By Mark Matthews

General Information

Under the rule, suppliers of fossil fuels or industrial greenhouse gases, manufacturers of vehicles and engines, and certain facilities that emit 25,000 metric tons or more per year of greenhouse gas (GHG) emissions are required to submit annual reports to Environmental Protection Agency. The gases covered by the proposed rule are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFC), perfluorocarbons (PFC), sulfur hexafluoride (SF6), and other fluorinated gases including nitrogen trifluoride (NF3) and hydrofluorinated ethers (HFE).  The final rule was signed by the Administrator on September 22, 2009.  Reporting is generally at the facility level, except that certain suppliers of fossil fuels and industrial greenhouse gases along with vehicle and engine manufacturers will report at the corporate level.  Covered facilities and suppliers must begin collecting data on January 1, 2010, and the first emissions report is due on March 31, 2011, for emissions during 2010.
 
Covered Source Categories and Where to Find Information on Whether a Facility is Covered

The final rule includes reporting requirements for 31 of the 42 emission sources considered in the proposed rule. The source categories currently covered by the rule include electricity generation, aluminum production, cement production, petrochemical production, pulp and paper manufacturing, and manure management, among others.  Source categories considered in the proposed rule but which are not currently covered by the final rule include electronics manufacturing, ethanol production, food processing, oil and natural gas systems, underground coal mines, wastewater treatment, and suppliers of coal, among others.  EPA has stated, however, that these categories may be added later.
 
Impact on Small Business

As currently written, the rule will not apply to most small businesses or commercial operations because they will fall well below the 25,000 tpy threshold.  According to EPA, 25,000 tpy is equivalent to emissions from the annual energy use of approximately 2,300 homes.  The threshold is also roughly equivalent to the annual GHG emissions from approximately 4,600 passenger vehicles, just over 58,000 barrels of oil consumed, or burning 131 railcars worth of coal.
 
Commercial operations with onsite emission sources such as boilers, combustion turbines, incinerators and process heaters will generally not be required to report.  The rule does not include any facility that has an aggregate maximum rated heat input capacity of stationary fuel combustion units of less than 30 mmBtu/hr.  EPA’s analysis determined that facilities that are below this threshold will not reach the 25,000 tpy limit established by the rule.  According to EPA, 75 percent of commercial buildings have combustion equipment with input capacity of less that 1 mmBtu/hr.  Of the commercial buildings using boilers for heating water and steam, approximately 80 percent of the buildings have boilers with less than 10 mmBtu/hr.  These are well below EPA’s threshold. If, however, a large commercial facility may reach this threshold, it should consult further with EPA to determine if it must comply with the rule.
 
Agriculture

The only emission source in the agriculture sector covered by the rule is manure management systems at livestock operations with GHG emissions that meet or exceed the threshold of 25,000 tpy.  EPA modeling estimates that just over 100 manure management systems at large livestock operations meet this threshold.  Agricultural emissions from sources such as enteric fermentation (emissions of methane from the digestive system of cattle and other ruminant livestock), rice cultivation, field burning of agricultural residues, composting (unless a component of a manure management system), agricultural soils, and carbon storage in living biomass or harvested wood products and are generally not required to report.

For additional information about the EPA’s Greenhouse Gas Reporting Rule, visit http://www.bhfs.com/NewsEvents/Publications?find=61715.

Mark Mathews is a shareholder in Brownstein Hyatt Farber Schreck’s Denver office. As co-chair of the firm’s natural resources group, his practice concentrates on environmental and energy law, as well as complex litigation.