October 17, 2008

DEQ Proposes Rule to Mandate Registration and Reporting of Greenhouse Gas Emissions by Municipal and Industrial Sources


By Steve Shropshire

Fall 2008

Municipal and Industrial emitters of carbon dioxide equivalent greenhouse gases ("GHG") that are believed to contribute to global warming will soon be subject to new registration, measurement, and reporting rules under a proposed rule issued by the Oregon Department of Environmental Quality ("DEQ") on or about October 6, 2008. The proposed final rule will require GHG emitters to annually register and report to DEQ if their emissions equal or exceed 2,500 metric tons ("Threshold Amount").

DEQ seeks this information to improve its understanding of greenhouse gas emissions and to assist in future policy development, including evaluating the need for regulations or helping to design and implement future regulations. The Greenhouse Gas Rule Adoption Package will be presented for final approval to the Environmental Quality Commission ("EQC") at its meeting on October 23, 2008. While public comments may be offered at the meeting, it is very likely that the rule will be approved in its current form. The rule will become final on approval.

Who Is Regulated

Any source operating under a Title V Operating Permit ("Title V") or Air Contaminant Discharge Permit ("ACDP"), that emits the Threshold Amount, will be subject to the new mandatory registration and reporting requirements. The new requirements are in addition to any federal reporting requirements, including the quarterly carbon dioxide, sulfur dioxide, and nitrogen oxide emissions reporting requirement under the Clean Air Act Title IV Acid Rain Program.

In addition to companies operating under Title V and ACDPs, the rule includes a list of specific sources and activities which, if they emit the Threshold Amount, are also subject to the reporting obligations. Asphaltic concrete paving plants (both stationary and portable), plywood manufacturing and/or veneer drying, pulp, paper and paperboard mills, sawmills and planing mills, municipal solid waste disposal and wastewater treatment facilities, and commercial printing are among these sources and activities. The full table of sources and activities is available here on pages 10 and 11.

What Is Regulated

The GHGs subject to the proposed rule are carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.

Regulated sources must report direct GHG emissions from fuel combustion activities, manufacturing operations or processes, and fugitive emissions. Sources are not required to report minor direct emissions from mobile activity such as delivery vehicles, forklifts, and fleets, or certain minor on-site activities such as janitorial and grounds-keeping activities. Likewise, indirect emissions such as power consumption and employee commuting are not covered by the rule.

Excluded Sectors

Transportation, agriculture, forestry, residential, and commercial activities are not subject to the rule. DEQ recommends exclusion of these sources from the proposed rule due to the difficulty in collecting the data. Fuel tax data may be used to calculate transportation related emissions, but DEQ has determined more research is needed at present before subjecting these emissions to the new requirements. It is likely that DEQ will take further action on this issue in a future rulemaking process.

Reporting Protocol

Sources falling under the new rule must report their GHG emissions using DEQ-approved reporting protocols. The initial report for 2009 emissions will be due on March 2010. The obligation to register and report GHG emissions is imposed on "owners and operators" of sources. Reports must include a signed statement certifying the report's accuracy to the best of the certifying individual's knowledge. The data to be collected includes source contact information; permit numbers; estimated annual emissions; activity data; emission, conversion, and global warming potential factors; and emission calculation methods used to determine emissions. DEQ has indicated it will launch a website in late 2008 to help sources identify and estimate their emissions. Failure to comply with the registration and reporting requirements could subject a source to regulatory enforcement.

Estimated Data Collection and Reporting Burden

DEQ estimates that for sources currently reporting air quality data, initial set up may require about one 8-hour day. Annual reporting of the data may require 1/2 day (4 hours) per year. For sources not currently reporting air quality data, DEQ estimates that initial set up may require about two weeks (80 hours). Annual reporting of the data may require 1/2 day (4 hours) per year.

During preliminary rule making, DEQ estimated initial setup costs could range from $400 to $4,000 per company and that ongoing annual costs would be appropriately $200 per company.

Regulatory Coordination

Several companies have expressed concerns during the rulemaking comment period that the inconsistency in mandatory reporting among states is burdensome for multi-state companies. DEQ is working closely with EPA, the Western Climate Initiative, and The Carbon Registry to bring uniformity to the data collection system and protocols within regional and national systems. Moreover, it is possible that state rules, including this rule proposed in Oregon, may be preempted by the United States Environmental Protection Agency ("EPA"), as EPA is currently proposing a mandatory greenhouse gas reporting program.

If you have any questions about how the new rule or other climate legislation and agency actions could affect your operations please contact Steve Shropshire or Chris Reive at 503-598-7070.

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