EPA Rule Requires GHG Monitoring as of January 1

EPA's Final Mandatory Reporting of Greenhouse Gases Rule requires several of the source categories subject to the rule to begin monitoring emissions on January 1, 2010. The rule covers all of the major greenhouse gases, and EPA estimates that approximately 10,000 facilities nationwide will be subject to the rule. These facilities will need to insure that they are legally compliant with the rule's requirements.

The following facilities must begin monitoring their greenhouse gas emissions starting on January 1, 2010, if they have emissions equal to or exceeding 25,000 metric tons of carbon dioxide, or its equivalent in another greenhouse gas, per year (≥ 25,000 mt CO2e/yr):

• municipal solid waste landfills (generating methane)
• ferroalloy production
• glass production
• hydrogen production
• iron and steel production
• lead production
• pulp and paper manufacturing
• zinc production

Manure management systems with emissions ≥ 25,000 mt CO2e/yr were also included as a source category in the final rule, but EPA has stated that it will not implement this section of the regulations in 2010 due to a Congressional restriction in EPA's appropriations prohibiting the expenditure of funds for this purpose.

The following facilities must begin monitoring starting on January 1, 2010, regardless of their annual greenhouse gas emissions:

• adipic acid production
• aluminum production
• ammonia production
• cement production
• electricity generation (reporting year-around CO2 emissions through 40 CFR part 75)
• HCFC-22 production
• certain HFC-23 destruction processes
• lime manufacturing
• municipal solid waste landfills
• nitric acid production
• petrochemical production
• petroleum refineries
• phosphoric acid production
• silicon carbide production
• soda ash production
• titanium dioxide production

The following suppliers of fossil fuels are subject to monitoring requirements beginning on January 1, 2010:

• coal-based liquid fuels (producers, importers and exporters)
• natural gas and natural gas liquids (all natural gas fractionators and all local distribution companies; pipeline operators are excluded)
• petroleum products (producers, importers and exporters)

The following suppliers of industrial greenhouse gases, including all producers and importers or exporters with ≥ 25,000 mt CO2e/yr, are subject to monitoring requirements beginning on January 1, 2010:

• fluorinated gases
• nitrous oxide
• carbon dioxide

In addition, the rule includes a couple of "catch-all" categories:

• facilities with ≥ 25,000 mt CO2e/yr in combined emissions from stationary fuel combustion (including boilers, stationary internal combustion engines, process heaters, combustion turbines, and other stationary fuel combustion equipment)
• facilities with certain uses of miscellaneous carbonates

Beginning with model year 2011, reporting requirements will also phase in for a number of motor vehicle and engine manufacturers outside of the light-duty sector, including manufacturers of heavy duty, marine, aircraft, snowmobile, and other types of vehicles and engines.

Certain additional source categories were included in the EPA's draft reporting rule, but were eliminated from the final rule. According to the EPA, requirements for these source categories could get issued in 2010:

• electronics manufacturing
• ethanol production
• food processing
• industrial landfills
• magnesium production
• oil and natural gas systems
• SF6 from electrical equipment
• underground coal mines
• wastewater treatment
• coal suppliers

For now, companies that could be subject to the rule should be taking a couple of important steps:

1) If not known already, companies should act quickly to determine whether any of their facilities are subject to the reporting rule. Facilities that are close to but under the reporting threshold should still be prepared to demonstrate that they are not subject to the rule.

2) If companies have determined that they do have facilities subject to the rule, they should have proper methodologies in place so that they can be sure to meet the rule's requirements. Among other things, this means having adequate and consistent monitoring procedures that will allow compliance with both the reporting and record-keeping requirements.

3) Companies should understand several special provisions that may apply to certain facilities in 2010. Such provisions include the following:

• Facilities may use "best available monitoring methods" through March 31, 2010. The EPA will consider additional extensions through the end of 2010, if (and only if) facilities submit qualifying applications for those extensions by January 28, 2010.
• Facilities falling within the general stationary combustion source category (and not the more specific source categories) may be able to submit abbreviated reports for 2010.
• By April 1, 2010, facilities must calibrate monitoring equipment to meet 5% accuracy specifications, and must develop monitoring plans that include accurate descriptions of data collection methodologies.

Facilities that are subject to the rule but fail to monitor or report their emissions may be subject to administrative, civil, and criminal penalties, including fines of $37,500 per day per violation, as well as injunctive relief. EPA has stated that it would consider, among other things, the failure to monitor and test as required.

As a result, companies should be in a position to understand any applicable compliance obligations, so that they are prepared to monitor and report as required under the rule.