EPA Finalizes Mandatory GHG Reporting Rule

December 8, 2009
by TODD KANTORCZYK
Client Alert Newsletter December 2009

At the end of September, the U.S. Environmental Protection Agency ("EPA") finalized its mandatory greenhouse gas ("GHG") reporting rule, which, among other things, requires stationary sources that emit 25,000 metric tons of GHGs (measured as CO2 carbon dioxide equivalents or "CO2e") per year to begin monitoring GHG emissions starting January 1, 2010, and to report these emissions and other operational information to EPA annually. The rule and preamble, which spans over 250 pages in the Federal Register, includes detailed requirements, and in some cases options, for sources to measure and report their annual GHG emissions. While the first GHG emissions report is not due until March 2011, the EPA's GHG reporting rule sets a number of fast-approaching compliance deadlines that facilities that are, or may be, subject to the rule will be required to observe over the next two quarters.

As a general matter, the GHG reporting rule, requires annual reporting of stationary source GHG emissions by each facility that falls within one of the following three categories:

  • Facilities that contain any specifically identified source categories, such as electric generating facilities subject to the Acid Rain program, aluminum production facilities and petroleum refineries, that EPA believes emit greater than 25,000 tons per year CO2e as part of normal operations;
  • Facilities that emit 25,000 tons per year CO2e or more from stationary fuel combustion sources and any of a number of industry-specific sources in any calendar year starting in 2010. Such sources include cement production, food processing, glass production, iron and steel production and landfills; and
  • Facilities that do not include one of the listed sources, but that include stationary fuel combustion sources with an aggregate maximum rated heat input capacity of 30 mmBTU/hour or greater and emit 25,000 tons per year of CO2e in any calendar year starting in 2010.

In the preamble of the proposed rule, EPA states that facilities that fall below the 30 mmBTU/hour level will not be required to engage in monitoring and/or reporting activities under the rule. The final rule also notes, however, that facilities with an aggregate stationary combustion capacity that exceeds the 30 mmBTU/hour threshold will be required to calculate their annual GHG emissions starting on January 1, 2010, in accordance with the final rule to determine whether they are required to report their annual GHG emissions.

The final GHG reporting rule is relatively prescriptive with respect to how subject facilities must measure their GHG emissions from enumerated sources. In light of the rule’s issuance date, the final rule allows facilities to use "best available data" for purposes of measuring GHG emissions through March 2010, in lieu of the methods listed in the reporting rule. Facilities can request to use best available data for the balance of 2010, but such requests must be submitted before January 28, 2010, and EPA has indicated they will be reluctant to grant such requests. The final rule also requires subject facilities to develop a GHG monitoring plan that at a minimum identifies persons responsible for the collection of GHG data, an explanation of the processes and methods used to collect data, and a description of the methods used for QA/QC, maintenance and the repair of instrumentation. Because the GHG reporting rule only allows for best available data to be used through March 2010, these GHG monitoring plans are, in effect, required to be in place by April 1, 2010.

There are a number of other exceptions and issues described over the thousands of pages of supporting materials associated with the GHG reporting rule, including, among others, GHG calculation methods for different types of combustion sources, when emergency generators can be excluded, what constitutes a "facility" for reporting purposes, the types of operational data (some of which may include confidential business information) and when a facility can opt out if emissions fall below 25,000 tons per year of CO2e in future years. The nature of these potential exceptions and other issues associated with EPA's final GHG reporting rule underscore the need to obtain and maintain the right operational records. Moreover, with the prospect of federal climate change legislation and EPA GHG regulations on the horizon, as well as ongoing state activity in the climate change area (including proposed state specific GHG action plans and reporting rules in Pennsylvania and New Jersey), strategic calls on these monitoring and reporting issues carry added significance because any annual GHG emission reports have the potential to "lock in" sources for purposes of these GHG programs going forward.