  SEQ CHAPTER \h \r 1 ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 82

[EPA- HQ-OAR-2006-1016; FRL-]

RIN:	2060-A030

Protection of Stratospheric Ozone: The 2008 Critical Use Exemption From
the Phaseout of Methyl Bromide

AGENCY:  Environmental Protection Agency (EPA).

ACTION:   Final Rule.

SUMMARY:  EPA is finalizing an exemption to the phaseout of methyl
bromide to meet the needs of 2008 critical uses.  Specifically, EPA is
authorizing uses that qualify for the 2008 critical use exemption and
the amount of methyl bromide that may be produced, imported, or supplied
from existing stocks for those uses in 2008.  EPA is taking action under
the authority of the Clean Air Act to reflect recent consensus decisions
taken by the Parties to the Montreal Protocol on Substances that Deplete
the Ozone Layer (Protocol) at the 18th Meeting of the Parties (MOP).

DATES:  This rule is effective on [insert date of publication].

ADDRESSES:  EPA has established a docket for this action identified
under Docket ID No. EPA-HQ-OAR-2006-1016.  All documents in the docket
are listed on the   HYPERLINK "http://www.regulations.gov" 
http://www.regulations.gov  site.  Although listed in the index, some
information is not publicly available, e.g., CBI or other information
whose disclosure is restricted by statute.  Certain other material, such
as copyrighted material, is not placed on the Internet and will be
publicly available only in hard copy form.  Publicly available docket
materials are available only through   HYPERLINK
"http://www.regulations.gov"  www.regulations.gov  or in hard copy.   To
obtain copies of materials in hard copy, please call the EPA Docket
Center at (202) 564-1744 between the hours of 8:30am-4:30pm E.S.T.,
Monday-Friday, excluding legal holidays, to schedule an appointment. 
The EPA Docket Center’s Public Reading Room address is EPA/DC, EPA
West, Room 3334, 1301 Constitution Ave. N.W., Washington, D.C.

For Further Information Contact: Aaron Levy by telephone at (202)
343-9215, or by e-mail at   HYPERLINK "mailto:levy.aaron@epa.gov" 
levy.aaron@epa.gov  or by mail at Aaron Levy, U.S. Environmental
Protection Agency, Stratospheric Protection Division, Stratospheric
Program Implementation Branch (6205J), 1200 Pennsylvania Avenue, N.W.,
Washington, D.C., 20460.  You may also visit the Ozone Depletion web
site of EPA’s Stratospheric Protection Division at     HYPERLINK
"http://www.epa.gov/ozone/index.html"  www.epa.gov/ozone  for further
information about EPA’s Stratospheric Ozone Protection regulations,
the science of ozone layer depletion, and other related topics.

Supplementary Information: 

	This final rule concerns Clean Air Act (CAA) restrictions on the
consumption, production, and use of methyl bromide (a class I, Group VI
controlled substance) for critical uses during calendar year 2008. 
Under the Clean Air Act, methyl bromide consumption (consumption is
defined under the CAA as production plus imports minus exports) and
production was phased out on January 1, 2005 apart from allowable
exemptions, namely the critical use exemption and the quarantine and
pre-shipment exemption.  With this action, EPA is authorizing the uses
that will qualify for the 2008 critical use exemption as well as
specific amounts of methyl bromide that may be produced, imported, or
sold from stocks for critical uses in 2008.

	Section 553(d) of the Administrative Procedure Act (APA), 5 U.S.C.
Chapter 5, generally provides that rules may not take effect earlier
than 30 days after they are published in the Federal Register.  EPA is
issuing this final rule under section 307(d) of the Clean Air Act, which
states: “The provisions of section 553 through 557 . . . of Title 5
shall not, except as expressly provided in this section, apply to
actions to which this subsection applies.”  CAA section 307(d)(1). 
Thus, section 553(d) of the APA does not apply to this rule.  EPA is
nevertheless acting consistently with the policies underlying APA
section 553(d) in making this rule effective on [Insert date of
publication].  APA section 553(d) provides an exception for any action
that grants or recognizes an exemption or relieves a restriction.  This
final rule grants an exemption from the phaseout of methyl bromide.

Table of Contents

I.	General Information

Regulated Entities

II.       What is Methyl Bromide?

III.      What is the Background to the Phaseout Regulations for Ozone
Depleting Substances?

IV.      What is the Legal Authority for Exempting the Production and
Import of Methyl Bromide for Critical Uses Authorized by the Parties to
the Montreal Protocol?  

V.	What is the Critical Use Exemption Process?

A.	A.	Background of the Process	

	B.	How Does This Final Rulemaking Relate to Previous Critical Use
Exemption Rulemakings?

	C.	Critical Uses

	D.	Critical Use Amounts

		1. Background of Critical Use Amounts

		2. Calculation of Available Stocks

		3. Adjusting New Production and Import Amounts to Account for 	 			
Available Stocks

		4. Treatment of Carry-Over Material

		5. Amounts for Research Purposes

		6. Methyl Bromide Alternatives

	E.	Recordkeeping and Reporting

F.	The Criteria in Decisions IX/6 and Ex. I/4

	G.	Emissions Minimization

	H.	Critical Use Allowance Allocations

	I.	Critical Stock Allowance Allocations and Total Volumes of Critical
Use Methyl Bromide

	J.	Stocks of Methyl Bromide

VI.	Statutory and Executive Order Reviews 

	A.	Executive Order 12866: Regulatory Planning and Review

	B.	Paperwork Reduction Act

	C.	Regulatory Flexibility Act

	D.	Unfunded Mandates Reform Act

	E.	Executive Order 13132: Federalism

	F.	Executive Order 13175: Consultation and Coordination with Indian
Tribal Governments

	G.	Executive Order 13045: Protection of Children from Environmental
Health and Safety Risks

	H.	Executive Order 13211: Actions that Significantly Affect Energy
Supply, Distribution, or Use

	I.	National Technology Transfer and Advancement Act

J.	Executive Order 12898:  Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Populations

K. 	Congressional Review Act

I.  General Information

A.  Regulated Entities

	Entities potentially regulated by this action are those associated with
the production, import, export, sale, application, and use of methyl
bromide covered by an approved critical use exemption.  Potentially
regulated categories and entities include:

Category		Examples of Regulated Entities

Industry	Producers, Importers and Exporters of methyl bromide;
Applicators, Distributors of methyl bromide; Users of methyl bromide,
e.g., farmers of vegetable crops, fruits and seedlings; and owners of
stored food commodities and structures such as grain mills and
processors, agricultural researchers.

	The above table is not intended to be exhaustive, but rather to provide
a guide for readers regarding entities likely to be regulated by this
action.  This table lists the types of entities that EPA is aware could
potentially be regulated by this action.  To determine whether your
facility, company, business, or organization is regulated by this
action, you should carefully examine the regulations promulgated at 40
CFR Part 82, Subpart A.  If you have questions regarding the
applicability of this action to a particular entity, consult the person
listed in the preceding section.

II.  What is Methyl Bromide?

	Methyl bromide is an odorless, colorless, toxic gas which is used as a
broad-spectrum pesticide and is controlled under the CAA as a class I
ozone-depleting substance (ODS).  Methyl bromide is used in the U.S. and
throughout the world as a fumigant to control a variety of pests such as
insects, weeds, rodents, pathogens, and nematodes.  Additional
characteristics and details about the uses of methyl bromide can be
found in the proposed rule on the phaseout schedule for methyl bromide
published in the Federal Register on March 18, 1993 (58 FR 15014) and
the final rule published in the Federal Register on December 10, 1993
(58 FR 65018).  Information on methyl bromide can be found at
http://www.epa.gov/ozone/mbr and http://www.unep.org/ozone or by
contacting the Stratospheric Ozone Hotline at 1-800-296-1996.

	Because it is a pesticide, methyl bromide is also regulated by EPA
under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA)
and other statutes and regulatory authority, as well as by States under
their own statutes and regulatory authority.  Under FIFRA, methyl
bromide is a restricted use pesticide.  Restricted use pesticides are
subject to certain Federal and State requirements governing their sale,
distribution, and use.  Nothing in this proposed rule implementing the
Clean Air Act is intended to derogate from provisions in any other
Federal, State, or Local laws or regulations governing actions
including, but not limited to, the sale, distribution, transfer, and use
of methyl bromide.  All entities that are affected by provisions of this
action must continue to comply with FIFRA and other pertinent statutory
and regulatory requirements for pesticides (including, but not limited
to, requirements pertaining to restricted use pesticides) when
importing, exporting, acquiring, selling, distributing, transferring, or
using methyl bromide for critical uses.  The regulations in this final
rule are intended only to implement the CAA restrictions on the
production, consumption, and use of methyl bromide for critical uses
exempted from the phaseout of methyl bromide. 

II.  What is the Background to the Phaseout Regulations for
Ozone-Depleting Substances?

	The current regulatory requirements of the Stratospheric Ozone
Protection Program that limit production and consumption of
ozone-depleting substances can be found at 40 CFR part 82, subpart A. 
The regulatory program was originally published in the Federal Register
on August 12, 1988 (53 FR 30566), in response to the 1987 signing and
subsequent ratification of the Montreal Protocol on Substances that
Deplete the Ozone Layer (Protocol).  The Protocol is the international
agreement aimed at reducing and eliminating the production and
consumption of stratospheric ozone depleting substances.  The U.S. was
one of the original signatories to the 1987 Montreal Protocol and the
U.S. ratified the Protocol on April 12, 1988.  Congress then enacted,
and President George H.W. Bush signed into law, the Clean Air Act
Amendments of 1990 (CAAA of 1990) which included Title VI on
Stratospheric Ozone Protection, codified as 42 U.S.C. Chapter 85,
Subchapter VI, to ensure that the United States could satisfy its
obligations under the Protocol.  EPA issued new regulations to implement
this legislation and has made several amendments to the regulations
since that time.

	Methyl bromide was added to the Protocol as an ozone-depleting
substance in 1992 through the Copenhagen amendment to the Protocol.  
The Parties to the Montreal Protocol (Parties) agreed that each
industrialized country’s level of methyl bromide production and
consumption in 1991 should be the baseline for establishing a freeze in
the level of methyl bromide production and consumption for
industrialized countries.  EPA published a final rule in the Federal
Register on December 10, 1993 (58 FR 65018), listing methyl bromide as a
class I, Group VI controlled substance, freezing U.S. production and
consumption at this 1991 level of 25,528,270 kilograms, and, in 40 CFR
82.7 of the rule, setting forth the percentage of baseline allowances
for methyl bromide granted to companies in each control period (each
calendar year) until 2001, when the complete phaseout would occur.  This
phaseout date was established in response to a petition filed in 1991
under sections 602(c)(3) and 606(b) of the CAAA of 1990, requesting that
EPA list methyl bromide as a class I substance and phase out its
production and consumption.  This date was consistent with section
602(d) of the CAAA of 1990, which for newly listed class I
ozone-depleting substances provides that “no extension [of the
phaseout schedule in section 604] under this subsection may extend the
date for termination of production of any class I substance to a date
more than 7 years after January 1 of the year after the year in which
the substance is added to the list of class I substances.”  EPA based
its action on scientific assessments and actions by the Parties to the
Montreal Protocol to freeze the level of methyl bromide production and
consumption for industrialized countries at the 1992 Meeting of the
Parties in Copenhagen.

	At their 1995 meeting, the Parties made adjustments to the methyl
bromide control measures and agreed to reduction steps and a 2010
phaseout date for industrialized countries with exemptions permitted for
critical uses.  At that time, the U.S. continued to have a 2001 phaseout
date in accordance with the CAAA of 1990 language.  At their 1997
meeting, the Parties agreed to further adjustments to the phaseout
schedule for methyl bromide in industrialized countries, with reduction
steps leading to a 2005 phaseout for industrialized countries. 

IV.  What is the Legal Authority for Exempting the Production and Import
of Methyl Bromide for Critical Uses Authorized by the Parties to the
Montreal Protocol?

	In October 1998, the U.S. Congress amended the CAA to prohibit the
termination of production of methyl bromide prior to January 1, 2005, to
require EPA to bring the U.S. phaseout of methyl bromide in line with
the schedule specified under the Protocol, and to authorize EPA to
provide exemptions for critical uses.  These amendments were contained
in Section 764 of the 1999 Omnibus Consolidated and Emergency
Supplemental Appropriations Act (Pub. L. 105-277, October 21, 1998) and
were codified in Section 604 of the CAA, 42 U.S.C. 7671c.  The amendment
that specifically addresses the critical use exemption appears at
Section 604(d)(6), 42 U.S.C. 7671c(d)(6).  EPA revised the phaseout
schedule for methyl bromide production and consumption in a direct final
rulemaking on November 28, 2000 (65 FR 70795), which allowed for the
phased reduction in methyl bromide consumption and extended the phaseout
to 2005.  EPA again amended the revised phaseout to allow for an
exemption for quarantine and preshipment purposes on July 19, 2001 (66
FR 37751) with an interim final rule and with a final rule on January 2,
2003 (68 FR 238).  

	On December 23, 2004 (69 FR 76982), EPA published a final rule titled
“Protection of Stratospheric Ozone: Process for Exempting Critical
Uses From the Phaseout of Methyl Bromide” (the “Framework Rule”)
in the Federal Register that established the framework for the critical
use exemption; set forth a list of approved critical uses for 2005; and
specified the amount of methyl bromide that could be supplied in 2005
from stocks and new production or import to meet the needs of approved
critical uses.  EPA then promulgated a second rule that added additional
uses to the exemption program for 2005 and allocated additional stock
allowances (70 FR 73604).  EPA published a final rule on February 6,
2006, to exempt production and import of methyl bromide for 2006
critical uses and indicated which uses met the criteria for the
exemption program for that year (71 FR 5985).  EPA published another
final rule on December 14, 2006, to exempt production and import of
methyl bromide for critical uses in 2007 and indicated which uses met
the criteria for critical uses for that year (71 FR 75386).  Under
authority of section 604(d)(6) of the CAA, this action lists the uses
that qualify as approved critical uses in calendar year 2008 and the
amount of methyl bromide required to satisfy those uses.

	This action reflects Decision XVIII/13, taken at the Eighteenth Meeting
of the Parties in October 2006.  In accordance with Article 2H(5), the
Parties have issued several Decisions pertaining to the critical use
exemption.  These include Decisions IX/6 and Ex. I/4, which set forth
criteria for review of proposed critical uses.  The status of Decisions
is addressed in NRDC v. EPA, (464 F.3d 1, D.C. Cir. 2006) and in EPA’s
“Supplemental Brief for the Respondent,” filed in NRDC v. EPA and
available in the docket for this action.  In this final rule, EPA is
honoring commitments made by the United States in the Montreal Protocol
context.  

V.  What is the Critical Use Exemption Process?

A.  Background of the Process

	Starting in 2002, EPA began notifying applicants of the process for
obtaining a critical use exemption to the methyl bromide phaseout.  On
May 8, 2003, the Agency published its first notice in the Federal
Register (68 FR 24737) announcing the availability of the application
for a critical use exemption and the deadline for submission of the
requisite data.  Applicants were informed that they may apply as
individuals or as part of a group of users (a “consortium”) who face
the same limiting critical conditions (i.e. specific conditions that
establish a critical need for methyl bromide).  EPA has repeated this
process annually since then.  The critical use exemption is designed to
permit production and import of methyl bromide for uses that do not have
technically and economically feasible alternatives.

	The criteria for the exemption initially appeared in Decision IX/6 of
the Parties to the Protocol.  In that Decision, the Parties agreed that
“a use of methyl bromide should qualify as ‘critical’ only if the
nominating Party determines that: (i) The specific use is critical
because the lack of availability of methyl bromide for that use would
result in a significant market disruption; and (ii) there are no
technically and economically feasible alternatives or substitutes
available to the user that are acceptable from the standpoint of
environment and public health and are suitable to the crops and
circumstances of the nomination.”  These criteria are reflected in
EPA’s definition of “critical use” at 40 CFR 82.3.

	In response to the yearly requests for critical use exemption
applications published in the Federal Register, applicants have provided
data on the technical and economic feasibility of using alternatives to
methyl bromide.  Applicants further submit data on their use of methyl
bromide, on research programs into the use of alternatives to methyl
bromide, and on efforts to minimize use and emissions of methyl bromide.

	EPA’s Office of Pesticide Programs reviews the data submitted by
applicants, as well as data from governmental and academic sources, to
establish whether there are technically and economically feasible
alternatives available for a particular use of methyl bromide and
whether there would be significant market disruption if no exemption
were available.  In addition, EPA reviews other parameters of the
exemption applications such as dosage and emissions minimization
techniques and applicants’ research or transition plans.  This
assessment process culminates with the development of a document
referred to as the “Critical Use Nomination” or CUN.  The U.S.
Department of State submits the CUN annually to the United Nations
Environment Programme (UNEP) Ozone Secretariat.  The CUNs of various
countries are subsequently reviewed by the Methyl Bromide Technical
Options Committee (MBTOC) and the Technical and Economic Assessment
Panel (TEAP), which are independent advisory bodies to Parties to the
Montreal Protocol.  These bodies make recommendations to the Parties on
the nominations.  The Parties then take a Decision to authorize a
critical use exemption for a particular country.  The Decision also
identifies how much methyl bromide may be supplied for the exempted
critical uses.  As required in Section 604(d)(6) of the Clean Air Act,
for each exemption period, EPA consults with the United States
Department of Agriculture and other departments and institutions of the
Federal government that have regulatory authority related to methyl
bromide, and provides an opportunity for public comment on the amounts
of methyl bromide that the Agency has determined to be necessary for
critical uses and the uses that the Agency has determined meet the
criteria of the critical use exemption.

	For more information on the domestic review process and methodology
employed by the Office of Pesticide Programs, please refer to a detailed
memo titled “Development of 2003 Nomination for a Critical Use
Exemption for Methyl Bromide for the United States of America”
available on the docket for this rulemaking.  While the particulars of
the data continue to evolve and clerical matters are further
streamlined, the technical review itself has remained the same since the
inception of the exemption program.

	On January 24, 2006, the U.S. Government (USG) submitted the fourth
Nomination for a Critical Use Exemption for Methyl Bromide for the
United States of America to the Ozone Secretariat of the United Nations
Environment Programme.  This fourth nomination contained the request for
2008 critical uses.  In March 2006, MBTOC sent questions to the USG
concerning technical and economic issues in the nomination.  In April
2006 the USG transmitted responses to MBTOC’s requests for
clarification.  The USG received MBTOC’s second-round of questions in
June 2006, and sent responses to MBTOC in August 2006.  These documents,
together with reports by the advisory bodies noted above, can be
accessed in the public docket for this rulemaking.  The determination in
this final rule reflects the analysis contained in those documents.

B.  How Does This Final Rulemaking Relate to Previous Critical Use
Exemption Rulemakings?

	The December 23, 2004 Framework Rule (69 FR 76982) established the
operational framework for the critical use exemption program in the
U.S., including trading provisions and recordkeeping and reporting
obligations.  The Framework Rule defined the terms “critical use
allowances” (CUAs) and “critical stock allowances” (CSAs) at 40
CFR 82.3.  Today’s action authorizes the uses that will qualify as
critical uses for 2008 and the amounts of CUAs and CSAs that will be
allocated for those uses.  The uses that EPA is authorizing as 2008
critical uses are the uses which the USG included in the fourth CUN, and
which were approved by the Parties in Decision XVIII/13.  In this
action, EPA is also refining its approach for determining the amount of
CSAs to allocate in 2008 and each year thereafter.  EPA discusses the
refined approach in detail in Section V.D. of this preamble.

C.  Critical Uses

	In Decision XVIII/13, taken in October 2006, the Parties to the
Protocol agreed as follows: “for the agreed critical-use categories
for 2008, set forth in table C of the annex to the present decision for
each Party to permit, subject to the conditions set forth in the present
decision and decision Ex.I/4, to the extent that those conditions are
applicable, the levels of production and consumption for 2008 set forth
in table D of the annex to the present decision which are necessary to
satisfy critical uses …”

	The following uses are those set forth in table C of the annex to
Decision XVIII/13: Commodities, Cocoa beans (NPMA subset), NPMA food
processing structures (cocoa beans removed), Mills and processors,
Smokehouse ham, Cucurbits – field, Eggplant – field, Forest nursery,
Nursery stock – fruit, nut, flower, Orchard replant, Ornamentals,
Peppers – field, Strawberry – field, Strawberry runners, Tomatoes
– field, Sweet potato slips.  The agreed critical-use levels for 2008
total 5,355,946 kilograms (kg), which is equivalent to 21.0% of the U.S.
1991 methyl bromide consumption baseline of 25,528,270 kg.  However, the
maximum amount of allowable new production and import as set forth in
table D of Decision XVIII/13 is 4,595,040 kg (18.0% of baseline).  For
the reasons described in Section V.D. of this preamble, EPA is allowing
limited amounts of new production or import of methyl bromide for
critical uses for 2008 up to the amount of 3,098,981 kg (12.1% of
baseline), with 1,724,550 kg (6.8% of baseline) coming from stocks.  To
clarify, while the Parties require only 760,906 kg of stockpile use if
the entire U.S. allotment is utilized, EPA is allowing use of 1,724,550
kg of stockpiles for critical uses and reducing allowable production
accordingly.  

	In this final rule, EPA is amending Columns B and C of Appendix L to 40
CFR Part 82, Subpart A to reflect the agreed critical-use categories
identified in Decision XVIII/13 for the 2008 control period (calendar
year).  The Agency is amending the table of critical uses based, in
part, on the technical analysis contained in the 2008 U.S. nomination
that assesses data submitted by applicants to the critical use exemption
program as well as public and proprietary data on the use of methyl
bromide and its alternatives.  EPA sought comment on the aforementioned
analysis and, in particular, any information regarding changes to the
registration or use of alternatives that may have transpired after the
2008 nomination was written. Such information has the potential to alter
the technical or economic feasibility of an alternative and could thus
cause EPA to modify the analysis that underpins EPA’s determination as
to which uses and what amounts of methyl bromide qualify for the
critical use exemption.  

	EPA received three comments on the recent time-limited federal
registration of the soil fumigant iodomethane (methyl iodide), which
began October 2007.  EPA reviewed information about the registration of
iodomethane, and determined that at this time the registration of
iodomethane does not change the Agency’s determination of which uses
qualify for the critical use exemption.  The impact of the recent
registration of iodomethane on EPA’s determination as to what amounts
of methyl bromide qualify for the critical use exemption is discussed in
Section V.D.6. of this preamble.  Based on the information described
above, EPA is determining that the uses in Table I: Approved Critical
Uses, with the limiting critical conditions specified, qualify to obtain
and use critical use methyl bromide in 2008.

Table I: Approved Critical Uses 

Column A	Column B	Column C

	

Approved Critical Uses	Approved Critical User and Location of Use
Limiting Critical Conditions 

that either exist, or that the approved critical user reasonably expects
could arise without methyl bromide fumigation:

PRE-PLANT USES			

Cucurbits	(a) Michigan growers	Moderate to severe soilborne disease
infestation  

A need for methyl bromide for research purposes

	(b) Southeastern U.S. limited to growing locations in Alabama,
Arkansas, Kentucky, Louisiana, Mississippi, North Carolina, South
Carolina, Tennessee, and Virginia  	Moderate to severe yellow or purple
nutsedge infestation

Moderate to severe soilborne disease infestation 

Moderate to severe root knot nematode infestation

A need for methyl bromide for research purposes

	(c) Georgia growers	Moderate to severe yellow or purple nutsedge
infestation

Moderate to severe soilborne disease infestation 

Moderate to severe root knot nematode infestation

A need for methyl bromide for research purposes

Eggplant	(a) Florida growers	Moderate to severe yellow or purple
nutsedge infestation 

Moderate to severe soilborne disease infestation

Restrictions on alternatives due to karst topographical features and
soils not supporting seepage irrigation

A need for methyl bromide for research purposes

	(b) Georgia growers	Moderate to severe yellow or purple nutsedge
infestation Moderate to severe nematode infestation

Moderate to severe pythium collar, crown and root rot

Moderate to severe southern blight infestation

Restrictions on alternatives due to karst topographical features

A need for methyl bromide for research purposes 

	(c) Michigan growers	Moderate to severe soilborne disease infestation 

A need for methyl bromide for research purposes

Forest Nursery Seedlings	(a) Growers in Alabama, Arkansas, Georgia,
Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina,
Tennessee, Texas, and Virginia 	Moderate to severe yellow or purple
nutsedge infestation 

Moderate to severe soilborne disease infestation

Moderate to severe nematode infestation



	(b) International Paper and its subsidiaries limited to growing
locations in Alabama, Arkansas, Georgia, South Carolina, and Texas 
Moderate to severe yellow or purple nutsedge infestation  Moderate to
severe soilborne disease infestation



	(c) Public (government-owned) seedling nurseries in Illinois,  Indiana,
Kentucky, Maryland, Missouri, New Jersey, Ohio, Pennsylvania, West
Virginia, and Wisconsin	Moderate to severe weed infestation including
purple and yellow nutsedge infestation

Moderate to severe Canada thistle infestation

Moderate to severe nematode infestation

Moderate to severe soilborne disease infestation



	(d) Weyerhaeuser Company and its subsidiaries limited to growing
locations in Alabama, Arkansas, North Carolina, and South Carolina 
Moderate to severe yellow or purple nutsedge infestation 

Moderate to severe soilborne disease infestation

Moderate to severe nematode or worm infestation 

	(e) Weyerhaeuser Company and its subsidiaries limited to growing
locations in Oregon and Washington 	Moderate to severe yellow nutsedge
infestation

Moderate to severe soilborne disease infestation

	(f) Michigan growers	Moderate to severe soilborne disease infestation

Moderate to severe Canada thistle infestation

Moderate to severe nutsedge infestation

Moderate to severe nematode infestation

	(g) Michigan herbaceous perennials growers	Moderate to severe nematode
infestation

Moderate to severe soilborne disease infestation

Moderate to severe  yellow nutsedge and other weed infestation

Orchard Nursery Seedlings	(a) Members of the Western Raspberry Nursery
Consortium limited to growing locations in California and Washington 
Moderate to severe nematode infestation

Presence of medium to heavy clay soils

Prohibition on use of 1,3-dichloropropene products because local
township limits on use of this alternative have been reached

A need for methyl bromide for research purposes

	(b) Members of the California Association of Nursery and Garden Centers
representing Deciduous Tree Fruit Growers	Moderate to severe nematode
infestation

Presence of medium to heavy clay soils

Prohibition on use of 1,3-dichloropropene products because local
township limits on use of this alternative have been reached

A need for methyl bromide for research purposes

	(c) California rose nurseries	Moderate to severe nematode infestation

Prohibition on use of 1,3-dichloropropene products because local
township limits on use of this alternative have been reached

A need for methyl bromide for research purposes

Strawberry Nurseries	(a) California growers	Moderate to severe soilborne
disease infestation

Moderate to severe yellow or purple nutsedge infestation

Moderate to severe nematode infestation

A need for methyl bromide for research purposes

	(b) North Carolina and Tennessee growers	Moderate to severe black root
rot

Moderate to severe root-knot nematode infestation

Moderate to severe yellow and purple nutsedge infestation

A need for methyl bromide for research purposes

Orchard Replant	(a) California stone fruit growers	Moderate to severe
nematode infestation

Moderate to severe soilborne disease  infestation

Replanted (non-virgin) orchard soils to prevent orchard replant disease

Presence of medium to heavy soils

Prohibition on use of 1,3-dichloropropene products because local
township limits on use of this alternative have been reached

	(b) California table and raisin grape growers 	Moderate to severe
nematode infestation

Moderate to severe soilborne disease  infestation

Replanted (non-virgin) orchard soils to prevent orchard replant disease

Medium to heavy soils

Prohibition on use of 1,3-dichloropropene products because local
township limits for this alternative have been reached

	(c) California wine grape growers	Moderate to severe nematode
infestation

Moderate to severe soilborne disease infestation

Replanted (non-virgin) orchard soils to prevent orchard replant disease

Medium to heavy soils

Prohibition on use of 1,3-dichloropropene products because local
township limits for this alternative have been reached

	(d) California walnut growers	Moderate to severe nematode infestation

Moderate to severe soilborne disease infestation

Replanted (non-virgin) orchard soils to prevent orchard replant disease

Medium to heavy soils

Prohibition on use of 1,3-dichloropropene products because local
township limits for this alternative have been reached

	(e) California almond growers	Moderate to severe nematode infestation

Moderate to severe soilborne disease infestation

Replanted (non-virgin) orchard soils to prevent orchard replant disease

Medium to heavy soils

Prohibition on use of 1,3-dichloropropene products because local
township limits for this alternative have been reached

Ornamentals	(a) California growers	Moderate to severe soilborne disease
infestation

Moderate to severe nematode infestation

Prohibition on use of 1,3-dichloropropene products because local
township limits for this alternative have been reached

A need for methyl bromide for research purposes

	(b) Florida growers	Moderate to severe weed infestation

Moderate to severe soilborne disease infestation

Moderate to severe nematode infestation

Restrictions on alternatives due to karst topographical features and
soils not supporting seepage irrigation 

A need for methyl bromide for research purposes

Peppers	(b) Alabama, Arkansas, Kentucky, Louisiana, Mississippi, North
Carolina, South Carolina, Tennessee, and Virginia growers	Moderate to
severe yellow or purple nutsedge infestation Moderate to severe nematode
infestation

Moderate to severe pythium root, collar, crown and root rots

A need for methyl bromide for research purposes

	(c) Florida growers	Moderate to severe yellow or purple nutsedge
infestation

Moderate to severe soilborne disease infestation

Moderate to severe nematode infestation

Restrictions on alternatives due to karst topographical features and
soils not supporting seepage irrigation 

A need for methyl bromide for research purposes

	(d) Georgia growers	Moderate to severe yellow or purple nutsedge
infestation Moderate to severe nematode infestation, or moderate to
severe pythium root and collar rots

Moderate to severe southern blight infestation, crown or root rot

A need for methyl bromide for research purposes

	(e) Michigan growers	Moderate to severe soilborne disease  infestation

A need for methyl bromide for research purposes

Strawberry Fruit	(a) California growers	Moderate to severe black root
rot or crown rot

Moderate to severe yellow or purple nutsedge infestation

Moderate to severe nematode infestation

Prohibition on use of 1,3-dichloropropene products because local
township limits for this alternative have been reached

Time to transition to an alternative

A need for methyl bromide for research purposes

	(b) Florida growers	Moderate to severe yellow or purple nutsedge
infestation

Moderate to severe nematode infestation

Moderate to severe soilborne disease infestation

Carolina geranium or cut-leaf evening primrose infestation

Restrictions on alternatives due to karst topographical features and
soils not supporting seepage irrigation 

a need for methyl bromide for research purposes

	(c) Alabama, Arkansas, Georgia, Illinois, Kentucky, Louisiana,
Maryland, Mississippi, Missouri, New Jersey, North Carolina, Ohio, South
Carolina, Tennessee, and Virginia growers	Moderate to severe yellow or
purple nutsedge infestation

Moderate to severe nematode infestation

Moderate to severe black root and crown rot

A need for methyl bromide for research purposes

Sweet Potato Slips	(a) California growers	Prohibition on use of
1,3-dichloropropene products because local township limits for this
alternative have been reached

Tomatoes	(a) Michigan growers	Moderate to severe soilborne disease
infestation

Moderate to severe fungal pathogen infestation

A need for methyl bromide for research purposes

	(c) Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, 
Mississippi, North Carolina, South Carolina, Tennessee, and Virginia
growers	Moderate to severe yellow or purple nutsedge infestation
Moderate to severe soilborne disease infestation

Moderate to severe nematodes

Restrictions on alternatives due to karst topographical features, and in
Florida, soils not supporting seepage irrigation

A need for methyl bromide for research purposes

POST-HARVEST  USES

Food Processing	(a) Rice millers in all locations in the U.S. who are
members of the USA Rice Millers Association.	Moderate to severe
infestation of beetles, weevils or moths

Presence of sensitive electronic equipment subject to corrosion

Time to transition to an alternative

	(b) Pet food manufacturing facilities in the U.S. who are active
members of the Pet Food Institute  (For this proposed rule, “pet
food” refers to domestic dog and cat food).  	Moderate to severe
infestation or beetles, moths, or cockroaches

Presence of sensitive electronic equipment subject to corrosion

Time to transition to an alternatives

	(c) Bakeries in the U.S.	

Presence of sensitive electronic equipment subject to corrosion

Time to transition to an alternative

	(d) Members of the North American Millers’ Association in the U.S.
Moderate to severe beetle infestation

Presence of sensitive electronic equipment subject to corrosion

Time to transition to an alternative

	(e) Members of the National Pest Management Association treating cocoa
beans in storage and associated spaces and equipment and processed food,
cheese, dried milk, herbs, spices and spaces and equipment in associated
processing facilities.	Moderate to severe beetle or moth  infestation

Presence of sensitive electronic equipment subject to corrosion

Time to transition to an alternatives

Commodities	(a) California entities storing walnuts, beans, dried plums,
figs, raisins, dates (in Riverside county only), and pistachios in
California	Rapid fumigation is required to meet a critical market
window, such as during the holiday season, rapid fumigation is required
when a buyer provides short (2 working days or less) notification for a
purchase or there is a short period after harvest in which to fumigate
and there is limited silo availability for using alternatives

A need for methyl bromide for research purposes

Dry Cured Pork Products	(a) Members of the National Country Ham
Association	Red legged ham beetle infestation

Cheese/ham skipper infestation

Dermested beetle infestation

Ham mite infestation

	(b) Members of the American Association of Meat Processors	Red legged
ham beetle infestation

Cheese/ham skipper infestation

Dermested beetle infestation

Ham mite infestation

	(c) Nahunta Pork Center (North Carolina)	Red legged ham beetle
infestation

Cheese/ham skipper infestation

Dermested beetle infestation

Ham mite infestation

	(d) Gwaltney and Smithfield Inc.	Red legged ham beetle infestation

Cheese/ham skipper infestation

Dermested beetle infestation

Ham mite infestation



One commenter requested that the language describing the National Pest
Management Association (NPMA) be changed to “Members of the National
Pest Management Association treating cocoa beans in storage and
associated spaces and equipment and processed food, cheese, dried milk,
herbs, spices and spaces and equipment in associated processing
facilities.”  EPA has incorporated this revised language describing
the NPMA because it clarifies that commodities will be fumigated as part
of space fumigations, as indicated in the application.

One commenter believes that post harvest application requests by NPMA,
NPCA, Pet Food Institute, and Rice Millers are for applications for
which methyl bromide is not necessary, and thus believes that they
should not receive CUE allocations.  The commenters assert that sulfuryl
fluoride is a feasible alternative for all post-harvest applications. 
EPA received one comment stating that some post-harvest use limiting
critical conditions are no longer relevant and should be removed.  The
commenter also notes that sufluryl fluoride has superseded phosphine and
heat as the preferred alternative in post-harvest use categories.  The
conditions that the commenter requested be removed are: 

Time to transition to an alternative

Older structures that cannot be properly sealed

Presence of sensitive electronic equipment subject to corrosivity

Rapid fumigation

EPA addresses the transition rate and overall feasibility of sulfuryl
fluoride for post-harvest sectors in Section V.D.6. of this preamble.

EPA agrees that the inability to properly seal older structures in
preparation for fumigation should not be a condition for granting
critical use exemption status to food processing facilities.  The 2008
U.S. Critical Use Nomination (CUN) does not state that the inability to
seal older structures is a basis for methyl bromide need.  This issue
was discussed only to highlight the difficulty in reducing methyl
bromide emissions from older structures. Therefore, EPA agrees and the
limiting critical condition for older structures has been removed from
the rule text. 

As discussed in the 2008 CUN, research is still ongoing regarding the
efficacy of sulfuryl fluoride for the post-harvest critical uses listed
in Table I, and EPA must ensure that post-harvest sectors have
sufficient time to validate and adopt the new technology.  Therefore,
the presence of sensitive electronic equipment remains a proper limiting
critical condition for critical use applications that would otherwise
use phosphine, which corrodes electronic equipment.

Regarding the rapid fumigation limiting critical condition for certain
post-harvest sectors, The United States Department of Agriculture (USDA)
Agriculture Research Service (ARS)  is currently conducting research on
the efficacy and practicality of using alternative fumigants, including
sulfuryl fluoride, to control post-harvest pests of durable commodities
such as nuts and dried fruit.  While acknowledging that sulfuryl
fluoride appears to have the potential to provide effective and rapid
vacuum fumigation of nuts and dried fruit, the Agency must ensure that
the tree nut and dried fruit industry has sufficient time to validate
and adopt the new technology.  Therefore, rapid fumigation remains a
valid limiting critical condition for the sectors where it is listed in
Table I.

EPA received one set of comments requesting that some of the pre-plant
limiting critical conditions be removed or modified in the final rule. 
For example, the commenter states that with the availability of 1,3-D as
a nematicide, “nematode infestations,” should not qualify as a
limiting critical condition.  The 2008 U.S. critical use nomination
explains that methyl bromide is the only option to effectively control
the target pests, which includes nematodes, found in the Southeastern
U.S. where pest pressures commonly exist at moderate to severe levels. 
EPA responds in more detail in the Response to Comment document for this
action.

EPA is finalizing the proposed changes amending the table in 40 CFR part
82, subpart A, Appendix L, as reflected above.  Specifically, EPA is
adding six references and deleting four references in column B, changing
the description of one critical use in column B, and removing one
limiting critical condition from five post-harvest sectors in column C,.
 The changes are as follows: adding Mississippi to the approved
locations for cucurbit growers because that location was included in the
approved Southeast Cucurbit Consortium application for 2008; removing
Florida from the approved forest seedling locations because a 2008
application for that location was not submitted to EPA; removing
Maryland from the approved strawberry nursery locations because a 2008
application for that location was not submitted to EPA; removing
California from the approved locations for pepper growers because the
United States Government did not reflect this location in its 2008
Critical Use Nomination; adding Mississippi to the approved locations
for pepper growers because that location was included in the approved
Southeast Pepper Consortium application for 2008; adding Mississippi and
Missouri to the approved locations for strawberry fruit growers because
those locations were included in the approved Southeastern Strawberry
Consortium application for 2008; adding California sweet potato slip
growers to reflect the authorization of that use in Decision XVIII/13;
adding Mississippi to the approved locations for tomato growers because
that location was included in the approved Southeastern Tomato
Consortium application for 2008; removing turfgrass because that use was
not agreed to by the Parties in Decision XVIII/13; adding Gwaltney and
Smithfield Inc. to the approved entities for dry cured pork products
because their application was approved for 2008; changing the
description of member of the National Pest Management Association (NPMA)
as requested by NPMA; and deleting the limiting critical condition
“older structures that can not be properly sealed to use an
alternative to methyl bromide” for post-harvest sectors.

	The categories listed in Table I above have been designated critical
uses for 2008 in Decision XVIII/13 of the Parties.  The amount of methyl
bromide approved for research purposes is included in the amount of
methyl bromide approved by the Parties for the commodities for which
“research purposes” is indicated as a limiting critical condition in
the table above.  As explained in Section V.D.5. of this preamble, EPA
is allowing sale of 15,491 kg of methyl bromide from existing stocks for
research purposes, and adjusting new production accordingly.  

In accordance with the recommendations in Table 9 of the TEAP’s
September 2006 Final Report titled “Evaluations of 2006 Critical Use
Nominations for Methyl Bromide and Related Matters,” available on the
docket for this rulemaking, EPA is allowing the following sectors to use
critical use methyl bromide for research purposes: commodities,
cucurbits (field), eggplant (field), nursery stock (fruit, nut, flower),
ornamentals, peppers (field), strawberry (field), strawberry runners,
and tomatoes (field).  In their applications to EPA, these sectors
identified research programs that require the use of methyl bromide.

D. Critical Use Amounts 

	Section V.C. of this preamble explains that Table C of the annex to
Decision XVIII/13 lists critical uses and amounts agreed to by the
Parties to the Montreal Protocol (Parties). When added together, the
critical use amounts authorized by the Parties for 2008 total 5,355,946
kilograms (kg), which is equivalent to 21.0% of the U.S. 1991 methyl
bromide consumption baseline of 25,528,270 kg as defined at 40 CFR 82.3.
 However, the limit on authorized new production or import as set forth
in Table D of the annex to Decision XVIII/13 is 4,595,040 kg (18.0% of
baseline).  The difference between allowable new production and import
and the total critical use amount will be made up from pre-phaseout
inventory that was produced before January 1, 2005.  EPA further
discusses the breakout between new production or import and stocks in
sections V.D.1., V.D.2. and V.D.3. of this preamble.

	EPA is establishing the following reductions to the amount of newly
produced or imported methyl bromide authorized in Decision XVIII/13 to
satisfy critical uses:

 	(a) Reductions to account for the amount of available stocks;

	(b) Reductions to account for unused critical use methyl bromide at the
end of 2006;

(c) Reductions to account for methyl bromide for research purposes that
should be taken from available stocks; and

	(d) Reductions to accommodate uptake of sulfuryl fluoride for
post-harvest cocoa bean fumigation in 2008.

After accounting for the reductions listed above, EPA is allowing
limited amounts of new production and import of methyl bromide for
critical uses for 2008 up to the amount of 3,098,981 kg (12.1% of
baseline) as shown in Table II.  EPA is also allowing sales of 1,724,550
kg (6.8% of baseline) of existing inventories for critical uses in 2008.
 EPA explains each of the reductions listed above in the subsequent
sections of this preamble.

EPA received five comments that object to EPA’s proposed reductions
and state that EPA should grant the full amount of new production
allowed by the Parties to the Montreal Protocol in Decision XVIII.  

EPA received comments from Chemtura Corporation (Chemtura) that assert
that EPA "arbitrarily" reduces the amount of production authorized by
the Parties and "never deigns to explain how amounts for production
previously determined to be critical are deemed no longer to be
critical.”

When the United States prepares a critical use nomination, it is making
a determination as to the level of critical need.  It is not making a
determination that a particular portion of that need should be met from
new production as compared to stocks.   The Parties' decisions contain a
determination as to the level of critical need as well as a maximum
amount of that total need that may be met from new production.  The
Parties' decisions do not specify a minimum amount that must be met from
new production.  It is not accurate to state, as the commenter does,
that a particular production amount is itself "critical."  As explained
elsewhere in this preamble, EPA is adjusting the amount of new
production to take into account stocks that it has determined to be
available.

One commenter notes that the Copenhagen Agreement was signed by the U.S.
to phase out methyl bromide 14 years ago, and believes that this time
period has been adequate for all users of methyl bromide to switch to
alternative fumigation methods.  The commenter believes that no methyl
bromide CUEs should be allocated, and that such allocations penalize
companies that already phased out methyl bromide.  Another commenter
requests that EPA make a reduction in the 2008 CUE allocations of at
least 1,275,000 kg and by larger amounts in 2009 due to advancements in
using sulfuryl fluoride and iodomethane.  The comments on EPA’s
proposed reductions are addressed in the subsequent sections of this
preamble and in the Response to Comment document.

1. Background of Critical Use Amounts

The Framework Rule (69 FR 76982) and subsequent CUE rules each took note
of language regarding stocks of methyl bromide in relevant decisions of
the Parties.   In developing this action, the Agency noted that
paragraph six of Decision XVIII/13 contains the following language:
“that each Party which has an agreed critical use renews its
commitment to ensure that the criteria in paragraph 1 of decision IX/6
are applied when licensing, permitting or authorizing critical use of
methyl bromide and that such procedures take into account available
stocks of banked or recycled methyl bromide, in particular, the
criterion laid down in paragraph 1(b)(ii) of decision IX/6.”  Language
calling on Parties to address stocks also appears in prior Decisions
related to the critical use exemption.  

In the Framework Rule, which established the architecture of the CUE
program and set out the exempted levels of critical use for 2005, EPA
interpreted paragraph 5 of Decision Ex. I/3, which is similar to
Decision XVIII/13(6), “as meaning that the U.S. should not authorize
critical use exemptions without including provisions addressing drawdown
from stocks for critical uses” (69 FR 76987).  Consistent with that
interpretation, The Framework Rule established provisions governing the
sale of pre-phaseout inventories for critical uses, including the
concept of CSAs and a prohibition on the sale of pre-phaseout
inventories for critical uses in excess of the amount of CSAs held by
the seller.  In addition, EPA noted that stocks were further taken into
account through the trading provisions that allow CUAs to be converted
into CSAs.  In developing this final rule, EPA did not propose changes
to these basic CSA provisions.

In the August 25, 2004 Proposed Framework Rule (69 FR 52366), EPA
proposed to adjust the authorized level of new production and
consumption for critical uses by the amount of “available” stocks. 
The methodology for determining the amount of “available” stocks
considered exports, methyl bromide for feedstock uses, and the need for
a buffer in case of catastrophic events.  However, EPA did not adopt the
proposed methodology for determining available stocks in the final
Framework Rule.  Instead, EPA issued CSAs in an amount equal to the
difference between the total authorized CUE amount and the amount of new
production or import authorized by the Parties (Total Authorized CUE
Amount – Authorized New Production and Import).

In the 2006 CUE Rule, published February 6, 2006 (71 FR 5997), EPA
applied the approach described in the Framework Rule by allocating as
CSAs the difference between the total authorized CUE amount and the
amount of new production and import authorized by the Parties (2.0% of
baseline), as well as the small supplemental allocation in Decision
XVII/9 (0.4% of baseline).   EPA also issued CSAs allowing additional
amounts of existing stocks to be sold for critical uses (roughly 3.0% of
baseline).  In the 2006 CUE Rule EPA issued a total of 1,136,008 CSAs,
equivalent to 5.0% of baseline.  Similarly, in the 2007 CUE Rule, EPA
issued a number of CSAs that represented not only the difference between
the total authorized CUE amount and the amount of authorized new
production and import (6.2% of baseline), but also an additional amount
(1.3% of baseline) for a total of 1,915,600 CSAs (7.5% of baseline).  By
allocating additional CSAs, EPA adjusted the portion of CUE methyl
bromide to come from new production and import as compared to the
proportion to come from stocks so that the total amount of methyl
bromide exempted for critical uses did not exceed the total amount
authorized by the Parties for that year.  

EPA viewed the additional CSA amounts as an appropriate exercise of its
discretion.  EPA reasoned that the Agency was not required to allocate
the full amount of authorized new production and consumption.  The
Parties agreed to “permit” a particular level of production and
consumption; they did not—and could not—mandate that the U.S.
authorize this level of production and consumption domestically. Nor
does the CAA require EPA to exempt the full amount permitted by the
Parties. Section 604(d)(6) of the Clean Air Act (CAA) does not require
EPA to exempt any amount of production and consumption for critical
uses, but instead specifies that the Agency “may” exempt amounts for
production, importation, and consumption, thus providing EPA with
substantial discretion in creating critical use exemptions. 

In the July 6, 2006 Proposed 2007 CUE Rule (71 FR 38325), EPA sought
comment on “whether, in the critical use exemption context, it would
be appropriate to adjust the level of new production and import with the
goal of maintaining a stockpile of some specified duration […] and on
how many months of methyl bromide inventory would be appropriate, in
order to maintain non-disruptive management of this chemical in the
supply chain” (71 FR 38339).  In the Final 2007 CUE Rule, EPA noted
that “the Parties have not taken a decision on an appropriate amount
of inventory for reserve. Nor has EPA reached any conclusion regarding
what amount might be appropriate.  Given this uncertainty, and the
continuing decline in inventory levels, EPA is exercising caution in
this year’s CSA allocation.  EPA will consider various approaches to
this issue in the future based on the data received during this notice
and comment rulemaking process and other information obtained by the
Agency” (71 FR 75399).  

The benefits of pre-phaseout methyl bromide inventories for critical
uses were discussed at the 18th and 19th Meetings of the Parties (MOP). 
The Parties did not take a decision at the 18th or 19th MOP on whether
it would be appropriate to allow some specific amount of pre-phaseout
stocks to remain in inventory, or what amount that might be.  However,
at the 19th MOP, the Parties did recognize that it is appropriate to
adjust new production and import levels to account for the amount of
“available stocks.”  In Table D of the Annex to Decision XIX/9, the
Parties authorized new production and consumption for critical uses in
the United States during 2009 of 3,961,974 kg, “minus available
stocks.”

In the proposed rule, EPA noted that in another instance - namely the
Essential Use Exemption process for CFC inhalers - the Parties have
allowed companies to maintain working stocks up to one year’s supply. 
As explained in the “FDA determination letter” available on the
public docket for this rulemaking, FDA bases its determination of the
amount of CFC production that is necessary for medical devices “on an
estimate of the quantity of CFCs that would allow manufacturers to
maintain as much as a 12-month stockpile.” However, neither FDA nor
EPA maintains a CFC reserve on behalf of any essential use manufacturer,
or guarantees that a certain amount of CFCs will always be held in
inventory.

Similarly, in developing this action, EPA did not propose to maintain a
reserve of methyl bromide for critical uses, or to guarantee that a
certain amount of methyl bromide would always be held in inventory.  EPA
did, however, propose to calculate the amount of existing methyl bromide
stocks that is available for critical uses in 2008, and to consider this
amount in the Agency’s determination of how much sale of existing
stocks and how much production and importation to allow for critical
uses in 2008.  Section V.D.2. of the proposed rule described EPA’s
proposed method to calculate the amount of stocks available for critical
uses in 2008.  Section V.D.3. of the proposed rule explained how EPA
proposed to adjust new production and import levels to account for the
Agency’s calculation of the amount of available stocks.  

In the proposed rule, EPA explained that through data collection and
experience, EPA has gained information about the CUE program that the
Agency did not have when the program began.  For example, data on the
aggregate amount of methyl bromide held in inventory at the end of
calendar years 2003, 2004, 2005, and 2006 is now available in the public
docket for this rulemaking.  The pre-phaseout inventory has gradually
declined to the point where, for the first time, EPA estimates that at
the start of next year (2008) inventory will represent less than a
one-year supply of critical use methyl bromide.  EPA explained that the
proposed approach is intended as a clear and repeatable process for the
Agency to make responsible allocations that reflect a reasonable
estimate of the amount of inventory available in a future control period
based on data collected from earlier control periods.

2. Calculation of Available Stocks

In developing this action, EPA proposed a formula to calculate the
amount of available stocks in 2008, which can be expressed as follows:
AS = ES – D – SCF, where AS = available stocks on January 1, 2008;
ES = existing pre-phaseout stocks of methyl bromide held in the United
States by producers, importers, and distributors on January 1, 2007; D =
estimated drawdown of existing stocks during calendar year 2007; and SCF
= a supply chain factor, the calculation of which was described in the
proposed rule and in the Technical Support Document available on the
public docket for this rulemaking.  Using the methodology described in
the proposed rule, EPA proposed that ES = 7,671,091 kg; D = 3,224,351
kg; and SCF = 2,731,211 kg.  Therefore, EPA proposed that 1,715,438 kg
(6.7% of baseline) of pre-phaseout methyl bromide stocks will be
available for critical uses in 2008.  The Agency sought comments on its
proposed methodology.

The Methyl Bromide Industry Panel (MBIP) correctly noticed in its
comments that EPA made a mathematical error in its calculation of
available stocks in the proposed rule.  Even though EPA listed existing
stocks as 7,671,091 kg, which is the correct value, the Agency used the
value 7,671,000 kg in its calculation.  As a result, EPA proposed
1,715,438 kg of available stocks in 2008, when EPA intended to proposed
available stocks of 1,715,529 kg.  In other words, EPA underestimated
available stocks by 91 kg.  EPA has corrected its calculations in this
final rule.

	One commenter believes the mechanisms for reporting stocks and usage
are imprecise, and therefore the Agency’s calculations of stock levels
are likely inaccurate.  The commenter did not explain why they believe
the mechanisms for reporting stocks and usage are imprecise, and EPA has
not found any specific reason to question the accuracy of its aggregate
methyl bromide stockpile data.

EPA received six comments supporting the creation of a supply chain
factor (SCF), but these comments assert that the 15-week SCF suggested
for use in the event of a supply disruption is inadequate and recommend
a one-year supply instead.  The commenters may be misled by the
assumption in EPA’s proposed SCF analysis that it would take up to 15
weeks for adequate amounts of methyl bromide imports to reach the U.S.
if there is a domestic production failure.  Because the Agency proposed
an SCF that would provide insurance against a production failure during
the peak production season (i.e. the beginning of the calendar year),
the Agency’s proposed SCF is actually equivalent to about 51% of the
5,355,946 kg authorized for U.S. critical uses in 2008, or roughly a
six-month supply if demand were constant throughout the year.  The
commenters provide a number of reasons why they recommend a one-year
supply buffer, and EPA responds to those comments below.

One commenter states that EPA’s proposed supply chain factor is
inappropriate because it conflicts with the United States Government’s
(USG) position at the 19th Meeting of the Parties (MOP) to the Montreal
Protocol in Montreal, Canada, where the USG delegation requested a six
month reserve for critical uses.  The commenter states that, “Given
that the United States has already acknowledged the importance of
maintaining a six-month field inventory of methyl bromide for critical
uses alone (accounting for only one half of the U.S. methyl bromide
consumption), EPA’s proposal to establish less than a one-year field
reserve fails to ensure that all authorized and potential emergency uses
of methyl bromide are adequately protected.” 

EPA disagrees with the commenter's characterization of the events at the
September 2007 MOP.  The Agency disagrees with the commenter's
assumption about the U.S. negotiating position regarding critical use
exemptions at the September 2007 MOP and the suggestion that EPA’s
proposal “conflicts with the U.S. government's position.”  We
appreciate that the commenter attended the MOP as an observer and
understand how this observer status might lead the commenter to make
assumptions about the U.S. negotiating position.  The Agency does not
believe the commenter's assumptions made as an observer during the MOP
justify a conclusion about conflicts between EPA's rulemaking proposal
and the U.S. government's position at the MOP.

Another commenter asserts that the Parties rejected the U.S. proposal to
allow maintenance of a half-year supply chain reserve at the 19th
Meeting of the Parties.  EPA disagrees with the commenter’s assertion,
because the Parties neither adopted nor rejected the creation of such a
reserve.  However, in Table D of the Annex to Decision XIX/9, the
Parties recognized that the U.S. will adjust authorized levels of new
production and imports to account for available stocks.

EPA received two comments that quote the technical limitations discussed
in EPA’s analysis and state that these limitations render the final
calculation invalid.  The Agency does not agree that any of the
acknowledged technical limitations individually, or taken together,
invalidate either the proposed supply chain factor or EPA’s
calculation of available stocks.  EPA’s analysis should be considered
within the context of the United States’ renewed commitment in
paragraph six of Dec. Ex.II/1, which was restated in Dec. XVIII/13, to
ensure that the criteria in Dec. IX/6(1), which is explained above, are
applied when permitting the use of methyl bromide.  One of the primary
ways that EPA met this commitment in previous years was to consider the
aggregate quantity of existing stocks, and to reduce authorized new
production levels to encourage a more rapid draw down of existing stocks
than required by the Parties.  EPA’s consideration of stocks in
determining the appropriate production level is partially responsible
for steadily shrinking the aggregate stock quantity to less than half of
its 2003 size, and the Agency projects that aggregate stocks will
represent less than a one year supply of critical use methyl bromide at
the beginning of 2008.  With existing inventories declining
significantly, EPA is asking, at what point should the Agency stop
facilitating a more rapid inventory draw down?  To answer this question,
and to enhance the transparency and uniformity of future CUE allocation
rules, EPA proposed to estimate the level of aggregate inventory that
would be necessary to respond to a scenario in which all methyl bromide
production in the U.S. is abruptly halted during peak production season.
 EPA chose this scenario largely because methyl bromide, unlike most
chemicals, is produced at a sole facility in the U.S.  Therefore, a
scenario in which this facility completely ceases production is of
special concern.  In estimating the amount of methyl bromide that would
be necessary in such a scenario, EPA considered the effect of such a
production failure during the peak production season.  EPA chose this
conservative approach partly in recognition that there could be other
contingencies that might affect critical users’ ability to obtain
methyl bromide in the event of a full production failure.  

Six commenters raise other examples of other events that could also
occur, and argue that the SCF should account for all of these
contingencies happening together.  EPA is not attempting to offer
insurance against all possible contingencies.  EPA notes that the
probability that all of these contingencies occurring together is lower
than the probability that any of them will occur individually.  In
addition, many of the possible events described by the commenters would
have an uncertain effect not easily quantified.  EPA’s scenario is
straightforward and readily susceptible to quantification.   In general,
EPA is relying on private entities to take prudent steps to protect
themselves against various contingencies.  The inclusion of the supply
chain factor in the calculation of available stocks provides suppliers
an opportunity to maintain a buffer, but does not constitute a
guarantee.  

The Natural Resources Defense Council (NRDC) and Dow AgroSciences (Dow)
state that there is not a basis for the assumed risk of catastrophic
loss at the U.S. methyl bromide production plant, as no such event has
ever occurred at this location, and that the chance of such an event
happening right after the first of the year is even less likely.  EPA
responded to the first part of the comment in the proposed rule, by
pointing out that the methyl bromide industry is unlike many others,
because there is only one active production facility in the United
States.  EPA recognizes that a catastrophic loss is unlikely: however,
this does not obviate the need to plan for such a scenario.  While EPA
expects private entities to take prudent steps to protect themselves,
EPA does not wish to render them incapable of maintaining a reasonable
supply buffer.  In conducting its SCF analysis, the Agency estimated
that significant imports could arrive in up to 15 weeks.  Depending on
what season the production failure occurred, the EPA estimated that the
lost production would be within the range of 11-51% of the 2008 demand
for 2008 critical use methyl bromide.  EPA chose the conservative end of
the range, and proposed an SCF equivalent to 51% of the 2008 need for
critical use methyl bromide.  EPA chose the conservative end of the
range, in part, so that its proposed SCF would more likely account for a
wider range of other supply disruption scenarios that could occur.  

Below, EPA reiterates the technical limitations of the proposed supply
chain factor analysis, and explains why each limitation does not render
the final estimate invalid, as a number of the commenters contend.

In its SCF analysis EPA stated that, “pre-2005 inventory is held by
multiple companies, and the sale of that inventory is governed by market
forces.  Hence, in the event of a production failure, the stockpile
could be purchased by any user (i.e., critical use/non-critical use,
QPS, feedstock, or foreign users).  Most likely, the stockpile would go
to the user willing to pay the highest price in time of short-term
global shortage. Second, there may also be existing contract agreements
that must be honored.  As a result, there is no guarantee that the
existing pre-2005 inventory of methyl bromide will flow towards U.S.
critical uses in the case of a production failure.”  EPA believes that
methyl bromide for QPS, feedstock, and in Article 5 country uses would
not have to be supplied from pre-phaseout inventory after a supply
disruption, because, as explained in the proposed rule, existing
regulations allow manufacturers and distributors to manage inventories
of methyl bromide designated for those purposes (72 FR 48968).  

There is precedent in the CUE program for allowing methyl bromide
distributors to respond to market forces.  In the Proposed Framework
Rule, EPA explained that, “The issuance of critical stock allowances
(CSAs) does not obligate holders to make these quantities available to
critical uses if they choose for practical or business reasons not to
sell or distribute stocks to critical uses.  However, EPA believes that
these firms will respond to market conditions” (69 FR 52376). 
Similarly, EPA’s consideration of a supply chain factor in its
calculation of available stocks does not obligate suppliers to sell
their stocks to critical users following a supply disruption.   For
example, a critical user may be able to delay fumigation until imports
arrive, while users needing methyl bromide for security reasons, such as
to fumigate structures suspected of anthrax infection, may be willing to
pay a higher price.  EPA is unable to predict exactly how stocks would
be used after a disruption.  All things considered, EPA does not believe
that the possibility that some inventory would be consumed by
non-critical users after a supply disruption invalidates the Agency’s
SCF analysis.

The SCF analysis also stated that, “it is not clear that a contingency
plan exists amongst the various methyl bromide producers as to how to
respond to a major supply disruption.  Thus, the reallocation of
shipping containers to import methyl bromide into the United States may
not occur smoothly over the first weeks or months while the various
manufacturers, shippers, and customers sort out their arrangements.” 
Similarly, two commenters express concern that importing the methyl
bromide necessary to meet U.S. demand would take far longer than 15
weeks due to the inflexible methyl bromide shipping system.  Chemtura
Corporation (Chemtura) states that “adjusting distribution patterns to
accommodate a sudden shift in worldwide demand and supply, as would
occur with the loss of U.S. production, would require an extensive, ad
hoc redesign of this distribution system with very little, if any, lead
time.”  

The possibility that methyl bromide distributors have not conducted
emergency response planning does not invalidate EPA’s SCF estimate. 
Methyl bromide distribution is the responsibility of the methyl bromide
industry and not EPA.  EPA’s role is to allow producers and
distributors to satisfy critical needs for methyl bromide, not to
guarantee that they will do so.  The Agency did consider physical
shipping constraints that dictate how rapidly methyl bromide
distribution patterns can shift.  However, for the reasons expressed
above, the Agency’s analysis does not assume that distributors will
need long periods of time to redesign their distribution patterns in
order to respond.  Furthermore, since each shipping route takes weeks to
complete, the Agency believes that industry will have ample planning
time to re-route containers as necessary.  EPA responds to comments
about physical shipping constraints below.

Finally, the Technical Support Document stated that, “characteristics
such as the purity of the pre-2005 inventory of methyl bromide could
affect users’ ability to use this inventory to meet their needs for
methyl bromide; however, these characteristics are not known.  For
example, some of the methyl bromide held in inventory may be intended
for pre-plant uses may be pre-mixed with chloropicrin in compressed gas
cylinders and therefore could not be used for post-harvest
fumigation.”  Similarly, EPA received two comments expressing concern
about the availability of stocks of methyl bromide free of chloropicrin
for the post-harvest sector.  One commenter states that chloropicrin is
premixed in “virtually the entire” U.S. inventory of existing
stocks.   The other commenter is especially worried about the possible
need for emergency fumigation treatments, which require pure methyl
bromide, due to failed attempts to move away from methyl bromide use.  

EPA’s current reporting requirements do not request information about
all of the characteristics, or composition, of the existing stockpile. 
Just prior to publishing the proposed rule, the Agency received
anecdotal information suggesting that a large percentage of the existing
stockpile is mixed with chloropicrin, and therefore unsuitable for
post-harvest uses.  EPA has also heard conflicting reports, stating that
a substantial portion of the existing stockpile is pure methyl bromide. 
The Agency is currently considering options to obtain more information
about the existing stockpile, including but not limited to, sending a
Section 114 letter to pre-phaseout inventory holders.  Because the CUA
amount in today’s final rule is less than the production amount
authorized by the Parties, EPA may consider allowing the conversion of
some CSAs to CUAs in appropriate circumstances.  The Agency also notes
that if pre-phaseout inventories contain very small amounts of pure
methyl bromide, then allowing for a larger supply buffer composed of
that inventory would not remedy the commenters’ concerns.

One commenter believes that EPA needs to acknowledge methyl bromide’s
role as a tool in responding to catastrophic events such as widespread
re-fumigation after a natural disaster.  The commenter states that
methyl bromide has security as well as economic importance. EPA agrees
with the commenter and acknowledges methyl bromide’s role in
responding to the situations described by the commenter.  Methyl
bromide’s role in responding to serious challenges such as those
listed by the commenter is one of the reasons EPA proposed to consider a
supply chain factor in its analysis of available stocks, and based its
estimate of the SCF on conservative assumptions.

Four commenters believe that the SCF should be a one-year supply because
of the global ramifications that the supply disruption from the U.S.’s
one plant would have.  EPA agrees with the commenter that a severe
critical use methyl bromide shortage in the U.S. could have important
global ramifications.  EPA considered international factors in its SCF
analysis.  For example, after close scrutiny EPA estimated that foreign
production capacity is capable of meeting global demands for all methyl
bromide.  While the commenters did not provide a specific basis for why
a one-year supply would be most appropriate, EPA responds to some of
their other concerns below and in the Response to Comments document on
the docket for this rulemaking.

Four of the commenters raise concerns about the ability of the Israeli
plant to divert methyl bromide to the U.S., especially in light of the
conflicts occurring in the Middle East.  The commenters do not provide
specific information about the likelihood or consequences of the Israeli
supply disruption that they mention.  As explained above, the SCF
estimate requires a determination about which contingencies to use as
the basis for the analysis.  Contingencies that are too speculative or
whose effects cannot readily be quantified are not included in the
analysis.  However, EPA adopted a conservative approach in recognition
that its analysis did not address all possible contingencies. One of the
commenters states that the U.S. would not be sacrificing environmental
goals by maintaining a one-year SCF because stockpiled methyl bromide
that is not in use can do no harm to the environment. EPA notes that
using existing methyl bromide can displace the need for new production
with corresponding environmental benefits.

Chemtura submitted, as business-confidential exhibits, two diagrams
showing its estimates of the current global distribution map, and how
the distribution map would change if U.S. production were suddenly
disrupted.  Chemtura asserts that the confidential diagrams show that
the number of specialized methyl bromide shipping containers that would
be required if U.S. production fails exceeds the number available by a
significant margin.  Similarly, MBIP contends that assuming round trip
times of 45 days for shipments from Israel to Europe and 90 days for all
other trips, the current worldwide fleet of ISO containers would need to
immediately grow by more than 35% to establish and maintain the global
distribution system for methyl bromide within the 15-week period
estimated by EPA. 

] For confidentiality reasons, EPA is unable to respond further in this
preamble.  The Agency concludes by stating that it closely analyzed
Chemtura’s comments, and did not find a specific reason therein to
revise its SCF estimate.

MBIP noted that “methyl bromide manufacturers typically plan
production several months in advance and schedule their bromine
production or purchases accordingly.  Thus, if the disruption in the
U.S. supply chain occured at a low point in the foreign manufactuer's
production cycle, it would take a significant amount of  time before
that manufacturer is able to acquire more bromine and ramp up production
to full capacity.”

The analysis undertaken to estimate the supply chain factor built in a
certain amount of time—starting from the time of disruption of the
U.S. supply chain—for Israeli Chemicals Ltd. (ICL) to make
arrangements and adjustments to its production schedules before it would
need to ramp up production to meet the needs of critical users in the
United States.  Given the volume of bromine currently produced by ICL
annually (179,000 MT compared to a capacity of 240,000 MT), and ICL’s
direct access to that bromine through extraction of minerals from the
Dead Sea, EPA believes that there is sufficient lead time to increase
production levels.

Similarly, MBIP asserts that the foreign producer may not be able to
increase production until it receives government approval to do so. 
Such an approval, the commenter contends, could take up to several
months.  EPA notes that foreign producers, such as producers in Israel,
could increase production and exports to the United States without
approval from the Parties to the Montreal Protocol, as long as the
United States is willing to use its authorized critical use exemption to
import that material.  The commenter did not provide specific
information about other government approval that would be necessary, or
whether such approval could be obtained in advance as a contingency
measure.

MBIP noted that “an immediate increase in methyl bromide production
may not be possible due to limited storage capacity.  Because of its
physical properties, methyl bromide [like other brominated products]
must be stored and shipped in specialized ‘ISO’ containers. 
Manufacturing plants typically have enough containers on hand to store
only several days of production.”  According to its Periodic Report
(for the period ending December 31, 2006), ICL—as the leading producer
of bromine worldwide—has the largest fleet of isotanks in the world. 
Thus, while the exact number of isotanks available for storing and
shipping all elemental bromine and brominated products is not known, it
is possible that ICL may be able to divert some additional containers to
store methyl bromide in the short term.  In the meantime, it is assumed
that U.S. company-owned isotanks in transit at the time of the domestic
production failure would be rerouted to Israel after traveling first to
their original destinations, and will arrive in Israel less than 15
weeks after the domestic production failure.  Thus, some new methyl
bromide production in Israel may be immediately stored and shipped in
these U.S. company-owned isotanks.  The commenter did not provide
specific information about the likelihood of storage capacity shortfall
in the scenario analyzed, or whether extra capacity could be arranged
for in advance as a contingency planning measure.

MBIP noted that “significant regulatory challenges could hamper
companies’ ability to obtain a sufficient supply of chloropicrin for
methyl bromide formulations” and that “if quantities of chloropicrin
had to be exported from the U.S. to Israel, several CWC [Chemical
Weapons Convention] regulatory requirements would be triggered.” 
While it is true that the export of chloropicrin to Israel would require
special export licenses and certificates—since Israel has not ratified
the CWC—it is not clear that quantities of chloropicrin would need to
be exported from the U.S. to Israel.

According to preliminary Form R reports from the 2006 Toxic Release
Inventory (TRI), as well as past reports from 2005, the formulation of
methyl-bromide chloropicrin products is currently undertaken at five or
more facilities around the United States (EPA has placed information
collected from the TRI on the docket for this action).  Thus, at least
for the products sold by these distributors to U.S. critical users,
chloropicrin would not be required to be exported to Israel for
formulation.  The commenter did not provide specific information about
the likelihood that the CWC, or other regulatory measures, would impede
the supply of methyl bromide products to U.S. critical users, or whether
advance planning could help resolve potential difficulties.

EPA received one comment that notes that the distribution system for
methyl bromide in the U.S. is complex and expresses concern that imports
would not reach all repackaging locations in the same timeframe.  The
commenter believes that 500,000 kilograms of methyl bromide must remain
in the system (a minimum of 3,231 metric tons of pre-phaseout stocks) to
keep the domestic distribution system functional. EPA believes that its
analysis accounts for the specific concern raised by the commenter.  EPA
specifically accounted for this concern in the proposed SCF analysis. 
The SCF would replace lost production for 15 weeks until imports arrive.
 Without a supply disruption, fresh methyl bromide would be coming out
of the production facility during week 16.  This methyl bromide would
still have to be transported to distributors and end-users.  In the SCF
scenario, the new production in week 16 would be replaced by imported
methyl bromide, which EPA assumes would follow similar distribution
patterns as U.S. produced material.  Therefore, contingent upon business
decisions by suppliers, the proposed SCF is large enough to provide
uninterrupted distribution in the analyzed scenario.  Furthermore,
because shipping containers may unload imports at multiple docks, as
opposed to new production which comes from one source, imports may
actually arrive faster in some locations than it would under normal
circumstances.  

One commenter stated: “EPA does not consider regulatory obstacles that
may delay the availability of alternate supply...In addition,
formulations of methyl bromide are regulated by EPA as pesticides under
FIFRA. As such, suppliers of these products must maintain registrations
with EPA. Under FIFRA, the source of methyl bromide used in the products
must be identified to EPA and detailed information about the
manufacturing process must be submitted. In addition, the labels for all
products must bear a special number that denotes the pesticide producing
establishment where the product is formulated. If production is shifted
to another location, the source information, manufacturing process data,
and labels for all affected products would have to be updated before the
products could be imported or distributed in the U.S. For example, if
the methyl bromide that is sourced from Israel is made using a different
manufacturing process than those on file with EPA, U.S. registrants may
need to notify EPA of the change in the formulation process that is on
file or even file an amendment to that process.”  

Pesticide registration information is highly confidential, but critical
sales data shows that imported methyl bromide is registered for some
critical uses in the U.S.  EPA does not obligate producers to register
their products for all U.S. critical uses, but the Agency believes that
firms will respond to market conditions, and undertake appropriate
emergency response planning.  A firm’s decision about whether to
register their product for critical uses is similar to business planning
decisions under the established critical stock allowance policy noted
above, in which EPA let firms respoind to market conditions, instead of
requiring them to sell methyl bromide to critical users (69 FR 52376). 
The Agency believes that the added transparency of the SCF approach will
help companies to respond to market conditions more rapidly and
appropriately.

EPA received two comments that object to the proposal to create an SCF
and believe the methyl bromide in question should be used to reduce or
eliminate the need for new production and import allocations for 2008. 
The Agency explained the reasons for proposing an SCF in the proposed
rule.  EPA responds to the commenters’ specific concerns below and in
the Response to Comment document.

One of the commenters believes that the SCF will be equivalent to
existing stockpiles and will be easy to get and use by those with
restricted use pesticide licenses. The commenter states that stocks will
not be maintained for the purpose of the SCF—the stocks intended for
the SCF that remain unallocated for CUEs can be freely used by
non-critical users.  The commenter is correct that this supply buffer
would be composed of methyl bromide produced before the January 1, 2005
phaseout.  The commenter is also correct that non-critical users are not
barred from purchasing the pre-phaseout stocks of methyl bromide.  In
the Final Framework Rule, EPA explained its rationale and authority for
allowing non-critical users to access stocks (69 FR 76988).  EPA is not
revisiting that issue in this rulemaking.  

The Agency does not believe that the fact that producers and
distributors may sell stocks to non-critical users invalidates the
proposed supply chain factor, or EPA’s proposed estimation of the
amount of available stocks in 2008.  The commenter is speculating about
what suppliers will do given the opportunity to maintain a buffer, which
is something that has not yet been tested.  Information on stock
drawdown during 2008 will inform EPA’s future CUE rulemakings.  

While EPA did not propose to require that distributors keep the supply
chain factor amount as a supply buffer for critical users, Section
V.D.3. of the proposed rule lays out an approach in which the Agency
would stop drawing down stocks faster than the minimum agreed by the
Parties, if EPA determines that available stocks will be less than the
SCF amount.  By considering a supply chain factor in its analysis of the
amount of stocks that are available for critical uses, EPA is giving
producers and distributors the opportunity to provide a reasonable
supply buffer to satisfy critical needs.  

Dow AgroSciences believes that the SCF should be based on the actual
2008 methyl bromide demand (4,816,514 kg) as determined by the U.S.
Government and as proposed in the rule) rather than the amount approved
by the Parties (5,355,946 kg).  The commenter states that  a SCF
calculated upon a methyl bromide volume that exceeds the critical need
for 2008 renders the SCF value and basis for the calculation
nonsensical.  He commenter concludes that this simple recalculation
would reduce overall new MB production demand in 2008 by more than
250,000 kg. 

It appears that the commenter’s figure for “actual methyl bromide
demand” is based derived by subtracting the proposed 539,432 kg carry
over amount (72 FR 48969), from the critical use amount agreed to by the
Parties (5,355,946 kg).  EPA reduces new production to account for carry
over critical use material in order to prevent companies from building
inventories of newly produced methyl bromide.  EPA reduces new
production amounts to account for carry over, but in doing so the Agency
is not disputing the Parties’ decision regarding the total critical
need in the United States for a given control period.  EPA expects that
critical users will satisfy their critical needs by using the critical
use methyl bromide that was unused in previous control periods.  Only
reductions to account for new information about the feasibility of
alternatives are actual reductions in the amount that EPA believes is
necessary to satisfy critical needs during the control period. 
Accordingly, because EPA is reducing the total 2008 CUE by 17,690 kg to
account for the increased uptake for sulfuryl fluoride for cocoa bean
fumigation, as explained in Section V.D.6. of this preamble, the Agency
has re-calculated the SCF with a total 2008 demand for critical uses of
5,338,256 kg.  This adjustment reduces the SCF by 9,021 kg.

One commenter believes that stockpiles or SCFs are counterproductive to
the phase out of methyl bromide and offer disincentives to companies to
invest in alternatives.  EPA recognizes that a very large methyl bromide
inventory could have the counterproductive effects that the commenter
raises.  In response to this concern, EPA has encouraged a faster draw
down of the pre-phaseout inventory than the minimum agreed by the
Parties.  In the proposed rule, and above in this preamble, EPA explains
why it is important to allow producers and distributors to maintain a
reasonable supply buffer to satisfy critical needs.  The Agency has also
explained the rigorous technical review process for critical uses both
domestically and internationally.  Companies should be aware that as
soon as technically and economically feasible methyl bromide
alternatives are available for particular uses, critical use exemptions
will be reduced accordingly.  Because the SCF is a percentage of the
current year’s critical use amount, , companies should also consider
that the SCF will decline to reflect declining critical use exemption
levels.

One commenter objects to the SCF because the commenter believes that the
Parties and Congress did not intend for EPA to designate stocks as
“unavailable.”  EPA did not propose to designate any amount of
stocks, or any specific holdings, as “unavailable.”  EPA proposed to
recognize the amount of existing stocks that are available.  As
discussed above and in the proposed rule, in paragraph 4 of Decision
XVIII/13, and similar decisions, the Parties indicated that each
individual Party has discretion to recognize the amount of existing
stocks that are available for critical uses.  Most recently, Table D of
the Annex to Decision XIX/9 explicitly indicates that the United States
will reduce authorized new production levels to account for the amount
of available stocks.  Thus, EPA’s proposed approach is consistent with
the Parties’ practice under the Montreal Protocol.  It is also an
appropriate exercise of the discretion granted by Congress under Section
604(d)(6) of the Clean Air Act.  

The commenter states that no chemical company keeps more than a two or
three month supply of a chemical, yet the SCF is nearly a four month
supply. The commenter provides no evidence for its assertion that no
chemical company keeps more than a two to three month supply of a
chemical.  Furthermore, in many ways the methyl bromide industry is
unusual, because there is only one production facility in the United
States, which is also the lone production facility in the Western
Hemisphere.  As explained above and in the proposed rule, EPA estimated
that the SCF for 2008 should be 2,731,211 kg, or roughly a six-month
supply of critical use methyl bromide if demand were constant throughout
the year.

The commenter contends that temporary adjustments at a manageable cost
can be made by methyl bromide users in the event of a supply disruption,
such as the use of alternatives or a shift in fumigation schedules.  EPA
agrees that depending on when a supply disruption occurs, it is possible
that a limited number of entities might be able to delay scheduled
fumigations.  It is also possible that some non-critical users might
need to access the pre-phaseout inventory for security or other
emergency purposes.  We do not know whether these effects would occur or
to what extent they would cancel each other out.   Such speculation does
not change the validity of EPA’s estimate that 2,731,211 kg is a
reasonable supply buffer for 2008.  EPA disagrees with the commenter’s
assertion that critical users could readily switch to alternatives
following a supply disruption.  By definition, and as confirmed by
several rounds of expert review, entities that qualify for critical use
methyl bromide do not have access to feasible alternatives.

	In this final rule, EPA is adopting the proposed formula for
calculating the amount of stocks available for critical uses in 2008,
which can be expressed as follows: AS = ES – D – SCF, where AS =
available stocks on January 1, 2008; ES = existing pre-phaseout stocks
of methyl bromide held in the United States by producers, importers, and
distributors on January 1, 2007; D = estimated drawdown of existing
stocks during calendar year 2007; and SCF = a supply chain factor, the
calculation of which was described in the proposed rule and in the
Technical Support Document available on the public docket for this
rulemaking.  Using the methodology described in the proposed rule,
correcting for mathematical errors explained above, and reducing 2008
critical needs by 17,690 kg to account for the uptake of sulfuryl
fluoride explained below in Section V.D.6., EPA finds that ES =
7,671,091 kg; D = 3,224,351 kg; and SCF = 2,722,190 kg.  Therefore, EPA
calculates that 1,724,550 kg (6.8% of baseline) of pre-phaseout methyl
bromide stocks will be available for critical uses in 2008.  

EPA believes 1,724,550 kg is a reasonable estimate of the amount of
stocks that should be considered available for critical uses in 2008,
recognizing that some amount of methyl bromide should remain in the
supply chain, especially given the U.S. role as one of the world’s
largest suppliers to meet global methyl bromide needs.  EPA also
believes the methodology used to make this estimate is consistent with
the relevant Decisions of the Parties, including Decision IX/6, and the
Clean Air Act. EPA has determined that the approach finalized in this
action is the most efficient and reasonable way to balance the goals of
satisfying critical needs for methyl bromide and also facilitating the
transition to ozone-safe alternatives. Finally, as discussed above and
in the Response to Comments document, EPA considered all of the comments
received and did not find a specific reason to change its proposed
calculation of the amount of available stocks.

	3. Adjusting New Production and Import Amounts to Account for Available
Stocks

In developing this action, EPA proposed to refine its allocation
approach in order to account for the amount of stocks available for
critical uses in 2008, and each year thereafter as appropriate and
feasible.  EPA proposed to allocate critical stock allowances (CSAs) in
2008 in an amount equal to the number of kilograms (kg) of stocks
available for critical uses in 2008, as estimated by EPA using the
formula described above.  EPA also proposed how to adjust new production
and import to account for the amount of available stocks in future years
if the amount of available stocks is less than the amount of stocks the
Parties authorize for critical uses for the year in question. As
explained above, EPA calculates that there will be 1,724,550 kg of
available inventory in 2008.  Therefore, EPA proposed to allow sale of
1,724,550 kg from existing stocks for critical uses in 2008 by
allocating an equivalent number of CSAs.  As in past years, EPA proposed
to adjust the critical use allowance (CUA) amounts accordingly, so that
the total number of CUAs and CSAs is not greater than the total critical
use amount authorized by the Parties.  In the proposed rule, EPA noted
that to account for carry-over amounts of methyl bromide, amounts for
research purposes, or for other appropriate reasons, including updated
information on alternatives, EPA may allocate a total number of CUAs and
CSAs that is less than the total critical use amount authorized by the
Parties for 2008.  EPA sought comments on its proposed approach for
adjusting new production and import amounts to account for the amount of
stocks available for critical uses.

	EPA received six comments expressing concern about the proposed level
of critical stock allowances of methyl bromide for 2008.  The commenters
note that the proposed amount of methyl bromide to come from stocks is
beyond the level agreed by the Parties.  The proposed rule, and Section
V.D.1. of this preamble explain that in previous years EPA has
determined that more critical use methyl bromide should come from stocks
than the minimum levels agreed by the Parties, and that EPA understands
those actions to be in compliance with the Montreal Protocol, and within
the Agency’s authority established in Section 604(d)(6) of the Clean
Air Act.

	One commenter believes that EPA’s proposal to use stocks for critical
uses jeopardizes the U.S.’s ability to address a catastrophic supply
disruption.  The proposed rule, and Section V.D.2. of this preamble
explain that by including a supply chain factor in its calculation of
available stocks, EPA is allowing for the maintenance of a supply buffer
that could help to satisfy critical needs in the event of an emergency,
such as a major supply disruption.

	One commenter believes that a timely and accurate accounting system for
use during the control period for both new production and CSAs should be
developed and should be available to CUE holders.  The commenter
contends that this accounting system would be important as stockpiles
decrease and would allow the Agency flexibility to shift from CSA’s to
new production during the control period if necessary.  Without this
flexibility, the commenter believes that the Agency should authorize the
total quantity approved for the 2008 Control Period as new production
with the understanding that the portion of material not used as a result
of the use of preexisting stocks during 2008 would be deducted from
future authorizations as the current practice for unused new production
authorized as CUAs.  If EPA understands correctly, the commenter is
concerned that at some point existing stocks will not be able to satisfy
all of the CSAs issued by EPA for a given control period, and that if
this happens during a control period, EPA should convert CSAs to CUAs. 
The Agency believes that the proposed approach for determining CUA and
CSA amounts, which accounts for the amount of available stocks, is a
major step towards decreasing the probability that EPA would issue more
CSAs than existing stocks are able to satisfy in a given control period.
 Currently, EPA collects annual data about critical sales of new
production and stocks.  EPA agrees with the commenter that collecting
this data more often, quarterly for example, could have certain benefits
related to monitoring stockpile information.  As the commenter states,
more timely data could help EPA more rapidly determine if it would be
appropriate to allow the conversion of some CSAs to CUAs.  However, by
increasing the repetition of reporting, the commenter’s proposal would
impose substantial administrative burden upon the regulated community,
especially upon small distributors that currently submit annual methyl
bromide reports.  Considering the approach that EPA is finalizing in
this rule, which should decrease the likelihood of impractically large
CSA allocations, the Agency does not believe the benefits of the
commenter’s proposal would justify the additional costs it would
impose.

	 In this rule, EPA is adopting the proposed approach for adjusting
allowable new production and import levels to account for the amount of
available stocks.  As discussed above, this approach is consistent with
the relevant Decisions of the Parties, especially considering Table D of
the Annex to Decision XIX/9, which explicitly authorizes the United
States a certain amount of new production and import “minus available
stocks.”  Furthermore, after considering all of the comments received,
EPA believes this is the most reasonable, efficient and transparent way
for the Agency to continue to facilitate responsible management of the
pre-phaseout inventory.  Therefore, with this action the Agency is
allowing 1,724,550 kg of stockpile consumption for critical uses in 2008
by issuing an equivalent number of CSAs, and adjusting the amount of
CUAs accordingly.

	To clarify, the critical use amounts authorized by the Parties in Dec.
XVIII/13 for 2008 total 5,355,946 kg.  However, the maximum amount of
authorized new production or import as set forth in Table D of the annex
to Decision XVIII/13 is 4,595,040 kg.  This means that while the Parties
require only 760,906 kg of stockpile consumption if the entire US
allotment is utilized, EPA is allowing 1,724,550 kg of stockpile
consumption for critical uses.  Thus, to account for the amount of
available stocks, EPA is allowing 963,644 kg of extra stockpile
consumption for critical uses in 2008.  As in past years, EPA proposed
to adjust the amount of CUAs accordingly, so that the sum of CUAs and
CSAs is not greater than the total amount authorized by the Parties. 
Therefore, EPA is reducing the allowable amount of new production and
import by 963,644 kg.  After accounting for the additional reductions
discussed below for unused critical use methyl bromide at the end of
2006, increased uptake of sulfuryl fluoride for post-harvest cocoa bean
fumigation in 2008, and reductions to encourage research amounts to be
supplied from existing stocks, EPA is allowing 3,098,981 kg of new
production and import for critical uses in 2008. 

	In developing this action, EPA also proposed how the Agency would
adjust new production and import to account for the amount of available
stocks in future years, if the amount of available stocks is less than
the amount of stocks the Parties authorize for critical uses for the
year in question (72 FR 48969).  EPA’s proposed response to that
possible scenario is a logical extension of the approach taken in this
action.  EPA did not receive any comments on how it proposed to account
for available stocks if the amount of available stocks is less than the
amount of stocks the Parties authorize for critical uses for the year in
question.  If that scenario arises, EPA may adopt the approach it
described in the proposed rule, after a notice and comment rulemaking
process.

4. Treatment of Carry-Over Material

	As described in the December 23, 2004 Framework Rule (69 FR 76997), EPA
is not permitting entities to build stocks of methyl bromide produced or
imported after January 1, 2005 under the critical use exemption.  Under
current regulations, quantities of methyl bromide produced, imported,
exported, or sold to end-users under the critical use exemption in a
calendar year must be reported to EPA the following year.  These
reporting requirements appear at Sections 82.13(f)(3), 82.13(g)(4),
82.13(h)(1), 82.13(bb)(2 ), and 82.13(cc)(2).  EPA uses the reported
information to calculate the amount of methyl bromide produced or
imported under the critical use exemption, but not exported or sold to
end-users in that year.  An amount equivalent to this “carry over,”
whether pre-plant or post-harvest, is then deducted from the total level
of allowable new production and import in the year following the year of
the data report.  For example, the amount of carry over from 2005, which
was reported in 2006, was deducted from the allowable amount of
production or import for critical uses in 2007.  In developing this
action, EPA proposed to treat carry over the same way for 2008.

As discussed in Section V.D.2., carry over material is not included in
EPA’s definition of existing stocks (ES) as it applies to the proposed
formula for determining the amount of available stocks (AS).  EPA is not
including carry over amounts as part of ES, because doing so could lead
to a double-counting of carry over amounts, and thus a double reduction
of critical use allowances (CUAs).  

In developing this action, EPA explained that in 2007, EPA received
reports about critical use methyl bromide production, imports, exports,
sales and/or inventory holdings in 2006 under the requirements at 40 CFR
82.13.  The information reported to EPA indicated that 6,923,926 kg of
critical use methyl bromide was acquired through production or import in
2006, and 6,384,493 kg of critical use methyl bromide was exported or
sold to end-users in 2006.  EPA proposed to calculate the amount of
carry over at the end of 2006 with the method used in column L of the
U.S. Accounting Framework for critical uses of methyl bromide.  The
Agency calculated that the carry-over amount at the end of 2006 was
539,433 kg, which was the difference between the reported amount of
critical use methyl bromide acquired (i.e. produced or imported) in 2006
and the reported amount used (i.e. sold to end users in 2006) (6,923,926
kg – 6,384,493 kg = 539,433 kg).  On March 16, 2007, the Agency
officially reported 539 metric tons of carry over from 2006 to the
United Nations Environment Programme (UNEP) Ozone Secretariat.

In the proposed rule, EPA brought attention to a petition submitted by
Chemtura Corporation (Chemtura) that proposes a number of changes to:
the Agency’s established method for calculating carry over; the
distribution of subsequent CUA reductions; and the existing record
keeping and reporting requirements.  The Agency made Chemtura’s
petition available on the public docket, and specifically sought
detailed comments on Chemtura’s proposals. EPA asked that comments
suggesting alternative methods for calculating the amount of carry over
material at the end of each year be detailed and comprehensive; address
what changes would be needed to the reporting requirements; and the
degree of administrative burden that alternative method might impose. 
The Agency also sought comment on ways to improve the completeness of
data reporting by affected companies.  EPA emphasized that the process
for calculating the amount of carry over CUE material each year relies
on sales to end user data reported to EPA by distributors and
applicators.  The Agency specifically requested comment on whether
requiring producers, importers, and distributors to report the names of
distributors and third-party applicators to which they have sold
critical-use methyl bromide would result in more complete reporting, and
whether this would justify the additional burden of such requirements.

Chemtura’s petition asserts that “EPA must adjust its methodology
for calculating carryover.”  EPA disagrees for two fundamental
reasons: the Agency’s established methodology is a simple and accurate
way to calculate the carry over amount each year; and adjusting the
established method could create international confusion about U.S.
reporting, which could jeopardize international authorizations of new
production to satisfy the critical needs of U.S. agriculture.

	The United States has important commitments to report information about
methyl bromide for critical uses.  In December 2004 the Parties agreed
to Decision XVI/6, which adopted an accounting framework for critical
uses of methyl bromide.  Each Party with critical needs submits an
accounting framework annually.  The U.S. submitted its first accounting
framework, for 2005 critical uses, on May 19, 2006.  The U.S. revised
the accounting framework agreed to by the Parties slightly, in part
because information requested about the amount of pre-phaseout
inventories was being treated as confidential.  

	For 2005 and 2006, EPA calculated the carry over amount using the
method described in the proposed rule, and reported the result
internationally in the U. S. Accounting Framework for critical uses of
methyl bromide.  The Parties were subsequently informed of the U.S.
carry over in the progress report of the Technology and Economic
Assessment Panel (TEAP), which is published prior to each Open-Ended
Working Group meeting, the first international meeting of each round to
discuss critical use authorization levels.  The 2006 carry over was
reported on page 78 of the 2007 TEAP Progress Report.  The Parties
consider that information when they make critical use authorizations,
and expect EPA to reduce new production, when appropriate, by the amount
of carry over CUE material.  A post-hoc revision of the methodology for
the U.S. Accounting Framework could create international confusion, and
as discussed more below, there is not a compelling reason to change
EPA’s method at this time.  Therefore, EPA has determined that any
revision of the previously reported 2006 carry over amount must be based
upon new data, not a new method for manipulating old data.

Six commenters support Chemtura’s request that EPA revise its
carryover calculation procedures to consider a broader range of
information sources when determining the carryover amount from a given
control period.  The commenters suggest that EPA calculate the carryover
as the sum of all critical use methyl bromide that companies report as
being held in inventory.  In its comments, Chemtura recognizes that this
approach would not fully address the problem of incomplete reporting,
and suggests that a conservative margin for error could be achieved by
calculating the average carryover for all reported sales and applying
the average to any remaining unreported volume.  If EPA understands
correctly, the commenters are requesting an “inventory approach” to
calculate the carry over amount, in which EPA would calculate carry over
as the sum of critical use methyl bromide inventory reported in section
2.6 of the annual Sales of Critical Use Methyl Bromide to End Users
Reports (“sales reports”), a sample of which is posted on the docket
for this rulemaking.  EPA understands that the commenters would prefer
the inventory method because they think it would result in a lower carry
over amount and because they believe it would be more accurate. 
However, EPA does not believe the inventory method would be as accurate
as the established  “sales method” that the Agency uses to report
carry over amounts internationally.

For 2006, the inventory method would rely on data reported in section
2.6 of the annual sales report forms.  In collaboration with major
methyl bromide producers and distributors, the reporting forms were
updated and simplified in [month] 2006, and posted on EPA’s website in
[month] 2006.  EPA posted instructional materials online with the
updated forms, and held compliance assistance meetings to teach
stakeholders how to use the new forms, including a session at the Methyl
Bromide Alternatives Outreach conference in Orlando in November 2006.  
If the sales reports are completely and accurately filled-out, section
2.6 is calculated with information from section 2.4A, 2.4B, 2.2, and
2.5.  For companies that hold critical use methyl bromide for other
companies, the information reported section 2.7 is an important
cross-check of the information reported in section 2.6.  However, EPA
reviewed the data in sections 2.4 through 2.7 of the 2006 sales reports,
and found at least 25 instances of blank, incomplete or apparently
misreported information in those sections.  EPA made efforts to contact
distributors that filed reports with significant inconsistencies, and
many of the reports were subsequently corrected.  However, some of the
data points remain blank or questionable.  On the other hand, there were
far fewer instances of blank or apparent misreporting in section 2.2 of
the sales report, which lists sales to end users by critical use sector.
 Most importantly, all instances of blank or apparently misreported
sales in section 2.2 were corrected after EPA staff contacted the
corresponding reporting entities.  Given EPA’s concerns about the data
in sections 2.4 through 2.7, and the Agency’s reservations about
changing the carry over calculation method, EPA has decided not to adopt
the commenters’ recommendations.

Six commenters assert that the critical use material calculated as carry
over for 2006 is actually unaccounted sales rather than inventory held
at the end of the year, and contend that EPA has evidence that this is
the case.  As discussed more below, the commenters claim to have
evidence that 2006 sales remain unreported, but have been unable, to
date, to produce official sales reports to support their claims.

The Methyl Bromide Industry Panel (MBIP) states that EPA should have
been aware of the underreporting of critical use sales and that its data
set for calculating the carryover set is deficient.  MBIP claims that
information it received in response to its FOIA request of [date]
clearly shows that some companies filed reports in 2005 and not in 2006.
 Nonetheless, MBIP contends, EPA has mistakenly assumed that 100 percent
of the unreported sales of critical use methyl bromide are held in
inventory.  In response, EPA points out that it made every reasonable
effort to contact entities that reported in 2005 and not 2006.  Although
EPA contacted these entities, some of them still have not reported 2006
sales for critical uses.  Whether every entity that sold critical use
methyl bromide in 2005 did so in 2006 remains an open question.  EPA has
made it clear to MBIP that it would consider late submissions, within
reason, of official sales reports from 2006, but MBIP has been unable,
to date, to produce suitable evidence of the unreported sales that they
insist took place during 2006.

At the Public Hearing for this action, one commenter from Ameribrom Inc.
said that he learned that 80 percent of the 539 MT that EPA calculated
as carryover is actually methyl bromide that was sold to critical users
but not reported.  He also said that many of the small distributors he
works with do not understand the reporting requirements, and some are
incapable of complying with them. The commenter did not provide
specific, verifiable information to support the claim that 80 percent of
the carry over is actually unreported sales.  Therefore, EPA will not
change its proposed approach as a result of Ameribrom’s claims.  The
Agency is concerned with Ameribrom’s claims about small distributors
that are not reporting.  EPA continues to educate stakeholders about
critical use exemption reporting requirements through outreach programs.
 For example, EPA posts instructional material on its website, holds
informational sessions about reporting at the annual Methyl Bromide
Alternatives Outreach Conference, and provides staff contacts to assist
with reporting requirements.

Most recently, EPA provided a letter template to members of MBIP,
including Ameribrom, that explains the importance of full reporting,
provides information about how to acquire official reporting forms, and
a contact person to answer questions.  EPA encouraged MBIP’s members
to customize the letter and send it to all of their customers;
especially entities that MBIP claims to know did not file a sales
report. 

MBIP states that an independent auditor found that approximately 20
methyl bromide suppliers failed to provide EPA with sales reports, which
accounted for approximately 80 percent of EPA’s calculated carryover. 
As EPA explains above, the Agency is unwilling to revise its methodology
for determining the previously calculated 2006 carry over amount, which
was reported internationally on March 16, 2007.  As mentioned above, EPA
has taken a number of steps to work with MBIP, and other stakeholders,
to encourage full reporting.  Such reporting, EPA believes, is in
everyone’s interest.  In addition, as explained below, EPA is taking
steps to collect the kind of information – namely a list of all
distributors and applicators that buy critical use methyl bromide in
each control period—that would allow the Agency to verify MBIP’s
claims. Whether or not the additional reporting requirements are
approved by the Office of Management and Budget, and therefore become
enforceable, the importance of full reporting will not be diminished,
and the Agency will continue to work with industry in outreach and
educational programs toward that end.  If MBIP can help to produce
official, signed, reports of 2006 critical sales the Agency remains
willing to consider that information, within reasonable time
constraints, and if necessary and appropriate, to proceed with a final
rule during 2008 to revise the 2006 carry over amount.

Chemtura asserts that many of the companies that routinely filed
required reports are the entities most likely to be holding critical use
methyl bromide inventory – manufacturers and distributors.  MBIP
states that its audit revealed that non-reporting entities are mostly
smaller entities that would be unlikely to hold any inventory. 
Following MBIP’s logic, one would also expect the alleged
non-reporting entities to sell less critical use methyl bromide than the
larger companies that regularly file required reports.  Therefore,
MBIP’s assertion does not support their claim that critical sales in
2006 were significantly greater than what was reported to EPA.  Above in
this preamble, the Agency explains why it believes the sales method,
which relies on reported critical sales, is a more reliable source of
data to calculate the 2006 carry over than the inventory method that
Chemtura supports, which relies on reported inventory holdings.  

Chemtura’s petition asserts that EPA’s contention that “carry over
increased while allocations and stocks have plummeted is not
credible.”  The commenters point to the reductions between the
quantities of methyl bromide in original CUE applications to the EPA
allocations, as well as declines in methyl bromide stocks, as proof that
carryover is unlikely.  The annual carry over amount is determined by
market forces and decisions of individual producers and distributors. 
Whether or not EPA, Chemtura, or anyone else thinks carry over is likely
to increase or decrease is irrelevant, because EPA must rely on official
data to ascertain the amount of carry over each year, and to credibly
report that amount internationally.

Six commenters request that EPA rigorously enforce compliance with
supplier reporting requirements.  EPA is currently encouraging full
reporting through educational, outreach and compliance assistance
programs.  An important part of these programs is to explain to the
regulated community that full reporting is in their best interest,
because non-reporting of sales will lead to reductions in allowable new
production in future years.  In addition, as discussed below, EPA is
contemplating an additional reporting requirement that would provide the
Agency the information it would need to identify entities that should
have filed sales reports for a particular control period.

Chemtura and MBIP contend that the proposed rule’s explanation of how
the carryover is calculated is the first such explanation given by EPA
in any CUE rule promulgated to date.  MBIP states that this was their
first opportunity to comment on EPA’s method of calculation.  MBIP,
including Chemtura, participated in stakeholder meetings as early as
2003 to develop reporting requirements for critical use methyl bromide. 
MBIP has been informed of, and had chance to comment on, every step of
the development of the reporting requirements for methyl bromide.  Thus,
if MBIP thought that compliance with the sales to end-user reporting
requirement was likely to be an issue, MBIP could have submitted
comments to that effect when that requirement was proposed.  MBIP and
its members may not have been informed through previous CUE rules
exactly how EPA intended to use the reported information to calculate
the carry over amount.  However, the U.S. has been using the production
minus sales approach to report carryover through the U.S. Accounting
Framework since May 19, 2006 when EPA submitted the first U.S.
Accounting Framework for critical uses of methyl bromide to the Ozone
Secretariat.  The Agency also posted the 2005 U.S. Accounting Framework
on the public docket for the 2007 CUE Rule on the date that the Proposed
2007 CUE Rule was published (July 6, 2007), so MBIP had an opportunity
to raise this specific issue during the comment period for the Proposed
2007 Rule. 

EPA received a comment from Chemtura expressing the view that EPA lacks
authority to reduce the 2008 CUE amount based on carryover from a
previous year.  EPA’s decision not to permit entities to build stocks
of methyl bromide produced or imported after January 1, 2005 under the
critical use exemption is contained in the Framework Rule.  EPA did not
propose to revisit this fundamental decision in its August 27, 2007,
proposed rule.  Rather, EPA sought comment on the method for calculating
the carryover and on ways to improve the completeness of data reporting.
 EPA has substantial discretion under section 604(d)(6) of the Clean Air
Act regarding the authorization of production for critical uses. 
EPA’s decision to deduct carryover from previous years is reasonable
because, it is a practical step to comply with limits imposed by the
Montreal Protocol on the amount of critical use methyl bromide that the
U.S. may consume in each control period.

kg [subject to change if EPA receives other late reports] of critical
use methyl bromide was sold to end-users in 2006.  As a result, EPA’s
official records now show that 6,424,692 kg of methyl bromide was sold
to end users in 2006.  Therefore, in accordance with EPA’s proposed
method for calculating carry over amounts, EPA calculates that the 2006
carry over amount was 499,234 kg of critical use methyl bromide.  This
amount was calculated as follows: 6,923,926 kg – 6,424,692 kg =
499,234 kg.  To account for carry over of inventory, EPA is reducing the
level of new production and import for critical uses by 499,234 kg.

The Agency believes it is appropriate to re-calculate the 2006 carry
over amount to account for all data that has been fully and properly
submitted to EPA.  Because the 2006 carry over amount affects 2008
production levels, EPA believes it is not too late to adjust the carry
over amount to account for data that was not included in the 2006 U.S.
Accounting Framework, or the proposed rule. EPA intends to submit a
revised 2006 U.S. Accounting Framework for critical uses of methyl
bromide to the Ozone Secretariat to account for the new data received by
the Agency.  In addition, if EPA receives in the near future more late
sales reports that, if taken into account, would significantly decrease
the calculated 2006 carry over amount, EPA may consider publishing a
final rule during 2008 revising the carry over amount and granting a
corresponding number of additional CUAs.

In developing this action, EPA specifically requested comment on whether
requiring producers, importers, and distributors to report the names of
distributors and third-party applicators to which they have sold
critical-use methyl bromide would provide valuable information to EPA,
and help to encourage complete reporting of sales to end-user data.  EPA
sought comment on whether this would justify the additional burden of
such requirements (72 FR 48970).  EPA did not receive any comments
opposing this additional requirement.

Six commenters support a petition submitted by Chemtura to augment the
current accounting framework and recordkeeping process to prevent
underreporting of methyl bromide use.  The commenters propose that EPA
modify its reporting system in a manner that would allow it to identify
non-reporting companies and the amount of critical use sales
attributable to each non-reporting company.  EPA could achieve this, for
example, by requiring each entity in the supply chain – from the
manufacturer to the company that sells to the end user – to file a
report stating who that entity sold critical use methyl bromide to and
how much material it sold. EPA agrees with the commenters that this
information could assist outreach efforts, and increase incentives for
regulated entities to properly submit reports.

EPA responds to these comments in Section V.E. of this preamble.  For
the reasons explained in Section V.E., in this action, the Agency is
amending the reporting requirements at 82.13 to require that all
individuals or legal entities that sell critical use methyl bromide must
report annually the names of all non-end user entities (i.e. producers,
importers, distributors, third-party applicators) to which they sell
critical use methyl bromide.  For the reasons discussed in Section V.E.,
EPA is not requiring entities to report the amount of critical use
methyl bromide that they sell to each non-end user entity.  EPA believes
these changes will provide important information, and additional
incentives for full reporting with the least amount of burden for
respondents.  

One commenter states that EPA’s reliance on full and accurate
reporting by the regulated community is unreasonable, because the
existing reporting system does not provide EPA with any way to verify
whether all entities that should file reports have done so.  EPA
currently relies upon officially submitted data to calculate the carry
over amount each year.  The commenter does not provide EPA sufficient
data to verify their assertions that the carryover consists in large
part of unreported sales.  EPA believes reliance on signed reporting
forms is preferable to reliance on unverified assertions.   The
importance of the international reporting commitments discussed above is
an additional reason not to recalculate the carryover on the basis of
anything less than additional signed sales reports.  The Agency will
continue educational and outreach programs to encourage full and
accurate reporting under 82.13.  As discussed above, EPA is actively
considering additional reporting requirements that may also help to
encourage full reporting.

NRDC states that EPA should require the reporting of the names of
distributors and third-party applicators to which they have sold any
methyl bromide, including pre-2005 stocks, in order to get accurate data
to track amounts sold for all purposes (including non-critical
purposes).  The commenter believes that the costs of such reporting
would be minimal and would be justified by the benefits of better
tracking of CAA and Protocol compliance.  EPA responds to this comment
in Section E of this preamble.

In previous CUE rules, EPA used the approach described in the Framework
Rule for implementing carry over reductions.  After applying this
reduction to the total volumes of allowable new production or import,
EPA pro-rated CUA allocations to each company based on their 1991
baseline market share. In developing this action, EPA proposed to use
the same approach for issuing company-specific CUA amounts in 2008. 

In the proposed rule, EPA explained that Chemtura’s petition
recommends alternative methods for apportioning carry-over reductions
among CUA holders.  EPA encouraged interested parties to consult
Chemtura’s petition and sought comments on the recommendations in that
petition, as well as any additional suggestions regarding the
apportionment of carry-over among companies.  

Chemtura’s petition requests that EPA apportion carryover amounts to
hold accountable only the producers responsible for the carryover
originating in their own supply chain.  The petition further states that
EPA’s process for apportioning carry over reductions among producers
is unfair and perpetuates poor stewardship.  As the commenter
acknowledges, EPA does not currently collect information that would
allow the Agency to reduce CUAs on the basis of carry over originating
in each producer’s supply chain.  As discussed below in more detail,
EPA believes that acquiring credible data of this nature would impose
extra burden on the regulated community with no discernible
environmental benefit, or help to achieve the primary goal of the CUE
program: to satisfy critical needs for methyl bromide.  EPA believes a
better solution is to continue to strengthen outreach and educational
programs that facilitate full reporting under existing requirements.

Chemtura’s petition asserts that “apportioning carryover penalties
based on 1991 consumption share is arbitrary and capricious.” 
Chemtura notes that CUE reductions to account for carry over are
distributed among the four methyl bromide producers based on their 1991
consumption baselines.  The commenter believes that an equal allocation
of the carry over would be fairer and that using the 1991 data is now
inconsistent with the available supply chain information and would
maximize future distortions in the critical use market.  However,
Chemtura has no grievances with EPA’s framework for distributing CUAs
to producers based on their 1991 market share, by which Chemtura
receives over 60 percent of the new production allowances each year. 
The Proposed Framework Rule stated that, “Allocating CUAs based on
each company’s 1991 baseline allowances (on a pro-rata basis) is a
better reflection of market share than simply dividing the number of
allowances by the total number of entities, and would be less burdensome
than conducting a detailed historical market share analysis on a [sic]
an annual basis.  Using the 1991 historic baseline method for
distributing CUAs is consistent with how EPA has allocated methyl
bromide production and consumption allowances for the past decade under
the methyl bromide phaseout” (69 FR 52376).  EPA believes the
arguments in the Proposed Framework Rule still apply.  Using the 1991
market shares, which have become the company-specific baselines for CUA
allocations , provides the best available estimation of how much carry
over is attributable to each company’s supply chain.  A more detailed
method of estimation would involve additional burden for respondents. 
Finally, EPA notes that in its comments Chemtura claims that four
distributors in its supply chain did not fully report sales to EPA.  EPA
encourages all producers to identify distributors in their supply chains
that did not fully report sales and to assist them in complying with the
requirements of 82.13.  If the commenters are correct in suggesting that
a large portion of the calculated carryover amount is actually
unreported sales, then full reporting would minimize the effects of the
carryover on all producers, including Chemtura. 

Chemtura’s petition recommends a “fault-based” system for
allocating CUA reductions to account for carry over amounts.  Chemtura
states that in order to support the fault-based carry over allocation
process, EPA could modify the reporting requirements established at
82.13 to require that importers, producers, distributors and third-party
applicators include information on the producer-level source of any
critical use methyl bromide they acquired during the year.  In its
comments, Chemtura asserts that, “Identifying the producer of origin
for any given sale or distributor should be a simple task, as each of
the four producers supplies downstream customers with methyl bromide
products under different pesticide registrations, labels, and product
names.  Thus, regardless of how many intermediary distributors a methyl
bromide product may have passed through before reaching the end user,
that entity can identify the producer by a review of the label or sales
invoice.”  

Whether or not producer of origin reporting would be a “simple
task,” it would add to the regulatory burden currently borne by
entities in the distribution chain.   Preliminary estimates, using
previous ICR analyses as a guideline, suggest that the burden imposed by
producer of origin reporting could require  150 respondent hours per
year, depending on how much EPA follow-up is necessary to perform
standard data quality assurance procedures.  EPA does not believe the
“fault-based” system, or the extra reporting burden it requires,
would have any discernible environmental benefit, or help to satisfy
critical needs for methyl bromide.  Therefore, while the Agency may
continue to analyze Chemtura’s proposed reporting additions as part of
its ICR renewal processes during 2008, in this final rule the Agency is
not implementing Chemtura’s “fault-based” system or the additional
reporting that it would require.

Chemtura’s petition asserts that, “The opt-out system proposed [in
the petition] provides an appropriate method for apportioning carryover
penalties.”  Chemtura’s proposed “opt-out” system would allow
producers to voluntarily submit supply chain data in exchange for
EPA’s removal of the individual producer from the “default penalty
pool.” As an example of the “opt-out” system, Chemtura provided
information that it believes establishes the following: 42 of the 48
entities that reported 2006 critical sales to EPA are part of
Chemtura’s supply chain; four third-party applicators in Chemtura’s
supply chain that had reporting obligations did not report 2006 critical
sales; and actual carry-over of critical use methyl bromide from
Chemtura’s supply chain into 2007 was less than 50,575 kg.  Chemtura
asserts that the information it provided does not support using the 1991
baseline for carry over reduction allocation.  

Verifying the confidential information that Chemtura voluntarily
provided would be costly for the distributors that EPA would have to
contact, and would not further any of EPA’s priorities under the CUE
program.  As discussed above, EPA relies on officially submitted data,
on OMB approved forms, for accuracy and reliability.   EPA followed the
appropriate procedures under the Paperwork Reduction Act (PRA) for the
current reporting requirements.  The Agency is concerned that in
practice the proposed “op-out” system would not be as voluntary as
Chemtura claims.  Allowing one entity to submit voluntary reports as the
basis for a more favorable allocation could be tantamount to imposing a
reporting requirement on all such entities, because the practical effect
of that policy would be that other companies would have to submit
similar reports in order to avoid being adversely affected.  EPA
estimates the burden hours associated with the submission and
consideration of these voluntary reports could annually impose 60 burden
hours for respondents.  The Agency believes this additional burden would
be unjustified.

In its comments on the proposed rule Chemtura asserts that Ameribrom has
acknowledged responsibility for the majority of the 2008 carryover. 
Chemtura contends that at the Public Hearing on this action, Ameribrom
admitted that approximately 80 percent of the 2006 carryover originated
within Ameribrom’s supply chain in the form of unreported sales. 
Chemtura states that Ameribrom also suggested that it had failed to
reach users with portions of its 2006 allocation, citing an inability to
move product through its supply chain during 2006.  Chemtura also states
that Ameribrom has suggested that distributors in its supply chain are
“probably never going to be able to comply” with EPA’s reporting
requirements.  A careful reading of the transcript from the public
hearing does not confirm Chemtura’s assertion that Ameribrom claimed
that 80 percent of the 2006 carry over originated from Ameribrom’s
supply chain.  EPA explains this response in more detail in the Response
to Comment document on the docket for this rulemaking.  EPA has not
received data to substantiate the claim that 80 percent of the 539 tons
constitutes unreported sales.

Chemtura’s petition asserts that, “EPA has received ample notice of
the flaws in the framework.”  In its comments, Chemtura states that
EPA has received multiple past comments regarding the issues surrounding
carryover calculation and should therefore be equipped to address the
reporting and penalty apportioning issues in the final 2008 rule.  For
the reasons discussed above, EPA does not agree with the commenter’s
assertion that there are flaws in the Agency’s framework for
calculating carry over, or implementing carry over reductions.  In
addition, EPA received Chemtura’s petition too late to evaluate
Chemtura’s proposals prior to issuance of the proposed rule.  

Chemtura further comments that any material that stays in the
distribution system past the end of a control period should be
considered part of the supply chain factor rather than carry over, and
that no carry over should be subtracted from CUEs in 2008 and beyond. 
The Framework Rule established EPA’s policy of not allowing companies
to build inventories of critical use methyl bromide.  In this final
rule, EPA is applying carry over reductions for 2008, and has explained
why it believes its method for calculating carry over is the appropriate
approach.  If EPA understands correctly, the commenter is suggesting
that EPA expand the supply chain factor to include carry over amounts. 
However, the proposed supply chain factor is based upon an analysis of
the amount of stocks necessary to respond to particular supply
disruption scenarios. The Agency does not understand why the amount of
carry over should affect that analysis.  In future rules EPA may
consider revising its policy towards carry over amounts, but at this
time, considering the amount of available stocks, the Agency believes it
is best to maintain the framework for responding to carry over.

In this action, EPA is reducing the total level of new production and
import for critical uses by 499,234 kg to reflect the total level of
carry-over material available at the end of 2006.  To implement the
reduction, the Agency is reducing the total number of CUAs issued for
2008 by 499,234.  EPA is not adopting any of the recommendations in
Chemtura’s petition that would change the way EPA apportions carry
over reductions to CUA recipients.  As explained below in Section V.E.
of this preamble, in this action EPA is amending 82.13 to add reporting
requirements that the Agency believes will enhance its continuing
efforts to encourage full and accurate reporting, which is used to
calculate the carry over amount.  However, EPA’s preliminary analysis
finds that adopting Chemtura’s other proposals would impose extra
burden on the regulated community without furthering any of EPA’s
goals under Section 604(d)(6) of the Clean Air Act.

	5. Amounts for Research Purposes

	Decision XVII/9(7) “request[ed] Parties to endeavor to use stocks,
where available, to meet any demand for methyl bromide for the purposes
of research and development.”  Consistent with that Decision, in the
2007 CUE Rule, EPA reduced the amount of new production and import by
21,702 kilograms, which was the amount needed for research. Consistent
with Decision XVII/9, EPA continued to encourage methyl bromide
suppliers to sell inventory to researchers and encouraged researchers to
purchase inventory.

Decision XVIII/15(1) authorizes “the production and consumption of
[methyl bromide] necessary to satisfy laboratory and analytical critical
uses.”  Paragraph 2 of that decision states that methyl bromide
produced under the exemption for laboratory and analytical uses may be
used as a reference or standard; in laboratory toxicology studies; to
compare the efficacy of methyl bromide and its alternatives inside a
laboratory; and as a laboratory agent which is destroyed in a chemical
reaction in the manner of feedstock.  In a separate notice-and-comment
rulemaking titled the “Global Essential Laboratory and Analytical Use
Exemption,” EPA is implementing the exemption authorized in Decision
XVIII/15 (72 FR 52332).  More information about that rulemaking process
is available on the docket for that rule (EPA-HQ-OAR-2007-0384). 

In developing this action, EPA stated that there continues to be a need
for methyl bromide for research purposes that do not meet the criteria
for laboratory and analytical uses, as defined in Decision XVIII/15.  A
common example is an outdoor field experiment that requires methyl
bromide as a standard control treatment with which to compare the trial
alternatives’ results.  In the proposed rule, EPA listed the critical
use sectors that were approved by the Parties to use methyl bromide for
research purposes in 2008 in Section V.C. and with the phrase
“research purposes” listed in their limiting critical conditions in
Table I of this preamble.  

In developing this action, EPA proposed to allow sale of 15,491 kg of
existing stocks for research purposes in 2008 to account for the amount
authorized for those purposes.  EPA proposed to allow methyl bromide
sale from stocks for exempted research purposes by expending CSAs.  An
explanation of what amounts of methyl bromide and of what sectors
qualify for research purposes can be found in Section V.C. of this
preamble.  The Agency proposed to continue to encourage methyl bromide
suppliers to sell inventory to researchers and to encourage researchers
to purchase inventory for research purposes.  EPA sought comment on its
proposal to issue CSAs for sale of methyl bromide stocks for exempted
research purposes.

EPA received one comment objecting to its proposal to issue CSAs for
sale of pre-phaseout stocks for exempted research purposes.  The
commenter believes that existing stocks of pre-2005 inventory are too
low to warrant further drawdown for research purposes and that new
production should be increased by 15,491 kilograms to account for
research needs.  The Agency disagrees, and proposed a detailed analysis
of the amount of available stocks, which found more than 1,700,000 kg of
stocks available for critical uses.  Therefore, in accordance with Dec.
XVII/9(7), EPA is reducing new production by 15,491 kg, and encouraging
researchers to procure methyl bromide from available stocks.

	6. Methyl Bromide Alternatives 

	In the 2006 CUE Rule (71 FR 5985) EPA allocated less methyl bromide for
critical uses than was authorized by the Parties in order to account for
the recent registration of sulfuryl fluoride.  The allocation reductions
in that rule reflected transition rates that were included for the first
time in the 2007 U.S. Critical Use Nomination (CUN).  In the 2007 CUE
Rule, EPA explained why a similar reduction was made in that rule:
“The report of the Methyl Bromide Technical Options Committee (MBTOC)
indicated that the MBTOC did not make any reductions in these
[post-harvest] use categories for the uptake of sulfuryl fluoride in
2007 because the United States Government indicated that it would do so
in its domestic allocation procedures. Therefore, EPA is reducing the
total volume of critical use methyl bromide by 53,703 kilograms to
reflect the continuing transition to sulfuryl fluoride” (75 FR 75390).

In developing this action, EPA referenced preliminary results of a study
by Dr. Brian D. Adam of Oklahoma State University, which the Agency is
making available on the public docket for this rulemaking.  The proposed
rule stated that the results of Dr. Adam’s study indicate that the
cost of post-harvest cocoa fumigation with sulfuryl fluoride is not
substantially greater than the cost of using methyl bromide for that
fumigation.  The proposed rule explained that in response to the study
results, the National Pest Management Association (NPMA) decided to
withdraw its nomination request for critical use methyl bromide for
cocoa for calendar year 2009 and not to seek critical use methyl bromide
for cocoa at all in calendar year 2010.  EPA reiterated NPMA’s stated
need for some critical use methyl bromide for cocoa in 2008 as the
sector transitions to sulfuryl fluoride, and explained the situation
further.  EPA sought comment on how much of the 50,188 kg of critical
use methyl bromide approved by the Parties for cocoa for 2008 should be
allowed by the Agency.  EPA asked that comments on this topic recommend
specific amounts of critical use methyl bromide for cocoa in 2008, and
provide detailed justifications for their recommendations.

EPA received a comment from NPMA that recognizes that an Oklahoma State
University study has shown that the cost of using sulfuryl fluoride to
treat post-harvest cocoa is not substantially greater than the cost of
using methyl bromide.  However, NPMA’s comment states that some
transition time is needed for the smaller companies in the industry to
transition to sulfuryl fluoride.  This transition includes the
completion of a manufacturer’s stewardship program as well as an
education process with the customers to receive their consent to a
different treatment.  Additionally, while most states in which cocoa is
processed have a special 24(C) label to allow for higher Concentration
and Time (CT) dosage allocations for use of sulfuryl fluoride on cocoa,
New York still needs to obtain this label.  Therefore, the commenter
requests that at least 75 percent of the 53.188 metric tones of critical
use methyl bromide approved by the Parties be allocated for 2008.  The
commenter states that NPMA’s application for 2009 has been withdrawn,
as the transition to sulfuryl fluoride should be complete by that time.

	In their 2008 CUE application, NPMA requested 79,950 kg for 2008
critical uses.  In developing the critical use nomination, the U.S.
government (USG) reduced NPMA’s original request by 3,051 kg to
account for growth, because EPA’s framework does not allow critical
users to increase their critical need based on expansion of their
operations (FR 69 76996).  USG also reduced NPMA’s original request by
12,980 kg to account for a reduction in the use rate of methyl bromide
from 24 kg/1,000 m3 to 20 kg/ 1,000 m3.  USG made a further reduction of
10,753 kg to NPMA’s request to account for a transition rate of 16.8%
per year to sulfuryl fluoride.  In light of new information about the
feasibility of sulfuryl fluoride for post-harvest cocoa fumigation, in
this action EPA is increasing these reductions to account for a greater
transition rate to sulfuryl fluoride.

	As noted previously, in its comments, NPMA requested that EPA approve
75 percent (or 39,891 kg) of the 53,188 kg that the Parties authorized
for 2008 cocoa fumigation in Dec. XVIII/13.  NPMA states that some of
its members need more time to complete the required manufacturer’s
stewardship program, time for customer education for consent to
non-methyl bromide treatments, and time for resolving regulatory issues
such as the need for 24(C) special local needs (SLN) labels for sulfuryl
fluoride to allow for a more effective concentration and time (CT)
dosage rate in New York State, which includes the third-largest cocoa
port.

However, NPMA does not provide specific calculations or estimates to
support its request for 75 percent of the amount agreed by the Parties. 
In its comments, and in previous communications with the Agency, NPMA
suggested that the two largest cocoa fumigation companies, which treat
the majority of post-harvest cocoa in the U.S., are fully ready to
transition to sulfuryl fluoride.  EPA acknowledges that the transition
to sulfuryl fluoride is impeded in New York State by the SLN label issue
that NPMA raises in its comments.  However, after considering the latest
available information, EPA can not support NPMA’s request for 75
percent of the 53,188 kg agreed to by the Parties.

	After these considerations, and noting NPMA’s proactive steps
transitioning to alternatives, EPA is approving 35,498 kg, or roughly 67
percent of the 53,118 kg of critical use methyl bromide agreed to by the
Parties for cocoa for 2008.  Therefore, EPA is reducing the total
critical use amount for 2008 by 17,690 kg, which is the difference
between the Parties’ authorization for cocoa fumigation (53,188 kg)
and the amount that EPA is approving (35,498 kg).

Besides the issues regarding post-harvest cocoa fumigation discussed
above, EPA did not propose to make any other reductions in post-harvest
or pre-plant critical use allowances to account for the uptake of
sulfuryl fluoride, or any other pre-plant or post-harvest alternatives. 
The Agency explained that the 2008 Critical Use Nomination (CUN) the
Agency applied transition rates for all critical use sectors.  The MBTOC
report of September 2006 included reductions in its recommendations for
critical use categories based on the transition rates in the 2008 CUN. 
MBTOC’s recommendations were then considered in the Parties’ 2008
authorization amounts, as listed in Decision XVIII/13.  Therefore, EPA
explained that transition rates, which account for the uptake of
alternatives, have already been applied for authorized 2008 critical use
amounts.  Furthermore, the Agency stated that the 2009 CUN, which
represents the most recent analysis and the best available data for
methyl bromide alternatives, does not conclude that transition rates
should be increased for 2008. In developing this action, EPA sought
comment on its proposal not to make further reductions in 2008 to
account for the uptake of methyl bromide alternatives.

One commenter states that post harvest application requests by NPMA,
NPCA, Pet Food Institute, and Rice Millers are for applications for
which methyl bromide is not necessary, and thus believes that they
should not receive CUE allocations.  One commenter expresses support for
EPA’s proposal not to make further reductions in 2008 to account for
the uptake of methyl bromide alternatives.  The commenter notes that
some fumigation companies need more time to transition to sulfuryl
fluoride, including the purchase of new equipment and training in its
use.  Specifically, the commenter believes that allowing CUEs for cocoa
in 2008 will enable a smoother transition to sulfuryl fluoride and would
help to guarantee methyl bromide availability to guard against
unforeseen problems with the transition.

EPA received two comments that state that sulfuryl fluoride is a viable
and economic fumigant alternative for all post-harvest structural
fumigations.  These commenters believe that methyl bromide allocations
for these applications should therefore be significantly reduced or
eliminated.  EPA received one comment that states that nearly 50 percent
of the 220 flour mills in the U.S. are fumigated with sulfuryl fluoride.
 The commenter believes that the 15-20 percent transition of new
technology stated by EPA may apply to farm applications but believes
that it is too low for structural applications. Additionally, the
commenter notes that sulfuryl fluoride has proved successful even after
multiple applications with no return to methyl bromide, and that
fumigation failures can happen with all materials, including methyl
bromide.  One commenter requests that EPA reduce the proposed CUE amount
for all structural uses by at least half for 2008 and eliminated
exemptions for such uses in 2009. The commenter notes that CUEs for
post-harvest cocoa uses in particular should be reduced.

The Agency believes that there are still some efficacy and validation
issues that need to be adequately addressed before sulfuryl fluoride can
be fully adopted by the food processing industry.  Sulfuryl fluoride
fumigation integrates temperature (requires less product as temperature
increases), dosages (choice of only post-embryonic stages or all life
stages), and exposure time.  Sulfuryl fluoride efficacy on insect eggs
requires higher concentrations, except at optimal temperatures.  Its use
also requires extensive training of applicators to proficiently use the
computerized fumigation guide.  Although many flour and rice mills have
indeed fumigated their facilities with sulfuryl fluoride in 2006, the
food processing industry is still learning how to incorporate sulfuryl
fluoride fumigation into its pest management strategies.   Therefore,
with this action, the post-harvest applications with the limiting
critical conditions listed in the table in 40 CFR part 82, subpart A,
Appendix L qualify for critical uses in 2008.  EPA further responds to
comments about the efficacy of sulfuryl fluoride in the response to
comment document for this rulemaking.

One commenter notes that EPA recently approved the use of iodomethane
(methyl iodide) for field uses, which will reduce the need for methyl
bromide CUE allocations.  The commenter states that iodomethane is a
drop-in substitute for methyl bromide and that while it is more costly
per kilogram, less of it is require to achieve the same efficacy.  The
commenter also states that while iodomethane poses direct toxicity
issues, the toxicity issues associated with methyl bromide are worse. 

One commenter requests that EPA assess the technical and economic
feasibility of methyl iodide for no fewer than two years before
factoring its availability into future CUE decisions.  The commenter
believes that the controversial nature of the registration combined with
the proximity of the registration to the close of the comment period on
the CUE rule provide reason to delay considering this alternative when
allocating CUEs.  The commenter also notes that methyl iodide is not yet
registered in California because of safety questions and that there is
anecdotal evidence of efficacy problems with the chemical. The commenter
believes that at least two growing seasons are necessary to review and
assess viability.

The Agency acknowledges that iodomethane is now registered at the
Federal level for certain authorized critical uses of methyl bromide,
most notably, strawberries, tomatoes, peppers, and ornamental crops. 
Notwithstanding the registration status at a Federal level, US growers
cannot currently use iodomethane in their production processes.  The
pesticide registration process in the United States involves multiple
layers of regulatory approval.  The product must first be registered at
the Federal level.  Subsequently, each State can elect to register or
not register the chemical for use in that state. Similarly, the
pesticide registrant has the option of not seeking registration in a
particular state.  To date, no state has registered iodomethane for use.
 Without state registrations in place, the Agency is not in a position
to reduce production levels for methyl bromide based on the status of
the Federal registration alone.

Dow AgroSciences (Dow) provided extensive comments objecting to EPA’s
assessment of the label restriction on 1,3-D product use near karst
topographical features in Florida.  The Agency’s assessment of those
restrictions was part of the basis for the 2008 and 2009 CUN for
pre-plant critical uses in Florida.  The commenter asserts that EPA’s
kart impact assessment represents an unnecessarily simplified, regional
assessment inappropriate to assess a site-specific restriction. The
commenter asserts that EPA’s 2007 assessment is not an accurate
reflection of the current 1,3-D product label restrictions which
specifies that a particular field is not impacted unless there is a
karst surface feature within 100’ of the edge of that field,
independent of the percentage of the surrounding area which may contain
karst surface features. The commenter references two field-level
evaluations of occupied structures that have been conducted in rural and
urban agricultural areas of Florida and Georgia.  The commenter believes
that EPA should use the methods in those studies as a surrogate for
karst surface features.  The commenter states that results of these
analyses indicate that restrictions on product use associated with
features (either occupied structures or karst surface features) at
distances of ≤100’ can be expected to have an impact on agricultural
ranging from 1% to 5.5% compared to the proposed impact of up to 93%
that is assigned to the 1,3-D karst restriction in the 2007 U.S.
assessment. The commenter also mentions that additional information on
this further characterization of the karst impact was presented to EPA
by Dow at a meeting on July 25, 2007 and submitted that information as
separate documents into the public docket associated with this rule.

EPA disagrees with the commenter’s critique of EPA’s 2007 karst
impact assessment.  It appears that Dow is arguing that occupied
structures can be used as a proxy for karst surface features, and that
therefore analyses that examine the presence of occupied structures as a
restriction to fumigant use are appropriate to use for estimates of the
karst impact. However, Dow assumes that karst features will occur with a
frequency and distribution similar to that of occupied structures in all
agricultural counties of Florida. Unless Dow has data to support this
presumption, information which they have not presented, EPA does not see
how using occupied structures as a proxy for karst topological features
is valid.  Therefore, we believe that our methodology of using
geological maps which identify “sensitive karst areas” is superior.

Dow’s comments go on to state that the 2007 U.S. government assessment
concludes that the soils restriction causes 23% to 100% of agricultural
land in Florida to be unsuitable for 1,3-D uses due to the
state-specific (“Special Local Need” registrations for 1,3-D
products) soil requirements. The commenter states that the U.S.
Government included in their assessment, agricultural land (in Alachua,
Gadsden and Jackson counties) that is not subject to the specific
Florida soil restrictions. In addition, the commenter states that the
2007 soils assessment relies on a simplified soil assessment that
characterizes the percentage of soil areas, by county, which are
non-suitable for 1,3-D applications. The county-specific percentage
values are then used to determine the percentage of agricultural land
within that county that is unsuitable for 1,3-D uses. This represents a
significant overestimation of impact, in the commenter’s opinion,
because non-agricultural land is considered into the assessment. A more
refined assessment utilizing GIS and land-use data, provided by Dow
AgroSciences in 2002, indicates that the southern Florida soil
restriction has the potential to impact up to only 24.6% of agricultural
land in the key south Florida counties. The commenter mentions that this
information was shared with EPA in 2002 and 2007 and is placed in
separate documents into the public docket that is associated with this
proposed rule.

EPA agrees with the commenter that three counties included in the 2007
U.S. assessment are not subject to the second “seepage irrigation”
SLN restriction, and that these counties should be removed from the
portion of the analysis done for the CUNs. These counties would be
Alachua, Gadsden and Jackson counties.  However, even completely
removing these counties from EPA’s analysis of soil restrictions would
remove only a relatively small amount of crop acreage: EPA’s analysis
only considered the strawberry crop in Alachua county, a total of 22
acres harvested, and a total of 2,513 acres of tomato in Gadsden and
Jackson counties (out of a total of 43,790 acres harvested in the
state). Crop acreage information is taken from Appendix B of the 2006
CUN for tomatoes, eggplants, peppers, and strawberry fruit.  EPA notes,
however, that these three counties are still affected by the ‘karst’
restriction on 1,3-D (Telone ®)use.   Therefore, even though EPA will
make the commenter’s recommended revisions in future analysis, the
Agency does not believe these revisions support changing the proposed
amount of critical use methyl bromide for pre-plant uses in 2008.

Regarding Dow’s comments on the technical aspects of the
Florida-specific “seepage irrigation” portion of EPA’s soils
analysis described: EPA examined the information supplied by Dow at its
meeting with Agency staff in July 2007.   In addition to the differences
in methods for estimating the impact of the karst restriction that are
discussed above, a major difference between the Dow analysis of seepage
irrigation restrictions and the EPA analysis is that the EPA analysis
assumes that the agricultural land is distributed within the county in
proportion to its overall percentage rather than looking at the specific
location of agricultural land used in the production of row crops.

Dow is correct in stating that using the actual location of agricultural
land would provide a refined estimate of potential 1,3-D product use.
However, this refinement would change the overall assessment very
little.  Particularly in counties which are largely agricultural, the
difference between the EPA and Dow estimates is very small.  The fact
that the estimates of karst-restricted areas must be overlaid on the
areas affected by seepage irrigation restrictions reduces the
differences still further.  The county where the difference is the most
pronounced is Palm Beach, a county where agricultural use makes up a
relatively small proportion of land use.  Palm Beach County is
approximately the 5th most important tomato-producing county in Florida,
producing 7-8% of the 2002 tomato crop (2002 is the most recent year for
which such data were available and thus the year used for the analysis).
 Palm Beach County is not a significant producer of strawberries. 
Strawberries and tomatoes are the Florida crops for which the largest
methyl bromide request is put forward in 2008 U.S. Critical Use
Nomination.  Thus, changing the estimate of the proportion of land in
Palm beach County that is eligible to use 1,3-D products will make very
little difference to the overall assessment  of the proportion of
Florida cropland where 1,3-D products can be used in place of methyl
bromide.  Therefore, EPA does not believe the commenter’s critique of
EPA’s analysis supports changing the proposed amount of critical use
methyl bromide for pre-plant uses in 2008.

EPA emphasizes that it is very interested in refining its estimates of
the impact of soil related restrictions on 1,3-D use in Florida, and is
open to working with Dow to do so for future methyl bromide CUE
assessments. EPA notes here that in order to significantly alter its
current karst analysis, EPA would need to see more than just a summary
of Dow’s study, but rather a detailed description of the study,
including data sources, analytical methods, and dataset sizes if
appropriate.

In this action, EPA is reducing the proposed critical use amount for
post-harvest cocoa fumigation by 17,690 kg.  EPA is not reducing any of
the other proposed critical use amounts for 2008 to account for the
uptake of alternatives, because uptake of alternatives was already
considered in the 2008 U.S. CUN, adopted by MBTOC, and reflected in the
2008 CUE authorization amounts that EPA is finalizing with this action. 
Furthermore, the most recent information that EPA has does not support
further reductions. 

E. Record Keeping and Reporting Requirements

	1. Reporting

	With this action, individuals or legal entities that produce,
distribute, sell, apply, or buy methyl bromide are required to report
the name of every non-end user entity (i.e. producer, distributor or
applicator) to which they sell critical use methyl bromide in each
control period.  These requirements will be added to the existing annual
reporting requirements at Part 82.13 for critical uses of methyl
bromide.  To collect this information, EPA will add a section to the
form titled Sales of Critical Use Methyl Bromide to End Users Report
(OMB Control Number 2060-0564), which must be submitted no later than 45
days after the 31st of December each year.  This new annual reporting
requirement will begin for the 2008 control period, meaning that no
later than 45 days after December 31, 2008, producers, distributors and
applicators must submit the name of every non-end user entity to which
they sell critical use methyl bromide during the 2008 control period. 
EPA is also requesting this information for the 2007 control period
under a separate Section 114 information request.  Section VI.B of this
preamble provides more information about the information collection
requirements in this rule, and compliance with the Paperwork Reduction
Act.

	EPA is adding the reporting requirement described above to enhance
compliance tracking of the critical use allowance and critical stock
allowance caps; and determinations of how much critical use methyl
bromide remains unused at the end of the compliance period.  The
information collected for this exemption is authorized under Sections
603(d) and 614(b) of the Clean Air Act Amendments of 1990.  EPA believes
these reporting requirements will enhance EPA’s fulfillment of U.S.
reporting obligations under Article 7 of the Protocol, Clean Air Act
reporting requirements to Congress under Section 603(d), and
implementation of the critical use exemption under Section 604(d)(6)
from one control period to the next.  Furthermore, EPA believes that
today’s recordkeeping and reporting requirements create the least
burden while still ensuring that EPA is able to meaningfully improve its
implementation of the U.S. critical use exemption framework established
in the December 23, 2004 Framework Rule (69 FR 76997).

In developing this action, EPA specifically requested comment on whether
requiring producers, distributors and applicators to report the names of
non-end user entities to which they have sold critical-use methyl
bromide would provide valuable information to EPA, and help to encourage
complete reporting .  EPA sought comment on whether this would justify
the additional burden of such requirements (72 FR 48970).  EPA did not
receive any comments opposing this additional reporting requirement.

EPA received six comments supporting a petition submitted by Chemtura to
augment the current reporting and record keeping process to prevent
underreporting of methyl bromide use.  The commenters propose that EPA
modify its reporting system in a manner that would allow the Agency to
identify non-reporting companies and the amount of critical use sales
attributable to each non-reporting company.  EPA could achieve this, the
commenters assert, by requiring each entity in the supply chain – from
the manufacturer to the company that sells to the end user – to file a
report stating who that entity sold critical use methyl bromide to and
how much material it sold.  EPA agrees with the commenters that
collecting information that would allow EPA to identify non-reporting
companies would assist EPA’s efforts to encourage full reporting, and
increase incentives for regulated entities to properly submit required
reports.  However, EPA does not agree that it should require information
that would allow the Agency to quantify the amount of critical use sales
attributable to each non-reporting company.  Instead of imposing
additional burden on entities that do report in order to obtain
information about non-reporters, the Agency believes a more
straightforward and practical approach is to encourage full reporting. 
EPA believes that collecting the names of all entities with reporting
requirements in each control period will increase incentives for full
reporting, facilitate Agency follow-up with non-reporters, and thus
diminish any advantages of collecting more detailed information, about
non-reporting entities.

EPA used previous information collection request (ICR) analyses of
burden hours for existing methyl bromide reporting requirements as a
guideline to estimate the burden associated with the additional
reporting requirements that the commenters propose. The Agency estimates
that annually requiring producers, distributors and third-party
applicators to provide the names of entities, excluding end-users, to
whom they sell critical use methyl bromide would add approximately 90
burden hours to all responders each year, or roughly 90 minutes per
respondent per year.  EPA believes the benefits of collecting that
additional information would outweigh the associated administrative
burden for respondents.  EPA also estimates that considering all burden
hours and other costs, it would cost the Agency less than $1,300 per
year to process this additional information.

EPA also estimated the burden associated with collecting information
that would allow the Agency to determine the amount of methyl bromide
sold to each non-reporting entity, as the commenters recommend.  Using
previous ICR analyses as a guideline, EPA estimates that collecting
information about the amount of critical use methyl bromide sold to each
non-end user would be more complicated than simply requiring the names
of those entities.  EPA expects that in some cases respondents would
have to compile multiple sales transaction records for each non-end user
entity to which they sold methyl bromide.  Therefore, EPA estimates that
this reporting would impose an additional 60 burden hours to all
respondents each year, or roughly one hour per respondent per year.  EPA
also estimates that it would cost the Agency more than $2,500 per year
to process this new information.  Most importantly, EPA does not believe
this reporting requirement would have any environmental benefit, or help
to meet the primary goals of the critical use exemption program. 
Therefore, with this action, EPA will not require respondents to provide
information about the amount of methyl bromide sold to each non-end user
each year.

	EPA received one comment from the Nation Resources Defense Council
stating that EPA should require reporting of the names of distributors
and third-party applicators to which they have sold any methyl bromide,
including pre-2005 stocks, in order to get accurate data to track
amounts sold for all purposes (including non-critical purposes).  As EPA
moves forward with the ICR renewal processes in 2008, the Agency intends
to give further consideration to the commenter’s suggestion that EPA
collect the names of distributors and applicators that buy pre-phaseout
material.  However, because the Agency did not specifically seek comment
on this additional requirement in the proposed rule, EPA would like to
gather more input before deciding whether to implement the commenter’s
proposal.

	2. Recordkeeping

	This action does not impose any additional recordkeeping requirements,
as the regulated community is already required, under Part 82.13, to
keep methyl bromide sales records and invoices for three years.

F. The Criteria in Decisions IX/6 and Ex. I/4

	Paragraphs 2 and 6 of Decision XVIII/13 request parties to ensure that
the conditions or criteria listed in Decisions Ex. I/4 and IX/6,
paragraph 1, are applied to exempted critical uses for the 2008 control
period.  A discussion of the Agency’s application of the criteria in
paragraph 1 of Decision IX/6 appears in sections V.A., V.C., V.D., and
V.H. of this preamble.  The critical use nominations (CUNs) detail how
each proposed critical use meets the criteria listed in paragraph 1 of
Decision IX/6, apart from the criterion located at (b)(ii), as well as
the criteria in paragraphs 5 and 6 of Decision Ex. I/4. 

	The criterion in Decision IX/6(1)(b)(ii), which refers to the use of
available stocks of methyl bromide, is addressed in sections V.D., V.G.,
and V.H. of this preamble.  The Agency has previously provided its
interpretation of the criterion in Decision IX/6(1)(a)(i) regarding the
presence of significant market disruption in the absence of an
exemption, and EPA refers readers to the 2006 CUE final rule (71 FR
5989) as well as to the memo on the docket titled “Development of 2003
Nomination for a Critical Use Exemption for Methyl Bromide for the
United States of America” for further elaboration.

	The remaining considerations, including the lack of available
technically and economically feasible alternatives under the
circumstance of the nomination; efforts to minimize use and emissions of
methyl bromide where technically and economically feasible; the
development of research and transition plans; and the requests in
Decision Ex. I/4(5) that Parties consider and implement MBTOC
recommendations, where feasible, on reductions in the critical use of
methyl bromide and in paragraph 6 for Parties that submit critical use
nominations to include information on the methodology they use to
determine economic feasibility, are all addressed in the nomination
documents.

	Some of these criteria are evaluated in other documents as well.  For
example, the U.S. has further considered matters regarding the adoption
of alternatives and research into methyl bromide alternatives, criterion
(1)(b)(iii) in Decision IX/6, in the development of the National
Management Strategy (NMS) submitted to the Ozone Secretariat in December
2005 and in on-going consultations with industry.  The NMS addresses all
of the aims specified in Decision Ex.I/4(3) to the extent feasible and
is available in the docket for this rulemaking.

G.   Emissions Minimization

	In the proposed rule, EPA noted for the regulated community the
reference to emission minimization techniques in paragraph 8 of Decision
XVIII/13, which states that Parties shall request critical users to
employ “emission minimization techniques such as virtually impermeable
films, barrier film technologies, deep shank injection and/or other
techniques that promote environmental protection, whenever technically
and economically feasible.”  EPA understands that research is being
conducted on the potential to reduce rates and emissions using newly
available high-barrier films and that these studies show promising
results.  Users of methyl bromide should make every effort to minimize
overall emissions of methyl bromide by implementing measures such as the
ones listed above, to the extent consistent with state and local laws
and regulations.  In the proposed rule, the Agency encouraged
researchers and users who are successfully utilizing such techniques to
inform EPA of their experiences as part of their comments and to provide
such information with their critical use applications.  In addition, the
Agency welcomed comments on the implementation of emission minimization
techniques and whether and how further emission minimization could be
achieved.

	One commenter believes that EPA should create a regulatory incentive
for emissions reduction.  One commenter states that the most effective
way to achieve further emission minimization is to require the use of
emission minimization techniques such as virtually impermeable films
(VIF), barrier films, and deep shank injection.  The commenter notes
that these techniques offer the concurrent benefit of reducing the
amount of methyl bromide needed for fumigations.  EPA believes that
reducing supply through the phaseout will provide an incentive for use
minimization and therefore limit emissions.  Other points discussed by
this commenter can be found in the corresponding Response to Comments
document for this action.

	One commenter notes that virually impermeable film (VIF) keeps the
methyl bromide applied in the soil longer so it is metabolized in the
soil rather than escaping into the atmosphere.  The commenter believes
that methyl bromide that is used in this way should not be decreased
since it is not reaching the ozone layer.  EPA has not fully reviewed
the research that the commenter is referring to.  In compiling annual
critical use nominations, the United States Government considers the
feasibility of VIF, and other less permeable tarps, because the use of
these technologies can reduce required dosage rates, and the critical
need for methyl bromide to treat certain crops.  EPA does not believe,
that methyl bromide used with VIF, would qualify for the critical use
exemption as it is currently defined under the Protocol.  The commenter
may be proposing a different type of exemption for methyl bromide use
that does not result in emissions to the stratosphere.  This issue is
outside the scope of the present rulemaking.  Until EPA fully reviews
the research that the commenter refers to, it would be inappropriate for
the Agency to respond further.

H.  Critical Use Allowance Allocations

	Each critical use allowance (CUA) is equivalent to 1 kg of critical use
methyl bromide.  These allowances expire at the end of the control
period and, as explained in the Framework Rule, are not bankable from
one year to the next.  This allocation of pre-plant and post-harvest
CUAs to the entities listed below is subject to the trading provisions
at 40 CFR 82.12, which are discussed in section V.G. of the preamble to
the Framework Rule (69 FR 76982).

	In the August 27, 2007 proposed rule, EPA proposed to allow limited
amounts of new production or import of methyl bromide for critical uses
for 2008 up to the amount of 3,101,076 kg (12.2% of baseline) as shown
in Table II below.  EPA sought comment on the total levels of exempted
new production or import for pre-plant and post-harvest critical uses in
2008.  For the reasons discussed in Section V.D. of this preamble EPA is
adjusting the proposed CUA amounts to account for late sales reports
that decrease the calculated 2006 carry over amount [list other
changes].  Therefore, the total critical use exemption amount for 2008
is 4,823,531 kg (18.9% baseline), with 3,098,981 kg (12.1% baseline) of
critical use allowances allowing new production or import, and the
remaining amount, 1,724,550 kg (6.8% baseline), available through
critical stocks allowances (CSAs) that allow critical users to access
pre-phaseout methyl bromide.  EPA is continuing to calculate
company-specific CUA allocations on the basis of the 1991 baseline
consumption share of the companies listed in Table II.  The updated
calculation spreadsheet is available on Docket ID No.
EPA-HQ-OAR-2006-1016.  Therefore, the CUAs are allocated as follows:

Table II: Proposed Allocation of Critical Use Allowances

Company	2008 Critical use allowances for pre-plant uses* (kilograms)
2008 Critical use allowances for post-harvest uses* (kilograms)

Great Lakes Chemical Corp.

A Chemtura Company	1,695,734	187,516

Albemarle Corp.	697,324	77,111

Ameribrom, Inc.	385,356	42,613

TriCal, Inc.	11,999	1,327

Total	2,790,414	308,567

* For production or import of class I, Group VI controlled substance
exclusively for the Pre-Plant or Post-Harvest uses specified in Appendix
L to 40 CFR Part 82. 

	

Paragraph five of Decision XVIII/13 states “that Parties shall
endeavor to license, permit, authorize, or allocate quantities of
critical use methyl bromide as listed in tables A and C of the annex to
the present decision.”  This is similar to language in Decisions Ex.
I/3(4), Ex. II/1(4) and VII/9(4) regarding 2005, 2006 and 2007 critical
uses, respectively.  The language from these Decisions calls on Parties
to endeavor to allocate critical use methyl bromide on a sector basis.

	In establishing the critical use exemption program, the Agency
endeavored to allocate directly on a sector-by-sector basis by analyzing
and proposing this option among others in the August 2004 Framework Rule
notice (69 FR 52366).  EPA solicited comment on both universal and
sector-based allocation of critical use allowances.  The Agency
evaluated the various options based on their economic, environmental,
and practical effects.  After receiving comments, EPA determined in the
final Framework Rule (69 FR 76989) that a lump-sum, or universal,
allocation, modified to include distinct caps for pre-plant and
post-harvest uses, was the most efficient and least burdensome approach
that would achieve the desired environmental results, and that a
sector-specific approach would pose significant administrative and
practical difficulties.  Although the approach adopted in the Framework
Rule does not directly allocate allowances to each category of use, the
Agency anticipates that reliance on market mechanisms will achieve
similar results indirectly.  The TEAP recommendations are based on data
submitted by the U.S. which in turn are based on recent historic use
data in the current methyl bromide market.  In other words, the TEAP
recommendations agreed to by the Parties are based on current use and
the current use patterns take place in a market where all pre-plant and
post-harvest methyl bromide uses compete for a lump sum supply of
critical use material.  Therefore, the Agency believes that under a
system of universal allocations, divided into pre-plant and post-harvest
sectors, the actual critical use will closely follow the sector breakout
listed by the TEAP. These issues were addressed in the previous rule and
EPA is not aware of any factors that would alter the analysis performed
during the development of the Framework Rule.  A summary of the options
analysis conducted by EPA is available in the docket for this
rulemaking.

In developing this action, EPA did not propose to change the approach
adopted in the Framework Rule for the allocation of CUAs but, in an
endeavor to address Decision XVIII/13(5), EPA sought additional comment
on the Agency’s allocation of CUAs in the two groupings (pre-plant and
post-harvest) that the Agency has employed in the past.  	Two commenters
note that the universal system is working well and believe the concept
of the pre-plant/post-harvest allocations is simple and easy for
stakeholders to understand.  The commenters also note that the system
has not disrupted the supply chain and has been easy for distributors to
implement.  The commenter discourages the Agency from switching to a
sector-by-sector allocation system.

Two commenters state that the geographical distribution of methyl
bromide has created shortfalls resulting in the inability of individual
growers to access or afford material to fumigate their fields in
accordance with their production schedules. One commenter indicates that
this was particularly noticeable during the 2005 and 2006 fall
fumigation periods.  One commenter states that the universal system does
not work well for the above reasons, but believes that a
sector-by-sector allocation system would be equally flawed due to
insufficient allocations in certain sectors and unequal holding of
stocks.

One commenter believes that EPA should explore a hybrid between a
regional and a lump-sum allocation system.  Specifically, the commenter
suggests that EPA consider creating several large regional areas (such
as the EPA regions) that combine all of the sectors within each region
to create a regional lump-sum.  The commenter further states that the
methyl bromide users who most frequently face difficulty obtaining
methyl bromide are small, minority growers.  The commenter argues that
the allocation of methyl bromide creates a harm that is
disproportionately distributed.  

The commenter’s primary concern is not human health and environmental
effects on minority or low-income populations.  Instead, the commenter
believes that EPA’s current allocation system causes economic harm for
these populations, because they have difficulty satisfying their
critical needs for methyl bromide.  

This final rule creates an exemption to the phaseout of methyl bromide. 
The overall impact of this action is deregulatory, and has an economic
benefit for growers with critical needs for methyl bromide.  EPA
responds further to this comment in the Response to Comment document for
this action.

EPA agrees with the commenters that support the existing allocation
system.  EPA considered sector-specific, and other allocation approaches
in the Framework Rule, and decided that the existing universal
allocation system with pre-plant and post-harvest allowances is the most
effective and least burdensome system.  In the Framework, EPA did not
consider a regional approach, as one commenter suggests.  EPA may
consider such an approach for future CUE rules.  EPA does not believe it
would be appropriate to finalize such an approach without giving other
interested parties an opportunity for comment.  EPA responds to these
comments further in the Response to Comment document available on the
docket for this action.

H.  Critical Stock Allowance Allocations and the Confidentiality of
Information about the Aggregate Methyl Bromide Inventory

	Each critical stock allowance (CSA) is equivalent to 1 kg of critical
use methyl bromide.  These allowances expire at the end of the control
period and, as explained in the Framework Rule, are not bankable from
one year to the next (69 FR 76990).  CSAs are not used to produce or
import methyl bromide but are rights that enable the holder to sell
pre-phaseout inventories of methyl bromide for use in approved critical
uses.  A CSA is expended when the entity selling methyl bromide sells
the material, or fumigation services with the material, to an approved
critical user who certifies that the material is for an approved
critical use.  Thus, the movement of pre-phaseout inventories or methyl
bromide along the supply chain does not require expenditures of a CSA.

	In developing this action, EPA proposed to allocate critical stock
allowances (CSAs) to the entities listed below in Table III for the 2008
control period in the amount of 1,724,550 kg (6.8% of US 1991 baseline).
 EPA’s proposal was based on the proposed approach for accounting for
available stocks of methyl bromide, which is described in Section V.D.
of this preamble.  For the reasons discussed in Section V.D., in this
action EPA is allocating 1,724,550 kg of CSAs to the entities listed in
Table 3 below.  The amounts are apportioned to each entity in proportion
to inventory held by each on January 1, 2007.   

In 2006 the United States District Court for the District of Columbia
upheld EPA’s treatment of company-specific methyl bromide inventory
information as confidential.  NRDC v. Leavitt, 2006 WL 667327 (D.D.C.
March 14, 2006).  EPA’s allocation of CSAs is based on each
company’s proportionate share of the aggregate inventory.  Therefore,
the documentation regarding company-specific allocation of CSAs is in
the confidential portion of the rulemaking docket and the individual CSA
allocations are not listed in the table below.  EPA will inform the
listed companies of their CSA allocations in a letter following
publication of the final rule.  

	In developing this action, EPA explained that several companies that
receive small amounts of CSAs from EPA have contacted the Agency and
requested that they be permitted to permanently retire their allowances.
 Due to the small CSA allocation and because they typically do not sell
critical use methyl bromide, they find the allocation of CSAs, and
associated record-keeping and reporting requirements, to be unduly
burdensome.  In response to this concern, in the Proposed 2007 CUE rule
EPA proposed to allow CSA holders, on a voluntary basis, to permanently
relinquish their allowances through written notification to the Agency. 
EPA received no adverse comments.  However, no CSA holders contacted EPA
to take advantage of that voluntary opportunity.  In the 2008 proposed
rule EPA again gave CSA holders the opportunity, on a voluntary basis,
to permanently relinquish their allowances through written notification
to the Agency.  EPA explained that companies voluntarily relinquishing
their allowances would not receive CSA allocations and would be excluded
from future allocations, and that all allowances forfeited by companies
would be reallocated to the remaining companies on a pro-rata basis.

	Seven companies voluntarily contacted EPA during the comment period for
this action and requested to relinquish their CSAs.  The companies that
contacted the Agency were: Blair Soil Fumigation, Dodson Brothers,
Carolina Eastern Inc., Harvey Fertilizer & Gas, J.C. Ehrlich Co.,
Southern States Cooperative Inc., and Vanguard Fumigation Co. With this
final rule, EPA is honoring their requests and removing these seven
companies from Table 3 below.  Additionally, EPA will not issue CSAs to
these seven companies in future control periods.  EPA has reallocated
their CSAs to the remaining companies on a pro-rata basis.

Table III: Allocation of Critical Stock Allowances 

Company

	Albemarle	Pacific Ag

Ameribrom, Inc.	Pest Fog Sales Corp.

Bill Clark Pest Control, Inc.	Prosource One 

Burnside Services, Inc.	Reddick Fumigants

Cardinal Professional Products	Royster-Clark, Inc.

Degesch America, Inc.	Trical Inc.

Great Lakes Chemical Corp.	Trident Agricultural Products

Helena Chemical Co.	UAP Southeast (NC)

Hendrix & Dail	UAP Southeast (SC)

Hy Yield Bromine	Univar

Industrial Fumigation Company	Western Fumigation

TOTAL – 1,724,550 kilograms 

	

I.  Stocks of Methyl Bromide

	As discussed above and in the December 23, 2004 Framework Rule, an
approved critical user may obtain access to exempted production and
import of methyl bromide and to limited inventories of pre-phaseout
methyl bromide, the combination of which constitute the supply of
“critical use methyl bromide” intended to meet the needs of agreed
critical uses.  The Framework Rule established provisions governing the
sale of pre-phaseout inventories for critical uses, including the
concept of CSAs and a prohibition on the sale of pre-phaseout
inventories for critical uses in excess of the amount of CSAs held by
the seller.  In the Framework Rule EPA also established trading
provisions that allow critical use allowances (CUAs) to be converted
into CSAs.  Under this action, no significant changes are being made to
those provisions.

	 Comments from the Natural Resources Defense Council (NRDC) state that
EPA should dedicate all pre-phaseout stocks of methyl bromide to CUEs. 
The Agency notes that it has responded to similar comments in the Final
Framework Rule (69 FR 76988), the Final 2007 CUE Rule (71 FR 75400), and
in response to NRDC’s late submission of supplemental comments on the
Proposed 2007 CUE Rule.  EPA is not revisiting this issue in this
rulemaking.

	With regard to information about stocks of methyl bromide, in the
proposed rule EPA explained in detail how it acquired that information
from 2003 until the present, and how EPA had applied its regulations on
treatment of information claimed as confidential.  In the proposed rule,
EPA noted that it did not receive any objections to releasing the
aggregate stocks information for calendar year 2006.  To  simplify the
process of releasing future aggregate stocks information, EPA proposed
to release the aggregate of methyl bromide stockpile information
reported to the Agency under the reporting requirements at 40 CFR 82.13
for the end of 2007, and each year thereafter.  For the reasons given in
a letter that EPA sent on April 23, 2007 to all entities which had
reported holding pre-phaseout inventory at the end of 2003, 2004, 2005
or 2006, which is available in the docket, this aggregate information is
clearly not entitled to confidential treatment.  EPA proposed to release
the aggregate of this stockpile data in future years without first
notifying entities by letter, as EPA has done in the past two years. 
EPA sought comment on this proposal.  In the proposed rule, the Agency
stated that if it did not receive any comments opposing its proposal,
the aggregate of methyl bromide stockpile data collected under the
reporting requirements at 40 CFR 82.13 would not be treated as
confidential information and could be released in future without further
notice.

VI. Statutory and Executive Order Reviews

A.  Executive Order 12866: Regulatory Planning and Review

	Under Executive Order (EO) 12866   SEQ CHAPTER \h \r 1 (58 FR 51735,
October 4, 1993), this action proposes a “significant regulatory
action,” because it raises novel or legal policy issues arising out of
legal mandates, the President’s priorities, or the principles set
forth in the Executive Order.    SEQ CHAPTER \h \r 1 Accordingly, EPA
submitted this action to the Office of Management and Budget (OMB) for
review under EO 12866 and any changes made in response to OMB
recommendations have been documented in the docket for this action.

B.  Paperwork Reduction Act

	The new information collection requirements in this rule, explained
further in Section E of this preamble, will be submitted for approval to
the Office of Management and Budget (OMB) under the Paperwork Reduction
Act (PRA), 44 U.S.C. 3501 et seq.  The information collection
requirements are not enforceable until OMB approves them.  SEQ CHAPTER
\h \r 1  	OMB has previously approved the information collection
requirements contained in the existing regulations at 40 CFR Part 82
under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et
seq. and has assigned OMB control number 2060-0564, and EPA ICR number
2179.03.   A copy of the OMB approved Information Collection Request
(ICR) may be obtained from Susan Auby, Collection Strategies Division;
U.S. Environmental Protection Agency (2822T); 1200 Pennsylvania Ave.,
NW, Washington, DC 20460 or by calling (202) 566-1672. 

The new information collection requirements in this rule are authorized
under Sections 603(d) and 614(B) of the CAAA of 1990.

	The new mandatory reporting requirements included in this rule are
intended to:

	(1) Enhance compliance with U.S. obligations under the international
treaty, The Montreal Protocol on Substances that Deplete the Ozone Layer
(Protocol), to report data under Article 7;

	(2) Enhance information provided to Congress on the production, use and
consumption of class I controlled substances as statutorily required in
Section 603(d) of the CAAA of 1990.

	The new information will be collected through annual reporting by
producers, importers, distributors and third-party applicators of methyl
bromide.  EPA estimates the total burden associated with the new
requirements in today’s action to be 90 hours annually.  EPA does not
estimate any start-up of capital costs associated with today’s action.

Collection Activity	No. of Respondents	Total No. of Responses	Hours per
Response	Total Hours

Rule Familiarization	60	60	0.5	30

Data Compilation (annual basis)	60	60	0.5	30

Data Reporting (annual basis)	60	60	0.5	30

Total Burden Hours	 	 	1.5	90



Burden means the total time, effort, or financial resources expended by
persons to generate, maintain, retain, or disclose or provide
information to or for a Federal agency. This includes the time needed to
review instructions; develop, acquire, install, and utilize technology
and systems for the purposes of collecting, validating, and verifying
information, processing and maintaining information, and disclosing and
providing information; adjust the existing ways to comply with any
previously applicable instructions and requirements; train personnel to
be able to respond to a collection of information; search data sources;
complete and review the collection of information; and transmit or
otherwise disclose the information.

	An agency may not conduct or sponsor, and a person is not required to
respond to a collection of information unless it displays a currently
valid OMB control number. The OMB control numbers for EPA's regulations
in 40 CFR are listed in 40 CFR part 9. [How will EPA notify public
if/when OMB approves the new ICR?]

C.  Regulatory Flexibility Act

	The Regulatory Flexibility Act (RFA) generally requires an agency to
prepare a regulatory flexibility analysis of any rule subject to
notice-and-comment rulemaking requirements under the Administrative
Procedure Act or any other statute unless the agency certifies that the
rule will not have a significant economic impact on a substantial number
of small entities.  Small entities include small businesses, small
organizations, and small governmental jurisdictions.  For purposes of
assessing the impacts of this action on small entities, small entity is
defined as: (1) a small business that is identified by the North
American Industry Classification System (NAICS) Code in the Table below;
(2) a small governmental jurisdiction that is a government of a city,
county, town, school district or special district with a population of
less that 50,000; and (3) a small organization that is any
not-for-profit enterprise which is independently owned and operated and
is not dominant in its field.

Category	NAICS code	SIC code	NAICS Small business size standard (in
number of employees or millions of dollars)

Agricultural production

Storage Uses

Distributors and Applicators

Producers and Importers	1112- Vegetable and Melon farming

1113- Fruit and Nut Tree Farming

1114- Greenhouse, Nursery, and Floriculture Production

115114- Postharvest Crop activities (except Cotton Ginning)

311211- Flour Milling

311212- Rice Milling

493110- General Warehousing and Storage

493130- Farm Product Warehousing and Storage

115112- Soil Preparation, Planting and Cultivating

325320- Pesticide and Other Agricultural Chemical Manufacturing	0171-
Berry Crops

0172- Grapes

0173- Tree Nuts

0175- Deciduous Tree Fruits (except apple orchards and farms)

0179- Fruit and Tree Nuts, NEC

0181- Ornamental Floriculture and Nursery Products

0831- Forest Nurseries and Gathering of Forest Products

2041- Flour and Other Grain Mill Products

2044- Rice Milling

4221- Farm Product Warehousing and Storage

4225- General Warehousing and Storage

0721- Crop Planting, Cultivation, and Protection

2879- Pesticides and Agricultural Chemicals, NEC	$0.75 million

$6.5 million

500 employees

$23.5 million

$6.5 million

500 employees

	Agricultural producers of minor crops and entities that store
agricultural commodities are categories of affected entities that
contain small entities.  This action will only affect entities that
applied to EPA for a de-regulatory exemption.  In most cases, EPA
received aggregated requests for exemptions from industry consortia.  On
the exemption application, EPA asked consortia to describe the number
and size distribution of entities their application covered.  EPA
estimated that 3,218 entities petitioned EPA for an exemption for the
2005 control period.  EPA received requests from a comparable number of
entities for the 2006, 2007, and 2008 control periods.  Since many
applicants did not provide information on the distribution of sizes of
entities covered in their applications, EPA estimated that, based on the
above definition, between one-fourth and one-third of the entities may
be small businesses.  In addition, other categories of affected entities
do not contain small businesses based on the above description.

	After considering the economic impacts of this final rule on small
entities, EPA certifies that this action will not have a significant
economic impact on a substantial number of small entities.  In
determining whether a rule has a significant economic impact on a
substantial number of small entities, the impact of concern is any
significant adverse economic impact on small entities, since the primary
purpose of the regulatory flexibility analyses is to identify and
address regulatory alternatives “which minimize any significant
economic impact of the proposed rule on small entities.” (5 U.S.C.
§§ 603- 604).  Thus, an Agency may certify that a rule will not have a
significant economic impact on a substantial number of small entities if
the rule relieves a regulatory burden, or otherwise has a positive
economic effect on all of the small entities subject to the rule.  Since
this rule exempts methyl bromide for approved critical uses after the
phaseout date of January 1, 2005, this is a de-regulatory action which
will confer a benefit to users of methyl bromide.  EPA believes the
estimated de-regulatory value for users of methyl bromide is between $20
million and $30 million annually.  We have therefore concluded that this
final rule will relieve regulatory burden for all small entities.

D.  Unfunded Mandates Reform Act

	Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L.
104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with "Federal mandates" that may
result in expenditures to State, local, and tribal governments, in the
aggregate, or to the private sector, of $100 million or more in any one
year. Before promulgating an EPA rule for which a written statement is
needed, section 205 of the UMRA generally requires EPA to identify and
consider a reasonable number of regulatory alternatives and adopt the
least costly, most cost-effective or least burdensome alternative that
achieves the objectives of the rule. The provisions of section 205 do
not apply when they are inconsistent with applicable law. Moreover,
section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effective or least burdensome alternative if the
Administrator publishes with the final rule an explanation why that
alternative was not adopted. Before EPA establishes any regulatory
requirements that may significantly or uniquely affect small
governments, including tribal governments, it must have developed under
section 203 of the UMRA a small government agency plan. The plan must
provide for notifying potentially affected small governments, enabling
officials of affected small governments to have meaningful and timely
input in the development of EPA regulatory proposals with significant
Federal intergovernmental mandates, and informing, educating, and
advising small governments on compliance with the regulatory
requirements.

	This final rule contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) for State, local, or tribal
governments or the private sector.  This action is deregulatory and does
not impose any new requirements on any entities.  Thus, this proposed
rule is not subject to the requirements of sections 202 and 205 of the
UMRA.  Further, EPA has determined that this rule contains no regulatory
requirements that might significantly or uniquely affect small
governments.

E.  Executive Order 13132: Federalism

	Executive Order 13132, entitled “Federalism” (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
“meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.”
 The phrase “policies that have federalism implications” is defined
in the Executive Order to include regulations that have “substantial
direct effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.”

	This final rule does not have federalism implications.  It will not
have substantial direct effects on the States, on the relationship
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government, as
specified in Executive Order 13132.  This final rule is expected to
primarily affect producers, suppliers, importers and exporters and users
of methyl bromide.  Thus, Executive Order 13132 does not apply to this
final rule. 

F. Executive Order 13175:  Consultation and Coordination with Indian
Tribal Governments 

	Executive Order 13175, entitled “Consultation and Coordination with
Indian Tribal Governments” (65 FR 67249, November 9, 2000), requires
EPA to develop an accountable process to ensure “meaningful and timely
input by tribal officials in the development of regulatory policies that
have tribal implications.”  This final rule does not have tribal
implications, as specified in Executive Order 13175.  This final rule
does not significantly or uniquely affect the communities of Indian
tribal governments.  The final rule does not impose any enforceable
duties on communities of Indian tribal governments.  Thus, Executive
Order 13175 does not apply to this final rule.

G.  Executive Order No. 13045: Protection of Children from Environmental
Health and Safety Risks

	Executive Order 13045: ‘‘Protection of Children from Environmental
Health Risks and Safety Risks’’ (62 FR 19885, April 23, 1997)
applies to any rule that: (1) Is determined to be ‘‘economically
significant’’ as defined under Executive Order 12866, and (2)
concerns an environmental health or safety risk that EPA has reason to
believe may have a disproportionate effect on children. If the
regulatory action meets both criteria, the Agency must evaluate the
environmental health or safety effects of the planned rule on children,
and explain why the planned regulation is preferable to other
potentially effective and reasonably feasible alternatives considered by
the Agency.  

	EPA interprets Executive Order 13045 as applying only to those
regulatory actions that are based on health or safety risks, such that
the analysis required under Section 5–501 of the Order has the
potential to influence the regulation.  This final rule is not subject
to Executive Order 13045 because it does not establish an environmental
standard intended to mitigate health or safety risks.

H.  Executive Order 13211: Actions that Significantly Affect Energy
Supply, Distribution, or Use

	This final rule is not a “significant energy action” as defined in
Executive Order 13211, “Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355
(May 22, 2001)) because it is not likely to have a significant adverse
effect on the supply, distribution, or use of energy.  This final rule
does not pertain to any segment of the energy production economy nor
does it regulate any manner of energy use.  Therefore, EPA has concluded
that this final rule is not likely to have any adverse energy effects.

I.  National Technology Transfer and Advancement Act

	Section 12(d) of the National Technology Transfer and Advancement Act
of 1995 ("NTTAA"), Public Law No. 104-113, Section 12(d) (15 U.S.C. 272
note) directs EPA to use voluntary consensus standards in its regulatory
activities unless to do so would be inconsistent with applicable law or
otherwise impractical.  Voluntary consensus standards are technical
standards (e.g., materials specifications, test methods, sampling
procedures, and business practices) that are developed or adopted by
voluntary consensus standards bodies.  The NTTAA directs EPA to provide
Congress, through OMB, explanations when the Agency decides not to use
available and applicable voluntary consensus standards.  This rulemaking
does not involve technical standards.   Therefore, EPA is not
considering the use of any voluntary consensus standards.

J.  Executive Order 12898:  Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Populations

Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes
federal executive policy on environmental justice.  Its main provision
directs federal agencies, to the greatest extent practicable and
permitted by law, to make environmental justice part of their mission by
identifying and addressing, as appropriate, disproportionately high and
adverse human health or environmental effects of their programs,
policies, and activities on minority populations and low-income
populations in the United States.

EPA has determined that this final rule will not have disproportionately
high and adverse human health or environmental effects on minority or
low-income populations, because it affects the level of environmental
protection equally for all affected populations without having any
disproportionately high and adverse human health or environmental
effects on any population, including any minority or low-income
population.  Any ozone depletion that results from this final rule will
impact all affected populations equally because ozone depletion is a
global environmental problem with environmental and human effects that
are, in general, equally distributed across geographical regions. 

K.  Congressional Review Act

	The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating the
rule must submit a rule report, which includes a copy of the rule, to
each House of the Congress and to the Comptroller General of the United
States. EPA will submit a report containing this rule and other required
information to the U.S. Senate, the U.S. House of Representatives, and
the Comptroller General of the United States prior to publication of the
rule in the Federal Register. A Major rule cannot take effect until 60
days after it is published in the Federal Register. This action not a
“major rule” as defined by 5 U.S.C. 804(2). This rule will be
effective [Insert date of publication].

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Redacted for CBI

Subject to change is more late sales reports arrive

Run by Alan Margolis, OGC

