[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: 40CFR82.9]



[Page 469-473]

 

                   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.  82.9  Availability of production allowances in addition to baseline 

production allowances for class I controlled substances.



    (a) Every person apportioned baseline production allowances for 

class I controlled substances under Sec.  82.5 (a) through (f) of this 

subpart is also granted Article 5 allowances equal to:

    (1) 10 percent of their baseline production allowances listed for 

class I, Group I, Group III, Group IV, and Group V controlled substances 

listed under Sec.  82.5 of this subpart for each control period ending 

before January 1, 1996;

    (2) 15 percent of their baseline production allowances for class I, 

Group VI controlled substances listed under Sec.  82.5 of this subpart 

for each control period ending before January 1, 2005;

    (3) 15 percent of their baseline production allowances for class I, 

Group II controlled substances listed under Sec.  82.5 of this subpart 

for each control period beginning January 1, 1994, until January 1, 

2003;

    (4) 15 percent of their baseline production allowances for Class I, 

Group IV and Group V controlled substances listed under Sec.  82.5 of 

this subpart for each control period beginning January 1, 1996 until 

January 1, 2010;

    (b) Effective January 1, 1995, a person allocated Article 5 

allowances may produce class I controlled substances for export to 

Article 5 countries as under Sec.  82.11 and transfer Article 5 

allowances as under Sec.  82.12.

    (c) A company may increase or decrease its production allowances, 

its Article 5 allowances by trading with another Party to the Protocol 

according to the provision under this paragraph (c). A company may 

increase or decrease its essential-use allowances for CFCs for use in 

essential MDIs according to the provisions under this paragraph (c). A 

nation listed in appendix C to this subpart (Parties to the Montreal 

Protocol) must agree either to transfer to the person for the current 

control period some amount of production or import that the nation is 

permitted under the Montreal Protocol or to receive from the person for 

the current control period some amount of production or import that the 

person is permitted under this subpart. If the controlled substance is 

produced under the authority of production allowances and is to be 

returned to the Party from whom production allowances are received, the 

request for production allowances shall also be considered a request for 

consumption allowances under Sec.  82.10(c). If the controlled substance 

is produced under the authority of production allowances and is to be 

sold in the United States or to another Party (not the Party from whom 

the allowances are received), the U.S. company must expend its 

consumption allowances allocated under Sec.  82.6 and Sec.  82.7 in 

order to produce with the additional production allowances.

    (1) For trades from a Party, the person must obtain from the 

principal diplomatic representative in that nation's embassy in the 

United States a signed document stating that the appropriate authority 

within that nation has established or revised production limits or 

essential-use allowance limits for the nation to equal the lesser of the 

maximum production that the nation is allowed under the Protocol minus 

the amount transferred, the maximum production or essential-use 

allowances that are allowed under the nation's applicable domestic law 

minus the amount transferred, or the average of the nation's actual 

national production level for the three years prior to the transfer 

minus the production transferred. The person must submit to the 

Administrator a transfer request that includes a true copy of this 

document and that sets forth the following:

    (i) The identity and address of the person;

    (ii) The identity of the Party;

    (iii) The names and telephone numbers of contact persons for the 

person and for the Party;

    (iv) The chemical type, type of allowance being transferred, and the 

level of allowances being transferred;



[[Page 470]]



    (v) The control period(s) to which the transfer applies; and

    (vi) For increased production intended for export to the Party from 

whom the allowances would be received, a signed statement of intent to 

export to the Party.

    (vii) In the case of transferring essential-use allowances, the 

transferor must include a signed document from the transferee 

identifying the CFC MDI products that will be produced using the 

essential-use allowances.

    (2) For trades to a Party, a person must submit a transfer request 

that sets forth the following:

    (i) The identity and address of the person;

    (ii) The identity of the Party;

    (iii) The names and telephone numbers of contact persons for the 

person and for the Party;

    (iv) The chemical type, type of allowance being transferred, and the 

level of allowances being transferred; and

    (v) The control period(s) to which the transfer applies.

    (3) After receiving a transfer request that meets the requirements 

of paragraph (c)(2) of this section, the Administrator may, at his 

discretion, consider the following factors in deciding whether to 

approve such a transfer:

    (i) Possible creation of economic hardship;

    (ii) Possible effects on trade;

    (iii) Potential environmental implications; and

    (iv) The total amount of unexpended production or essential-use 

allowances held by a U.S. entity.

    (v) In the case of transfer of essential-use allowances the 

Administrator may consider whether the CFCs will be used for production 

of essential MDIs.

    (4) The Administrator will issue the person a notice either granting 

or deducting production allowances, Article 5 allowances, or essential-

use allowances, and specifying the control period to which the transfer 

applies, provided that the request meets the requirement of paragraph 

(c)(1) of this sections for trades from Parties and paragraph (c)(2) of 

this section for trades to Parties, unless the Administrator has decided 

to disapprove the trade under paragraph (c)(3) of this section. For a 

trade from a Party, the Administrator will issue a notice that revises 

the allowances held by the person to equal the unexpended production, 

Article 5, or essential-use allowances held by the person under this 

subpart plus the level of allowable production transferred from the 

Party. For a trade to a Party, the Administrator will issue a notice 

that revises the production limit for the person to equal the lesser of:

    (i) The unexpended production allowances, essential-use allowances, 

or Article 5 allowances held by the person under this subpart minus the 

amount transferred; or

    (ii) The unexpended production allowances, essential-use allowances, 

or Article 5 allowances held by the person under this subpart minus the 

amount by which the United States average annual production of the 

controlled substance being traded for the three years prior to the 

transfer is less than the total production allowable for that substance 

under this subpart minus the amount transferred. The change in 

allowances will be effective on the date that the notice is issued.

    (5) If after one person obtains approval for a trade of allowable 

production of a controlled substance to a Party, one or more other 

persons obtain approval for trades involving the same controlled 

substance and the same control period, the Administrator will issue 

notices revising the production limits for each of the other persons 

trading that controlled substance in that control period to equal the 

lesser of:

    (i) The unexpended production allowances or Article 5 allowances 

held by the person under this subpart minus the amount transferred; or

    (ii) The unexpended production allowances or Article 5 allowances 

held by the person under this subpart minus the amount by which the 

United States average annual production of the controlled substance 

being traded for the three years prior to the transfer is less than the 

total allowable production for that substance under this subpart 

multiplied by the amount transferred divided by the total amount 

transferred by all the other persons trading the same controlled 

substance in the same



[[Page 471]]



control period minus the amount transferred by that person.

    (iii) The Administrator will also issue a notice revising the 

production limit for each person who previously obtained approval of a 

trade of that substance in that control period to equal the unexpended 

production allowances or unexpended Article 5 allowances held by the 

person under this subpart plus the amount by which the United States 

average annual production of the controlled substance being traded for 

the three years prior to the transfer is less than the total allowable 

production under this subpart multiplied by the amount transferred by 

that person divided by the amount transferred by all of the persons who 

have traded that controlled substance in that control period. The change 

in production allowances or Article 5 allowances will be effective on 

the date that the notice is issued.

    (d) Effective January 1, 1996, there will be no trade in production 

or consumption allowances with other Parties to the Protocol for class I 

controlled substances, except for class I, Group VI, methyl bromide.

    (e) Until January 1, 1996 for all class I controlled substances, 

except Group VI, and until January 1, 2005 for class I, Group VI, a 

person may obtain production allowances for that controlled substance 

equal to the amount of that controlled substance produced in the United 

States that was transformed or destroyed within the United States, or 

transformed or destroyed by a person of another Party, in the cases 

where production allowances were expended to produce such substance in 

the U.S. in accordance with the provisions of this paragraph. A request 

for production allowances under this section will be considered a 

request for consumption allowances under Sec.  82.10(b).

    (1) Until January 1, 1996, for all class I controlled substances, 

except Group VI, and until January 1, 2005, for class I, Group VI, a 

person must submit a request for production allowances that includes the 

following:

    (i) The name, address, and telephone number of the person requesting 

the allowances, and the Employer Identification Number if the controlled 

substance is being exported;

    (ii) The name, quantity, and level of controlled substance 

transformed or the name, quantity and volume destroyed, and the 

commodity code if the substance was exported;

    (iii) A copy of the invoice or receipt documenting the sale of the 

controlled substance, including the name, address, contact person and 

telephone number of the transformer or destroyer;

    (iv) A certification that production allowances were expended for 

the production of the controlled substance, and the date of purchase, if 

applicable;

    (v) If the controlled substance is transformed, the name, quantity, 

and verification of the commercial use of the resulting chemical and a 

copy of the IRS certificate of intent to use the controlled substance as 

a feedstock; and,

    (vi) If the controlled substance is destroyed, the verification of 

the destruction efficiency.

    (2) Until January 1, 1996 for all class I controlled substances, 

except Group VI, and until January 1, 2005, for class I, Group VI, the 

Administrator will review the information and documentation submitted 

under paragraph (e)(1) of this section and will assess the quantity of 

class I controlled substance that the documentation and information 

verifies was transformed or destroyed. The Administrator will issue the 

person production allowances equivalent to the controlled substances 

that the Administrator determines were transformed or destroyed. For 

controlled substances completely destroyed under this rule, the Agency 

will grant allowances equal to 100 percent of volume intended for 

destruction. For those controlled substances destroyed at less than a 98 

percent destruction efficiency, the Agency will grant allowances 

commensurate with that percentage of destruction efficiency that is 

actually achieved. The grant of allowances will be effective on the date 

that the notice is issued.

    (3) Until January 1, 1996 for all class I controlled substances, 

except Group VI, and until January 1, 2005, for class I, Group VI, if 

the Administrator determines that the request for production allowances 

does not satisfactorily substantiate that the person transformed or 

destroyed controlled substances as



[[Page 472]]



claimed, or that modified allowances were not expended, the 

Administrator will issue a notice disallowing the request for additional 

production allowances. Within ten working days after receipt of 

notification, the person may file a notice of appeal, with supporting 

reasons, with the Administrator. The Administrator may affirm the 

disallowance or grant an allowance, as she/he finds appropriate in light 

of the available evidence. If no appeal is taken by the tenth day after 

notification, the disallowance will be final on that day.

    (f) Effective January 1, 1996, and until January 1, 2000, a person 

who was nominated by the United States to the Secretariat of the 

Montreal Protocol for an essential use exemption may obtain destruction 

and transformation credits for a class I controlled substance (except 

class I, Group VI) equal to the amount of that controlled substance 

produced in the United States that was destroyed or transformed within 

the United States in cases where the controlled substance was produced 

for other than destruction or transformation in accordance with the 

provisions of this subpart, subtracting an offset of 15 percent.

    (1) Effective January 1, 1996, and until January 1, 2000, a person 

must submit a request for destruction and transformation credits that 

includes the following:

    (i) The identity and address of the person and the essential-use 

exemption and years for which the person was nominated to the 

Secretariat of the Montreal Protocol;

    (ii) The name, quantity and volume of controlled substance destroyed 

or transformed;

    (iii) A copy of the invoice or receipt documenting the sale or 

transfer of the controlled substance to the person;

    (iv) A certification of the previous use of the controlled 

substance;

    (v) For destruction credits, a certification that the controlled 

substance was destroyed and a certification of the efficiency of the 

destruction process; and

    (vi) For transformation credits, an IRS certificate of feedstock use 

or transformation of the controlled substance.

    (2) Effective January 1, 1996, and until January 1, 2000, the 

Administrator will issue the person destruction and transformation 

credits equivalent to the class I controlled substance (except class I, 

Group VI) recovered from a use system in the United States, that the 

Administrator determines were destroyed or transformed, subtracting the 

offset of 15 percent. For controlled substances completely destroyed 

under this rule, the Agency will grant destruction credits equal to 100 

percent of volume destroyed minus the offset. For those controlled 

substances destroyed at less than a 98 percent destruction efficiency, 

the Agency will grant destruction credits commensurate with that 

percentage of destruction efficiency that is actually achieved minus the 

offset. The grant of credits will be effective on the date that the 

notice is issued.

    (3) Effective January 1, 1996, and until January 1, 2000, if the 

Administrator determines that the request for destruction and 

transformation credits does not satisfactorily substantiate that the 

person was nominated for an essential-use exemption by the United States 

to the Secretariat for the Montreal Protocol for the control period, or 

that the person destroyed or transformed a class I controlled substance 

as claimed, or that the controlled substance was not recovered from a 

U.S. use system the Administrator will issue a notice disallowing the 

request for additional destruction and transformation credits. Within 

ten working days after receipt of notification, the person may file a 

notice of appeal, with supporting reasons, with the Administrator. The 

Administrator may affirm the disallowance or grant an allowance, as she/

he finds appropriate in light of the available evidence. If no appeal is 

taken by the tenth day after notification, the disallowance will be 

final on that day.

    (g) International transfer of essential-use CFCs. (1) For trades of 

essential-use CFCs where the transferee or the transferor is a person in 

another nation (Party), the persons involved in the transfer must submit 

the information requested in Sec.  82.12(d)(2) and (d)(3), along with a 

signed document from the principal diplomatic representative in



[[Page 473]]



the Party's embassy in the United States stating that the appropriate 

authority within that nation has approved the transfer of the essential-

use CFCs.

    (2) If the transfer claim is complete, and EPA does not object to 

the transfer, then EPA will issue letters to the transferor and the 

transferee 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 to produce MDIs 

that are not essential MDIs. If EPA objects to the transfer, 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.



[60 FR 24986, May 10, 1995, as amended at 63 FR 41643, Aug. 4, 1998; 63 

FR 53290, Oct. 5, 1998; 65 FR 70804, Nov. 28, 2000; 67 FR 6360, Feb. 11, 

2002; 67 FR 21134, Apr. 29, 2002; 70 FR 77047, Dec. 29, 2005]