EPA Releases Proposed Rule for Mandatory Greenhouse Gas Reporting

On Tuesday, March 10, 2009, the Environmental Protection Agency ("EPA") released its much anticipated proposed rule for monitoring and reporting of greenhouse gas ("GHG") emissions, which is intended to collect data that is very likely to inform future legislative and regulatory climate change decisions. Congress directed EPA to use its Clean Air Act authority to develop the mandatory GHG reporting rule in the FY2008 Consolidated Appropriations Act. The proposal builds largely on work done under the previous Administration.

The proposed rule would require reporting, on a carbon dioxide equivalent basis ("CO₂e"), of annual emissions of the anthropogenic GHGs covered under the United Nations Framework Convention on Climate Change, including carbon dioxide, methane, and nitrous oxide. Most reporting would be done at the facility level, although some suppliers, including importers and exporters, would have to report at the corporate level. The first reports under the rule would be submitted to EPA on March 31, 2011.

In order to avoid mandatory reporting by all sources of GHGs, however small, EPA has proposed to cover mostly large direct emitters (downstream sources), as well as suppliers of fossil fuels and industrial greenhouse gases and manufacturers of vehicles and engines (upstream sources). Downstream sources covered by the rule would include those that emit 25,000 metric tons per year of more of CO₂e emissions through stationary combustion, as well as a number of source categories expressly designated by the rule, such as petroleum refineries, cement production facilities, underground coal mines, municipal landfills that emit methane in amounts equal to 25,000 metric tons of CO₂e or more per year, and manure management systems that emit methane and nitrous oxide in amounts equal to 25,000 metric tons of CO₂e or more per year. To put these numbers in perspective, 25,000 metric tons of CO₂e are estimated to equal the amount of emissions from the annual energy use of about 2,200 homes. Suppliers of fossil fuels would be responsible for reporting the volume of fuel they place in the economy each year and the emissions associated with the complete oxidation of the fuel.

According to EPA, its proposal would affect approximately 13,000 facilities and account for about 85 percent to 90 percent of all GHGs emitted in the United States. It acknowledges that by covering both upstream and downstream sources, the proposal calls for double counting of some emissions. Nevertheless, it believes that double reporting is consistent with Congress's intent and provides important information to EPA and stakeholders in the development of climate change policy and programs. EPA estimates that the cost to the private sector of complying with the reporting requirements will be $160 million for the first year and $127 million in subsequent years.

EPA plans to hold hearings on the proposed rule on April 6-7 in Arlington, Virginia and on April 16 in Sacramento, California. Anyone wishing to comment on the proposed rule must do so within 60 days after the date that the proposed rule is published in the Federal Register.