EPA Issues Final Greenhouse Gas Reporting Rule

September 28, 2009


On September 22, 2009, EPA released its final greenhouse gas ("GHG") reporting rule (the "Rule"), which requires approximately 10,000 facilities to begin monitoring GHG emissions on January 1, 2010, and report their emissions beginning in March 2011. The Rule, which is intended to cover approximately 85% of US GHG emissions, imposes only monitoring and reporting obligations, and does not require new control or reduction of GHG emissions. EPA received 16,800 comments on the draft rule it proposed on March 10, 2009, and made various modifications in response to those comments, including a provision allowing facilities to cease reporting if emissions drop below certain thresholds. The Rule would assist EPA in collecting the necessary GHG emissions data to facilitate implementation of a cap and trade system as proposed in the Waxman-Markey bill that passed the House this July (H.R. 2454) and is currently being considered by the Senate.

Applicability. The Rule applies to stationary source GHG emitters, fossil fuel and industrial gas suppliers, and manufacturers of heavy-duty and off-road vehicles and engines. There is a general reporting threshold of 25,000 metric tons of CO2 equivalent (CO2e) per year from facilities with stationary fuel combustion sources having an aggregate maximum heat input capacity of 30 mmBtu/hr or greater. There are also 15 specifically listed categories of emissions sources (including cement, petrochemical and aluminum production) that are required to report whether or not the 25,000 ton threshold is exceeded, and 9 categories (including iron and steel, glass, and pulp and paper production) that are also subject to a 25,000 ton threshold, but not limited to fuel combustion sources. EPA believes that most small businesses will fall below the 25,000 ton threshold.

Facilities subject to the Rule only in connection with stationary fuel combustion sources are only required to report GHG emissions from those sources. By contrast, facilities falling into one of the 24 specific categories must report GHG emissions from all source categories and GHGs for which calculation methodologies are provided in the Rule.

For fossil fuel and industrial gas suppliers, the Rule requires reporting by suppliers of coal-based liquid fuels, petroleum products, natural gas and natural gas liquids, industrial GHGs, and carbon dioxide if they supply fuels, liquids or gases with annual emissions of CO2e of 25,000 tons or more. Fossil fuel suppliers must report GHG emissions that would result from complete combustion or oxidation of products they supply. EPA recognizes that in some cases this will lead to double reporting of emissions (i.e., by a fuel supplier and user), and will require some entities to report their actual emissions as well as those associated with their products (e.g., petroleum refineries).

The Rule also requires that manufacturers of heavy-duty trucks, motorcycles, and off-road engines report CO2 emission rates for the 2011 model year and emission rates for other GHGs in subsequent model years. The Rule does not cover cars and light-duty trucks, but EPA expects to propose a comprehensive light-duty GHG emission control program commencing in model year 2012, which is likely to contain monitoring, reporting and GHG data retention requirements.

Changes to Draft Rule. The draft rule was designed as a “once in, always in” program, but as mentioned above, the Rule now includes provisions allowing facilities to cease reporting under the following circumstances: (i) after 5 consecutive years of emissions below 25,000 metric tons of CO2e per year, (ii) after 3 consecutive years of emissions below 15,000 metric tons of CO2e per year, or (iii) if GHG-emitting processes or operations are shut down.

The Rule also reduced the number of source categories that were required to report under the draft rule, eliminating 11 categories, including electronics manufacturing, ethanol production and food processing. It also excludes R&D activities from reporting.

The Rule also includes a new provision to ease the transition to GHG monitoring, allowing the use of “best available monitoring methods” in lieu of the required monitoring methods for the period January to March 2010. It also shortened the general records retention period from 5 years to 3 years.

Monitoring and Reporting. The Rule sets forth monitoring and emissions estimation methods for 29 individual source categories, and for stationary combustion sources that may not fall into one of those categories. For those combustion sources, emissions can be estimated based on fuel type by using one of three methods (designated Tier 1, 2 and 3) or by use of continuous emission monitoring systems. Annual emission reports, due on March 31, must provide the quantity of CO2, methane, nitrous oxide, and fluorinated GHGs emitted by each source category at the facility. In addition, reporters must provide certain data specified in the applicable subparts for each category, including activity data (e.g., fuel use, feedstock inputs) that were used to generate the emissions data and additional data to support QA/QC and emissions verification. Reports must be self-certified by a designated representative of the facility.

For more information about the Rule and its applicability to your operations, please contact John Rousakis at jrousakis@omm.com.