Protection of Stratospheric Ozone: Amendment to Transshipment Provision in Final Rule Accelerating the Phaseout of Ozone-Depleting Substances

SUMMARY: EPA is proposing stricter requirements for transshipments of

substances that deplete stratospheric ozone from foreign countries

through the United States to foreign destinations. The proposed

amendment would require a person to petition the Environmental

Protection Agency (EPA) prior to the export of a controlled ozone-

depleting substance to the United States for transshipment. EPA is

proposing the amendment due to new information that the current

regulation is being abused to illegally introduce controlled substances

into U.S. commerce. The proposed amendment, at the request of industry,

will protect the economic interests of legitimate businesses by

deterring the illegal diversion of transshipments of controlled

substances into U.S. commerce.

DATES: Written comments on this proposal must be received by June 9,

1995, at the address below. A public hearing, if requested, will be

held in Washington, D.C. If such a hearing is requested, it will be

held on May 25, 1995, and the comment period would then be extended to

June 26, 1995. Anyone who wishes to request a hearing should call Tom

Land at 202/233-9185 by May 17, 1995. Interested persons may contact

the Stratospheric Ozone Protection Hotline at 1-800-296-1996 to see if

a hearing will be held and to obtain the date and location of any

hearing. Any hearing will be strictly limited to the subject matter of

this proposal, the scope of which is discussed below.

ADDRESSES: Comments on this proposal must be submitted to the Air

Docket Office, Public Docket No. A-92-13, Room M-1500, Environmental

Protection Agency, 401 M St., SW, Washington, DC 20406. Additional

comments and materials supporting this rulemaking are contained in

Docket No. A-92-13. The Docket may be inspected from 8 a.m. until 5:30

p.m., Monday through Friday, at the address above. A reasonable fee may

be charged for copying Docket materials.

FOR FURTHER INFORMATION CONTACT: Tom Land, Environmental Protection

Agency, Office of Atmospheric Programs, Stratospheric Protection

Division, (6205-J), 401 M St., SW, Washington, DC 20460, (202) 233-

9185. The Stratospheric Ozone Protection Hotline at 1-(800)-296-1996

can also be contacted for further information of a copy of this rule.

SUPPLEMENTARY INFORMATION:

I. Background

Under the current regulatory requirements, published in the Federal

Register on December 10, 1993, a person who transships a controlled

substance from one foreign country through the United States to another

foreign destination does not need allowances. The Environmental

Protection Agency (EPA) implements a program of allowances to limit and

monitor the production, import and export of controlled substances in

the United States.

In the proposed rulemaking published in the Federal Register on

November 10, 1994 (59 FR 56275), EPA proposed clarifications to the

definition of transshipment. In response to that proposal several

companies suggested EPA create a permitting process for transshipments

to combat the known use of transshipment as a means of illegally

importing controlled substances. Since that time, EPA has confirmed

that transshipments are a large and common loophole for the illegal

entry of controlled substances into U.S. commerce. EPA and U.S. Customs

criminal investigators have identified transshipment as one of the most

likely schemes for the illegal import of controlled substances into the

United States. As recently as January 1995, three men were arrested for

conspiracy to divert material into U.S. interstate commerce that they

alleged was being transshipped. Legitimate U.S. companies that are

worldwide leaders in the transition to alternatives are being adversely

affected by illegal imports, and have requested such a change to

discourage this activity.

II. Amendment to the Transhipment Requirements

To eliminate the use of transhipments as a loophole for the illegal

import of controlled substances, EPA is proposing that a person must

petition the Agency to tranship class I substances. The proposed

petition process for transhipments would parallel the petition process

created to combat the illegal imports of used, recycled and reclaimed

controlled substances.

The proposed petition process for transhipments would require a

person to submit a petition to EPA to tranship each shipment through

the United States at least 15 working days prior to the date the ship

is to leave the foreign country prior to arriving in the U.S. to

tranship. The petition must include the following information:

The name and quantity of the controlled substance to be

transhipped,

The name and address of the importer, the importer I.D.

number, the contact person, and the phone and fax numbers,

Name and address of the exporter and/or foreign owner of

the material,

The U.S. port of entry for the import, the expected date

of shipment and the vessel transporting the chemical,

The intended foreign destination of the transhipped

material, the anticipated date of export from the U.S., U.S. port of

export, and, when practical, the anticipated vessel that will transport

the chemical.

As with petitions to import used controlled substances, EPA will

have 15 working days to review the petition to tranship. If during the

15 working days, EPA decides to object to the petition or to request

additional information, the person submitting the petition will be

notified. If EPA needs additional information, the importer may re-

submit the petition with the requested information. If EPA does not

object to the particular petition within the 15 working days, the

person may proceed with the transhipment and assume it is permitted.

EPA will then notify the U.S. Customs Service of the anticipated

arrival of the shipments that will be transhipped to another foreign

destination.

EPA believes that a shipment-by-shipment petition process for

transhipments will most effectively counter illegal imports and restore

market-based incentives for the transition to alternatives to

controlled ozone-depleting substances. Shipments to the United States

considered Transportation and Export (T&E) are not subject to the

proposed petition requirements.

III. Summary of Supporting Analysis

A. Executive Order 12866

Under Executive Order 12866 (58 FR 51735, October 4, 1993), the

Agency must determine whether this regulatory action is ``significant''

and therefore subject to OMB review and the requirements of the

Executive Order. [[Page 25011]] The Order defines ``significant''

regulatory action as one that is likely to lead to a rule that may:

(1) Have an annual effect on the economy of $100 million or more,

or adversely and materially affect a sector of the economy,

productivity, competition, jobs, the environment, public health or

safety, or State, local, or tribal governments or communities;

(2) Create a serious inconsistency or otherwise interfere with an

action taken or planned by another agency;

(3) Materially alter the budgetary impact of entitlement, grants,

user fees, or loan programs or the rights and obligations of recipients

thereof; or

(4) Raise novel legal or policy issues arising out of legal

mandates, the President's priorities, or the principles set forth in

the Executive Order.

It has been determined by OMB and EPA that this amendment to the

final rule is not a ``significant regulatory action'' under the terms

of Executive Order 12866 and is therefore not subject to OMB review

under the Executive Order.

B. Regulatory Flexibility Act

The Regulatory Flexibility Act, 5 U.S.C. 601-602, requires that

Federal agencies examine the impacts of their regulations on small

entities. Under 5 U.S.C. 604(a), whenever an agency is required to

publish a general notice of proposed rulemaking, it must prepare and

make available for public comment an initial regulatory flexibility

analysis (RFA). Such an analysis is not required if the head of an

agency certifies that a rule will not have a significant economic

impact on a substantial number of small entities, pursuant to 5 U.S.C.

605(b).

The Agency originally published an RFA to accompany the August 12,

1998 final rule (53 FR 30566) that placed the initial limits on the

production and consumption of CFCs and halons. The RFA was also updated

as Appendix G of the Regulatory Impact Analysis for the regulations

implementing the phaseout schedule of section 604 of the Clean Air Act

Amendments of 1990. The Addendum to the Regulatory Impact Analysis was

further updated in 1993 to examine the impact of the acceleration of

the phaseout and the phaseout of HCFCs on small businesses. The

analysis in the Addendum indicated that the actions were not expected

to have a substantial impact on small entities.

EPA believes that any impact that today's proposed amendment will

have on the regulated community will serve only to provide relief from

otherwise applicable regulations, and will therefore limit the negative

economic impact associated with the regulations previously promulgated

under Section 604 and 606. Although almost all businesses participants

in the phaseout program for ozone-depleting substances are large

businesses, today's proposed amendment reduces reporting or

recordkeeping burdens that might possibly impact small businesses.

Therefore, the proposed amendment is expected to have minimal if any

impact on small entities.

Under section 605 of the Regulatory Flexibility Act, 5 U.S.C. 605,

I certify that the regulation promulgated in this notice of proposed

rulemaking will not have any additional negative economic impacts on

any small entities.

C. Paperwork Reduction Act

The information collection requirements in this proposed rule have

been approved by the Office of Management and Budget (OMB) under the

Paperwork Reduction Act, 44 U.S.C. 3501 et. seq. and assigned control

number, OMB 2060-0170. An Information Collection Request document has

been prepared by EPA (ICR No. 1432.15) and a copy may be obtained from

Sandy Farmer, Information Policy Branch, U.S. EPA, 401 M St. SW.

(2136), Washington, DC 20460 or by calling (202)-260-2740.

The information collection requirements for this final rule has an

estimated reporting burden averaging 23.3 hours per response. This

estimate includes time for reviewing instructions, searching existing

data sources, gathering and maintaining the data needed and completing

the collection of information.

Send comments regarding the burden estimate of any other aspect of

this collection of information, including suggestions for reducing this

burden to Chief, Information Policy Branch, U.S. EPA, 401 M St., SW.,

(2136), Washington, DC 20460; and to the Office of Information and

Regulatory Affairs, Office of Management and Budget, Washington, DC

20503, marked ``Attention: Desk Officer for EPA.'' The final rule will

respond to any OMB or public comments on the information collection

requirements contained in this proposal.

D. Enhancing the Intergovernmental Partnership Under Executive Order

12875

In compliance with Executive Order 12875 we have involved state,

local, and tribal governments in the development of this rule to the

extent they are affected by these requirements. EPA is conducting an

outreach program to facilitate the transition for state, local and

tribal governments to ozone-friendly alternatives.

E. Unfunded Mandate Act

Section 202 of the Unfunded Mandates Reform Act of 1995 requires

EPA to prepare a budgetary impact statement before promulgating a rule

that includes a Federal mandate that may result in expenditure by

state, local and tribal governments, in aggregate, or by the private

sector, of $100 million or more in any one year. Section 203 requires

the Agency to establish a plan for obtaining input from and informing

any small governments that may be significantly or uniquely affected by

the rule. Section 250 requires that regulatory alternatives be

considered before promulgating a rule for which a budgetary impact

statement is prepared. The Agency must select the least costly, most

cost-effective, or least burdensome alternative that achieves the

rule's objectives, unless there is an explanation why this alternative

is not selected or this alternative is inconsistent with law.

The net effect of all the amendments to the accelerated phaseout

rule is a reduction in regulatory burden for regulated entities. This

proposed amendment is designed to confront illegal activities which are

costing legitimate U.S. businesses and the government millions of

dollars in lost revenue. Because this proposed amendment to the rule is

estimated to result in the expenditure of less than $100 million in any

one year by state, local, and tribal governments, or the private

section, the Agency has neither prepared a budgetary impact statement

nor addressed the selection of the least costly, most cost-effective,

or least burdensome alternative. Because small government will not be

significantly or uniquely affected by this rule, the Agency is not

required to develop a plan with regard to small governments.

List of Subjects in 40 CFR Part 82

Environmental protection, Administrative practice and procedure,

Air pollution control, Chemicals, Chlorofluorocarbons, Exports,

Hydrochlorofluorocarbons, Imports, Ozone layer, Reporting and

recordkeeping requirements, Stratospheric ozone layer.

Dated: April 19, 1995.

Carol Browner,

Administrator.

Part 82 is proposed to be amended as follows: [[Page 25012]]

PART 82--PROTECTION OF STRATOSPHERIC OZONE

1. The authority citation for part 82 continues to read as follows:

Authority: 42 U.S.C. 7414, 7671-671q.

Subpart A--Production and Consumption Controls

2. Section 82.4 is amended by adding paragraph (g), to read as

follows:

Sec. 82.4 Prohibitions.

* * * * *

(g) Effective January 1, 1995, no person may import, at any time in

any control period, a used class I controlled substance, or tranship a

controlled substance through the United States, without petitioning the

Administrator as under Sec. 82.13(g)(2) for authorization.

* * * * *

3. Section 82.13 is amended by adding paragraph (g)(2) to read as

follows:

Sec. 82.13 Record-keeping and reporting requirements.

* * * * *

(g) * * *

(1) * * *

(2) Petitioning--Importers of Used Controlled Substances and

Transhipments. For each shipment of a used controlled substance

(contaminated, recycled or reclaimed material), or each transhipment of

a class I controlled substance, an importer must submit to the

Administrator, at least 15 working days before the shipment is to leave

the port of export, the following information in a petition:

(i) The name and quantity of the used controlled substance to be

imported (including material that has been recycled or reclaimed) or of

the controlled substance to be transhipped;

(ii) The name and address of the importer, the importer ID number,

the contact person, and the phone and fax numbers;

(iii) Name and address of the source(s) of the used controlled

substance, including a description of the previous use(s), when

possible;

(iv) Name and address of the exporter and/or foreign owner of the

material,

(v) The U.S. port of entry for the import, the expected date of

arrival of the shipment and the vessel transporting the chemical;

(vi) The intended use of the used controlled substance;

(vii) The intended foreign destination of the transhipped material,

the anticipated date of export from the U.S., U.S. port of export, and,

when practical, the anticipated vessel that will transport the

chemical.

* * * * *

[FR Doc. 95-10615 Filed 5-9-95; 8:45 am]

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