Peter Brosse Shares Client Alert on the
NEW EPA GREENHOUSE GAS MONITORING AND REPORTING REQUIREMENTS
On September 22, 2009, the Administrator of the Environmental Protection Agency (EPA) signed the Final Mandatory Reporting of Greenhouse Gases Rule (the “Rule”), which goes into effect on December 29, 2009 and is designed to assist in the fight against climate change. The Rule requires that, beginning on January 1, 2010, many manufacturing facilities, facilities that emit greenhouse gases (GHGs), and suppliers of fossil fuels and industrial GHGs must begin monitoring their emissions of GHGs. On March 31, 2011, these companies must file their first annual report with the EPA, showing the results of the data collected during the previous year.
Who Must Comply with the Rule?
The Rule applies to many diverse industries and types of facilities, including facilities emitting GHGs, suppliers of fossil fuels, and manufacturers of new vehicles and engines. However, some facilities that produce less than the threshold (i.e., reportable) amount of GHGs may be exempt from the monitoring and reporting requirements.
Facilities Emitting GHGs
There are seventeen (17) types of industrial facilities that must monitor and report GHG emissions regardless of their level of emissions:
• Adipic Acid Production
• Aluminum Production
• Ammonia Manufacturing
• Cement Production
• Electricity-Generating Facilities
• HCFC-22 Production
• HFC-23 Destruction Processes
• Lime Manufacturing
• Manure Management Systems
• Municipal Solid Waste Landfills
• Nitric Acid Production
• Petrochemical Production
• Petroleum Refineries
• Phosphoric Acid Production
• Silicon Carbide Production
• Soda Ash Production
• Titanium Dioxide Production
Additionally, other specific facilities will be required to monitor and report their emissions if they emit GHGs in excess of 25,000 metric tons of CO2 equivalent (CO2e) annually from all stationary fuel combustion devices. These facilities include:
• Ferroalloy Production
• Glass Production
• Hydrogen Production
• Iron and Steel Production
• Lead Production
• Pulp and Paper Manufacturing
* Zinc Production
The Rule excludes from this tonnage calculation any CO2 emitted from the combustion of biogenic fuels. Biomass-related emissions must be independently identified in any report generated by a facility that is subject to the Rule.
Suppliers of Fossil Fuels and Industrial GHGs
All suppliers of fossil fuels, except those that supply solid-based coal, are required to report annual amounts of fuel sold and applicable emissions, regardless of the level of emissions. This includes producers, importers, and exporters of fossil fuels. Suppliers of industrial GHGs which supply more than 25,000 metric tons of CO2e products must report the amount of such products sold and related emissions. “Suppliers”, for these purposes, includes producers, importers, and exporters of industrial GHGs.
Manufacturers of New Vehicles and Engines
Manufacturers of heavy-duty vehicles and engines must report CO2 emissions beginning in model year 2011, and reporting on additional GHGs may be required for subsequent model years. Heavy-duty vehicles and engines includes all vehicles and engines except passenger cars and trucks. Light-duty vehicles and engines (passenger cars and trucks) are not included in the Rule. The EPA, however, has proposed a comprehensive program including monitoring and reporting that may begin in model year 2012. For more information on this pending program, visit the EPA’s Office of Transportation and Air Quality at:
http://www.epa.gov/otag/climate/regulations.htm.
Other Companies with GHG Emissions
In addition to those companies and industries listed above, other companies are required to report their emissions on a facility-by-facility basis. According to the Rule, “facility” means “any physical property, plant, building, structure, source, or stationary equipment located on one or more contiguous or adjacent properties in actual physical contact or separated solely by a public roadway or other public right-of-way and under common ownership or common control.” Those facilities with GHG emissions greater than the threshold amount of 25,000 CO2e, will be required to monitor and report their emissions.
Exiting the Program
Once a company or facility is subject to the Rule for any calendar year, it will continue to be subject to the monitoring and reporting requirements until it meets one of the exit criteria. The exit criteria consist of the following: (i) permanently ceasing all GHG-emitting processes and operations covered by the Rule; (ii) reducing covered emissions to less than 25,000 CO2e per year for a period of five (5) consecutive years; or (iii) reducing covered emissions to less than 15,000 CO2e per year for a period of three (3) consecutive years. If a company or facility stops reporting because it has met one of the above requirements for the appropriate amount of time, it must immediately begin reporting again if its emissions increase to 25,000 CO2e or more.
Requirements of the Rule
What Monitoring is Required by the Rule?
Under the Rule, companies and facilities that are already required to collect data using continuous emissions monitoring systems (“CEMS”) under another air emission program must now also monitor GHGs using the same systems, which could force them to upgrade their systems. Facilities that do not currently use CEMS may use emissions calculations, as specified in the Regulations for each source-category. Depending on the specific category, periodic data collection may be required (i.e., flow rates, fuel use, or heat values).
Facilities and companies should begin to plan for the purchase and installation of required monitoring equipment. In order to give companies sufficient time to acquire and install the necessary monitoring equipment installed and operating, the Rule allows for the use of the “best available” data in lieu of the required monitoring methods for the period from January 1, 2010 to March 31, 2010. Facilities can request an extension beyond March 2010, but extensions beyond December 31, 2010 will not be granted. During this extension period, the facility must use the GHG calculation methods specified for the relevant source category, but it may continue to use the best available monitoring method for any parameter for which it is not reasonable feasible to acquire, install, and operate the required piece of monitoring equipment by January 1, 2010. Requests for extension must be submitted by January 31, 2010. The EPA estimates that the expected cost to the private sector to comply with the Rule will be $115 million in the first fiscal year.
The Rule also provides for calibration requirements for GHG measurement devices. Such devices must be calibrated by April 1, 2010, to an accuracy of five percent (5%). However, devices with an unexpired existing calibration need not be recalibrated until the existing calibration expires. Fuel billing meters are exempt from the calibration requirement, provided that there is no common ownership between the fuel supplier and the fuel combustion source.
What Reporting and Recordkeeping is Required by the Rule?
Reporting will be required on an annual basis, with the first annual report being due on March 31, 2011. If a facility becomes subject to the Rule due to a change in its operations after January 1, 2010, it must begin reporting for the year in which the change occurs, beginning in the first month of the change through December 31 of that year. The Rule requires self-certification of monitoring results and includes an EPA verification process. Each report must contain a signed certification by a “Designated Representative” selected by the company or facility. Only one Designated Representative and an alternate may be specified per reporting company or facility. After a report is submitted, the EPA will conduct a two-step verification process. First, it will conduct a centralized review of the data to ensure its completeness and accuracy. The EPA will then follow up with the facilities if potential errors, discrepancies or questions are identified or arise through the review of reported data. The EPA will conduct on-site audits of the selected facilities; these verifications may be conducted by private firms or by federal, state or local personnel.
Each company or facility that is subject to the Rule must maintain for three (3) years and make available upon request by the EPA the following records:
•
A list of all units, operations, processes, and activities for which GHG emissions are calculated;
•
The data used to calculate the emissions data including, among others: GHG emissions calculations and methods used, analytical results for the development of site-specific emissions factors, any facility operating data, or process information used for the emissions calculations;
•
The annual emissions reports;
•
Missing data computations, including a record of the duration of the missing data event, actions taken to restore malfunctioning monitoring equipment, the cause of the event, and the actions taken to prevent or minimize occurrence in the future;
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A written GHG monitoring plan containing required information;
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The results of all required certification and quality assurance tests of monitoring equipment and instruments;
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Maintenance records for all monitoring equipment; and
•
Any other data specified in any applicable part of the Rule.
These records may be maintained in electronic or hard-copy.
Penalties for Noncompliance
Companies or facilities that fail to monitor or report GHG emissions as required by the Rule may be subject to administrative, civil and criminal penalties. The EPA may seek injunctive relief to compel compliance, and civil or administrative fines of up to $37,500 per day per violation may be assessed.
For more information on the new EPA Monitoring and Reporting Requirements, including answers to Frequently Asked Questions, please visit:
http://www.epa.gov/climatechange/emissions/ghgrulemaking.html
If you would like to discuss how the Rule may affect you or your business, or for a fuller description of the new EPA Monitoring and Reporting Requirements, please contact:
Peter D. Brosse, Esq.
Chair, Business Practice Group and
Green Sustainable Practice Group
Meyers, Roman, Friedberg & Lewis
28601 Chagrin Blvd., Suite 500
Cleveland, Ohio 44122
(216) 831-0042 ext. 144
pbrosse@meyersroman.com
Sarah M. Duffy, Esq.
Meyers, Roman, Friedberg & Lewis
28601 Chagrin Blvd., Suite 500
Cleveland, Ohio 44122
(216) 831-0042 ext. 191
sduffy@meyersroman.com
This Client Alert is a summary only, prepared for general informational purposes, and is not an exhaustive description of the complex legal issues addressed herein. Nothing in this Client Alert is intended or is to constitute a legal opinion or legal advice from Meyers Roman Friedberg & Lewis or any of its attorneys.
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