EPA Opens Comment Period for GHG Reporting Rule with a Focus on Stationary Combustion Sources

April 29, 2009
by TODD KANTORCZYK
MGKF Special Alert

On April 10, 2009, the United States Environmental Protection Agency (EPA) published a proposed rule that would require mandatory monitoring and annual reporting of greenhouse gas (GHG) emissions by stationary sources that emit 25,000 metric tons of GHGs (measured as CO2 equivalents or "CO2e") in any year starting in 2010. The almost 300 page notice of proposed rulemaking contains detailed rules, and in many cases options, as to how sources—in particular, stationary combustion sources—are required to measure and report their annual GHG emissions. 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, any facility with fossil fuel fired combustion sources will want to pay close attention to this rule as it develops because the annual monitoring and reporting requirements have the potential to "lock in" sources for purposes of these GHG programs going forward. Comments on the proposed rule are due to EPA by June 9, 2009.

As a general matter, the GHG reporting rule, which is to be promulgated at 40 C.F.R. Part 98, requires annual reporting of GHG emissions by each facility that falls within one of three categories. Two of those categories explicitly reference facilities with stationary combustion sources. Specifically, reporting will be required by

  • Facilities that emit 25,000 CO2e or more in any calendar year starting in 2010 from any of a number of industry-specific sources when combined with GHG emissions from the facility's stationary fuel combustion sources. The specific industries include cement production, food processing, glass production, iron and steel production and landfills.
  • 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 that emit 25,000 tons per year of CO2e in any calendar year starting in 2010.

In the preamble of the proposed rule, EPA characterizes the 30 mmBTU/hour level as a presumption that will allow facilities that fall below the threshold to forego additional monitoring and/or reporting activities under the proposed rule. The preamble also estimates, however, that about 17,000 facilities with stationary combustion capacity that exceeds the 30 mmBTU/hour threshold will be required to calculate their GHG emissions to determine whether they are subject to the GHG reporting rule.

Importantly, the proposed rule excludes from the fuel combustion source category portable "emergency generators." However, the proposed definition of "emergency generator" contains provisions designed to ensure that the "emergency generator" is not used for non-emergency uses. Specifically, the equipment must be designated as an "emergency generator" in a permit, and excludes engines that serve as back-up power sources under conditions of load shedding, peak shaving, or power interruptions pursuant to an interruptible power service agreement. In addition, the proposed rule takes a "once in, always in" approach, meaning that if a facility exceeds the reporting thresholds in any calendar year starting in 2010, that facility is subject to the rule every year the rule remains in effect, even if the facility falls below the applicable thresholds in future years.

With respect to calculating CO2 emissions from stationary combustion sources, the proposed rule prescribes a four-tiered approach, with the applicable calculation method dependent upon the size of the source (heat input capacity greater or less than 250 mmBTU/hour), the fuel source (liquid, gas or solid fuel), and any emissions measurement equipment already in place (i.e., whether the facility employs continuous emission monitoring devices). The proposed rule also raises a number of other issues related to the types of data other than GHG emissions that must be reported and maintained by affected facilities with stationary combustion sources.

The recent activity in Congress on comprehensive climate change legislation and EPA's recent proposed "endangerment finding" for GHGs, which raises the prospect of EPA regulation of GHGs under the current provisions of the Clean Air Act, indicate that the likelihood of mandatory federal GHG regulation is higher than ever. At the same time, a number of states, including Pennsylvania and New Jersey, continue to consider mandatory GHG emission reduction rules. Facilities may be required, however, to report GHG emissions under EPA's proposed rule before these emission reduction rules come on line. Thus, a facility's options with respect to these potential GHG emission reduction programs may be constrained by how the facility has chosen to report its GHG emissions under the proposed reporting rule. Accordingly, facilities that are potentially subject to the EPA's GHG proposed reporting rule may wish to consider carefully its compliance options under the rule and whether it may be useful to submit comments to EPA before the June 9 deadline.

If you have any questions about EPA's proposed GHG reporting rule or about submitting comments on the proposed rule, please contact Todd D. Kantorczyk at tkantorczyk@mgkflaw.com or (484) 430-2359.