AGC Advises EPA to Exempt Small Emitters, Delay Requirements in Proposed Rule for Mandatory Reporting of Greenhouse Gases

On June 9, AGC submitted comments to the U.S. Environmental Protection Agency (EPA) on a proposed rule that would require thousands of facilities to monitor their greenhouse gas (GHG) emissions starting in January 2010 and report those emissions to EPA in 2011.  All facilities that produce Portland cement or manufacture lime would be required to report.  Additionally, thousands of small emitters would be scrambling to determine whether their emissions fall within the threshold for reporting or face the risk of high penalties for noncompliance.  If finalized, EPA's proposal would require reporting of GHG emissions from all sectors of the economy in very short order.  EPA has identified "source categories" wherein all of the facilities with that source of emissions within their boundaries would be subject to the rule.  These source categories include large operations such as petroleum refineries, power plants, Portland cement plants, landfills, etc.  In addition to these sources, EPA has suggested a threshold of 25,000 metric tons per year of carbon dioxide equivalent (metric tpy CO2e) above which other facilities would be required to report annual GHG emissions from stationary fuel combustion sources (boilers, process heaters, etc.). AGC suggested EPA set the reporting threshold at 100,000 metric tpy CO2e and exempt residential and non-residential commercial buildings (including houses of worship, schools, hospitals, shopping malls and office buildings) from the reporting requirements.  The lower thresholds EPA is considering would drastically increase the number of facilities required to report and the associated costs of reporting, without delivering a significant increase in the percent of emissions reported.  EPA's analysis shows that the number of affected facilities doubles at the 25,000 level (13,205 facilities) as opposed to the 100,000 level (6,598 facilities), whereas the percentage of emissions reported at the 25,000 level raises only 2.5 percent.  Should EPA set the reporting threshold at the 25,000 metric tpy CO2e level, thousands of small businesses could be required to monitor emissions starting as early as January 2010.  In addition, EPA estimates approximately 30,000 more facilities would have to shoulder the expense of measuring their emissions to determine whether they are required to report.  Setting the reporting threshold at 100,000 metric tpy CO2e would release approximately 6,600 small emitters from the burden of reporting and thousands of other facilities from the expense of measuring emissions solely to demonstrate non-applicability.  AGC also suggested that EPA extend the effective date by a year and use a phased-in approach wherein businesses are given more time to prepare for implementation of the reporting requirements.  Most facilities (1) do not know whether they fall within the proposed reporting threshold, (2) do not know how to prepare GHG inventory baselines and collect emissions data and (3) do not know how to perform audits and verification; all required under the rule.  Facilities may need to hire consultants, purchase new equipment, develop standard operating procedures, and train employees.  At the same time the facilities are learning how to comply, they also could face huge penalties for non-compliance. Background The U.S. Congress required EPA to develop a GHG reporting rule pursuant to its existing authority under §§ 114(a)(1) and 208 of the Clean Air Act in the Consolidated Appropriations Act of 2008, Public Law 110-161, 121 Stat. 1844, 2128 (2008).  The GHG reporting program would be used to assist in the development of climate policy.  EPA was not charged with developing an ongoing reporting program that will address all emissions from all sources; and the agency has discretion in determining what sectors must report, the emissions threshold that would trigger such reporting (must include large emitters) and for how long regulated facilities must report.  AGC also urged EPA to collect only the data that fulfills its obligation under the appropriations bill and wait until after the U.S. Congress finalizes climate legislation to establish a full EPA reporting program - if one is ultimately needed.   To read AGC's June 9 comment letter on the proposed mandatory reporting rule, click here.   For additional background information, click here to read a recent article in AGC's Environmental Observer.   For more information, contact Melinda Tomaino at (703) 837-5415 or tomainom@agc.org.