[Code of Federal Regulations]

[Title 40, Volume 17]

[Revised as of July 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 40CFR82.12]



[Page 475-480]

 

                   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. After January 1, 2005, any critical use allowance holder 

(``transferor'') may transfer critical use allowances to any other 

person (``transferee''). After January 1,



[[Page 476]]



2005, any critical stock allowance holder (``transferor'') may transfer 

critical stock allowances to any critical stock allowance holder or any 

methyl bromide producer, importer, distributer or third party applicator 

(``transferee'').

    (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;

    (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 one percent offset applied to the unweighted amount traded 

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. In the case of transferring critical use 

allowances, the amount of one tenth of one percent of the amount traded 

will be deducted from the transferor's critical use 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 and critical use allowances, 

one tenth of 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



[[Page 477]]



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 and critical 

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:

    (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



[[Page 478]]



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.

    (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



[[Page 479]]



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 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.



[[Page 480]]



    (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 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.

    (e) Exchange of Critical Use Allowances for Critical Stock 

Allowances. (1) Critical use allowance holders may petition the 

Administrator to exchange a quantity of their unexpended critical use 

allowances for an equivalent amount of critical stock allowances. A 

person allocated critical stock allowances may not petition to exchange 

unexpended critical stock allowances for critical use allowances.

    (2) [Reserved]



[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; 69 FR 77004, Dec. 23, 

2004]