• Air
• Climate Change
• Environmental

EPA Issues Mandatory GHG Reporting Rule

Beveridge & Diamond, P.C., September 28, 2009

UPDATE:  The Mandatory Greenhouse Reporting Rule was published in the Federal Register on October 30, 2009.  For a copy of the final rule, click here. 

On Tuesday, September 22, 2009, the U.S. Environmental Protection Agency (“EPA”) announced the issuance of a final rule establishing the first comprehensive national system for reporting emissions of carbon dioxide and other greenhouse gases (“GHG”) produced by major emission sources in the United States.  In press releases accompanying the announcement, EPA stated that the “new reporting system will provide a better understanding of where GHGs are coming from and will guide development of the best possible policies and programs to reduce emissions” and that “[t]his comprehensive, nationwide emissions data will help in the fight against climate change.”[i] 

Under the final rule, facilities with production processes that fall into certain industrial source categories such as petroleum refiners and petrochemical companies, suppliers of fossil fuels or industrial greenhouse gases, manufacturers of vehicles and engines outside of the light-duty sector, and facilities that contain boilers and process heaters with an aggregate combustion unit capacity of at least 30 mmBtu/hr and emit 25,000 or more metric tons per year of CO₂e (CO₂ or another GHG equivalent in global warming potential) will be required to submit annual GHG emission reports to EPA.  

The rule directs reporting facilities to begin collecting data on January 1, 2010, and to submit their first annual reports for calendar year 2010 by March 31, 2011.  The gases covered by the  rule are the same as those covered under the United Nations Framework Convention on Climate Change (UNFCCC):  carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), hydrofluorocarbons (HFC), perfluorocarbons (PFC), and sulfur hexafluoride (SF₆).  In addition, the rule requires reporting of certain other fluorinated gases including nitrogen trifluoride (NF₃) and hydrofluorinated ethers (HFE).  Vehicle and engine manufacturers will report CO₂ for all mobile source categories outside of the light-duty sector beginning with model year 2011 and other GHGs in subsequent model years.[ii]

EPA issued the final rule in response to direction from Congress in the Fiscal Year 2008 Consolidated Appropriations Act (H.R. 2764; Public Law 110-161).  The Act tasked EPA with instituting mandatory reporting of GHGs using the Agency’s existing authority under the Clean Air Act.

The final rule has not yet been published in the Federal Register, but once published, it will be effective 60 days later.  A pre-publication copy of the final rule and supporting information is available at http://www.epa.gov/climatechange/emissions/ghgrulemaking.html.  Below, we discuss who is affected and what information must be reported, followed by an analysis of changes EPA made from the proposed rule.

Who is affected?

The final rule establishes four categories under which a facility or company will be subject to GHG reporting requirements.  Under the first category are facilities that include any of the following source categories onsite.  These facilities will be required to report annual GHG emissions facility-wide and, except where noted, regardless of the amount of GHG they emit:

• Adipic acid production
• Aluminum production
• Ammonia manufacturing
• Cement production
• Electricity generating facilities that are subject to the Acid Rain Program under the Clean Air Act
• HCFC-22 Production
• HFC-23 Destruction facilities that are not collocated with a HCFC-22 production facility and that destroy more than 2.14 metric tons of HFC-23 per year.
• Lime manufacturing
• Manure management systems with combined CH₄ and N₂O emissions in amounts equivalent to 25,000 metric tons CO₂e or more per year
• Municipal landfills that generate CH₄ in amounts equivalent to 25,000 metric tons CO₂e or more per year
• Nitric acid production
• Petrochemical production
• Petroleum refineries
• Phosphoric acid production
• Silicon carbide production
• Soda ash manufacturing
• Titanium dioxide production

A second category of facilities would also be subject to facility-wide reporting, but only if the combined total emissions from the following source categories at the site, plus emissions from the facility’s stationary fuel combustion units and miscellaneous uses of carbonate, meet or exceed 25,000 metric tons of CO₂e in any calendar year starting in 2010.  (Note that 25,000 metric tons of CO₂e is a relatively small amount, roughly equal to the annual emissions of 4,500 cars or a medium-sized industrial boiler.)

• Ferroalloy production
• Glass production
• Hydrogen production
• Iron and steel production
• Lead production
• Pulp and paper manufacturing
• Zinc production

The third category of facilities subject to reporting includes any facility not encompassed in the above categories and that (1) has stationary fuel combustion units[iii] with an aggregate maximum rated heat input capacity of 30 mmBtu/hr or greater, and (2) emits 25,000 metric tons CO₂e or more in any calendar year starting in 2010 from all stationary fuel combustion sources.  The term “facility” is defined broadly in the rule, and includes any physical property, plant, building, structure, source or stationary equipment that (i) is located on one or more contiguous or adjacent properties in actual physical contact or separated solely by a public roadway or other public right-of-way, (ii) is under common ownership or common control, and (iii) emits, or may emit, any greenhouse gas.  For the third category of reporting facilities, only GHG emissions from the stationary fuel combustion sources will have to be monitored and reported. 

In addition to the above three categories of facilities subject to reporting of direct GHG emissions, the final rule also creates a fourth category aimed at suppliers of fossil fuels (suppliers of coal-based liquid fuels, petroleum products, natural gas, and natural gas liquids) and industrial GHGs (fluorinated gases, nitrous oxide, carbon dioxide).  This “supplier” category encompasses producers, importers, and exporters.  Suppliers will have to report on the amount of fuel or quantities of each gas supplied into the economy each year and the emissions associated with their complete oxidation or release.  

What information must be reported?

How and what GHG data a facility or supplier must submit varies by source category.  EPA has established a section in the final rule for each source category listed above. A single facility may be subject to more than one category for reporting purposes.  For example, a typical petroleum refinery would be subject to the reporting requirements of several source categories in addition to the general petroleum refinery category, e.g., general combustion units, hydrogen production, and suppliers of petroleum products.  While the methods for monitoring GHG emissions vary by source category, in general, facilities already equipped with CEMS for other pollutants will have to use CEMS for purposes of GHG reporting.

How does the Final Rule differ from the Proposed Rule?

EPA received approximately 16,800 written comments on the proposed rule during the public comment period.  Among the comments EPA declined to incorporate were requests to: extend the proposed 2010 start date, adjust the March 31 annual reporting deadline, modify the thresholds triggering reporting, include a de minimis cutoff, eliminate alleged duplicative reporting in some sectors by both downstream and upstream sources, simplify calculation methods into a general monitoring approach, or modify the verification method.  However, EPA  made the following key changes from the proposal:

• Listed Source Categories:  EPA excluded the following eleven source categories originally listed in the proposed rule from reporting requirements.:  electronics manufacturing, ethanol production, fluorinated GHG production,[iv] food processing, magnesium production, oil and natural gas systems, SF₆ from electrical equipment, underground coal mines, industrial land fills, wastewater treatment, and suppliers of coal.  EPA stated that it plans to carefully review public comments and other relevant information as it considers next steps for these source categories.
• “Once In, Always In”:  EPA added a mechanism for facilities to cease annual reporting by reducing their GHG emissions.  A facility may cease reporting after five consecutive years of emissions below 25,000 metric tons CO₂e/year; cease reporting after three consecutive years of emissions below 15,000 metric tons CO₂e/year; or cease reporting if the GHG-emitting processes or operations are shut down.  Under EPA’s proposed rule, once a facility was subject to GHG reporting, it would continue to submit annual reports even if it fell below the reporting thresholds in future years. 
• Implementation of Monitoring Methods:  Because the final rule will go into effect less than three months before monitoring of emissions begins on January 1, 2010, EPA will allow the use of best available data in lieu of the required monitoring methods for January through March 2010.  Facilities must still use the calculation methodologies and equations in the “Calculating GHG Emissions” sections of each relevant subpart of the rule, but may use the best available monitoring method for any parameter for which it is not reasonably feasible to acquire, install, and operate a required piece of monitoring equipment by January 1, 2010.  Facilities may request that this deadline be extended beyond March, 2010 by submitting a request no later than 30 days after the effective date of the rule, but EPA will not approve any requests for an extension beyond 2010.  EPA states that it is requiring reporting of calendar year 2010 emissions because the data are crucial to the timely development of future GHG policy and regulatory programs.
• Confidential Business Information (CBI):  EPA plans to go through a notice and comment process to establish those data elements in the reporting of GHG emissions that are “emissions data” and therefore will not be afforded the protections of CBI.  As part of that process, EPA may identify classes of information that are CBI.  EPA plans to initiate this effort later this year, or in early 2010.
• Designated Representative:  EPA revised the requirements associated with the “designated representative” who must sign the annual GHG emissions reports.  Specifically, the final rule provides that owners and operators may choose any individual, employee, or non-employee to be the designated representative, and clarifies that each facility and each supplier must identify one and only one designated representative who is responsible for certifying, signing, and submitting all submissions to EPA.  Each covered facility or supplier may also identify one alternate designated representative to act in lieu of the designated representative.  A designated representative or alternate designated representative may also delegate the submission of information to one or more “agents.”  The agent can make electronic submissions to EPA, but is not allowed to certify or sign a submission.  The final rule does not specify who must prepare reports, but does specify who must certify, sign, and submit them. 
• Certificate of Representation:  The final rule provides that a designated representative must submit a certificate of representation that identifies the owners and operators of the facility or supplier, the designated representative, any alternate designated representative, and other required information.  EPA notes that the electronic data reporting system will provide the means to electronically submit both the initial and any subsequent certificate of representation.  Certificates of representation are due at least 60 days before the deadline for the initial GHG report, and the final rule allows facilities up to 90 days to submit a revised certificate of representation when a change in owners or operators occurs.
• Facilities Required to Correct Errors in Reports:  EPA added a provision that requires facilities to submit a revised annual GHG report within 45 days of discovering or being notified by EPA of errors in an annual GHG report.
• Records Retention:  In order to reduce the recordkeeping burden, EPA changed the general records retention period from five years to three years.
• Monitoring :  EPA added to the rule’s General Provisions an accuracy specification of plus or minus five percent for the calibration of flow meters used to collect data for emissions calculations.  In some cases, EPA also modified the specific monitoring methods for a source category based on public comments (e.g., clarification of when Continuous Emissions Monitors (CEMS) and CEMS upgrades are required.)
• Potential for Duplicative Reporting:  EPA clarified that facilities subject to one of the source category subparts and also to the general stationary fuel combustion subpart should report stationary fuel combustion emissions under the stationary fuel combustion subpart only (40 CFR part 98, subpart C), and report process GHG emissions under the respective source category subparts.
• Recordkeeping:  EPA clarified the contents of the monitoring plan, and noted that the plan can rely on references to existing corporate documents.  The final rule also contains a provision for updating the monitoring plan.
• Exemptions:  EPA revised the final rule to exclude research and development activities from reporting.
• Monitoring Equipment:  In several source category subparts, EPA added monitoring options, changed monitoring locations, or allowed engineering calculations to reduce the need for installing new monitors.
• Sampling Frequency:  For fuel combustion and some other source categories, EPA reduced the required frequency for sampling and analysis.
• Verification:  In several source category subparts, EPA required more data to be reported rather than kept as records to allow EPA to verify reported emissions.
• Combustion Sources:  The final rule added exemptions for unconventional fuels, flares, hazardous wastes, and emergency equipment, thereby reducing the need for mass flow monitors for some units or fuels. The final rule also allows more facilities to aggregate reporting of emissions from smaller units rather than report emissions for each individual unit.

How does the Final Rule affect other GHG reporting programs?

The final rule does not preempt any of the voluntary or mandatory GHG emissions reporting programs that currently exist at the federal, regional, or state level and under which many companies already report GHG emissions.  EPA’s reporting rule is in addition to these programs and, in effect, adds a new scope and level of detail to the variety of reporting programs already in place.  For example:

• Companies in the Climate Leaders program annually report corporate-wide emissions, but the final rule requires facility and process-level reporting.

• The Climate Registry’s General Reporting Protocol contains procedures for reporting emissions of the six internationally-recognized GHGs, but EPA’s final rule covers other fluorinated gases including nitrogen trifluoride (NF₃) and hydrofluorinated ethers (HFE).

• At least seventeen states have developed or are in the process of developing mandatory GHG reporting rules, and these rules differ with regard to the type of facilities that must report (e.g., Title V, large Electricity Generating Units, or threshold emitters), the gases reported (e.g., all six internationally recognized GHGs, or CO₂ only), and the level of specificity regarding GHG monitoring and calculation methods (e.g., CEMS or AP-42).

Can the Final Rule be challenged?

Under section 307(b)(1) of the Clean Air Act, a challenge to the rule must be made through a petition for review in the U.S. Court of Appeals for the District of Columbia Circuit within 60 days after the rule is published in the Federal Register.  Any petition must be based on an objection to the final rule that was raised with reasonable specificity during the public comment period.  For issues in the final rule on which it was impracticable to raise objections during the public comment period or if the grounds for an objection arose after the public comment period, one may consider filing an administrative petition for reconsideration.  A petition for reconsideration must set forth why any objection is of central relevance to the outcome of the final rule and must occur within the time specified for judicial review, but it will not affect the finality of such rule nor extend the time within which a petition for judicial review may be filed.  Considering the number of source categories covered, the sheer volume of comments filed, and the short time EPA had to digest and respond to comments, it is likely that some companies will feel that EPA has not responded appropriately to their comments.  EPA responses to comments received on the proposed rule are available at http://www.epa.gov/climatechange/emissions/responses.html.

What resources has EPA made available to assist with implementing the Final Rule?

EPA has developed information sheets for each sector, made a variety of guidance documents available on its website, http://www.epa.gov/climatechange/emissions/ghgrulemaking.html, and will host a number of in-person and internet-based training sessions for people involved with reporting under the final rule.  EPA is also operating a hotline (1-877-GHG-1188 or email GHGMRR@epa.gov) for general and administrative questions about the rule.  Finally, EPA has designed an “Applicability Tool” and other guidance to help companies assess whether they are subject to the rule.  See EPA Applicability Tool, http://www.epa.gov/climatechange/emissions/GHG-calculator/index.html.   

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The impact and implementation of this rule will vary considerably depending on the industry sector and even the characteristics of a particular facility.  Experience with analogous reporting requirements under the Clean Air Act and related climate change programs will help to ensure timely and effective compliance.  Please contact us if we can assist you in evaluating challenges to or your compliance with the rule.

For more information or if you have any questions, please contact David Friedland at dfriedland@bdlaw.com, (202) 789-6047; Russ LaMotte at rlamotte@bdlaw.com, (202) 789-6080; Tom Richichi at trichichi@bdlaw.com, (202) 789-6026; or Stephen Richmond at srichmond@bdlaw.com, (781) 416-5710. 

[i] EPA Final Mandatory Reporting of Greenhouse Gases Rule, http://www.epa.gov/climatechange/emissions/ghgrulemaking.html (last visited Sept. 24, 2009).

[ii] For aircraft engine manufacturers, the reporting requirements will apply to the engine models in production in 2011.

[iii] The term “stationary fuel combustion devices” is defined to include boilers and process heaters, and exclude, for example, portable equipment and emergency generators.

[iv] Note that only fluorinated gas production is excluded from the rule at this time; suppliers of fluorinated GHGs must report.