jurisdiction that is a government of a city, county, town, school 
district or special district with a population of less than 50,000; and 
(3) a small organization that is any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.
    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. 
Based on comments received from the one pharmaceutical company that is 
not receiving essential-use allowances for use in CFC MDIs, EPA has 
determined that this company will experience an economic impact. The 
direct impact of this rule is that this company will be unable to 
import or produce CFCs for research and development of CFC MDIs that 
contain active moieties already available to the public. However, the 
economic impact is not quantifiable since this company does not have 
MDI products that are approved by the FDA and can be sold in the U.S. 
This company has participated in the essential-use allowance process 
since the original phaseout of class I ODS in 1996, and is aware that 
the U.S. as a Party to the Montreal Protocol is bound to complete the 
transition to CFC-free MDIs.
    Environmental testing labs are affected by this rule since 
beginning January 1, 2002, newly imported or produced CFC-113 cannot be 
used in the testing of oil and grease, and total petroleum hydrocarbons 
in water. EPA believes that because there is an alternative non-CFC 
method available, and that stockpiled and recycled CFC-113 can continue 
to be used for this testing if necessary, that there is no economic 
impact on small environmental testing laboratories. EPA did not receive 
any comments indicating that there would be significant economic 
impacts on any environmental testing laboratories as a result of this 
action.
    Although this final rule will not have significant economic impact 
on a substantial number of small entities, EPA nonetheless has tried to 
reduce the impact on small entities. In the case of environmental 
testing laboratories, EPA is minimizing the reporting requirements 
associated with this rule by simply amending the yearly certification 
already required of them under existing regulations. In this case of 
the one pharmaceutical company that is not receiving essential-use 
allowances for CFCs, we believe that there is no way to reduce the 
impact on this small business while still complying with Decision XII/2 
of the Montreal Protocol.

F. Applicability of 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 phase-out schedule and exemptions 
established by Congress in Title VI of the Clean Air Act.

G. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 
note) directs EPA to use voluntary consensus standards in the 
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.

H. 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,

[[Page 6359]]

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. With 
today's action EPA is establishing that the use of CFC-113 for testing 
of oil and grease is no longer considered ``essential'' as consistent 
with Decision XI/15 of the Parties to the Montreal Protocol. Thus, 
import and production of CFCs for this use will be prohibited beginning 
January 1, 2002. EPA believes that this will not substantially affect 
local and state government implementation of the Clean Water Act since 
stockpiles of CFC-113 produced or imported prior to the year 2002, and 
recycled material can continue to be used for these methods. Further, 
alternative methods that do not use ODSs are available. Thus, Executive 
Order 13132 does not apply to this rule.

I. Executive Order 13211 (Energy Effects)

    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 a 
significant regulatory action under Executive Order 12866.

VIII. 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 the judicial proceedings brought to enforce 
those requirements.

IX. Submittal to Congress and the General Accounting Office

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. 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 February 11, 2002.

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: February 1, 2002.
Christine Todd Whitman,
Administrator.

    40 CFR part 82 is amended as follows:

PART 82--PROTECTION OF STRATOSPHERIC OZONE

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

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

Subpart A--Production and Consumption Controls

    2. Section 82.3 is amended by adding new definitions in 
alphabetical order for ``Essential-use chlorofluorocarbons (Essential 
CFCs)'', and ``Essential metered dose inhaler (Essential MDI)'', and 
revising the definition of ``Essential-use allowances'' to read as 
follows:

Sec. 82.3  Definitions.

* * * * *
    Essential Metered Dose Inhaler (Essential MDI) means metered dose 
inhalers for the treatment of asthma and chronic obstructive pulmonary 
disease, approved by the Food and Drug Administration or by another 
Party's analogous health authority before December 31, 2000, and 
considered to be essential by the Party where the MDI product will 
eventually be sold. In addition, if the MDI product is to be sold in 
the U.S., the active moiety contained in the MDI must be listed as 
essential at 21 CFR 2.125(e).
    Essential-Use Allowances means the privileges granted by 
Sec. 82.4(t) to produce class I substances, as determined by allocation 
decisions made by the Parties to the Montreal Protocol and in 
accordance with the restrictions delineated in the Clean Air Act 
Amendments of 1990.
    Essential-Use Chlorofluorocarbons (Essential-use CFCs) are the CFCs 
(CFC-11, CFC-12, or CFC-114) produced under the authority of essential-
use allowances and not the allowances themselves. Essential-use CFCs 
include CFCs imported or produced by U.S. entities under the authority 
of essential-use allowances for use in essential metered dose inhalers, 
as well as CFCs imported or produced by non-U.S. entities under the 
authority of privileges granted by the Parties and the national 
authority of another country for use in essential metered dose 
inhalers.
* * * * *

    3. Section 82.4 is amended:
    a. By revising paragraph (d).
    b. By revising paragraph (k).
    c. By revising paragraphs (t) introductory text, (t)(1)(i), and 
(t)(3).
    d. By adding the table to the end of paragraph (t)(2).
    e. By adding paragraphs (t)(1)(iii) and (t)(4).
    The revisions and additions read as follows:

Sec. 82.4  Prohibitions.

* * * * *
    (d) Effective January 1, 1996, for any class I , Group I, Group II, 
Group III, Group IV, Group V, or Group VII controlled substances, and 
effective January 1, 2005, for any class I, Group VI controlled 
substances, no person may import (except for transhipments or heels), 
at any time in any control period (except for controlled substances 
that are transformed or destroyed, or transfers of essential-use CFCs) 
in excess of the amount of unexpended essential-use allowances or 
exemptions as allocated under this section, or the amount of unexpended 
destruction and transformation credits obtained under Sec. 82.9 held by 
that person under the authority of this subpart at that time for that 
control period. Every kilogram of excess importation (other than 
transhipments or heels) constitutes a separate violation of this 
subpart. It is a violation of this subpart to obtain unused class I 
ODSs under the general laboratory exemption in excess of actual need 
and to recycle that material for sale into other markets.
* * * * *
    (k) Prior to January 1, 1996, for all Groups of class I controlled 
substances, and prior to January 1, 2005, for class I, Group VI 
controlled substances, a person may not use production allowances to 
produce a quantity of a class I controlled substance unless that person 
holds under the authority of this subpart at the same time consumption 
allowances sufficient to cover that quantity of class I controlled 
substances nor may a person use consumption allowances to produce a 
quantity of class I controlled substances unless the person holds under 
authority of this subpart at the same time production allowances 
sufficient to cover that quantity of class I controlled substances. 
However, prior to January 1, 1996, for all class I controlled 
substances, and prior to January 1, 2005 for class I, Group VI 
controlled substances, only

[[Page 6360]]

consumption allowances are required to import, with the exception of 
transhipments, heels and used controlled substances. Effective January 
1, 1996, for all Groups of class I controlled substances, except Group 
VI, only essential-use allowances or exemptions are required to import 
class I controlled substances, with the exception of transhipments, 
heels, used controlled substances, and essential-use CFCs.
* * * * *
    (t) Effective January 1, 1996, essential-use allowances are 
apportioned to a person under paragraphs (t)(2) and (t)(3) of this 
section for the exempted production or importation of specified class I 
controlled substances solely for the purposes listed in paragraphs 
(t)(1)(i) through (iii) of this section.
    (1) * * *
    (i) Metered dose inhalers (MDIs) for the treatment of asthma and 
chronic obstructive pulmonary disease that were approved by the Food 
and Drug Administration before December 31, 2000.
    (ii) * * *
    (iii) Essential Laboratory and Analytical Uses (Defined at appendix 
G of this subpart).
    (2) * * *

        Table I.--Essential-use Allocation For Calendar Year 2002
------------------------------------------------------------------------
                                                               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,             343
                                    CFC-114.
Aventis..........................  CFC-11 or, CFC-12 or,             150
                                    CFC-114.
Boehringer Ingelheim               CFC-11 or, CFC-12 or,             743
 Pharmaceuticals.                   CFC-114.
Glaxo SmithKline.................  CFC-11 or, CFC-12 or,             660
                                    CFC-114.
Schering-Plough Corporation......  CFC-11 or, CFC-12 or,             949
                                    CFC-114.
Sidmak Laboratories Inc..........  CFC-11 or, CFC-12 or,              67
                                    CFC-114.
3M Pharmaceuticals...............  CFC-11 or, CFC-12 or,             120
                                    CFC-114.
------------------------------------------------------------------------
(ii) Cleaning, Bonding and Surface Activation Applications for the Space
                    Shuttle Rockets and Titan Rockets
------------------------------------------------------------------------
National Aeronautics and Space     Methyl Chloroform.......           47
 Administration (NASA)/Thiokol
 Rocket.
United States Air Force/Titan      Methyl Chloroform.......          3.4
 Rocket.
------------------------------------------------------------------------

    (3) A global exemption for class I controlled substances for 
essential laboratory and analytical uses shall be in effect through 
December 31, 2005 subject to the restrictions in appendix G of this 
subpart, and subject to the record keeping and reporting requirements 
at Sec. 82.13(u) through (z). There is no amount specified for this 
exemption.
    (4) Any person acquiring unused class I ODSs produced under the 
authority of essential-use allowances or the essential-use exemption in 
paragraph (t)(3) of this section for use in anything other than an 
essential-use (i.e. for uses other than those specifically listed in 
paragraph (t)(1) of this section) is in violation of this subpart. Each 
kilogram of unused class I ODS produced or imported under the authority 
of essential-use allowances or the essential-use exemption and used for 
a non-essential-use is a separate violation of this subpart. Any person 
selling unused class I material produced or imported under the 
authority of essential-use allowances or the essential-use exemption 
for uses other than an essential-use is in violation of this subpart. 
Each kilogram of unused class I ODS produced under the authority of 
essential-use allowances or the essential-use exemption and sold for a 
use other than an essential-use is a separate violation of this 
subpart. It is a violation of this subpart to obtain unused class I 
ODSs under the exemption for laboratory and analytical uses in excess 
of actual need and to recycle that material for sale into other 
markets.
* * * * *

    4. Section 82.9 is amended:
    a. By revising the section heading.
    b. By revising paragraphs (c) introductory text, (c)(1) 
introductory text, (c)(1)(iv), (c)(2)(iv), (c)(3)(iv) and (c)(4).
    c. By adding paragraphs (c)(1)(vii), (c)(3)(v) and (g).
    The revisions and additions read as follows:

Sec. 82.9  Availability of allowances in addition to baseline 
production allowances for class I ozone depleting substances--
International transfers of production allowances, Article 5 allowances, 
essential-use allowances, and essential-use CFCs.

* * * * *
    (c) A company may increase or decrease its production allowances, 
its Article 5 allowances by trading with another Party to the Protocol 
according to the provision under this paragraph (c). A company may 
increase or decrease its essential-use allowances for CFCs for use in 
essential MDIs according to the provisions under this paragraph (c). A 
nation listed in appendix C to this subpart (Parties to the Montreal 
Protocol) must agree either to transfer to the person for the current 
control period some amount of production or import that the nation is 
permitted under the Montreal Protocol or to receive from the person for 
the current control period some amount of production or import that the 
person is permitted under this subpart. If the controlled substance is 
produced under the authority of production allowances and is to be 
returned to the Party from whom production allowances are received, the 
request for production allowances shall also be considered a request 
for consumption allowances under Sec. 82.10(c). If the controlled 
substance is produced under the authority of production allowances and 
is to be sold in the United States or to another Party (not the Party 
from whom the allowances are received), the U.S. company must expend 
its consumption allowances allocated under Sec. 82.6 and Sec. 82.7 in 
order to produce with the additional production allowances.
    (1) For trades from a Party, the person must obtain from the 
principal diplomatic representative in that nation's embassy in the 
United States a signed document stating that the appropriate authority 
within that nation has established or revised production limits or 
essential-use allowance limits for the nation to equal the lesser of 
the maximum production that the nation is allowed under the Protocol 
minus the amount transferred, the maximum

[[Page 6361]]

production or essential-use allowances that are allowed under the 
nation's applicable domestic law minus the amount transferred, or the 
average of the nation's actual national production level for the three 
years prior to the transfer minus the production transferred. The 
person must submit to the Administrator a transfer request that 
includes a true copy of this document and that sets forth the 
following:
* * * * *
    (iv) The chemical type, type of allowance being transferred, and 
the level of allowances being transferred;
* * * * *
    (vii) In the case of transferring essential-use allowances, the 
transferor must include a signed document from the transferee 
identifying the CFC MDI products that will be produced using the 
essential-use allowances.
    (2) * * *
    (iv) The chemical type, type of allowance being transferred, and 
the level of allowances being transferred; and
    (3) * * *
    (iv) The total amount of unexpended production or essential-use 
allowances held by a U.S. entity.
    (v) In the case of transfer of essential-use allowances the 
Administrator may consider whether the CFCs will be used for production 
of essential MDIs.
* * * * *
    (4) The Administrator will issue the person a notice either 
granting or deducting production allowances, Article 5 allowances, or 
essential-use allowances, and specifying the control period to which 
the transfer applies, provided that the request meets the requirement 
of paragraph (c)(1) of this sections for trades from Parties and 
paragraph (c)(2) of this section for trades to Parties, unless the 
Administrator has decided to disapprove the trade under paragraph 
(c)(3) of this section. For a trade from a Party, the Administrator 
will issue a notice that revises the allowances held by the person to 
equal the unexpended production, Article 5, or essential-use allowances 
held by the person under this subpart plus the level of allowable 
production transferred from the Party. For a trade to a Party, the 
Administrator will issue a notice that revises the production limit for 
the person to equal the lesser of:
    (i) The unexpended production allowances, essential-use allowances, 
or Article 5 allowances held by the person under this subpart minus the 
amount transferred; or
    (ii) The unexpended production allowances, essential-use 
allowances, or Article 5 allowances held by the person under this 
subpart minus the amount by which the United States average annual 
production of the controlled substance being traded for the three years 
prior to the transfer is less than the total production allowable for 
that substance under this subpart minus the amount transferred. The 
change in allowances will be effective on the date that the notice is 
issued.
* * * * *
    (g) International transfer of essential-use CFCs. (1) For trades of 
essential-use CFCs where the transferee or the transferor is a person 
in another nation (Party), the persons involved in the transfer must 
submit the information requested in Sec. 82.12(d)(2) and (d)(3), along 
with a signed document from the principal diplomatic representative in 
the Party's embassy in the United States stating that the appropriate 
authority within that nation has approved the transfer of the 
essential-use CFCs.
    (2) If the transfer claim is complete, and EPA does not object to 
the transfer, then EPA will issue letters to the transferor and the 
transferee indicating that the transfer may proceed. EPA reserves the 
right to disallow a transfer if the transfer request is incomplete, or 
if it has reason to believe that the transferee plans to produce MDIs 
that are not essential MDIs. If EPA objects to the transfer, EPA will 
issue letters to the transferor and transferee stating the basis for 
disallowing the transfer. The burden of proof is placed on the 
transferee to retain sufficient records to prove that the transferred 
essential-use CFCs are used only for production of essential MDIs. If 
EPA ultimately finds that the transferee did not use the essential-use 
CFCs for production of essential MDIs then the transferee is in 
violation of this subpart.
* * * * *

    5. Section 82.12 is amended by
    a. Revising the section heading.
    b. Revising paragraph (a)(1) introductory text.
    c. Adding paragraphs (a)(1)(i)(I) and (d).
    The revisions and additions read as follows:

Sec. 82.12  Domestic transfers for class I controlled substances.

    (a) * * *
    (1) Until January 1, 1996, for all class I controlled substances, 
except for Group VI, and until January 1, 2005, for Group VI, any 
person (``transferor'') may transfer to any other person 
(``transferee'') any amount of the transferor's consumption allowances 
or production allowances, and effective January 1, 1995, for all class 
I controlled substances any person (``transferor'') may transfer to any 
other person (``transferee'') any amount of the transferor's Article 5 
allowances. After January 1, 2002 any essential-use allowance holder 
(including those persons that hold essential-use allowances issued by a 
Party other than the United States) (``transferor'') may transfer 
essential-use allowances for CFCs to a metered dose inhaler company 
solely for the manufacture of essential MDIs.
    (i) * * *
    (I) The transferor must include a signed document from the 
transferee identifying the CFC MDI products that will be produced using 
the essential-use allowances.
* * * * *
    (d) Transfers of essential-use CFCs. (1) Effective January 1, 2002, 
any metered dose inhaler company (transferor) may transfer essential-
use CFCs to another metered dose inhaler company (transferee) provided 
that the Administrator approves the transfer.
    (2) The transferee must submit a transfer claim to the 
Administrator for approval before the transfer can take place. The 
transfer claim must set forth the following:
    (i) The identities and addresses of the transferor and the 
transferee; and
    (ii) The name and telephone numbers of contact persons for the 
transferor and the transferee; and
    (iii) The amount of each controlled substance (CFC-11, CFC-12, or 
CFC-114) being transferred; and
    (iv) The specific metered dose inhaler products (i.e. the MDI drug 
product or active moiety) that the transferee plans to produce with the 
transferred CFCs; and
    (v) The country(ies) where the CFC metered dose inhalers produced 
with the transferred essential-use CFCs will be sold if other than in 
the United States; and
    (vi) Certification that the essential-use CFCs will be used in the 
production of essential MDIs. If the MDIs are to be sold in the United 
States, the certification must state that MDIs produced with the 
transferred essential-use CFCs are listed as essential at 21 CFR 2.125, 
and were approved by the Food and Drug Administration before December 
31, 2000. If the MDIs produced with the essential-use CFCs are to be 
sold outside the United States, the transferee must certify that the 
metered dose inhalers produced with the essential-use CFCs are 
considered essential by the importing country.
    (3) The transferor must submit a letter stating that it concurs 
with the terms of

[[Page 6362]]

the transfer as requested by the transferee.
    (4) Once the transfer claim is complete, and if EPA does not object 
to the transfer, then EPA will issue letters to the transferor and the 
transferee within 10 business days indicating that the transfer may 
proceed. EPA reserves the right to disallow a transfer if the transfer 
request is incomplete, or if it has reason to believe that the 
transferee plans use the essential-use CFCs in anything other than 
essential MDIs. If EPA objects to the transfer, within EPA will issue 
letters to the transferor and transferee stating the basis for 
disallowing the transfer. The burden of proof is placed on the 
transferee to retain sufficient records to prove that the transferred 
essential-use CFCs are used only for production of essential MDIs. If 
EPA ultimately finds that the transferee did not use the essential-use 
CFCs for production of essential MDIs then the transferee is in 
violation of this subpart.
* * * * *

    6. Section 82.13 is amended:
    a. By revising paragraphs (f)(2)(xv) and (f)(3)(xii).
    b. By revising paragraphs (g)(1)(xvi) and (g)(4)(xiii).
    c. By revising paragraph (u).
    d. By revising paragraph (v).
    e. By revising paragraph (y) introductory text.
    The revisions read as follows:

Sec. 82.13  Recordkeeping and reporting requirements.

* * * * *
    (f) * * *
    (2) * * *
    (xv) Written certifications that quantities of controlled 
substances, meeting the purity criteria in appendix G of this subpart, 
were purchased by distributors of laboratory supplies or by laboratory 
customers to be used only in essential laboratory and analytical uses 
as defined by appendix G, and not to be resold or used in 
manufacturing.
* * * * *
    (3) * * *
    (xii) In the case of laboratory essential-uses, certifications from 
distributors of laboratory supplies that controlled substances were 
purchased for sale to laboratory customers who certify that the 
substances will only be used for essential laboratory and analytical 
uses as defined by appendix G of this subpart, and will not be resold 
or used in manufacturing; or, if sales are made directly to 
laboratories, certification from laboratories that the controlled 
substances will only be used for essential laboratory and analytical 
uses (defined at appendix G of this subpart) and will not be resold or 
used in manufacturing.
* * * * *
    (g) * * *
    (1) * * *
    (xvi) Copies of certifications that imported controlled substances 
are being purchased for essential laboratory and analytical uses 
(defined at appendix G of this subpart) or being purchased for eventual 
sale to laboratories that certify that controlled substances are for 
essential laboratory and analytical uses (defined at appendix G of this 
subpart).
* * * * *
    (4) * * *
    (xiii) The certifications from essential-use allowance holders 
stating that the controlled substances were purchased solely for 
specified essential-uses and will not be resold or used in 
manufacturing; and the certifications from distributors of laboratory 
supplies that the controlled substances were purchased solely for 
eventual sale to laboratories that certify the controlled substances 
are for essential laboratory and analytical uses (defined at appendix G 
of this subpart), or if sales are made directly to laboratories, 
certifications from laboratories that the controlled substances will 
only be used for essential laboratory and analytical uses (defined at 
appendix G of this subpart) and will not be resold or used in 
manufacturing.
* * * * *
    (u) Any person allocated essential-use allowances who submits an 
order to a producer or importer for a controlled substance must report 
the quarterly quantity received from each producer or importer.
    (v) Any distributor of laboratory supplies receiving controlled 
substances under the global laboratory essential-use exemption for sale 
to laboratory customers must report quarterly the quantity received of 
each controlled substance from each producer or importer.
* * * * *
    (y) A laboratory customer purchasing a controlled substance under 
the global laboratory essential-use exemption must provide the 
producer, importer or distributor with a one-time-per-year 
certification for each controlled substance that the substance will 
only be used for essential laboratory and analytical uses (defined at 
appendix G of this subpart) and not be resold or used in manufacturing. 
The certification must also include:
* * * * *

    7. The heading and paragraph 1 of appendix G to subpart A is 
revised to read as follows:

Appendix G to Subpart A of Part 82--UNEP Recommendations for Conditions 
Applied to Exemption for Essential Laboratory and Analytical Uses

    1. Essential laboratory and analytical uses are identified at 
this time to include equipment calibration; use as extraction 
solvents, diluents, or carriers for chemical analysis; biochemical 
research; inert solvents for chemical reactions, as a carrier or 
laboratory chemical and other critical analytical and laboratory 
purposes. Pursuant to Decision XI/15 of the Parties to the Montreal 
Protocol, effective January 1, 2002 the following uses of class I 
controlled substances are not considered essential under the global 
laboratory exemption:
    a. Testing of oil and grease and total petroleum hydrocarbons in 
water;
    b. Testing of tar in road-paving materials; and
    c. Forensic finger printing.
    Production for essential laboratory and analytical purposes is 
authorized provided that these laboratory and analytical chemicals 
shall contain only controlled substances manufactured to the 
following purities:

CTC (reagent grade)--99.5
1,1,1,-trichloroethane--99.5
CFC-11--99.5
CFC-13--99.5
CFC-12--99.5
CFC-113--99.5
CFC-114--99.5
Other w/ Boiling P>20 degrees C--99.5
Other w/ Boiling P20 degrees C--99.0
* * * * *
[FR Doc. 02-3101 Filed 2-8-02; 8:45 am]
BILLING CODE 6560-50-U

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