Review of Nominations for Critical Uses – Methyl Bromide

Agenda Item 8(a) Review of Nominations for Critical Uses -- Methyl Bromide

For the past several years, my delegation was unable to release to the public or to other Parties information on the amount of our stockpile of methyl bromide. This was because several companies had taken the Environmental Protection Agency (EPA) to Federal court in the United States to prevent EPA from releasing this information; in the view of those companies, even the aggregate number was considered "business confidential information" because of the small number of manufacturers. This past August, the companies withdrew their lawsuit, and EPA subsequently released the information for 2003 to the public.

At the same time, EPA also released comparable data for 2004 and 2005; as you know, data for 2006 are not yet available. These numbers show that the U.S. stockpile was some 63 percent of baseline in 2003, that it declined to 50 percent of baseline in 2004 and that it declined further to 39 percent of baseline in 2005. It is still lower than this amount today. Even with this decline of more than one third since 2003, some have expressed surprise at how large the stockpile still is.

It is important to point out to them, however, that at the current rate of drawdown the United States will exhaust its stockpile completely by 2009. This presents a problem for us but likely for others as well. While much progress has been made in reducing the amount of methyl bromide used in agriculture, it is well-know and accepted that there are some uses for which there are as yet no substitutes that are technically and economically feasible.

And although it is the purpose of the Protocol to reduce and eliminate all non-critical and non-essential uses of ozone depleting substances, it is not the purpose of the Protocol -- and it thus cannot be the intention of the Parties -- to eliminate all uses of a substance for which no alternatives yet exist. This was not the intention of the Parties in taking decision IX/6.

While Parties may annually propose critical use exemptions, the significant lead times required to put in place the decisions of the Parties make it essential in some cases to propose critical use exemptions a year ahead of the year in which the amount is needed -- this is the situation in the United States, for example.

And just as sufficient lead time is vital to put in place decisions of the Parties, so an adequate stockpile is vital to ensure that farmers who have no alternative to methyl bromide have access to it on a timely basis so that their work and their livelihoods are not disrupted.

The reasons for an adequate stockpile are well known, and the Parties have dealt with this issue before in the case of metered dose inhalers (MDIs).

Allow me briefly to recite some of the key reasons for an adequate stockpile:

1. Amounts are needed in the supply chain to ensure the smooth and timely distribution of material. Our experts have estimated that as much as a three-month to four-month supply is needed for this purpose.
2. Amounts are needed to supply critical use demands for non-Article 5 Parties and consumption from Article 5 Parties -- in 2005, U.S. inventories were used for both purposes.
3. Amounts are needed to serve as a "safety net" in the event of a catastrophic event -- for example, if widespread re-fumigation is required after a natural disaster -- as was the case in the southeastern part of the United States after a severe hurricane.
4. Amounts are also needed because, as the United States is one of the few global manufacturers of methyl bromide, reserves are necessary to ensure continued supplies in the event of a major plant failure.

These are all examples of prudent, responsible chemical management, taking into account the concerns of countries across the globe. While the need for an adequate stockpile has been addressed in the case of CFCs for metered dose inhalers, the Parties have not yet done so in the case of methyl bromide. Now that the U.S. data are available, we are in a position to begin this discussion and we look forward to considering this issue at this meeting.

In fact, it is vital that we reach such a decision now because on it hinges this year's decision with respect to the U.S. 2008 proposal for a critical use exemption for methyl bromide -- without some understanding among the Parties of what constitutes an adequate stockpile, it will be impossible to determine how much of the U.S. critical use exemption should come from new production, and how much from existing stocks.

In the absence of agreement on the size of an adequate stockpile, we will have no choice but to insist that the entire critical use exemption come from new production, in light of our concern about the rapid decline in U.S. stocks. Nevertheless, as the United States has done in the past three years, we would conduct a domestic review in our licensing to ascertain whether stocks could be used to meet some of our critical need.

Methyl Bromide Technical Options Committee Report

But there is another issue with which we must also deal, and it arises because, having phased out methyl bromide in non-Article 5 countries as of January 1, 2005, we are now in a world of critical use exemptions -- which were accepted long ago as vital to the phase out. The United States submitted a CUE nomination for 2008 that totaled about 25 percent of its baseline in 1991. This request was 42 percent less than our original CUE request just a few short years ago -- for 2005.

I note this 42 percent decline to demonstrate as clearly as possible how our use of methyl bromide has shrunk in recent years and to emphasize the progress we are making in seeking to reduce our use of methyl bromide still further. Still, I must emphasize once again that today there are no known alternatives to methyl bromide for a number of agricultural uses, and absent alternatives, we are likely to need critical use exemptions for some time to come.

It is important that the Parties recognize this -- and that they make clear to those who would advocate a complete near-term phase out that this not only is this impossible but it is also inconsistent with the Montreal Protocol's agreed approach to phasing out methyl bromide, which allows for certain exemptions in cases where no technically and economically feasible alternatives are available.

Notwithstanding our reduced nomination, the Methyl Bromide Technical Options Committee (MBTOC) decided to recommend an amount that is radically less than the amount requested -- the MBTOC recommendation is fully one-third less, amounting to only 17 percent of the U.S. baseline.

Why this discrepancy? Because the MBTOC has chosen to substitute its judgment for that of the nominating Party in terms of both the amount needed and the rate at which that Party is able to transition. This is not what the Parties, all of us, have asked the MBTOC to do -- the MBTOC has not followed the decision taken by the Parties in our efforts on 'MBTOC revitalization.'

In saying so, let me underscore that we hold the MBTOC and its hardworking members in high esteem. These individuals toil long hours in the service of the Parties and must deal with a great deal of information in a relatively short time period and seek to understand the complex and widely varying situations of Parties throughout the world Theirs is a difficult task and their sacrifices are no doubt often unsung.

But on the MBTOC and its members rests the integrity of the process, and it is therefore vital to us all that they follow the evaluation procedures agreed by the Parties and that they "get it right." Unfortunately, this year, we do not believe that the MBTOC has done so in our case. In our view, the MBTOC has not in our case followed the agreed procedures for evaluation adopted by the Parties in Decision XVI/4. In challenging MBTOC's recommendation, we have three broad areas of concern having to do with: (1) usage rates, (2) availability of alternatives and economic infeasibility, and (3) transition times.

First on transparency -- MBTOC applied a number of broad, across-the-board reductions in usage rates; MBTOC justified these reductions in usage rates based on its own 'meta-analysis.'  As Parties may recall, my delegation publicly asked MBTOC at the Open-Ended Working Group in early July for information related to the statistical analysis, starting points for the model, the raw data, inclusion criteria, reasons for design, and references. We followed up our request in writing at the meeting. Unfortunately, MBTOC provided reference information only two weeks ago. Even more unfortunate, MBTOC has provided none of the other information we requested -- in contradiction to the requirement that MBTOC make its recommendations in a transparent form. Consequently we are unable to assess the conclusions of the meta-analysis to determine whether the reductions in usage rates that MBTOC would impose can be justified.

Second, MBTOC did not follow its procedures -- MBTOC denied two U.S. nominations in a manner inconsistent with the Parties' decision on MBTOC revitalization. In one case, paragraph 25 of the decision provides that MBTOC should recommend a CUE if an alternative product is subject to local or national regulatory restrictions -- but MBTOC zeroed out our request. MBTOC did so even though local township caps prevent, in many instances, the use of the alternatives it cites. In the second case, we have based our nomination on economic infeasibility but MBTOC did not acknowledge or explain how it addresses this factor, as called for in paragraph 20 of Decision XVI/4 -- yet MBTOC still denied this nomination.

Third, MBTOC did not consider the individual circumstances -- MBTOC applied across-the-board 25 percent cuts for market penetration of alternatives on top of the 4 to 8 percent transition rate already imposed by the United States in its nomination. MBTOC argues that this rate of adoption was achieved in three other countries, but in fact it is higher than that for any country in the world.

1. The revitalization decision (paragraph 36) specifies that MBTOC must use a case-by-case approach -- MBTOC failed to do this even though we provided information substantiating that circumstances in the Southeast United States are different from those in the other countries under discussion.
2. The revitalization decision (paragraph 35) calls on MBTOC to explain fully the time period for market penetration, and take fully into account information provided by Parties. Moreover, it states that relevant factors for such a calculation include the number of enterprises that need to transition, estimated training time, opportunities for importing alternative equipment, and costs involved. The MBTOC report addresses none of these factors that were previously agreed by the Parties.

In this regard, I wish to call the attention of the Parties to the minority statement that appears on pages 27 and 28 of the Report of the Technical and Economic Assessment Panel from September 2006. The minority urges that the MBTOC should defer to transition times submitted by Parties and not impose different transition times. If MBTOC wishes to impose different transition times, they must be substantiated in the manner I have described. MBTOC did not do so.

The minority notes that "...in deciding MBTOC's recommendation for these U.S. critical use nominations MBTOC did not fully consider the specific circumstances of these four nominations." For all of these reasons, and supported by the minority report, we firmly disagree with the MBTOC recommendation, and believe that MBTOC did not follow the procedures agreed by the Parties in Decision XVI/4. We therefore request that the full amount of our revised request be approved by the Parties.

Note that I mention our revised request -- in the interest of transparency and in the spirit of our own desire to limit our critical use exemption request to the minimum necessary, we have given careful consideration to the MBTOC recommendations. This has led us to revise our nomination downward, from 25 percent of baseline to 23 percent for 2008.

We will be happy to provide the details of our revised request to the MBTOC and also to the Parties in the course of our meeting here in New Delhi. Mr. Co-Chairman, it is vital to the integrity of this treaty and our process that we "get it right." While this may be a matter of particular concern to non-Article 5 Parties today, it will soon be a concern to Article 5 Parties as well.

Thank you, Mr. Co-Chairman.