United States: EPA Finalizes GHG Reporting Rule, Proposes New GHG Permitting Requirements

The Final Mandatory Reporting of Greenhouse Gases Rule creates a requirement that certain facilities and industries report their annual emissions of CO2 and other greenhouse gases to the Environmental Protection Agency.

On September 22 and 30, 2009, the U.S. Environmental Protection Agency (EPA) moved ahead with addressing climate change within the context of its authority under the Clean Air Act (CAA). EPA Administrator Lisa Jackson signed the final Mandatory Reporting of Greenhouse Gases (GHGs) Rule (Final GHG Reporting Rule), and this week, the EPA released a proposed rule that would require certain stationary sources, including large industrial facilities, to obtain CAA construction and operating permits under the EPA's New Source Review. At the same time, Senators Boxer and Kerry have introduced the Clean Energy, Jobs and American Power Act, which would create limits on GHG emissions, implemented by a national cap-and-trade program, and the EPA's announcement of a proposed rule to regulate through construction and operating permits GHG emissions from power plants and large industrial facilities emitting at least 25,000 tons of carbon dioxide (CO₂) and other GHGs per year.

Final GHG Reporting Rule

The Final GHG Reporting Rule, using the EPA's authority under the Clean Air Act, creates a requirement that certain facilities and industries report their annual emissions of CO₂ and other GHGs to the EPA. The new reporting system covers approximately 85 percent of total U.S. emissions and will allow the EPA to gain a more comprehensive understanding of where emissions are coming from to help inform and guide the development of emissions management and reduction policies.

Covered Industries and Emissions

Suppliers of fossil fuels or industrial GHGs, direct GHG emitters, manufacturers of vehicles and engines outside of the light-duty sector (which includes passenger cars and trucks), and certain large downstream facilities that emit more than 25,000 metric tons of CO₂ and other GHGs per year will be subject to reporting requirements under the Final GHG Reporting Rule. Covered entities must report emissions of anthropogenic GHG emissions covered under the United Nations Framework Convention on Climate Change (UNFCCC), which includes CO₂, methane, nitrous oxide, hydrofluorocarbons, perfluorochemicals and sulfur hexafluoride, as well as other fluorinated gases.

The emissions threshold exempts most small businesses from having reporting obligations under the Final GHG Reporting Rule. Among the source and supply categories that are specifically not required to report are oil and natural gas systems, underground coal mines and industrial landfills. The EPA also has excluded light-duty vehicles, but has proposed a comprehensive GHG emission control program, including GHG measurement and reporting requirements, for the light-duty vehicle sector that will begin in 2012.

Annual Reporting Requirements

The Final GHG Reporting Rule's annual reporting requirements generally apply on facility level, except for certain suppliers of fossil fuels and industrial GHGs, and vehicle and engine manufacturers, which will all report at the corporate level. All facilities and suppliers must begin collecting data on January 1, 2010, with the first annual emissions report due on March 31, 2011, for 2010 emissions.

The Final GHG Reporting Rule also provides a mechanism for exiting the reporting program: once an emitting entity has reported either five consecutive years of emissions below 25,000 metric tons per year, or three consecutive years of emissions below 15,000 metric tons per year, it may cease reporting under this rule.

The EPA is working with the states, the Climate Registry and the Exchange Network on a data exchange standard for GHG reporting. Reporting entities are required to self-certify all data submitted, and EPA intends to verify such data on its own, similar to other Clean Air Act programs, and thus reporting entities will not be required to obtain third-party verification. Emissions reports must contain the following information, among other things:

In addition, covered entities must retain certain types of records, including the data used to calculate the GHG emissions and a written GHG monitoring plan, for three years. All reported information will be publically available.

GHG Permitting Requirements

The EPA also has proposed new thresholds for GHGs from large industrial facilities to determine when Clean Air Act permits under the New Source Review and Title V operating permits programs would be required. The EPA has mirrored the emissions threshold under the Final GHG Reporting Rule, proposing that this proposed permitting rule will focus on large facilities emitting more than 25,000 tons of GHG emissions per year, which includes power plants, refineries and cement production facilities. Facilities emitting less than the threshold would not be required to obtain an operating permit under the proposed rule.

Title V Operating Permits Program

The Title V operating permits contain air emissions control requirements that apply to a facility, including the best available control technologies (BACT). The EPA's proposed rule would extend the operating permits requirements to cover GHG emissions, but those facilities that already have operating permits for other types of emissions would not need to immediately revise them and instead could wait to include the GHG emissions data in their five-year renewal application. The EPA anticipates that emitters will use the data reported under the Final GHG Reporting Rule to revise their operating permit applications.

Prevention of Significant Deterioration Program

The Prevention of Significant Deterioration (PSD) program is a permit program designed to minimize emissions from new sources and existing sources subject to major modifications. Under the proposed revisions to the PSD program, new major GHG emitters and certain existing GHG emitters making major modifications to their facility resulting in increases of emissions over a certain threshold, which has not yet been determined by EPA, will be required to obtain a PSD permit.

Unlike sources with a Title V operating permit, entities that trigger PSD permitting requirements would need to apply for a revision to their permit to incorporate BACT and energy efficiency measures related to minimizing GHG emissions.

EPA will accept comments on the proposed rule for 60 days after publication in the Federal Register.

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