Request for Applications for Essential Use Exemptions to the Production and Import Phaseout of Ozone Depleting Substances Under the Montreal Protocol for the Years 2006 and 2007

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Notice.

SUMMARY:

Through this action, the Environmental Protection Agency (EPA) is requesting applications for essential use allowances for calendar years 2006 and 2007. Essential use allowances provide exemptions to the production and import phaseout of ozone-depleting substances and must be authorized by the Parties to the Montreal Protocol on Substances that Deplete the Ozone Layer. The U.S. Government will use the applications received in response to this notice as the basis for its nomination of essential use allowances at the Seventeenth Meeting of the Parties to the Montreal Protocol on Substances that Deplete the Ozone Layer (the Protocol), to be held in 2005.

DATES:

Applications for essential use exemptions must be submitted to EPA no later than November 5, 2004 in order for the U.S. Government to complete its review and to submit nominations to the United Nations Environment Programme and the Protocol Parties in a timely manner.

ADDRESSES:

Send two copies of application materials to: Scott Monroe, Stratospheric Protection Division (6205J), U.S. Environmental Protection Agency, 1200 Pennsylvania Avenue, NW., Washington, DC 20460. (For applications sent via courier service, use the following direct mailing address: 1310 L Street, NW., Washington, DC 20005.) Confidentiality: Application materials that are confidential should be submitted under separate cover and be clearly identified as “trade secret,” “proprietary,” or “company confidential.” Information covered by a claim of business confidentiality will be treated in accordance with the procedures for handling information claimed as confidential under 40 CFR part 2, subpart B, and will be disclosed only to the extent and by means of the procedures, set forth in that subpart. Please note that data will be presented in aggregate form by the United States as part of the nomination to the Parties. If no claim of confidentiality accompanies the information when it is received by EPA, the information may be made available to the public by EPA without further notice to the company (40 CFR 2.203).

FOR FURTHER INFORMATION CONTACT:

Scott Monroe at the above address, or by telephone at (202) 343-9712, by fax at (202) 343-2363, or by e-mail at monroe.scott@epa.gov. General information may be obtained from EPA's stratospheric protection Web site at http://www.epa.gov/ozone .

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background on the Essential Use Nomination Process

II. Information Required for Essential Use Applications for Production or Importation of Class I Substances in 2006 and 2007

I. Background—The Essential Use Nomination Process

As described in previous Federal Register (FR) documents, the Parties to the Protocol agreed during the Fourth Meeting in Copenhagen on November 23-25, 1992, to accelerate the phaseout schedules for Class I ozone-depleting substances. Specifically, the Parties agreed that non-Article 5 Parties (that is, developed countries) would phase out the production and consumption of halons by January 1, 1994, and the production and consumption of other class I substances (under 40 CFR part 82, subpart A), except methyl bromide, by January 1, 1996. The Parties also reached decisions and adopted resolutions on a variety of other matters, including the criteria to be used for allowing “essential use” exemptions from the phaseout of production and importation of controlled substances. Decision IV/25 of the Fourth Meeting of the Parties details the specific criteria and review process for granting essential use exemptions.

Decision IV/25, paragraph 1(a), states 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.” In addition, the Parties agreed “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 the existing stocks of banked or recycled controlled substances * * *.” Decision XII/2 taken at the twelfth meeting of the Parties states that any CFC metered dose inhaler (MDI) product approved after December 31, 2000, is nonessential unless the product meets the criteria in Decision IV/25, paragraph 1(a).

The first step in obtaining essential use allowances is for the user to consider whether the use of the controlled substance meets the criteria of Decision IV/25. If the essential use request is for an MDI product, that product must also meet the criteria of Decision XII/2. The user should then send a completed application in order to notify EPA of the candidate use and provide information for U.S. Government agencies and the Protocol Parties to evaluate that use according to the criteria under the Protocol.

Upon receipt of the essential use exemption application, EPA reviews the information provided and works with other interested Federal agencies to determine whether it meets the essential use criteria and warrants being nominated by the United States for an exemption. In the case of multiple exemption requests for a single use, such as for MDIs, EPA aggregates exemption requests received from individual entities into a single U.S. request. An important part of the EPA review of requests for CFCs for MDIs is to determine that the aggregate request for a particular future year adequately reflects the total market need for CFC MDIs and expected availability of CFC substitutes by that point in time. If the sum of individual requests does not account for such factors, the U.S. Government may adjust the aggregate request to better reflect true market needs.

Nominations submitted by the United States and other Parties are forwarded from the United Nations Ozone Secretariat to the Montreal Protocol's Technical and Economic Assessment Panel (TEAP) and its Technical Options Committees (TOCs), which review the submissions and make recommendations to the Protocol Parties for essential use exemptions. Those recommendations are then considered by the Parties at their annual meeting for final decision. If the Parties declare a specified use of a controlled substance as essential, and issue the necessary exemption from the production and consumption phaseout, EPA may propose regulatory changes to reflect the decisions by the Parties, but only to the extent such action is consistent with the Clean Air Act (CAA or Act).

Applicants should be aware that essential use exemptions granted to the United States under the Protocol in recent years have been limited to chlorofluorocarbons (CFCs) for metered dose inhalers (MDIs) to treat asthma and chronic obstructive pulmonary disease, and methyl chloroform for use in manufacturing solid rocket motors. As of January 1, 2005, methyl chloroform will no longer be eligible for essential use allowances under section 604(d)(1) of the Act. EPA is consulting with the Department of Defense to identify mission-critical uses for which methyl chloroform or other ozone-depleting substances may be needed in the future.

The timing of the process described above is such that in any given year the Parties review nominations for essential use exemptions from the production and consumption phaseout intended for the following year and subsequent years. This means that, if nominated, applications submitted in response to today's notice for an exemption in 2006 and 2007 will be considered by the Parties in 2005 for final action.

The quantities of controlled ODSs that are requested in response to this notice, if approved by the Parties to the Montreal Protocol in 2005, will then be allocated as essential use allowances (EUAs) to the specific U.S. companies through notice and comment rulemaking, to the extent that such allocations are consistent with the Act. EUAs for the year 2006 will be allocated to U.S. companies at the end of 2005, and EUAs for the year 2007 will be allocated at the end of 2006.

II. Information Required for Essential Use Applications for Production or Importation of Class I Substances in 2006 and 2007

Through this action, EPA requests applications for essential use exemptions for all class I substances, except methyl bromide, for calendar years 2006 and 2007. (EPA requests and considers applications for critical use exemptions for methyl bromide through a separate process.) This notice is the last opportunity to submit new or revised applications for 2006. This notice is also the first opportunity to submit requests for 2007. Companies will have an opportunity to submit new, supplemental, or amended applications for 2007 next year. All requests for exemptions submitted to EPA must present information as prescribed in the current version of the TEAP “Handbook on Essential Use Nominations” (or “handbook”), which was published in June 2001. The handbook is available electronically on the Web at http://www.teap.org , or at http://www.epa.gov/ozone .

In brief, the TEAP Handbook states that applicants must present information on:

• Role of use in society;
• Alternatives to use;
• Steps to minimize use;
• Steps to minimize emissions;
• Recycling and stockpiling;
• Quantity of controlled substances requested; and
• Approval date and indications (for MDIs).

First, in order to obtain complete information from essential use applicants for CFC MDIs, EPA requires that any person who requests CFCs for multiple companies make clear the amount of CFCs requested for each member company. Second, all essential use applications for CFCs must provide a breakdown of the quantity of CFCs necessary for each MDI product to be produced. This detailed breakdown of EUAs will allow EPA and the Food and Drug Administration to make informed decisions on the amount of CFC to be nominated by the U.S. Government for the years 2006 and 2007. Third, all new drug application (NDA) holders for CFC MDI products produced in the United States must submit a complete application for essential use allowances either on their own or in conjunction with their contract filler. In the case where a contract filler produces a portion of an NDA holder's CFC MDIs, the contract filler and the NDA holder must determine the total amount of CFCs necessary to produce the NDA holder's entire product line of CFC MDIs. The NDA holder must provide an estimate of how the CFCs would be split between the contract filler and the NDA holder in the allocation year. This estimate will be used only as a basis for determining the nomination amount, and may be adjusted prior to allocation of EUAs. Since the U.S. Government cannot forward incomplete or inadequate nominations to the Ozone Secretariat, it is important for applicants to provide all information requested in the Handbook, including the information specified in the Supplemental Research and Development form (page 45).

The accounting framework matrix in the handbook entitled “Table IV: Reporting Accounting Framework for Essential Uses Other Than Laboratory and Analytical” requests data for the year 2004 on the amount of ODS exempted for an essential use, the amount acquired by production, the amount acquired by import, the amount on hand at the start of the year, the amount available for use in 2004, the amount used for the essential use, the quantity contained in exported products, the amount destroyed, and the amount on hand at the end of 2004. Because all data necessary for applicants to complete Table IV will not be available until after January 1, 2005, companies should not include this chart with their EUA applications in response to this notice. Instead, companies should provide the required data as specified in 40 CFR 82.13(u)(2). EPA must compile companies' responses to complete the U.S. CFC Accounting Framework for submission to the Parties to the Montreal Protocol by the end of January.

EPA anticipates that the Parties' review of MDI essential use requests will focus extensively on the United States' progress in phasing out CFC MDIs, including efforts by pharmaceutical companies to research, develop, and market non-CFC products. Accordingly, applicants are strongly advised to present detailed information on this subject. Applicants should submit their exemption requests to EPA as noted in the ADDRESSES section above.