Protection of Stratospheric Ozone: Allowance System for Controlling HCFC Production, Import and Export

Note: EPA no longer updates this information, but it may be useful as a reference or resource.

[Federal Register: June 17, 2004 (Volume 69, Number 116)]
[Proposed Rules]
[Page 34034-34041]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17jn04-25]

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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 82
[OAR-2003-0130; FRL-7774-2]

Protection of Stratospheric Ozone: Allowance System for
Controlling HCFC Production, Import and Export

AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.

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SUMMARY: EPA is proposing this action to conform its regulations
governing the trade of certain ozone depleting substances with the
Montreal Protocol and to correct a drafting error. We are proposing
minor adjustments to domestic regulations to ensure that those
complying with the U.S. regulations are also complying with the terms
of the Montreal Protocol. Elsewhere in today's Federal Register EPA has
also issued today a Direct Final Rule.

DATES: Comments must be received on or before July 19, 2004. If
requested by July 2, 2004 a hearing will be held on July 19, 2004 and
the comment period will be extended until August 2, 2004.

ADDRESSES: Submit your comments, identified by EDocket ID No. OAR-2003-
0130 (Legacy docket A-98-33) by one of the following methods:
? Federal eRulemaking Portal: http://www.regulations.gov.
Follow the on-line instructions for submitting comments.
? Agency Web site: http://www.epa.gov/edocket. EDOCKET,
EPA's electronic public docket and comment system, is EPA's preferred
method for receiving comments. Follow the on-line instructions for
submitting comments.
? Fax comments to (202) 566-1741.
? Mail/Hand delivery: Submit comments to Air and Radiation
Docket at EPA West, 1301 Constitution Avenue NW., Room B108, Mail Code
6102T, Washington, DC 20460, Phone: (202) 566-1742.
Instructions: Direct your comments to Docket ID No. OAR-2003-0130.
The historical docket for this rulemaking is A-98-33. EPA's policy is
that all comments received will be included in the public docket
without change and may be made available online at http://www.epa.gov/
edocket, including any personal information provided, unless the
comment includes information claimed to be Confidential Business
Information (CBI) or other information whose disclosure is restricted
by statute. Do not submit information that you consider to be CBI or
otherwise protected through EDOCKET, regulations.gov, or e-mail. The
EPA EDOCKET and the Federal regulations.gov Web sites are ``anonymous
access'' systems, which means EPA will not know your identity or
contact information unless you provide it in the body of your comment.
If you send an e-mail comment directly to EPA without going through
EDOCKET or regulations.gov, your e-mail address will be automatically
captured and included as part of the comment that is placed in the
public docket and made available on the Internet. If you submit an
electronic comment, EPA recommends that you include your name and other
contact information in the body of your comment and with any disk or
CD-ROM you submit. If EPA cannot read your comment due to technical
difficulties and cannot contact you for clarification, EPA may not be
able to consider your comment. Electronic files should avoid the use of
special characters, any form of encryption, and be free of any defects
or viruses. For additional information about EPA's public docket visit
EDOCKET on-line or see the Federal Register of May 31, 2002 (67 FR
38102).
Docket: All documents in the docket are listed in the EDOCKET index
at http://www.epa.gov/edocket. Although listed in the index, some
information is not publicly available, i.e., CBI 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 in EDOCKET or in hard
copy at the Air and Radiation Docket EPA/DC, EPA West, Room B102, 1301
Constitution Ave., NW., Washington, DC. 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: Cindy Newberg, EPA, Global Programs
Division, Office of Atmospheric Programs, Office of Air and Radiation
(6205J), 1200 Pennsylvania Avenue, NW., Washington, DC 20460, (202)
343-9729.

SUPPLEMENTARY INFORMATION: (1) Under the Montreal Protocol on
Substances that Deplete the Ozone Layer (Protocol), as amended, the
U.S. and other industrialized countries that are Parties to the
Protocol have agreed to limit production and consumption of
hydrochlorofluorocarbons (HCFCs) and to phase out consumption in a
step-wise fashion over time, culminating in a complete phaseout in
2030. The Parties to the Montreal Protocol met November 10-14, 2003 in
Nairobi, Kenya where they discussed and agreed to Decision XV/3. As a
Party to the Protocol, the United States was represented at that
meeting, participated in the discussions, and agreed with the resulting
Decision XV/3. Upon review of the current domestic regulations in
relation to Decision XV/3, EPA identified discrepancies between the
Decision and EPA's regulations. Therefore, Decision XV/3 led to this
action aimed at promulgating minor adjustments to the regulations
issued January 21, 2003 (68 FR 2820) to ensure that those complying
with the U.S. regulations are also complying with the terms of the
Montreal Protocol.
EPA views this as a noncontroversial action and anticipates no
adverse comment. Therefore, in today's Federal Register, we are
publishing a separate Direct Final rulemaking to revise the trade
restrictions provisions. This direct final rule will be effective on
August 16, 2004 without further notice unless we receive adverse
comment by July 19, 2004. If EPA receives adverse comment, we will
publish a timely withdrawal in the Federal Register informing the
public that the rule will not take effect. If necessary, we will
consider and address all public comments in any subsequent final rule
based on this proposed rule. We will not institute a second comment
period on this action. Any parties interested in commenting must do so
at this time.
(2) Abbreviations and Acronyms Used in This Document:

Act--Clean Air Act Amendments of 1990
ANPRM--Advance Notice of Proposed Rulemaking
Article 2 countries--industrialized countries who are not parties
operating under paragraph 1 of Article 5 of the Montreal Protocol
Article 5 countries--developing countries who satisfy certain
conditions laid out in paragraph 1 of Article 5 of the Montreal Protocol
CAA--Clean Air Act Amendments of 1990
cap--limitation in level of production or consumption
CFC--chlorofluorocarbon
CFR--Code of Federal Regulations
EPA--Environmental Protection Agency
FDA--Food and Drug Administration
FR--Federal Register
HCFC--hydrochlorofluorocarbon
NASA--National Aeronautics and Space Administration

[[Page 34035]]

NODA--Notice of Data Availability
NPRM--Notice of Proposed Rulemaking
ODP--ozone depletion potential (CFR 40, part 82)
ODS--ozone-depleting substance
Party--States and regional economic integration organizations that have
consented to be bound by the Montreal Protocol on Substances that
Deplete the Ozone Layer
Protocol--Montreal Protocol on Substances that Deplete the Ozone Layer
SBREFA--Small Business Regulatory Enforcement Fairness Act
SNAP--Significant New Alternatives Policy
UNEP--United Nations Environment Programme
U.S.--United States

(3) Tips for Preparing Your Comments. When submitting comments,
remember to:
? Identify the rulemaking by docket number and other
identifying information (subject heading, Federal Register date and
page number).
? Follow directions--The agency may ask you to respond to
specific questions or organize comments by referencing a Code of
Federal Regulations (CFR) part or section number.
? Explain why you agree or disagree; suggest alternatives
and substitute language for your requested changes.
? Describe any assumptions and provide any technical
information and/or data that you used.
? If you estimate potential costs or burdens, explain how
you arrived at your estimate in sufficient detail to allow for it to be
reproduced.
? Provide specific examples to illustrate your concerns, and
suggest alternatives.
? Explain your views as clearly as possible, avoiding the
use of profanity or personal threats.
? Make sure to submit your comments by the comment period
deadline identified.

Table of Contents

I. Regulated Entities
II. Background
III. Proposed Action
A. Incorporation of Decision XV/3: Obligations of Parties to the
Beijing Amendments under Article 4 of the Montreal Protocol with
respect to hydrochlorofluorcarbons
1. Trade with States that have ratified the Copenhagen and
Beijing Amendments or have shown their intention to ratify, accede,
accept, or approve
2. Article 5 Parties
B. Correction to References to Appendices
V. Administrative Requirements
A. Executive Order 12866
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 & Safety Risks
H. Executive Order 13211: Actions that Significantly Affect
Energy Supply, Distribution, or Use
I. National Technology Transfer Advancement Act

I. Regulated Entities

The HCFC allowance allocation system will affect the following
categories:

----------------------------------------------------------------------------------------------------------------
Category NAICS code SIC code Examples of regulated entities
----------------------------------------------------------------------------------------------------------------
Chlorofluorocarbon gas manufacturing....... 325120 2869 Chlorodifluoromethane
manufacturers;
.............. .............. Dichlorofluoroethane manufacturers;
.............. .............. Chlorodifluoroethane manufacturers.
--------------------------------------------
Chlorofluorocarbon gas importers........... 325120 2869 Chlorodifluoromethane importers;
.............. .............. Dichlorofluoroethane importers;
.............. .............. Chlorodifluoroethane importers.
--------------------------------------------
Chlorofluorocarbon gas exporters........... 325120 2869 Chlorodifluoromethane exporters;
.............. .............. Dichlorofluoroethane exporters;
.............. .............. Chlorodifluoroethane exporters.
--------------------------------------------
Polystyrene Foam Products Manufacturing.... 326140 3086 Plastics Foam Products (Polystyrene
Foam Products).
--------------------------------------------
Urethane and Other Foam Products (Except 326150 3086 Insulation and cushioning, foam
Polystyrene) Manufacturing. plastics (except polystyrene)
manufacturing.
----------------------------------------------------------------------------------------------------------------

This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists the types of entities that EPA is now aware
could potentially be regulated by this action. Other types of entities
not listed in this table could also be affected. To determine whether
your facility, company, business organization, or other entity is
regulated by this action, you should carefully examine these
regulations. If you have questions regarding the applicability of this
action to a particular entity, consult the person listed in the FOR
FURTHER INFORMATION CONTACT section.

II. Background

In 1990, as part of a resolution on ozone-depleting substances, the
Parties to the Protocol identified HCFCs as transitional substitutes
for CFCs and other more destructive ozone-depleting substances (ODSs).
In 1992, the Parties negotiated amendments to the Protocol (the
``Copenhagen Amendment'') that created a detailed phaseout schedule for
HCFCs, with a cap on consumption for Article 2 (industrialized)
countries like the U.S. The Protocol defines consumption as production
plus imports minus exports. The consumption cap is derived from the
formula of 2.8 percent of the Party's CFC consumption in 1989, plus the
Party's consumption of HCFCs in 1989. Based on this formula, the
consumption cap for the U.S. is 15,240 ODP-weighted metric tonnes,
effective January 1, 1996.
In the Copenhagen Amendments, the Parties created a schedule with
graduated reductions and the eventual phaseout of the consumption of
HCFCs. The schedule calls for a 35 percent reduction of the cap in
2004, followed by a 65 percent reduction in 2010, a 90 percent
reduction in 2015, a 99.5 percent reduction in 2020, and a total
phaseout in 2030. As a party to the Copenhagen Amendment (the U.S.
deposited its instrument of ratification on March 2, 1994), the U.S.
must comply with this phaseout schedule under the Protocol.

[[Page 34036]]

In 1999, the Parties negotiated another amendment to the Protocol
(the Beijing Amendment''), where they agreed to a cap on HCFC
production for industrialized countries, effective January 1, 2004.
This cap was derived from the average of the Party's consumption cap
(2.8 percent of the Party's CFC consumption in 1989, plus the Party's
HCFC consumption 1989) and the result of the same formula for
production (2.8 percent of the Party's CFC production in 1989, plus the
Party's HCFC production in 1989). This formula results in a U.S.
production cap of 15,537 ODP-weighted metric tonnes. Since the U.S.
subsequently joined the Beijing Amendment (the U.S. deposited its
instrument of ratification on October 1, 2003) EPA has promulgated
regulations that are consistent with that production cap as authorized
by section 606 of the CAA.
In addition, Parties to the Beijing Amendment agree that under the
Beijing Amendment, beginning in January 1, 2004, they will ban HCFC
imports from and exports to ``any State not party to this Protocol.''
These amendments are reflected in Article 4 of the Protocol in
paragraphs 1 quin. and 2 quin.
As a party to the Beijing Amendment, the U.S. therefore, has an
obligation from January 1, 2004 to ban trade in HCFCs with respect to
``any State not party to this Protocol.'' The Protocol defines this
phrase (Article 4(9)) to include any State or regional economic
integration organization (of which the European Community is the only
present example) that has not agreed to be bound by the control
measures in effect for HCFCs.
To implement the Protocol, as amended by the Copenhagen and Beijing
Amendments, EPA established an allowance system to control the U.S.
consumption of HCFCs and published the implementing regulations in the
Federal Register on January 21, 2003 (68 FR 2820). The HCFC allowance
system is part of EPA's program to reduce the emissions of ODSs to
protect the stratospheric ozone layer. These regulations also included
a provision, section 82.15(e), to implement the ban on trade with
states not a Party to the Protocol. EPA interpreted Article 4 of the
Protocol to ban imports from and exports to countries that had not
ratified the amendments to the Protocol containing control measure for
HCFCs relevant to that country (e.g., for countries that produce HCFCs
they needed to be a Party to Beijing, but for countries that only
consume, but do not produce HCFCs, they needed to be Party to Copenhagen).

III. Proposed Action

A. Incorporation of Decision XV/3: Obligations of Parties to the
Beijing Amendments Under Article 4 of the Montreal Protocol With
Respect to Hydrochlorofuorcarbons

The Parties to the Montreal Protocol met November 10-14, 2003 in
Nairobi, Kenya where they discussed and agreed to Decision XV/3. The
Decision was necessary because different Parties to the Beijing
Amendment, including the U.S., were adopting differing and conflicting
interpretations of the term ``state not Party to this Protocol:
Domestically and in ways that would have created great uncertainty and
confusion within the regulated community with respect to which states
trade was allowed under Article 4. As a Party to the Protocol,
including both the Copenhagen and Beijing amendments, the United States
was represented at that meeting, participated in the discussions, and
agreed with the resulting Decision XV/3. Upon review of the current
domestic regulations in relation to Decision XV/3, EPA identified
discrepancies between the Decision and EPA's regulations. Therefore,
Decision XV/3 led to this action aimed at promulgating minor
adjustments to the regulations issued January 21, 2003 (68 FR 2820) to
ensure that those complying with the U.S. regulations are also
complying with the terms of the Montreal Protocol. What follows is a
review of Decision XV/3 and a discussion of what changes are being made
to the current regulations through this action.
Decision XV/3 reads as follows:
Affirming that it is operating by consensus,
Reaffirming the obligation to control consumption of
hydrochlorofluorocarbons by the Parties to the amendment adopted by the
Fourth Meeting of the Parties to the Montreal Protocol at Copenhagen on
25 November 1992 (the ``Copenhagen Amendment''),
Reaffirming the obligation to control production of
hydrochlorofluorocarbons by the Parties to the amendment adopted by the
Eleventh Meeting of the Parties to the Montreal Protocol at Beijing on
3 December 1999 (the ``Beijing Amendment''),
Strongly urging all States not yet party to the Copenhagen or
Beijing Amendments to ratify, accede to or accept them as soon as possible,
Recalling that, as of 1 January 2004, the Parties to the Beijing
Amendment have accepted obligations under Article 4, paragraph 1 quin.,
and paragraph 2 quin., of the Protocol to ban the import and export of
the controlled substances in group 1 of Annex C
(hydrochlorofluorocarbons) from any ``State not a party to this
Protocol,''
Noting that Article 4, paragraph 9 of the Protocol provides that
``for the purposes of this Article, the term ``State not party to this
Protocol'' shall include, with respect to a particular controlled
substance, a State or regional economic integration organization that
has not agreed to be bound the control measures in effect for that
substance,''
Acknowledging that the meaning of the term ``State not party to
this Protocol'' may be subject to differing interpretation with respect
to hydrochlorofluorocarbons by Parties to the Beijing Amendment, given
that control measures for the consumption of hydrochlorofluorocarbons
were introduced in the Copenhagen Amendment while control measures for
the production of hydrochlorofluorocarbons were introduced in the
Beijing Amendment,
Acknowledging also that, for those Parties operating under Article
5, paragraph 1, of the Protocol no control measures for the consumption
of production of hydrochlorofluorocarbons will be in effect under
either the Copenhagen or Beijing Amendments until 2016,
Desiring to decide in that context on a practice in the application
of Article 4, paragraph 9 of the Protocol by establishing by consensus
a single interpretation of the term ``State not party to this
Protocol,'' to be applied by Parties to the Beijing Amendment for the
purpose of trade in hydrochlorofluorocarbons under Article 4 of the
Protocol,
Expecting Parties to the Beijing Amendment to import or export
hydrochlorofluorocarbons in ways that do not result in the importation
of exportation of hydrochlorofluorocarbons to any ``State not party to
this Protocol'' as that term is interpreted herein, recognizing the
need to assess the fulfillment of that expectation,
1. That the Parties to the Beijing Amendment will determine their
obligations to ban the import and export of controlled substances in
group I of Annex C (hydrochlorofluorocarbons) with respect to States
and regional economic organizations that are not parties to the Beijing
Amendment by January 1, 2004 in accordance with the following:
(a) The term ``State not party to this Protocol'' in Article 4,
paragraph 9 does not apply to those States operating under Article 5,
paragraph 1, of the Protocol until January 1, 2016 when, in

[[Page 34037]]

accordance with the Copenhagen and Beijing Amendments,
hydrochlorofluorocarbon production and consumption control measures
will be in effect for States that operate under Article 5, paragraph 1,
of the Protocol;
(b) The term ``State not party to this Protocol'' includes all
other States and regional economic integration organizations that have
not agreed to be bound by the Copenhagen and Beijing Amendments;
(c) Recognizing, however, the practical difficulties imposed by the
timing associated with the adoption of the foregoing interpretation of
the term ``State not party to this Protocol,'' paragraph 1 (b) shall
apply unless such a State has by 31 March 2004:

(i) Notified the Secretariat that it intends to ratify, accede
or accept the Beijing Amendment as soon as possible;
(ii) Certified that it is in full compliance with Articles 2, 2A
to 2G and Article 4 of the Protocol, as amended by the Copenhagen
Amendment;
(iii) Submitted data on (i) and (ii) above to the Secretariat,
to be updated on 31 March 2005,

in which case that State shall fall outside the definition of ``State
not party to this Protocol'' until the conclusion of the Seventeenth
Meeting of the Parties;
2. That the Secretariat shall transmit data received under
paragraph 1(c) above to the Implementation Committee and the Parties;
3. That the Parties shall consider the implementation and operation
of the foregoing decision at the Sixteenth Meeting of the Parties, in
particular taking into account any comments on the data submitted by
States by 31 March 2004 under paragraph 1(c) above that the
Implementation Committee may make.
This Decision differs from the corresponding U.S. requirements
promulgated at 40 CFR part 82, subpart A. The Parties' recent agreement
to Decision XV/3 permits trade in HCFCs when the criteria stated in the
Decision have been met. The current regulations also provide for trade
in HCFCs; however, the criteria in Decision XV/3 are different from the
current criteria at 40 CFR part 82, subpart A.
Sec. 82.15(e) reads:
(e) Trade with Parties. Effective January 1, 2004, no person may
import or export any quantity of a class II controlled substance listed
in Appendix A to this subpart, from or to any foreign state that is not
listed as a Party either:
(1) In Appendix L of this subpart and also listed in Appendix C,
Annex 1 of the Protocol as having ratified the Beijing Amendments, or
(2) In Appendix C, Annex 1 of the Protocol as having ratified
Copenhagen Amendments but not listed in Appendix L of this subpart, or
(3) In Appendix C, Annex 2 of the Protocol, as being a foreign
state complying with the Beijing Amendments if the foreign state is
listed in Appendix L of this subpart, or as being a foreign state
complying with Copenhagen Amendments if the foreign state is not listed
in Appendix L of this subpart.
This NPRM proposes to modify the current regulations to eliminate
the inconsistencies with Decision XV/3. In addition, as set forth
below, this action proposes corrections to drafting errors discovered
after the Final Rule was published in the Federal Register in January
21, 2003. As a result, the revised regulations will permit trades
consistent with the requirements decided by the Parties and in
accordance with the terms of Decision XV/3.
Under section 614(b) of the Clean Air Act, Title VI of the Act
``shall be construed, interpreted, and applied as a supplement to the
terms and conditions of the Montreal Protocol, as provided in Article
2, paragraph 11 thereof and shall not be construed, interpreted, or
applied to abrogate the responsibilities or obligations of the United
States to implement fully the provisions of the Montreal Protocol.'' 42
U.S.C. 7671m(b). Furthermore, with respect to trade restrictions, this
provision specifically states that ``[n]othing in this subchapter shall
be construed, interpreted, or applied to affect the authority or
responsibility of the Administrator to implement Article 4 of the
Montreal Protocol with other appropriate agencies.'' Finally, section
614(b) of the Act provides that ``[i]n case of a conflict between any
provision of this subchapter [Title VI]
and any provision of the
Montreal Protocol, the more stringent provision shall govern.''
Accordingly, EPA may not promulgate regulations under the Clean Air Act
that authorize trade of HCFCs with nations not authorized under Article
4 and Decision XV/3 of the Montreal Protocol. In addition, EPA does not
wish to impose trade restrictions more stringent than those required
under the Protocol.
EPA considers Decisions of the Parties, as well as the text of the
Protocol itself, when applying section 614(b). Under customary
international law, as codified in the 1969 Vienna Convention on the Law
of Treaties (8 International Legal Materials 679 (1969)) both the
treaty text and the practice of the parties in interpreting that text
form the basis for its interpretation. Although the United States is
not a party to the 1969 Convention, it has regarded it since 1971 as
``the authoritative guide to current treaty law and practice.'' See
Secretary of State William D. Rodgers to President Richard Nixon,
October 18, 1971, 92nd Cong., 1st Sess., Exec. L (November 22, 1971).
Specifically, Article 31(1) of the Vienna Convention provides that
``[a]
treaty shall be interpreted in good faith in accordance with the
ordinary meaning to be given to the terms of the treaty in their
context and in light of its object and purpose.'' Article 31(3) goes on
to provide that ``[t]here shall be taken into account, together with
the context: (a) Any subsequent agreement between the parties regarding
the interpretation of the treaty or the application of its provisions;
(b) any subsequent practice in the application of the treaty which
establishes the agreement of the parties regarding its
interpretation.'' Decision XV/3 constitutes a subsequent consensus
agreement among the Parties to the Montreal Protocol, including the
United States, regarding the interpretation and application of the
trade restriction provision in Article 4 of the Protocol. Decision XV/3
also constitutes subsequent practice in the application of the Montreal
Protocol by the Parties to it, including the United States. Thus, EPA
intends to conform its regulations on trade restrictions with Decision
XV/3.
1. Trade With States That Have Ratified the Copenhagen and Beijing
Amendments or Have Shown Their Intention To Ratify, Accede, Accept, or
Approve
Section 82.15(e)(2) permits trade with non-producing countries that
have ratified the Copenhagen Amendments. However, Decision XV/3 is more
restrictive than the current EPA promulgated regulations. According to
Decision XV/3 starting on January 1, 2004, notwithstanding the ability
to trade with States operating under Article 5(1) of the Protocol, U.S.
companies cannot trade HCFCs with any State not operating under Article
5(1) of the Protocol that has not agreed to be bound by (ratified) the
Copenhagen and Beijing Amendments, unless that State has fulfilled the
requirements under paragraphs 1(c)(i) through (iii) of Decision XV/3
and submitted the information to the Ozone Secretariat by March 31,
2004. In accordance with this Decision, it would be a violation of the
Protocol to trade HCFCs with a non-Article 5(1) Party that has not
ratified both the Copenhagen and Beijing Amendments, unless the State
has provided the relevant

[[Page 34038]]

information listed in paragraphs (c)(i) through (iii) of Decision XV/3
to the Ozone Secretariat by March 31, 2004. Therefore, as a Party to
the Protocol and a participant in the discussions that resulted in
Decision XV/3, EPA believes it is necessary to amend the regulations to
be consistent with the Decision.
In addition, under EPA's current interpretation of Sec.
82.15(e)(3) (correcting for the absence of the referenced Appendix C to
the Protocol as set forth below), this regulation permitted trade with
any party determined by EPA to be in compliance with relevant amendment
to the Protocol and listed by EPA in Appendix C of 40 CFR part 82,
subpart A. However, before trade with such nations is permitted,
Decision XV/3 requires such parties to submit notification,
certification, and data to the Ozone Secretariat in accordance with
paragraphs (1)(c)(i)-(iii) of the Decision. As a Party to the Protocol
and a participant in the discussions that resulted in Decision XV/3,
EPA must amend its regulations to reflect these additional requirements
of the Decision.
EPA recognizes that the process to ratify amendments to the
Protocol can be lengthy and cumbersome. Further, often countries make
their intention to ratify amendments and begin to comply with the terms
of the amendments in advance of actual ratification. The criteria
established by Decision XV/3 (c)(i) through(iii) provide an appropriate
mechanism for the Ozone Secretariat and EPA to ensure compliance with
the terms of the amendments in advance of ratification of the
amendments by those States.
Through this action, EPA is proposing to amend Sec. 82.15(e) to
permit trade with non-Article 5(1) Parties that have not ratified both
the Copenhagen and Beijing Amendments, if the States have provided the
relevant information listed in paragraphs (c)(i) through (iii) of
Decision XV/3 to the Ozone Secretariat by March 31, 2004.
The Ozone Secretariat has agreed to collect the necessary
documentation required by Decision XV/3(c) and will publish the list of
countries that met the March 31, 2004 deadline. At this time, the Ozone
Secretariat is maintaining a list of countries that have submitted the
required data on its Web site: http://www.unep.org/ozone/index.asp,
Obligations of Parties to the Beijing Amendment under Article 4 of the
Montreal Protocol with Respect to Hydrochlorofluorocarbons (HCFCs). To
ensure that the regulated community, the Agency and all interested
parties are referencing the most accurate and complete list of Parties
complying with Decision XV/3(c), EPA recommends referring to Ozone
Secretariat's list. However, to further simplify implementation,
through this action, EPA is adding to Appendix C of subpart A of 40 CFR
part 82, Annex 3, titled Nations that are Parties to the Montreal
Protocol that have not yet ratified all applicable Amendments to the
Protocol but have Notified the Ozone Secretariat and Properly Submitted
Supporting Documentation in Accordance with the Requirements of
Decision XV/3. This list of Parties that will appear in Annex 3 to
Appendix C is consistent with the most recent information provided to
the EPA by the Ozone Secretariat. It is intended to mirror the Ozone
Secretariat's document. The reader is informed that the list maintained
by the Ozone Secretariat may be used to supplement the Annex since the
Ozone Secretariat's list may include additional States that complied
with the Decision and met the deadline. EPA consults with the Ozone
Secretariat regularly and therefore believes that only a select number
of additional States may be added to the Ozone Secretariat's list, but
noting this potential, EPA believes its own Annex may need to be
supplemented from time to time. EPA plans to use other non-regulatory
outreach means to alert the regulated entities of any States that have
been included on the Ozone Secretariat's list but do not appear in
Annex 3. Further, the Agency plans to appropriately revise Annex 3 to
Appendix C through a subsequent notice.
As a result of these changes to subpart A to incorporate Decision
XV/3, EPA is also proposing to eliminate Appendix L to Subpart A. The
Ozone Secretariat's list and Annex 3 to Appendix C of this subpart
provides the reader with sufficient guidance to ensure that Parties
have submitted data in accordance with Decision XV/3(c); therefore,
Appendix L to part 82, subpart A--Parties to the Montreal Protocol that
Have Reported Production of HCFCs Since 1996 in Accordance with Article
7, paragraph 3 of the Montreal Protocol is no longer needed.
Eliminating Appendix L will limit the potential for misinterpretation.
Thus, through this action, EPA is proposing to remove Appendix L from
subpart A.
EPA requests comment on amending Sec. 82.15(e), Appendix C to this
subpart and eliminating Appendix L to conform with the Decision XV/3 of
the Parties to the Montreal Protocol.
2. Article 5 Parties
Parties to the Montreal Protocol that are operating under Article
5(1) have been given a different schedule for phasing out their
production and consumption of ozone-depleting substances, than those
that are not listed under Article 5(1). EPA would like to clarify that
in accordance with the Protocol, Parties to the Protocol that operate
under Article 5(1) may continue to trade in HCFCs with other Parties as
long as they continue to meet the appropriate obligations under the
Protocol and its amendments, until the date for phasing out HCFC
consumption and production by Article 5(1) countries has been reached.
Under Article 5 (1) of the Protocol no control measures for the
consumption or production of HCFCs will be in effect under either the
Copenhagen or Beijing Amendments until 2016. Therefore, through this
action, EPA is proposing to amend Sec. 82.15(e) appropriately.
EPA is also proposing to add to Appendix C of this subpart Annex 4:
Nations that are Parties to the Montreal Protocol and are operating
under Article 5(1) as of June 17, 2004. The proposed Annex 4 is a list
of nations that are operating under Article 5(1) of the Montreal
Protocol. Including this annex in the subpart will assist regulated
entities complying with the regulations by providing a list of nations
operating under Article 5(1) in the regulatory text. While this
information will be valuable, the Agency notes that the list is dated
June 17, 2004. Additional Nations may agree to the terms of the
Montreal Protocol, become a Party to the treaty, and qualify to operate
under these provisions after this list appears in the Federal Register,
and thus will not be included in Annex 4. Therefore, while including
this Annex in this subpart is useful and will benefit the regulated
entities, this annex is not intended to be the sole and complete
catalogue of Article (5)(1) nations.
Through this action, EPA is proposing to add Annex 4: Nations that
are Parties to the Montreal Protocol and are operating under Article
5(1) as of June 17, 2004 to Appendix C of subpart A.
EPA requests comment on amending the Sec. 82.15(e) to clarify that
trade with Article (5)(1) countries may continue in accordance with the
terms of this Subpart and the Montreal Protocol. Further, EPA requests
comment on adding Annex 4 to Appendix C of this subpart to assist
regulated entities complying with these trade restrictions.

B. Corrections to the References to Appendices

Appendix C of 40 CFR part 82, subpart A provides information on
ratification, accession, acceptance, and approval of the Montreal
Protocol, London amendment, Copenhagen Amendment, Montreal Amendment and

[[Page 34039]]

the Beijing Amendment. Section 82.15(e) was intended to cite this
Appendix. However, the language at Sec. 82.15(e) contains drafting
errors and refers instead to Appendix C of the Montreal Protocol. There
is no Appendix C to the Montreal Protocol. In the absence of an
Appendix C to the Protocol, EPA interprets Sec. 82.15(e) to refer to
Appendix C of subpart A. While the Agency has made this interpretation
known through letters to regulated entities, a change to the
regulations is necessary to ensure that all interested parties are able
to correctly interpret the regulations. Therefore, through this action,
EPA proposes to amend Sec. 82.15(e) to ensure that all references are
to Appendix C of subpart A of 40 CFR part 82.
With the promulgation of this action, Appendix C of subpart A will
have four separate sections (annexes). Currently, the CFR includes the
2 sections: Appendix C to Subpart A:--Parties to the Montreal Protocol
(As of June 14, 2002) and Annex 2: Annex 2 to Subpart A--Nations
Complying with, But Not Parties to, the Protocol. This action proposes
adding the following sections: Annex 3: Nations that are Parties to the
Montreal Protocol that have not yet ratified all applicable Amendments
to the Protocol but have Notified the Ozone Secretariat and Properly
Submitted Supporting Documentation in Accordance with the Requirements
of Decision XV/3 and Annex 4: Nations that are Parties to the Montreal
Protocol and are operating under Article 5(1) as of June 17, 2004. To
further clarify that Appendix C has four distinct sections, through
this action, EPA is proposing to amend the titles of each section to
include ``Appendix C'' in each and to label the sections as ``Annex
1,'' ``Annex 2,'' ``Annex 3,'' and `` Annex 4'' respectively. Thus the
proposed revised titles will be:

--Appendix C to Subpart A, Annex 1--Parties to the Montreal Protocol,
As Amended by the Beijing Amendment (As of June 14, 2002)
--Appendix C to Subpart A, Annex 2--Nations Complying with, But Not
Parties to, the Protocol
--Appendix C to Subpart A, Annex 3--Nations that are Parties to the
Montreal Protocol that have not yet ratified all applicable Amendments
to the Protocol but have Notified the Ozone Secretariat and Properly
Submitted Supporting Documentation in Accordance with the Requirements
of Decision XV/3.
-- Appendix C to Subpart A, Annex 4--Nations that are Parties to the
Montreal Protocol and are operating under Article 5(1) as of June 17, 2004.
EPA requests comment on these changes to Appendix C of 40 CFR part
82, subpart A.

IV. Administrative Requirements

A. Executive Order 12866: Regulatory Planning and Review

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

B. Paperwork Reduction Act

This action does not propose any new information collection burden.
However, the Office of Management and Budget (OMB) has previously
approved the information collection requirements contained in the
existing regulations 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 No. 1432.21). A copy of the OMB approved Information
Collection Request (ICR) may be obtained from The 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 (RFA), as Amended by the Small Business
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et seq.

The RFA generally requires an Agency to prepare a regulatory
flexibility analysis of any rule subject to notice and comment
rulemaking requirements under the Administrative Procedure Act or any
other statute unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
Small entities include small businesses, small organizations, and small
government jurisdictions.
For the purposes of assessing the impacts of today's proposed rule
on small entities, small entity is defined as: (1) A small business
that is identified by the North American Industry Classification System
(NAICS) Code in the Table below; (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.

[[Page 34040]]

----------------------------------------------------------------------------------------------------------------
NAICS small
business size
standard (in
Category NAICS code SIC code number of
employees or
millions of
dollars)
----------------------------------------------------------------------------------------------------------------
1. Chemical and Allied Products, NEC.......................... 424690 5169 100
2. Chlorofluorocarbon gas exporters........................... 325120 2869 100
----------------------------------------------------------------------------------------------------------------

After considering the economic impacts of this proposed rule on
small entities, EPA certifies that this action will not have a
significant economic impact on a substantial number of small entities.
This proposed rule will not impose any requirements on small entities.
None of the entities affected by this rule are considered small as
defined by the NAICS Code listed above. EPA requests comments on this
determination.

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
government and the private sector. Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures by State, local and tribal governments, in
the aggregate, or by the private sector, of $100 million or more in any
one year. If a written statement is required under section 202, section
205 of the UMRA generally requires EPA to identify and consider a
reasonable number of regulatory alternatives and adopt the least
costly, most cost-effective or least burdensome alternative that
achieves the objectives of the rule, unless the Agency explains why
this alternative is not selected or the selection of this alternative
is inconsistent with law.
Section 203 of the UMRA requires the Agency to establish a plan for
obtaining input from and informing, educating, and advising any small
governments that may be significantly or uniquely affected by the rule.
Section 204 of the UMRA requires the Agency to develop a process to
allow elected State, local, and tribal government officials to provide
input in the development of any proposal containing a significant
Federal intergovernmental mandate.
EPA has determined that this proposed rule does not contain a
Federal mandate that may result in expenditures of $100 million or more
by State, local and tribal governments, in the aggregate, or by the
private sector, in any one year. The provisions in this proposed rule
fulfill the obligations of the United States under the international
treaty, The Montreal Protocol on Substances that Deplete the Ozone
Layer, as well as those requirements set forth by Congress in the Clean
Air Act. Viewed as a whole, all of today's proposed amendments do not
create a Federal mandate resulting in costs of $100 million or more in
any one year for State, local and tribal governments, in the aggregate,
or for the private sector. Thus, today's proposed rule is not subject
to the requirements of sections 202 and 205 of the UMRA. EPA has also
determined that this proposal contains no regulatory requirements that
might significantly or uniquely affect small governments; therefore,
EPA is not required to develop a plan with regard to small governments
under section 203. Finally, because this proposal does not contain a
significant intergovernmental mandate, the Agency is not required to
develop a process to obtain input from elected State, local, and tribal
officials under section 204. EPA requests comments regarding these
determinations.

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.''
Under section 6 of Executive Order 13132, EPA may not issue a
regulation that has federalism implications, that imposes substantial
direct compliance costs, and that is not required by statute, unless
the Federal government provides the funds necessary to pay the direct
compliance costs incurred by State and local governments, or EPA
consults with State and local officials early in the process of
developing the regulation. EPA also may not issue a regulation that has
federalism implications and that preempts State law, unless the Agency
consults with State and local officials early in the process of
developing the regulation.
This proposed 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. Today's proposal is expected to
primarily affect importers and exporters of HCFCs. Thus, the
requirements of section 6 of the Executive Order do not apply. EPA
requests comment regarding this determination.

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

Executive Order 13175, entitled ``Consultation and Coordination
with Indian Tribal Governments'' (59 FR 22951, 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 proposed rule does not
have tribal implications, as specified in Executive Order 13175.
Today's proposal does not significantly or uniquely affect the
communities of Indian tribal governments. It does not impose any
enforceable duties on communities of Indian tribal governments. Thus,
Executive Order 13175 does not apply to this rule. EPA requests comment
on this determination.

G. Applicability of Executive Order 13045: Protection of Children From
Environmental Health & 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

[[Page 34041]]

environmental health or 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 E.O. 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 is not such a rule, and therefore E.O.
13045 does not apply. This proposed rule is not subject to E.O. 13045
because it implements specific trade measures adopted under the
Montreal Protocol and required by section 614 of the CAA. EPA requests
comment on this determination.

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

This proposed rule is not a ``significant energy action'' as
defined in 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.

I. The 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 its
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
proposed rulemaking does not involve technical standards. Therefore,
EPA did not consider the use of any voluntary consensus standards.

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: June 10, 2004.
Michael O. Leavitt,
Administrator.
[FR Doc. 04-13681 Filed 6-16-04; 8:45 am]
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