EPA's Mandatory Greenhouse Gas Reporting Rule

EPA's Mandatory Greenhouse Gas Reporting Rule

   By Mary Ellen Ternes, Shareholder, McAfee & Taft; General Editor Bradley M. Marten

As of January 1, 2010, large emitters of heat-trapping emissions must collect greenhouse gas (GHG) data under a new recording system, pursuant to a new U.S. Environmental Protection Agency (EPA) Rule.  Most of the more than 10,000 affected facilities have not previously gathered GHG emissions data.  To help you and your clients make sense of all the requirements, LexisNexis has published a new pamphlet, entitled EPA’s Mandatory Greenhouse Gas Reporting Rule, which provides a comprehensive overview of what you’ll need to know to start complying with the rule.  An excerpt, consisting of the first section of the pamphlet, is provided below.

To purchase the complete pamphlet, click here. This handy pamphlet is the first offering in the new LexisNexis Global Climate Change Special Pamphlet Series.

With its final Mandatory Greenhouse Gas Reporting Rule (“Final Rule,” “Reporting Rule” or “Rule”), the Environmental Protection Agency (EPA) has taken its first step towards greenhouse gas (GHG) emission regulation in the United States.[1] The Reporting Rule imposes no emission controls but is intended to provide EPA with sufficient information in the form of discrete, targeted and comparable GHG emission data at the facility and corporate level to inform GHG policy development. Because the goal of the Rule is to generate comparable data for a specific purpose, application of the Reporting Rule provisions may not result in a complete snapshot of GHG emissions from each regulated entity. However, what the Rule sacrifices in specific accuracy, the Rule may achieve in comprehensive, comparable and timely GHG emission representation appropriate for developing national GHG emission regulations of prospective applicability.

§ 1.01 Purpose of This Pamphlet

The purpose of this pamphlet is to provide a general summary of EPA’s Mandatory GHG Reporting Rule, sufficient to prepare covered facilities and their legal counsel for the inevitable questions their clients will have when confronted with the very broad scope of this Rule, which should become effective on, or before, January 1, 2010. In order to remain a manageable summary, this pamphlet does not include a detailed description of the many subparts imposing specific requirements upon identified source categories. Additionally, while the Reporting Rule also triggers reporting of certain GHGs by all vehicle and engine manufacturers outside of the light-due sector, these new GHG mobile source reporting requirements are also outside the scope of this pamphlet.[2]

The significance of the data reported pursuant to the Reporting Rule is heightened by follow-on GHG rulemaking actions, including, first, EPA’s proposed Mobile Source Rule[3] and, second, its proposed “Tailoring Rule.”[4] On September 15, 2009, acting upon the Supreme Court’s mandate in its landmark decision, Massachusetts v. EPA,[5] EPA proposed new GHG emission standards as new fuel efficiency standards for light vehicles. EPA’s adoption of the Mobile Source Rule imposing emission standards and limitations for GHG emissions triggers automatic application the 250 ton per year and 100 ton per year Clean Air Act (CAA) Major Source Threshold for Prevention of Significant Deterioration Threshold (PSD) and CAA Title V Operating Permit Thresholds to GHG emissions from stationary sources.[6] Thus, shortly thereafter, on September 30, 2009, EPA issued a “Tailoring Rule” to mitigate the impact of PSD and Title V application to stationary sources of GHG emissions by raising the 250 and 100 ton per year thresholds to 25,000 tons per year of CO2e.[7] The significance of the Mobile Source Rule, the first actual EPA regulation of GHG, cannot be overstated for entities subject to the Reporting Rule, as it will, as a matter of law, trigger the CAA PSD and Title V Operating Permit sections of the CAA for GHGs.

Recognizing that EPA intends to widely distribute the data collected by the Reporting Rule, reporting entities should also be aware of recent developments in GHG litigation. As of October 2009, the Second and Fifth Federal Circuit Courts of Appeal have found that plaintiffs alleging claims of “public nuisance” against major GHG emitters have properly asserted the three elements of Article III standing while allowing defendant GHG emitters no “political question” defense.[8] EPA will be making public, and distributing widely, GHG emissions data identifying for the public the largest GHG emitters.

Entities impacted by the Reporting Rule are urged to begin preparations to monitor GHG emissions pursuant to the general provisions and any applicable subparts, including drafting their Greenhouse Gas Monitoring Plan, complete with assigned roles for facility staff to gather data, as well as training and a documentation strategy consistent with the recordkeeping requirements (see § 1.03[3]). If a reporter intends to use Best Available Monitoring Methods (BAMM) after April 1, 2010, the BAMM request is due 30 days after the anticipated December 31, 2009 effective date of the Rule, i.e., most likely prior to January 31, 2010. At this time, the reporter should consider submitting a “Certificate of Representation” naming the reporter’s “Designated Representative” initially to ensure that the EPA will properly process the BAMM request, given that the Rule states that EPA will not process any submittal under the Reporting Rule without having first received the Certificate of Representation.

[1] For the full version of the final Mandatory Greenhouse Gas Reporting Rule and its Preamble, see 74 Fed. Reg. 56260 (Oct. 30, 2009) (to be codified at 40 C.F.R. Parts 86, 87, 89, 90, 94, 98, 1033, 1039, 1042, 1045, 1048, 1051, 1054, and 1065), available at EPA’s website at http://www.epa.gov/climatechange/emissions/downloads09/GHG-MRR-Full%20Version.pdf.

[2] For a summary of the mobile source reporting requirements, see http://www.epa.gov/climatechange/emissions/downloads/infosheets/mobilevehicle_enginemanuf.pdf.

[3]See Proposed Rulemaking To Establish Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards, 74 Fed. Reg. 49454 (Sept. 28, 2009) (to be codified at 40 C.F.R. Parts 86 and 600 and 49 C.F.R. Parts 531, 533, 537, and 538), available at http://edocket.access.gpo.gov/2009/pdf/E9-22516.pdf.

[4] See Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule, Proposed Rule, 74 Fed. Reg. 55292 (Oct. 27, 2009) (to be codified at 40 C.F.R. Parts 51, 52, 70, and 71), available at http://www.epa.gov/fedrgstr/EPA-AIR/2009/October/Day-27/a24163.pdf.

[5] 549 U.S. 497, 127 S. Ct. 1438, 167 L. Ed. 2d 248 (2007).

[6] Proposed “Tailoring Rule,” 74 Fed. Reg. 55292, at 55305 (quoting CAA §§ 165(a) and 169(1), which identify the new sources subject to PSD, and CAA § 111(a)(4), which describes the modifications of existing sources subject to PSD; quoting CAA §§ 502(a), 501(2)(B) and 302(j) which provide that it is unlawful for any person to operate a “major source” without a Title V permit, and define a “major source” as “any major stationary facility or source of air pollutants which directly emits, or has the potential to emit, one hundred tons per year or more of any air pollutant”).

[7] “CO2e” stands for “carbon dioxide equivalent,” which is explained in § 1.02[6][a][ii].

[8] Connecticut v. American Electric Power Co., 2009 U.S. App. LEXIS 20873 (2d Cir. Sept. 21, 2009); and Comer v. Murphy Oil USA, 2009 U.S. App. LEXIS 22774 (5th Cir. Oct. 16, 2009). But see Native Village of Kivalina v. ExxonMobil Corp., Case No: C 08-1138 SBA (N.D. Cal., Oakland Div.) (Sept. 30, 2009) (order granting defendants’ motion to dismiss for lack of subject matter jurisdiction).
Mary Ellen Ternes is a Shareholder and Environmental Practice Group Leader at McAfee & Taft A Professional Corporation, in Oklahoma City, Oklahoma. Her practice encompasses all facets of environmental law and related aspects arising in energy law, including regulatory, enforcement, and transactional matters, as well as federal and state litigation, particularly citizen suits. Mary Ellen’s practice focuses on air, greenhouse gas, solid and hazardous waste, water quality and water rights regulatory issues. She also works frequently with legal issues involving emergency planning, voluntary cleanups, Brownfields, Superfund, NEPA, underground storage tank regulation, in addition to “All Appropriate Inquiry” and other due diligence issues.

Mary Ellen advises clients regarding strategic business development, navigating regulatory requirements to minimize cost of compliance and exposure to claims of noncompliance. She assists clients with self-audits and self-reporting to achieve compliance. She helps clients resolve allegations of non-compliance and, where penalties are assessed, negotiates acceptable settlement terms, reduced penalties, supplemental environmental projects and appropriate corrective action schedules. In transactions, Mary Ellen works with clients to negotiate allocations of risk for environmental liabilities identified through insightful due diligence.

Prior to entering law school, Mary Ellen worked as a chemical engineer for the Environmental Protection Agency in Superfund emergency response/site characterization and Resource Conservation and Recovery Act (RCRA) incinerator permitting. Mary Ellen then joined industry as an environmental project officer for a commercial hazardous waste incineration company overseeing RCRA, Toxic Substances Control Act and Clean Air Act permitting and compliance. During law school, she worked as a law clerk for the EPA’s Office of General Counsel, Air and Radiation Division.

Mary Ellen is a frequent author and speaker on environmental issues. Through her leadership roles in the American Bar Association and the American Institute of Chemical Engineers, she provides education and initiates collaboration on scientific, legal and policy issues arising from developments in energy and carbon management, tracking and sequestration.

Mary Ellen is listed in Best Lawyers in America, the International Who’s Who of Business Lawyers for Environment Law, Oklahoma Super Lawyers and “Top 25 Women Oklahoma Super Lawyers.” Mary Ellen is a Fellow of the American College of Environmental Lawyers.

Bradley M. Marten, founder and Managing Partner of Marten Law PLLC, is consistently ranked by his peers as one of the nation's top environmental lawyers. He is a Regent of the American College of Environmental Lawyers and Chairs its Policy Committee. He is listed as a top environmental lawyer in the Best Lawyers in America, Chambers, and the International Who's Who of Environmental Lawyers, and been recognized in many other publications for his work in the environmental law field over a 25 year career. Brad represents both corporate and public clients in matters touching on most of the major environmental and energy practice areas. He is the General Editor for the LexisNexis Global Climate Change Special Pamphlet Series.