Washington State Releases Draft GHG Reporting Rules That Are More Stringent Than New Federal Rules

Just two weeks after EPA released a national Greenhouse Gas (“GHG”) reporting rule, Washington State, on October 7, 2009, released its own draft GHG reporting rule, one that is significantly more stringent than its federal counterpart. Specifically:

Just two weeks after EPA released a national Greenhouse Gas (“GHG”) reporting rule, Washington State, on October 7, 2009, released its own draft GHG reporting rule, one that is significantly more stringent than its federal counterpart. Specifically:

• The Washington rule includes food processors, industrial landfills, and natural gas extraction, processing, storage, transmission, and distribution, which are excluded from the federal rule;
• The initial threshold for stationary sources for reporting year 2009 (25,000 metric tons of CO2e[1] per year) is reduced to 10,000 metric tons for reporting years 2010 and beyond;
• Once a source reaches the threshold of direct emissions requiring reporting, it must also include indirect emissions;

Greenhouse gas reporting is the first step toward greater regulation of sources of carbon dioxide. Neither EPA nor the states are waiting for Congress to enact climate change legislation. They are proceeding to set up regional cap and trade systems, to regulate GHGs under the Clean Air Act, or both. Companies headquartered outside of the Pacific Northwest, but doing business in Washington State, should play particularly close attention to the Washington rules, because they are different than the federal rules they may be more familiar with. These include vehicle fleet owners, food processors, landfill operators and natural gas transmission companies.

Marten Law Group will be conducting a free breakfast briefing, co-hosted by the environmental consulting firm, Environ. on Tuesday, October 27, from 7:30 a.m. to 9:30 a.m., at the Washington Athletic Club in Seattle. The seminar will provide both legal and technical analysis of the new state GHG reporting rules, as well as analysis of the federal GHG reporting rule, and EPA's proposed GHG stationary source permitting rules. If you are interested in attending, please e-mail nbeckett [at] martenlaw [dot] com (Ruth Beckett).

The chart below summarizes the principal differences between the federal and Washington State reporting rules:

Comments on the proposed Washington state rule are due to Ecology by November 12, 2009. Ecology is conducting workshops on the rule throughout the state through the end of October.[2] Public hearings will take place on November 3 at Ecology’s Regional Offices in Spokane, Washington and November 5 at Ecology’s Headquarters in Lacey, Washington.

The federal reporting rules are discussed in EPA Issues Mandatory Greenhouse Gas Reporting Rule; Monitoring To Begin January 1, 2010, Marten Law Group Environmental News, September 23, 2009.

Washington’s Proposed Reporting Requirements

The draft rule will be implemented in phases. Specifically, each facility or fleet of non-road mobile sources[3] that meet a 25,000 metric ton CO2e threshold will be required, by October 31, 2010, to report GHG emissions for 2009.[4] Emissions from off-road equipment such as forklifts and frontend loaders are not required to be reported under the rule. Fleets of on-road motor vehicles that meet a 2,500 metric ton CO2e threshold will be held to the same schedule.[5] In order to quantify emissions for 2009, reporters that have not been directly measuring GHGs may use calculation-based methodologies that calculate emissions based on “activity data” such as fuel consumption, input material flow, product output, or vehicle-miles-traveled.[6]

In 2011, the reporting threshold would be reduced, with facilities emitting over 10,000 metric tons CO2e required to report their 2010 emissions. The threshold for fleets of on-road motor vehicles remains the same. Whether an emitter meets a threshold depends solely on that emitter’s direct emissions[7], but once that threshold is met, the emitters must report the total GHG emissions, including indirect emissions.[8] The penalty for failure to report is up to $10,000 per day of violation.[9] Ecology will waive fines and penalties for first time reporting violations.[10]

The fleets subject to the rule include trucking and delivery fleets, rental car companies, large customer service fleets (such as phone, cable or power companies) and large government-agency fleets.[11] Large fleets of aircraft, marine vessels or rail equipment must report if they emit at least 10,000 metric tons of greenhouse gases a year in the state (the phase-in threshold for 2009 is 25,000 metric tons CO2e).[12] Washington’s largest factories and power facilities will also exceed this threshold and be required to report. They include refineries, pulp and paper mills, cement kilns, some lumber mills, large food processors, and some entities that use fossil fuels to generate power, steam, heat or cooling.[13]

There are several notable changes between the original draft of the rule, which was first circulated in January 2009, and the currently released draft. For example, an emitter may now submit a written petition to Ecology to end the reporting requirements when a change in operations results in the permanent reduction of direct emissions below the applicable threshold.[14] Without a written petition however, an emitter must continue to report until direct emissions are below the applicable reporting threshold for at least three consecutive years.[15] Emitters also would no longer be required to submit a “Greenhouse Gas Inventory Management Plan,” as originally proposed in the first draft rule.

An important revision clarifies quantification methods from a source or combination of sources: all stationary sources except oil refineries must use one of the methods described in The Climate Registry’s General Reporting Protocol, Version 1.1 (May 2008), while oil or petroleum refineries must used one of the methods in WAC 173-441-510.[16] For most other sources, including nonroad mobile sources, on-road motor vehicles, and direct emissions from processes such as aluminum, cement, steel, and pulp and paper manufacturing, emitters must use the appropriate tiers from The Climate Registry’s General Reporting Protocol.[17] Earlier drafts of the rule had contemplated requiring third-party verification beginning with emissions reports submitted in 2011 for the 2010 calendar year for sources emitting more than 25,000 metric tons CO2e,[18] or when Washington begins participating in a regional or national cap-and-trade program for GHG.[19] However, the final draft of the rule eliminates third-party verification in favor of self-certification by a designated representative.[20]

The draft rule also provides detailed quantification guidelines for fugitive emissions from sources such as wastewater treatment plants and coal piles, and indirect emissions from purchased electricity and imported steam, heating, cooling, and electricity from a combined heat and power plant.[21] Finally, emitters may petition Ecology to use an alternative quantification method, such as those developed by EPA, World Resources Institute, or the California Air Resources Board.[22]

Integrating Federal and State GHG Reporting Rules Nationwide

At least seventeen states other than Washington have adopted rules which will require businesses to quantify and report their greenhouse gas emissions, including, on the west coast, Oregon and California. The State programs vary in reporting thresholds, the criteria for covered facilities, what emissions must be reported (only CO2, or some or all of the 6 primary GHGs), and monitoring and data verification requirements. For example, on January 1, 2009, Oregon facilities with air discharge permits had to begin calculating greenhouse gas emissions for annual reports to the Oregon Department of Environmental Quality (ODEQ).[23] California’s mandatory GHG reporting rule became effective on December 2, 2008. The California Air Resources Board (“CARB”) has posted an online “Instructional Guidance for Operators,” providing sector-specific instructions for GHG reporting. Operators of cement plants, electricity generators, cogeneration, petroleum refineries, etc. can use this tool, in conjunction with CARB’s online reporting tool to calculate and report GHG emissions and power transactions.

EPA’s reporting rule does not preempt states from requiring their own GHG emission reporting. Indeed, neither the House nor Senate versions of comprehensive climate change legislation preempt states from adopting their own enforcement of GHG emissions. Ecology has said it will seek consistency with the federal rule to avoid duplicative reporting. However the state appears determined to require more universal reporting than EPA is requiring.[24]

For more information on Washington’s GHG Reporting Rule, contact Svend Brandt-Erichsen or any other member of Marten Law Group’s Climate Change Practice Group.