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EPA Looks to Expand Mandatory GHG Emissions Reporting Program

Beveridge & Diamond, P.C., May 7, 2010

The Mandatory Greenhouse Gas (“GHG”) Reporting Program is less than a year old, and already the United States Environmental Protection Agency (“EPA” or the “Agency”) is looking to expand the program’s scope.  Four proposed amendments published on April 12, 2010, would add to the information already being reported under the program and bring new facilities within the program’s purview.  Specifically, annual reports submitted under the program would have to include information on the reporting entity’s U.S. parent company(ies), applicable North American Industry Classification System (“NAICS”) codes, and whether any of the GHG emissions being reported are from cogeneration (i.e., producing both electric and useful thermal energy) activities.  See 75 Fed. Reg. 18455 (April 12, 2010).  New source categories proposed to be added to the program include electronics manufacturing, fluorinated gas production, the injection and sequestration of carbon dioxide, and certain segments of the petroleum and natural gas industries.  See 75 Fed. Reg. 18652; 18576; 18608 (April 12, 2010). 

In addition to the April 12 proposals, the Agency has sent a draft final rule to the White House that would add four more source categories to the program: industrial landfills, wastewater treatment facilities, underground coal mines, and magnesium production.  The proposals and draft rule are discussed in more detail below.    

I.          Proposed new reporting requirements.

The additional reporting requirements proposed April 12 would apply to all facilities meeting the applicability criteria of the GHG emissions reporting program (found at 40 CFR part 98, subpart A), and would require facilities to submit the following information as part of their annual GHG emissions reports: (1) the name, address, and ownership status of U.S. parent company(ies)[1]; (2) primary and other applicable NAICS code(s); and (3) whether any reported GHG emissions are from cogeneration units.  See 75 Fed. Reg. at 18457-64. 

According to EPA’s statements in the proposed rulemaking, the parent company and NAICS information will assist the Agency in aggregating comprehensive corporate-level and sector-level GHG emissions, id. at 18461-62, while information on cogeneration units is intended to assist in the development of future GHG-mitigation strategies.  Id. at 18463.

A complete copy of the proposed rule amendment as published in the Federal Register on April 12, 2010, is available here.  Comments on the proposal are due June 11, 2010.

II.        Proposed mandatory GHG reporting for additional source categories.

A.  Five source categories re-proposed for inclusion in the reporting program.

A second proposed rulemaking issued April 12 proposes to add five more source categories to the GHG reporting program: electronics manufacturing; production of fluorinated gases; use of electrical transmission and distribution equipment; manufacture or refurbishment of electrical equipment; and import and export of pre-charged equipment and closed cell foams.  See 75 Fed. Reg. at 18652.  All five of these categories were part of EPA’s original GHG reporting program, as it was proposed in April, 2009, but were among several categories EPA elected not to include when finalizing the reporting program in October, 2009 based on concerns raised in public comments about costs and technical feasibility.  Id. at 18654; see 74 Fed. Reg. 16448 (April 10, 2009). 

The re-proposal includes changes to the categories’ scope and applicable requirements designed to address these concerns.  For example, based on public comments, EPA has proposed to clarify the affected source category for electric power transmission and distribution system equipment by defining a “facility” in this category as an “electric power system.”  75 Fed. Reg. at 18681.  “Electric power system” would be defined as the collection of SF6- and PFC-insulted equipment that is linked through electric power transmission or distribution lines and operated as an integrated unit by one entity.  SF6- and PFC-insulted equipment includes gas-insulated substations, circuit breakers and other switchgear, gas-insulated lines, and power transformers containing SF6 and PFCs.  Equipment also includes gas containers such as pressurized cylinders, gas carts, new equipment owned but not yet installed, or other containers.  Id.  EPA is soliciting comments on further clarification of “facility” in this context and whether the Agency should incorporate the definition of a transmission/distribution entity used by the Regional Greenhouse Gas Initiative (“RGGI”).  Id. at 18681. 

With respect to electronics manufacturing facilities (e.g., facilities that manufacture semiconductors, liquid crystal displays, micro-electro-mechanical systems, and photovoltaic cells (“PV” cells)), the Agency has proposed new methods for estimating facility emissions and for reporting controlled emissions from abatement systems.  See id. at 18655-69.  Facilities under the electronics manufacturing subpart would have to report annual emissions from the production and transformation of fluorinated gas and destruction of fluorinated GHGs.  Id. at 18670.  EPA seeks comments on whether it should require reporting processes where GHGs are generated as by-products or intermediaries, and where fluorinated gas transformation is not co-located with fluorinated gas production facilities.  Id.

For importers and exporters of pre-charged or closed-cell foams, reporting would include the type, charge sizes, and total pieces of equipment imported or exported.  Id. at 18683.  Foam importers would further report on the volume and fluorinated GHG density of the foam imported.  Id.  EPA seeks comments on the distribution of imports and exports, and the likely coverage at the proposed 25,000 mtCO2e threshold.  Id. at 18685.

Lastly, with respect to the manufacture and refurbishment of electrical equipment, the proposal is aimed specifically at SF6 or PFC-insulated closed pressure equipment and sealed-pressure equipment, such as gas-insulated substations, circuit breakers and other switchgear, gas-insulated lines, or power transformers.  Id. at 18686.  The proposed reporting threshold is total annual purchases of SF6 and PFCs exceeding 23,000 pounds.  Id.  EPA is seeking comment on whether transformers that use PFCs are manufactured in the United States, and whether PFC emissions occur at the same rate as SF6 emissions.

Facilities in all five of these re-proposed categories would have to report emissions of fluorinated GHGs (e.g., perfluorocarbons (PFCs), hydrofluorocarbons (HFCs), sulfur hexafluoride (SF6), and nitrogen  trifluoride (NF3)).  Data collection requirements for affected facilities would begin in 2011, with the first reports due to EPA March 21, 2012.  Id. at 18655. 

A copy of the proposed rule is available here.  Comments are due June 11, 2010.

B.  Supplemental proposal to require reporting on injection and sequestration of carbon dioxide.

Another proposed amendment to the GHG reporting program would require monitoring and reporting on carbon dioxide (CO2) injection and geologic sequestration (“GS”).  See 75 Fed. Reg. at 18576.  CO2 injection facilities would be required to report CO2 transferred onsite, the source of the CO2, and CO2 injected.  Id. at 18579.  GS facilities would be required to calculate CO2 sequestered, factoring in leakages, fugitive, vented, or other CO2 emissions.  Id.  The proposal includes an amendment to the reporting programs general provisions to apply the program to CO2 injection and sequestration on and under the Outer Continental Shelf.  Id. at 18580.  EPA states in the proposal that it’s seeking information on CO2 injection and GS to aid in the Agency’s evaluation of GHG mitigation technology and relevant policy options.  Id

Comments on the proposal must be received by June 11, 2010.  A copy of the proposed rule is available here.

C.  Supplemental proposal to require GHG emissions reporting from petroleum and natural gas systems.

In the fourth proposed rule issued on April 12, 2010, EPA proposed to create 40 CFR part 98, subpart W, which would require certain facilities within the petroleum and natural gas industry to report if they emit 25,000 metric tons or more of CO2e through vented, fugitive, or flare combustion sources.  See 75 Fed. Reg. at 18610-11.  These facilities would include: offshore petroleum and natural gas production facilities; onshore petroleum and natural gas production facilities (including enhanced oil recovery); onshore natural gas processing plants; onshore natural gas transmission compression facilities; onshore natural gas storage facilities; liquefied natural gas (“LNG”) storage; LNG import and export facilities; and natural gas distribution facilities owned or operated by local distribution companies.  Id. at 18611.  The Agency proposes the use of direct GHG emissions monitoring only for the most significant sources, and where other monitoring options are unavailable.  Id.  Component count and emissions factors are proposed methodologies for smaller sources.  Id.  Data collection at these source would begin in 2011, with the first report due to EPA in 2012.  Id. at 18612.  To ease the burden on sources, EPA opted not to propose the use of best available monitoring methods for the first year of data collection, but seeks comments on that decision.  Id.  Comments are due on or before June 11, 2010.  A copy of the proposed rule is available here.

III.  Draft final rule to require four more sectors to report GHG emissions.

In addition to the proposed rulemakings published on April 12, EPA has also sent to the White House for review a draft final rule that would extend the GHG reporting program to cover four more industry source categories: industrial landfills; wastewater treatment facilities; underground coal mines; and magnesium production.  These four sectors were among the source categories originally proposed for inclusion in the program in April, 2009, but deferred when the final reporting program rule was issued later that year.  According to the summary of the rule on the White House Office of Management and Budget’s website, EPA has concluded, after review of the relevant public comments, that the four categories do not need to be re-proposed.  Rather, EPA has addressed the comments and is prepared to issue a final rulemaking incorporating the source categories into the reporting program.  The draft final rule was submitted to the White House on April 30 for final interagency review.  No publication date has been set.  The status of the rulemaking is available on www.reginfo.gov under RIN 2060-AQ03.

For additional information, please contact Stephen Richmond at srichmond@bdlaw.com, Amy Lincoln at alincoln@bdlaw.com, or Bina Reddy at breddy@bdlaw.com.


[1] Among the issues open for comment is whether EPA should require only the highest-level U.S. parent company for each facility or a list of all U.S. parent companies.  See 75 Fed. Reg. at 18457 n.3.