On March 10, 2009, EPA publicly released¹ its proposed rule that would require mandatory reporting of greenhouse gas (GHG) emissions from all sectors of the economy. While this proposed rule would require reporting of emissions rather than emission controls, this rule is only the first step in a broad and expensive GHG regulatory program that will affect most U.S. industries. EPA acknowledges that this mandatory reporting program would provide EPA with “economy-wide data” on GHG emissions that “is essential for informing some future climate change policy decisions.” Those future policies could include emissions standards, a carbon tax, or a cap-and-trade program.

The rule would require (i) suppliers of fossil fuels and industrial GHGs; (ii) manufacturers of vehicles and engines; (iii) facilities containing certain source categories regardless of actual emission levels; and (iv) facilities that emit 25,000 metric tons per year of carbon dioxide equivalent GHG emissions or more to calculate and report GHG emissions (or certain alternate information) to EPA on an annual basis. The GHGs subject to these reporting requirements are: carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hydrofluocarbons, perfluorochemicals, and other fluorinated gases². Once subject to a reporting requirement, a facility would be required to continue to submit reports even if it falls below the reporting threshold in future years (except for inactive coal mines).

Owners and operators would report annually at the facility level, except that certain suppliers of fossil fuels and industrial gases and vehicle and engine manufacturers would report at the corporate level. The report would contain a signed certification (that would be verified by EPA) from a representative designated by the owner or operator of a facility regulated by this rule. Failure to report GHG emissions according to the requirements of this rule could result in administrative, civil, and criminal penalties. The Clean Air Act allows for injunctive relief and penalties of up to $32,500.00 per day.

The proposed rule requires that data be collected as of January 1, 2010 and the first annual report is due by March 31, 2011.

At this time, EPA is aware that the proposed rule will affect the following industries³:

• General stationary fuel combustion sources (i.e., facilities operating boilers, process heaters, incinerators, turbines, and internal combustion engines; extractors of crude petroleum and natural gas; manufacturers of lumber and wood products; pulp and paper mills; chemical manufacturers; petroleum refineries, and manufacturers of coal products; manufacturers of rubber and miscellaneous plastic products; steel works and blast furnaces; electroplating, plating, polishing, anodizing, and coloring; manufacturers of motor vehicle parts and accessories; electric, gas, and sanitary services; health services; educational services)
• Electricity generation
• Adipic acid production
• Aluminum production
• Ammonia manufacturing
• Cement production
• Electronics manufacturing
• Ethanol production
• Ferroalloy production
• Fluorinated GHG production
• Food processing
• Glass processing
• HCFC-22 production and HFC-23 destruction
• Hydrogen production
• Iron and steel production
• Lead production
• Lime production
• Magnesium production
• Nitric acid production
• Oil and natural gas systems
• Petrochemical production
• Petroleum refineries
• Phosphoric acid production
• Pulp and paper manufacturing
• Silicon carbide production
• Soda ash manufacturing
• Sulfur hexafluoride from electrical equipment
• Titanium dioxide production
• Underground coal mines
• Zinc production
• Landfills
• Wastewater treatment
• Manure management
• Suppliers of coal and coal-based products
• Suppliers of coal-based liquid fuels
• Suppliers of petroleum products
• Suppliers of natural gas and natural gas liquids
• Suppliers of industrial GHGs
• Suppliers of carbon dioxide
• Mobile sources (i.e., light-duty vehicles and trucks manufacturing facilities; heavy-duty, non-road, aircraft, locomotive, and marine diesel engine manufacturing; heavy-duty vehicle manufacturing facilities; small non-road, and marine spark-ignition engine manufacturing facilities; personal watercraft manufacturing facilities; and motorcycle manufacturing facilities)

EPA believes that approximately 30,000 facilities will need to determine if they are subject to the reporting requirements of the rule and that approximately 13,000 facilities will meet the requisite thresholds. EPA estimates that the total national annualized compliance cost for the private sector for the first year is approximately $160 million and approximately $127 million for subsequent years.

EPA acknowledges that reporting requirements at the state and local level that may be broader in scope and more aggressive will likely continue despite this rule.

While public comments addressing any issue related to this proposed rule are welcome, EPA has asked specifically for comments on a significant number of issues, including whether (i) information already being submitted under existing voluntary programs could be used to satisfy the reporting requirements of this rule, (ii) the frequency and schedule for reporting is appropriate, (iii) the reporting thresholds are appropriate for each source category, (iv) the methodologies selected by EPA are appropriate, (v) the selection of GHGs for reporting requirements is sufficient and appropriate, and (vi) the appropriateness of the duration of the program.

Please also note that EPA is preparing to declare that greenhouse gases are a danger to public health and welfare, thereby taking another step toward costly and complex GHG regulation⁴.

Please contact the authors or SGR’s Sustainability Practice Group if you are interested in filing public comments on the EPA proposed rule or have any questions about possible greenhouse gas regulation and how it may affect your industry or company.

Endnotes