PROTECTION
OF
STRATOSPHERIC
OZONE:
PROCESS
FOR
EXEMPTING
CRITICAL
USES
OF
METHYL
BROMIDE
MEMORANDUM:
EXPLANATION
OF
EPA'S
METHODOLOGY
FOR
CALCULATING
CRITICAL
STOCK
ALLOWANCES
(
CSAs)

TO:
E­
Docket
OAR­
2003­
0230
DATE:
December
15,
2004
Section
I:
Background
on
Proposed
Action
In
accordance
with
the
Clean
Air
Act
(
CAA)
and
the
Montreal
Protocol
on
Substances
that
Deplete
the
Ozone
Layer
(
Protocol),
EPA
proposed
to
issue
critical
use
allowances
to
producers
and
importers
of
methyl
bromide
for
the
continued
production
and
import
of
methyl
bromide
to
satisfy
particular
critical
uses
after
the
phaseout
of
the
ozone
depleting
substance
takes
effect
on
January
1,
2005.
In
accordance
with
these
authorities,
EPA
also
proposed
a
limit
on
the
sale
of
inventory
of
methyl
bromide
to
critical
use
categories.
This
action
proposed
that
holders
of
stocks
will
be
authorized
to
sell
methyl
bromide
for
critical
use
by
expending
critical
stock
allowances
(
CSAs)
that
would
be
allocated
by
EPA
through
a
final
rulemaking
action.

In
order
to
implement
its
proposed
action
and
allocate
CSAs
on
a
pro­
rata
basis
according
to
the
amount
of
inventory
held
for
sale
by
each
entity
EPA
needs
to
identify
the
total
amount
of
inventory
held
for
sale
by
all
entities.
This
memorandum
describes
the
methodology,
data
sources,
and
assumptions
that
EPA
has
used
to
calculate
CSAs
to
regulated
entities.

The
remainder
of
this
memorandum
is
organized
as
follows:

°
Section
II
explains
how
EPA
obtained
and
calculated
the
current
baseline
data.
°
Section
III
explains
the
methodology
EPA
used
to
calculate
CSAs.

Section
II:
EPA's
Calculation
of
Current
Baseline
Data
Since
2002,
EPA
has
used
its
authority
under
Section
114
of
the
CAA
to
require
that
certain
regulated
entities
provide
EPA
with
inventory
information
about
methyl
bromide.
Prior
to
the
development
of
this
Action,
EPA
last
made
a
Section
114
request
to
five
regulated
entities
in
January
2004,
requiring
that
the
entities
provide
inventory
data
for
2003.
However,
for
the
development
of
this
action,
EPA
wanted
to
have
the
most
recent,
current
data
possible,
from
all
entities
that
may
have
stocks
of
methyl
bromide
available
to
sell.

Therefore,
on
August
25,
2004,
EPA
issued
a
Section
114
request
for
methyl
bromide
inventory
information
in
the
Federal
Register.
Any
entity
that
owned
methyl
bromide
for
sale
or
for
transfer
was
required
to
respond.
The
request
required
entities
to
report
total
inventory
(
in
kilograms)
of
methyl
bromide,
the
amount
of
the
total
for
QPS,
and
the
amount
of
the
total
from
Article
5
allowances.
These
amounts
were
requested
as
of
12/
31/
04
and
as
of
8/
25/
04.

EPA
received
a
total
of
38
responses
from
regulated
entities.
Of
those
responses,
CSAs
were
calculated
for
28
entities.
The
remaining
10
entities
either
reported
0
inventory
for
both
dates,
are
end
users,
or
only
carry
out
QPS
fumigations,
which
means
that
their
inventory
consists
of
amounts
produced
under
a
different
exemption
for
specified
purposes.
EPA
then
totaled
the
inventory
from
the
entities,
subtracted
QPS
and
Article
5
allowances,
and
arrived
at
the
current
baseline.

Section
III:
Methodology
Used
to
Calculate
CSAs
Once
EPA
had
calculated
the
amount
of
stocks
in
aggregate,
EPA
then
calculated
each
individual
entity's
percentage
of
that
baseline,
based
on
their
reported
amount.
Based
on
Decision
Ex1/
3,
taken
at
the
Extraordinary
Meeting
of
the
Parties
in
March,
2004,
the
difference
between
the
total
critical
use
level
authorized
in
that
Decision
(
35%
of
baseline)
and
the
level
of
new
production/
import
(
30%
of
baseline)
must
be
drawn
down
from
available
inventories.
This
amount
totals
1,283,214
kilograms.

Some
entities
reported
zero
inventory
for
either
12/
31/
03
or
8/
25/
04,
but
more
substantial
inventory
for
the
other
control
period.
EPA
believes
that
this
is
in
part
because
the
level
of
inventories
fluctuate
throughout
the
year
with
the
fumigation
season
dwindling
as
winter
approaches
in
some
regions.
Rather
than
try
to
estimate
the
remaining
draw
down
for
2004,
EPA
decided
to
take
the
average
of
the
amounts
held
on
the
two
dates
to
establish
the
operational
baseline
for
each
company
as
this
is
the
best
data
available
to
the
Agency
at
this
time.
To
distribute
CSAs
to
these
entities,
EPA
took
the
average
of
the
12/
31/
03
and
the
8/
25/
04
inventory
totals
to
account
for
this
discrepancy.
EPA
calculated
the
CSAs
in
the
following
manner:

Assume:

X
=
percentage
of
baseline
Y
=
total
available
stocks
Z
=
total
CSAs
available
(
1,283,214
kg)
A
=
amount
of
entity
holdings
reported
B
=
amount
of
entity
CSA
allowance
Step
1:
In
order
to
calculate
each
entity's
percentage
of
baseline,

X
=
A
Y
Step
2:
In
order
to
calculate
each
entity's
CSA:
B
=
(
X)
x
(
Z)

Prior
to
making
any
calculations,
EPA
staff
called
all
of
the
regulated
entities
to
be
granted
CSAs
to
ensure
that
the
amount
of
reported
inventory
was
actually
owned
by
the
regulatory
entity
in
question,
and
was
available
for
sale.
