CHALLENGE OF ENFORCING THE MONTREAL PROTOCOL ON PROTECTION
OF STRATOSPHERIC OZONE
JOHN S. SEITZ' and SALLY D. MITOFF2
1 Director, Stationary
Source Compliance Division, Office of Air & Radiation, U.S. Environmental Protection Agency, Washington,
D.C. 20460 (United States)
2 Environmental
Engineer, Stationary Source Compliance Division, Office of Air & Radiation, U.S. Environmental Protection
Agency, Washington, D.C. 20460 (United
States)
The views expressed in this article are solely those of the
author; they do not necessarily reflect the views or policies of the U.S.
Environmental Protection Agency.
SUMMARY
In September 1987, under the auspices of the United Nations
Environmental Programme, the United States and 23 other nations signed the
"Montreal Protocol on Substances that Deplete the Ozone Layer." (1)
To implement the requirements of the Protocol within the United States, the
Environmental Protection Agency (EPA) has developed regulations for protection
of stratospheric ozone. Development and
administration of the program to enforce an international agreement such as the
Montreal Protocol carries with it a unique set of challenges, but is
underscored by the same enforcement principles that govern domestic
environmental regulations.
This paper addresses the challenge of enforcing the Montreal
Protocol in four parts. Section 1.0
presents an overview of the basic requirements of the Protocol, followed in
Section 2.0 by a description of how the U.S. regulation on Protection of
Stratospheric Ozone was structured to facilitate implementation and enforcement
of the Protocol. Section 3.0 highlights
the EPA's strategy for monitoring compliance with the regulation and the
Protocol, and Section 4.0 discusses the impact of other nations' enforcement
strategies on the success of the U.S. program and the Montreal Protocol.
1 OVERVIEW OF
THE MONTREAL PROTOCOL
The September, 1987, Montreal Protocol on Substances that
Deplete the Ozone
Layer sets forth a timetable for reducing ozone-depleting
chemicals. This international agreement
is designed to address the global health and environmental risks of increased
levels of harmful ultraviolet radiation due to stratospheric ozone
depletion. The Protocol, which entered
into force on January 1, 1989, has been ratified by 52 nations; these nations
are referred to as Parties to the Protocol.
The Montreal Protocol contains control measures, trade
provisions, reporting requirements, and noncompliance provisions pertaining to
the production and net importation of ozone-depleting substances. Each of these provisions is discussed below.
The control measures in the Montreal Protocol apply to two
distinct groups of ozone-depleting chemicals, termed "controlled
substances." Group I consists of five chlorofluorocarbons (CFCs), whereas
Group II is comprised of three halons.
The Group II controlled substances are stronger ozone-depleters than
Group I chemicals, but some question exists about the halons' exact ozone
depletion potential, and they are currently emitted in relatively small
quantities. The Montreal Protocol
restricts the production and consumption of these
substances. Production is simply
defined in the Protocol as the amount of controlled substances produced minus
the amount destroyed by technologies to be approved by the Parties, whereas
consumption is defined as production plus imports minus exports.
As of July 1989, each Party to the Protocol must limit their
production and consumption of Group I substances to their 1986 levels of
production and consumption. These CFCs
are scheduled for further reduction to 80% of 1986 production and consumption
levels starting July 1, 1993, and a 50% reduction starting July 1, 1998. The Group II controlled substances are to be
frozen at 1986 levels of production and consumption, beginning January 1, 1992.
The means by which Parties to the Protocol are to meet these
mandated restrictions on production and consumption were not specified in the
Protocol. However, the Protocol does
require that these limits be met on a specified annual basis, termed the
"control period."
Since the production of controlled substances is
straightforward in definition, it can be relatively simple to regulate. Consumption, on the other hand, is
inherently more challenging to control.
Nations must regulate the balance of production, import, and export to
meet the consumption cap. One of the
challenges created by the Protocol, therefore, is how to design a system to
monitor and regulate the consumption of controlled substances.
Also restricted by the Montreal Protocol is trade with
non-Party nations. A ban on the import
of controlled substances from nations which are not Parties to the Protocol
commenced January 1, of this year.
Similarly, the Protocol contains provisions which would ban the import
of products containing controlled substances.
Still further restrictions on import and export are contemplated in the
Protocol. Consequently, the Protocol
presents an array of import and export limitations which must be monitored and
verified.
To establish each Party's compliance with the Protocol,
annual reporting of production, import, and export activity is required. Procedures for determining noncompliance
with the Protocol, and for addressing the treatment of Parties found to be in
noncompliance, will be considered at future meetings of the Parties.
Revisions
to the Protocol are therefore likely, not only with respect to treatment of
noncompliers and establishment of trade restrictions, but also with respect to
the basic control measures. A complete
phaseout of chlorofluorocarbons, and the inclusion of additional chemicals as
controlled substances are currently contemplated. As revisions are made to the Protocol, each nation must revise
their own regulations or policies accordingly.
Hence, another challenge of implementing an international agreement such
as the Montreal Protocol, is maintaining consistency between the ensuing
domestic regulations and the international agreement.
2 THE U.S.
REGULATION FOR PROTECTION OF STRATOSPHERIC OZONE
To
implement and enforce the Montreal Protocol within the United States, the EPA
developed, and issued in August 1988 under Clean Air Act authority, final
regulations for Protection of Stratospheric Ozone. The following discussion summarizes the requirements of the U.S.
regulation, with respect to compliance monitoring and enforcement.
The Stratospheric Ozone Rule sets forth limitations on the
production and importation of controlled substances, and adjusts allowable
levels of importation based on export activity. (2) This rule is essentially a
marketable permit system, with compliance focusing on the valuation of
production and importation rights as assigned by EPA. The rule currently applies to approximately twelve production
plants, eighteen importers, and thirty-five exporters.
Ensuring compliance with the Montreal Protocol necessitates
the development of an easily administered and readily enforced regulation. Enforceability of the United States' rule
for Protection of Stratospheric Ozone is ensured in four ways.
Each of
these points is discussed in more detail below.
First, EPA resolved to design a simple, and thereby
enforceable, regulatory program.
Because the Montreal Protocol does not specify the means for meeting,
the production and consumption caps, one of the first issues addressed in the
U.S. rulemaking was how to best restrict production and use of CFCs and
halons. From the enforcement
perspective, the U.S. needed a regulatory system that would give the greatest
degree of assurance that the Protocol's production and consumption caps could
be achieved. The system had to be easy
to administer and enforce. The EPA
considered several regulatory systems, including auctions or allocation of user
rights, adjustable fees, mandated engineering controls, and caps on CFC and
halon production and importation. The
ultimate choice of the regulatory system depended on many considerations,
including economic costs, equities, administrative costs, legal certainty, and
small business impact, in addition to enforceability. Yet, the final rule resulted in a system that was deemed to be
the most enforceable, that being allocated caps on production and importation.
(3) This system minimizes the number of sources with which we must monitor
compliance, and sets a clearly defined cap on production and consumption which
meets the Protocol's limits.
A second example of how enforceability was addressed in
development of the regulatory system is in the administration of trading
production and importation rights between companies. It was decided to allow trading, for example buying and selling,
of allowable levels of production and importation, to alleviate the
inflexibility that unadjustable caps would impose on businesses. Since trading does add complexity to the
rule, EPA minimized the potential for error when structuring the trading
provisions. Therefore, all transfers of
production or importation rights must come into EPA for approval or denial,
accompanied by data from which EPA can evaluate the transfer request, before
the transfer may occur. In this way,
companies will not be erroneously or intentionally trading rights which they do
not hold.
These two examples illustrate ways to structure a rule to allow
for high rates of compliance; namely, by keeping the regulatory system as
simple as possible, by minimizing the size of the regulated community, and by
keeping a clear definition or control of the applicable limits.
Also essential to monitoring compliance and thereby
enhancing compliance rates, is requiring the regulated community to keep
records and make reports which document their compliance status. The Stratospheric Ozone Rule requires
companies to keep dated records and make periodic reports of the quantity of
controlled substances they produce, import, and export, and further requires
records which enable inspectors to check that data.
Importers, for example, must record the quantities they
import, the date of import, the port of exit and entry, and the country of
origin, along with the commodity code and importer number for the shipment as
appears on U.S. Customs Entry Summary forms.
This information must be reported quarterly, thereby enabling EPA to compare
the reported values to import records collected by U.S. Census. EPA may then assess the likely compliance
status of the importer every three months.
Since compliance with the Protocol is determined on an annual basis,
this quarterly reporting allows for identification and possible correction of
problems before they lead to noncompliance with the Protocol. Importers are required to maintain
additional records on site, namely bills of lading and invoices for each
import, as a further check on the quantities reported as imported. It is essential that regulations contain the
record keeping and reporting requirements that allow early identification of
potential noncompliance, and allow some means of verifying reported production
and import.
In accordance with the third means specified for ensuring
enforceability, it is beneficial when developing a regulation to consider
existing monitoring programs. For
example, in the analysis of the quarterly import reports required by the
Stratospheric Ozone Rule, EPA compares the quantities of controlled substances
reported as imported, to records collected by U.S. Census. However, to make that Census information
most useful to EPA, it was necessary to request the International Trade
Commission to assign specific Commodity Codes to the controlled
chlorofluorocarbons and halons. With
this minor revision to Census' data collection technique, EPA has created an
independent check on import records.
As another example, to facilitate EPA's review of import and
export data and to minimize confusion among the regulated community, import and
export reports required under the Stratospheric Ozone Rule use the same
parameters and terminologies already used by U.S. Customs. Similarly, the Stratospheric Ozone Rule defines
importer as the "importer of record" as listed on U.S. Customs
Service forms. Early consideration of
other agencies' existing monitoring requirements enabled the writing of more
cohesive and stronger import and export provisions.
Likewise, in the development of the record keeping system
for production, EPA reviewed producers' current means for measuring and
monitoring production. Use of these
existing procedures facilitates accurate monitoring by the regulated industry.
Providing incentives for compliance is the fourth way the
EPA addressed enforceability of the Stratospheric Ozone regulations. Compliance with the U.S. regulation is
enhanced by the inclusion of clear prohibitions and penalty authority. The U.S. rule contains a specific section on
prohibitions, which clearly states that it is a violation to produce or import
at any time without sufficient allowances.
The rule specifies that every kilogram produced or imported in excess of
the authorized amount is a separate violation, subject to penalty assessment of
up to the $25,000 statutory maximum under the Clean Air Act. These conditions provide a strong incentive
for compliance.
3 COMPLIANCE MONITORING STRATEGY
With
the promulgation of the final rule for Protection of Stratospheric Ozone, the
legal mechanism was in place to monitor and enforce the applicable provisions
of the Montreal Protocol. However, in
order to ensure that violations of the rule would be discovered and enforced,
EPA established a compliance monitoring strategy. (4) In summary, that strategy
includes:
This strategy enables EPA to monitor compliance throughout
the control period, thereby allowing early identification of problems which, if
not noticed in time, might lead to noncompliance with the Protocol. Through this strategy and the careful review
of Customs data, EPA has already identified several potential importer
violations, and is working towards resolving those situations before the end of
the control year. Through the
development of the computer system, EPA has facilitated reporting for those
companies choosing to report electronically.
This electronic reporting can deliver more timely information, thereby
enhancing the Agency's enforcement capabilities. These initiatives, along with the development of an enforceable
regulation, optimize the United States' ability to meet the Protocol limits.
Violations of the Stratospheric Ozone Rule will be addressed
as quickly and as early in the control period as possible, to avoid
noncompliance with the Montreal Protocol.
Violators will be required to obtain the production and importation
rights from other companies necessary to compensate for their excess Production
or importation. If violations cannot be
remedied prior to the end of the control period, EPA may need to reduce the
number of production and importation rights allocated the next ear to ensure
achievement of the long-term goals of the Protocol. Alternatively, the Parties to the Protocol may in the future
specify acceptable techniques for destroying controlled substances. The EPA will assess penalties for
violations, within the statutory limits of the Clean Air Act, based on the
seriousness and economic benefit of the particular violation.
4 IMPACT OF
OTHER NATIONS' ENFORCEMENT PROGRAMS ON THE U.S. AND THE MONTREAL PROTOCOL
Although it is still prior to the end of the first control
period, it is possible to anticipate the impact other nations' programs may
have on implementation of the U.S. Stratospheric Ozone Rule and the Montreal
Protocol. Since the U.S. rule is
designed to function independently from other nations' rules, the effect of
other nations' programs on our ability to monitor compliance is minimal. Nonetheless, varying import and export
requirements may have an indirect effect on compliance. Differences in the way countries define who
is the importer, and what constitutes an import may cause misunderstandings
among the regulated community, thereby creating unintentional violations of the
U.S. regulation. The Parties of the
Protocol do, however, strive to avoid this ambiguity, and achieve consistent
implementation where plausible.
For example, countries have varied in their interpretation
of whether used and recycled CFCs and halons should be counted for
exports. The U.S. in the 1988 final
rule for Protection of Stratospheric Ozone did not allow exporters of used or
recycled controlled substances to claim credit for those exports. However, during the 1989 Protocol meeting in
Helsinki, Parties agreed that trade of recycled or used controlled substances
should be included in the consumption calculation. Therefore, EPA is revising its rule to ensure the international
consistency of this provision.
The effect of other nations' enforcement programs on the
success of the Protocol overall depends on the complexity of each nation's
control measures, and how readily they are enforced. Many nations will be able to achieve the initial freeze on CFC
production and consumption by limiting use of CFCs as propellants in aerosols;
an action taken by the United States in 1977.
Since a ban on CFC use in aerosols is straightforward to implement, and
will allow many countries to come well within their 1986 levels of production
and consumption, these countries are likely to achieve compliance with the
Protocol's initial control measures.
Through periodic meetings of the Parties to the Protocol, and the
worldwide effort to limit use of ozone-depleting substances, reduction of CFCs
and halons to the levels required by the Protocol will likely be achieved.
CONCLUSION
In summary, the Montreal Protocol is a comprehensive
agreement for addressing the global threat of stratospheric ozone
depletion. The Protocol establishes a
framework of production, import, and export restrictions, to achieve worldwide
reductions in ozone-depleting chemicals.
The Protocol gives nations discretion as to how best meet those
restrictions, and requires annual reporting to monitor each country's progress
in meeting the restrictions. Future revisions
to the Protocol may necessitate that countries revise their own regulations and
policies regarding the control of ozone-depleting chemicals.
The
U.S. has initially chosen to implement the Protocol through adjustable caps on
production and importation. The
Environmental Protection Agency will enforce and monitor compliance with these
caps through: annual inspections of producer and importer records, review of
quarterly compliance reports, and comparison of quarterly reports with Census
and Customs data. The U.S. compliance
monitoring strategy should enable quick identification of violators, which,
combined with clearly defined limitations and strong enforcement provisions,
will minimize noncompliance. Similar
emphasis on enforcement of the Protocol worldwide will successfully reduce the
levels of ozone-depleting chemicals, and help achieve protection of the
stratospheric ozone layer.
REFERENCES
4.
U.S.
Environmental Protection Agency, Office of Air Quality Planning and Standards,
Stationary Source Compliance Division, Compliance Monitoring Strategy for the
Stratospheric Ozone Rule, April 18, 1989.