[Code of Federal Regulations]
[Title 40, Volume 17]
[Revised as of July 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 40CFR82.23]

[Page 502-504]
 
                   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. 82.23  Transfers of allowances of class II controlled substances.

    (a) Inter-company transfers. Effective January 1, 2003, a person 
(``transferor'') may transfer to any other person (``transferee'') any 
quantity of the transferor's class II consumption allowances, production 
allowances, export production allowances, or Article 5 allowances for 
the same type of allowance 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 allowances being transferred, including the names of 
the class II controlled substances for which allowances are to be 
transferred;
    (D) The quantity (in kilograms) of allowances being transferred;
    (E) The control period(s) for which the allowances are being 
transferred;
    (F) The quantity of unexpended allowances of the type and for the 
control period being transferred that the transferor holds under 
authority of this subpart on the date the claim is submitted to EPA; and
    (G) For trades of consumption allowances, production allowances, 
export production allowances, or Article 5 allowances, the quantity of 
the 0.1 percent offset applied to the unweighted quantity traded that 
will be deducted from the transferor's allowance balance.
    (ii) The Administrator will determine whether the records maintained 
by EPA indicate that the transferor possesses unexpended allowances 
sufficient to cover the transfer claim on the date the transfer claim is 
processed. The transfer claim is the quantity (in kilograms) to be 
transferred plus, in the case of transfers of production or consumption 
allowances, 0.1 percent of that quantity. The Administrator will take 
into account any previous transfers, any production, and allowable 
imports and exports of class II controlled substances reported by the 
transferor. Within three working days of receiving a complete transfer 
claim, the Administrator will take action to notify the transferor and 
transferee as follows:
    (A) The Administrator will issue a notice indicating that EPA does 
not object to the transfer if EPA's records show that the transferor has 
sufficient unexpended allowances to cover the transfer claim. In the 
case of transfers of production or consumption allowances, EPA will 
reduce the transferor's

[[Page 503]]

balance of unexpended allowances by the quantity to be transferred plus 
0.1 percent of that quantity. In the case of transfers of export 
production or Article 5 allowances, EPA will reduce the transferor's 
balance of unexpended allowances, respectively, by the quantity to be 
transferred. The transferor and the transferee may proceed with the 
transfer when EPA issues a no objection notice. However, if EPA 
ultimately finds that the transferor did not have sufficient unexpended 
allowances to cover the claim, the transferor and transferee, where 
applicable, will be held liable for any knowing violations of the 
regulations of this subpart that occur as a result of, or in conjunction 
with, the improper transfer.
    (B) The Administrator will issue a notice disallowing 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. Either party may file a notice of 
appeal, with supporting reasons, with the Administrator within 10 
working days after receipt of notification. 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) The transferor and transferee may proceed with the transfer if 
the Administrator does not respond to a transfer claim within the three 
working days specified in paragraph (a)(1)(ii) of this section. In the 
case of transfers of production or consumption allowances, EPA will 
reduce the transferor's balance of unexpended allowances by the quantity 
to be transferred plus 0.1 percent of that quantity. In the case of 
transfers of export production allowances or Article 5 allowances, EPA 
will reduce the transferor's balance of unexpended allowances by the 
quantity to be transferred plus 0.1 percent of that quantity. If EPA 
ultimately finds that the transferor did not have sufficient unexpended 
allowances to cover the claim, the transferor and/or the transferee, 
where applicable, will be held liable for any knowing violations of the 
regulations of this subpart that occur as a result of, or in conjunction 
with, the improper transfer.
    (b) Inter-pollutant transfers. (1) Effective January 1, 2003, a 
person (transferor) may convert consumption allowances or production 
allowances for one class II controlled substance to the same type of 
allowance for another class II controlled substance listed in Appendix B 
of this subpart, following the procedures described in paragraph (b)(3) 
of this section.
    (2) Inter-pollutant transfers will be permitted at any time during 
the control period and during the 30 days after the end of a control 
period.
    (3) The transferor must submit to the Administrator a transfer claim 
that includes the following:
    (i) The identity and address of the transferor;
    (ii) The name and telephone number of a contact person for the 
transferor;
    (iii) The type of allowances being converted, including the names of 
the class II controlled substances for which allowances are to be 
converted;
    (iv) The quantity (in kilograms) and type of allowances to be 
converted;
    (v) The quantity (in kilograms) of allowances to be subtracted from 
the transferor's unexpended allowances for the first class II controlled 
substance, to be equal to 100.1 percent of the quantity of allowances 
converted;
    (vi) The quantity (in kilograms) of allowances to be added to the 
transferee's unexpended allowances for the second class II controlled 
substance, to be equal to the quantity (in kilograms) of allowances for 
the first class II controlled substance being converted multiplied by 
the quotient of the ozone depletion potential of the first class II 
controlled substance divided by the ozone depletion potential of the 
second class II controlled substance, as listed in Appendix B to this 
subpart;
    (vii) The control period(s) for which the allowances are being 
converted; and
    (viii) The quantity (in kilograms) of unexpended allowances of the 
type and for the control period being converted that the transferor 
holds under authority of this subpart as of the date the claim is 
submitted to EPA.

[[Page 504]]

    (4) The Administrator will determine whether the records maintained 
by EPA indicate that the convertor possesses unexpended allowances 
sufficient to cover the transfer claim on the date the transfer claim is 
processed (i.e., the quantity (in kilograms) to be converted plus 0.1 
percent of that quantity (in kilograms)). EPA will take into account any 
previous transfers, and any production, imports (not including 
transshipments or used class II controlled substances), or exports (not 
including transhipments or used class II controlled substances) of class 
II controlled substances reported by the convertor. Within three working 
days of receiving a complete transfer claim, the Administrator will take 
action to notify the convertor as follows:
    (i) The Administrator will issue a notice indicating that EPA does 
not object to the transfer if EPA's records show that the convertor has 
sufficient unexpended allowances to cover the transfer claim. EPA will 
reduce the transferor's balance of unexpended allowances by the quantity 
to be converted plus 0.1 percent of that quantity (in kilograms). When 
EPA issues a no objection notice, the transferor 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 
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.
    (ii) The Administrator will issue a notice disallowing 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. The transferor may file a notice of 
appeal, with supporting reasons, with the Administrator within 10 
working days after receipt of notification. 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) The transferor may proceed with the transfer if the 
Administrator does not respond to a transfer claim within the three 
working days specified in paragraph (b)(4) of this section. EPA will 
reduce the transferor's balance of unexpended allowances by the quantity 
(in kilograms) to be converted plus 0.1 percent of that quantity (in 
kilograms). The transferor 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 if EPA ultimately finds that the transferor 
did not have sufficient unexpended allowances or credits to cover the 
claim.
    (c) Inter-company transfers and Inter-pollutant transfers. If a 
person requests an inter-company transfer and an inter-pollutant 
transfer simultaneously, the quantity (in kilograms) subtracted from the 
transferor's unexpended production or consumption allowances for the 
first class II controlled substance will be equal to 100.1 percent of 
the quantity (in kilograms) of allowances that are being converted and 
transferred.
    (d) A person receiving a permanent transfer of baseline production 
allowances or baseline consumption allowances (the transferee) for a 
specific class II controlled substance will be the person who has their 
baseline allowances adjusted in accordance with phaseout schedules in 
this section.

[68 FR 2848, Jan. 21, 2003]