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Global Climate Change Digest
A Guide to Information on Greenhouse Gases and Ozone Depletion
Published July 1988 through June 1999

FROM VOLUME 1, NUMBER 3, SEPTEMBER 1988

NEWS...
EPA ISSUES RULING AND PROPOSAL

Item #d88sep2

The U.S. Environmental Protection Agency issued its final rule for limiting chlorofluorocarbons and halons on August 1, 1988, which differs little from the proposed version issued December 14, 1987. The rule meets, but does not exceed, the obligation of the United States as a party to the Montreal protocol (see preceding item). When the protocol becomes effective, the agency will publish the date the rule will take effect and reporting requirements in the Federal Register. If the protocol takes effect January 1, 1989, as expected, annual CFC production in the United States will be frozen at 1986 levels beginning July 1, 1989, and reduced to 80 percent of that level beginning in 1993 and 50 percent in 1988.

At the same time, the agency proposed for comment approaches to offset windfall profits for CFC manufacturers that could result from rising prices once production is restricted, which it feels would discourage the development of safer alternatives. The EPA estimates a sixfold price increase and additional profits of $1.8 to $7.2 billion are possible. Suggested approaches are a regulatory fee system, or the auctioning of production rights, instead of allocating rights to previous producers and importers. The present regulation allocates production quotas to the five United States manufacturers that account for a third of world CFC production--Du Pont, Allied-Signal, Pennwalt, Kaiser Aluminum and Chemical, and Racon. The EPA seeks comments on the legality as well as the structure of these approaches--whether it has the legal right as a regulatory agency to impose them. Windfall profit and CFC phaseout legislation has been introduced in the U.S. Congress, and will be reviewed in a future issue of Global Climate Change Digest. Also proposed are requirements for recycling CFCs and bans on certain uses.

Representatives of the CFC and halon industries, such as the Alliance for Responsible CFC Policy, feel the windfall profit situation is exaggerated. They say the producers are already developing substitutes, and the proposed fee system is unnecessary. For example, Du Pont has announced plans for its first commercial-scale manufacturing plant for producing CFC and halon alternatives in Michigan. It will spend over $30 million this year on operations related to developing CFC substitutes. The firm also announced in July 1988 it will discontinue making CFCs by the year 2000.

The day before EPA's rule was issued, the Investor Responsibility Research Center, which compiles and analyzes information relating to policy for its member investing corporations, released a synopsis of the CFC situation. It concludes the EPA regulation will mitigate but not solve ozone depletion and global warming (see REPORTS, this Global Climate Change Digest issue--Sep. 1988).

EPA's final ruling and advanced notice of proposed rule making were published in the Federal Register, 53(156), pp. 30,566-30,619.