Part II

 
CONTENT

Federal Register: April 10, 2009 (Volume 74, Number 68)

Proposed Rules

Page 16447-16731

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DOCID:fr10ap09-10

Page 16447

Part II

Environmental Protection Agency

40 CFR Parts 86, 87, 89, et al.

Mandatory Reporting of Greenhouse Gases; Proposed Rule

Page 16448

ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 86, 87, 89, 90, 94, 98, 600, 1033, 1039, 1042, 1045, 1048, 1051, 1054, and 1065

EPA-HQ-OAR-2008-0508; FRL-8782-1

RIN 2060-A079

Mandatory Reporting of Greenhouse Gases

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

SUMMARY: EPA is proposing a regulation to require reporting of greenhouse gas emissions from all sectors of the economy. The rule would apply to fossil fuel suppliers and industrial gas suppliers, as well as to direct greenhouse gas emitters. The proposed rule does not require control of greenhouse gases, rather it requires only that sources above certain threshold levels monitor and report emissions.

DATES: Comments must be received on or before June 9, 2009. There will be two public hearings. One hearing was held on April 6 and 7, 2009, in the Washington, DC, area (One Potomac Yard, 2777 S. Crystal Drive,

Arlington, VA 22202). One hearing will be on April 16, 2009 in

Sacramento, CA (Sacramento Convention Center, 1400 J Street,

Sacramento, CA 95814). The April 16, 2009 hearing will begin at 9 a.m. local time.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-

OAR-2008-0508, by one of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov.

Follow the online instructions for submitting comments.

E-mail: a-and-r-Docket@epa.gov.

Fax: (202) 566-1741.

Mail: Environmental Protection Agency, EPA Docket Center

(EPA/DC), Mailcode 6102T, Attention Docket ID No. EPA-HQ-OAR-2008-0508, 1200 Pennsylvania Avenue, NW., Washington, DC 20460.

Hand Delivery: EPA Docket Center, Public Reading Room, EPA

West Building, Room 3334, 1301 Constitution Avenue, NW., Washington, DC 20004. Such deliveries are only accepted during the Docket's normal hours of operation, and special arrangements should be made for deliveries of boxed information.

Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR- 2008-0508. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at http://www.regulations.gov, including any personal information provided, unless the comment includes information claimed to be CBI or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through http://www.regulations.gov or e-mail. The http:// www.regulations.gov Web site is an ``anonymous access'' system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through http://www.regulations.gov your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses.

Docket: All documents in the docket are listed in the http:// www.regulations.gov index. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy.

Publicly available docket materials are available either electronically in http://www.regulations.gov or in hard copy at the Air Docket, EPA/

DC, EPA West, Room B102, 1301 Constitution Ave., NW., Washington, DC.

This Docket Facility is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the

Public Reading Room is (202) 566-1744, and the telephone number for the

Air Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Carole Cook, Climate Change Division,

Office of Atmospheric Programs (MC-6207J), Environmental Protection

Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460; telephone number: (202) 343-9263; fax number: (202) 343-2342; e-mail address:

GHGReportingRule@epa.gov. For technical information, contact the

Greenhouse Gas Reporting Rule Hotline at telephone number: (877) 444- 1188; or e-mail: ghgmrr@epa.gov. To obtain information about the public hearings or to register to speak at the hearings, please go to http:// www.epa.gov/climatechange/emissions/ghgrulemaking.html. Alternatively, contact Carole Cook at 202-343-9263.

SUPPLEMENTARY INFORMATION:

Additional Information on Submitting Comments: To expedite review of your comments by Agency staff, you are encouraged to send a separate copy of your comments, in addition to the copy you submit to the official docket, to Carole Cook, U.S. EPA, Office of Atmospheric

Programs, Climate Change Division, Mail Code 6207-J, Washington, DC, 20460, telephone (202) 343-9263, e-mail GHGReportingRule@epa.gov.

Regulated Entities. The Administrator determines that this action is subject to the provisions of CAA section 307(d). See CAA section 307(d)(1)(V) (the provisions of section 307(d) apply to ``such other actions as the Administrator may determine.''). This is a proposed regulation. If finalized, these regulations would affect owners and operators of fuel and chemicals suppliers, direct emitters of GHGs and manufacturers of mobile sources and engines. Regulated categories and entities would include those listed in Table 1 of this preamble:

Table 1--Examples of Affected Entities by Category

Examples of affected

Category

NAICS

facilities

General Stationary Fuel

.............. Facilities operating

Combustion Sources.

boilers, process heaters, incinerators, turbines, and internal combustion engines: 211 Extractors of crude petroleum and natural gas. 321 Manufacturers of lumber and wood products. 322 Pulp and paper mills. 325 Chemical manufacturers. 324 Petroleum refineries, and manufacturers of coal products.

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316, 326, 339 Manufacturers of rubber and miscellaneous plastic products. 331 Steel works, blast furnaces. 332 Electroplating, plating, polishing, anodizing, and coloring. 336 Manufacturers of motor vehicle parts and accessories. 221 Electric, gas, and sanitary services. 622 Health services. 611 Educational services.

Electricity Generation.........

221112 Fossil-fuel fired electric generating units, including units owned by Federal and municipal governments and units located in

Indian Country.

Adipic Acid Production.........

325199 Adipic acid manufacturing facilities.

Aluminum Production............

331312 Primary Aluminum production facilities.

Ammonia Manufacturing..........

325311 Anhydrous and aqueous ammonia manufacturing facilities.

Cement Production..............

327310 Owners and operators of

Portland Cement manufacturing plants.

Electronics Manufacturing......

334111 Microcomputers manufacturing facilities. 334413 Semiconductor, photovoltaic (solid- state) device manufacturing facilities. 334419 LCD unit screens manufacturing facilities.

.............. MEMS manufacturing facilities.

Ethanol Production.............

325193 Ethyl alcohol manufacturing facilities.

Ferroalloy Production..........

331112 Ferroalloys manufacturing facilities.

Fluorinated GHG Production.....

325120 Industrial gases manufacturing facilities.

Food Processing................

311611 Meat processing facilities. 311411 Frozen fruit, juice, and vegetable manufacturing facilities. 311421 Fruit and vegetable canning facilities.

Glass Production...............

327211 Flat glass manufacturing facilities. 327213 Glass container manufacturing facilities. 327212 Other pressed and blown glass and glassware manufacturing facilities.

HCFC-22 Production and HFC-23

325120 Chlorodifluoromethane

Destruction.

manufacturing facilities.

Hydrogen Production............

325120 Hydrogen manufacturing facilities.

Iron and Steel Production......

331111 Integrated iron and steel mills, steel companies, sinter plants, blast furnaces, basic oxygen process furnace shops.

Lead Production................

331419 Primary lead smelting and refining facilities. 331492 Secondary lead smelting and refining facilities.

Lime Production................

327410 Calcium oxide, calcium hydroxide, dolomitic hydrates manufacturing facilities.

Magnesium Production...........

331419 Primary refiners of nonferrous metals by electrolytic methods. 331492 Secondary magnesium processing plants.

Nitric Acid Production.........

325311 Nitric acid manufacturing facilities.

Oil and Natural Gas Systems....

486210 Pipeline transportation of natural gas. 221210 Natural gas distribution facilities. 325212 Synthetic rubber manufacturing facilities.

Petrochemical Production.......

32511 Ethylene dichloride manufacturing facilities. 325199 Acrylonitrile, ethylene oxide, methanol manufacturing facilities. 325110 Ethylene manufacturing facilities. 325182 Carbon black manufacturing facilities.

Petroleum Refineries...........

324110 Petroleum refineries.

Phosphoric Acid Production.....

325312 Phosphoric acid manufacturing facilities.

Pulp and Paper Manufacturing...

322110 Pulp mills. 322121 Paper mills. 322130 Paperboard mills.

Silicon Carbide Production.....

327910 Silicon carbide abrasives manufacturing facilities.

Soda Ash Manufacturing.........

325181 Alkalies and chlorine manufacturing facilities.

Sulfur Hexafluoride (SF6) from

221121 Electric bulk power

Electrical Equipment.

transmission and control facilities.

Titanium Dioxide Production....

325188 Titanium dioxide manufacturing facilities.

Underground Coal Mines.........

212113 Underground anthracite coal mining operations. 212112 Underground bituminous coal mining operations.

Zinc Production................

331419 Primary zinc refining facilities. 331492 Zinc dust reclaiming facilities, recovering from scrap and/or alloying purchased metals.

Landfills......................

562212 Solid waste landfills. 221320 Sewage treatment facilities. 322110 Pulp mills. 322121 Paper mills. 322122 Newsprint mills. 322130 Paperboard mills. 311611 Meat processing facilities. 311411 Frozen fruit, juice, and vegetable manufacturing facilities. 311421 Fruit and vegetable canning facilities.

Wastewater Treatment...........

322110 Pulp mills. 322121 Paper mills. 322122 Newsprint mills. 322130 Paperboard mills.

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311611 Meat processing facilities. 311411 Frozen fruit, juice, and vegetable manufacturing facilities. 311421 Fruit and vegetable canning facilities. 325193 Ethanol manufacturing facilities. 324110 Petroleum refineries.

Manure Management..............

112111 Beef cattle feedlots. 112120 Dairy cattle and milk production facilities. 112210 Hog and pig farms. 112310 Chicken egg production facilities. 112330 Turkey Production. 112320 Broilers and Other Meat type Chicken

Production.

Suppliers of Coal and Coal-

212111 Bituminous, and lignite based Products.

coal surface mining facilities. 212113 Anthracite coal mining facilities. 212112 Underground bituminous coal mining facilities.

Suppliers of Coal Based Liquids

211111 Coal liquefaction at

Fuels.

mine sites.

Suppliers of Petroleum Products

324110 Petroleum refineries.

Suppliers of Natural Gas and

221210 Natural gas

NGLs.

distribution facilities. 211112 Natural gas liquid extraction facilities.

Suppliers of Industrial GHGs...

325120 Industrial gas manufacturing facilities.

Suppliers of Carbon Dioxide

325120 Industrial gas

(CO2).

manufacturing facilities.

Mobile Sources.................

336112 Light-duty vehicles and trucks manufacturing facilities. 333618 Heavy-duty, non-road, aircraft, locomotive, and marine diesel engine manufacturing. 336120 Heavy-duty vehicle manufacturing facilities. 336312 Small non-road, and marine spark-ignition engine manufacturing facilities. 336999 Personal watercraft manufacturing facilities. 336991 Motorcycle manufacturing facilities.

Table 1 of this preamble is not intended to be exhaustive, but rather provides a guide for readers regarding facilities likely to be regulated by this action. Table 1 of this preamble lists the types of facilities that EPA is now aware could be potentially affected by this action. Other types of facilities not listed in the table could also be subject to reporting requirements. To determine whether your facility is affected by this action, you should carefully examine the applicability criteria found in proposed 40 CFR part 98, subpart A. If you have questions regarding the applicability of this action to a particular facility, consult the person listed in the preceding FOR

FURTHER INFORMATION CONTACT section.

Many facilities that would be affected by the proposed rule have

GHG emissions from multiple source categories listed in Table 1 of this preamble. Table 2 of this preamble has been developed as a guide to help potential reporters subject to the mandatory reporting rule identify the source categories (by subpart) that they may need to (1) consider in their facility applicability determination, and (2) include in their reporting. For each source category, activity, or facility type (e.g., electricity generation, aluminum production), Table 2 of this preamble identifies the subparts that are likely to be relevant.

The table should only be seen as a guide. Additional subparts may be relevant for a given reporter. Similarly, not all listed subparts would be relevant for all reporters.

Table 2--Source Categories and Relevant Subparts

Source category (and main applicable Subparts recommended for review subpart)

to determine applicability

General Stationary Fuel Combustion

General Stationary Fuel

Sources.

Combustion.

Electricity Generation................. General Stationary Fuel

Combustion, Electricity

Generation, Suppliers of CO2,

Electric Power Systems.

Adipic Acid Production................. Adipic Acid Production, General

Stationary Fuel Combustion.

Aluminum Production.................... General Stationary Fuel

Combustion.

Ammonia Manufacturing.................. General Stationary Fuel

Combustion, Hydrogen, Nitric

Acid, Petroleum Refineries,

Suppliers of CO2.

Cement Production...................... General Stationary Fuel

Combustion, Suppliers of CO2.

Electronics Manufacturing.............. General Stationary Fuel

Combustion.

Ethanol Production..................... General Stationary Fuel

Combustion, Landfills,

Wastewater Treatment.

Ferroalloy Production.................. General Stationary Fuel

Combustion.

Fluorinated GHG Production............. General Stationary Fuel

Combustion.

Food Processing........................ General Stationary Fuel

Combustion, Landfills,

Wastewater Treatment.

Glass Production....................... General Stationary Fuel

Combustion.

HCFC-22 Production and HFC-23

General Stationary Fuel

Destruction.

Combustion.

Hydrogen Production.................... General Stationary Fuel

Combustion, Petrochemicals,

Petroleum Refineries,

Suppliers of Industrial GHGs,

Suppliers of CO2.

Iron and Steel Production.............. General Stationary Fuel

Combustion, Suppliers of CO2.

Lead Production........................ General Stationary Fuel

Combustion.

Lime Manufacturing..................... General Stationary Fuel

Combustion.

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Magnesium Production................... General Stationary Fuel

Combustion.

Nitric Acid Production................. General Stationary Fuel

Combustion, Adipic Acid.

Oil and Natural Gas Systems............ General Stationary Fuel

Combustion, Petroleum

Refineries, Suppliers of

Petroleum Products, Suppliers of Natural Gas and NGL,

Suppliers of CO2.

Petrochemical Production............... General Stationary Fuel

Combustion, Ammonia, Petroleum

Refineries.

Petroleum Refineries................... General Stationary Fuel

Combustion, Hydrogen,

Landfills, Wastewater

Treatment, Suppliers of

Petroleum Products.

Phosphoric Acid Production............. General Stationary Fuel

Combustion.

Pulp and Paper Manufacturing........... General Stationary Fuel

Combustion, Landfills,

Wastewater Treatment.

Silicon Carbide Production............. General Stationary Fuel

Combustion.

Soda Ash Manufacturing................. General Stationary Fuel

Combustion.

Sulfur Hexafluoride (SF6) from

General Stationary Fuel

Electrical Equipment.

Combustion.

Titanium Dioxide Production............ General Stationary Fuel

Combustion.

Underground Coal Mines................. General Stationary Fuel

Combustion, Suppliers of Coal.

Zinc Production........................ General Stationary Fuel

Combustion.

Landfills.............................. General Stationary Fuel

Combustion, Ethanol, Food

Processing, Petroleum

Refineries, Pulp and Paper.

Wastewater Treatment................... General Stationary Fuel

Combustion, Ethanol, Food

Processing, Petroleum

Refineries, Pulp and Paper.

Manure Management...................... General Stationary Fuel

Combustion.

Suppliers of Coal...................... General Stationary Fuel

Combustion, Underground Coal

Mines.

Suppliers of Coal-based Liquid Fuels... Suppliers of Coal, Suppliers of

Petroleum Products.

Suppliers of Petroleum Products........ General Stationary Fuel

Combustion, Oil and Natural

Gas Systems.

Suppliers of Natural Gas and NGLs...... General Stationary Fuel

Combustion, Oil and Natural

Gas Systems, Suppliers of CO2.

Suppliers of Industrial GHGs........... General Stationary Fuel

Combustion, Hydrogen

Production, Suppliers of CO2.

Suppliers of Carbon Dioxide (CO2)...... General Stationary Fuel

Combustion, Electricity

Generation, Ammonia, Cement,

Hydrogen, Iron and Steel,

Suppliers of Industrial GHGs.

Mobile Sources......................... General Stationary Fuel

Combustion.

Acronyms and Abbreviations. The following acronyms and abbreviations are used in this document.

A/C air conditioning

AERR Air Emissions Reporting Rule

ANPR advance notice of proposed rulemaking

ARP Acid Rain Program

ASME American Society of Mechanical Engineers

ASTM American Society for Testing and Materials

BLS Bureau of Labor Statistics

CAA Clean Air Act

CAFE Corporate Average Fuel Economy

CARB California Air Resources Board

CBI confidential business information

CCAR California Climate Action Registry

CDX central data exchange

CEMS continuous emission monitoring system(s)

CERR Consolidated Emissions Reporting Rule cf cubic feet

CFCs chlorofluorocarbons

CFR Code of Federal Regulations

CH4methane

CHP combined heat and power

CO2carbon dioxide

CO2e CO2-equivalent

COD chemical oxygen demand

DE destruction efficiency

DOD U.S. Department of Defense

DOE U.S. Department of Energy

DOT U.S. Department of Transportation

DE destruction efficiency

DRE destruction or removal efficiency

ECOS Environmental Council of the States

EGUs electrical generating units

EIA Energy Information Administration

EISA Energy Independence and Security Act of 2007

EO Executive Order

EOR enhanced oil recovery

EPA U.S. Environmental Protection Agency

EU European Union

FTP Federal Test Procedure

FY2008 fiscal year 2008

GHG greenhouse gas

GWP global warming potential

HCFC-22 chlorodifluoromethane (or CHClF2)

HCFCs hydrochlorofluorocarbons

HCl hydrogen chloride

HFC-23 trifluoromethane (or CHF3)

HFCs hydrofluorocarbons

HFEs hydrofluorinated ethers

HHV higher heating value

ICR information collection request

IPCC Intergovernmental Panel on Climate Change

ISO International Organization for Standardization kg kilograms

LandGEM Landfill Gas Emissions Model

LCD liquid crystal display

LDCs local natural gas distribution companies

LEDs light emitting diodes

LNG liquified natural gas

LPG liquified petroleum gas

MEMS microelectricomechanical system mmBtu/hr millions British thermal units per hour

MMTCO2e million metric tons carbon dioxide equivalent

MSHA Mine Safety and Health Administration

MSW municipal solid waste

MW megawatts

N2O nitrous oxide

NAAQS national ambient air quality standard

NACAA National Association of Clean Air Agencies

NAICS North American Industry Classification System

NEI National Emissions Inventory

NESHAP national emission standards for hazardous air pollutants

NF3nitrogen trifluoride

NGLs natural gas liquids

NIOSH National Institute for Occupational Safety and Health

NSPS new source performance standards

NSR New Source Review

NTTAA National Technology Transfer and Advancement Act of 1995

O3ozone

ODS ozone-depleting substance(s)

OMB Office of Management and Budget

ORIS Office of Regulatory Information Systems

PFCs perfluorocarbons

PIN personal identification number

POTWs publicly owned treatment works

PSD Prevention of Significant Deterioration

PV photovoltaic

QA quality assurance

QA/QC quality assurance/quality control

QAPP quality assurance performance plan

RFA Regulatory Flexibility Act

RFS Renewable Fuel Standard

RGGI Regional Greenhouse Gas Initiative

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RIA regulatory impact analysis

SAE Society of Automotive Engineers

SAR IPCC Second Assessment Report

SBREFA Small Business Regulatory Enforcement Fairness Act

SF6sulfur hexafluoride

SFTP Supplemental Federal Test Procedure

SI international system of units

SIP State Implementation Plan

SSM startup, shutdown, and malfunction

TCR The Climate Registry

TOC total organic carbon

TRI Toxic Release Inventory

TSCA Toxics Substances Control Act

TSD technical support document

U.S. United States

UIC underground injection control

UMRA Unfunded Mandates Reform Act of 1995

UNFCCC United Nations Framework Convention on Climate Change

USDA U.S. Department of Agriculture

USGS U.S. Geological Survey

VMT vehicle miles traveled

VOC volatile organic compound(s)

WBCSD World Business Council for Sustainable Development

WCI Western Climate Initiative

WRI World Resources Institute

XML eXtensible Markup Language

Table of Contents

I. Background

A. What Are GHGs?

B. What Is Climate Change?

C. Statutory Authority

D. Inventory of U.S. GHG Emissions and Sinks

E. How does this proposal relate to U.S. government and other climate change efforts?

F. How does this proposal relate to EPA's Climate Change ANPR?

G. How was this proposed rule developed?

II. Summary of Existing Federal, State, and Regional Emission

Reporting Programs

A. Federal Voluntary GHG Programs

B. Federal Mandatory Reporting Programs

C. EPA Emissions Inventories

D. Regional and State Voluntary Programs for GHG Emissions

Reporting

E. State and Regional Mandatory Programs for GHG Emissions

Reporting and Reduction

F. How the Proposed Mandatory GHG Reporting Program is Different

From the Federal and State Programs EPA Reviewed

III. Summary of the General Requirements of the Proposed Rule

A. Who must report?

B. Schedule for Reporting

C. What do I have to report?

D. How do I submit the report?

E. What records must I retain?

IV. Rationale for the General Reporting, Recordkeeping and

Verification Requirements That Apply to All Source Categories

A. Rationale for Selection of GHGs To Report

B. Rationale for Selection of Source Categories To Report

C. Rationale for Selection of Thresholds

D. Rationale for Selection of Level of Reporting

E. Rationale for Selecting the Reporting Year

F. Rationale for Selecting the Frequency of Reporting

G. Rationale for the Emissions Information to Report

H. Rationale for Monitoring Requirements

I. Rationale for Selecting the Recordkeeping Requirements

J. Rationale for Verification Requirements

K. Rationale for Selection of Duration of the Program

V. Rationale for the Reporting, Recordkeeping and Verification

Requirements for Specific Source Categories

A. Overview of Reporting for Specific Source Categories

B. Electricity Purchases

C. General Stationary Fuel Combustion Sources

D. Electricity Generation

E. Adipic Acid Production

F. Aluminum Production

G. Ammonia Manufacturing

H. Cement Production

I. Electronics Manufacturing

J. Ethanol Production

K. Ferroalloy Production

L. Fluorinated GHG Production

M. Food Processing

N. Glass Production

O. HCFC-22 Production and HFC-23 Destruction

P. Hydrogen Production

Q. Iron and Steel Production

R. Lead Production

S. Lime Manufacturing

T. Magnesium Production

U. Miscellaneous Uses of Carbonates

V. Nitric Acid Production

W. Oil and Natural Gas Systems

X. Petrochemical Production

Y. Petroleum Refineries

Z. Phosphoric Acid Production

AA. Pulp and Paper Manufacturing

BB. Silicon Carbide Production

CC. Soda Ash Manufacturing

DD. Sulfur Hexafluoride (SF6) from Electrical

Equipment

EE. Titanium Dioxide Production

FF. Underground Coal Mines

GG. Zinc Production

HH. Landfills

II. Wastewater Treatment

JJ. Manure Management

KK. Suppliers of Coal

LL. Suppliers of Coal-Based Liquid Fuels

MM. Suppliers of Petroleum Products

NN. Suppliers of Natural Gas and Natural Gas Liquids

OO. Suppliers of Industrial GHGs

PP. Suppliers of Carbon Dioxide (CO2)

QQ. Mobile Sources

VI. Collection, Management, and Dissemination of GHG Emissions Data

A. Purpose

B. Data Collection

C. Data Management

D. Data Dissemination

VII. Compliance and Enforcement

A. Compliance Assistance

B. Role of the States

C. Enforcement

VIII. Economic Impacts of the Proposed Rule

A. How are compliance costs estimated?

B. What are the costs of this proposed rule?

C. What are the economic impacts of the proposed rule?

D. What are the impacts of the proposed rule on small entities?

E. What are the benefits of the proposed rule for society?

IX. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

B. Paperwork Reduction Act

C. Regulatory Flexibility Act (RFA)

D. Unfunded Mandates Reform Act (UMRA)

E. Executive Order 13132: Federalism

F. Executive Order 13175: Consultation and Coordination With

Indian Tribal Governments

G. Executive Order 13045: Protection of Children From

Environmental Health Risks and Safety Risks

H. Executive Order 13211: Actions That Significantly Affect

Energy Supply, Distribution, or Use

I. National Technology Transfer and Advancement Act

J. Executive Order 12898: Federal Actions To Address

Environmental Justice in Minority Populations and Low-Income

Populations

I. Background

The proposed rule would require reporting of annual emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulfur hexafluoride (SF6), hydrofluorocarbons (HFCs), perfluorochemicals (PFCs), and other fluorinated gases (e.g., nitrogen trifluoride and hydrofluorinated ethers (HFEs)). The proposed rule would apply to certain downstream facilities that emit GHGs (primarily large facilities emitting 25,000 tpy of CO2equivalent GHG emissions or more) and to upstream suppliers of fossil fuels and industrial GHGs, as well as to manufacturers of vehicles and engines. Reporting would be at the facility level, except certain suppliers and vehicle and engine manufacturers would report at the corporate level.

This preamble is broken into several large sections, as detailed above in the Table of Contents. Throughout the preamble we explicitly request comment on a variety of issues. The paragraph below describes the layout of the preamble and provides a brief summary of each section. We also highlight particular issues on which, as indicated later in the preamble, we would specifically be interested in receiving comments.

The first section of this preamble contains the basic background information about greenhouse gases and climate change. It also describes the origin of this proposal, our legal authority and how this proposal relates to other efforts to address emissions of greenhouse gases. In this section we

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would be particularly interested in receiving comment on the relationship between this proposal and other government efforts.

The second section of this preamble describes existing Federal,

State, Regional mandatory and voluntary GHG reporting programs and how they are similar and different to this proposal. Again, similar to the previous section, we would like comments on the interrelationship of this proposal and existing GHG reporting programs.

The third section of this preamble provides an overview of the proposal itself, while the fourth section provides the rationale for each decision the Agency made in developing the proposal, including key design elements such as: (i) Source categories included, (ii) the level of reporting, (iii) applicability thresholds, (iv) reporting and monitoring methods, (v) verification, (vi) frequency and (vii) duration of reporting. Furthermore, in this section, EPA explains the distinction between upstream and downstream reporters, describes why it is necessary to collect data at multiple points, and provides information on how different data would be useful to inform different policies. As stated in the fourth section, we solicit comment on each design element of the proposal generally.

The fifth section of this preamble looks at the same key design elements for each of the source categories covered by the proposal.

Thus, for example, there is a specific discussion regarding appropriate applicability thresholds, reporting and monitoring methodologies and reporting and recordkeeping requirements for each source category. Each source category describes the proposed options for each design element, as well as the other options considered. In addition to the general solicitation for comment on each design element generally and for each source category, throughout the fifth section there are specific issues highlighted on which we solicit comment. Please refer to the specific source category of interest for more details.

The sixth section of this preamble explains how EPA would collect, manage and disseminate the data, while the seventh section describes the approach to compliance and enforcement. In both sections the role of the States is discussed, as are requests for comment on that role.

Finally, the eighth section provides the summary of the impacts and costs from the Regulatory Impact Analysis and the last section walks through the various statutory and executive order requirements applicable to rulemakings.

A. What Are GHGs?

The proposed rule would cover the major GHGs that are directly emitted by human activities. These include CO2,

CH4, N2O, HFCs, PFCs, SF6, and other specified fluorinated compounds (e.g., HFEs) used in boutique applications such as electronics and anesthetics. These gases influence the climate system by trapping in the atmosphere heat that would otherwise escape to space. The GHGs vary in their capacity to trap heat. The GHGs also vary in terms of how long they remain in the atmosphere after being emitted, with the shortest-lived GHG remaining in the atmosphere for roughly a decade and the longest-lived GHG remaining for up to 50,000 years. Because of these long atmospheric lifetimes, all of the major GHGs become well mixed throughout the global atmosphere regardless of emission origin.

Global atmospheric CO2concentration increased about 35 percent from the pre-industrial era to 2005. The global atmospheric concentration of CH4has increased by 148 percent from pre- industrial levels, and the N2O concentration has increased 18 percent. The observed increase in concentration of these gases can be attributed primarily to human activities. The atmospheric concentration of industrial fluorinated gases--HFCs, PFCs,

SF6--and other fluorinated compounds are relatively low but are increasing rapidly; these gases are entirely anthropogenic in origin.

Due to sheer quantity of emissions, CO2is the largest contributor to GHG concentrations followed by CH4.

Combustion of fossil fuels (e.g., coal, oil, gas) is the largest source of CO2emissions in the U.S. The other GHGs are emitted from a variety of activities. These emissions are compiled by EPA in the

Inventory of U.S. Greenhouse Gas Emissions and Sinks (Inventory) and reported to the UNFCCC \1\ on an annual basis.\2\ A more detailed discussion of the Inventory is provided in Section I.D below.

\1\ For more information about the UNFCCC, please refer to: http://www.unfccc.int. See Articles 4 and 12 of the UNFCCC treaty.

Parties to the Convention, by ratifying, ``shall develop, periodically update, publish and make available * * * national inventories of anthropogenic emissions by sources and removals by sinks of all greenhouse gases not controlled by the Montreal

Protocol, using comparable methodologies * * *''.

\2\ The U.S. submits the Inventory of U.S. Greenhouse Gas

Emissions and Sinks to the Secretariat of the UNFCCC as an annual reporting requirement. The UNFCCC treaty, ratified by the U.S. in 1992, sets an overall framework for intergovernmental efforts to tackle the challenge posed by climate change. The U.S. has submitted the GHG inventory to the United Nations every year since 1993. The annual Inventory of U.S. Greenhouse Gas Emissions and Sinks is consistent with national inventory data submitted by other UNFCCC

Parties, and uses internationally accepted methods for its emission estimates.

Because GHGs have different heat trapping capacities, they are not directly comparable without translating them into common units. The

GWP, a metric that incorporates both the heat-trapping ability and atmospheric lifetime of each GHG, can be used to develop comparable numbers by adjusting all GHGs relative to the GWP of CO2.

When quantities of the different GHGs are multiplied by their GWPs, the different GHGs can be compared on a CO2e basis. The GWP of

CO2is 1.0, and the GWP of other GHGs are expressed relative to CO2. For example, CH4has a GWP of 21, meaning each metric ton of CH4emissions would have 21 times as much impact on global warming (over a 100-year time horizon) as a metric ton of CO2emissions. The GWPs of the other gases are listed in the proposed rule, and range from the hundreds up to 23,900 for

SF6.\3\ Aggregating all GHGs on a CO2e basis at the source level allows a comparison of the total emissions of all the gases from one source with emissions from other sources.

\3\ EPA has chosen to use GWPs published in the IPCC SAR

(furthermore referenced as ``SAR GWP values''). The use of the SAR

GWP values allows comparability of data collected in this proposed rule to the national GHG inventory that EPA compiles annually to meet U.S. commitments to the UNFCCC. To comply with international reporting standards under the UNFCCC, official emission estimates are to be reported by the U.S. and other countries using SAR GWP values. The UNFCCC reporting guidelines for national inventories were updated in 2002 but continue to require the use of GWPs from the SAR. The parties to the UNFCCC have also agreed to use GWPs based upon a 100-year time horizon although other time horizon values are available. For those fluorinated compounds included in this proposal that not listed in the SAR, EPA is using the most recent available GWPs, either the IPCC Third Assessment Report or

Fourth Assessment Report. For more specific information about the

GWP of specific GHGs, please see Table A-1 in the proposed 40 CFR part 98, subpart A.

For additional information about GHGs, climate change, climate science, etc. please see EPA's climate change Web site found at http:// www.epa.gov/climatechange/.

B. What Is Climate Change?

Climate change refers to any significant changes in measures of climate (such as temperature, precipitation, or wind) lasting for an extended period. Historically, natural factors such as volcanic eruptions and changes in the amount of energy released from the sun have affected the earth's climate. Beginning in the late 18th century, human activities associated with the industrial revolution

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have also changed the composition of the earth's atmosphere and very likely are influencing the earth's climate.\4\ The heating effect caused by the buildup of GHGs in our atmosphere enhances the Earth's natural greenhouse effect and adds to global warming. As global temperatures increase other elements of the climate system, such as precipitation, snow and ice cover, sea levels, and weather events, change. The term ``climate change,'' which encompasses these broader effects, is often used instead of ``global warming.''

\4\ IPCCC: Climate Change 2007: The Physical Science Basis,

February 2, 2007 (http://www.ipcc.ch/).

According to the IPCC, warming of the climate system is

``unequivocal,'' as is now evident from observations of increases in global average air and ocean temperatures, widespread melting of snow and ice, and rising global average sea level. Global mean surface temperatures have risen by 0.74 [deg]C (1.3 [deg]F) over the last 100 years. Global mean surface temperature was higher during the last few decades of the 20th century than during any comparable period during the preceding four centuries. U.S. temperatures also warmed during the 20th and into the 21st century; temperatures are now approximately 0.56

deg

C (1.0 [deg]F) warmer than at the start of the 20th century, with an increased rate of warming over the past 30 years. Most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic

GHG concentrations.

According to different scenarios assessed by the IPCC, average global temperature by end of this century is projected to increase by 1.8 to 4.0 [deg]C (3.2 to 7.2 [deg]F) compared to the average temperature in 1990. The uncertainty range of this estimate is 1.1 to 6.4 [deg]C (2.0 to 11.5 [deg]F). Future projections show that, for most scenarios assuming no additional GHG emission reduction policies, atmospheric concentrations of GHGs are expected to continue climbing for most if not all of the remainder of this century, with associated increases in average temperature. Overall risk to human health, society and the environment increases with increases in both the rate and magnitude of climate change.

For additional information about GHGs, climate change, climate science, etc. please see EPA's climate change Web site found at http:// www.epa.gov/climatechange/.

C. Statutory Authority

On December 26, 2007, President Bush signed the FY2008 Consolidated

Appropriations Act which authorized funding for EPA to ``develop and publish a draft rule not later than 9 months after the date of enactment of this Act, and a final rule not later than 18 months after the date of enactment of this Act, to require mandatory reporting of

GHG emissions above appropriate thresholds in all sectors of the economy of the United States.'' Consolidated Appropriations Act, 2008,

Public Law 110-161, 121 Stat 1844, 2128 (2008).

The accompanying joint explanatory statement directed EPA to ``use its existing authority under the Clean Air Act'' to develop a mandatory

GHG reporting rule. ``The Agency is further directed to include in its rule reporting of emissions resulting from upstream production and downstream sources, to the extent that the Administrator deems it appropriate.'' EPA has interpreted that language to confirm that it may be appropriate for the Agency to exercise its CAA authority to require reporting of the quantity of fuel or chemical that is produced or imported from upstream sources such as fuel suppliers, as well as reporting of emissions from facilities (downstream sources) that directly emit GHGs from their processes or from fuel combustion, as appropriate. The joint explanatory statement further states that

``[t]he Administrator shall determine appropriate thresholds of emissions above which reporting is required, and how frequently reports shall be submitted to EPA. The Administrator shall have discretion to use existing reporting requirements for electric generating units'' under section 821 of the 1990 CAA Amendments.

EPA is proposing this rule under its existing CAA authority. EPA also proposes that the rule require the reporting of the GHG emissions resulting from the quantity of fossil fuel or industrial gas that is produced or imported from upstream sources such as fuel suppliers, as well as reporting of GHG emissions from facilities (downstream sources) that directly emit GHGs from their processes or from fuel combustion, as appropriate. This proposed rule would also establish appropriate thresholds and frequency for reporting.

Section 114(a)(1) of the CAA authorizes the Administrator to, inter alia, require certain persons (see below) on a one-time, periodic or continuous basis to keep records, make reports, undertake monitoring, sample emissions, or provide such other information as the

Administrator may reasonably require. This information may be required of any person who (i) owns or operates an emission source, (ii) manufactures control or process equipment, (iii) the Administrator believes may have information necessary for the purposes set forth in this section, or (iv) is subject to any requirement of the Act (except for manufacturers subject to certain title II requirements). The information may be required for the purposes of developing an implementation plan, an emission standard under sections 111, 112 or 129, determining if any person is in violation of any standard or requirement of an implementation plan or emissions standard, or

``carrying out any provision'' of the Act (except for a provision of title II with respect to manufacturers of new motor vehicles or new motor vehicle engines).\5\ Section 208 of the CAA provides EPA with similar broad authority regarding the manufacturers of new motor vehicles or new motor vehicle engines, and other persons subject to the requirements of parts A and C of title II.

\5\ Although there are exclusions in section 114(a)(1) regarding certain title II requirements applicable to manufacturers of new motor vehicle and motor vehicle engines, section 208 authorizes the gathering of information related to those areas.

The scope of the persons potentially subject to a section 114(a)(1) information request (e.g., a person ``who the Administrator believes may have information necessary for the purposes set forth in'' section 114(a)) and the reach of the phrase ``carrying out any provision'' of the Act are quite broad. EPA's authority to request information reaches to a source not subject to the CAA, and may be used for purposes relevant to any provision of the Act. Thus, for example, utilizing sections 114 and 208, EPA could gather information relevant to carrying out provisions involving research (e.g., section 103(g)); evaluating and setting standards (e.g., section 111); and endangerment determinations contained in specific provisions of the Act (e.g., 202); as well as other programs.

Given the broad scope of sections 114 and 208 of the CAA, it is appropriate for EPA to gather the information required by this rule because such information is relevant to EPA's carrying out a wide variety of CAA provisions. For example, emissions from direct emitters should inform decisions about whether and how to use section 111 to establish NSPS for various source categories emitting GHGs, including whether there are any additional categories of sources that should be listed under section 111(b). Similarly, the information required of manufacturers of mobile

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sources should support decisions regarding treatment of those sources under sections 202, 213 or 231 of the CAA. In addition, the information from fuel suppliers would be relevant in analyzing whether to proceed, and particular options for how to proceed, under section 211(c) regarding fuels, or to inform action concerning downstream sources under a variety of Title I or Title II provisions. For example, the geographic distribution, production volumes and characteristics of various fuel types and subtypes may also prove useful is setting NSPS or Best Available Control Technology limits for some combustion sources. Transportation distances from fuel sources to end users may be useful in evaluating cost effectiveness of various fuel choices, increases in transportation emissions that may be associated with various fuel choices, as well as the overall impact on energy usage and availability. The data overall also would inform EPA's implementation of section 103(g) of the CAA regarding improvements in nonregulatory strategies and technologies for preventing or reducing air pollutants.

This section, which specifically mentions CO2, highlights energy conservation, end-use efficiency and fuel-switching as possible strategies for consideration and the type of information collected under this rule would be relevant. The above discussion is not a comprehensive listing of all the possible ways the information collected under this rule could assist EPA in carrying out any provision of the CAA. Rather it illustrates how the information request fits within the parameters of EPA's CAA authority.

D. Inventory of U.S. GHG Emissions and Sinks

The Inventory of U.S. Greenhouse Gas Emissions and Sinks

(Inventory), prepared by EPA's Office of Atmospheric Programs in coordination with the Office of Transportation and Air Quality, is an impartial, policy-neutral report that tracks annual GHG emissions. The annual report presents historical U.S. emissions of CO2,

CH4, N2O, HFCs, PFCs, and SF6.

The U.S. submits the Inventory to the Secretariat of the UNFCCC as an annual reporting requirement. The UNFCCC treaty, ratified by the

U.S. in 1992, sets an overall framework for intergovernmental efforts to tackle the challenge posed by climate change. The U.S. has submitted the GHG inventory to the United Nations every year since 1993. The annual Inventory is consistent with national inventory data submitted by other UNFCCC Parties, and uses internationally accepted methods for its emission estimates.

In preparing the annual Inventory, EPA leads an interagency team that includes DOE, USDA, DOT, DOD, the State Department, and others.

EPA collaborates with hundreds of experts representing more than a dozen Federal agencies, academic institutions, industry associations, consultants, and environmental organizations. The Inventory is peer- reviewed annually by domestic experts, undergoes a 30-day public comment period, and is also peer-reviewed annually by UNFCCC review teams.

The most recent GHG inventory submitted to the UNFCCC, the

Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2006 (April 2008), estimated that total U.S. GHG emissions were 7,054.2 million metric tons of CO2e in 2006. Overall emissions have grown by 15 percent from 1990 to 2006. CO2emissions have increased by 18 percent since 1990. CH4emissions have decreased by 8 percent since 1990, while N2O emissions have decreased by 4 percent since 1990. Emissions of HFCs, PFCs, and SF6have increased by 64 percent since 1990. The combustion of fossil fuels

(i.e., petroleum, coal, and natural gas) was the largest source of GHG emissions in the U.S., and accounted for approximately 80 percent of total CO2e emissions.

The Inventory is a comprehensive top-down national assessment of national GHG emissions, and it uses top-down national energy data and other national statistics (e.g., on agriculture). To achieve the goal of comprehensive national emissions coverage for reporting under the

UNFCCC, most GHG emissions in the report are calculated via activity data from national-level databases, statistics, and surveys. The use of the aggregated national data means that the national emissions estimates are not broken-down at the geographic or facility level. In contrast, this reporting rule focuses on bottom-up data and individual sources above appropriate thresholds. Although it would provide more specific data, it would not provide full coverage of total annual U.S.

GHG emissions, as is required in the development of the Inventory in reporting to the UNFCCC.

The mandatory GHG reporting rule would help to improve the development of future national inventories for particular source categories or sectors by advancing the understanding of emission processes and monitoring methodologies. Facility, unit, and process level GHG emissions data for industrial sources would improve the accuracy of the Inventory by confirming the national statistics and emission estimation methodologies used to develop the top-down inventory. The results can indicate shortcomings in the national statistics and identify where adjustments may be needed.

Therefore, although the data collected under this rule would not replace the system in place to produce the comprehensive annual national Inventory, it can serve as a useful tool to better improve the accuracy of future national-level inventories.

At the same time, EPA solicits comment on whether the submission of the Inventory to the UNFCCC could be utilized to satisfy the requirements of the rule promulgated by EPA pursuant to the FY2008

Consolidated Appropriations Act.

For more information about the Inventory, please refer to the following Web site: http://www.epa.gov/climatechange/emissions/ usinventoryreport.html.

E. How does this proposal relate to U.S. government and other climate change efforts?

The proposed mandatory GHG reporting program would provide EPA, other government agencies, and outside stakeholders with economy-wide data on facility-level (and in some cases corporate-level) GHG emissions. Accurate and timely information on GHG emissions is essential for informing some future climate change policy decisions.

Although additional data collection (e.g., for other source categories such as indirect emissions or offsets) may be required as the development of climate policies evolves, the data collected in this rule would provide useful information for a variety of policies. For example, through data collected under this rule, EPA would gain a better understanding of the relative emissions of specific industries, and the distribution of emissions from individual facilities within those industries. The facility-specific data would also improve our understanding of the factors that influence GHG emission rates and actions that facilities are already taking to reduce emissions. In addition, the data collected on some source categories such as landfills and manure management, which can be covered by the CAA, could also potentially help inform offset program design by providing fundamental data on current baseline emissions for these categories.

Through this rulemaking, EPA would be able to track the trend of emissions from industries and facilities within

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industries over time, particularly in response to policies and potential regulations. The data collected by this rule would also improve the U.S. government's ability to formulate a set of climate change policy options and to assess which industries would be affected, and how these industries would be affected by the options. Finally,

EPA's experience with other reporting programs is that such programs raise awareness of emissions among reporters and other stakeholders, and thus contribute to efforts to identify reduction opportunities and carry them out.

The goal is to have this GHG reporting program supplement and complement, rather than duplicate, U.S. government and other GHG programs (e.g., State and Regional based programs). As discussed in

Section I.D of this preamble, EPA anticipates that facility-level GHG emissions data would lead to improvements in the quality of the

Inventory.

As discussed in Section II of this preamble, a number of EPA voluntary partnership programs include a GHG emissions and/or reductions reporting component (e.g., Climate Leaders, the Natural Gas

STAR program). Because this mandatory reporting program would have much broader coverage than the voluntary programs, it would help EPA learn more about emissions from facilities not currently included in these programs and broaden coverage of these industries.

Also discussed in Section II of this preamble, DOE EIA implements a voluntary GHG registry under section 1605(b) of the Energy Policy Act.

Under EIA's ``1605(b) program,'' reporters can choose to prepare an entity-wide GHG inventory and identify specific GHG reductions made by the entity.\6\ EPA's proposed mandatory GHG program would have a much broader set of reporters included, primarily at the facility \7\ rather than entity-level, but this proposed rule is not designed with the specific intent of reporting of emission reductions, as is the 1605(b) program.

\6\ Under the 1605(b) program an ``entity'' is defined as ``the whole or part of any business, institution, organization or household that is recognized as an entity under any U.S. Federal,

State or local law that applies to it; is located, at least in part, in the U.S.; and whose operations affect U.S. greenhouse gas emissions.'' (http://www.pi.energy.gov/enhancingGHGregistry/)

\7\ For the purposes of this proposal, 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, that emits or may emit any greenhouse gas. Operators of military installations may classify such installations as more than a single facility based on distinct and independent functional groupings within contiguous military properties.

Again, in Section II, existing State and Regional GHG reporting and reduction programs are summarized. Many of those programs may be broader in scope and more aggressive in implementation. States collecting that additional information may have determined that types of data not collected by this proposal are necessary to implement a variety of climate efforts. While EPA's proposal was specifically developed in response to the Appropriations Act, we also acknowledge, similar to the States, there may be a need to collect additional data from sources subject to this rule as well as other sources depending on the types of policies the Agency is developing and implementing (e.g., indirect emissions and offsets). Addressing climate change may require a suite of policies and programs and this proposal for a mandatory reporting program is just one effort to collect information necessary to inform those policies. There may well be subsequent efforts depending on future policy direction and/or requests from Congress.

F. How does this proposal relate to EPA's Climate Change ANPR?

On July 30, 2008, EPA published an ANPR on ``Regulating Greenhouse

Gas Emissions under the Clean Air Act'' (73 FR 44354). The ANPR presented information relevant to, and solicited public comment on, issues regarding the potential regulation of GHGs under the CAA, including EPA's response to the U.S. Supreme Court's decision in

Massachusetts v. EPA. 127 S.Ct. 1438 (2007). EPA's proposing the mandatory GHG reporting rule does not indicate that EPA has made any final decisions related to the questions identified in the ANPR. Any information collected under the mandatory GHG reporting program would assist EPA and others in developing future climate policy.\8\

\8\ At this time, a regulation requiring the reporting of GHG emissions and emissions-related data under CAA sections 114 and 208 does not trigger the need for EPA to develop or revise regulations under any other section of the CAA, including the PSD program. See memorandum entitled ``EPA's Interpretation of Regulations that

Determine Pollutants Covered By Federal Prevention of Significant

Deterioration (PSD) Permit Program'' (Dec. 18, 2008). EPA is reconsidering this memorandum and will be seeking public comment on the issues raised in it. That proceeding, not this rulemaking, would be the appropriate venue for submitting comments on the issue of whether monitoring regulations under the CAA should trigger the PSD program.

G. How was this proposed rule developed?

In response to the FY2008 Consolidated Appropriations Amendment,

EPA has developed this proposed rulemaking. The components of this development are explained in the following subsections. 1. Identifying the Goals of the GHG Reporting System

The mandatory reporting program would provide comprehensive and accurate data which would inform future climate change policies.

Potential future climate policies include research and development initiatives, economic incentives, new or expanded voluntary programs, adaptation strategies, emission standards, a carbon tax, or a cap-and- trade program. Because we do not know at this time the specific policies that may be adopted, the data reported through the mandatory reporting system should be of sufficient quality to support a range of approaches. Also, consistent with the Appropriations Act, the reporting rule proposes to cover a broad range of sectors of the economy.

To these ends, we identified the following goals of the mandatory reporting system:

Obtain data that is of sufficient quality that it can be used to support a range of future climate change policies and regulations.

Balance the rule coverage to maximize the amount of emissions reported while excluding small emitters.

Create reporting requirements that are consistent with existing GHG reporting programs by using existing GHG emission estimation and reporting methodologies to reduce reporting burden, where feasible. 2. Developing the Proposed Rule

In order to ensure a comprehensive consideration of GHG emissions,

EPA organized the development of the proposal around seven categories of processes that emit GHGs: Downstream sources of emissions: (1)

Fossil Fuel Combustion: Stationary, (2) Fossil Fuel Combustion: Mobile,

(3) Industrial Processes, (4) Fossil Fuel Fugitive \9\ Emissions, (5)

Biological Processes and Upstream sources of emissions: (6) Fuel

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Suppliers, and (7) Industrial GHG Suppliers.

\9\ The term ``fugitive'' often refers to emissions that cannot reasonably pass through a stack, chimney, vent or other functionally equivalent opening. This definition of fugitives is used throughout the preamble, except in Section W Oil and Natural Gas Systems, which uses a slightly modified definition based on the Intergovernmental

Panel on Climate Change.

For each category, EPA evaluated the requirements of existing GHG reporting programs, obtained input from stakeholders, analyzed reporting options, and developed the general reporting requirements and specific requirements for each of the GHG emitting processes. 3. Evaluation of Existing GHG Reporting Programs

A number of State and regional GHG reporting systems currently are in place or under development. EPA's goal is to develop a reporting rule that, to the extent possible and appropriate, would rely on similar protocols and formats of the existing programs and, therefore, reduce the burden of reporting for all parties involved. Therefore, each of the work groups performed a comprehensive review of existing voluntary and mandatory GHG reporting programs, as well as guidance documents for quantifying GHG emissions from specific sources. These

GHG reporting programs and guidance documents included the following:

International programs, including the IPCC, the EU

Emissions Trading System, and the Environment Canada reporting rule;

U.S. national programs, such as the U.S. GHG inventory, the ARP, voluntary GHG partnership programs (e.g., Natural Gas STAR), and the DOE 1605(b) voluntary GHG registry;

State and regional GHG reporting programs, such as TCR,

RGGI, and programs in California, New Mexico, and New Jersey;

Reporting protocols developed by nongovernmental organizations, such as WRI/WBCSD; and

Programs from industrial trade organizations, such as the

American Petroleum Institute's Compendium of GHG Estimation

Methodologies for the Oil and Gas Industry and the Cement

Sustainability Initiative's CO2Accounting and Reporting

Standard for the Cement Industry, developed by WBCSD.

In reviewing these programs, we analyzed the sectors covered, thresholds for reporting, approach to indirect emissions reporting, the monitoring or emission estimating methods used, the measures to assure the quality of the reported data, the point of monitoring, data input needs, and information required to be reported and/or retained. We analyzed these provisions for suitability to a mandatory, Federal GHG reporting program, and compiled the information. The full review of existing GHG reporting programs and guidance may be found in the docket at EPA-HQ-OAR-2008-0508-054. Section II of this preamble summarizes the fundamental elements of these programs. 4. Stakeholder Outreach To Identify Reporting Issues

Early in the development process, we conducted a proactive communications outreach program to inform the public about the rule development effort. We solicited input and maintained an open door policy for those interested in discussing the rulemaking. Since January 2008, EPA staff held more than 100 meetings with over 250 stakeholders.

These stakeholders included:

Trade associations and firms in potentially affected industries/sectors;

State, local, and Tribal environmental control agencies and regional air quality planning organizations;

State and regional organizations already involved in GHG emissions reporting, such as TCR, CARB, and WCI;

Environmental groups and other nongovernmental organizations.

We also met with DOE and USDA which have programs relevant to GHG emissions.

During the meetings, we shared information about the statutory requirements and timetable for developing a rule. Stakeholders were encouraged to provide input on key issues. Examples of topics discussed were, existing GHG monitoring and reporting programs and lessons learned, thresholds for reporting, schedule for reporting, scope of reporting, handling of confidential data, data verification, and the role of States in administering the program. As needed, the technical work groups followed up with these stakeholder groups on a variety of methodological, technical, and policy issues. EPA staff also provided information to Tribes through conference calls with different Indian working groups and organizations at EPA and through individual calls with Tribal board members of TCR.

For a full list of organizations EPA met with during development of this proposal, see the memo found at EPA-HQ-OAR-2008-0508-055.

II. Summary of Existing Federal, State, and Regional Emission Reporting

Programs

A number of voluntary and mandatory GHG programs already exist or are being developed at the State, Regional, and Federal levels. These programs have different scopes and purposes. Many focus on GHG emission reduction, whereas others are purely reporting programs. In addition to the GHG programs, other Federal emission reporting programs and emission inventories are relevant to the proposed GHG reporting rule.

Several of these programs are summarized in this section.

In developing the proposed rule, we carefully reviewed the existing reporting programs, particularly with respect to emissions sources covered, thresholds, monitoring methods, frequency of reporting and verification. States may have, or intend to develop, reporting programs that are broader in scope or are more aggressive in implementation because those programs are either components of established reduction programs (e.g., cap and trade) or being used to design and inform specific complementary measures (e.g., energy efficiency). EPA has benefitted from the leadership the States have shown in developing these programs and their experiences. Discussions with States that have already implemented programs have been especially instructive. Where possible, we built upon concepts in existing Federal and State programs in developing the mandatory GHG reporting rule.

A. Federal Voluntary GHG Programs

EPA and other Federal agencies operate a number of voluntary GHG reporting and reduction programs that EPA reviewed when developing this proposal, including Climate Leaders, several Non-CO2 voluntary programs, the CHP partnership, the SmartWay Transport

Partnership program, the National Environmental Performance Track

Partnership, and the DOE 1605(b) voluntary GHG registry. There are several other Federal voluntary programs to encourage emissions reductions, clean energy, or energy efficiency, and this summary does not cover them all. This summary focuses on programs that include voluntary GHG emission inventories or reporting of GHG emission reduction activities for sectors covered by this proposed rulemaking.

Climate Leaders.\10\ Climate Leaders is an EPA partnership program that works with companies to develop GHG reduction strategies. Over 250 industry partners in a wide range of sectors have joined. Partner companies complete a corporate-wide inventory of GHG emissions and develop an inventory management plan using Climate Leaders protocols.

Each company sets GHG reductions goals and submits to EPA an

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annual GHG emissions inventory documenting their progress. The annual reporting form provides corporate-wide emissions by type of emissions source.

\10\ For more information about the Climate Leaders program please see: http://www.epa.gov/climateleaders/.

Non-CO2Voluntary Partnership Programs.\11\ Since the 1990s, EPA has operated a number of non-CO2voluntary partnership programs aimed at reducing emissions from GHGs such as

CH4, SF66, and PFCs. There are four sector-specific voluntary CH4reduction programs: Natural

Gas STAR, Landfill Methane Outreach Program, Coalbed Methane Outreach

Program and AgSTAR. In addition, there are sector-specific voluntary emission reduction partnerships for high GWP gases. The Natural Gas

STAR partnership encourages companies across the natural gas and oil industries to adopt practices that reduce CH4emissions. The

Landfill Methane Outreach Program and Coalbed Methane Outreach Program encourage voluntary capture and use of landfill and coal mine

CH4, respectively, to generate electricity or other useful energy. These partnerships focus on achieving CH4 reductions. Industry partners voluntarily provide technical information on projects they undertake to reduce CH4emissions on an annual basis, but they do not submit CH4emissions inventories. AgSTAR encourages beneficial use of agricultural

CH4but does not have partner reporting requirements.

\11\ For more information about the Non-CO2Voluntary

Partnership Programs please see: http://www.epa.gov/nonco2/ voluntaryprograms.html.

There are two sector specific partnerships to reduce SF6 emissions: The SF6Emission Reduction Partnership for

Electric Power Systems, with over 80 participating utilities, and an

SF6Emission Reduction Partnership for the Magnesium

Industry. Partners in these programs implement practices to reduce

SF6emissions and prepare corporate-wide annual inventories of SF6emissions using protocols and reporting tools developed by EPA. There are also two partnerships focused on PFCs. The

Voluntary Aluminum Industrial Partnership promotes technically feasible and cost effective actions to reduce PFC emissions. Industry partners track and report PFC emissions reductions. Similarly, the Semiconductor

Industry Association and EPA formed a partnership to reduce PFC emissions. A third party compiles data from participating semiconductor companies and submits an aggregate (not company-specific) annual PFC emissions report.

CHP Partnership.\12\ The CHP Partnership is an EPA partnership that cuts across sectors. It encourages use of CHP technologies to generate electricity and heat from the same fuel source, thereby increasing energy efficiency and reducing GHG emissions from fuel combustion.

Corporate and institutional partners provide data on existing and new

CHP projects, but do not submit emissions inventories.

\12\ For more information about the CHP Partnership please see: http://www.epa.gov/chp/.

SmartWay Transport Partnership.\13\ The SmartWay Transport

Partnership program is a voluntary partnership between freight industry stakeholders and EPA to promote fuel efficiency improvements and GHG emissions reductions. Over 900 companies have joined including freight carriers (railroads and trucking fleets) and shipping companies.

Carrier and shipping companies commit to measuring and improving the efficiency of their freight operations using EPA-developed tools that quantify the benefits of a number of fuel-saving strategies. Companies report progress annually. The GHG data that carrier companies report to

EPA is discussed further in Section V.QQ.4b of this preamble.

\13\ For more information about SmartWay please see: http:// www.epa.gov/smartway/.

National Environmental Performance Track Partnership.\14\ The

Performance Track Partnership is a voluntary partnership that recognizes and rewards private and public facilities that demonstrate strong environmental performance beyond current requirements.

Performance Track is designed to augment the existing regulatory system by creating incentives for facilities to achieve environmental results beyond those required by law. To qualify, applicants must have implemented an independently-assessed environmental management system, have a record of sustained compliance with environmental laws and regulations, commit to achieving measurable environmental results that go beyond compliance, and provide information to the local community on their environmental activities. Members are subject to the same legal requirements as other regulated facilities. In some cases, EPA and states have reduced routine reporting or given some flexibility to program members in how they meet regulatory requirements. This approach is recognized by more than 20 states that have adopted similar performance-based leadership programs.

\14\ For more information about Performance Track please see: http://www.epa.gov/perftrac/index.htm.

1605(b) Voluntary Registry.\15\ The DOE EIA established a voluntary

GHG registry under section 1605(b) of the Energy Policy Act of 1992.

The program was recently enhanced and a final rule containing general reporting guidelines was published on April 21, 2006 (71 FR 20784). The rule is contained in 10 CFR part 300. Unlike EPA's proposal which requires of reporting of GHG emissions from facilities over a specific threshold, the DOE 1605(b) registry allows anyone (e.g., a public entity, private company, or an individual) to report on their emissions and their emission reduction projects to the registry. Large emitters

(e.g., anyone that emits over 10,000 tons of CO2e per year) that wish to register emissions reductions must submit annual company- wide GHG emissions inventories following technical guidelines published by DOE and must calculate and report net GHG emissions reductions. The program offers a range of reporting methodologies from stringent direct measurement to simplified calculations using default factors and allows the reporters to report using the methodological option they choose. In addition, as mentioned above, unlike EPA's proposal, sequestration and offset projects can also be reported under the 1605(b) program. There is additional flexibility offered to small sources who can choose to limit annual inventories and emission reduction reports to just a single type of activity rather than reporting company-wide GHG emissions, but must still follow the technical guidelines. Reported data are made available on the Web in a public use database.

\15\ For more information about DOE's 1605(b) programs please see: http://www.pi.energy.gov/enhancingGHGregistry/.

Summary. These voluntary programs are different in nature from the proposed mandatory GHG emissions reporting rule. Industry participation in the programs and reporting to the programs is entirely voluntary. A small number of sources report, compared to the number of facilities that would likely be affected by the proposed mandatory GHG reporting rule. Most of the EPA voluntary programs do not require reporting of annual emissions data, but are instead intended to encourage GHG reduction projects/activities and track partner's successes in implementing such projects. For the programs that do include annual emissions reporting (e.g., Climate Leaders, DOE 1605(b)) the scope and level of detail are different. For example, Climate Leaders annual reports are generally corporate-wide and do not contain the facility and process-

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level details that would be needed by a mandatory program to verify the accuracy of the emissions reports.

At the same time, aspects of the voluntary programs serve as useful starting points for the mandatory GHG reporting rules. GHG emission calculation principles and protocols have been developed for various types of emission sources by Climate Leaders, the DOE 1605(b) program, and some partnerships such as the SF6reduction partnerships and SmartWay. Under these protocols, reporting companies monitor process or operating parameters to estimate GHG emissions, report annually, and retain records to document their GHG estimates. Through the voluntary programs, EPA, DOE, and participating companies have gained understanding of processes that emit GHGs and experience in developing and reviewing GHG emission inventories.

B. Federal Mandatory Reporting Programs

Sulfur Dioxide (SO2) and Nitrogen Oxides (NOX) Trading Programs.

The ARP and the NOXBudget Trading Program are cap-and-trade programs designed to reduce emissions of SO2and

NOX\16\. As a part of those programs facilities with EGUs that serve a generator larger than 25 MW are required to report emissions. The 40 CFR part 75 CEMS rule establishes monitoring and reporting requirements under these programs. The regulations in 40 CFR part 75 require continuous monitoring and quarterly and annual emissions reporting of CO2mass emissions,\17\

SO2mass emissions, NOXemission rate, and heat input. Part 75 contains specifications for the types of monitoring systems that may be used to determine CO2emissions and sets forth operations, maintenance, and QA/QC requirement for each system.

In some cases, EGUs are allowed to use simplified procedures other than

CEMS (e.g., monitoring fuel feed rates and conducting periodic sampling and analyses of fuel carbon content) to determine CO2 emissions. Under the regulations, affected EGUs must submit detailed quarterly and annual CO2emissions reports using standardized electronic reporting formats. If CEMS are used, the quarterly reports include hourly CEMS data and other information used to calculate emissions (e.g., monitor downtime). If alternative monitoring programs are used, detailed data used to calculate

CO2emissions must be reported.

\16\ For more information about these cap and trade programs see http://www.epa.gov/airmarkt/.

\17\ The requirements regarding CO2emissions reporting apply only to ARP sources and are pursuant to section 821 of the CAA Amendments of 1990, Public Law 101-549.

The joint explanatory statement accompanying the FY2008

Consolidated Appropriations Amendment specified that EPA could use the existing reporting requirements for electric generating units under section 821 of the 1990 CAA Amendments.\18\ As described in Sections

V.C. and V.D. of this preamble, because the part 75 regulations already require reporting of high quality CO2data from EGUs, the

GHG reporting rule proposes to use the same CO2data rather than require additional reporting of CO2from EGUs. They would, however, have to include reporting of the other GHG emissions, such as CH4and N2O, at their facilities.

\18\ The joint explanatory statement refers to ``Section 821 of the Clean Air Act'' but section 821 was part of the 1990 CAA

Amendments not codified into the CAA itself.

TRI. TRI requires facility-level reporting of annual mass emissions of approximately 650 toxic chemicals.\19\ If they are above established thresholds, facilities in a wide range of industries report including manufacturing industries, metal and coal mining, electric utilities, and other industrial sectors. Facilities must submit annual reports of total stack and fugitive emissions of the listed toxic chemicals using a standardized form which can be submitted electronically. No information is reported on the processes and emissions points included in the total emissions. The data reported to TRI are not directly useful for the GHG rule because TRI does not include GHG emissions and does not identify processes or emissions sources. However, the TRI program is similar to the proposed GHG reporting rule in that it requires direct emissions reporting from a large number of facilities

(roughly 23,000) across all major industrial sectors. Therefore, EPA reviewed the TRI program for ideas regarding program structure and implementation.

\19\ For more information about TRI and what chemicals are on the list, please see: http://www.epa.gov/tri/.

Vehicle Reporting. EPA's existing criteria pollutant emissions certification regulations, as well as the fuel economy testing regulations which EPA administers as part of the CAFE program, require vehicle manufacturers to measure and report CO2for essentially all of their light duty vehicles. In addition, many engine manufacturers currently measure CO2as an integral part of calculating emissions of criteria pollutants, and some report

CO2emissions to EPA in some form.

C. EPA Emissions Inventories

U.S. Inventory of Greenhouse Gas Emissions and Sinks. As discussed in Section I.D of this preamble, EPA prepares the U.S. Inventory of

Greenhouse Gas Emissions and Sinks every year. The details of this

Inventory, the methodologies used to calculate emissions and its relationship to this proposal are discussed in Section I.D of this preamble.

NEI. \20\ EPA compiles the NEI, a database of air emissions information provided primarily by State and local air agencies and

Tribes. The database contains information on stationary and mobile sources that emit criteria air pollutants and their precursors, as well as hazardous air pollutants. Stationary point source emissions that must be inventoried and reported are those that emit over a threshold amount of at least one criteria pollutant. Many States also inventory and report stationary sources that emit amounts below the thresholds for each pollutant. The NEI includes over 60,000 facilities. The information that is required consists of facility identification information; process information detailing the types of air pollution emission sources; air pollution emission estimates (including annual emissions); control devices in place; stack parameters; and location information. The NEI differs from the proposed GHG reporting rule in that the NEI contains no GHG data, and the data are reported primarily by State agencies rather than directly reported by industries.\21\

However, in developing the proposed rule, EPA used the NEI to help determine sources that might need to report under the GHG reporting rule. We considered the types of facility, process and activity data reported in NEI to support the emissions data as a possible model for the types of data to be reported under the GHG reporting rule. We also considered systems that could be used to link data reported under the

GHG rule with data for the same facilities in the NEI.

\20\ For more information about the NEI please see: http:// www.epa.gov/ttn/chief/net/.

\21\ As discussed in section IV of the preamble, tropospheric ozone (O3) is a GHG. The precursors to tropospheric

O3(e.g., NOX, VOCs, etc) are reported to the NEI by

States and then EPA models tropospheric O3based on that precursor data.

D. Regional and State Voluntary Programs for GHG Emissions Reporting

A number of States have demonstrated leadership and developed corporate voluntary GHG reporting programs individually or joined with other States to develop GHG reporting programs as part of their approaches to addressing GHG emissions. EPA has

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benefitted from this leadership and the States' experiences; discussions with those that have already implemented programs have been especially instructive. Section V of the preamble describes the proposed methods for each source category. The different options considered have been particularly informed by the States' expertise.

This section of the preamble summarizes two prominent voluntary efforts. In developing the greenhouse rules, EPA reviewed the relevant protocols used by these programs as a starting point. We recognize that these programs may have additional monitoring and reporting requirements than those outlined in the proposed rule in order to provide distinct program benefits.

CCAR.\22\ CCAR is a voluntary GHG registry already in use in

California. CCAR has released several methodology documents including a general reporting protocol, general certification (verification) protocol, and several sector-specific protocols. Companies submit emissions reports using a standardized electronic system. Emission reports may be aggregated at the company level or reported at the facility level.

\22\ For more information about CCAR please see: http:// www.climateregistry.org/.

TCR.\23\ TCR is a partnership formed by U.S. and Mexican States,

Canadian provinces, and Tribes to develop standard GHG emissions measurement and verification protocols and a reporting system capable of supporting mandatory or voluntary GHG emission reporting rules and policies for its member States. TCR has released a General Reporting

Protocol that contains procedures to measure and calculate GHG emissions from a wide range of source categories. They have also released a general verification protocol, and an electronic reporting system. Founding reporters (companies and other organizations that have agreed to voluntarily report their GHG emissions) implemented a pilot reporting program in 2008. Annual reports would be submitted covering six GHGs. Corporations must report facility-specific emissions, broken out by type of emission source (e.g., stationary combustion, electricity use, direct process emissions) within the facility.

\23\ For more information about TCR please see: http:// www.theclimateregistry.org/.

E. State and Regional Mandatory Programs for GHG Emissions Reporting and Reduction

Several individual States and regional groups of States have demonstrated leadership and are developing or have developed mandatory

GHG reporting programs and GHG emissions control programs. This section of the preamble summarizes two regional cap-and-trade programs and several State mandatory reporting rules. We recognize that, like the current voluntary regional and State programs, State and regional mandatory reporting programs may evolve or develop to include additional monitoring and reporting requirements than those included in the proposed rule. In fact, these programs may be broader in scope or more aggressive in implementation because the programs are either components of established reduction programs (e.g., cap and trade) or being used to design and inform specific complementary measures (e.g., energy efficiency).

RGGI.\24\ RGGI is a regional cap-and-trade program that covers

CO2emissions from EGUs that serve a generator greater than 25 MW in member States in the mid-Atlantic and Northeast. The program goal is to reduce CO2emissions to 10 percent below 1990 levels by the year 2020. RGGI will utilize the CO2reported to and verified by EPA under 40 CFR part 75 to determine compliance of the EGUs in the cap-and-trade program. In addition, the EGUs in RGGI that are not currently reporting to EPA under the ARP and NOX Budget program (e.g., co-generation facilities) will start reporting their

CO2data to EPA for QA/QC, similar to the sources already reporting. Certain types of offset projects will be allowed, and GHG offset protocols have been developed. The States participating in RGGI have adopted State rules (based on the model rule) to implement RGGI in each State. The RGGI cap-and-trade program took effect on January 1, 2009.

\24\ For more information about RGGI please see: http:// www.rggi.org/.

WCI.\25\ WCI is another regional cap-and-trade program being developed by a group of Western States and Canadian provinces. The goal is to reduce GHG emissions to 15 percent below 2005 levels by the year 2020. Draft options papers and program scope papers were released in early 2008, public comments were reviewed, and final program design recommendations were made in September 2008. Other elements of the program, such as reporting requirements, market operations, and offset program development continues. Several source categories are being considered for inclusion in the cap and trade framework. The program might be phased in, starting with a few source categories and adding others over time. Points of regulation for some source categories, calculation methodologies, and other reporting program elements are under development. The WCI is also analyzing alternative or complementary policies other than cap-and-trade that could help reach

GHG reduction goals. Options for rule implementation and for coordination with other rules and programs such as TCR are being investigated.

\25\ For more information about WCI please see: http:// www.westernclimateinitiative.org/.

A key difference between the Federal mandatory GHG reporting rule and the RGGI and WCI programs is that the Federal mandatory GHG rule is solely a reporting requirement. It does not in any way regulate GHG emissions or require any emissions reductions.

State Mandatory GHG Reporting Rules. Seventeen States have developed, or are developing, mandatory GHG reporting rules.\26\ The docket contains a summary of these State mandatory rules (EPA-HQ-OAR- 2008-0508-056). Final rules have not yet been developed by some of the

States, so details of some programs are unknown. Reporting requirements have taken effect in twelve States as of 2009; the rest start between 2010 and 2012. Reporting is typically annual, although some States require quarterly reporting for EGUs, consistent with RGGI and the ARP.

\26\ These include: California, Colorado, Connecticut, Delaware,

Hawaii, Iowa, Maine, Maryland, Massachusetts, New Jersey, New

Mexico, North Carolina, Oregon, Virginia, Washington, West Virginia, and Wisconsin.

State rules differ with regard to which facilities must report and which GHGs must be reported. Some States require all facilities that must obtain Title V permits to report GHG emissions. Others require reporting for particular sectors (e.g., large EGUs, cement plants, refineries). Some State rules apply to any facility with stationary combustion sources that emit a threshold level of CO2. Some apply to any facility, or to facilities within listed industries, if their emissions exceed a specified threshold level of CO2e.

Many of the State rules apply to six GHGs (CO2,

CH4, N2O, HFCs, PFCs, SF6); others apply only to CO2or a subset of the six gases. Most require reporting at the facility level, or by unit or process within a facility.

The level of specificity regarding GHG monitoring and calculation methods varies. Some of the States refer to use of protocols established by TCR or CCAR. Others look to industry-specific protocols

(such as methods developed by the American Petroleum Institute), to accepted international methodologies such as IPCC, and/or to emission factors in EPA's Compilation of Air Pollutant

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Emission Factors (known as AP-42 \27\) or other EPA guidance.

\27\ See Compilation of Air Pollutant Emission Factors, Fifth

Edition: http://www.epa.gov/ttn/chief/ap42/index.html_ac/ index.html.

California Mandatory GHG Reporting Rule.\28\ CARB's mandatory reporting rule is an example of a State rule that covers multiple source categories and contains relatively detailed requirements, similar to this proposal developed by EPA. According to the CARB proposed rule (originally proposed October 19, 2007, and revised on

December 5, 2007), monitoring must start on January 1, 2009, and the first reports will be submitted in 2010. The rule requires facility- level reporting of all GHGs, except PFCs, from cement manufacturing plants, electric power generation and retail, cogeneration plants, petroleum refineries, hydrogen plants, and facilities with stationary combustion sources emitting greater than 25,000 tons CO2per year. California requires 40 CFR part 75 data for EGUs. The California rule contains specific GHG estimation methods that are largely consistent with CCAR protocols, and also rely on American Petroleum

Institute protocols and IPCC/EU protocols for certain types of sources.

California continues to participate in other national and regional efforts, such as TCR and WCI, to assist with developing consistent reporting tools and procedures on a national and regional basis.

\28\ For more information about CA mandatory reporting program please see: http://www.arb.ca.gov/cc/reporting/ghg-rep/ghg-rep.htm.

F. How the Proposed Mandatory GHG Reporting Program Is Different From the Federal and State Programs EPA Reviewed

The various existing State and Federal programs EPA reviewed are diverse. They apply to different industries, have different thresholds, require different pollutants and different types of emissions sources to be reported, rely on different monitoring protocols, and require different types of data to be reported, depending on the purposes of each program. None of the existing programs require nationwide, mandatory GHG reporting by facilities in a large number of sectors, so

EPA's proposed mandatory GHG rule development effort is unique in this regard.

Although the mandatory GHG rule is unique, EPA carefully considered other Federal and State programs during development of the proposed rule. Documentation of our review of GHG monitoring protocols for each source category used by Federal, State, and international voluntary and mandatory GHG programs, and our review of State mandatory GHG rules can be found at EPA-HQ-OAR-2008-0508-056. The proposed monitoring and GHG calculation methodologies for many source categories are the same as, or similar to, the methodologies contained in State reporting programs such as TCR, CCAR, and State mandatory GHG reporting rules and similar to methodologies developed by EPA voluntary programs such as Climate

Leaders. The reporting requirements set forth in 40 CFR part 75 are also being used for this proposed rule. Similarity in proposed methods would help maximize the ability of individual reporters to submit the emissions calculations to multiple programs, if desired. EPA also continues to work closely with States and State-based groups to ensure that the data management approach in this proposal would lead to efficient submission of data to multiple programs. Section V of this preamble includes further information on the selection of monitoring methods for each source category.

The intent of this proposed rule is to collect accurate and consistent GHG emissions data that can be used to inform future decisions. One goal in developing the rule is to utilize and be consistent with the GHG protocols and requirements of other State and

Federal programs, where appropriate, to make use of existing cooperative efforts and reduce the burden to facilities submitting reports to other programs. However, we also need to be sure the mandatory reporting rule collects facility-specific data of sufficient quality to achieve the Agency's objectives for this rule. Therefore, some reporting requirements of this proposed rule are different from the State programs. The remaining sections of this preamble further describe the proposed rule requirements and EPA's rationale for all of the requirements.

EPA seeks comment on whether the conclusions drawn during its review of existing programs are accurate and invites data to demonstrate if, and if so how, the goals and objectives of this proposed mandatory reporting system could be met through existing programs. In particular, comments should address how existing programs meet the breadth of sources reporting, thresholds for reporting, consistency and stringency of methods for reporting, level of reporting, frequency of reporting and verification of reports included in this proposal.

III. Summary of the General Requirements of the Proposed Rule

The proposed rule would require reporting of annual emissions of

CO2, CH4, N2O, SF6, HFCs,

PFCs, and other fluorinated gases (as defined in proposed 40 CFR part 98, subpart A). The rule would apply to certain downstream facilities that emit GHGs, upstream suppliers of fossil fuels and industrial GHGs, and manufacturers of vehicles and engines.\29\ We are proposing that reporting be at the facility \30\ level, except that certain suppliers of fossil fuels and industrial gases and manufacturers of vehicles and engines would report at the corporate level.

\29\ We are proposing to incorporate the reporting requirements for manufacturers of motor vehicles and engines into the existing reporting requirements of 40 CFR parts 86, 89, 90, 91, 92, 94, 1033, 1039, 1042, 1045, 1048, 1051, and 1054.

\30\ For the purposes of this proposal, 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, that emits or may emit any greenhouse gas. Operators of military installations may classify such installations as more than a single facility based on distinct and independent functional groupings within contiguous military properties.

A. Who must report?

Owners and operators of the following facilities and supply operations would submit annual GHG emission reports under the proposal:

A facility that contains any of the source categories listed below in any calendar year starting in 2010. For these facilities, the

GHG emission report would cover all sources in any source category for which calculation methodologies are provided in proposed 40 CFR part 98, subparts B through JJ.

--Electricity generating facilities that are subject to the ARP, or that contain electric generating units that collectively emit 25,000 metric tons of CO2e or more per year.\31\

\31\ This does not include portable equipment or generating units designated as emergency generators in a permit issued by a state or local air pollution control agency. As described in section

V.C of the preamble we are taking comment on whether or not a permit should be required.

--Adipic acid production.

--Aluminum production.

--Ammonia manufacturing.

--Cement production.

--Electronics--Semiconductor, MEMS, and LCD (LCD) manufacturing facilities with an annual production capacity that exceeds any of the thresholds listed in this paragraph--Semiconductors:

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1,080 m\2\ silicon, MEMS: 1,202 m\2\ silicon, LCD: 235,700 m\2\ LCD.

--Electric power systems that include electrical equipment with a total nameplace capacity that exceeds 17,820 lbs (7,838 kg) of

SF6or PFCs.

--HCFC-22 production.

--HFC-23 destruction processes that are not colocated with a HCFC- 22 production facility and that destroy more than 2.14 metric tons of

HFC-23 per year.

--Lime manufacturing.

--Nitric acid production.

--Petrochemical production.

--Petroleum refineries.

--Phosphoric acid production.

--Silicon carbide production.

--Soda ash production.

--Titanium dioxide production.

--Underground coal mines that are subject to quarterly or more frequent sampling by MSHA of ventilation systems.

--Municipal landfills that generate CH4in amounts equivalent to 25,000 metric tons CO2e or more per year.

--Manure management systems that emit CH4and

N2O in amounts equivalent to 25,000 metric tons

CO2e or more per year.

Any facility that emits 25,000 metric tons CO2e or more per year in combined emissions from stationary fuel combustion units, miscellaneous use of carbonates and all of the source categories listed below that are located at the facility in any calendar year starting in 2010. For these facilities, the GHG emission report would cover all source categories for which calculation methodologies are provided in proposed 40 CFR part 98, subparts B through JJ of the rule.

--Electricity Generation \32\

\32\ This does not include portable equipment or generating units designated as emergency generators in a permit issued by a state or local air pollution control agency. As described in section

V.C of the preamble we are taking comment on whether or not a permit should be required.

--Electronics--Photovoltaic Manufacturing

--Ethanol Production

--Ferroalloy Production

--Fluorinated Greenhouse Gas Production

--Food Processing

--Glass Production

--Hydrogen Production

--Iron and Steel Production

--Lead Production

--Magnesium Production

--Oil and Natural Gas Systems

--Pulp and Paper Manufacturing

--Zinc Production

--Industrial Landfills

--Wastewater

Any facility that in any calendar year starting in 2010 meets all three of the conditions listed in this paragraph. For these facilities, the GHG emission report would cover emissions from stationary fuel combustion sources only. For 2010 only, the facilities can submit an abbreviated emissions report according to proposed 40 CFR 98.3(d).

--The facility does not contain any source in any source category designated in the above two paragraphs;

--The aggregate maximum rated heat input capacity of the stationary fuel combustion units at the facility is 30 mmBtu/hr or greater; and

--The facility emits 25,000 metric tons CO2e or more per year from all stationary fuel combustion sources.\33\

\33\ This does not include portable equipment or generating units designated as emergency generators in a permit issued by a state or local air pollution control agency. As described in section

V. C of the preamble we are taking comment on whether or not a permit should be required.

Any supplier of any of the products listed below in any calendar year starting in 2010. For these suppliers, the GHG emissions report would cover all applicable products for which calculation methodologies are provided in proposed 40 CFR part 98, subparts KK through PP.

--Coal.

--Coal-based liquid fuels.

--Petroleum products.

--Natural gas and NGLs.

--Industrial GHGs: All producers of industrial GHGs, importers and exporters of industrial GHGs with total bulk imports or total bulk exports that exceed 25,000 metric tons CO2e per year.

--CO2: All producers of CO2, importers and exporters of CO2or a combination of CO2and other industrial GHGs with total bulk imports or total bulk exports that exceed 25,000 metric tons CO2e per year.

Manufacturers of mobile sources and engines would be required to report emissions from the vehicles and engines they produce, generally in terms of an emission rate.\34\ These requirements would apply to emissions of CO2, CH4, N2O, and, where appropriate, HFCs. Manufacturers of the following vehicle and engine types would need to report: (1) Manufacturers of passenger cars, light trucks, and medium-duty passenger vehicles, (2) manufacturers of highway heavy-duty engines and complete vehicles, (3) manufacturers of nonroad diesel engines and nonroad large spark- ignition engines, (4) manufacturers of nonroad small spark-ignition engines, marine spark-ignition engines, personal watercraft, highway motorcycles, and recreational engines and vehicles, (5) manufacturers of locomotive and marine diesel engines, and (6) manufacturers of jet and turboprop aircraft engines.

\34\ As discussed in Section V.QQ, manufacturers below a size threshold would be exempt.

B. Schedule for Reporting

Facilities and suppliers would begin collecting data on January 1, 2010. The first emissions report would be due on March 31, 2011, for emissions during 2010.35 36Reports would be submitted annually. Facilities with EGUs that are subject to the ARP would continue to report CO2mass emissions quarterly, as required by the ARP, in addition to providing the annual GHG emissions reports under this rule. EPA is proposing that the rule require the submission of GHG emissions data on an ongoing, annual basis. The snapshot of information provided by a one-time information collection request would not provide the type of ongoing information which could inform the variety of potential policy options being evaluated for addressing climate change. EPA is taking comment on other possible options, including a commitment to review the continued need for the information at a specific later date, or a sunset provision. Once subject to this reporting rule, a facility or supply operation would continue to submit reports even if it falls below the reporting thresholds in future years.

\35\ Unless otherwise noted, years and dates in this notice refer to calendar years and dates.

\36\ There is a discussion in section I.IV of this preamble that takes comment on alternative reporting schedules.

C. What do I have to report?

The report would include total annual GHG emissions in metric tons of CO2e aggregated for all the source categories and for all supply categories for which emission calculation methods are provided in part 98. The report would also separately present annual mass GHG emissions for each source category and supply category, by gas.

Separate reporting requirements are provided for vehicle and engine manufacturers. These sources would be required to report emissions from the vehicles and engines they produce, generally in terms of an emission rate.

Within a given source category, the report also would break out emissions at the level required by the respective subpart (e.g., reporting could be

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required for each individual unit for some source categories and for each process line for other source categories).

In addition to GHG emissions, you would report certain activity data (e.g., fuel use, feedstock inputs) that were used to generate the emissions data. The required activity data are specified in each subpart. For some source categories, additional data would be reported to support QA/QC and verification.

EPA would protect any information claimed as CBI in accordance with regulations in 40 CFR part 2, subpart B. However, note that in general, emission data collected under CAA sections 114 and 208 cannot be considered CBI.\37\

\37\ Although CBI determinations are usually made on a case-by- case basis, EPA has issued guidance in an earlier Federal Register notice on what constitutes emissions data that cannot be considered

CBI (956 FR 7042-7043, February 21, 1991).

D. How do I submit the report?

The reports would be submitted electronically, in a format to be specified by the Administrator after publication of the final rule.\38\

To the extent practicable, we plan to adapt existing facility reporting programs to accept GHG emissions data. We are developing a new electronic data reporting system for source categories or suppliers for which it is not feasible to use existing reporting mechanisms.

\38\ For more information about the reporting format please see section VI of this preamble.

Each report would contain a signed certification by a Designated

Representative of the facility. On behalf of the owner or operator, the

Designated Representative would certify under penalty of law that the report has been prepared in accordance with the requirements of 40 CFR part 98 and that the information contained in the report is true and accurate, based on a reasonable inquiry of individuals responsible for obtaining the information.

E. What records must I retain?

Each facility or supplier would also have to retain and make available to EPA upon request the following records for five years in an electronic or hard-copy format as appropriate:

A list of all units, operations, processes and activities for which GHG emissions are calculated;

The data used to calculate the GHG emissions for each unit, operation, process, and activity, categorized by fuel or material type;

Documentation of the process used to collect the necessary data for the GHG emissions calculations;

The GHG emissions calculations and methods used;

All emission factors used for the GHG emissions calculations;

Any facility operating data or process information used for the GHG emissions calculations;

Names and documentation of key facility personnel involved in calculating and reporting the GHG emissions;

The annual GHG emissions reports;

A log book documenting any procedural changes to the GHG emissions accounting methods and any changes to the instrumentation critical to GHG emissions calculations;

Missing data computations;

A written QAPP;

Any other data specified in any applicable subpart of proposed 40 CFR part 98. Examples of such data could include the results of sampling and analysis procedures required by the subparts

(e.g., fuel heat content, carbon content of raw materials, and flow rate) and other data used to calculate emissions.

IV. Rationale for the General Reporting, Recordkeeping and Verification

Requirements That Apply to All Source Categories

This section of the preamble explains the rationales for EPA's proposals for various aspects of the rule. This section applies to all of the source categories in the preamble (further discussed in Sections

V.B through V.PP of this preamble) with the exception of mobile sources

(discussed in Section V.QQ of this preamble). The proposals EPA is making with regard to mobile sources are extensions of existing EPA programs and therefore the rationales and decisions are discussed wholly within that section. With respect to the source categories B through PP, EPA is particularly interested in receiving comments on the following issues:

(1) Reporting thresholds. EPA is interested in receiving data and analyses on thresholds. In particular, we solicit comment on whether the thresholds proposed are appropriate for each source category or whether other emissions or capacity based thresholds should be applied.

If suggesting alternative thresholds, please discuss whether and how they would achieve broad emissions coverage and result in a reasonable number of reporters.

(2) Methodologies. EPA is interested in receiving data, technical information and analyses relevant to the methodology approach. We solicit comment on whether the methodologies selected by EPA are appropriate for each source category or whether alternative approaches should be adopted. In particular, EPA would like information on the technical feasibility, costs, and relative improvement in accuracy of direct measurement at facilities. If suggesting an alternative methodology (e.g., using established industry default factors or allowing industry groups to propose an industry specific emission factor to EPA), please discuss whether and how it provides complete and accurate emissions data, comparable to other source categories, and also reflects broadly agreed upon calculation procedures for that source category.

(3) Frequency and year of reporting. EPA is interested in receiving data and analyses regarding frequency of reporting and the schedule for reporting. In particular, we solicit information regarding whether the frequency of data collection and reporting selected by EPA is appropriate for each source category or whether alternative frequencies should be considered (e.g., quarterly or every few years). If suggesting an alternative frequency, please discuss whether and how it ensures that EPA and the public receive the data in a timely fashion that allow it to be relevant for future policy decisions. EPA is proposing 2010 data collection and 2011 reporting, however, we are interested in receiving comment on alternative schedules if we are unable to meet our goal.

(4) Verification. EPA is interested in receiving data and analyses regarding verification options. We solicit input on whether the verification approach selected by EPA is appropriate for each source category or whether an alternative approach should be adopted. If suggesting an alternative verification approach, please discuss how it weighs the costs and burden to the reporter and EPA as well as the need to ensure the data are complete, accurate, and available in the timely fashion.

(5) Duration of the program. EPA is interested in receiving data and analyses regarding options for the duration of the GHG emissions information collection program in this proposed rule. By duration, EPA means for how many years the program should require the submission of information. EPA solicits input on whether the duration selected by EPA is appropriate for each source category or whether an alternative approach should be adopted. If suggesting an alternative duration, please discuss how it impacts the need to ensure the data are sufficient to inform the variety of potential policy decisions regarding climate change under consideration.

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A. Rationale for Selection of GHGs To Report

The proposed rule would require reporting of CO2,

CH4, N2O, HFCs, PFCs, SF6, and other fluorinated compounds (e.g., NF3and HFEs) as defined in the rule \39\. These are the most abundantly emitted GHGs that result from human activity. They are not currently controlled by other mandatory

Federal programs and, with the exception of the CO2 emissions data reported by EGUs subject to the ARP \40\, GHG emissions data are also not reported under other mandatory Federal programs.

CO2is the largest contributor of GHGs directly emitted by human activities, and is a significant driver of climate change. The anthropogenic combined heating effect of CH4,

N2O, HFCs, PFCs, SF6, and the other fluorinated compounds are also significant: About 40 percent as large as the

CO2heating effect according to the Fourth Assessment Report of the IPCC.

\39\ The GWPs for the GHGs to be reported are found in Table A-1 of proposed 40 CFR part 98, subpart A.

\40\ Pursuant to regulations established under section 821 of the CAA Amendments of 1990, hourly CO2emissions are monitored and reported quarterly to EPA. EPA performs a series of

QA/QC checks on the data and then makes it available on the Web site

(http://epa.gov/camddataandmaps/) usually within 30 days after receipt.

The IPCC focuses on CO2, CH4, N2O,

HFCs, PFCs, and SF6for both scientific assessments and emissions inventory purposes because these are long-lived, well-mixed

GHGs not controlled by the Montreal Protocol as Substances that Deplete the Ozone Layer. These GHGs are directly emitted by human activities, are reported annually in EPA's Inventory of U.S. Greenhouse Gas

Emissions and Sinks, and are the common focus of the climate change research community. The IPCC also included methods for accounting for emissions from several specified fluorinated gases in the 2006 IPCC

Guidelines for National Greenhouse Gas Inventories.\41\ These gases include fluorinated ethers, which are used in electronics, anesthetics, and as heat transfer fluids. Like the other six GHGs for which emissions would be reported, these fluorinated compounds are long-lived in the atmosphere and have high GWP. In many cases these fluorinated gases are used in expanding industries (e.g., electronics) or as substitutes for HFCs. As such, EPA is proposing to include reporting of these gases to ensure that the Agency has an accurate understanding of the emissions and uses of these gases, particularly as those uses expand.

\41\ 2006 IPCC Guidelines for National Greenhouse Gas

Inventories. The National Greenhouse Gas Inventories Programme, H.S.

Eggleston, L. Buendia, K. Miwa, T. Ngara, and K. Tanabe (eds), hereafter referred to as the ``2006 IPCC Guidelines'' are found at: http://www.ipcc.ch/ipccreports/methodology-reports.htm. For additional information on these gases please see Table A-1 in proposed 40 CFR part 98, subpart A and the Suppliers of Industrial

GHGs TSD (EPA-HQ-OAR-2008-0508-041).

There are other GHGs and aerosols that have climatic warming effects that we are not proposing to include in this rule: Water vapor,

CFCs, HCFCs, halons, tropospheric O3, and black carbon.

There are a number of reasons why we are not proposing to require reporting of these gases and aerosols under this rule. For example, these GHGs and aerosols are not covered under any State or Federal voluntary or mandatory GHG program, the UNFCCC or the Inventory of U.S.

Greenhouse Gas Emissions and Sinks. Nonetheless, we request comment on the selection of GHGs that are or are not included in the proposed rule; include data supporting your position on why a GHG should or should not be included. More detailed discussions for particular substances that we do not propose including in this rule follow.

Water Vapor. Water vapor is the most abundant naturally occurring

GHG and, therefore, makes up a significant share of the natural, background greenhouse effect. However, water vapor emissions from human activities have only a negligible effect on atmospheric concentrations of water vapor. Significant changes to global atmospheric concentrations of water vapor occur indirectly through human-induced global warming, which then increases the amount of water vapor in the atmosphere because a warmer atmosphere can hold more moisture.

Therefore, changes in water vapor concentrations are not an initial driver of climate change, but rather an effect of climate change which then acts as a positive feedback that further enhances warming. For this reason, the IPCC does not list direct emissions of water vapor as an anthropogenic forcing agent of climate change, but does include this water vapor feedback mechanism in response to human-induced warming in all modeling scenarios of future climate change. Based on this recognition that anthropogenic emissions of water vapor are not a significant driver of anthropogenic climate change, EPA's annual

Inventory of U.S. Greenhouse Gas Emissions and Sinks does not include water vapor, and GHG inventory reporting guidelines under the UNFCCC do not require data on water vapor emissions.

ODS. The CFCs, HCFCs, and halons are all strong anthropogenic GHGs that are long-lived in the atmosphere and are adding to the global anthropogenic heating effect. Therefore, these gases share common climatic properties with the other GHGs discussed in this preamble. The production and consumption of these substances (and, hence, their anthropogenic emissions) are being controlled and phased out, not because of their effects on climate change, but because they deplete stratospheric O3, which protects against harmful ultraviolet

B radiation. The control and phase-out of these substances in the U.S. and globally is occurring under the Montreal Protocol on Substances that Deplete the Ozone Layer, and in the U.S. under Title VI of the CAA as well.\42\ Therefore, the climate change research and policy community typically does not focus on these substances, precisely because they are essentially already being addressed with non-climate policy mechanisms. The UNFCCC does not cover these substances, and instead defers their treatment to the Montreal Protocol.

\42\ Under the Montreal Protocol, production and consumption of

CFCs were phased out in developed countries in 1996 (with some essential use exemptions) and are scheduled for phase-out by 2010 in developing countries (with some essential use exemptions). For halons the schedule was 1994 for phase out in developed countries and 2010 for developing countries; HCFC production was frozen in 2004 in developed countries, and in 2016 production will be frozen in developing countries; and HCFC consumption phase-out dates are 2030 for developed countries and 2040 in developing countries.

Tropospheric Ozone. Increased concentrations of tropospheric

O3are causing a significant anthropogenic warming effect, but, unlike the long-lived GHGs, tropospheric O3has a short atmospheric lifetime (hours to weeks), and therefore its concentrations are more variable over space and time. For these reasons, its global heating effect and relevance to climate change tends to entail greater uncertainty compared to the well-mixed, long-lived GHGs. Tropospheric

O3is not addressed under the UNFCCC. Moreover, tropospheric

O3is already listed as a NAAQS pollutant and its precursors are reported to States. Tropospheric O3is subsequently modeled based on the precursor data reported to the NEI.

Black Carbon. Black carbon is an aerosol particle that results from incomplete combustion of the carbon contained in fossil fuels, and it remains in the atmosphere for about a week. There is some evidence that black carbon emissions may contribute to climate warming by absorbing incoming and reflected sunlight in the atmosphere and by darkening clouds, snow and ice. While the net effect of anthropogenic aerosols has a cooling effect (CCSP 2009), there is considerable uncertainty

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in quantifying the effects of black carbon on radiative forcing and whether black carbon specifically has direct or indirect warming effects. The National Academy of Sciences states ``Regulations targeting black carbon emissions or ozone precursors would have combined benefits for public health and climate'' \43\ while also indicating that the level of scientific understanding regarding the effect of black carbon on climate is ``very low.'' The direct and indirect radiative forcing properties of multiple aerosols, including sulphates, organic carbon, and black carbon, are not well understood.

While mobile diesel engines have been the largest black carbon source in the U.S., these emissions are expected to be reduced significantly over the next several decades based on CDPFs for new vehicles.

\43\ National Academy of Sciences, ``Radiative Forcing of

Climate Change: Expanding the Concept and Addressing

Uncertainties,'' October 2005.

B. Rationale for Selection of Source Categories To Report

Section III of this preamble lists the source categories that would submit reports under the proposed rule. The source categories identified in this list were selected after considering the language of the Appropriations Act and the accompanying explanatory statement, and

EPA's experience in developing the U.S. GHG Inventory. The

Appropriations Act referred to reporting ``in all sectors of the economy'' and the explanatory statement directed EPA to include

``emissions from upstream production and downstream sources to the extent the Administrator deems it appropriate.'' \44\ In developing the proposed list, we also used our significant experience in quantifying

GHG emissions from source categories across the economy for the

Inventory of U.S. Greenhouse Gas Emissions and Sinks.

\44\ To read the full appropriations language please refer to the links on this Web site: http://www.epa.gov/climatechange/ emissions/ghgrulemaking.html.

As a starting point, EPA first considered all anthropogenic sources of GHG emissions. The term ``anthropogenic'' refers to emissions that are produced as a result of human activities (e.g., combustion of coal in an electric utility or CH4emissions from a landfill).

This is in contrast to GHGs that are emitted to the atmosphere as a result of natural activities, such as volcanoes. Anthropogenic emissions may be of biogenic origin (manure lagoons) or non-biogenic origin (e.g., coal mines). Consistent with existing international, national, regional, and corporate-level GHG reporting programs, this proposal includes only anthropogenic sources.

As a second step, EPA considered all of the source categories in the Inventory of U.S. Greenhouse Gas Emissions and Sinks because, as described in Section I.D of this preamble, it is a top-down assessment of anthropogenic sources of emissions in the U.S. Furthermore, the

Inventory has been independently reviewed by national and international experts and is considered to be a comprehensive representation of national-level GHG emissions and source categories relevant for the

U.S.

As a third step, EPA also carefully reviewed the recently completed 2006 IPCC Guidelines for National Greenhouse Gas Inventories for additional source categories that may be relevant for the U.S. These international guidelines are just beginning to be incorporated into national inventories. The 2006 IPCC Guidelines identified one additional source category for consideration (fugitive emissions from fluorinated GHG production).

As a fourth step, once EPA had a complete list of source categories relevant to the U.S., the Agency systematically reviewed those source categories against the following criteria to develop the list to the source categories included in the proposal:

(1) Include source categories that emit the most significant amounts of GHG emissions, while also minimizing the number of reporters, and

(2) Include source categories that can be measured with an appropriate level of accuracy.

To accomplish the first criterion, EPA set reporting thresholds, as described in Section IV.C of this preamble, that are designed to target large emitters. When the proposed thresholds are applied, the source categories included in this proposal meet the criterion of balancing the emissions coverage with a reasonable number of reporters. For more detailed information about the coverage of emissions and number of reporters see the Thresholds TSD (EPA-HQ-OAR-2008-0508-046) and the RIA

(EPA-HQ-OAR-2008-0508-002).

The second criterion was to require reporting for only those sources for which measurement capabilities are sufficiently accurate and consistent. Under this criterion, EPA considered whether or not facility reporting would be as effective as other means of obtaining emissions data. For some sources, our understanding of emissions is limited by lack of knowledge of source-specific factors. In instances where facility-specific calculations are feasible and result in sufficiently accurate and consistent estimates, facility-level reporting would improve current inventory estimates and EPA's understanding of the types and levels of emissions coming from large facilities, particularly in the industrial sector. These source categories have been included in the proposal. For other source categories, uncertainty about emissions is related more to the unavailability of emission factors or simple models to estimate emissions accurately and at a reasonable cost at the facility-level.

Under this criterion, we would require facility-level reporting only if reporting would provide more accurate estimates than can be obtained by other means, such as national or regional-level modeling. For an example, please refer to the discussion below on emissions from agricultural sources and other land uses.

As the Agency completed its four step evaluation of source categories to include in the proposal, some source categories were excluded from consideration and some were added. The reasons for the additions and deletions are explained below. In general, the proposed reporting rule covers almost all of the source categories in the

Inventory of U.S. Greenhouse Gas Emissions and Sinks and the 2006 IPCC

Guidelines for National Greenhouse Gas Inventories.

Reporting by direct emitters. Consistent with the appropriations language regarding reporting of emissions from ``downstream sources,''

EPA is proposing reporting requirements from facilities that directly emit GHGs above a certain threshold as a result of combustion of fuel or processes. The majority of the direct emitters included in this proposal are large facilities in the electricity generation or industrial sectors. In addition, many of the electricity generation facilities are already reporting their CO2emissions to EPA under existing regulations. As such, these facilities have only a minimal increase in the amount of data they have to provide EPA on their CH4and N2O emissions. The typical industrial facilities that are required to report under this proposal have emissions that are substantially higher than the proposed thresholds and are already doing many of the measurements and quantifications of emissions required by this proposal through existing business practices, voluntary programs, or mandatory State-level GHG reporting programs.

For more information about the thresholds included in this proposal please refer to Section IV.C of this

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preamble and for more information about the requirements for specific sources refer to Section V of this preamble.

Reporting by fuel and industrial GHG suppliers. \45\ Consistent with the appropriations language regarding reporting of emissions from

``upstream production,'' EPA is proposing reporting requirements from upstream suppliers of fossil fuel and industrial GHGs. In the context of GHG reporting, ``upstream emissions'' refers to the GHG emissions potential of a quantity of industrial gas or fossil fuel supplied into the economy. For fossil fuels, the emissions potential is the amount of

CO2that would be produced from complete combustion or oxidation of the carbon in the fuel. In many cases, the fossil fuels and industrial GHGs supplied by producers and importers are used and ultimately emitted by a large number of small sources, particularly in the commercial and residential sectors (e.g., HFCs emitted from home A/

C units or GHG emissions from individual motor vehicles).\46\ To cover these direct emissions would require reporting by hundreds or thousands of small facilities. To avoid this impact, the proposed rule does not include all of those emitters, but instead requires reporting by the suppliers of industrial gases and suppliers of fossil fuels. Because the GHGs in these products are almost always fully emitted during use, reporting these supply data would provide an accurate estimate of national emissions while substantially reducing the number of reporters.\47\ For this reason, the proposed rule requires reporting by suppliers of coal and coal-based products, petroleum products, natural gas and NGLs, CO2gas, and other industrial GHGs. We are not proposing to require reporting by suppliers of biomass-based fuels, or renewable fuels, due to the fact that GHGs emitted upon combustion of these fuels are traditionally taken into account at the point of biomass production. However, we seek comment on this approach and note that producers of some biomass-based fuels (e.g., ethanol) would be subject to reporting requirements for their on-site emissions under this proposal, similar to other fuel producers. For more information about these source categories please see the source-specific discussions in Section V of this preamble.

\45\ In this context, suppliers include producers, importers, and exporters of fossil fuels and industrial GHGs.

\46\ While EPA is not proposing any reporting requirements in this rule for operators of mobile source fleets, we are requesting comment in Section V.QQ.4.b of the Preamble.

\47\ As an example of estimating the CO2emissions that result from the combustion of fossil fuels, please see, 2006

IPCC Guidelines for National Greenhouse Gas Inventories, Volume 2--

Energy, Chapter 1--Introduction (http://www.ipcc-nggip.iges.or.jp/ public/2006gl/index.html).

There is inherent double-reporting of emissions in a program that includes both upstream and downstream sources. For example, coal mines would report CO2emissions that would be produced from combustion of the coal supplied into the economy, and the receiving power plants are already reporting CO2emissions to EPA from burning the coal to generate electricity. This double-reporting is nevertheless consistent with the appropriations language, and provides valuable information to EPA and stakeholders in the development of climate change policy and programs. Policies such as low-carbon fuel standards can only be applied upstream, whereas end-use emission standards can only be applied downstream. Data from upstream and downstream sources would be necessary to formulate and assess the impacts of such potential policies. EPA recognizes the double-reporting and as discussed in Section I.D of this preamble does not intend to use the upstream and downstream emissions data as a replacement for the national emissions estimates found in the Inventory.

It is possible to construct a reporting system with no double- reporting. For example, such a system could include fossil fuel combustion-related emissions upstream only, based on the fuel suppliers, supplemented by emissions reported downstream for industrial processes at select industries (e.g., CO2process emissions from the production of cement); fugitive emissions from coal, oil, and gas operations; biological processes and mobile source manufacturers.

Industrial GHG suppliers could be captured completely upstream, thereby removing reporting obligations from the use of the industrial gases by large downstream users (e.g., magnesium production and SF6 in electric power systems). Under this option, the total number of facilities affected is approximately 32% lower than the proposed option, and the private sector costs are approximately 26% lower than the proposed option. The emissions coverage remains largely the same as the proposed option although it is important to note that some process related emissions may not be captured due to the fact that downstream combustion sources would not be covered under this option. A source with process emission plus combustion emissions would only have to report their process emission, thus the exclusion of downstream combustion could result in some sources being under the threshold. For more information about this analysis and the differences in the number of reporters and coverage of emissions, please see the RIA (EPA-HQ-OAR- 2008-0508-002).

Emissions from agricultural sources and other land uses. The proposed rule does not require reporting of GHG emissions from enteric fermentation, rice cultivation, field burning of agricultural residues, composting (other than as part of a manure management system), agricultural soil management, or other land uses and land-use changes, such as emissions associated with deforestation, and carbon storage in living biomass or harvested wood products. As discussed in Section V of this preamble, the proposal does include reporting of emissions from manure management systems.

EPA reports on the GHG emissions and sinks associated with agricultural and land-use sources in the Inventory of U.S. Greenhouse

Gas Emissions and Sinks. In the agriculture sector, the U.S. GHG inventory report estimated that agricultural soil management, which includes fertilizer application (including synthetic and manure fertilizers, etc.), contributed N2O emissions of 265 million metric tons CO2e in 2006 and enteric fermentation contributed CH4emissions of 126 million metric tons

CO2e in 2006. These amounts reflect 3.8 percent and 1.8 percent of total GHG emissions from anthropogenic sources in 2006. Rice cultivation, agricultural field burning, and composting (other than as part of a manure management system) contributed emissions of 5.9, 1.2, and 3.3 million metric tons CO2e, respectively in 2006.

Total carbon fluxes, rather than specific emissions from deforestation, for U.S. forestlands and other land uses and land-use changes were also reported in the U.S. GHG inventory report.

The challenges to including these direct emission source categories in the rule are that practical reporting methods to estimate facility- level emissions for these sources can be difficult to implement and can yield uncertain results. For more information on uncertainty for these sources, please refer to the TSD for Biological Process Sources

Excluded from this Rule (EPA-HQ-OAR-2008-0508-045). Furthermore, these sources are characterized by a large number of small emitters. In light of these challenges, we have determined that it is impractical to require reporting of emissions from these sources in the proposed rule at

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this time for the reasons explained below.

For these sources, currently, there are no direct greenhouse gas emission measurement methods available except for research methods that are prohibitively expensive and require sophisticated equipment.

Instead, limited modeling-based methods have been developed for voluntary GHG reporting protocols which use general emission factors, and large-scale models have been developed to produce comprehensive national-level emissions estimates, such as those reported in the U.S.

GHG inventory report.

To calculate emissions using emission factor or carbon stock change approaches, it would be necessary for landowners to report on management practices, and a variety of data inputs. Activity data collection and emission factor development necessary for emissions calculations at the scale of individual reporters can be complex and costly.

For example, for calculating emissions of N2O from agricultural soils, data on nitrogen inputs necessary for accurate emissions calculations include: Synthetic fertilizer, organic amendments (manure and sludge), waste from grazing animals, crop residues, and mineralization of soil organic matter. While some activity data can be collected with reasonable certainty, the emissions estimates could still have a high degree of uncertainty because the emission factors available for individual reporters do not reflect the variety of conditions (e.g., soil type, moisture) that need to be considered for accurate estimates.

Without reasonably accurate facility-level emissions factors and the ability to accurately measure all facility-level calculation variables at a reasonable cost to reporters, facility-level emissions reporting would not improve our knowledge of GHG emissions relative to national or regional-level emissions models and data available from national databases. While a systematic measurement program of these sources could improve understanding of the environmental factors and management practices that influence emissions, this type of measurement program is technically difficult and expensive to implement, and would be better accomplished through an empirical research program that establishes and maintains rigorous measurements over time.

Despite the issues associated with reporting by the agriculture and land use sectors, threshold analyses were conducted for several source categories within these sectors as part of their consideration for inclusion in this rule. For some agricultural source categories, the number of individual farms covered at various thresholds was estimated.

The resulting analyses showed that for most of these sources no facilities would exceed any of the thresholds evaluated.

Because facility-level reporting is impracticable, the proposed rule contains other provisions to improve our understanding of emissions from these source categories. For example, agricultural soil management is a significant source of N2O. Activity data, including synthetic nitrogen-based fertilizer applications, influence

N2O emissions from this agricultural source category. To gain additional information on synthetic nitrogen-based fertilizers,

EPA is proposing that the industrial facilities reporting under this rule include information on the production and nitrogen content of fertilizers as part of their annual reports to EPA. It is estimated that all of the synthetic nitrogen-based fertilizer produced in the

U.S. is manufactured by industrial facilities that are covered under this rule due to onsite combustion-related and industrial process emissions (e.g., ammonia manufacturing facilities). The reporting requirements are contained in proposed 40 CFR part 98, subpart A.

EPA is requesting comment on this approach. In particular, the

Agency is looking for information on the usefulness of the fertilizer data for estimating N2O emissions from agricultural soils, and also on including other possible reporters of synthetic nitrogen- based fertilizers, such as fertilizer wholesalers or distributors, or importers in order to develop a better understanding of the source of

N2O emissions from fertilizer use.

For additional background information on emissions from agricultural sources and other land use, please refer to the TSD for

Biological Process Sources Excluded from this Rule (EPA-HQ-OAR-2008- 0508-045).

C. Rationale for Selection of Thresholds

The proposed rule would establish reporting thresholds at the facility level.48 49 50Only those facilities that exceed a threshold as specified in proposed 40 CFR part 98, subpart A would be required to submit annual GHG reports.

\48\ Facilities reporting under this rule will likely have more than one source category within their facility (e.g., a petroleum refinery would have to report on its refinery process, combustion, landfill and wastewater emissions).

\49\ For the purposes of this 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, that emits or may emit any greenhouse gas. Operators of military installations may classify such installations as more than a single facility based on distinct and independent functional groupings within contiguous military properties.

\50\ A different threshold approach is proposed for vehicle and engine manufacturers (when reporting emissions from the vehicles and engines the produce). Here, EPA proposes to exempt small businesses from reporting requirements, instead of applying an emission-based threshold.

The thresholds are expressed in several ways (e.g., actual emissions or capacity). The use of these different types of thresholds is discussed later in this section, but most correspond to an annual facility-wide emission level of 25,000 metric tons of CO2e, and the thresholds result in covering approximately 85-90 percent of

U.S. emissions. That level is largely consistent with many of the existing GHG reporting programs, including California, which also has a 25,000 metric ton of CO2e threshold. Furthermore, many industry stakeholders that EPA met with expressed support for a 25,000 metric ton of CO2e threshold because it sufficiently captures the majority of GHG emissions in the U.S., while excluding smaller facilities and sources.\51\ The three exceptions to the 25,000 metric ton of CO2e threshold are electricity production at selected units subject to existing Federal programs, fugitive emissions from coal mining, and emissions from mobile sources. These thresholds were selected to be consistent with existing thresholds for reporting similar data to EPA and the MSHA. The proposed thresholds maximized the rule coverage with over 85 percent of U.S. emissions reported by approximately 13,000 reporters, while keeping reporting burden to a minimum and excluding small emitters.

\51\ To view a summary of EPA's outreach efforts please refer to

EPA-HQ-OAR-2008-0508-055.

Consideration of alternative emissions thresholds. In selecting the proposed threshold level, we considered two lower emission threshold alternatives and one higher alternative. We collected available data on each industry and analyzed the implication of various thresholds in terms of number of facilities and level of emissions covered at both the industry level and the national level. We also performed a similar analysis for each proposed source category to determine if there were reasons to develop a different threshold in specific industry sectors.

From these analyses, we concluded that a 25,000 metric ton threshold suited the needs of the reporting program by providing comprehensive coverage of

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emissions with a reasonable number of reporters and that having a uniform threshold was an equitable approach. This conclusion took into account our finding that a threshold other than 25,000 metric tons of

CO2e might appear to achieve an appropriate balance between number of facilities and emissions covered for a limited number of source categories. Our conclusions about the alternative thresholds are summarized below and in the Thresholds TSD (EPA-HQ-OAR-2008-0508-046), and the considerations for individual source categories are explained in Section V of this preamble.

The lower threshold alternatives that we considered were 1,000 metric tons of CO2e per year, and 10,000 metric tons of

CO2e per year. Both broaden national emissions coverage but do so by disproportionately increasing the number of affected facilities (e.g., increasing the number of reporters by an order of magnitude in the case of a 1,000 metric tons CO2e/yr threshold and doubling the number of reporters in the case of a 10,000 metric tons CO2e/yr threshold). The majority of stakeholders were opposed to these lower thresholds for that reason--the gains in emissions coverage are not adequately balanced against the increased number of affected facilities.

A 1,000 metric ton of CO2e per year threshold would increase the number of affected facilities by an order of magnitude over the proposed threshold. The effect of a 1,000 metric ton threshold would be to change the focus of the program from large to small emitters. This threshold would impose reporting costs on tens of thousands of small businesses that in total would amount to less than 10 percent of national GHG emissions.

A 10,000 metric ton of CO2e per year threshold approximately doubles the number of facilities affected compared to a 25,000 metric ton threshold. The effect of a 10,000 metric ton threshold would only improve national emissions coverage by approximately 1 percent. The extra data that would result from a 10,000 metric ton threshold would do little to further the objectives of the program. EPA believes the 25,000 metric ton threshold more effectively targets large industrial emitters, which are responsible for some 90 percent of U.S. emissions. Similarly, California's mandatory GHG reporting program also based their selection of a 25,000 metric ton threshold on similar results at the State level.\52\

\52\ For more information on CA analysis please see http:// www.arb.ca.gov/regact/2007/ghg2007/isor.pdf.

We also considered 100,000 metric tons of CO2e per year as an alternative threshold but concluded that it fails to satisfy two key objectives. First, it may exclude enough emitters in certain source categories such that the emissions data would not adequately cover key sectors of the economy. At 100,000 metric tons CO2e per year, reporting for several large industry sectors would be rather significantly fragmented, resulting in an incomplete picture of direct emissions from that sector. For example, at a 100,000 metric ton of

CO2e threshold in ammonia manufacturing, approximately 22 out of 24 facilities would have to report; in nitric acid production, approximately 40 out of 45 facilities would have to report; in lime manufacturing, 52 out of 89 facilities would have to report; and in pulp and paper, 410 out of 425 facilities would have to report. Several stakeholders we met with stressed this potential fragmentation as a concern and requested that EPA include all facilities in a particular sector to simplify compliance, even if there was some uncertainty about whether all facilities in an industry would technically meet a particular threshold. For more information about the impact of thresholds on different industries, please see the source-specific discussion in Section V of this preamble.

The data collected by this rulemaking is intended to support analyses of future policy options. Those options may depend on harmonization with State or even international reporting programs.

Several States and regional GHG programs are using thresholds that are comparable in scope to a 25,000 metric ton of CO2e per year threshold.\53\ As noted earlier, California specifically chose a threshold of 25,000 metric ton of CO2e after analyzing

CO2data from the air quality management districts because they concluded that level provided the correct balance of emissions coverage and number of reporters. Implementing a national reporting program using a 100,000, 10,000 or 1,000 metric ton of CO2e per year limit would result in a fragmentary dataset insufficient in detail or coverage, or a more burdensome reporting requirement, and these options would be inconsistent with what many other GHG programs are requiring today.

\53\ For more information about what different States are requiring, see section II of this preamble, the ``Summary of

Existing State GHG Rules'' memorandum and ``Review of Existing

Programs'' memorandum found at EPA-HQ-OAR-2008-0508-056 and 054.

In addition to the typical emissions thresholds associated with GHG reporting and reduction programs (e.g., 25,000 metric tons

CO2e), under the CAA, there are (1) the Title V program that requires all major stationary sources, including all sources that emit or have the potential to emit over 100 tons per year of an air pollutant, to hold an operating permit \54\ and (2) the PSD/NSR program that requires new major sources and sources that are undergoing major modifications to obtain a permit. A major source for PSD is defined as any source that emits or has the potential to emit either 100 or 250 tons per year of a regulated pollutant, dependent on the source category.\55\ In nonattainment areas, the major source threshold for

NSR is at most 100 tons per year, and is less in some areas depending on the pollutant and the nonattainment classification of the area.

\54\ Other sources required to obtain Title V operating permits include all sources that are required to have PSD permits,

``affected sources'' under the ARP, and sources subject to NSPS or

NESHAP (although non-major sources under those programs can be exempted by rule).

\55\ The 100 tons per year level is the level at which existing sources in 28 industry categories listed in the CAA are classified as major sources for the PSD program. The 250 tons per year level is the level at which existing sources in all other categories are classified as major sources for PSD purposes.

EPA performed some preliminary analyses to generally estimate the existing stock of major sources in order to then estimate the approximate number of new facilities that could be required to obtain

NSR/PSD permits.\56\ For example, if the 100 and 250 tons per year thresholds were applied in the context of GHGs, the Agency estimates the number of PSD permits required to be issued each year would increase by more than a factor of 10 (i.e., more than 2,000 to 3,000 permits per year). The additional permits would generally be issued to smaller industrial sources, as well as large office and residential buildings, hotels, large retail establishments, and similar facilities.

\56\ For more information about the major source analysis please see docket number EPA-HQ-OAR-2008-0318.

For more information about the affect of thresholds considered for this rule on the number of reporters, emissions coverage and costs, please see Table VIII-2 in Section VIII of this preamble and Table IV- 47 of the RIA found at EPA-HQ-OAR-2008-0508-002.

Determining applicability to the rule. The thresholds listed in proposed 40 CFR part 98, subpart A fall into three groups: Capacity, emissions, or ``all in.'' The thresholds developed are generally equivalent to a threshold of 25,000 metric tons of CO2e per year of actual emissions.

EPA carefully examined thresholds and source categories that might be able

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to report utilizing a capacity metric, for example, tons of product produced per year. A capacity-based threshold could be the least burdensome alternative for reporting because a facility would not have to estimate emissions to determine if the rule applies. However, EPA faced two key challenges in trying to develop capacity thresholds.

First, in most cases we did not have sufficient data to determine an appropriate capacity threshold. Secondly, for some source categories defining the appropriate capacity metric was not feasible. For example, for some source categories, GHG emissions are not related to production capacity, but are more affected by design and operating factors.

The scope of the proposed emission threshold is emissions from all applicable source categories located within the physical boundary of a facility. To determine emissions to compare to the threshold, a facility that directly emits GHGs would estimate total emissions from all source categories for which emission estimation methods are provided in proposed 40 CFR part 98, subparts C through JJ. The use of total emissions is necessary because some facilities are comprised of multiple process units or collocated source categories that individually may not be large emitters, but that emit significant levels of GHGs collectively. The calculation of total emissions for the purposes of determining whether a facility exceeds the threshold should not include biogenic CO2emissions (e.g., those resulting from combustion of biofuels). Therefore, these emissions, while accounted for and reported separately, are not considered in a facility's emissions totals.

In order to ensure that the reporting of GHG emissions from all source categories within a facility's boundaries is not unduly burdensome, EPA has proposed flexibility in two ways. First, a facility would only have to report on the source categories for which there are methods provided in this rule. EPA has proposed methods only for source categories that typically contribute a relatively significant amount to a facility's total GHG emissions (e.g., EPA has not provided a method for a facility to account for the CH4emissions from coal piles). Second, for small facilities, EPA has proposed simplified emission estimation methods where feasible (e.g., stationary combustion equipment under a certain rating can use a simplified mass balance approach as opposed to more rigorous direct monitoring).

The proposed emissions threshold is based on actual emissions, with a few exceptions described below. An actual emission metric accounts for actual operating practices at each facility. A threshold based on potential emissions would bring in far more facilities including many small emitters. For example, under a potential emissions threshold, a facility that operates one shift a day would have to estimate emissions assuming three shifts per day, and would have to assume continuous use of feedstocks or fuels that result in the highest rate of GHG emissions absent enforceable limitations. Such an approach would be inconsistent with the twin goals of collecting accurate data on actual GHG emissions to the atmosphere and excluding small emitters from the rule. However, we note that emissions thresholds in some CAA rules are based on actual or potential emissions. Moreover, although actual emissions may change year to year due to fluctuations in the market and other factors, potential emissions are less subject to yearly fluctuations. We solicit comment on how considerations of actual and potential emissions should be incorporated into the proposed threshold.

There is one source category that has a proposed threshold based on

GHG generation instead of emissions--municipal landfills. In this case, a GHG generation threshold is more appropriate because some landfills have installed CH4gas recovery systems. A gas recovery system collects a percentage of the generated CH4, and destroys it, through flaring or use in energy recovery equipment. The use of a threshold based on GHG generation prior to recovery is proposed because it ensures reporting from landfills that have similar

CH4emission generating activities (e.g., ensures that landfills of similar size and management practices are reporting).

As described in Section III of this preamble, in the case of 19 source categories all of the facilities that have that particular source category within their boundaries would be subject to the proposed rule. For these facilities, our analysis indicated that all facilities with that source category emit more than 25,000 metric tons of CO2e per year or that only a few facilities emit marginally below this level. These source categories include large manufacturing operations such as petroleum refineries and cement production. This simplifies the applicability determination for facilities with these source categories.

When determining if a facility passes a relevant applicability threshold, direct emissions from the source categories would be assessed separately from the emissions from the supplier categories.

For example, a company that produces and supplies coal would be subject to reporting as a supplier of coal (40 CFR part 98, subpart KK), because coal suppliers is an ``all in'' supplier category. But the company would separately evaluate whether or not emissions from their underground coal mines (40 CFR part 98, subpart FF) would also be reported.

In addition, the source categories listed in proposed 40 CFR 98.2(a)(1) and (2) and the supply operations listed in proposed 40 CFR 98.2(a)(4) represent EPA's best estimate of the large emitters of GHGs or large suppliers of fuel and industrial GHGs. In order to ensure that all large emitters are included in this reporting program, proposed 40

CFR 98.2(a)(3) also covers any facility that emits more than 25,000 metric tons of CO2e per year from stationary fuel combustion units at source categories that are not listed in proposed 40 CFR 98.2(a)(2). To minimize the reporting burden, such facilities would be required to submit an annual report that covers stationary combustion emissions.

Furthermore, we recognize that a potentially large number of facilities would need to calculate their emissions in order to determine whether or not they had to report under proposed 40 CFR 98.2(a)(3). Therefore, to further minimize the burden on those facilities, we are proposing that any facility that has an aggregate maximum rated heat input capacity of the stationary fuel combustion units less than 30 mmBtu/hr may presume it has emissions below the threshold. According to our analysis, a facility with stationary combustion units that have a maximum rated heat input capacity of less that 30 mmBtu/hr, operating full time (e.g., 8,760 hours per year) with all types of fossil fuel would not exceed 25,000 metric tons

CO2e/yr (EPA-HQ-OAR-2008-0508-049). Under this approach, we estimate that approximately 30,000 facilities would have to assess whether or not they had to report according to proposed 40 CFR 98.2(a)(3).\57\ Of the 30,000, approximately 13,000 facilities would likely meet the threshold and have to report. Therefore, an additional 17,000 facilities may have to assess their applicability but potentially not meet the threshold for reporting. We concluded that is a reasonable number of assessments in order to ensure all

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large emitters in the U.S. are included in this reporting program. We are seeking comment on (1) whether the presumption for maximum rated heat input capacity of 30 mmBtu/hr is appropriate, (2) whether a different (lower or higher) mmBtu/hr capacity presumption should be set and (3) whether other capacity thresholds should be developed for different types of facilities. The comments should contain data and analysis to support the use of different thresholds.

\57\ This estimate is based on the Energy and Environmental

Analysis, ``Characterization of the U.S. Industrial/Commercial

Boiler Population'' (2005) (EPA-HQ-OAR-2008-0508-050). We assumed 3 boilers per manufacturing facility and 1 boiler per commercial facility. For additional information on the impact to these 30,000 facilities, please see the ICR and RIA (EPA-HQ-OAR-2008-0508-002).

We are proposing that once a facility is subject to this reporting rule, it would continue to submit annual reports even if it falls below the reporting thresholds in future years. (As discussed in section

IV.K. of this preamble, EPA is proposing that this rule require the submission of data into the foreseeable future, although EPA is soliciting comment on other options.) The purpose of the thresholds is to exclude small sources from reporting. For sources that trigger the thresholds, it is important for the purpose of policy analysis to be able to track trends in emissions and understand factors that influence emission levels. The data would be most useful if the population of reporting sources is consistent, complete and not varying over time.

The one exception to the proposed requirement to continue submitting reports even if a facility falls below the reporting threshold is active underground coal mines. When coal is no longer produced at a mine, the mine often becomes abandoned. As discussed in

Section V.FF of this preamble, we are proposing to exclude abandoned coal mines from the proposed rule, and therefore methods are not proposed for this source category.

We recognize that in some cases, this provision of ``once in, always in'' could potentially act as a disincentive for some facilities to reduce their emissions because under this proposal those facilities that did lower their emissions below the treshold would have to continue to report. To address this issue in California, CARB's mandatory reporting rule offers a facility that has emissions under the threshold for three consecutive years the opportunity to be exempt from the reporting program. We request comment on whether EPA should develop a similar process for this reporting program. Comments should include specifics on how the exemption process could work, e.g., the number of years a facility is under the threshold before they could be exempt, the quantity of emissions reductions required before a facility could be exempt, whether a facility should formally apply to EPA for an exemption or if it is automatic, etc.

EPA requests comment on the need for developing simplified emissions calculation tools for certain source categories to assist potential reporters in determining applicability. These simplified calculation tools would provide conservatively high emission estimates as an aid in identifying facilities that could be subject to the rule.

Actual facility applicability would be determined using the methods presented for each source category in the rule.

For additional information about the threshold analysis EPA conducted see the Thresholds TSD (EPA-HQ-OAR-2008-0508-046) and the individual source category discussions in Section V of this preamble.

In addition, Section V.QQ of this preamble describes the threshold for vehicle and engine manufacturers, which is a different approach from what is described in this section.

D. Rationale for Selection of Level of Reporting

EPA is proposing facility-level reporting for most source categories under this program. Specifically, the owner or operator of a facility would be required to report its GHG emissions from all source categories for which there are methods developed and listed in this proposal. For example, a petroleum refinery would have to report its emissions resulting from stationary combustion, production processes, and any fugitive or biological emissions. Facility-level reporting by owners or operators is consistent with other CAA or State-level regulatory programs that typically require facility or unit level data and compliance (e.g., ARP, NSPS, RGGI, and the California and New

Mexico mandatory GHG reporting rules). This approach allows flexibility for firms to determine whether the owner or operator of the facility would report and avoid the challenges of establishing complex reporting rules based on equity or operational control.

In addition to reporting emissions at the total facility level, the emissions would also be broken out by source category (e.g., a petroleum refinery would separately identify its emissions for refinery production processes, wastewater, onsite landfills, and any other source categories listed in proposed 40 CFR part 98, subpart A that are located onsite). This would enable EPA to understand what types of emission sources are being reported, determine that the facility is reporting for all required source categories, and use the source- category specific estimates for future policy development. Within each source category, further breakout of emissions by process or unit may be specified. Information on process or unit-level reporting and associated rationale is contained in the source category sections within Section V of this preamble.

Although many voluntary programs such as Climate Leaders or TCR have corporate-level reporting systems, EPA concluded that corporate- level reporting is overly complex under a mandatory system involving many reporters and thus is not appropriate for this rule, except where discussed below. Complex ownership structures and the frequent changes in ownership structure make it difficult to establish accountability over time and ensure consistent and uniform data collection at the facility-level. Because the best technical knowledge of emitting processes and emission levels exists at the facility level, this is where responsibility for reporting should be placed. Furthermore, the ability to differentiate and track the level and type of emissions by facility, unit or process, is essential for development of certain types of future policy (e.g., NSPS).

The only exception to facility level reporting is for some supplier source categories (e.g., importers of fuels and industrial GHGs or manufacturers of motor vehicles and engines). Importers are not individual facilities in the traditional sense of the word. The type of information reported by motor vehicle and engine manufacturers is an extension of long-standing existing reporting requirements (e.g., reporting of criteria emissions rates from vehicle and engine manufacturers) and as such does not necessitate a change in reporting level. The reporting level for these source categories is specified in

Section V of this preamble.

E. Rationale for Selecting the Reporting Year

EPA is proposing that the monitoring and reporting requirements would start on January 1, 2010.\58\ The first report to EPA would be submitted by March 31, 2011, and would cover calendar year 2010. The year 2011 is therefore referred to as the first reporting year, and includes 2010 data (there is a discussion later in this section that takes comment on alternative approaches to the reporting year). EPA is requesting comment on whether or not we should select an alternative reporting date that

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corresponds with the requirements of an existing reporting system.

\58\ The exception is for vehicle and engine manufacturers when reporting emissions from the vehicles and engines they produce. For these sources, reporting requirements would apply beginning with the 2011 model year.

For existing facilities that meet the applicability criteria in proposed 40 CFR part 98, subpart A, monitoring would begin on January 1, 2010. For new facilities that begin operation after January 1, 2010, monitoring would begin with the first month that the facility is operating and end on December 31 of that same calendar year in which they start operating. Each subsequent monitoring year would begin on

January 1 and end on December 31 of each calendar year. EPA is proposing that new facilities monitor and report emissions for the first partial year after they begin operating so that EPA has as complete an inventory as possible of GHG emissions for each calendar year.

Due to the comprehensive reporting and monitoring requirements in this proposal, the Agency has concluded that it is not appropriate to require reporting of historical emissions data for years before 2010.

Compiling, submitting, and verifying historical data according to the methodologies specified in this rule would create additional burdens on both the affected facilities and the Agency, and much of the needed data might not be available. Because Federal policy for GHG emissions is still being developed, the Agency's focus is on collecting data of known quality that is generated on a consistent basis. Collecting historic emissions data would introduce data of unknown quality that would not be comparable to the data reported under the program for years 2011 and beyond.

The first year of monitoring for existing facilities would begin on

January 1, 2010. This schedule would give existing facilities lead time after the date the rule is promulgated to prepare for monitoring and reporting. Preparation would include studying the final rule, determining whether it applies to the facility, identifying the requirements with which the facility must comply, and preparing to monitor and collect the required data needed to calculate and report

GHG emissions.

A beginning date of January 1, 2010 would allow sufficient time to begin monitoring and collecting data because many of the parameters that would need to be monitored under the proposed rule are already monitored by facilities for process management and accounting reasons

(e.g., feedstock input rates, production output, fuel purchases). In addition, the monitoring methods specified by the rule are already well-known and documented; and monitoring devices required by the rule are routinely available, in ready supply (e.g., flow meters, automatic data recorders), and in some cases already installed. These same monitoring devices are already required by other air quality programs with which many of these same facilities are already complying.

It is reasonable for new sources that start operation after January 1, 2010, to begin monitoring the first month of operation because new sources would be aware of the rule requirements when they design the facility and its processes and obtain permits. They can plan the data collection and reporting processes and install needed monitoring equipment as they build the facility and begin operating the monitoring equipment when they begin operating the facility.

We recognize that although the Agency plans to issue the final rule in sufficient time to begin monitoring on January 1, 2010, we may be unable to meet that goal. Therefore, we are interested in receiving comments on alternative effective dates, including the following two options:

Report 2010 data in 2011 using best available data: Under this scenario, the rule would be effective January 1, 2010, allowing affected facilities to use either the methods in proposed 40 CFR part 98 or best available data. As in the current proposal, the report would be submitted on March 31, 2011, and then full data collection, using the methods in 40 CFR part 98 would begin in 2011, with that report sent to EPA on March 31, 2012. Under this approach, EPA solicits comment on the types of best available data and methods that should be allowed in 2010, by source category, (e.g., fuel consumption, emissions by process, default emissions factors, fuel receipts, etc.) as well as additional basic data that should be reported (e.g., facility name, location). This approach is similar to the CARB mandatory reporting rule, which allowed affected facilities to report 2009 emissions in 2010 using best available data, and then requires 2010 data collection in 2011 using the methods in the rule. The advantages of this approach are that the dates of the proposal remain intact and EPA receives basic information, including emissions and fuel data from all affected facilities in 2011. Furthermore, this approach can ease facilities into the program by giving them potentially a full year to implement the required methods and install any necessary equipment. For example, this option encourages the use of the methods in 40 CFR part 98 but if that is not possible, it allows the use of best available data (e.g., if a facility does not have a required flow meter installed for 2010 they can substitute the data from their fuel receipts in the calculation).

The disadvantage of this approach is that it delays full data collection using the methods in the rule by 1 year from what is proposed. Further, in some cases, this approach could lead to data that is of lesser quality than the data we would receive using the methods in 40 CFR part 98. In other cases, because sources are already following the methods in 40 CFR part 98 (e.g., stationary combustion units in the ARP), the quality of the data would remain unchanged under this option. Given the objective of this rule to collect comprehensive and accurate data to inform future policies and the interest in

Congress in developing climate change legislation, any delay in receiving that data could adversely affect the ability to inform those policies. That said, the data we would receive in 2011 under this option would at least provide basic information about the types, locations, emissions and fuel consumption from facilities in the United

States.

Report 2011 data in 2012: Under this scenario, the rule would require that affected facilities begin collecting data January 1, 2011 and submit the first reports to EPA on March 31, 2012. The methods in the proposed rule would remain unchanged and the only difference is that this option would delay implementation of the rule by one year.

The advantages of this approach are that affected facilities would have a substantial amount of time to prepare for this reporting rule, including implementing the method and installing equipment. In addition, we would have even more time to conduct outreach and guidance to affected facilities. The disadvantages of this approach are that it delays implementation of this rule by a year and does not offer a mechanism for EPA to receive crucial data, even basic data, necessary to inform future policy and regulatory development. Furthermore, in some cases affected facilities are already implementing the methods required by proposed 40 CFR part 98 (e.g., stationary combustion units in the ARP) or are familiar with the methods, and have all of the necessary equipment or processes in place to monitor emissions consistent with the methods in 40 CFR part 98. Therefore, delaying implementation by a year not only deprives EPA of valuable data to support future policy development, but at the same time, does not provide any real advantage to these facilities.

Proposed 40 CFR part 98, subpart A, specifies numerical reporting thresholds for different direct emitters or supply

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operations. A facility or supply operation that exceeds any of these reporting thresholds in 2010 would submit a full emissions report in reporting year 2011, which contains calendar year 2010 data. The facilities and supply operations that contain many of the source categories that are listed in 40 CFR part 98, subpart A are larger facilities that have been participating in a variety of mandatory and voluntary GHG emissions programs. Therefore, those facilities and supply operations should be familiar with the methods and able to comply with the requirements and submit a full report without significant burden.

As discussed earlier, if a facility does not have any of the source categories listed in proposed 40 CFR 98.2 (a)(1) or (2), but has stationary combustion onsite that exceeds the GHG reporting threshold in 2010, they would still be required to estimate GHG emissions in 2010 and report in 2011. However, because those facilities would not contain any of the source categories specifically identified in proposed 40 CFR 98.2 (a)(1) or (2) and tend to be smaller facilities in diverse industrial sectors, they may require some extra time to implement the requirements of this rule. As such, they would be allowed to use an abbreviated facility report using simplified emission estimation methods for the first year (i.e., for calendar year 2010) and would not be required to complete a full report until the second reporting year

(i.e., 2012).

The abbreviated report would allow the facility to use default fuel-specific CO2emission factors. They would not be required to determine actual fuel carbon content or to use a CEMS to determine CO2emissions, as they may otherwise be required to do with a full report. This provision for abbreviated reporting requirements has been proposed because there are potentially many facilities that are not in the listed industries, but are required to report solely due to stationary combustion sources at their facility.

These include numerous and diverse sources in a wide variety of industries, some of which may not be as familiar with GHG monitoring and reporting. Such sources may often need more time to determine if they are above the threshold and subject to the rule and, if they are, to implement the full monitoring and reporting systems required.

Therefore, the abbreviated report with simpler estimating methodologies is being proposed for these sources for the first year of monitoring and reporting.

EPA proposes that the annual GHG emissions reports would be submitted no later than March 31 for the previous calendar year's reporting period. Three months is a reasonable time to compile and review the information needed for the annual GHG emissions report and to prepare and submit the report. The data needed to estimate emissions and compile the report would be collected by the facility on an ongoing basis throughout the year, so facilities could begin data summary during the year as the data are collected. For example, they could compile needed GHG calculation input data (e.g., fuel use or raw material consumption data) or emission data on a periodic basis (e.g., monthly or quarterly) throughout the year and then total it at the end of the year. Therefore, only the most recently collected information would need to be compiled and a final set of calculations would need to be performed before the final report is assembled. Given the nature of the methodologies contained in the rule, three months is sufficient time to calculate emissions, quality-assure, certify, and submit the data.

F. Rationale for Selecting the Frequency of Reporting

EPA is proposing that all affected facilities would have to submit annual GHG emission reports. Facilities with ARP units that report

CO2emissions data to EPA on a quarterly basis would continue to submit quarterly reports as required by 40 CFR part 75, in addition to providing the annual GHG reports. The annual CO2 mass emissions from the ARP reports would simply be converted to metric tons and included in the GHG report. This approach should not impose a significant burden on ARP sources.

We have determined that annual reporting is sufficient for policy development. It is consistent with other existing mandatory and voluntary GHG reporting programs at the State and Federal levels (e.g.,

TCR, several individual State mandatory GHG reporting rules, EPA voluntary partnership programs, the DOE voluntary GHG registry).

However, as future policies develop it may be necessary to reconsider the reporting frequency and require more or less frequent reporting

(e.g., quarterly or every few years). For example, under future programs or policy initiatives, particularly if regulatory in nature

(e.g., a cap-and-trade program similar to the ARP) it may be more appropriate require quarterly reporting.

G. Rationale for the Emissions Information To Report 1. General Content of Reports

Generally, we propose that facilities report emissions for all source categories at the facility for which methods have been defined in any subpart of proposed 40 CFR part 98. Facilities would report (1) total annual GHG emissions in metric tons CO2e and (2) separately present annual mass emissions of each individual GHG for each source category at the facility .\59\ Reporting of CO2e allows a comparison of total GHG emissions across facilities in varying categories which emit different GHGs. Knowledge of both individual gases emitted and total CO2e emissions would be valuable for future policy development and help EPA quantify the relative contribution of each gas to a source category's emissions, while maintaining the transparency of reporting total mass of individual gases released by facility, unit, or process.

\59\ Consistent with the IPCC, the CARB reporting rule and the

EU Emission Trading System, the proposed rule requires units to separately report the biogenic portion of their total annual

CO2emissions.

Emissions would be reported at the level (facility, process, unit) at which the emission calculation methods are specified in each applicable subpart. For example, if a pulp and paper mill has three boilers and a wastewater treatment operation, the facility would report emissions for each boiler (according to the methodologies presented in proposed 40 CFR part 98, subpart C), the wastewater treatment operation

(according to proposed 40 CFR part 98, subpart II), and from chemical recovery units, lime kilns, and makeup chemicals (according to proposed 40 CFR part 98, subpart AA). In addition, the report would include summary information on certain process operating data that influence the level of emissions and that are necessary to calculate GHG emissions and verify those calculations using the methodologies in the rule. Examples of these data include fuel type and amount, raw material inputs, or production output. The specific process information to report varies for each source category and is specified in each subpart.

Furthermore, in addition to any specific requirements for reporting emissions from electricity generation in Sections V.C and V.D of this preamble, EPA is proposing that all facilities and supply operations affected by this rule would also report the quantity of electricity generated onsite. The generation of onsite electricity can

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represent a relatively significant fraction of onsite fuel use. We seek comment on whether this information would be useful to support future climate policy development, given the other data related to GHG emissions from electricity generation already collected under other sections of this proposed rule. At this point, we do not propose separate reporting of the onsite electricity generation by generation source (e.g., combined heat and power or renewable or fossil-based) due to the burden on reporters, but we recognize the potential value of being able to discern the quantity of electricity being generated from renewable and non-renewable sources. We are seeking comment on the value of collecting this data; and if it is collected, whether there is a need to separately report the kilowatt-hours by type of generation source.

We are also taking comment on, but not proposing at this time, requiring facilities and supply operations affected by the proposed rule to also report the quantity of electricity purchased. For many industrial facilities, purchased electricity represents a large part of onsite energy consumption, and their overall GHG emissions footprint when taking into account the indirect emissions from fossil fuel combusted for the electricity generated. Together, the reporting of electricity purchase data and onsite generation could provide a better understanding of how electricity is used in the economy and the major industry sectors.

Many existing reporting programs require reporting of indirect emissions (e.g., Climate Leaders, CARB, TCR, DOE 1605(b) program). In general, the protocols for these programs follow the methods developed by WRI/WBCSD for the quantification and reporting of indirect emissions from the purchase of electricity. The WRI/WBCSD protocol outlines three scopes to help delineate direct and indirect emission sources, with the stated goal to improve transparency, and provide utility for different types of organizations and different types of climate policies and business goals. Scope 1 includes direct GHG emissions occurring from sources that are owned or controlled by the business. Scope 2 includes indirect GHG emissions resulting from the generation of purchased electricity, heat, and/or steam. Scope 3 is optional and includes other types of indirect emissions (e.g., from production of purchased materials, waste disposal or employee transportation).

We are taking comment on, but not proposing at this time, an approach that would require the reporting of electricity purchase data, and not indirect emissions, because these data are more readily available to all facilities. Through the review of existing reporting programs that require the reporting of indirect emissions data it was determined that there are multiple ways proposed to calculate indirect emissions from electricity purchases. This reflects the challenge associated with determining the specific fossil fuel mix used to generate the electricity consumed by a facility, and thus the indirect emissions that should be attributed to the facility. Although indirect emissions data would not be directly reported under this approach, it would enable indirect emissions for facilities to be calculated. This option also would be the least burdensome to reporting facilities since the data would be easily available.

The information that is proposed to be reported reflects the data that could support analyses of GHG emissions for future policy development and ensure the data are accurate and comparable across source categories. Besides total facility emissions, it benefits policymakers to understand: (1) The specific sources of the emissions and the amounts emitted by each unit/process to effectively interpret the data, and (2) the effect of different processes, fuels, and feedstocks on emissions. This level of reporting should not be overly burdensome because many of these data already are routinely monitored and recorded by facilities for business reasons. The remainder of the reported data would need to be collected to determine GHG emissions.

The report would contain a signed certification from a representative designated by the owner or operator of a facility affected by this rule. This ``Designated Representative'' would act as a legal representative between the source and the Agency. The use of the Designated Representative would simplify the administration of the program while ensuring the accountability of an owner or operator for emission reports and other requirements of the mandatory GHG reporting rule. The Designated Representative would certify that data submitted are complete, true, and accurate. The Designated Representative could appoint an alternate to act on their behalf, but the Designated

Representative would maintain legal responsibility for the submission of complete, true, and accurate emissions data and supplemental data.

Besides these general reporting requirements, the specific reporting requirements for each source category are described in the methodological discussions in Section V of this preamble. 2. De minimis Reporting for Minor Emission Points

A number of existing GHG reporting programs contain ``de minimis'' provisions. The goal of a de minimis provision is to avoid imposing excessive reporting costs on minor emission points that can be burdensome or infeasible to monitor. Existing GHG reporting programs recognize that it may not be possible or efficient to specify the reporting methods for every source that must be reported and, therefore, have some type of provision to reduce the burden for smaller emissions sources. Depending on the program, the reporter is allowed to either not report a subset of emissions (e.g., 2 to 5 percent of facility-level emissions) or use simplified calculation methods for de minimis sources.

We analyzed the de minimis provisions of existing reporting rules and concluded that there is no need to exclude a percentage of emissions from reporting under this proposal. EPA recognizes the potential burden of reporting emissions for smaller sources. The proposal addresses this concern in several ways. First, only those facilities over the established thresholds would be required to report.

Smaller facilities would not be subject to the program. Second, for those facilities subject to the rule, only emissions from those source categories for which methods are provided would be reported. Methods are not proposed for what are typically smaller sources of emissions

(e.g., coal piles on industrial sites). Third, because some facilities subject to the rule could still have some relatively small sources, the proposal includes simplified emissions estimation methods for smaller sources, where appropriate. For example, small stationary combustion units could use a default emission factor and heat rate to estimate emissions, and no fuel measurements would be required. Where simplified methods are proposed, they are described in the relevant discussions in

Section V of this preamble.

Our analysis showed that the GHG reporting programs with de minimis exclusions are structured differently than our proposed rule. For example, most rules with de minimis exclusions require corporate level reporting of all emission sources. Under these programs, some corporations must report emissions from numerous remote facilities and must report emissions from small onsite equipment (e.g., lawn mowers).

For these programs, a de minimis exclusion avoids potentially

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unreasonable reporting burdens. The recent trend in these programs, however, is to require full reporting of all required GHG emissions, but allow simplified calculation procedures for small sources. In contrast to these other reporting programs, today's proposed rule would affect only larger facilities, would require reporting of significant emission points only, and would contain simplified reporting where practicable. Accordingly, a de minimis exclusion is not necessary. EPA requests comment on whether this approach to smaller sources of emissions is appropriate or if we should include some type of de minimis provision.

For additional information on the treatment of de minimis in existing GHG reporting programs, please refer to the ``Reporting

Methods for Small Emission Points (De Minimis Reporting)'' (EPA-HQ-OAR- 2008-0508-048). 3. Recalculation and Missing Data

Most voluntary and mandatory GHG reporting programs include provisions for operators to revise previously submitted data. For example, some voluntary programs require reporters to revise their base year emissions calculations if there is a significant change in the boundary of a reporter, a change in methodologies or input data, a calculation error, or a combination of the above that leads to a significant change in emissions. Recalculation procedures particularly appear to be central in voluntary GHG reporting programs that are also tracking emissions reductions.

Moreover, some programs (e.g., ARP) have detailed provisions for filling in data gaps that are missing in the required report. For example, in ARP, these procedures apply when CEMS are not functioning and as a result several hours of the required hourly data are missing.

Note, however, that merely filling in data gaps that are missing or correcting calculation errors does not relieve an operator from liability for failure to properly calculate, monitor and test as required.

For this mandatory GHG reporting program, EPA concluded it was important to have missing data procedures in order to ensure there is a complete report of emissions from a particular facility. However, because this program requires annual reporting rather than quarterly reporting of hourly data as in ARP, the missing data provision often require the facility to redo the test or calculation of emissions.

Section V of the preamble details the missing data procedures for facilities reporting to this program. EPA is seeking comment on whether to include a provision to require a minimum standard for reported data

(e.g., only 10 percent of the data reported can be generated using missing data procedures).

In addition to establishing procedures for missing data, there may be benefit in requiring previously submitted data to be recalculated in order to ensure that the GHG emissions reported by a facility are as accurate as possible. The proposed California mandatory GHG reporting program, for example, allows reporters to revise submitted emissions data if errors are identified, subject to approval by the program.

EPA is considering whether or not to include provisions to require facilities to correct previously submitted data under certain circumstances. However, these benefits must also be weighed against the additional costs associated with requiring reporters to recalculate and resubmit previous data, and the magnitude of the emissions changes expected from such recalculations. Moreover, even if EPA were to allow recalculation of submitted data or accept data submitted using missing data procedures, that would not relieve the reporter of their obligation to report data that are complete, accurate and in accordance with the requirements of this rule. Although submitting recalculated data or data using missing data procedures would correct the data that are wrong, that resubmission or missing data procedures does not necessarily reverse the potential rule violation and would not relieve the reporter of any penalties associated with that violation. EPA is seeking comment on whether the mandatory GHG reporting program should include provisions to require reporters to submit recalculated data and under what circumstances such recalculations should be required.

H. Rationale for Monitoring Requirements

In selecting the monitoring requirements for the proposed rule,

EPA's goal is to collect data of sufficient accuracy and quality to be used to inform future climate policy development and support a range of possible policies and regulations. Future policies and regulations could range from research and development initiatives to regulatory programs (e.g. , cap-and-trade programs). Accurate and timely information is critical to making policy decisions and developing programs. However, EPA recognizes that methods that provide the most accurate data may also entail higher data collection costs. In selecting a general monitoring approach, EPA considered the relative accuracy and costs of different approaches, the monitoring methods already in use within the regulated industries, and consistency with the monitoring approaches required by various Federal and State mandatory and voluntary GHG reporting programs. Measurement methods can range from continuous direct emissions measurements to simple calculation methods that rely on default factors and assumptions. EPA considered four broad monitoring approaches for the mandatory GHG rule.

These general approaches (options 1 through 4) and the rationale for the selected approach are described in this section. After a general approach was selected, EPA developed the specific proposed monitoring methods for each source category as described in Section V of this preamble.

Option 1. Direct Emission Measurement. Option 1 would require direct measurement of GHGs for all source categories where direct measurement is feasible. It would require installation of CEMS for

CO2in the stacks from stationary combustion units and industrial processes. The approach would be similar to 40 CFR part 75 that require coal-fired EGUs to install, operate, and maintain CEMs for

SO2and NOXemissions and report hourly emissions data (although some lower-emitting units have the option to use fuel sampling and fuel flow rate metering to determine emissions). Like 40

CFR part 75, the direct measurement approach would have detailed requirements for the CEMS including stringent QA/QC requirements to monitor accuracy and precision.

Direct measurement is not technically feasible in all cases. For example, CEMS are not available for many of the GHGs that must be reported. Direct measurement is also infeasible for emissions that are not captured and emitted through a stack, such as CH4 emissions from the surface of landfills or fugitive emissions from selected oil and natural gas operations. For sources where direct measurement is not technically feasible, this option would require the use of rigorous methods with a comparable level of accuracy to CEMS.

The direct measurement option has the highest degree of certainty of the data reported. It is also the most costly because all facilities where direct measurement is feasible would need to install, operate, and maintain emission monitors. Most facilities currently do not have

CEMS to measure GHG emissions.

Option 2. Combination of Direct Emission Measurement and Facility-

Specific Calculations. This option

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would require direct measurement of emissions from units at facilities that already are required to collect and report data using CEMS under other Federally enforceable programs (e.g., ARP, NSPS, NESHAP, SIPs).

In some cases, this may require upgrading existing CEMS that currently monitor criteria pollutants to also monitor CO2.

Facilities that do not have units that have CEMS installed would have the choice to either directly measure emissions or to use facility-specific GHG calculation methods. The measurement and calculation methods for each source category would be specified in each subpart. Depending on the source category, methods could include mass balance; measurement of the facility's use of fuels, raw materials, or additives combined with site-specific measured carbon content of these materials; or other procedures that rely on facility-specific data. For the supplier source categories (e.g., those that supply fuels or industrial GHGs), this option would require reporting of production, import, and export data. The supplier companies already closely track these data for financial and other reasons.

This option provides a relatively high degree of certainty and takes advantage of existing practices at facilities. This option is less costly than option 1 because most facilities are not required to install CEMS and can, in many cases, make use of data they are already collecting for other reasons.

Option 3. Simplified Calculation Methods. Under option 3, facilities would calculate emissions using simple inputs (e.g., total annual production) that are usually already measured for other reasons, and EPA-supplied default emission factors (many of which have been developed by industry consortiums, such as the World Resources

Institute/World Business Council for Sustainable Development (WRI/

WBCSD) (Cement Sustainability Initiative) Protocol). The default emission factors would represent national average factors. These methods and emission factors would not take into account facility- specific differences in processes or in the composition of raw materials, fuels, or products.

Under this option, the only facilities that would have to use more rigorous monitoring or site-specific calculations methods are facilities that are already required to report emissions under 40 CFR part 75. These facilities would continue to follow the CO2 monitoring and reporting requirements of 40 CFR part 75.

Data collected under this option would have a lower degree of certainty than options 1 or 2. Furthermore, many facilities are already calculating GHG emissions to a higher degree of certainty for business reasons or for other mandatory or voluntary reporting programs, and option 3 would not make use of such available data. However, the cost to facilities is lower than under options 1 and 2.

Option 4. Reporter's Choice of Methods. Under this approach, reporters would have flexibility to select any measurement or calculation method and any emission factors for determining emissions.

The rule would not prescribe any methods or present any specific options for determining emissions.

Data collected under this option would not be comparable across a given industry and across reporters subject to the program, thereby minimizing the usefulness of the data to support future policymaking.

Although some facilities might choose to use direct measurement because

CEMS are already installed at the facility, other facilities would select default calculations. This option would be the lowest cost to reporters.

Proposed Option. For the proposed rule, EPA selected option 2

(combination of direct measurement and facility-specific calculations) as the general monitoring approach. This option results in relatively high quality data for use in developing climate policies and supporting a wide range of potential future policy options. Because we do not yet know which specific policy options the data may ultimately be used to support, the reported GHG emission estimates should have a sufficient degree of certainty such that they could be used to help develop a potential variety of programs.

Option 2 strikes a balance between data accuracy and cost. It makes use of existing data and methodologies to the extent feasible, and avoids the cost of installing and operating CEMS at numerous facilities. It is consistent with the types of methods contained in other GHG reporting programs (e.g., TCR, California programs, Climate

Leaders). Because this option specifies methods for each source category, it should result in data that are comparable across facilities.

Option 1 (direct emission measurement) was not chosen because the cost to the reporters if all facilities had to install continuous emission monitoring systems would be unreasonably high in the absence of a defined policy that would require this type of monitoring.

However, under the selected option, facilities that already use CEMS would still be required to use them for purposes of the GHG reporting rule.

Option 3 (simplified calculation methods) was not chosen because the data would be less accurate than option 2 and would not make use of site-specific data that many facilities already have available and refined calculation approaches that many facilities are already using.

Option 3 would also be inconsistent with several other GHG reporting programs such as TCR and California programs that contain more site- specific calculation methods for several of the source categories.

Option 4 (reporter's choice of methods) was not proposed because the accuracy and reliability of the reported data would be unknown and would vary from one reporter to the next. Because consistent methods would not be used under this option, the reported data would not be comparable across similar facilities. The lack of comparability would undermine the use of the data to support policy decisions.

EPA requests comments on the selected monitoring approach and on other potential options and their advantages and disadvantages.

I. Rationale for Selecting the Recordkeeping Requirements

EPA is proposing that each facility that would be required to submit an annual GHG report would also keep the following records, in addition to any records prescribed in each applicable subpart:

A list of all units, operations, processes and activities for which GHG emissions are calculated;

The data used to calculate the GHG emissions for each unit, operation, process, and activity, categorized by fuel or material type;

Documentation of the process used to collect the necessary data for the GHG emissions calculations;

The GHG emissions calculations and methods used;

All emission factors used for the GHG emissions calculations;

Any facility operating data or process information used for the GHG emissions calculations;

Names and documentation of key facility personnel involved in calculating and reporting the GHG emissions;

The annual GHG emissions reports;

A log book documenting any procedural changes to the GHG emissions accounting methods and any changes to the instrumentation critical to GHG emissions calculations;

Missing data computations;

A written QAPP;

Any other data specified in any applicable subpart of proposed 40 CFR part 98. Examples of such data could

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include the results of sampling and analysis procedures required by the subparts (e.g., fuel heat content, carbon content of raw materials, and flow rate) and other data used to calculate emissions.

These data are needed to verify the accuracy of reported GHG emission calculations and, if needed, to reproduce GHG emission estimates using the methods prescribed in the proposed rule. Since the above information must be collected in order to calculate GHG emissions, the added burden of maintaining records of that information should be minimal.

Each facility would be required to retain all required records for at least 5 years. Records would be maintained for this period so that a history of compliance could be demonstrated and questions about past emission estimates could be resolved, if needed.

The records would be required to be kept in an electronic or hard- copy format (as appropriate) that is readily accessible within a reasonable time for onsite inspection and auditing. They would be recorded in a form that can be easily inspected and reviewed. The allowance of a variety of electronic and hard copy formats for records allows flexibility for facilities to use a system that meets their needs and is consistent with other facility records maintenance practices, thereby minimizing the recordkeeping burden.

J. Rationale for Verification Requirements 1. General Approach to Verification Proposed in This Rule

GHG emissions reported under this rule would be verified to ensure accuracy and completeness so that EPA and the public could be confident in using the data for developing climate policies and potential future regulations. To ensure the completeness and quality of data reported to the program, the Agency proposes self-certification with EPA verification. Under this approach, all reporters subject to this rule would certify that the information they submit to EPA is truthful, accurate and complete. EPA would then review the emissions data and supporting data submitted by reporters to verify that the GHG emission reports are complete, accurate, and meet the reporting requirements of this rule.

Given the scope of this rulemaking, this approach is consistent with many EPA regulatory programs. That said, this proposal does not preclude that in the future, as climate policies evolve, EPA may consider third party verification for other programs (e.g., offsets).

Furthermore, many programs in the States and Regions may be broader in scope and the use of third party verifiers may be appropriate to meet the needs of those programs.

In addition, under the authorities of CAA sections 114 and 208, EPA has the authority to independently conduct site visits to observe monitoring procedures, review records, and verify compliance with this rule (see Section VII of this preamble for further information on compliance and enforcement). For vehicle and engine manufacturers, EPA is not proposing additional verification requirements beyond the current emissions testing and certification procedures. These procedures include well-established methods for assuring the completeness and quality of reported emission test data and EPA is proposing to include the new GHG reporting requirements as part of these methods. 2. Options Considered

In selecting this proposed approach to verification, the Agency reviewed verification requirements and procedures under a number of existing EPA regulatory programs, as well as existing domestic and international GHG reporting programs. Additional information on this review and the verification approaches can be found in a technical memorandum (``Review of Verification Systems in Environmental Reporting

Programs,'' EPA-HQ-OAR-2008-0508-047). Based on this review, EPA considered three alternative approaches to verification: (1) Self- certification without independent verification, (2) self-certification with third-party verification, and (3) self-certification with EPA verification.

Option 1. Self-certification without independent verification.

Under this option, the Designated Representative of the reporting facility would be required to sign and submit a certification statement as part of each annual emissions report. The certification would affirm that the report has been prepared in accordance with the requirements of the GHG reporting rule, and that the emissions data and other information reported is true and accurate to the best knowledge and belief of the certifying official. The reasons for requiring self- certification are contained in Section IV.G of this preamble. Under option 1, EPA would not independently verify the accuracy and consistency of the reported data. Furthermore, because this approach does not include independent verification by EPA or a third party, the facility would not have to submit the detailed data needed to verify emissions estimates. Such information would be retained at the facility. For example, facilities would not be required to submit detailed monitoring data, activity data (e.g., fuel use, raw material consumption, production rates), carbon content measurements, or emission factor data used to calculate emissions.

Option 1 is a low burden option for reporters submitting data for this rule. Reporters under this option would not have to pay for third- party verifiers and would not necessarily have to submit the additional data required under the other options. In addition, EPA would not incur the expense of conducting verification of the reported data or certifying independent verifiers to conduct verification activities.

The major disadvantages of this approach are the greater potential for inconsistent and inaccurate data in the absence of independent verification and the lower level of confidence that the public, stakeholders and EPA may have in the data.

Option 2. Self-certification with third-party verification. Under this approach, reporters would submit the same self-certification statements as under option 1. In addition, reporters would be required to hire independent third-party verifiers. The third-party verifiers would review the emissions report and the underlying monitoring system records, activity data collection, calculation procedures, and documentation, and submit a verification statement that the reported emissions are accurate and free of material misstatement. Under this approach, records supporting the GHG emissions calculations would be retained at the facility for compliance purposes and provided to the verifiers, but not submitted to EPA. In addition, as discussed below,

EPA would have to establish a system to certify the independent verifiers.

Self-certification with third-party verification provides greater assurance of accuracy and impartiality than self-certification without verification. While this option is consistent with some existing domestic and international GHG reporting programs such as TCR, the

California mandatory reporting rule, CCAR, and the EU Emission Trading

System, the majority of industry stakeholders that met with EPA are opposed to this approach for this rulemaking, primarily due to the additional cost. Compared to option 1, the third-party verification approach places two additional costs on reporters: (1) Reporters would need to hire and pay verifiers, at a cost of thousands of dollars per reporting facility, and (2) reporters would incur costs to assemble

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and provide to verifiers detailed supporting data for the emission estimates.

To ensure consistency and quality of the third-party verifications,

EPA would need to develop verification protocols, establish a system to qualify and accredit the third-party verifiers, and conduct ongoing oversight and auditing of verifications to be sure that third-party verifications continue to be conducted in a consistent and high quality manner.

As mentioned above, as climate policy evolves, it may be appropriate for EPA to consider the use of third party verification in other circumstances (e.g., offsets).

Option 3. Self-certification with EPA verification. Under this option, reporters would submit the same self-certification as under option 1. Reporters also would assemble data to support their emissions estimates, similar to option 2 but submit it to EPA in their annual emission reports, rather than to a third party verifier. EPA would review the emissions estimates and the supporting data contained in the reports, and perform other activities (e.g., comparison of data across similar facilities, site visits) to verify that the reported emissions data are accurate and complete.

EPA verification provides greater assurance of accuracy and impartiality than self-reporting without verification. Compared to a third-party verification system, there would be a consistent approach to verification from one centralized verifier rather than a variety of separate verifiers although this option would require EPA to ensure consistency if it chose to use its own contractors to support its verification activities. In addition, a centralized verification system would provide greater ability to the government to identify trends and outliers in data and thus assist with targeted enforcement planning.

Finally, an EPA verification approach is consistent with other EPA emissions reporting programs including EPA's ARP.\60\ The cost to the reporter is intermediate between options 1 and 2. Although this approach would not subject reporters to the cost of paying for third- party verifiers, reporters would have to assemble and submit detailed supporting data to ensure proper verification by EPA. An EPA verification program would result in greater costs to the Agency than options 1 and 2, but due to economies of scale may result in lower overall costs.

\60\ For a description of how verification is conducted in ARP please see, ``Fundamentals of Successful Monitoring, Reporting, and

Verification under a Cap-and-Trade Program.'' John Schakenbach,

Robert Vollaro, and Reynaldo Forte, U.S. EPA/OAP. Journal of the Air and Waste Management Association 56:1576-1583. November 2006. (EPA-

HQ-OAR-2008-0508-051.)

3. Selection of Self-Certification With EPA Verification as the

Proposed Approach

EPA is proposing self-certification with EPA verification (option 3) because it ensures that data reported under this rule are consistent, accurate, and complete. In addition, we are seeking comment on requiring third-party verification for suppliers of petroleum products, many of whom currently report to EPA under the Office of

Transportation and Air Quality's fuels programs. Third-party verification could be reasonable in these instances because this rule, to some extent, would build on existing transportation fuels programs that already require audits of records maintained by these suppliers by independent certified public accountants or certified internal auditors. For more information about the approach to fuel suppliers please refer to Section V of this preamble.

EPA is successfully using self certification with EPA verification in a number of other emissions reporting programs. EPA verification option provides greater assurance of the accuracy, completeness, and consistency of the reported data than option 1 (no independent verification) and consistent with feedback from industry stakeholders, does not require reporters to hire third-party verifiers (option 2). In addition, EPA verification option does not require the establishment of an accreditation and approval program for third-party verifiers although it would require EPA to ensure consistency if it chose to use its own contractors to support its verification activities.

EPA judged that option 1 (no independent verification) does not ensure sufficient quality data for the possible future uses of the data. The potential inconsistency, inaccuracy, and increased uncertainty of the data collected under option 1 would make the data less useful for informing decisions on climate policy and supporting the development of a wide range of potential future policies and regulations.

We selected EPA verification (option 3) instead of third-party verification (option 2) because EPA verification is consistent with other EPA programs, has lower costs to reporters than option 2, and would result in a consistent verification approach applied to all submitted data. Even with a verifier accreditation and approval process, the third-party verification approach could entail a risk of inconsistent verifications because verification responsibilities are spread amongst numerous verifiers. Given the potential diversity of verifiers, the quality and thoroughness of verifications may be inconsistent and EPA audit and enforcement oversight would become the predominant factor in ensuring uniformity. Under option 2, EPA would also need to develop and administer a process to ensure that verifiers hired by the reporting facilities do not have conflicts of interest.

Such a program could require EPA to review numerous individual conflict of interest screening determinations made each time a reporter hires a third-party verifier. Finally, EPA verification would likely avoid any delays that may be introduced by third-party verification and better ensure the timely reporting and use of the reported data. Some reporting programs provide four to six months after the annual emissions report is submitted for third-party verification. That said, as mentioned above, depending on the scope or type of program (e.g., offsets), EPA may consider the use of third party verification in the future as policy options evolve.

The Agency recognizes that, in some instances, data submitted by reporters under this rule may have been independently verified as the result of other mandatory or voluntary GHG reporting programs or by other Federal, State or local regulations. Whether or not data have been independently verified outside of the requirements of this proposed GHG reporting rule, EPA has concluded for the purposes of this proposal it is important to apply the same verification requirements to all affected facilities in order to ensure equity across all reporters and consistent data collection for policy analysis and public information.

K. Rationale for Selection of Duration of the Program

EPA is proposing that the rule require the reporting of GHG emissions data on an ongoing, annual basis. Other approaches that EPA considered include a one-time collection of information and collection of a limited duration (e.g., a three-year data collection effort).

EPA does not believe that a one-time data collection effort is consistent with the legislative history of the FY 2008 Consolidated

Appropriations Act, which instructed EPA to develop a rule to require the reporting of GHG emissions. Typically, a rule is not required to undertake a one-time information collection request. Moreover, the

President's FY 2010

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Budget, as well as initial Congressional budgets for the remainder of

FY 2009 indicate that policy makers anticipate that the information will be collected for multiple years.

For example, on February 6, 2009, Senators Feinstein, Boxer, Snowe and Klobuchar sent a letter to EPA's Administrator Lisa Jackson and

OMB's Director Peter Orszag stating that this program allowed EPA to

``gather critical baseline data on greenhouse gas emissions, which is essential information that policymakers need to craft an effective climate change approach.'' In addition, in recent testimony from John

Stephenson, Director of Natural Resources and Environment at the

Government Accountability Office,\61\ stated that when setting baselines for past regulatory policies, averaging data ``across several years also helped to ensure that the baseline reflected changes in emissions that can result in a given year due to economic and other conditions.'' The testimony further noted the because EPA's ARP was able to average several years worth of data when setting the baseline for SO2reductions, the program ``achieved greater assurances that it reduced emissions from historical levels'' as opposed to the EU who did not have enough data to set accurate baselines for the first phase of the EU Emissions Trading System.

Furthermore, EPA's experience with certain CAA programs show that a one-time snapshot of information is not always representative of normal operations, and hence emissions, of a facility. See, e.g., Final New

Source Review (NSR) Reform Rules, 68 FR 80186, 80199 (2002). Finally, as discussed earlier, a multi-year reporting program allows EPA to track trends in emissions and understand factors that influence emissions levels.

\61\ High Quality Greenhouse Gas Emissions Data are a

Cornerstone of Programs to Address Climate Change, Statement of John

Stephenson, Director, Natural Resources and Environment, Government

Accountability Office, February 24, 2009.

EPA also considered a multi-year program that would sunset at a date certain in the future (e.g., three years) absent subsequent regulatory action by EPA to extend it. EPA decided against this approach because it would unnecessarily limit the debate about potential policy options to address climate change. At this time, it would be premature to guess at what point in the future this information may be less relevant to decision-making. Rather, a more prudent approach is to maintain the program until such time in the future when it is determined that the information for one or more source categories is no longer relevant to decision-making, or is adequately provided in the context of regulatory program (e.g., CAA

NSPS). Notably, EPA crafted the requirements in this rule with the potential monitoring, recordkeeping and reporting requirements for any future regulations addressing GHG emissions in mind. EPA solicits comment on all of these possible approaches, including whether EPA should commit to revisit the continued necessity of the reporting program at a future date.

V. Rationale for the Reporting, Recordkeeping and Verification

Requirements for Specific Source Categories

Section V of this preamble discusses the source categories covered by the proposed rule. Each section presents a description of a source category and the proposed threshold, monitoring methods, missing data procedures, and reporting and recordkeeping requirements.

A. Overview of Reporting for Specific Source Categories

Once you have determined that your facility exceeds any reporting threshold specified in 40 CFR 98.2(a), you would have to calculate and report GHG emissions, or alternate information as required (e.g., production and imports for industrial GHG suppliers) for all source categories at your facility for which there are measurement methods provided. The threshold determination is separately assessed for suppliers (fossil fuel suppliers and industrial GHG suppliers) and downstream source categories.

Facilities, or corporations, where relevant, that trigger only the threshold for upstream fossil fuel or industrial GHG supply (proposed 40 CFR part 98, subparts KK through PP) need only follow the methods in those respective sections. Facilities (or corporations) that contain source categories that also have downstream sources of emissions (e.g., proposed 40 CFR part 98, subparts B through JJ), or facilities that are exclusively downstream sources of emissions may have to monitor and report GHG emissions using methods presented in multiple sections. For example, a food processing facility should review Section V.C (General

Stationary Fuel Combustion), Section V.HH (Landfills) and Section V.II

(Wastewater Treatment) in addition to Section V.M (Food Processing) of this preamble. Table 2 of this preamble (in the SUPPLEMENTARY

INFORMATION section of this preamble) provides a cross walk to aid facilities in identifying potentially relevant source categories. The cross-walk table should only be seen as a guide as to the types of source categories that may be present in any given facility and therefore the methodological guidance in Section V of this preamble that should be reviewed. Additional source categories (beyond those listed in Table 2 of this preamble) may be relevant to a given reporter. Similarly, not all listed source categories would be relevant to all reporters. The remainder of this overview summarizes the general approach to calculating and reporting these downstream sources of emissions.

Consistent with the requirements in the proposed 40 CFR part 98, subpart A, facilities would have to report GHG emissions from all source categories located at their facility--stationary combustion, process (e.g., iron and steel), fugitive (e.g., oil and gas) or biologic (e.g., landfills) sources of GHG emissions. The methods presented typically account for normal operating conditions, as well as

SSM, where significant (e.g., HCFC-22 production and oil and gas systems). Although SSM is not specifically addressed for many source categories, emissions estimation methodologies relying on CEMS or mass balance approaches would capture these different operating conditions.

For many facilities, calculating facility-wide emissions would simply involve adding GHG emissions calculated under Section V.C of this preamble (General Stationary Fuel Combustion Sources) and emissions calculated under the source-specific subpart. For other facilities, particularly selected sources in Sections V.E through V.JJ of this preamble that rely on mass balance approaches or the use of

CEMS, the proposed methods would (depending on the operating conditions and configuration of the plant) capture both combustion and process- related emissions and there is no need to separately quantify combustion-related emissions using the methods presented in Section V.C of this preamble.

Generally, the proposed method depends on the equipment you currently have installed at the facility.

Sources with CEMS. If you have CEMS that meet the requirements in proposed 40 CFR part 98, subpart C you would be required to quantify and report the CO2emissions that can be monitored using the existing CEMS. Non-CO2combustion-related emissions would be estimated consistent with proposed 40 CFR part 98, subpart C, and other non-CO2emissions would be estimated using the source- specific methods provided.

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(1) Where the CEMS capture both combustion- and process-related emissions you would be required to follow the calculation procedures, monitoring and QA/QC methods, missing data procedures, reporting requirements, and recordkeeping requirements of proposed 40 CFR part 98, subpart C to estimate emissions from the industrial source. In this case, use of the additional methods provided in the source-specific discussions would not be required.

(2) Where the CEMS do not capture both combustion and process- related emissions, you should refer to the source-specific sections that provide methods for calculating process emissions. You would also be required to follow the calculation procedures, monitoring and QA/QC methods, missing data procedures, reporting requirements, and recordkeeping requirements of proposed 40 CFR part 98, subpart C to estimate any stationary fuel combustion emissions from the industrial source.

Sources without CEMS. If you do not have CEMS that meet the requirements outlined in proposed 40 CFR part 98, subpart C, you would be required to carry out facility-specific calculations to estimate process emissions. You would also be required to follow the calculation procedures, monitoring and QA/QC methods, missing data procedures, reporting requirements, and recordkeeping requirements of proposed 40

CFR part 98, subpart C to estimate any stationary fuel combustion emissions from the industrial source.

B. Electricity Purchases

At this time, we are not proposing that facilities report information to us regarding their electricity purchases or indirect emissions from electricity consumption. However, we carefully considered proposing that all facilities that report to us also report their total purchases of electricity. This section describes our deliberations and outlines potential methods for monitoring and reporting electricity purchases. We generally seek comment on the value of collecting information on electricity purchases. Further, we are specifically interested in receiving feedback on the approach outlined below. 1. Definition of the Source Category

The electric utility sector is the largest emitter of GHG emissions in the U.S. The level of GHG emissions associated with electricity use is determined not just by the fuel and combustion technology onsite at the power plant, but also by customer demand for electricity.

Accordingly, electricity use and the efficiency of this use indirectly affect the emissions of CO2, CH4and

N2O from the combustion of fossil fuel at electric generating stations.

For many facilities, purchased electricity represents a large part of onsite energy consumption, and their overall GHG emissions footprint when taking into account the indirect emissions from fossil fuel combusted for the electricity generated. Therefore, the reporting of electricity purchase data from facilities could provide a better understanding of how electricity is used in the economy and the major sectors. We would propose not to provide for adjustments to take into account the purchases of renewable energy credits or other mechanisms.

If included, this source category would include electricity purchases, but not include electricity generated onsite (i.e., facility-operated power plants, emergency back-up generator