[Federal Register Volume 65, Number 195 (Friday, October 6, 2000)]
[Proposed Rules]
[Pages 59783-59791]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-25745]
[[Page 59783]]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 82
[FRL-6881-8]
RIN 2060-AJ33
Protection of Stratospheric Ozone: Allocation of Essential Use
Allowances for Calendar Year 2001
AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: With this action, EPA is proposing to allocate essential-use
allowances for stratospheric ozone depleting substances for the year
2001 control period. EPA allocates essential use allowances to an
applicant for exempted production or import of a specific quantity of
class I ozone depleting substances (ODS) solely for the designated
essential purpose. Essential use allowances permit a person to obtain
controlled ODS as an exemption to the January 1, 1996 regulatory phase-
out of production and import of these substances. Today, EPA is
proposing essential-use allowances (EUAs) for the production and/or
import of ODSs for use in medical devices and for use in the Space
Shuttle Rockets and Titan Rockets for calendar year 2001. EPA is also
proposing a regulatory change which would allow EUAs for CFCs to be
transferred among essential use recipients.
DATES: Written comments on this proposed rule must be received on or
before November 6, 2000, unless a public hearing is requested. Comments
must then be received on or before 30 days following the public
hearing. Any party requesting a public hearing must notify the
Stratospheric Ozone Protection Hotline listed below by 5 p.m. Eastern
Standard Time on October 16, 2000. If a hearing is held, EPA will
publish a document in the Federal Register announcing the hearing
information. Inquiries regarding a public hearing should be directed to
the Stratospheric Ozone Protection Hotline at 1-800-269-1996.
ADDRESSES: Comments on this rulemaking should be submitted to: Erin
Birgfeld, Essential Use Program Manager, U.S. Environmental Protection
Agency (6205J), 1200 Pennsylvania Avenue, NW., Washington, DC 20460.
All comments will be filed in EPA Air docket number A-93-39. Comments
that contain business confidential information should be submitted in
two versions, one clearly marked ``Public'' to be filed in the docket,
and the other marked ``Confidential'' to be reviewed by authorized
government personnel only.
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 4 p.m. Monday through Friday. A reasonable fee may be
charged by EPA for copying docket materials.
FOR FURTHER INFORMATION CONTACT: The Stratospheric Ozone Protection
Hotline at 1-800-296-1996 or Erin Birgfeld, U.S. Environmental
Protection Agency, Stratospheric Protection Division, Office of
Atmospheric Programs, 6205J, 1200 Pennsylvania Avenue, Washington, DC
20460; 202-564-9079.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
II. Allocation Process for CFCs for Use in Medical Devices for the
Year 2001
III. Allocation of Essential Use Allowances for Calendar Year 2001
IV. Proposed Changes to 82.12 Allowing Transfer of EUAs for CFCs
Among Essential Use Allowance Holders
V. Administrative Requirements
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 of all stratospheric ozone
depleting substances. (``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.) The
elimination of production and consumption is accomplished through
adherence to phase-out schedules for the production and consumption of
specific ODSs including chlorofluorocarbons (CFCs), halons, carbon
tetrachloride, methyl chloroform, hydrochlorofluorocarbons, and methyl
bromide. As of January 1996, production and import of class I ODSs were
phased out in all 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 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
Decision IV/25 are the following:
``(1) that a use of a controlled substance should qualify as
`essential' only if:
(i) it is necessary for the health, safety or is critical for the
functioning of society (encompassing cultural and intellectual
aspects); and
(ii) there are no available technically and economically feasible
alternatives or substitutes that are acceptable from the standpoint of
environment and health;
(2) 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.''
The procedure set out by Decision IV/25 first calls for individual
Parties to nominate essential uses. The Protocol's Technology and
Economic Assessment Panel (TEAP or the Panel) evaluates the nominated
essential uses and makes recommendations to the Protocol Parties. The
Parties make the final decisions on essential use nominations at their
annual meeting.
The CAA provides exemptions to the phase-out of class I ODSs for
which these controlled substances may continue to be produced and/or
imported. EPA is responsible for allocating essential use allowances at
the domestic level through rulemaking in accordance with provisions in
the CAA. Today's action proposes to allocate essential use allowances
for the use of CFCs in metered dose inhalers (MDIs), and methyl
chloroform for use in the Space Shuttle and Titan Rocket solid rocket
motor assemblies for calendar year 2001. Today's action also proposes
changes to regulations at 40 CFR 82.12 which would allow transfer of
CFC allowances among MDI manufacturers that hold EUAs.
What Was the International Procedure for Approving Essential Use
Exemptions for the Year 2001?
The international process for nominating and approving essential
use allowances for the year 2001 occurred in the same way as in prior
years. The companies in Table III submitted
[[Page 59784]]
applications either on their own or as a part of the International
Pharmaceutical Aerosol Consortium (IPAC) requesting class I controlled
substances for essential uses in response to the August 10,1998 Federal
Register notice (63 FR 42629). Their applications requested exemptions
for the production and import of specific quantities of certain class I
controlled substances after the phase-out, and provided information in
accordance with the criteria set forth in Decision IV/25 of the
Protocol and the procedures outlined in the ``1997 Handbook on
Essential Use Nominations.'' EPA reviewed the applications and
nominated these uses to the Protocol Secretariat for consideration by
the Technical and Economic Assessment Panel (TEAP) and its Technical
Options Committees (TOCs). MDI producers requested a total of 3,101
metric tons of CFCs for use in 2001. The Parties to the Montreal
Protocol approved this amount as essential for the U.S. for 2001 at the
Eleventh Meeting in 1999 (Decision XI/14). On September 15, 1999, EPA
issued another notice requesting applications for essential use
allowances for the year 2001 and beyond (64 FR 50083). No company
requested a supplemental amount of CFCs for the year 2001 at that time.
How Does the Clean Air Act Authorize Essential Use Allowances?
The CAA provides standing exemptions to the phase-out of class I
ODSs found at section 604(d) of the Act. With today's action, EPA is
proposing to implement the exemption at 604(d)(2) of the Act which
states that notwithstanding the phase-out, EPA shall, to the extent
consistent with the Montreal Protocol, 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. The term ``medical device'' is defined in
section 601(8) of the Clean Air Act as follows:
[A]ny device (as defined in the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 321)), diagnostic product, drug (as defined in the
Federal Food, Drug, and Cosmetic Act), and drug delivery system--
(A) if such device, product, drug, or drug delivery system
utilizes a class I or class II substance for which no safe and
effective alternative has been developed, and where necessary,
approved by the Commissioner [of FDA]; and
(B) if such device, product, drug, or drug delivery system, has,
after notice and opportunity for public comment, been approved and
determined to be essential by the Commissioner [of FDA] in
consultation with the Administrator [of EPA].
The preamble to FDA's September 1, 1999, notice of proposed
rulemaking on essential use determinations (64 FR 47735) discusses
FDA's approach to determining whether ``safe and effective
alternative[s]'' have been developed. It states that ``A non-CFC
product simply having the same active moiety as a CFC product is only
one factor to be considered. Other factors, such as whether the non-CFC
product has the same route of administration, the same indication, and
can be used with approximately the same level of convenience, are
important considerations. Additionally, FDA must consider whether
patients who medically need the CFC product are adequately served by
the non-CFC product. FDA's approval of a non-CFC product is a
determination that the product is safe and effective, but it is not a
determination that the product is a safe and effective alternative for
any other product. That requires a separate and distinct analysis.''
Although FDA has approved one CFC-free MDI for market, it has not yet
determined that any non-CFC product is a safe and effective alternative
to any CFC MDI. Accordingly, part (A) of the definition of medical
device has not affected today's proposed allocation.
With respect to part (B) of the definition of medical device
(section 601(8)(B)), and in particular the use of the word
``essential'' in that part of the definition, EPA is relying on current
FDA regulations (21 CFR 2.125) which contain a list of categories of
CFC-containing medical devices, as that term is used in the CAA, that
FDA, in consultation with EPA, has found to be essential. This list
includes, among others, metered-dose steroids, metered-dose adrenergic
bronchodilators, metered-dose cromolyn sodium, metered-dose ipratropium
bromide, and metered-dose nedocromil sodium; all drugs for oral
inhalation in humans for the treatment of asthma and chronic
obstructive pulmonary disease. The companies for which EPA is proposing
to grant essential use allowances produce CFC MDIs that fall within one
of these categories. Thus, the products for which EPA is proposing to
grant essential use allowances are ``determined to be essential'' by
FDA.
Also with respect to part (B) of the definition of ``medical
device'', EPA and FDA considered how to interpret the language
regarding approval by FDA of the ``device, product, drug, or drug
delivery system.'' The complete phrase reads as follows: ``if such
device, product, drug, or drug delivery system, has, after notice and
opportunity for public comment, been approved and determined to be
essential by the Commissioner in consultation with the Administrator.''
EPA and FDA determined that in light of the surrounding language, this
phrase refers to FDA's approval of an essential use, and not the
approval of the specific product in question through approval of the
New Drug Application (NDA) or Abbreviated New Drug Application (ANDA)
for that product. Since approval of an NDA or ANDA under the Food,
Drug, and Cosmetic Act (FDCA) involves unilateral action by FDA without
notice-and-comment rulemaking or consultation with EPA, it is
reasonable to conclude that section 601(8)(B) does not refer to
approval of an NDA or ANDA under the FDCA. Therefore, FDA and EPA read
section 601(8)(B) to refer to FDA's approval of an essential use which
does require notice-and comment rulemaking in consultation with EPA.
This means that an MDI is ``approved and determined to be essential''
if the MDI is included within the list of categories of CFC-MDIs on
FDA's essential use list. All of the MDIs for which we are proposing to
allocate CFCs today meet this qualification.
With this action EPA is also proposing to allocate methyl
chloroform (MCF) for use in solid rocket motor assemblies. Because the
original phase-out date of methyl chloroform is 2002, EPA is not
required to implement the exemption at 604(d)(1) until that time.
Instead, EPA is proposing to allocate methyl chloroform under the
authority of the original phase-out schedule at section 604(a) which
provides that MCF may be produced at up to 20 percent of the baseline.
EPA is proposing to allocate a total of 60.1 metric tons of MCF, an
amount well below 20% of the MCF baseline production allowance of
315,169 metric tons (defined at 40 CFR 82.6).
II. Allocation Process for CFCs for Use in Medical Devices for the
Year 2001
How Were the Essential Use Allowances for Medical Devices Determined
for the Year 2001?
As explained above, section 604(d)(2) of the Act provides that EPA
shall authorize production and import of limited quantities of class I
substances for use in medical devices if FDA, in consultation with EPA,
determines such authorization to be necessary. The following is a step-
by-step list of actions EPA and FDA have taken thus far to implement
the exemption for medical devices under the Act.
1. EPA worked closely with FDA to define what information would be
[[Page 59785]]
required from companies in order that FDA in consultation with EPA
could make a determination on the amount of CFCs necessary for use in
MDIs. EPA and FDA determined that the following data were needed to
make a decision on the amount of CFCs necessary for use in MDIs for
2001:
The specific MDI products to be produced in 2001
The number of units each product produced each year since
1996
Number of units produced in the first quarter of 2000
Number of units anticipated to be produced in 2001
Gross target fill weight per unit (grams)
Total amount of CFC to be contained in product for 2001
(metric tons)
Additional amounts of CFCs necessary for production of
MDIs
Total CFC request per product for 2001
2. On May 24, 2000, EPA sent letters to MDI manufacturers
requesting the information outlined in paragraph 1. EPA also requested
information on the amount of CFCs held in inventory as of January 1,
2000. The letters that EPA sent each company are available for review
in the docket. The company's responses however, are considered
confidential business information and are not publicly available.
Tables I and II are reproductions of the reporting forms EPA asked
companies to fill out in response to our letters requesting information
under section 114 of the Act (114 letters).
Table I.--Year 2001 Essential Use Allocation: CFC Reporting Form
--------------------------------------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K
Product Number of Number of Number of Number of Number of Number of Gross Total CFC Additional Total
Units Units Units Units Units Units Target to be amount request
produced produced produced produced produced anticipated fill contained necessary per
from 1/1/ from 1/1/ from 1/1/ from 1/1/ from 1/1/ to be weight in for product
96 to 12/ 97 to 12/ 98 to 12/ 99 to 12/ 00 to 3/ produced in per unit product production for 2001
31/96 31/97 31/98 31/99 31/00 2001 (grams) \ for 2001 \3\ \4\
1\ (metric
tons) \2\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Example Product....................... 1,112,569 1,010,526 1,215,452 1,327,456 352,101 1,500,000 22 30.42 5.20 35.62
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ If significant numbers of different canister sizes are produced, this target fill number should either be the weighted average for that product
(i.e., the sum of the gross target fill times the percentage of canisters produced in that size divided by the total number of canisters) or each size
may be contained in a separate row of the report.
\2\ Column I= (Column G) (Column H).
\3\ Provide details regarding your additional amount needed, e.g., canisters produced but not distributed, CFCs lost in processing, CFCs remaining at
end of batch run, CFCs used in line cleaning.
\4\ Total request per product for 2001 (metric tons) = Sum of Columns I+J.
Note: The data presented in columns B through E will be compared to data provided in annual reports to FDA. Any significant differences in these
numbers should be explained in detail.
Table II.--Year 2000 CFC Stockpile Analysis
----------------------------------------------------------------------------------------------------------------
On January 1,
On 1/1/2000: On 1/1/2000: Total 2000: Amount of Total quantity of
Quantity (in quantity (in chemical produced chemical acquired
Chemical metric tons) of metric tons) of prior to January using 1999
chemical stored at chemical available 1, 1996 \6\ essential use
your facility to your company available to your allowances
\5\ company
----------------------------------------------------------------------------------------------------------------
CFC-11
CFC-12
CFC-114
----------------------------------------------------------------------------------------------------------------
\5\ This includes amounts stored at your facility, other facilities, or an order with the chemical
manufacturers.
\6\ This amount refers to your company's stockpile (on 1/1/2000) of CFCs produced prior to the 1996 ban on
import and production.
3. In a letter to FDA, dated August 3, 2000, Paul Stolpman,
Director of EPA's Office of Atmospheric Programs, requested that FDA
provide EPA with a determination regarding the amount of CFCs necessary
for use in MDIs for calendar year 2001. We attached the information
provided in response to 114 letters from MDI manufacturers for FDA's
review. FDA verified the data against the annual reports companies file
with FDA, and used the information from the companies' response to our
section 114 letters as a basis for their determination.
4. On September 6, 2000, FDA Commissioner Jane Henney sent a letter
to EPA with the FDA determination on the amount of CFCs necessary for
use in MDIs for calendar year 2001. The quantity of CFCs to be
allocated for production of MDIs in this proposed rule reflect FDA's
determination made in consultation with EPA.
5. In accordance with the determinations made by FDA, in
consultation with EPA, specified in their letter of September 6, 2000,
today's proposal would allocate a total of 3098.67 metric tons of CFCs
for use in MDIs for calendar year 2001.
6. EPA plans to issue a final allocation rule by the end of the
calendar year to provide adequate time for companies to replenish their
supply of CFCs for MDI production in the year 2001.
How Were the Decisions on the Amounts of EUAs for CFCs for Each
Company Made?
FDA states in their letter to EPA that ``* * * we have examined the
information you obtained from individual sponsors regarding their
historical and intended use of CFCs in specific products. We compared
this information to the information filed with us by sponsors in
previous annual reports. In listing the amounts we believe to be
necessary for use in medical devices, we referred to this information,
eliminated any double-counting we found, considered changes in the
prevalence of asthma and COPD, and eliminated allocations for uses not
[[Page 59786]]
considered essential by the parties to the Montreal Protocol, even if
those uses are currently listed in our regulation at 21 CFR 2.125(e).''
In response to EPA's request for information under section 114 of
the Act, two companies stated that they required CFCs to produce the
same products leading to double counting and an inflated request of
CFCs to manufacture these particular MDI products. This is because one
company is a New Drug Application (NDA) holder who produces some of its
own products, and the other is a contract filler for the NDA holder who
produces the remainder of the NDA holder's products. At the time we
gathered information via 114 letters, the companies had not reached an
agreement on the amount of MDIs to be produced by the contract filler
and the amount to be produced by the NDA holder. With this action, EPA
is proposing to allocate CFCs to these two companies in the amount
requested by the NDA holder. Because we are also proposing to allow
EUAs to be transferrable, the NDA holder will have the opportunity to
transfer some of its EUAs to the contract filler if necessary. This
transfer can be accomplished by adhering to the requirements in the
regulations at 40 CFR 82.12 which will be explained in detail in
section IV. In the event that the change to 40 CFR 82.12 proposed in
this rule which allow the transfer of EUAs is not finalized, EPA and
FDA will consult with the both contract filler and the NDA holder to
determine the proper allocation. Please note that EPA and FDA took into
account that the contract filler also manufactures products for yet
another company along with its own brand of MDIs and allocated the
entire amount requested to manufacture these other MDI products.
Can the Allocation Listed in This Proposed Rulemaking Be Changed in the
Final Rule?
The allocation amounts listed in this proposal are subject to
additional review by EPA and FDA if new information demonstrates that
the allocations are either too high or too low. Commenters requesting
increases or decreases of EUAs should provide detailed information
supporting their claim for additional or fewer CFCs. Any company that
determines that they no longer need the full amount allocated under
this proposal should notify EPA of the actual amount needed. Please
note that EPA is only authorized to allocate a total of 3,101 metric
tons of CFC, the amount requested by U.S. pharmaceutical companies and
subsequently approved by the Parties to the Montreal Protocol for 2001.
III. Allocation of Essential Use Allowances for Calendar Year 2001
What Is EPA's Proposed Essential Use Allocation for Calendar Year 2001?
EPA is proposing to allocate essential use allowances for the year
2001 control period to entities listed in Table III for exempted
production or import of the specific quantity of class I controlled
substances solely for the specified essential use. The proposed
allocation of CFCs for use in MDIs reflects the determination on the
amount of CFCs ``necessary'' as specified under section 604(d)(2) of
the Act.
TABLE III.--Essential Use Allocation for Calendar Year 2000
------------------------------------------------------------------------
Quantity
Company Chemical (metric tons)
------------------------------------------------------------------------
(i) Metered Dose Inhalers (for oral inhalation) for Treatment of Asthma
and Chronic Obstructive Pulmonary Disease (in metric tons)
------------------------------------------------------------------------
Medeva, Armstrong Pharmaceuticals CFC-11 or CFC-12 or 189.00
Inc.. CFC-114.
Boehringer Ingelheim CFC-11 or CFC-12 or 258.00
Pharmaceuticals. CFC-114.
Glaxo Wellcome Inc................ CFC-11 or CFC-12 or 858.10
CFC-114.
Aventis Pharmaceuticals (formerly CFC-11 or CFC-12 or 190.00
RPR). CFC-114.
3M Pharmaceuticals................ CFC-11 or CFC-12 or 384.87
CFC-114.
Sidmak Laboratories/Medisol CFC-11 or CFC-12 or 192.20
Laboratories, Inc.. CFC-114.
Schering Corporation.............. CFC-11 or CFC-12 or 1025.20
CFC-114.
Sciarra Laboratories, Inc......... CFC-11 or CFC-12 or 1.30
CFC-114.
------------------------------------------------------------------------
(ii) Cleaning, Bonding and Surface Activation Applications for the Space
Shuttle Rockets and Titan Rockets
------------------------------------------------------------------------
National Aeronautics and Space Methyl Chloroform... 56.7
Administration (NASA)/Thiokol
Rocket.
United States Air Force/Titan Methyl Chloroform... 3.4
Rocket.
------------------------------------------------------------------------
Why Is EPA Allocating CFC-11, CFC-12, and CFC-114 in the Aggregate to
Each Company?
EPA is allocating essential-use allowances for CFC-11, CFC-12, and
CFC-114 in the aggregate in accordance with Decision X/6 of the Parties
to the Montreal Protocol which states that ``the quantities approved
under paragraph 2 above and all future approvals are for total CFC
volumes with flexibility between CFCs within each group.'' Allocating
CFCs for MDI manufacture in the aggregate instead of on a compound-by-
compound basis adds flexibility to the regulation without causing
additional damage to the stratospheric ozone layer since CFC-11, CFC-12
and CFC-114 all have the same ozone depleting potential of 1.0.
Why Is EPA No Longer Allocating EUAs to the International
Pharmaceutical Aerosol Consortium (IPAC) as a Whole, But Instead
Allocating on a Company-by-Company Basis?
In the past, EPA allocated EUAs to IPAC as a whole and then sent
letters to each of its member companies notifying them of their
particular allocation. This inevitably resulted in minor delays in
informing IPAC member companies of their allocations. This year, EPA is
allocating EUAs on a company-by-company basis in order to inform the
IPAC member companies directly of their specific allocations. Thus it
will be clear to each company, including the IPAC members, the
quantities that are being proposed for each company allowing all
companies opportunity to comment on their individual allocations.
What Is EPA's Method for Allocating Methyl Chloroform (MCF) for Use in
Solid Rocket Motors?
With this action, EPA is proposing to allocate 60.1 metric tons of
MCF for use in solid rocket motors, the same amount allocated in the
years 1999 and 2000. Please note that with this action EPA is proposing
to allocate MCF in an amount
[[Page 59787]]
lower than would be consistent with Decision X/6 taken at the Tenth
meeting of the Parties to the Protocol because EPA believes that doing
so would allocate MCF in excess of the necessary amount.
Decision X/6 states that `` * * * the remaining quantity of methyl
chloroform authorized for the United States at previous meetings of the
Parties be made available for use in manufacturing solid rocket motors
until such time as the 1999-2001 quantity of 176.4 tons (17.6 ODP-
weighted tons) allowance is depleted, or until such time as safe
alternatives are implemented for remaining essential uses.'' According
to the EPA tracking system, the total amount of MCF produced or
imported by U.S. essential use recipients in 1999 was just 12 metric
tons indicating that the transition away from MCF is progressing faster
than anticipated, and that allocating the unused portion of MCF in its
entirety would be excessive. EPA believes that allocating the same
amount allocated in 2000, 60.1 metric tons of MCF, provides a
sufficient amount for use in solid rocket motors for the year 2001.
Please note that in future allocations essential use allowance holders
for MCF will still have access to MCF until the 1999-2001 quantity of
176.4 metric tons is depleted or until this use is no longer considered
essential.
In the event that commenters provide sufficient reasons as to why
EPA should allocate MCF in an amount consistent with Decision X/6, for
example, EPA would allocate MCF according to the following equation:
The amount of MCF approved by the Parties for essential uses for 1999-
2001 -2 x The amount of MCF imported or produced by U.S. essential
use holders in 1999=Allocation for 2001 (i.e., 176.4 metric tons -2 x
12 metric tons=152.4 metric tons).
Since the amount of MCF acquired in the year 2000 is not yet known,
the equation assumes that essential use holders will acquire the same
amount of MCF in 2000 as they had in 1999 and provides the best
possible approximation of the quantity of MCF that should be allocated
if EPA is persuaded to allocate MCF in the amount consistent with
Decision X/6.
What Reporting Requirements Relate to the Essential Uses of Ozone
Depleting Substances?
Any person obtaining class I controlled substances after the phase-
out under the essential use exemptions in today's action is subject to
all the restrictions and requirements in other sections of 40 CFR part
82, subpart A. Holders of essential-use allowances or persons obtaining
class I controlled substances under the essential-use exemptions must
comply with the record keeping and reporting requirements in 40 CFR
82.13. Instructions and forms for reporting are found in the Guidance
Document for the Stratospheric Ozone Protection Program after January
1, 1996. This document can be obtained by contacting the Stratospheric
Ozone Protection Hotline at (800) 296-1996 between 10:00 am and 4:00 pm
Eastern Standard Time.
It should be noted that under 40 CFR 82.3 and 82.4 (63 FR 41626,
August 4, 1998), entities receiving essential-use allowances must be
the importer of record for quantities of CFCs brought into the United
States. This requires that the essential-use allowance holder be listed
as the importer of record on Customs Form 7501. As a result, the
essential-use allowance holder who imports quantities of class I
controlled substances is responsible for submitting both an Importer
Quarterly Report and an Essential-Use Holder Quarterly Report.
IV. Proposed Changes to 82.12 Allowing Transfer of EUAs for CFCs
Among Essential Use Allowance Holders
With this document EPA is proposing to add essential use allowances
to the list of allowances that can be transferred under 40 CFR 82.12.
This change will enable essential use holders to transfer EUAs for CFCs
to other essential use holders for the production of essential MDIs.
EPA believes that allowing EUAs to be transferred among essential use
allowance holders incorporates flexibility into the current regulations
without increasing the amount of ODSs allocated.
Why Is EPA Proposing To Allow EUAs To Be Transferred Among EUA Holders?
Each year EPA requests applications from pharmaceutical companies
for essential use allowances for use in MDIs. EPA analyzes these
applications and uses them as the basis for the U.S. nomination for
essential use allowances at the Meeting of the Parties to the Montreal
Protocol which occurs two years prior to the year in which EUAs are
allocated to companies. Because it can be difficult to forecast the
amount of CFCs required for MDI production two years in advance, the
Parties provide an opportunity for countries to request a supplemental
amount of essential use allowances in the year following the initial
request. This system allows companies two opportunities to request
essential use allowances for the same year, ensuring that if the
initial request is not sufficient, there is a mechanism to increase the
allocation for that year. Essential use applicants had the option of
requesting supplemental CFCs for 2001 in September 15, 1999, in
response to the EPA document (64 FR 50083). No applicant elected to
supplement their request for the year 2001 at that time.
Even in the absence of applications for supplemental CFCs from
pharmaceutical companies, EPA and FDA consulted in March of this year
to determine whether the total allocation of 3,101 metric tons would be
sufficient to produce MDIs for the U.S. market. EPA and FDA determined,
based on the amount of CFCs used for MDI production in previous years,
that 3,101 metric tons would be sufficient to supply the MDI market as
a whole while accounting for the projected increase in demand for MDIs.
However, EPA and FDA noted that individual companies may have increased
market growth compared to others and would therefore need additional
CFCs. Because of the inherent uncertainty in allocating specific
amounts of CFCs to individual companies engaged in a dynamic market,
EPA is proposing that EUAs for CFCs become transferable among EUA
holders. This will ensure that companies have the opportunity to access
CFCs beyond the amount allocated to them in the year 2001 and beyond,
and can better respond to market shifts that may occur.
Will I Be Able To Transfer EUAs for CFCs to Anyone I Want?
No, EUAs for CFCs would only be transferable among those companies
that have applied for and received EUAs for the year 2001. In addition,
companies must certify in writing to EPA that the EUAs will only be
used in the production of essential medical devices as defined in the
Food, Drug and Cosmetic Act at 21 CFR 2.125 and considered essential by
the Parties to the Protocol.
If EUAs for CFCs Are Transferable, Can They Be Transferred From Year to
Year?
No, EUAs would not be transferable from year to year. Any EUAs for
CFCs not expended in 2001 will expire at the end of 2001.
Is There a Penalty for Transferring EUAs?
Yes. The CAA at section 607(a) states that rules governing transfer
of allowances for the production of class I and class II substances ``
* * * shall insure that the transactions under the
[[Page 59788]]
authority of this section will result in greater total reductions in
the production in each year of class I and class II substances than
would occur in that year in the absence of such transactions.'' In
compliance with this section, current regulations at 40 CFR 82.12
governing transfers of production and consumption allowances require
one percent of the traded amount to be deducted from the transferor's
unexpended allowances. EPA is proposing to amend the regulation so that
in the case of EUA transfers, one tenth of one percent of the amount
traded would be deducted from the transferor's account. EPA believes
that given the relatively small amount of EUAs available for use in
MDIs, and that providing sufficient EUAs for MDIs is critically
important for protecting public health, deducting one percent of the
amount of EUAs to be traded would be too high a penalty and may create
a barrier against transferring EUAs freely. EPA believes that reducing
the amount deducted from the transferor's account, would overcome this
potential barrier. Therefore, with today's action EPA is proposing
changes to regulations at Sec. 82.12 to require that in the case of
transferring EUAs, one tenth of one percent in excess of the amount
traded would be deducted from the transferor's account.
How Can I Transfer EUAs From My Company to Another?
In order to complete a transfer of EUAs for CFCs from one essential
use allowance holder to another, the transferor would have to submit to
the Administrator a letter with the information requested in 40 CFR
82.12(a)(1). Under the regulations at 40 CFR 82.12 the transferor must
submit to the Administrator a transfer claim with the following
information:
1. The identities and addresses of the transferor and
transferee.
2. The names and telephone numbers of contact persons for both
the transferor and transferee.
3. The type of allowances being transferred, which in this case
would always be essential use allowances.
4. The group of controlled substances being transferred, which
would always be Group I.
5. The amount of allowances being transferred in kilograms.
6. The control period for which the allowances are being
transferred (e.g. calendar year 2001).
7. The amount of unexpended essential use allowances for the
current control period.
8. The amount of the 0.1% offset applied to the unweighted
amount traded that will be deducted from the transferor's allowance
balance.
Guidance documents and a sample letter which outlines the necessary
information that a transferor must submit to EPA will be available
through the Stratospheric Ozone Hotline at 1-800-296-1996.
As outlined in Sec. 82.12, EPA will determine according to records
maintained by the EPA ODS tracking system whether the transferor
possesses as of the date of the transfer claim, unexpended allowances
sufficient to cover the transfer claim (i.e., the amount to be
transferred plus one tenth of one percent of that amount). Within three
working days of receiving a complete transfer claim, EPA will notify
the transferor and transferee if the transferor has sufficient
unexpended allowances to confer the transfer claim, and will issue a
notice indicating that EPA does not object to the transfer. EPA will
then reduce the transferor's balance of essential use allowances by the
amount to be transferred plus one tenth of one percent of that amount.
When EPA issues a no objection notice, the transferor and the
transferee may proceed with the transfer.
If EPA's records show that the transferor has insufficient
unexpended allowances to cover the transfer claim, or that the
transferor has failed to respond to one or more Agency requests to
supply information needed to make a determination, EPA will issue a
notice disallowing the transfer. Within 10 working days after receipt
of notifications, either party may file a notice of appeal, with
supporting reasons, to EPA, in which case EPA may either affirm or
vacate the disallowance. If no appeal is taken by the tenth working day
after notification, the disallowance shall be final on that day. (The
transferor and transferee will be held liable in accordance with Title
I, section 113 of the Act for any violations that occur as a result of
an improper transfer.) In the event that EPA does not respond to a
transfer claim within three working days of receipt of the completed
claim, the transferor and transferee may proceed with the transfer and
EPA will reduce the transferor's balance accordingly.
V. 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.
Today's rule contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) for State, local, or tribal
governments or the private sector. Because this rule imposes no
enforceable duty on any State, local or tribal government 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.
[[Page 59789]]
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)
This action does not impose any new information collection burden
as defined by the PRA. The Office of Management and Budget's (OMB's)
draft guidance on PRA states that a rule is exempt from OMB review if
it ``explicitly applies to nine or fewer persons''. Since the reporting
requirements in this rule are not of general applicability, and apply
only to the eight entities receiving EUAs for CFCs only if a company
decides to transfer EUAs to another essential use holder, we believe
that this rule is exempt from the requirement of submitting an
Information Collection Request and undergoing OMB review.
However, the Office of Management and Budget (OMB) has previously
approved the information collection requirements contained in the
existing regulations at 40 CFR 82.12 which set forth the process for
inter-company transfers of consumption allowances 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.1432.17). Copies of the ICR
document(s) may be obtained from Sandy Farmer, by mail at the Office of
Environmental Information, Collection Strategies Division; U.S.
Environmental Protection Agency (2822); 1200 Pennsylvania Ave., NW,
Washington, DC 20460, by email at [email protected], or by calling
(202) 260-2740. A copy may also be downloaded off the internet at
http://www.epa.gov/icr. Include the ICR and/or OMB number in any
correspondence.
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 13084: Consultation and Coordination With Indian
Tribal Governments
Under Executive Order 13084, EPA may not issue a regulation that is
not required by statute, that significantly or uniquely affects the
communities of Indian tribal governments, and that imposes substantial
direct compliance costs on those communities, unless the Federal
government provides the funds necessary to pay the direct compliance
costs incurred by the tribal governments, or EPA consults with those
governments. If EPA complies by consulting, Executive Order 13084
requires EPA to provide to the Office of Management and Budget, in a
separately identified section of the preamble to the rule, a
description of the extent of EPA's prior consultation with
representatives of affected tribal governments, a summary of the nature
of their concerns, and a statement supporting the need to issue the
regulation. In addition, Executive Order 13084 requires EPA to develop
an effective process permitting elected officials and other
representatives of Indian tribal governments to provide meaningful and
timely input in the development of regulatory policies on matters that
significantly or uniquely affect their communities.'' Today's rule does
not significantly or uniquely affect the communities of Indian tribal
governments. Accordingly, the requirements of section 3(b) of Executive
Order 13084 do not apply to this rule.
E. Regulatory Flexibility
After considering the economic impacts of today's proposed rule on
small entities, EPA has determined that it is not necessary to prepare
a regulatory flexibility analysis in connection with this rule. EPA has
also determined that this action will not have a significant economic
impact on a substantial number of small entities. This rule does not
have a significant impact on a substantial number of small entities.
The only entities that are directly affected by this allocation are
those to which CFCs and other ODSs are being allocated. There are only
ten entities which are affected by this rulemaking (see table 1 above).
This rule does not have an adverse economic impact on any entity
because it grants exceptions to a pre-existing ban.
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
[[Page 59790]]
standards in this regulatory activities unless to do so would be
inconsistent with applicable law or otherwise impractical. Voluntary
consensus standards are technical standards (e.g., materials
specifications, test methods, sampling procedures, and business
practices) that are developed or adopted by voluntary consensus
standards bodies. The NTTAA directs EPA to provide Congress, through
OMB, explanations when the Agency decides not to use available and
applicable voluntary consensus standards. This 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 432255,
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
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 State and local governments, or EPA
consults with State and local officials early in the process of
developing the proposed regulation. EPA also may not issue a regulation
that has federalism implications and theat preempts State law unless
the Agency consults with State and local officials early in the process
of developing the proposed regulation.
If EPA complies by consulting, Executive Order 13132 requires EPA
to provide the Office of Management and Budget (OMB), in a separately
identified section of the preamble to the rule, a federalism summary
impact statement (FSIS). The FSIS must include a description of the
extent of EPA's prior consultation with State and local officials, a
summary of the nature of their concerns and the agency's position
supporting the need to issue the regulation, and a statement of the
extent to which the concerns of State and local officials have been
met. Also, when EPA transmits a draft final rule with federalism
implications to OMB for review pursuant to Executive Order 12866, EPA
must include a certification from the agency's Federalism Official
stating that EPA has met the requirements of Executive Order 13132 in a
meaningful and timely manner. This rule 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. This rule will affect only the ability of
private entities and the national government to request production of
controlled ozone-depleting substances. Thus, the requirements of
section 6 of the Executive Order do not apply to this rule.
List of Subjects in 40 CFR Part 82
Environmental protection, Administrative practice and procedure,
Air pollution control, Chemicals, Chlorofluorocarbons, Exports,
Imports, Ozone layer, Reporting and recordkeeping requirements.
Dated: September 29, 2000.
Carol M. Browner,
Administrator.
40 CFR Part 82 is proposed to be 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 82.4 is amended by revising the table in paragraph
(t)(2) to read as follows:
Sec. 82.4 Prohibitions.
* * * * *
(t) * * *
(2) * * *
Table I.--Essential Use Allocation for Calendar Year 2000
------------------------------------------------------------------------
Quantity
Company Chemical (metric tons)
------------------------------------------------------------------------
(i) Metered Dose Inhalers (for oral inhalation) for Treatment of Asthma
and Chronic Obstructive Pulmonary Disease (in metric tons)
------------------------------------------------------------------------
Medeva Americas, Inc.............. CFC-11 or CFC-12 or 189.00
CFC-114.
Boehringer Ingelheim.............. CFC-11 or CFC-12 or 258.00
CFC-114.
Glaxo Wellcome.................... CFC-11 or CFC-12 or 858.10
CFC-114.
Aventis........................... CFC-11 or CFC-12 or 190.00
CFC-114.
3M Pharmaceuticals................ CFC-11 or CFC-12 or 384.87
CFC-114.
Sidmak Laboratories, Inc.......... CFC-11 or CFC-12 or 192.20
CFC-114.
Schering Corporation.............. CFC-11 or CFC-12 or 1025.20
CFC-114.
Sciarra Laboratories, Inc......... CFC-11 or CFC-12 or 1.3
CFC-114.
------------------------------------------------------------------------
(ii) Cleaning, Bonding and Surface Activation Applications for the Space
Shuttle Rockets and Titan Rockets
------------------------------------------------------------------------
National Aeronautics and Space Methyl Chloroform... 56.7
Administration (NASA)/Thiokol
Rocket.
United States Air Force/Titan Methyl Chloroform... 3.4
Rocket.
------------------------------------------------------------------------
Sec. 82.12 [Amended]
* * * * *
3. Section 82.12 is amended by revising paragraphs (a) (1)
introductory text, (a)(1)(i)(H), (a)(1)(ii) introductory text,
(a)(1)(ii)(A), and (a)(1)(iii) to read as follows:
Sec. 82.12 Transfers.
(a) * * *
(1) Until January 1, 1996, for all class I controlled substances,
except for Group VI, and until January 1, 2001, 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
[[Page 59791]]
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, and after January 1,
2001 any essential use allowance holder (``transferor'') may transfer
essential use allowances for CFCs to any other essential use allowance
holder for CFCs (``transferee'') solely for the production of essential
products (defined at 21 CFR 2.125) as follows:
(i) * * *
(H) The amount of the one percent offset applied to the unweighted
amount traded that will be deducted from the transferor's production or
consumption allowance balance (except for trades from transformers and
destroyers to producers or importers for the purpose of allowance
reimbursement) In the case of transferring essential use allowances,
the amount of one tenth of one percent of the amount traded will be
deducted from the transferor's allowance balance.
(ii) The Administrator will determine whether the records
maintained by EPA, taking into account any previous transfers and any
production, allowable imports and exports of controlled substances
reported by the transferor, indicate that the transferor possesses, as
of the date the transfer claim is processed, unexpended allowances
sufficient to cover the transfer claim (i.e., the amount to be
transferred plus, in the case of transferors of essential use
allowances, one tenth of one percent of that amount, and in the case of
transferors of production or consumption allowances, one percent of
that amount). Within three working days of receiving a complete
transfer claim, the Administrator will take action to notify the
transferor and transferee as follows:
(A) If EPA's records show that the transferor has sufficient
unexpended allowances to cover the transfer claim, the Administrator
will issue a notice indicating that EPA does not object to the transfer
and will reduce the transferor's balance of unexpended allowances by
the amount to be transferred plus, in the case of transfers of
production or consumption allowances, one percent of that amount, or in
the case of transfers of essential use allowances, one tenth of one
percent of that amount. When EPA issues a no objection notice, the
transferor and the transferee may proceed with the transfer. However,
if EPA ultimately finds that the transferor did not have sufficient
unexpended allowances to cover the claim, the transferor and transferee
will be held liable for any violations of the regulations of this
subpart that occur as a result of, or in conjunction with, the improper
transfer.
* * * * *
(iii) In the event that the Administrator does not respond to a
transfer claim within the three working days specified in paragraph
(a)(1)(ii) of this section, the transferor and transferee may proceed
with the transfer. EPA will reduce the transferor's balance of
unexpended allowances by the amount to be transferred plus, in the case
of transfers of production or consumption allowances, one percent of
that amount, or in the case of essential use allowances, one tenth of
one percent of that amount. However, if EPA ultimately finds that the
transferor did not have sufficient unexpended allowances to cover the
claim, the transferor and transferee will be held liable for any
violations of the regulations of this subpart that occur as a result
of, or in conjunction with, the improper transfer.
* * * * *
[FR Doc. 00-25745 Filed 10-5-00; 8:45 am]
BILLING CODE 6560-50-U