Alert: EPA Releases Proposed Mandatory Reporting Requirement for Greenhouse Gas Emissions
On Tuesday, March 10, 2009 the U.S. EPA released a long-awaited proposed rule mandating reporting of Greenhouse Gas (GHG) emissions from a wide range of emission sources. Congress had directed EPA to create a GHG reporting rule in late 2007, but the Bush Administration delayed development and EPA missed the statutory deadline for publishing the rule. Under new EPA Administrator Lisa Jackson, EPA has moved quickly to release a proposed rule. The rule would cover approximately 13,000 facilities that are responsible for up to 90 percent of the nation's GHG emissions. Comments on the proposed rule are due in 60 days.
The rule will apply generally to facilities that emit 25,000 or more metric tons per year of CO2 equivalent GHG emissions and will also apply to fossil fuel and industrial chemical suppliers as well as manufacturers of motor vehicles and engines regardless of their total emissions. The reporting will be required at the facility level except certain suppliers and vehicle and engine manufacturers will be required to report at the corporate level. GHGs requiring reporting include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulfur hexafluoride (SF6), hydrofluorocarbons (HFCs), perfluorochemicals (PFCs), and other fluorinated gases (e.g., nitrogen trifluoride and hydrofluorinated ethers (HFEs)).
The first annual emissions report would be due on March 31, 2011, for emissions that occurred during 2010. It should be noted that this rule does not require third-party certification of the emissions reports which could raise questions during the comment period as to whether these reports will provide an appropriate level of certainty and accountability. EPA has not yet determined the format in which the electronic emissions reports must be submitted, but it says it is seeking to "adapt existing facility reporting programs to accept GHG emissions data" to the extent practicable. The reports will be required to contain emissions data on the identified GHGs and particular content and quantification requirements are identified in the rule for each type of source. Thanks to the frontier efforts of California and other states, and the work of voluntary programs such as the Carbon Disclosure Project, emissions reporting similar to this is likely already being conducted at many of the companies to be effected by this rule.
While this would be the first nation-wide mandatory reporting requirement, EPA says the rule has been designed to be in line with the various state rules requiring reporting, including California's AB 32 reporting requirements. In preparing this rule EPA indicated it reviewed the various different voluntary and mandatory GHG reporting regimes that are in place internationally, nationally and at the state level. When compared to California's reporting rule that was finalized in December of 2008, pursuant to the California Air Resources Board authority under AB 32, the EPA rule appears to follow a similar model, with some notable differences. Besides not requiring third-party certification, another significant difference from California's rule is that the EPA rule contains a requirement that vehicle and engine manufacturers report their emissions. The EPA rule uses the same basic numeric threshold of 25,000 metric tons per year of CO2 equivalent emissions, but the EPA rule appears to also specify a number of additional sources not encompassed in the California rule such as ammonia and electronics manufacturing.
As a proposed rule there is an opportunity to comment on the development of the rule and to suggest areas for improvement. Comments must be received on or before 60-days after the rule is published in the federal register. For more information on how to submit comments, on the public hearings, or to see a copy of the proposed rule and the supporting materials visit EPA's website.
Farella Braun + Martel advises clients on carbon management strategies, reporting obligations and the treatment of GHG emissions in CEQA documents and is closely monitoring the development of climate change-related statutes and regulations. For more information, please contact Buzz Hines at 415.954.4400.