[Code of Federal Regulations]
[Title 40, Volume 15]
[Revised as of July 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 40CFR82.12]

[Page 345-350]
 
                   TITLE 40--PROTECTION OF ENVIRONMENT
 
         CHAPTER I--ENVIRONMENTAL PROTECTION AGENCY (CONTINUED)
 
PART 82--PROTECTION OF STRATOSPHERIC OZONE--Table of Contents
 
             Subpart A--Production and Consumption Controls
 
Sec. 82.12  Transfers of allowances for class I controlled substances.

    (a) Inter-company transfers. (1) Until January 1, 1996, for all 
class I controlled substances, except for Group VI, and until January 1, 
2005, for Group VI, any person (``transferor'') may transfer to any 
other person (``transferee'') any amount of the transferor's consumption 
allowances or production allowances, and effective January 1, 1995, for 
all class I controlled substances any person (``transferor'') may 
transfer to any other person (``transferee'') any amount of the 
transferor's Article 5 allowances. After January 1, 2002 any essential-
use allowance holder (including those persons that hold essential-use 
allowances issued by a Party other than the United States) 
(``transferor'') may transfer essential-use allowances for CFCs to a 
metered dose inhaler company solely for the manufacture of essential 
MDIs.
    (i) The transferor must submit to the Administrator a transfer claim 
setting forth the following:
    (A) The identities and addresses of the transferor and the 
transferee;
    (B) The name and telephone numbers of contact persons for the 
transferor and the transferee;
    (C) The type of allowances being transferred, including the names of 
the controlled substances for which allowances are to be transferred;
    (D) The group of controlled substances to which the allowances being 
transferred pertains;
    (E) The amount of allowances being transferred;

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    (F) The control period(s) for which the allowances are being 
transferred;
    (G) The amount of unexpended allowances of the type and for the 
control period being transferred that the transferor holds under 
authority of this subpart as of the date the claim is submitted to EPA; 
and
    (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.
    (I) The transferor must include a signed document from the 
transferee identifying the CFC MDI products that will be produced using 
the essential-use allowances.
    (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 
the transferred amount, and in the case of transferors of production or 
consumption allowances, one percent of the transferred 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.
    (B) 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, the Administrator 
will issue a notice disallowing the transfer. Within 10 working days 
after receipt of notification, either party may file a notice of appeal, 
with supporting reasons, with the Administrator. The Administrator may 
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.
    (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, and 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.
    (2) Effective January 1, 1996, any person (``transferor'') may 
transfer to an eligible person (``transferee'') as defined in Sec. 82.9 
any amount of the transferor's destruction and transformation credits. 
The transfer proceeds as follows:

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    (i) The transferor must submit to the Administrator a transfer claim 
setting forth the following:
    (A) The identities and addresses of the transferor and the 
transferee;
    (B) The name and telephone numbers of contact persons for the 
transferor and the transferee;
    (C) The type of credits being transferred, including the names of 
the controlled substances for which credits are to be transferred;
    (D) The group of controlled substances to which the credits being 
transferred pertains;
    (E) The amount of destruction and transformation credits being 
transferred;
    (F) The control period(s) for which the destruction and 
transformation credits are being transferred;
    (G) The amount of unexpended destruction and transformation credits 
for the control period being transferred that the transferor holds under 
authority of this subpart as of the date the claim is submitted to EPA; 
and
    (H) The amount of the one-percent offset applied to the unweighted 
amount traded that will be deducted from the transferor's balance.
    (ii) The Administrator will determine whether the records maintained 
by EPA, taking into account any previous transfers and any production of 
controlled substances reported by the transferor, indicate that the 
transferor possesses, as of the date the transfer claim is processed, 
unexpended destruction and transformation credits sufficient to cover 
the transfer claim (i.e., the amount to be transferred plus 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 destruction and transformation credits 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 or credits by the amount to be transferred plus 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 
credits 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.
    (B) If EPA's records show that the transferor has insufficient 
unexpended destruction and transformation credits 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, 
the Administrator will issue a notice disallowing the transfer. Within 
10 working days after receipt of notification, either party may file a 
notice of appeal, with supporting reasons, with the Administrator. The 
Administrator may 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.
    (iii) In the event that the Administrator does not respond to a 
transfer claim within the three working days specified in paragraph 
(a)(2)(ii) of this section, the transferor and transferee may proceed 
with the transfer. EPA will reduce the transferor's balance of 
unexpended destruction and transformation credits by the amount to be 
transferred plus one percent of that amount. However, if EPA ultimately 
finds that the transferor did not have sufficient unexpended credits 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.
    (b) Inter-pollutant conversions.
    (1) Until January 1, 1996, for all class I controlled substances, 
except Group VI, and until January 1, 2005 for Group VI, any person 
(``convertor'') may convert consumption allowances or production 
allowances for one class I controlled substance to the same type of 
allowance for another class I controlled substance within the same Group 
as the first as listed in appendix A of this subpart, following the 
procedures described in paragraph (b)(4) of this section.

[[Page 348]]

    (2) Effective January 1, 1995, any person (``convertor'') may 
convert Article 5 allowances for one class I controlled substance to the 
same type of allowance for another class I controlled substance within 
the same Group of controlled substances as the first as listed in 
appendix A of this subpart, following the procedures described in 
paragraph (b)(4) of this section.
    (3) Effective January 1, 1996, any person (``convertor'') may 
convert destruction and/or transformation credits for one class I 
controlled substance to the same type of credits for another class I 
controlled substance within the same Group of controlled substances as 
the first as listed in appendix A of this subpart, following the 
procedures in paragraph (b)(4) of this section.
    (4) The convertor must submit to the Administrator a conversion 
claim.
    (i) The conversion claim would include the following:
    (A) The identity and address of the convertor;
    (B) The name and telephone number of a contact person for the 
convertor;
    (C) The type of allowances or credits being converted, including the 
names of the controlled substances for which allowances or credits are 
to be converted;
    (D) The group of controlled substances to which the allowances or 
credits being converted pertains;
    (E) The amount and type of allowances or credits to be converted;
    (F) The amount of allowances or credits to be subtracted from the 
convertor's unexpended allowances or credits for the first controlled 
substance, to be equal to 101 percent of the amount of allowances or 
credits converted;
    (G) The amount of allowances or credits to be added to the 
convertor's unexpended allowances or credits for the second controlled 
substance, to be equal to the amount of allowances or credits for the 
first controlled substance being converted multiplied by the quotient of 
the ozone depletion factor of the first controlled substance divided by 
the ozone depletion factor of the second controlled substance, as listed 
in appendix A to this subpart;
    (H) The control period(s) for which the allowances or credits are 
being converted; and
    (I) The amount of unexpended allowances or credits of the type and 
for the control period being converted that the convertor holds under 
authority of this subpart as of the date the claim is submitted to EPA.
    (ii) The Administrator will determine whether the records maintained 
by EPA, taking into account any previous conversions, any transfers, any 
credits, and any production, imports (not including transhipments or 
used controlled substances), or exports (not including transhipments or 
used controlled substances) of controlled substances reported by the 
convertor, indicate that the convertor possesses, as of the date the 
conversion claim is processed, unexpended allowances or credits 
sufficient to cover the conversion claim (i.e., the amount to be 
converted plus one percent of that amount). Within three working days of 
receiving a complete conversion claim, the Administrator will take 
action to notify the convertor as follows:
    (A) If EPA's records show that the convertor has sufficient 
unexpended allowances or credits to cover the conversion claim, the 
Administrator will issue a notice indicating that EPA does not object to 
the conversion and will reduce the convertor's balance of unexpended 
allowances or credits by the amount to be converted plus one percent of 
that amount. When EPA issues a no objection notice, the convertor may 
proceed with the conversion. However, if EPA ultimately finds that the 
convertor did not have sufficient unexpended allowances or credits to 
cover the claim, the convertor 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 conversion.
    (B) If EPA's records show that the convertor has insufficient 
unexpended allowances or credits to cover the conversion claim, or that 
the convertor has failed to respond to one or more Agency requests to 
supply information needed to make a determination, the Administrator 
will issue a notice disallowing the conversion. Within 10

[[Page 349]]

working days after receipt of notification, the convertor may file a 
notice of appeal, with supporting reasons, with the Administrator. The 
Administrator may 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.
    (iii) In the event that the Administrator does not respond to a 
conversion claim within the three working days specified in paragraph 
(b)(4)(ii) of this section, the convertor may proceed with the 
conversion. EPA will reduce the convertor's balance of unexpended 
allowances or credits by the amount to be converted plus one percent of 
that amount. However, if EPA ultimately finds that the convertor did not 
have sufficient unexpended allowances or credits to cover the claims, 
the convertor 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 conversion.
    (5) Effective January 1, 1995, and for every control period 
thereafter, inter-pollutant trades will be permitted during the 45 days 
after the end of a control period.
    (c) Inter-company transfers and Inter-pollutant conversions.
    (1) Until January 1, 1996, for production and consumption 
allowances; effective January 1, 1995, for Article 5 allowances; and 
effective January 1, 1996, for destruction and/or transformation 
credits; if a person requests an inter-company transfer and an inter-
pollutant conversion simultaneously, the amount subtracted from the 
convertor-transferor's unexpended allowances or unexpended credits for 
the first controlled substance will be equal to 101 percent of the 
amount of allowances or credits that are being converted and 
transferred.
    (2) [Reserved]
    (d) Transfers of essential-use CFCs. (1) Effective January 1, 2002, 
any metered dose inhaler company (transferor) may transfer essential-use 
CFCs to another metered dose inhaler company (transferee) provided that 
the Administrator approves the transfer.
    (2) The transferee must submit a transfer claim to the Administrator 
for approval before the transfer can take place. The transfer claim must 
set forth the following:
    (i) The identities and addresses of the transferor and the 
transferee; and
    (ii) The name and telephone numbers of contact persons for the 
transferor and the transferee; and
    (iii) The amount of each controlled substance (CFC-11, CFC-12, or 
CFC-114) being transferred; and
    (iv) The specific metered dose inhaler products (i.e. the MDI drug 
product or active moiety) that the transferee plans to produce with the 
transferred CFCs; and
    (v) The country(ies) where the CFC metered dose inhalers produced 
with the transferred essential-use CFCs will be sold if other than in 
the United States; and
    (vi) Certification that the essential-use CFCs will be used in the 
production of essential MDIs. If the MDIs are to be sold in the United 
States, the certification must state that MDIs produced with the 
transferred essential-use CFCs are listed as essential at 21 CFR 2.125, 
and were approved by the Food and Drug Administration before December 
31, 2000. If the MDIs produced with the essential-use CFCs are to be 
sold outside the United States, the transferee must certify that the 
metered dose inhalers produced with the essential-use CFCs are 
considered essential by the importing country.
    (3) The transferor must submit a letter stating that it concurs with 
the terms of the transfer as requested by the transferee.
    (4) Once the transfer claim is complete, and if EPA does not object 
to the transfer, then EPA will issue letters to the transferor and the 
transferee within 10 business days indicating that the transfer may 
proceed. EPA reserves the right to disallow a transfer if the transfer 
request is incomplete, or if it has reason to believe that the 
transferee plans use the essential-use CFCs in anything other than 
essential MDIs. If EPA objects to the transfer, within EPA will issue 
letters to the transferor and transferee stating the basis for 
disallowing the transfer. The burden of proof is placed on the 
transferee to retain sufficient records to prove that the transferred 
essential-use CFCs are used only for production of essential

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MDIs. If EPA ultimately finds that the transferee did not use the 
essential-use CFCs for production of essential MDIs then the transferee 
is in violation of this subpart.

[60 FR 24986, May 10, 1995, as amended at 65 FR 70804, Nov. 28, 2000; 66 
FR 1471, Jan. 8, 2001; 67 FR 6361, Feb. 11, 2002]