Mandatory Greenhouse Gas Reporting Under 40 C.F.R. Part 98: A Helpful Stepping Stone or a Hollow Exercise?

Although not nearly as aggressive as many of us would like to see, the truth is that EPA has taken some regulatory action in the area of climate change in recent years.  This article provides a brief summary of these developments, and also highlights a few of the opportunities and challenges that lie ahead.

Not long after the Supreme Court declared that EPA has the authority to regulate carbon dioxide and other greenhouse gases (GHGs) as pollutants under the existing framework of the Clean Air Act,[1] EPA began promulgating regulations under 40 C.F.R. Part 98 as part of its new “Mandatory Greenhouse Gas Reporting Program.”[2]  In simple terms, these new regulations, which are generally referred to as the “Mandatory Reporting Rule (MRR),” require owners and operators of facilities across most U.S industries to monitor their equipment and submit significant amounts of GHG emissions data to EPA on an annual basis.  Not surprisingly, EPA’s stated purpose behind these monitoring and reporting requirements is “to collect accurate and timely GHG data to inform future policy decisions.”[3]

Indeed, thousands of private companies and other public sector entities across the country – and the consultants they have hired – are working right now on reports they will be submitting to EPA by April 1, 2011 – the regulatory deadline under the MRR – as part of the first GHG reporting cycle, which covers emissions that occurred during calendar year 2010.  These reports, which will be filed with EPA through their internet-based “Electronic Greenhouse Gas Reporting Tool (e-GGRT)” system, will not only focus on leaks and other vented emissions of GHGs from particular categories of source equipment, but will also incorporate data associated with emissions from stationary combustion units.

When looking at these new regulations, it does not take long to recognize that they involve nothing more than monitoring and reporting; nowhere is there mention of permits, controls, limits or thresholds.  Equally as disappointing, these regulations impose no restrictions or reductions of any kind on the amount of GHG’s that can be emitted into the atmosphere, even though they easily span more than a thousand pages in total.

We realize that EPA is interested in this data because it is working to formulate a national GHG regulatory scheme to combat global warming.  Yet the main questions asked by most are where exactly are we going with this, and where does the path lead from here?  In other words, will the GHG emissions data that will be reported to EPA starting this year establish a solid foundation for an effective future regulatory program?  Or will the Mandatory GHG Reporting Program be as far as we get?  As we all know, complex problems rarely require simple solutions, and global warming is certainly no exception.  For that reason, there are no clear answers to these questions, but there are a few things to keep in mind.

Somewhat understandably, EPA decided that it needed to begin its approach to regulating GHGs by initiating what is basically an information and data gathering phase.  After all, its other major regulatory programs (e.g., air, water, hazardous waste, etc.) by design have never generated a comprehensive assemblage of facility- and industry-specific GHG emissions data for the entire country.  Thus, it appears that EPA – through its Mandatory GHG Reporting Program – should finally have sufficient nationwide data with which to move forward and design a sound regulatory program for controlling and reducing GHG emissions.  In this sense, EPA’s MRR has real potential to help us get to where we want to be.

At the same time, however, some of the detailed requirements for GHG “monitoring” under the MRR[4] are being questioned by industry and advocacy groups, some of whom have already filed petitions for judicial review[5] on the basis that certain terms and definitions found in the MRR are vague and open to conflicting interpretations, and will, therefore, result in inconsistent data.  In addition, some of these parties are also arguing that several formulas included in the MRR for calculating emissions contain serious errors and, as a result, need to be reworked. 

Besides raising obvious questions regarding the reliability of the GHG data that EPA will be compiling under the MRR, these legal challenges, if not settled, also carry the genuine possibility of evolving into long-term, multi-year disputes, any of which could result in EPA being forced to re-engage in additional resource- and time-consuming notice-and-comment rulemaking to revise the current rules.  There is no question that such an outcome would ultimately slow down the entire process and delay the design and implementation of a much-needed GHG regulatory scheme.

The overall timing of the next step (i.e., design and implementation of a regulatory scheme through rulemaking and enforcement) is also very critical.  In fact, timing could turn out to be the most important factor in determining whether EPA ever truly regulates GHGs.  Notwithstanding the fact that additional time-consuming legal challenges will likely be raised the longer it takes EPA to shift gears from this initial data and information gathering phase into the next phase (i.e., design and implementation), it cannot be ignored that as more times goes by the chances increase substantially that we will see another administration overhaul and a reversal of the political forces currently driving the executive branch, all of which could bring EPA’s GHG regulatory efforts to a grinding halt.  Thus, EPA must find a way to move forward quickly so as to prevent becoming overly bogged down with its “Mandatory Greenhouse Gas Reporting Program.”

For these reasons, EPA needs to maintain a delicate balance as it moves forward; it must gather the data it needs, while both carefully resolving the challenges raised by the regulated community and preparing to advance beyond this data gathering phase as soon as possible.  Because it is exactly what they have asked for, there is a reasonable likelihood that the GHG data that will be reported to EPA under the MRR should prove valuable.  Therefore, EPA’s Mandatory GHG Reporting Program has the potential to be a helpful stepping stone rather than just a hollow exercise, but only time will tell how true that proves to be. 

[1] Massachusetts v. EPA, 549 U.S. 497 (2007).

[2] 40 C.F.R. pt. 98 (2011).

[3] Greenhouse Gas Reporting Program, EPA, (last visited Feb. 19, 2011).

[4] “Monitoring” refers to the process of identifying and calculating volumes of GHGs emitted from particular facilities.  This process is completed through application of the highly prescriptive requirements found in 40 C.F.R. pt. 98, many of which require use of multivariable equations incorporating default emissions factors and other assumed values that may or may not match actual conditions at specific facilities.

[5] In January 2011, the American Gas Association (AGA) filed one such petition in the U.S. Court of Appeals for the D.C. Circuit.  AGA Petition for Subpart W Judicial Review (Jan. 28, 2011), Am. Gas Ass’n, (last visited Feb. 19, 2011).

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