On September 22, 2009, the U.S. Environmental Protection Agency (EPA) issued its Final Rule for Mandatory Reporting of Greenhouse Gases (the "Rule").  Based on existing Clean Act authority, the Rule requires large U.S. emissions sources and major U.S. fuel suppliers to monitor their greenhouse gas (GHG) emissions and report the results to EPA.

The rule does not control any greenhouse gas emissions but provides information for designing and administering future control programs.  Information EPA collects will also help businesses track their own emissions and compare them to similar U.S. facilities.

Canada's Federal GHG Reporting Requirement

Canada introduced mandatory reporting of greenhouse gas emissions in 2004 under the Canadian Environmental Protection Act, 1999.  In Canada, an operator of a facility that emits at least 50,000 metric tons of carbon dioxide equivalent (CO2e) of specified GHGs in the year 2009 must report emissions.  The reporting threshold was reduced this year from 100,000 metric tons of CO2e to 50,000 metric tons.

As with the EPAs recent rule, Canada's reporting requirement does not directly control GHG emission levels.  However, there are penalties under the Canadian Environmental Protection Act, 1999 if an operator fails to comply with the reporting requirement.

Canada's reporting requirement applies to a specified list of GHG emissions.  As with the EPA rule, it excludes emissions from biomass from the calculations to determine whether a facility meets the threshold GHG emission level.  The specific information that must be reported is set out in the Notice published in the Canada Gazette on July 11, 2009 and includes a requirement that an operator report carbon dioxide, methane and nitrous oxide emissions by source category. Such categories include, for example, stationary fuel combustion emissions, industrial process emissions and waste emissions.

The deadline in Canada for reporting on GHGs emitted in 2009 is June 1, 2010. 

Sources And Gases Covered

The Rule applies to carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFC), perfluorocarbons (PFC), sulfur hexafluoride (SF6), and other fluorinated gases, including nitrogen trifluoride (NF3) and hydrofluorinated ethers (HFE).  GHG are measured in units known as carbon dioxide equivalents or CO2e.

Under the Rule, all stationary sources that emit more than 25,000 metric tons of GHG annually and all suppliers of liquid or gaseous fuels in quantities which, when burned, would emit that amount of GHG are required to report annually to EPA on the type and volume of GHG they directly or indirectly emit.  The Rule also applies to some vehicle and aircraft engine manufacturers and a number of other specifically listed source types such as electric generating units, pulp and paper production, cement production, lime manufacturing, petroleum refining and municipal landfills.1

Most small businesses will fall below the 25,000 metric ton threshold and will not be required to report GHG emissions.  However, EPA estimates the Rule will apply to approximately 10,000 facilities collectively responsible for 85 percent of U.S. GHG emissions.

Timing And Verification Of Reporting

Under the Rule, reporters must begin collecting data on January 1, 2010.  The first annual GHG report for GHGs emitted or products supplied during 2010 will be due March 31, 2011.  With some exceptions, GHG reporting is at the facility level and must follow reporting protocols prescribed by EPA in some detail.  EPA will specify the electronic format in which reports must be submitted.

Once subject to the reporting requirement, each reporter must continue to submit GHG reports annually; however, a reporter can stop reporting if its annual reports demonstrate that its emissions are (1) less than 25,000 metric tons of CO2e per year for five consecutive years, or (2) less than 15,000 metric tons of CO2e per year for three consecutive years.

Each reporter will self-certify its data, and EPA will review the reports by performing electronic data quality assurance checks and a range of other emission verification activities.  No third party verification will be required.

EPA received many comments on the trade secret status of submitted data.  EPA will conduct a separate rulemaking to address this issue.

EPA's rule will not preempt any existing state or local reporting requirements, and EPA may establish additional reporting requirements in the future.

EPA has developed an online applicability tool to assist potential reporters to assess whether they would be required to report, and to assist compliance if reporting is required. For these resources, visit EPA's Web site at: http://www.epa.gov/climatechange/emissions/ghgrulemaking.html.

Implications

The Rule and the information it produces give clues on how future mandatory GHG control programs will work. The 25,000 metric ton threshold for emissions reporting is the same as the threshold for coverage by the cap and trade program contained in the Waxman-Markey bill that passed the House.  The monitoring and data quality requirements can reasonably be taken as the minimum monitoring and data quality procedures that EPA will consider acceptable for quantifying source emissions and deciding how many allowances a source must hold.

Who Will Decide U.S. Climate Policy – The Courts Or Congress?

Almost simultaneous with EPA's release of its reporting rule, the U.S. Court of Appeals for the Second Circuit opened the door wider than before to federal nuisance claims against GHG emissions.   

In State of Connecticut v. American Electric Power Co., Nos. 05-5104 and 05-5119 (Sept. 21, 2009), the court rejected a lower court finding that federal common law remedies for climate change presented "political questions" the courts could not decide. The court also found that the plaintiff states had standing to raise such issues on behalf of their citizens and remanded the case to the lower court to consider whether plaintiffs could show global warming was a "public nuisance" – that is, "an unreasonable interference with a right common to the general public."

The court made clear that Congressional or EPA action could displace and preempt the court's authority. However, the opinion suggests that only a comprehensive statutory or administrative approach to the issue would constitute preemption. 

Conclusion

Both Canada and the United States are moving towards more stringent GHG reporting requirements that will affect an increasing number of emitters in both countries.  We will continue to monitor this important regulatory development and are available to assist with any inquiries you may have about reporting requirements in Canada and the United States.

Footnote

1. http://www.epa.gov/climatechange/emissions/ghgrulemaking.html

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.