Climate Change Alert authored by Ross Forman and Ron Farley
December 2, 2009
Each branch of our government is now involved with greenhouse gases. Congress is actively pursuing legislation to regulate the amount of greenhouse gases which may be emitted. The House has passed its bill, but the Senate is considering its own bill. No one knows what the end legislation will require, but it will probably include cap and trade provisions. EPA has now leaped ahead of Congress. On October 30, 2009, EPA published its final rule requiring reporting of annual emissions of greenhouse gases beginning with calendar year 2010. EPA has also proposed a rule restricting greenhouse gas emissions for major new sources or major modifications to existing sources. The judiciary has also been active with two United States Circuit Courts of Appeals allowing claims of nuisance and negligence to be pursued against major emitters of greenhouse gases. The required reporting of greenhouse gas emissions to EPA will probably lead to more such suits being filed. With all three branches involved, it is clear that regulation of greenhouse gas emissions has arrived.
EPA’s Greenhouse Gas Reporting Rule
EPA has now issued its final rule requiring an estimated 10,000 facilities to monitor and report greenhouse gas emissions to EPA. The rule applies to fossil fuel suppliers, direct emitters, and manufacturers of heavy-duty and off-road vehicles and engines. The reporting period begins January 1, 2010, and the first annual report must be submitted by March 31, 2011.
While the reporting rule does not limit greenhouse gas emissions, it is certainly the precursor to such a rule. The rule requires each individual facility or supplier to report emissions. Under the rule, greenhouse gases are defined as carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and other fluorinated gases, such as trifluoride and hydrofluorinated ethers. However, the precise list of greenhouse gas emissions that a facility or supplier is required to report depends upon the category in which the facility or supplier falls. The greenhouse gas emission calculations and reporting protocols vary depending on the applicable category.
For direct emitters, the rule applies to three separate classes. First, the rule is applicable to any facility that involves electricity generation, adipic acid production. aluminum production, ammonia manufacturing, cement production, HSFC-22 production, HFC-23 destructive processes, lime manufacturing, nitric acid production, petrochemical production, petroleum refineries, phosphoric acid production, silicone carbide production, sodium ash production, titanium dioxide production, municipal waste landfills and manure management systems. Second, the rule applies to any facility involved in ferroalloy production, glass production, hydrogen production, iron and steel production, lead production, pulp and paper manufacturing, and zinc production, if the facility emits at least 25,000 metric tons of greenhouse gas per year. Third, the rule applies to any facility which has stationary fuel combustion units with an aggregate maximum rated heat input capacity of 30 mmBtu/hr or greater which emit, in the aggregate, at least 25,000 metric tons of greenhouse gas per year.
In addition to requiring reporting from direct emitters of greenhouse gas, the rule also requires certain producers, importers, and exporters of petroleum products, natural gas, and industrial greenhouse gases to report the greenhouse gas component of their product.
The rule requires the owners and operators of such facilities to report greenhouse gas emissions by March 31 of each year, and once a facility is required to report, it must continue to report even if it drops below the reporting threshold, unless certain exceptions apply.
The rule requires immediate action since any monitoring equipment needed to allow greenhouse emissions to be calculated must be installed by March 31, 2010. Any request for an extension of time to install needed monitoring equipment must be submitted to EPA by January 28, 2010.
The annual report must be certified by a designated representative, under penalty of law. A Certificate of Representation must be filed with EPA by January 30, 2010. Emission records, calculations and other information supporting the annual report to EPA must be maintained for 3 years.
A violation of any part of the rule is considered a violation of the Clean Air Act which can subject the offending party to a substantial penalty.
EPA’s Proposed Greenhouse Gas Emission Rule
EPA has published a proposed rule which will limit greenhouse gas emissions from major new stationary sources or major modifications of existing sources. The rule would apply to facilities that emit more than 25,000 tons of greenhouse gas per year. The new sources or major modifications would be required to install the best available control technology for limiting greenhouse emissions. Existing sources would not be required to install the best available control technology unless it undergoes a major modification.
The gases proposed to be regulated are carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride. Best available control technology is not defined and will be determined on a case by case basis by EPA.
Comments concerning the proposed rule must be received by EPA by November 30, 2009. This rule does seem premature, since Congress will pass some control legislation in the near future.
Legislation
On June 26, 2009, the House of Representatives passed a 1,500 page energy and climate change bill (HR2454) which will establish a federal cap on greenhouse gas emissions and an emission trading program. The emission cap is designed to reduce greenhouse gas emissions 17% by 2020 and 83% by 2050. It would require a 3% reduction in emissions by 2012. Utilities will be required to obtain 15% of their electricity from renewable sources by 2020 and to reduce demand for electricity by 5% through conservation. It also contains new energy efficient standards for buildings and appliances. To date, the Senate has not acted on climate control legislation.
Litigation
Surprisingly, the Fifth and Second U.S. Circuit Courts of Appeals have reversed district court decisions dismissing common law negligence and nuisance lawsuits against major emitters of greenhouse gases. Both cases had been dismissed by the lower district courts, because these courts felt that greenhouse gas emissions were political issues which needed to be resolved by Congress and not by the courts. On appeal, the Fifth and Second Circuit Court of Appeals held that common law tort claims, like negligence and nuisance, are not political issues. The Courts of Appeals held that such claims are normal legal questions to be resolved by the courts. The courts held that “so long as there is a fairly traceable connection between the alleged injury in fact and the alleged conduct of the defendant, the case may go forward”. While we do not know what the courts will require of the plaintiffs at trial to support their causation assertions, these opinions do open the door for suits against emitters of greenhouse gases. This is particularly troublesome since the final EPA rule requiring facilities to report their greenhouse emissions will identify potential defendants for the plaintiffs.
Conclusion
Quick action is needed by direct emitters of greenhouse gas who must report such emissions to EPA. All needed monitoring equipment must be installed and operational by March 31, 2010. If an extension of time is needed, the request must be submitted to EPA by January 28, 2010 with all data supporting the need for an extension. Also a Certificate of Representation must be submitted to EPA by January 30, 2010.
If you have any questions, contact Ross Forman, 205-458-5213, rforman@burr.com, or Ron Farley, 205-458-5185, rfarley@burr.com, with the Burr Forman LLP Climate Change Group.
by: J. Ross Forman, III, Ronald W. Farley
topics: Environmental & Land Use