[Federal Register: December 14, 2006 (Volume 71, Number 240)]
[Rules and Regulations]
[Page 75385-75406]
[DOCID:fr14de06-14]

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Part III

Environmental Protection Agency

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40 CFR Part 82

 Protection of Stratospheric Ozone: The 2007 Critical Use Exemption
From the Phaseout of Methyl Bromide; Final Rule

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 82

[EPA-HQ-OAR-2005-0538; FRL-8257-2]
RIN 2060-AN54

Protection of Stratospheric Ozone: The 2007 Critical Use
Exemption From the Phaseout of Methyl Bromide

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: EPA is finalizing an exemption to the phaseout of methyl
bromide to meet the needs of 2007 critical uses. Specifically, EPA is
authorizing uses that will qualify for the 2007 critical use exemption
and the amount of methyl bromide that may be produced, imported, or
supplied from inventory for those uses in 2007. 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 17th Meeting of the
Parties (MOP).

DATES: This final rule is effective on December 14, 2006.

ADDRESSES: EPA has established a docket for this action identified
under Docket ID No. EPA-HQ-OAR-2005-0538. All documents in the docket
are listed on the 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
http://www.regulations.gov or in hard copy. To obtain copies of materials in

hard copy, please call the EPA Docket Center at<PHONE_NUMBER> 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. NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Marta Montoro, Office of Atmospheric
Programs, Stratospheric Protection Division, Mail Code 6205J,
Environmental Protection Agency, 1200 Pennsylvania Ave, NW.,
Washington, DC 20460; telephone number<PHONE_NUMBER>; fax number (202)
343-2338; e-mail address<EMAIL_ADDRESS>
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 2007. Under the CAA, 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 preshipment exemption. With this action, EPA is
authorizing the uses that will qualify for the 2007 critical use
exemption as well as specific amounts of methyl bromide that may be
produced, imported, or made available from stocks for critical uses in
2007.
    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 December 14, 2006. 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
    A. Regulated Entities
II. What Is the Background to the Phaseout Regulations for Ozone-
Depleting Substances?
III. What Is Methyl Bromide?
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. Background of the Process
    B. How Does This Final Rulemaking Relate to Previous Critical
Use Exemption Rulemakings?
    C. Critical Uses and Adjustments to Critical Use Amounts
    D. The Criteria in Decisions IX/6 and Ex. I/4
    E. Emissions Minimization
    F. Critical Use Allowance Allocations
    G. Critical Stock Allowance Allocations and Inventory of Methyl
Bromide
VI. Statutory and Executive Order Reviews
    A. Executive Order No. 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order No. 13132: Federalism
    F. Executive Order No. 13175: Consultation and Coordination With
Indian Tribal Governments
    G. Executive Order No. 13045: Protection of Children From
Environmental Health and Safety Risks
    H. Executive Order No. 13211: Actions That Significantly Affect
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. 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:

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           Category                  Examples of regulated entities
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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.
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    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 FOR FURTHER INFORMATION CONTACT section.

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.

III. 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 wide 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).
    The phaseout schedule for methyl bromide production and consumption
was revised 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. The revised phaseout
schedule was again amended 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).
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 and therefore subject to certain
Federal and State requirements governing its sale, distribution, and
use. Nothing in this final 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 would be affected by provisions of this final rule 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 action 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.

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?

    Methyl bromide was added to the Protocol as an ozone-depleting
substance in 1992 through the Copenhagen Amendment to the Protocol. The
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, and, in 40 CFR 82.7,
setting forth the percentage of baseline allowances for methyl bromide
granted to companies in each control period (each calendar year) until
the year 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. The
controls on methyl bromide appear in Article 2H of the Protocol.
Critical use exemptions are addressed in Article 2H(5), which provides
that the 2005 methyl bromide phaseout shall not apply ``to the extent
the Parties decide to permit the level of production or consumption
that is necessary to satisfy uses agreed by them to be critical uses.''
    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). Section 604(d)(6) provides
that ``[t]o the extent consistent with the

Montreal Protocol, the Administrator, after notice and the opportunity
for public comment, and after consultation with other departments or
instrumentalities of the Federal Government having regulatory authority
related to methyl bromide, including the Secretary of Agriculture, may
exempt the production, importation, and consumption of methyl bromide
for critical uses.'' More generally, Section 614(b) provides that Title
VI of the CAAA of 1990 ``shall be construed, interpreted, and applied
as a supplement to the terms and conditions of the Montreal Protocol.''
    On November 28, 2000, EPA issued regulations to amend the phaseout
schedule for methyl bromide and extend the complete phaseout of
production and consumption to 2005 (65 FR 70795). On December 23, 2004
(69 FR 76982), EPA published a final rule (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 pre-phaseout inventory and new production or import to meet the
needs of approved critical uses. EPA then published a second final rule
that added additional uses to the exemption program for 2005 and
allocated additional critical 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 to indicate which
uses met the criteria for the exemption program for that year (71 FR
5985). A Technical Correction amending the critical use allowances was
published on April 28, 2006 (71 FR 25077). With this action, under
authority of section 604(d)(6) of the CAA, EPA is listing the uses that
will qualify as approved critical uses in 2007 and the amount of methyl
bromide required to satisfy those uses.
    This action reflects Decision XVII/9, taken at the Parties'
Seventeenth Meeting in December 2005. 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 the recent D.C. Circuit opinion, NRDC v.
EPA., D.C. Cir. No. 04-1438 (August 29, 2006), 2006 U.S. App. LEXIS
22074, and in EPA's ``Supplemental Brief for the Respondent,'' filed in
NRDC v. EPA and available on Docket No. EPA-HQ-OAR-2005-0538. 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 10, 2002, the Agency published its first notice in the Federal
Register (67 FR 31798) 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 CUN is
submitted annually by the U.S. Department of State to the United
Nations Environment Programme (UNEP)'s 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. Finally, for each exemption period, EPA
provides an opportunity for 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 program.
    On January 31, 2005, the U.S. Government submitted the third U.S.
Nomination for a Critical Use Exemption for Methyl Bromide to UNEP's
Ozone Secretariat. This nomination contained the request for 2007
critical uses. On March 16 and 18, 2005, and June 10 and 13, 2005,
MBTOC sent questions to the U.S. Government concerning technical and
economic issues in the nomination. The U.S. Government transmitted
responses to these requests for clarification on April 8, 2005 and
August 18, 2005. These documents, together with reports by the advisory
bodies noted above, can be accessed in the docket for this rulemaking.
The determination in this final rule reflects the analysis contained in
those documents.

    EPA received one comment requesting it not exempt any methyl
bromide for critical uses. The CAA allows the Agency to create an
exemption for critical uses from the production and consumption
phaseout of methyl bromide. Although the Act does not require EPA to
establish an exemption, EPA believes the lack of suitable alternatives
for the uses listed as approved critical uses in this rulemaking
warrants the continuation of the exemption process begun in 2005.
    The history of ozone protection programs has been the transition of
industries away from production, import, and use of ozone-depleting
substances to alternatives. In some instances a successful transition
was possible within the allotted time. In other instances, additional
time has been required to allow for the development and market
penetration of alternatives. In fact, more than ten years after the
phaseout of chlorofluorocarbons (CFCs), the U.S. Government is still
exempting the production of CFCs for essential uses in metered dose
inhalers. In the instance of critical uses where suitable alternatives
are not yet available for all uses, EPA believes it would be
inconsistent with the history and the goals of the ozone protection
program not to allow for a safety valve in accordance with the
provisions of both international and domestic law.

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

    The December 23, 2004 Framework Rule (69 FR 76982) established the
bulk of the framework for the critical use exemption in the U.S.
including trading provisions and recordkeeping and reporting
obligations. In this action, EPA is not changing the framework of the
exemption program but rather is establishing a list of approved
critical uses for 2007 and is issuing allowances that will determine
the amount of methyl bromide available for those uses consistent with
the Framework Rule.
    In the proposed rulemaking, published on July 6, 2006 (71 FR
38325), EPA sought comment on the proposed critical use exemptions for
the 2007 calendar year. No major changes to the operational framework
were proposed. Some commenters, however, requested that EPA re-examine
significant portions of the operational framework identified in the
December 23, 2004 Framework Rule. In this action, EPA is only
addressing comments within the scope of the proposal, but may consider
additional suggestions pertaining to other areas in future critical use
exemption rulemakings. With respect to the comments on the operational
framework, EPA has already addressed similar points in the Response to
Comments document for the Framework Rule, accessible on Docket No. EPA-
HQ-OAR-2005-0538.
    EPA received three comments concerning the term significant market
disruption, as described in Decision IX/6. One commenter requested a
proper definition of the term, in addition to the terms ``technical
feasibility'' and ``economic feasibility.'' Another commenter stated
that the proposal lacked a market disruption finding and that EPA did
not provide support for its claims of market disruption. The other
commenter noted that the critical use exemption application for the
Florida Golf Course Superintendents Association was rejected because of
a failure to demonstrate that the loss of methyl bromide would result
in significant market disruption, and believes the term is undefined by
EPA. These comments are addressed in the separate response to comments
document, available on the docket for this action. A description of
EPA's application of this concept is available in the memo titled
``Development of the 2003 Nomination for a Critical Use Exemption for
Methyl Bromide for the United States of America,'' on Docket Nos. EPA-
HQ-OAR-2003-0017, EPA-HQ-OAR-2004-0506, EPA-HQ-OAR-2005-0122, and EPA-
HQ-OAR-2005-0538. One commenter stated that a ``significant market
disruption'' refers to ``a decrease or delay in supply or an increase
in price of a commodity produced with methyl bromide.'' EPA views this
as one possible type of market disruption. As stated in the memo
available on EPA-HQ-OAR-2004-0506, ``markets are partially defined by
the interaction between supply and demand, which determines the price
and quantity of a good traded in a market. EPA's position is that a
disruption to either side of a market, demand or supply, would result
in market disruption.'' For example, if the loss of methyl bromide in
strawberry production resulted in significant production decreases,
followed by an increase in the price of strawberries--and, depending on
the price elasticity of strawberries, potential loss of grower income--
EPA could determine that it constituted a significant market
disruption.
    In determining whether a change in supply or demand is significant,
EPA considers several dimensions of which two are key: (1) Individual
versus aggregate and (2) absolute versus relative. EPA typically
evaluates losses at the individual level, e.g., on a per-acre basis. We
then extrapolate to the aggregate loss by multiplying this loss by the
number of acres affected, using crop budgets and other relevant
information. EPA balances the two measures to determine whether impacts
are significant. For example, if the loss of methyl bromide in Michigan
for vegetable production results in high prices in the upper Midwest,
EPA may determine that it constitutes a significant market disruption,
even if producers and consumers in the rest of the country are
unaffected.
    The other key dimension is absolute versus relative impacts. The
loss of a single processing plant may not seem significant. However, if
there are only three such plants, the loss of one could still result in
significant market disruption. EPA relies on detailed crop budgets and
other sources of information for data on production costs, gross
revenues, and other measures.

C. Critical Uses and Adjustments to Critical Use Amounts

    In Decision XVII/9, taken in December 2005, the Parties to the
Protocol agreed as follows: ``for the agreed critical-use categories
for 2007, set forth in table C to 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, the levels of production and
consumption for 2007 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 XVII/9: cucurbits; dry commodities/structures cocoa beans;
dried fruit and nuts; NPMA dry commodities/structures (processed foods,
herbs & spices, dried milk and cheese processing facilities); dry cure
pork products (building and product); eggplant (field); forest nursery
seedlings; mills and processors; nursery stock-fruit trees,
raspberries, roses; orchard replant; ornamentals; peppers (field);
strawberry fruit (field); strawberry runners; tomato (field) and turf
grass. When added together, the agreed critical-use levels for 2007
total 6,749,060 kilograms, which is equivalent to 26.4% of the U.S.
1991 methyl bromide consumption baseline of 25,528,000 kilograms.
However, the maximum amount of allowable new production or import as
set forth in table D of Decision XVII/9 is 5,149,060 kilograms, which
is equivalent to 20% of the 1991 methyl bromide consumption baseline.
The difference between allowable new production or import and the total
critical use amount

will be made up from pre-phaseout inventory. EPA further discusses the
breakout between new production or import and stocks in section V.G. of
this preamble.
    EPA is establishing the following reductions to the amount of newly
produced or imported methyl bromide authorized in Decision XVII/9 to
satisfy critical uses:
    (a) Reductions to accommodate uptake of sulfuryl fluoride in 2007;
    (b) Reductions to account for unused critical use methyl bromide at
the end of 2005;
    (c) Reductions to accommodate increased allocation of critical
stock allowances (CSAs).
    Eleven commenters objected to EPA's proposed reductions and stated
that EPA should grant the full amount of new production allowed by the
Parties to the Montreal Protocol in Decision XVII/9. However, another
commenter stated that new production and import should be decreased
further to account for large inventory. The comments on EPA's proposed
reductions are addressed in the subsequent section of this preamble,
and the comments on inventory are addressed in Section F.
    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 Agency
based those reductions on the data contained in the 2008 CUN, which was
submitted to the Ozone Secretariat in January 2006. The 2008 CUN is
available in the docket for the July 6, 2006 proposed rule. The
nomination indicated that sulfuryl fluoride is registered to control
the relevant pests in all post-harvest sectors except for cheese and
dry cured ham use categories and that between 12 percent and 18 percent
of the industry, depending on the use category, could feasibly
transition to this alternative each year. This analysis still
represents the best available data on the transition to sulfuryl
fluoride including factors such as potential obstacles in the export of
treated commodities. The report of the Methyl Bromide Technical Options
Committee (MBTOC) indicated that the MBTOC did not make any reductions
in these 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. The July 6,
2006 proposed rule sought comment on the transition rates for sulfuryl
fluoride described in the 2008 CUN. In particular, the Agency sought
comment on the ability of certain end users, such as dried fruit and
nut processors, to use sulfuryl fluoride given the progress made by
importing countries in establishing and approving tolerance levels for
the use of sulfuryl fluoride. A copy of the 2008 analysis is available
in the rulemaking docket for comment.
    EPA received 26 comments on the availability of sulfuryl fluoride.
Nine commenters stated that EPA's transition estimates of 12%-18% were
not justified and were premature, and five commenters contended that
the proposed reduction had no factual basis. Four commenters cited the
Motion of Stay of Effectiveness of Sulfuryl Fluoride Tolerances,
described in the Request For Stay of Tolerances notice published in the
Federal Register on July 5, 2006 (71 FR 38125). The commenters also
cited concerns with the regulatory status of sulfuryl fluoride. One
commenter noted that data collection on the efficacy of sulfuryl
fluoride is just beginning this year and will continue over the next
three years. This commenter requested that EPA not make any additional
reductions in methyl bromide allocations until sulfuryl fluoride and
other alternatives have been more thoroughly studied. One commenter
stated that sulfuryl fluoride is not meeting expectations as an
alternative and another questioned the viability of sulfuryl fluoride
as a commercial use. Another commenter provided supporting documents,
available on the docket for this action, explaining why sulfuryl
fluoride uptake has not kept pace with EPA's transition estimates.
Similar comments expressed concerns relating to the safety, efficacy,
and/or trade limitations associated with sulfuryl fluoride.
    In contrast, eight commenters stated that sulfuryl fluoride is a
satisfactory alternative to methyl bromide because of its excellent
results in application, pest population control, and aeration timing,
among other reasons, and supported the use of sulfuryl fluoride in
post-harvest applications. Two commenters noted that sulfuryl fluoride
could replace all methyl bromide in the post-harvest sector by December
31, 2007. One commenter noted that sulfuryl fluoride provides pest
control at all life stages and does not deplete the ozone layer. The
commenter provided nineteen supporting documents. Another commenter
stated that the market penetration of sulfuryl fluoride is inhibited by
the continued availability of methyl bromide through the critical use
exemption process.
    The Agency sought comments on the ability of certain end-users,
such as dried fruit and nut processors, to use sulfuryl fluoride given
the progress made by importing countries in establishing and approving
tolerance levels for the use of sulfuryl fluoride. One commenter
responded by noting that Maximum Residue Levels (MRLs) have been
established in Japan, Canada, the European Union, and the U.S. The
commenter also noted that sulfuryl fluoride is registered in eight
nations. Three other commenters noted that there were few or no
tolerances for sulfuryl fluoride.
    One commenter suggested EPA poll industries that have the
opportunity to use sulfuryl fluoride to identify those able to
transition. On August 23, 2006, EPA issued letters to a sample of
fumigation and flour milling operations under Section 114 of the CAA in
order to obtain better data on sulfuryl fluoride transition estimates.
However, the data received from the Section 114 responses did not
result in significantly comparable data points and therefore EPA is
making no additional sulfuryl fluoride reductions at this time.
However, EPA may use the data obtained from the Section 114 responses
in future rulemakings and in conjunction with information that EPA may
receive in the future.
    After considering the comments received, in this final rule, EPA is
reducing the amount of newly produced or imported critical use methyl
bromide by 53,703 kilograms to reflect the continuing transition to
sulfuryl fluoride. The July 6, 2006 proposed rule sought to reduce the
amount of newly produced or imported methyl bromide by 68,170
kilograms. However, one post-harvest sub-sector had been double-counted
in the original post-harvest calculations. EPA has placed the revised
spreadsheet demonstrating the revised calculation on the docket.
Responses to specific comments appear in the separate Response To
Comment document, available on the docket for this rulemaking.
    As described in the December 23, 2004 Framework Rule (69 FR 76997),
EPA is deducting the amount of unused methyl bromide from the total
number of allowances issued for the control period following the
control period immediately after the control period when the methyl
bromide was unused for critical uses. For example, all unused methyl
bromide that was produced or imported under the critical use exemption
in 2005 was reported to EPA in 2006 and would be reduced from the total
allowable levels of new production/import in 2007. EPA's July

6, 2006 proposed rule proposed to reduce the total level of new
production and import for critical uses by 443,000 kilograms to reflect
the total level of unused material available at the end of 2005. As
described in the Framework Rule, after applying this reduction to the
total volumes of allowable new production or import, EPA allocates
prorated critical use allowances (CUAs) to each company based on their
1991 baseline market share in the corresponding proposal.
    EPA received fourteen comments objecting to EPA's proposal to
reduce the level of new production and import for critical uses by
443,000 kilograms to reflect the total level of unused material at the
end of 2005. The commenters contend that the unused amount described in
the proposal was largely attributed to the delay in finalizing the 2005
supplemental rule and that stakeholders should not be penalized.
    EPA notes that the accumulation of inventory is not allowed under
the critical use exemption program, and that the unused amount consists
of material that was produced but was never sold to critical users. The
2005 supplemental rule only authorized an additional 610,655 kilograms
of pre-phaseout inventory to be made available for critical uses (70 FR
73604) and did not authorize additional new production or import for
the 2005 calendar year. Thus, the 2005 supplemental rule did not affect
the carryover amount. Therefore, to account for carryover of inventory,
EPA is reducing the level of new production and import for critical
uses by 443,000 kilograms as proposed.
    Decision XVII/9, paragraph 7, ``request[s] Parties to endeavor to
use stocks, where available, to meet any demand for methyl bromide for
the purposes of research and development.'' EPA then proposed to reduce
the total supply of new production and import for critical uses by an
amount equivalent to the total amount authorized for research purposes,
which is 21,702 kilograms. The calculations used by the Agency for the
research adjustment are available for public comment in the docket for
this action. Further, EPA encouraged methyl bromide suppliers to sell
pre-phaseout inventory to researchers and encouraged researchers to
purchase stocks of methyl bromide.
    EPA received three comments stating that research amounts should
come from new production amounts because such research is critical to
the long-term acceptance of alternatives, and allowing new production
for this use will facilitate the transition to non-ozone-depleting
substances.
    EPA's allocation for the 2007 control period is consistent with the
above Decision. To account for research amounts, in this final rule EPA
is reducing the amount of methyl bromide available for new production
and import by 21,702 kilograms but notes that use of methyl bromide for
research purposes will facilitate the transition to alternatives. In
response to Decision XVII/9, EPA continues to encourage methyl bromide
suppliers to sell inventory to researchers and encourages researchers
to purchase inventory. Additional discussion can be found in Section
V.F of this final rule.
    Lastly, the Agency proposed to allocate critical stock allowances
(CSAs) for 2007 critical uses in an amount equal to either 6.2% or 7.5%
of baseline. The Agency is allocating CSAs equal to 7.5% of baseline in
this final rule. In section V.G. of this preamble, the Agency describes
the reasons for this action. Having chosen the larger CSA amount, the
Agency is making a corresponding reduction in the amount of new
production and import under the exemption program.
    On February 6, 2006, EPA amended the label for 1,3-dichloropropene
(1,3-D) regarding karst restrictions. Copies of the amended labels are
available in the docket for this action. The previous label states ``Do
not apply in areas overlying karst geology'' whereas the new label
states ``Do not apply this product within 100 feet of karst
topographical features.'' The new label language is more instructive on
the use of 1,3-D in areas with karst topography, while still protecting
the environment, than the previous label language. EPA's assessment of
the amount of methyl bromide that may be displaced by the use of 1,3-D
over karst areas in the 2007 technical analysis was already based on
the revised label language now in place. Therefore, EPA did not propose
to make further reductions to the volumes of pre-plant methyl bromide
based on the label change. A more detailed explanation of this matter
appears in the responses to the MBTOC, available in the docket for this
rulemaking. A copy of the label amendment is available in the docket as
well. EPA received one comment on the karst label restriction, which is
addressed in the Response to Comments document for this action.
    With 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 XVII/9 for the 2007 control period
(calendar year). The Agency is amending the table of critical uses
based, in part, on the technical analysis contained in the 2007 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 2007 U.S. 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 did not
receive any comments regarding changes to the registration of an
alternative, but did receive five comments stating that it is
inappropriate for EPA to revisit the technical analysis contained in
the 2007 nomination at this time because the Parties have already
authorized critical use amounts for the 2007 calendar year. While EPA
is not revising the technical analysis at this time due to the lack of
new information regarding the registration or use of alternatives, EPA
will continue to consider such information in future rulemakings. 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
2007.

                                        Table I.--Approved Critical Uses
----------------------------------------------------------------------------------------------------------------
              Column A                         Column B                              Column C
----------------------------------------------------------------------------------------------------------------
Approved Critical Uses.............  Approved Critical User and   Limiting Critical Conditions that either
                                      Location of Use.             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 fungal disease
                                                                   infestation.
                                                                  Moderate to severe disease infestation.
                                                                  A need for methyl bromide for research
                                                                   purposes.
                                     (b) Southeastern U.S.        Moderate to severe yellow or purple nutsedge
                                      limited to growing           infestation.
                                      locations in Alabama,       Moderate to severe fungal disease infestation.
                                      Arkansas, Kentucky,         Moderate to severe root knot nematodes.
                                      Louisiana, North Carolina,  A need for methyl bromide for research
                                      South Carolina, Tennessee,   purposes.
                                      and Virginia.
                                     (c) Georgia growers........  Moderate to severe yellow or purple nutsedge
                                                                   infestation.
                                                                  Moderate to severe fungal disease infestation.
                                                                  Moderate to severe root knot nematodes.
                                                                  A need for methyl bromide for research
                                                                   purposes.
Eggplant...........................  (a) Florida growers........  Moderate to severe yellow or purple nutsedge
                                                                   infestation.
                                                                  Moderate to severe nematodes.
                                                                  Moderate to severe disease infestation.
                                                                  Restrictions on alternatives due to karst
                                                                   geology.
                                                                  A need for methyl bromide for research
                                                                   purposes.
                                     (b) Georgia growers........  Moderate to severe yellow or purple nutsedge
                                                                   infestation.
                                                                  Moderate to severe nematodes.
                                                                  Moderate to severe pythium root, collar, crown
                                                                   and root rot.
                                                                  Moderate to severe disease infestation.
                                                                  Moderate to severe southern blight
                                                                   infestation.
                                                                  Restrictions on alternatives due to karst
                                                                   geology.
                                                                  A need for methyl bromide for research
                                                                   purposes.
                                     (c) Michigan growers.......  Moderate to severe soilborne fungal disease
                                                                   infestation.
                                                                  A need for methyl bromide for research
                                                                   purposes.
Forest Nursery Seedlings...........  (a) Members of the Southern  Moderate to severe yellow or purple nutsedge
                                      Forest Nursery Management    infestation.
                                      Cooperative limited to      Moderate to severe disease infestation.
                                      growing locations in
                                      Alabama, Arkansas,
                                      Florida, Georgia,
                                      Louisiana, Mississippi,
                                      North Carolina, Oklahoma,
                                      South Carolina, Tennessee,
                                      Texas, and Virginia.
                                     (b) International Paper and  Moderate to severe yellow or purple nutsedge
                                      its subsidiaries limited     infestation.
                                      to growing locations in     Moderate to severe disease infestation.
                                      Alabama, Arkansas,
                                      Georgia, South Carolina,
                                      and Texas.
                                     (c) Public (government-      Moderate to severe weed infestation including
                                      owned) seedling nurseries    purple and yellow nutsedge infestation.
                                      in Illinois, Indiana,       Moderate to severe Canada thistle infestation.
                                      Kentucky, Maryland,         Moderate to severe nematodes.
                                      Missouri, New Jersey,       Moderate to severe fungal disease infestation.
                                      Ohio, Pennsylvania, West
                                      Virginia, and Wisconsin.
                                     (d) Weyerhaeuser Company     Moderate to severe yellow or purple nutsedge
                                      and its subsidiaries         infestation.
                                      limited to growing          Moderate to severe disease infestation.
                                      locations in Alabama,       Moderate to severe nematodes and worms.
                                      Arkansas, North Carolina,
                                      and South Carolina.
                                     (e) Weyerhaeuser Company     Moderate to severe yellow nutsedge
                                      and its subsidiaries         infestation.
                                      limited to growing          Moderate to severe fungal disease infestation.
                                      locations in Oregon and
                                      Washington.
                                     (f) Michigan growers.......  Moderate to severe disease infestation.
                                                                  Moderate to severe Canada thistle infestation.
                                                                  Moderate to severe nutsedge infestation.
                                                                  Moderate to severe nematodes.
                                     (g) Michigan herbaceous      Moderate to severe nematodes.
                                      perennials growers.         Moderate to severe fungal disease infestation.
                                                                  Moderate to severe yellow nutsedge and other
                                                                   weed infestation.
Orchard Nursery Seedlings..........  (a) Members of the Western   Moderate to severe nematode infestation.
                                      Raspberry Nursery           Presence of medium to heavy clay soils.
                                      Consortium limited to       Prohibition on use of 1,3-dichloropropene
                                      growing locations in         products because local township limits on use
                                      California and Washington    of this alternative have been reached.
                                      (Driscoll's Raspberries     A need for methyl bromide for research
                                      and their contract growers   purposes.
                                      in California and
                                      Washington).
                                     (b) Members of the           Moderate to severe nematode infestation.
                                      California Association of   Presence of medium to heavy clay soils.
                                      Nurserymen--Deciduous       Prohibition on use of 1,3-dichloropropene
                                      Fruit and Nut Tree Growers.  products because local township limits on use
                                                                   of this alternative have been reached.
                                                                  A need for methyl bromide for research
                                                                   purposes.

                                     (c) California rose          Moderate to severe nematode infestation.
                                      nurseries.                  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 disease infestation.
                                                                  Moderate to severe yellow or purple nutsedge
                                                                   infestation.
                                                                  Moderate to severe nematodes.
                                                                  A need for methyl bromide for research
                                                                   purposes.
                                     (b) Maryland, North          Moderate to severe black root rot.
                                      Carolina, and Tennessee     Moderate to severe root-knot nematodes.
                                      growers.                    Moderate to severe yellow and purple nutsedge
                                                                   infestation.
                                                                  A need for methyl bromide for research
                                                                   purposes.
Orchard Replant....................  (a) California stone fruit   Moderate to severe nematodes.
                                      growers.                    Moderate to severe fungal 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.
                                                                  A need for methyl bromide for research
                                                                   purposes.
                                     (b) California table and     Moderate to severe nematodes.
                                      raisin grape growers.       Moderate to severe fungal 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.
                                                                  A need for methyl bromide for research
                                                                   purposes.
                                     (c) California wine grape    Moderate to severe nematodes.
                                      growers.                    Moderate to severe fungal 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.
                                                                  A need for methyl bromide for research
                                                                   purposes.
                                     (d) California walnut        Moderate to severe nematodes.
                                      growers.                    Moderate to severe fungal 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.
                                                                  A need for methyl bromide for research
                                                                   purposes.
                                     (e) California almond        Moderate to severe nematodes.
                                      growers.                    Moderate to severe fungal 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.
                                                                  A need for methyl bromide for research
                                                                   purposes.
Ornamentals........................  (a) California growers.....  Moderate to severe disease infestation.
                                                                  Moderate to severe nematodes.
                                                                  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 disease infestation.
                                                                  Moderate to severe nematodes.
                                                                  Karst topography.
                                                                  A need for methyl bromide for research
                                                                   purposes.
Peppers............................  (a) California growers.....  Moderate to severe disease infestation.
                                                                  Moderate to severe nematodes.
                                                                  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) Alabama, Arkansas,       Moderate to severe yellow or purple nutsedge
                                      Kentucky, Louisiana, North   infestation.
                                      Carolina, South Carolina,   Moderate to severe nematodes.
                                      Tennessee, and Virginia     Moderate to severe pythium root, collar, crown
                                      growers.                     and root rots.
                                                                  Presence of an occupied structure within 100
                                                                   feet of a grower's field the size of 100
                                                                   acres or less.
                                                                  A need for methyl bromide for research
                                                                   purposes.

                                     (c) Florida growers........  Moderate to severe yellow or purple nutsedge
                                                                   infestation.
                                                                  Moderate to severe disease infestation.
                                                                  Moderate to severe nematodes.
                                                                  Karst topography.
                                                                  A need for methyl bromide for research
                                                                   purposes.
                                     (d) Georgia growers........  Moderate to severe yellow or purple nutsedge
                                                                   infestation.
                                                                  Moderate to severe nematodes, 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 fungal 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 nematodes.
                                                                  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.
                                                                  Moderate to severe nematodes.
                                                                  Moderate to severe disease infestation.
                                                                  Carolina geranium or cut-leaf evening primrose
                                                                   infestation.
                                                                  Karst topography and to a lesser extent a need
                                                                   for methyl bromide for research purposes.
                                     (c) Alabama, Arkansas,       Moderate to severe yellow or purple nutsedge.
                                      Georgia, Illinois,          Moderate to severe nematodes.
                                      Kentucky, Louisiana,        Moderate to severe black root and crown rot.
                                      Maryland, New Jersey,       Presence of an occupied structure within 100
                                      North Carolina, Ohio,        feet of a grower's field the size of 100
                                      South Carolina, Tennessee,   acres or less.
                                      and Virginia growers.       A need for methyl bromide for research
                                                                   purposes.
Tomatoes...........................  (a) Michigan growers.......  Moderate to severe disease infestation.
                                                                  Moderate to severe fungal pathogen
                                                                   infestation.
                                                                  A need for methyl bromide for research
                                                                   purposes.
                                     (b) Alabama, Arkansas,       Moderate to severe yellow or purple nutsedge
                                      Florida, Georgia,            infestation.
                                      Kentucky, Louisiana, North  Moderate to severe disease infestation.
                                      Carolina, South Carolina,   Moderate to severe nematodes.
                                      Tennessee, and Virginia     Presence of an occupied structure within 100
                                      growers.                     feet of a grower's field the size of 100
                                                                   acres or less.
                                                                  Karst topography.
                                                                  A need for methyl bromide for research
                                                                   purposes.
Turfgrass..........................  (a) U.S. turfgrass sod       Production of industry certified pure sod.
                                      nursery producers who are   Moderate to severe bermudagrass.
                                      members of Turfgrass        Moderate to severe nutsedge.
                                      Producers International     Moderate to severe white grub infestation.
                                      (TPI).                      Control of off-type perennial grass
                                                                   infestation.
                                                                  A need for methyl bromide for research
                                                                   purposes.
----------------------------------------------------------------------------------------------------------------
                                                POST-HARVEST USES
----------------------------------------------------------------------------------------------------------------
Food Processing....................  (a) Rice millers in all      Moderate to severe infestation of beetles,
                                      locations in the U.S. who    weevils or moths.
                                      are members of the USA      Older structures that can not be properly
                                      Rice Millers Association.    sealed to use an alternative to methyl
                                                                   bromide.
                                                                  Presence of sensitive electronic equipment
                                                                   subject to corrosivity.
                                                                  Time to transition to an alternative.
                                     (b) Pet food manufacturing   Moderate to severe infestation of beetles,
                                      facilities in the U.S. who   moths, or cockroaches.
                                      are active members of the   Older structures that can not be properly
                                      Pet Food Institute (For      sealed to use an alternative to methyl
                                      this rulemaking, ``pet       bromide.
                                      food'' refers to domestic   Presence of sensitive electronic equipment
                                      dog and cat food).           subject to corrosivity.
                                                                  Time to transition to an alternative.
                                     (c) Kraft Foods in the U.S.  Older structures that can not be properly
                                                                   sealed to use an alternative to methyl
                                                                   bromide.
                                                                  Presence of sensitive electronic equipment
                                                                   subject to corrosivity.
                                                                  Time to transition to an alternative.
                                     (d) Members of the North     Moderate to severe beetle infestation.
                                      American Millers'           Older structures that can not be properly
                                      Association in the U.S.      sealed to use an alternative to methyl
                                                                   bromide.
                                                                  Presence of sensitive electronic equipment
                                                                   subject to corrosivity.
                                                                  Time to transition to an alternative.

                                     (e) Members of the National  Moderate to severe beetle or moth infestation.
                                      Pest Management             Older structures that can not be properly
                                      Association treating cocoa   sealed to use an alternative to methyl
                                      beans in storage and         bromide.
                                      associated spaces and       Presence of sensitive electronic equipment
                                      equipment and processed      subject to corrosivity.
                                      food, cheese, dried milk,   Time to transition to an alternative.
                                      herbs, and spices and
                                      spaces and equipment in
                                      associated processing
                                      facilities.
Commodity Storage..................  (a) California entities      Rapid fumigation is required to meet a
                                      storing walnuts, beans,      critical market window, such as during the
                                      dried plums, figs,           holiday season, rapid fumigation is required
                                      raisins, dates (in           when a buyer provides short (2 working days
                                      Riverside county only),      or less) notification for a purchase or there
                                      and pistachios in            is a short period after harvest in which to
                                      California.                  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  Moderate to severe red legged ham beetle
                                      Country Ham Association.     infestation.
                                                                  Moderate to severe cheese/ham skipper
                                                                   infestation.
                                                                  Moderate to severe dermested beetle
                                                                   infestation.
                                                                  Ham mite infestation.
                                     (b) Members of the American  Moderate to severe red legged ham beetle
                                      Association of Meat          infestation.
                                      Processors.                 Moderate to severe cheese/ham skipper
                                                                   infestation.
                                                                  Moderate to severe dermested beetle
                                                                   infestation.
                                                                  Ham mite infestation.
                                     (c) Nahunta Pork Center      Moderate to severe red legged ham beetle
                                      (North Carolina).            infestation.
                                                                  Moderate to severe cheese/ham skipper
                                                                   infestation.
                                                                  Moderate to severe dermested beetle
                                                                   infestation.
                                                                  Ham mite infestation.
----------------------------------------------------------------------------------------------------------------

    EPA received five comments on the proposed critical uses for 2007.
Four commenters noted that the Southern Forest Nursery Management
Cooperative was not listed in the way the consortium had been in
previous allocation rules, although the member states were described.
In response, EPA agrees with the commenters and is adding ``Southern
Forest Nursery Management Cooperative'' to column B under ``Approved
Critical Users'' for the Forest Nursery Seedling sector. However, EPA
is not adding the State of Kentucky to the consortium description in
Column B at this time, which was requested by the commenters, as the
corresponding exemption application filed did not list Kentucky as a
consortium member. One other commenter requested that the language
describing the National Pest Management Association 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 and spices and spaces and equipment in
associated processing facilities.'' EPA has incorporated this revised
language describing the National Pest Management Association because it
clarifies that commodities will be fumigated as part of space
fumigations, as indicated in the application.
    EPA received one set of comments on the pre-plant limiting critical
conditions. The commenter requested that karst restriction be removed
from the final rule and that the U.S. Government conduct a post-harvest
evaluation of the regulatory impact of the 1,3-D label change. However,
as stated above, EPA's analysis already took the change in the label
language into account when conducting the 2007 analysis, and EPA is not
making further reductions in this area. For responses to the remaining
pre-plant comments on limiting critical conditions, please see the
corresponding Response to Comments document in the docket for this
action.
    EPA received two comments stating that some post-harvest limiting
critical conditions are no longer relevant and should be removed. One
commenter also notes that sulfuryl fluoride has superseded phosphine
and heat as the preferred alternative in post-harvest use categories.
The conditions that the commenter requested be removed are:
     Older structures that cannot be properly sealed
     Presence of sensitive electronic equipment subject to
corrosivity
     Rapid fumigation
     Time to transition to an alternative
    However, EPA believes these limiting critical conditions are
appropriate under certain circumstances. For example, EPA notes that
phosphine is a registered alternative and therefore will continue to
consider phosphine when conducting future analyses of the post-harvest
sector, and the presence of electronic equipment subject to corrosivity
is a factor to consider when evaluating this alternative. As per the
critical use requirements, EPA will continue to consider heat a non-
chemical alternative, as non-chemical alternative information is
requested in the application. EPA also notes the sulfuryl fluoride is
not registered on beans in California. Additional information on the
limiting critical conditions is in the corresponding Response to
Comments 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 one reference to column B and deleting seven references. EPA
is adding cheese processing facilities to NPMA dry commodities to
reflect the authorization of this use in Decision XVII/9 and removing
Idaho, Kansas, Nebraska, Oregon, Utah, and Washington from the approved
public nursery locations in the Forest Nursery Sector because a 2007
application for these locations was not submitted.
    The categories listed in Table I above have been designated
critical uses for 2007 in Decision XVII/9 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'' is indicated as a limiting critical condition in the table
above. However, consistent with the approach taken in the 2006 CUE
Rule, the Agency is not setting

aside a specific quantity of methyl bromide to be associated with
research activities. Methyl bromide is needed for research purposes
including experiments that require methyl bromide as a standard control
treatment with which to compare the trial alternatives' results. EPA is
permitting the following sectors to use critical use methyl bromide for
research purposes: cucurbits, dried fruit and nuts, nursery stock,
strawberry nurseries, turfgrass, eggplant, peppers, strawberry fruit,
tomatoes, and orchard replant. In their applications to EPA, these
sectors identified research programs that require the use of methyl
bromide.

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

    Paragraphs 2 and 5 of Decision XVII/9 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 2007 control
period. A discussion of the Agency's application of the criteria in
paragraph 1 of Decision IX/6 appears in sections V.A. and V.C. of this
preamble. In section V.C. of the original proposal, the Agency
solicited comments from the public on the technical basis for
determining that the uses listed in this proposed rule meet the
criteria of the critical use exemption. The 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. EPA has
addressed these comments in the Response to Comments document,
available on the docket for this final rule.
    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.G. 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 on the CUE process, in addition to Section V.A
above, 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 CUNs 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 submitted to the Ozone Secretariat in
December 2005 and in on-going consultations with industry. The National
Management Strategy 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.

E. Emissions Minimization

    EPA notes for the regulated community the reference to emission
minimization techniques in paragraph 6 of Decision XVII/9, 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.'' In addition, 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 decrease
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. The Agency encouraged researchers and users who
are successfully utilizing such techniques to inform EPA of their
experiences as part of their comments on the July 6, 2006 proposed rule
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
and use minimization could be achieved.
    EPA received five comments on emissions minimization. Two
commenters stated that EPA should continue to encourage emissions
minimization without mandating emissions control technology. EPA
strongly encourages emissions minimization techniques, as stated above,
and notes that the critical use exemption application contains an
emission reduction worksheet.
    One commenter suggested that EPA facilitate improvements by
communicating beneficial alternatives and publicizing research in a
timely manner. EPA agrees with the commenter and will examine ways to
improve this communication in the future.
    Another commenter asserted that a phaseout of methyl bromide will
not contribute to a reduction in ozone depletion, and cited the 2002
World Meteorological Organization's Scientific Assessment of Ozone
Depletion. However, the recently published Executive Summary of the
Scientific Assessment of Ozone Depletion: 2006 contains the following
paragraphs that refute the commenter's conclusions:
    ``Both the recently observed decline and the 20th Century increase
inferred for atmospheric methyl bromide were larger than expected.
Although industrial emissions of methyl bromide were thought to account
for 20% (range 10-40%) of atmospheric methyl bromide during 1992-1998
(i.e., before production was reduced), observed concentrations are
consistent with this fraction having been 30% (range 20-40%). This
suggests that fumigation-related emissions could have a stronger
influence on atmospheric methyl bromide mixing ratios than estimated in
past Assessments, though uncertainties in the variability of natural
emission rates and loss, and in the magnitude of methyl bromide banked
in recent years, limit our understanding of this sensitivity.
    ``The percentage reduction in integrated equivalent effective
stratospheric chlorine for methyl bromide in Column A is larger than
previously reported. This is because of the upward revision of the
fraction of anthropogenic emissions relative to total methyl bromide
emissions, as well as upward revision in the ozone-depletion
effectiveness of bromine atoms compared with chlorine atoms mentioned
earlier.
    ``If critical-use methyl bromide exemptions continue indefinitely
at the 2006 level compared to a cessation of these exemptions in 2010
or 2015, midlatitude integrated equivalent effective stratospheric
chlorine would increase by 4.7% or 4.0%, respectively.''
    Another commenter notes that the main barrier to adoption of
emissions controls is the lack of commercial incentives for industry to
use emissions control technology for pre-plant, post-harvest, or QPS
applications. EPA

believes that by 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. The Executive Summary is
available on the docket for this action, and the full report will be
released in December 2006.

F. 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 July 6, 2006 proposed rule, EPA proposed that the amount to
come from pre-phaseout inventory be either 6.2% of baseline (which is
the difference between the agreed U.S. critical use level and the
amount of allowable new production and import) or 7.5% of baseline.
However, in the proposed rule, both the high and low end of the
proposed ranges included an additional amount that had been adjusted to
account for the proposed reduced research amount of 21,702 kilograms.
As a result, the proposed high end of the CSA range amounted to
1,936,302 kilograms, or 7.6% of baseline. However, EPA is finalizing
the CSA amount so that the CSAs reflect exactly 7.5% of baseline, or
1,914,600 kilograms. Similarly, the proposed low end of the range was
1,621,702 kilograms but should have been expressed as 1,600,000
kilograms, which equals 6.2% of baseline. As noted in Section V.C
above, the authorized research amount of 21,702 kilograms will be
deducted from the amount of newly produced or imported methyl bromide
in response to Decision XVII/9. These adjustments do not affect the
calculation of the critical use allowances. The calculation spreadsheet
is available on Docket ID No. EPA-HQ-OAR-2005-0538. The total critical
use exemption amount for 2007 is 6,230,655 kilograms (24.4% of
baseline) with 4,316,055 kilograms (16.9% of baseline) of critical use
allowances (CUAs) available from new production or import and the
remaining amount, 1,914,600 kilograms (7.5% of baseline), available
through CSAs. Therefore, the CUAs are allocated as follows:

            Table II.--Allocation of Critical Use Allowances
------------------------------------------------------------------------
                                           2007 Critical   2007 Critical
                                                use             use
                                          allowances for  allowances for
                 Company                     pre-plant      post-harvest
                                               uses*           uses*
                                            (kilograms)     (kilograms)
------------------------------------------------------------------------
Great Lakes Chemical Corp...............       2,401,699         221,167
Albemarle Corp..........................         987,633          90,949
Ameribrom, Inc..........................         545,787          50,260
TriCal, Inc.............................          16,994           1,565
                                         -------------------------------
    Total...............................       3,952,114         363,941
------------------------------------------------------------------------
* 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 four of Decision XVII/9 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) and Ex. II/1(4) regarding 2005 and 2006 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
proposed Framework Rule (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. 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 XVII/9(4), EPA considered 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. A
summary of the options analysis conducted by EPA is available in the
docket for this rulemaking.
    EPA received six comments on the allocation approach. Five
commenters believe the current two-group approach is preferable and
should be maintained by EPA because it is consistent with the way the
market currently operates. One commenter stated that the allocations

should be made directly to each sector, as requested by the Parties,
and noted that other countries have established use-specific allocation
systems. The commenter also stated that the ``lump sum'' approach
delays the transition to alternatives but requested that if EPA does
not adopt a use-specific approach, that the current allocation system
be maintained. In response, EPA agrees with the majority of the
commenters and intends to continue differentiating between ``pre-
plant'' and ``post-harvest'' uses as defined in the Framework Rule (69
FR 76982) for the 2007 control period.

G. Critical Stock Allowance Allocations and Inventory of Methyl Bromide

    As discussed above and in the December 23, 2004 Framework Rule, an
approved critical user may obtain access to exempted production/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.
    In developing this action, the Agency noted that Decision XVII/9
(para. 5) 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.'' This language is similar to language in Decision XVI/
2 authorizing 2006 critical uses. Language calling on Parties to
address stocks also appears in Decision Ex. I/3, which authorized 2005
critical uses.
    In the Framework Rule, which established the architecture of the
critical use exemption program and set out the exempted levels of
critical use for 2005, EPA interpreted paragraph 5 of Decision Ex. I/3
``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). The Framework Rule established
provisions governing the sale of pre-phaseout inventories for critical
uses, including the concept of CSAs and a prohibition on sale of pre-
phaseout inventories for critical uses in excess of the amount of CSAs
held by the seller. In addition, EPA noted that inventories were
further taken into account through the trading provisions that allow
critical use allowances to be converted into CSAs. Under this action,
no significant changes would be made to those provisions.
    In the February 6, 2006 final rule that determined the amount to
come from inventory during the 2006 control period, EPA stated that
``bearing in mind the United States' `renewed commitment' as stated in
Decision Ex II/1, and its experience with the 2005 critical use
nomination,'' EPA would exercise its discretion to reduce production/
import and authorize an additional amount from inventory (71 FR 5998).
For the 2006 control period, EPA authorized 1,136,008 kilograms (5% of
baseline) to be supplied from pre-phaseout methyl bromide inventories.
EPA noted that ``continued drawdown of inventory for critical uses at
the level authorized in the Framework Rule for 2005'' (i.e., 5% of
baseline) was an appropriate means, for the 2006 control period, ``of
continuing the commitment previously made, in light of our
understanding of current inventory and our analysis of the current
needs of users.'' In addition, EPA responded to stakeholder concerns
that taking 5% of baseline from inventory in 2006 and 6.2% in 2007
would result in shortages. EPA reported that the Agency ``has re-
examined the available inventory data and has projected multiple
scenarios concerning levels of consumption of existing inventory. Based
on these efforts, EPA believes that critical users will continue to be
able to meet their needs throughout 2006 and 2007 through the
anticipated combination of new production and import and inventory
drawdown'' (71 FR 6000).
    After EPA published the 2006 final rule, it received data on
holdings of pre-2005 stocks from methyl bromide suppliers as part of
routine reporting under the CUE program. This data enabled EPA to track
and project inventory drawdown. For 2007, EPA proposed that the amount
to come from stocks be either 6.2% of baseline (which is the difference
between the agreed U.S. critical use level and the amount of allowable
new production and import) or 7.5% of baseline. Both amounts are larger
than the amount of CSAs in the preceding year of the exemption program
and take into account Decisions of the Parties including Decision XVII/
9(5). EPA also sought comment on whether some other number in this
range would be appropriate.
    EPA also noted in the proposed rule that an alternative means of
addressing stocks appeared in a recent Federal Register notice relating
to the essential use exemption program (71 FR 18264). In that context,
the relevant Decision stated that ``Parties shall take into account * *
* stocks of controlled substances * * * such that no more than a one-
year operational supply is maintained by that manufacturer.'' This
Decision refers to another exemption program, one that is analogous but
structured differently from the CUE, and operating for different
applications and circumstances. 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 how many months of inventory
of methyl bromide would be appropriate to maintain non-disruptive
management of this chemical in the supply chain for purposes of
determining availability as inventories are reduced over time.
    EPA proposed to allocate critical stock allowances (CSAs) to the
entities listed below in Table III for the control period of 2007 in
the range of between 6.2% of baseline and 7.5% of baseline. EPA is
employing the same methodology and baselines for allocating CSAs as in
previous critical use rulemakings (69 FR 76982). The Agency sought
comment on the amount of critical use methyl bromide to come from
inventory.
    EPA received fourteen comments expressing concern about the
increased reliance on inventory. These commenters stated that the
proposed increase in the amount of methyl bromide to come from
inventory is beyond the level approved by the Parties and that an
adequate emergency inventory must be maintained. Several commenters
stated that increased reliance on inventory puts critical users in
jeopardy and noted the possibility of increased competition for this
inventory with non-critical users. Commenters also noted the reduction
in inventory reserves since 2002.
    Two commenters stated that inventory should only be for critical
use needs and that existing inventory is sufficient to cover both
proposed amounts of CSAs.
    EPA received 15 comments on the proportion of critical use methyl
bromide that would come from pre-phaseout inventories (allocated as
CSAs) and the proportion of new production or import (allocated as
CUAs). Fourteen commenters were concerned with the option under which a
greater amount of critical use material would come from the pre-
phaseout inventory than the minimum amount specified in Decision XVII/9
by the Parties to the Protocol. Five of these commenters stated that
the increased reliance on the pre-phaseout inventory

``puts critical use sectors in jeopardy'' because it was being proposed
at a time when this inventory is decreasing. One commenter supported
the concept of applying a ``strategic reserve'' approach to the
critical use exemption program in order to mitigate a potential failure
at the single methyl bromide production facility in the U.S. and to
support unforeseen demand increases. One commenter stated that EPA
underestimated the amount of methyl bromide needed to respond in the
event of an emergency, stating that at least a nine-month supply would
be needed to bring a currently closed methyl bromide factory back
online as opposed to EPA's 100-day estimate. Six commenters said that
the strategic inventory should at a minimum equal one year of the
critical use need. Three commenters noted that the one-year stockpile
should be a minimum standard because the time period is based on the
standard used in the ``essential use program'' for CFCs and unlike
alternatives to other ozone depleting substances, alternatives to
methyl bromide are not universally effective in all geographic
locations, even on the same crop, because of the large number of
variables involved. Two commenters suggested a 24-month stockpile to
maintain non-disruptive management in the methyl bromide supply chain.
In contrast with concerns from commenters about taking too much of the
2007 authorized amount from pre-phaseout inventory, which they claim
would leave too little in the necessary strategic reserve, EPA received
two comments that said although reliance on stocks in the proposed rule
is increased from previous years, the amount remains too low. These two
commenters believed that EPA should preferentially use the existing
stockpiles to support CUEs and not allow any new production or
importation unless the stocks are not sufficient to meet critical
needs.
    EPA believes that allocating CSAs at a level of 7.5% of baseline
(1,914,600 kg) is a reasonable drawdown from pre-phaseout inventory for
critical uses, recognizing that some amount of methyl bromide must
remain in the supply chain. This level accounts for past practice in
CSA allocations, the range contained in the proposed rule, and Decision
XVII/9, especially given the U.S. role as one of the world's largest
suppliers to meet global methyl bromide needs.
    Since publication of the proposal for 2007 methyl bromide critical
use exemptions (71 FR 38325) EPA released information on the pre-
phaseout aggregate inventory at the end of 2003, 2004 and 2005, which
is available on the docket for this action. The release of the
aggregate end-of-year inventory follows resolution of the two court
cases blocking disclosure of a smaller aggregate and an EPA
determination that the larger aggregates are not entitled to
confidential treatment. EPA notes that some of the inventory available
at the end of 2004 was exported to meet Article 5 countries' basic
domestic needs during 2005, and some of this inventory was exported to
meet a non-Article 5 country's critical use needs in 2005. The
inventory has decreased significantly over the three years that EPA has
collected data. The average annual drawdown of the inventory has been
approximately 12% of baseline.
    EPA believes the finalized CSAs for 2007 are appropriate given the
U.S.'s commitment to the Montreal Protocol and the history of Decisions
of the Parties to the Montreal Protocol. In the Decisions for the 2005
control period, the Parties authorized a total of 7.5% of the 1991
baseline for critical uses in the U.S. beyond the allowable level of
new production, which was 30% of baseline. While those Decisions have
no direct application to other control periods, they do provide some
indication that the drawdown in this final rule is reasonable under the
Montreal Protocol.
    In addition, Decision XVII/9, which directly addresses critical
uses for 2007, states: ``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 taken into
account available stocks of banked or recycled methyl bromide.''
Decision XVII/9 authorizes a critical use exemption level for the U.S.
that is equivalent to 26.4% of baseline, and states that the U.S. may
produce or import at a level equivalent to 20.2% of baseline. It also
states that the difference between the two levels may be made up ``by
using quantities of methyl bromide from stocks that the Party has
recognized to be available.'' Therefore, EPA proposed that the total
number of CSAs would be at least 6.2% of baseline. EPA is exercising
its discretion in setting the total number of CSAs at 7.5% of baseline,
or 1,914,600 kilograms. The Agency believes that using an amount of
pre-phaseout inventory greater than the amount that appears on the face
of the Decision, when feasible, is an appropriate means of implementing
the continuing U.S. commitment as reflected in Decision XVII/9. More
specifically, EPA has selected 7.5% for 2007 because of the Parties'
earlier agreement to this number and because, under the current
circumstances, this level of inventory drawdown for critical uses is
feasible. The aggregate inventory data as of December 31, 2005,
indicate that pre-phaseout inventory amounts to 39% of baseline and
therefore EPA does not anticipate a shortage during 2007.
    However, EPA notes that the pre-phaseout inventory is decreasing
over time and if the Agency is informed of a severe inventory shortage,
it may consider various options including, but not limited to,
promulgating a final version of the petition process proposed on
October 27, 2005 (70 FR 62030), taking into account comments received
on that proposal; proposing a different administrative mechanism to
serve the same purpose; or authorizing conversion of a limited number
of CSAs to CUAs through a rulemaking, bearing in mind the upper limit
on U.S. production/import for critical uses.
    EPA appreciates the comments received to date on the appropriate
level of inventory and intends to continue exploring the issue in
future rulemakings. EPA notes 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. While EPA believes that 7.5%
is an appropriate amount for 2007, the Agency will revisit whether this
is the appropriate figure to use in future allocation rules taking into
account the feasibility of such drawdowns and other relevant factors
and data presented to the Agency.
    Two commenters stated that stocks should be only for critical use
needs, and that therefore access to pre-phaseout methyl bromide stocks
should be denied to non-critical users and restricted for critical
users to prevent ``double dipping,'' as per the Montreal Protocol and
Decisions. EPA does not believe the language in the Protocol or
subsequent Decisions of the Parties indicates that inventory should be
reserved for critical users, nor did EPA request comment on this issue.
EPA addressed similar comments in its Response to Comments for the
Framework Rule, which is included in the docket for this action. EPA
believes that some sectors have relied on pre-phaseout inventories of
methyl bromide to test, and perform commercial trials on, alternatives
to methyl bromide

instead of pursuing critical use exemptions. This is an appropriate
strategy that is consistent with the Protocol. The inventory is
assisting both critical use sectors and non-critical use sectors during
this period of transition in the U.S. to methyl bromide alternatives
that are verifiably feasible from a technical and economic standpoint.
The inventory has also helped the world's methyl bromide supply chain
make the transition to the post-phaseout controls without interruptions
to the amount available for export to Article 5 countries and without
interruptions to the shipments of CUE material to other CUE countries.
    EPA continues to consider the use of pre-phaseout inventories and
will revisit the issue again. In addition, EPA received a set of late
comments on the proposed rule, after the Parties took Decisions at the
18th Meeting held October 30-November 3, 2006. The comments describe
issues related to accelerated inventory drawdown and access to
inventories by critical and non-critical users, stating that only
critical users should have inventory access. While these comments
arrived too late for consideration in this rulemaking, EPA has noted
these comments and may explore the merits of the particular points
raised by the commenter. These issues were discussed in depth at the
18th Meeting of the Parties as well and the Agency intends to consider
the concerns raised by meeting participants.

           Table III.--Allocation of Critical Stock Allowances
------------------------------------------------------------------------
                  Company                              Company
------------------------------------------------------------------------
Albemarle.................................  Industrial Fumigation
                                             Company.
Ameribrom, Inc............................  J.C. Ehrlich Co.
Bill Clark Pest Control, Inc..............  Pacific Ag.
Blair Soil Fumigation.....................  Pest Fog Sales Corp.
Burnside Services, Inc....................  Prosource One.
Cardinal Professional Products............  Reddick Fumigants.
Carolina Eastern, Inc.....................  Royster-Clark, Inc.
Degesch America, Inc......................  Southern State Cooperative,
                                             Inc.
Dodson Bros...............................  Trical Inc.
Great Lakes Chemical Corp.................  Trident Agricultural
                                             Products.
Harvey Fertilizer & Gas...................  UAP Southeast (NC).
Helena Chemical Co........................  UAP Southeast (SC).
Hendrix & Dail............................  Univar.
Hy Yield Bromine..........................  Vanguard Fumigation Co.
                                            Western Fumigation.
------------------------------------------------------------------------
Total--1,914,600 kilograms.

    Several companies that receive very small amounts of CSAs from EPA
have contacted the Agency and requested that they be permitted to
permanently retire their allowances. Some companies receive as few as 3
allowances which allow the holder to sell up to 3 kilograms of methyl
bromide to critical uses. Due to the small 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, EPA
proposed to allow CSA holders, on a voluntary basis, to permanently
relinquish their allowances through written notification to EPA. Such
companies would not receive CSA allocations and would be excluded from
future allocations. All allowances forfeited by companies through the
written notification process would be reallocated to the remaining
companies on a pro-rata basis. However, during the comment period, EPA
did not receive any notification from CSA holders wishing to relinquish
their allowances. Therefore, the CSA holders listed in the July 6, 2006
proposal will continue to be CSA holders during the 2007 calendar year,
but EPA may extend the option of relinquishing allowances in future
rulemakings.
    In sections V.F. and V.G. of the preamble of the proposed rule, EPA
sought comment on the amount of critical use methyl bromide to come
from stocks compared to new production and import. EPA addressed these
comments in Sections V.C and V.F above but will continue to consider
other approaches in the future.

VI. Statutory and Executive Order Reviews

A. Executive Order No. 12866: Regulatory Planning and Review

    Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993),
this action is 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. 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.
    In addition, EPA prepared an analysis of the potential costs and
benefits associated with the CUE process. This analysis is contained in
the document titled ``Economic Analysis for Methyl Bromide Allocation
in the U.S., and a Regulatory Impact Analysis was also prepared. A copy
of the analysis is available in the docket for this action and the
analysis is briefly summarized here.
    The Economic Impact Analysis (EIA) provided an analysis of the
costs of regulating the distribution of critical use exemption (CUE)
methyl bromide allocated to the United States by the Parties to the
Montreal Protocol. The analysis presented the impacts associated with
the proposed continued use of methyl bromide through the implementation
of the CUE process under two allocation options (each with two
allocation methods) and briefly analyzes a third auction option, and
compared these results to a complete phaseout in 2005. The sections
provide a brief overview on the background of the methyl bromide
phaseout and the regulated community, a description of the baseline
phaseout analysis and a comparison to the allocation analysis used for
this report, an overview of the allocation options, and a description
of the costs and overall cost savings to industry participants for the
two options.

B. Paperwork Reduction Act

    This action does not impose an information collection burden under
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.
The recordkeeping and reporting requirements included in this action
are already included in an existing information collection burden and
this action does not make any changes that would affect the burden.
However, the Office of Management and Budget (OMB) has previously
approved the information collection requirements contained in the
existing regulations, 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, EPA ICR number 2179.03. A copy of the OMB
approved 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. A copy may also be downloaded off the internet at http://www.regulations.gov
.

    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.

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 today's rule 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 than 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.

----------------------------------------------------------------------------------------------------------------
                                                                                NAICS Small business size
                                                                                standard (in number of
              Category                     NAICS code               SIC code           employees or millions of
                                                                                dollars)
----------------------------------------------------------------------------------------------------------------
Agricultural Production............  1112--Vegetable and     0171--Berry Crops.      $0.75 million.
                                      Melon farming..
                                     1113--Fruit and Nut     0172--Grapes.
                                      Tree Farming..
                                     1114--Greenhouse,       0173--Tree Nuts.
                                      Nursery, and           0175--Deciduous Tree
                                      Floriculture            Fruits (except apple
                                      Production.             orchards and farms)..
                                                             0181--Ornamental        $6 million.
                                                              Floriculture and
                                                              Nursery products.
                                                             0831--Forest Nurseries
                                                              and Gathering of
                                                              Forest Products.
Storage Uses.......................  115114--Post-harvest    4221--Farm Product      $21.5 million.
                                      crop activities         Warehousing and
                                      (except Cotton          Storage.
                                      Ginning).
                                     493110--General         4225--General           ...........................
                                      Warehousing and         Warehousing and
                                      Storage.                Storage.
                                     493130--Farm product                            ...........................
                                      Warehousing Storage.
Distributors and Applicators.......  115112--Soil            0721--Crop Planting,    $6 million.
                                      Preparation,            Cultivation, and
                                      Planting, and           Protection.
                                      Cultivating.
Producers and Importers............  325320--Pesticide and   2879--Pesticides and    500 employees.
                                      Other Agricultural      Agricultural
                                      Chemical                Chemicals, NEC.
                                      Manufacturing.
----------------------------------------------------------------------------------------------------------------

    Agricultural producers of minor crops and entities that store
agricultural commodities are categories of affected entities that
contain small entities. This rule 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 and 2007 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 today's 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 rule on small entities.'' 5 U.S.C. 603 and 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 regulatory burden, or otherwise has a positive economic effect
on all of the small entities subject to the rule. Since this final 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 that the
estimated de-regulatory value for users of methyl bromide is between
$20 million and $30 million annually. We have therefore concluded that
today's final rule will relieve regulatory burden for all affected
small entities.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub.
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