On March 10, 2009, the U.S. Environmental Protection Agency (EPA) issued draft regulations requiring the mandatory reporting of greenhouse gas (GHG) emissions from large GHG sources. The purpose of the new rules is to collect data on GHG emissions to assist in the development of future public policy decisions relating to the regulation of carbon by either a carbon tax or a market-based cap-and-trade program.

The GHG gas emissions covered by the rule are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFC), perfluorocarbons (PFC), sulfur hexafluoride (SF6) as well as other fluorinated gases - all of which can be expressed in metric tons of carbon dioxide equivalent (mtCO2e). Under the proposed rule, the following sources of GHG emissions would be required to begin collecting GHG emissions data on January 1, 2010, and submit annual reports to EPA starting in 2011:

  • All suppliers of specified industrial gases and fossil fuels.
  • Manufacturers of vehicles and engines.
  • Facilities that emit 25,000 mtCO2e or more of GHG emissions per year.

The EPA estimates that approximately 13,000 facilities will fall within the scope of this rule, which will affect the following business sectors:

  • Power plants.
  • Manufacturers of new vehicles and engines, including passenger vehicles, heavy trucks, locomotive engines, marine engines, aircraft engines and other non-road engines.
  • Petroleum refineries, natural gas distribution companies and manufacturers of industrial gases (e.g., HFCs, N2O, PFCs, CO2).
  • Large agricultural manure management systems.
  • Iron, steel, aluminum, lead, copper, nickel, gold, iron and zinc producers.
  • Municipal landfills, wastewater treatment plants, ethanol plants and food processing plants.

Note that individual home and car owners and most commercial and residential buildings are not intended to fall within the scope of the rule.

The Minnesota Legislature is currently debating a bill that would mandate GHG reporting for facilities whose GHG emissions exceed a threshold set by the commissioner of the Minnesota Pollution Control Agency at between 10,000 to 25,000 mtCO2e or more per year. In late 2007, Gov. Tim Pawlenty, along with governors from five other midwestern states and Manitoba, agreed to implement the Midwestern Greenhouse Gas Reduction Program, as outlined in the Midwestern Greenhouse Gas Accord. The goal of the accord is to have a multi-sector, market-based carbon cap-and-trade program in place and operating at the member-state level by mid-2010.

Comments on the EPA's rule are likely to focus on the reasonableness of the 25,000 mtCO2e standard, the adverse impact of the reporting requirements on certain sectors of the business community, and the extent to which EPA's mandatory reporting program may conflict with state or regional reporting requirements.

The EPA is holding public hearings this April and accepting public comment on its proposed mandatory reporting rule for 60 days.