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Vol. 58 No. 249 Thursday, December 30, 1993 p 69235 (Rule)

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________________________________________________________________________

40 CFR Part 82

[FRL-4819-7]

Protection of Stratospheric Ozone

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rulemaking.

____________________________________________________________________________

SUMMARY: With this action, EPA is establishing baseline production

and consumption allowances for chemicals that EPA has added

to the list of class I ozone-depleting substances in a Federal

Register notice signed by the Administrator on November 30,

1993. These substances are methyl bromide and

hydrobromofluorocarbons

(HBFCs). EPA is now establishing baseline production and

consumption

allowances for producers and importers of methyl bromide and

HBFCs derived from data submitted to the Agency in response

to a section 114 data collection request issued on July 27,

1993. The data collection request required companies to report

the amounts of these substances that they produced, imported,

exported, transformed or destroyed in 1991.

EFFECTIVE DATE: This rule is effective on January 1, 1994.

ADDRESSES: Public materials relevant to this rulemaking are

contained in Air Docket No. A-92-13 at: U.S. Environmental

Protection

Agency, 401 M Street SW., Washington, DC 20640. The public docket

room is located in room M-1500, Waterside Mall (Ground Floor).

Docket No. A-92-13 is the same docket as that used for the rule

to add methyl bromide and the HBFCs to the class I list, which

was published on December 10, 1993. Materials relevant to the

allowances rulemaking have been placed in a new and separate

section of Docket No. A-92-13, which is segregated from the

sections of the docket containing material relevant to the December

10 listing rule. The data on which the consumption and production

allowances promulgated in this allowances rule are based were

submitted under a claim of confidentiality. That data is therefore

confidential, pending final determination by the Administrator,

and, therefore, is not available in the docket for public

inspection.

FOR FURTHER INFORMATION CONTACT: Peter Voigt at (202) 233-9185,

Program Implementation Branch, Stratospheric Protection Division,

Office of Atmospheric Programs, Office of Air and Radiation,

6205J, 401 M Street SW., Washington DC 20460.

SUPPLEMENTARY INFORMATION:

I. Background

A. Newly Listed Substances

B. Baseline Production and Consumption Allowances

II. Statutory Authority

III. Notice Prior to Effective Date

IV. Summary of Supporting Analyses

A. Executive Order 12866

B. Regulatory Flexibility Act

C. Paperwork Reduction Act

I. Background

A. Newly Listed Substances

EPA has added methyl bromide and HBFCs to the list of class

I substances under section 602 of the Clean Air Act in a final

rule signed by the Administrator of EPA on November 30, 1993,

58 FR 65018 (December 10, 1993). As explained in the listing

regulation, under title VI of the Clean Air Act, a newly listed

substance is automatically subject to the section 604(a) phaseout

schedule unless:

(1) The Administrator accelerates that schedule pursuant

to section 606; or

(2) The Administrator determines that the section 604(a)

schedule is unattainable and extends that schedule pursuant

to section 602(d).

For reasons explained in the final rule, the Agency determined

that the section 604(a) schedule is unattainable for methyl

bromide and extended that schedule under section 602(d) to a

freeze until the termination date. The regulations freeze

production

and consumption levels of methyl bromide at 1991 levels beginning

on January 1, 1994 until January 1, 2001, when production and

consumption will be eliminated. For HBFCs, the regulations freeze

production and consumption at 1991 baseline levels beginning

on January 1, 1994 until January 1, 1996, when production and

consumption will be eliminated.

Under EPA's rules, controls on the production and consumption

of regulated substances operates through a company-specific

allowance system. Companies are prohibited from production and

consumption beyond the amount for which they hold unexpended

allowances. See 40 CFR 82.4. Section 607 of the Clean Air Act

provides that the Administrator, by September 15, 1991, was

to promulgate rules providing for the issuance of allowances

for the production and consumption of class I and II substances

and governing the transfer of such allowances. EPA promulgated

rules issuing allowances for then-listed substances on March

6, 1991 (56 FR 9518). Section 607(b) and (c) specify that EPA's

rules are to provide for trading of allowances on an ozone

depletion

weighted basis.

EPA's obligation to issue company-specific allowances is

inherent in the allowance and trading scheme under the Act.

As explained in the July 27 information collection request (58

FR 40048), the section 604 phaseout provision and the section

607 allowance and trading provision were drafted against the

regulatory backdrop of EPA's implementation of the Montreal

Protocol under authority existing prior to the Clean Air Act

Amendments of 1990 (formerly section 151(b)). The Agency had

implemented the Protocol production and consumption limits through

company-specific allowances. See 53 FR 30566 (August 12, 1988).

Enactment of sections 604 and 607 continued this approach, and

the Agency's current regulations comport with it. (See regulation

to implement 1992 and later production and consumption limits

under section 604 (57 FR 33754, July 30, 1992)). EPA, through

recent rulemaking, has adopted the same approach for methyl

bromide and the HBFCs in its final listing regulation. EPA must

issue company-specific allowances for methyl bromide and the

HBFCs in order to implement the production and consumption freeze

applicable to these substances. EPA received no comments on

the November 9, 1993 allowances proposal.

B. Baseline Production and Consumption Allowances

To establish these allowances, EPA exercised its information

collection authority under section 114(a) of the Clean Air Act

to require companies to submit information on the amount of

methyl bromide and HBFCs that they produced, imported, exported,

transformed or destroyed in 1991. 58 FR 40048 (July 27, 1993).

EPA has used the information collected to calculate the company-

specific production and consumption allowances. On November

9, 1993, EPA proposed baseline production and consumption

allowances

for methyl bromide and HBFCs (58 FR 59630). EPA received no

comments on the November 9 proposal. EPA has taken final action

adding methyl bromide and the HBFCs to the class I list of ozone-

depleting substances, 58 FR 65018 (December 10, 1993). With

this rule, EPA is establishing the company-specific production

and consumption allowances for these substances in order to

implement the production and consumption limitations beginning

January 1, 1994.

A company's production allowances are equal to its domestic

production minus the amount that is transformed and destroyed

by it or by other companies. Amounts of class I substances that

are recycled are also excluded from the calculation of production

allowances. For producers that also import, transformation is

allocated proportionately between domestic production and imports.

Second-party transformation not attributed to a specific producer

is allocated proportionately among all producers, based on

production

share.

Company-specific consumption allowances for each chemical

consist of a company's production allowances, as calculated

above, plus its imports, minus its exports. Amounts imported

for transformation and for destruction are excluded from the

import total. Exports that are not attributable to a specific

company are proportionately allocated among all producers based

on production share. In addition, imports of used and recycled

ozone-depleting substances are excluded from the calculation

of allowances.

II. Statutory Authority

EPA is authorized by section 604(c) of the Act to promulgate

regulations implementing the phaseout of ozone-depleting

substances,

57 FR 33754 (July 30, 1992). Pursuant to section 607, the phaseout

is to be implemented through an allowance system. EPA also has

broad authority under section 301(a) ``to prescribe such

regulations

as are necessary to carry out [its] functions under this chapter''

and broad authority under section 615 to promulgate regulations

respecting the control of substances that may reasonably be

anticipated to affect the stratosphere.

As explained above, EPA must promulgate company-specific

production and consumption allowances in order to implement

controls on methyl bromide and the HBFCs under title VI of the

Clean Air Act. In addition, such controls are necessary to

implement

the controls on these substances that will become mandatory

under the Montreal Protocol beginning in 1995. The reader is

referred to the March 18 notice proposing to add these substances

to the class I list for a full discussion of the Protocol Parties'

agreement to controls on these substances at their Copenhagen

meeting. See 58 FR 15014. Section 614(b) provides that title

VI ``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.''

III. Notice Prior to Effective Date

The effective date of this rule is January 1, 1994. Since

title VI controls on production and consumption are implemented

on an annual basis, the allowances must be effective January

1, 1994 in order to achieve the environmental benefits associated

with controls in the 1994 calendar year.

EPA believes that the time between publication of this final

rule and January 1, 1994 is sufficient for industry to comply

with the annual production and consumption limits beginning

January 1, 1994. EPA believes that the amount of time provided

before the rule becomes effective is appropriate for several

reasons.

First, EPA explained in its November 9 proposal that it was

proposing production and consumption allowances at that time

in order that the allowances would be available in time if the

Agency were to establish a freeze beginning January 1, 1994.

The comment period was to close no earlier than December 9,

1993, making it clear that EPA intended to provide less than

30 days notice of the final allowances prior to January 1, 1994.

EPA received no comments on this or any other aspect of the

November 9 proposal.

Second, only very small changes to the proposed allowances

have been made, based on late receipts of data from companies

that transformed methyl bromide in 1991. As a result, the affected

companies had reasonably precise information regarding the

anticipated

level of allowances since the November 9 proposal, and they

have been on notice since November 30, 1993, (when the

Administrator

signed the final rule listing methyl bromide and the HBFCs)

that EPA was freezing production beginning January 1, 1994.

The allowances contained in the final rule do not reflect

substantial

changes.

Third, EPA believes that compliance with the annual production

controls necessitates less advance notice than other regulations

for which compliance is required on a continuous basis or over

a shorter period. Compliance with an annual limit on production

and consumption is not likely to be violated until a significant

part of a given year has elapsed. Steps during the first few

days of 1994 that will prove necessary to comply for the entire

calendar year should be minimal.

EPA notes that the general requirement under 5 U.S.C. 553(d)

(the Administrative Procedure Act), that publication or service

of a substantive rule be made not less than 30 days before it

becomes effective does not apply here. Section 307(d)(1) of

the Clean Air Act specifically applies to regulations under

title VI of the Clean Air Act and provides that ``[t]he provisions

of sections 553 through 557 and section 706 of title 5 shall

not, except as expressly provided in this subsection, apply

to actions to which this subsection applies.'' Nowhere does

subsection 307(d) expressly provide that section 553(d) of title

5 applies. Even if section 553(d) were to apply, EPA believes

that the environmental benefits associated with controls in

1994 and the limited need for advance notice in this situation

constitute good cause under section 553(d)(3) of title 5 to

provide less than 30 days notice following publication. In any

case, EPA has taken steps to provide notice of this final action

to the regulated industry as soon as possible upon signature

of the rule and prior to publication.

IV. Summary of Supporting Analyses

A. Executive Order 12866

Under Executive Order 12866 (58 FR 51,735 (10/4/94)) the

Agency must determine whether the 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 lead to a rule that may:

(1) have an annual effect on the economy of $100 million

or more or adversely and materially affecting a sector of the

economy, productivity, competition, jobs, the environment, public

health or safety, or State, local, or tribal governments or

communities;

(2) create a serious inconsistency or otherwise interfere

with an action taken or planned by another agency;

(3) materially alter the budgetary impact of entitlements,

grants, user fees, or loan programs or the rights and obligations

of recipients thereof;

(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 has determined that this rule is not a ``significant

regulatory action'' under the terms of Executive Order 12866

and is therefore not subject to OMB review.

B. Regulatory Flexibility Act

The Regulatory Flexibility Act, 5 U.S.C. 601-612, requires

that federal agencies examine the impact of their regulations

on small entities. Under 5 U.S.C. 604(a), whenever an agency

is required to publish a general notice of proposed rulemaking,

it must prepare and make available for public comment an initial

regulatory flexibility analysis. Such an analysis is not required

if the head of the agency certifies that a rule will not have

a significant economic impact on a substantial number of small

entities, pursuant to 5 U.S.C. 605(b). The Administrator believes

that this regulation will not have a significant impact on a

substantial number of small entities and has concluded that

a formal regulatory flexibility analyses is unnecessary.

This regulation establishes allowance levels for the production

and consumption of the newly listed class I ozone-depleting

chemicals. Baseline allowances in and of themselves do not impose

any adverse costs on producers or importers. As the administrative

mechanism for implementing regulations that are effective on

January 1, 1994, the overall regulatory impacts on small business

are impacts of the scheme as a whole and have been addressed

in that rulemaking. See 58 FR 65018 at 65060 (December 10, 1993).

The Administrator certifies that this rule will not have a

significant

impact on a substantial number of small entities.

C. Paperwork Reduction Act

The information collection requirements governing the addition

of newly listed substances to the list of class I ozone-depleting

substances and the regulatory changes to section 604 of the

Act has been submitted to OMB as required by section 35D of

the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. Comments

regarding these requirements have been received and considered

in the development of the final rule to implement changes in

section 604.

The promulgation of the regulation establishing company-specific

allowance levels will not generate additional recordkeeping

and reporting requirements. As a result, no information collection

request was prepared and submitted to OMB.

List of Subjects in 40 CFR Part 82

Administrative practice and procedure, Air pollution control,

Chemicals, Chlorofluorocarbons, Exports, Imports, Ozone layer,

Reporting and recordkeeping requirements, Stratospheric ozone.

Dated: December 22, 1993.

Carol M. Browner,

Administrator.

40 CFR part 82 is amended as follows:

PART 82-PROTECTION OF STRATOSPHERIC OZONE

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

follows:

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

2. Section 82.5 is amended by adding paragraphs (f) and (g)

to read as follows:

82.5 Apportionment of baseline production allowances.

* * * * *

(f) For Group VI controlled substances:

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Controlled substance Person

Allowances

(kg)

컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴

Methyl Bromide .............. Great Lakes Chemical

19,945,788

Corporation

Ethyl Corporation ...........

8,233,894

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(g) For Group VII controlled substances:

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컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴

HBFC 22B1-1.................. Great Lakes Chemical

46,211

Corporation

컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴

3. Section 82.6 is amended by adding paragraphs (f) and (g)

to read as follows:

82.6 Apportionment of baseline consumption allowances.

* * * * *

(f) For Group VI controlled substances:

컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴

Controlled substance Person

Allowances

(kg)

컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴

Methyl Bromide .............. Great Lakes Chemical

15,514,746

Corporation

Ethyl Corporation ...........

6,379,906

AmeriBrom Inc ...............

3,524,393

TriCal Inc ..................

109,225

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(g) For Group VII controlled substances:

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컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴

HBFC 22B1-1 ................. Great Lakes Chemical

40,110

Corporation

컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴

* * * * *

[FR Doc. 93-31834 Filed 12-29-93; 8:45 am]

BILLING CODE 6560-50-P

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The Contents entry for this article reads as follows:

Air programs:

Stratospheric ozone protection-

Class I ozone-depleting substances; nonessential products ban,

69672

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