On September 22, 2009 the United States Environmental Protection Agency (“EPA”) released its final rule mandating greenhouse gas (“GHG”) monitoring and reporting. Under the new reporting system, EPA will, for the first time, require large emitters of heat-trapping emissions to begin collecting GHG data. The new program will cover approximately 85% of the nation’s GHG emissions and approximately 10,000 facilities in all sectors of the economy. The new rule, which goes into effect January 1, 2010, requires annual reporting of GHG emissions over defined “threshold levels.” Current estimates published by EPA place the cost to the private sector of compliance with the rule at $115 million in the first year and $72 million in subsequent years. The rule will provide EPA with a better understanding of where GHGs are originating and will be used to guide the development of “best possible” policies and programs to reduce emissions. The data will also allow businesses to track their own emissions, compare them to similar facilities, and provide assistance in identifying cost effective ways to reduce emissions in the future.
EPA’s new rule was published in response to a congressional mandate contained in the fiscal year 2008 Consolidated Appropriations Act, which directed EPA to issue regulations for “mandatory reporting of greenhouse gas emissions above appropriate thresholds in all sectors of the economy.” See Pub. L. No. 110-161, 121 stat. 1844, 2128 (2008). EPA’s authority to issue the rule is derived from its existing Clean Air Act (“CAA”) authority. Though the current rule does not require controls or limits on greenhouse gas emissions, EPA has several programs for GHG controls in the CAA regulatory pipeline. Further, it is speculated that Congress may enact new global climate legislation in the near future. The inventory of GHG emission data collected by this new rule will serve as the foundation for the nation’s climate control programs, whether based on regulations under the existing CAA, or new legislation.
The first annual reports will be due on March 31, 2011. The reporting requirements generally apply to facilities within one of 31 source categories that emit at least 25,000 metric tons of carbon dioxide equivalent (“CO2e”) per year. Twenty-five thousand metric tons of CO2e is estimated by EPA to be equivalent to the annual GHG emissions from the energy use of approximately 2,300 homes or 4,600 passenger vehicles. The 25,000 ton threshold applies to cumulative emissions for the calendar year. Thus, if there is a possibility that a facility may meet or exceed a threshold by the end of the year, it will need to collect data beginning January 1, 2010. Most commercial buildings and small businesses are expected to be below the threshold.
In response to significant objections, EPA has stressed that the final rule will not cover agricultural facilities, unless there are livestock operations with manure management systems. Additionally, EPA is not requiring mobile sources, including fleet operators and vehicle owners, to report at this time because such emissions will be covered by reports from fuel suppliers and engine manufacturers. Other significant provisions include those allowing exit from the program upon reduction of GHG emissions below certain thresholds. Specifically, if a facility decreases its emissions below 25,000 metric tons of CO2e per year for five years in a row, or decreases its emissions below 15,000 metric tons of CO2e per year for three years in a row, the facility can apply to exit the program.
EPA has added a provision to the final rule allowing for the use of “best available monitoring methods” through March 31, 2010. After that time, facilities must comply with the monitoring methods specified in the regulations. Records must be kept and maintained for three years. Third-party verification of the data is not required; however, reporters are required to self-certify using a designated representative.
The CAA provides EPA with authority to take enforcement action for noncompliance with the new rule. EPA has indicated that it will consider the following to be violations: failure to report, failure to collect data needed to calculate emissions, failure to continuously monitor and test as required, failure to retain records, and failure to calculate emissions using the methodologies specified in the regulations.
While the new rule does not impose any emissions limitations on facilities that emit GHGs, it is widely acknowledged that the monitoring and recordkeeping requirements are the precursor to subsequent rules that will attempt to limit GHG emissions. The facilities that are subject to, or potentially subject to the new rule will need to consider carefully their options. which may include voluntarily reducing GHG emissions to avoid falling under the purview of the new rule.
If you have questions about the applicability of the new rule to your facility, or any of the requirements of the new rule, please contact Stephen O’Day at 404-815-3527 or firstname.lastname@example.org or Phillip Hoover at 404-815-3769 or email@example.com.