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EPA Finalizes GHG Reporting Requirements for Petroleum and Natural Gas Systems and Sources of Fluorinated Gases

By Lisa Epifani, Tomás Carbonell

November 11, 2010

On November 9, 2010, EPA issued the final versions of two major supplements to its regulations requiring reporting of greenhouse gas (GHG) emissions from major stationary sources and fossil fuel suppliers.  The first rule, commonly referred to as "Subpart W," mandates the monitoring and reporting of certain fugitive and vented GHG emissions from a variety of facility types in the petroleum and natural gas sector.  The second rule adds five new subparts to EPA's GHG reporting rule (Subparts I, L, DD, QQ, and SS), requiring reporting of emissions of certain fluorinated GHGs within a variety of industrial sectors. 

Both rules will be implemented on an aggressive timetable.  GHG monitoring under the new subparts is required to begin January 1, 2011, with the first reports to EPA due by March 31, 2012.  The reporting requirements for petroleum and natural gas facilities are particularly complex, and will require covered facilities to move quickly to determine the applicability of the rule; obtain necessary equipment and monitoring services; train personnel; and build adequate recordkeeping and reporting capabilities. 

OVERVIEW OF SUBPART W Background. EPA has experienced a number of delays in crafting a final version of Subpart W.  EPA originally proposed a version of Subpart W in March 2009 as part of its GHG Reporting Rule.  That version of Subpart W, which would have required petroleum and natural gas facilities to undertake labor-intensive direct measurements of fugitive emissions (which EPA now refers to as "equipment leaks") from a vast number of components, received numerous critical comments regarding its potential cost and practicability.  Thus, EPA refrained from promulgating Subpart W when it finalized the rest of the GHG Reporting Rule in October 2009, and indicated it would re-propose Subpart W in a separate rulemaking.

The refashioned Subpart W, proposed in April of this year, expanded the scope of the rule to require GHG monitoring and reporting from onshore and offshore petroleum and natural gas production facilities, as well as local gas distribution facilities (both of which were excluded from the previous version of Subpart W).  At the same time, the new proposal allowed covered facilities to make use of engineering techniques to estimate GHG emissions from many types of components, and circumscribed the use of direct measurement.  These general features have been preserved in the final version of Subpart W. 

Applicability. In its final form, Subpart W requires monitoring and reporting of GHG emissions from the following types of facilities:

  • Offshore petroleum and natural gas platforms;
  • Onshore petroleum and natural gas production facilities (including some portable equipment used at wellheads, and excluding gathering lines and boosting stations);
  • Natural gas processing facilities (excluding gathering lines and boosting stations);
  • Natural gas transmission compression facilities;
  • Underground natural gas storage facilities;
  • Liquefied natural gas (LNG) storage, import, and export facilities; and
  • Certain natural gas distribution facilities (including distribution pipelines and metering and regulating equipment at city gate stations, but excluding customer meters).
Any facility in one of the above categories is covered by Subpart W if its combined GHG emissions (including combustion-related emissions and fugitive and vented emissions) exceed 25,000 metric tons CO2-equivalent per year.  For purposes of Subpart W only, EPA decided to define an onshore petroleum and natural gas production "facility" as comprising all production wells under common ownership and located within a single hydrocarbon basin.  EPA clarified in the final rule that this definition is not intended to be applied under any other regulatory program of the Clean Air Act.

In the preamble to the final version of Subpart W released this week, EPA also committed to eventually provide a simplified "screening tool" that would allow facilities to determine whether they are clearly above or below the 25,000 ton threshold on the basis of straightforward indicators such as equipment size or component counts.    

Emissions to be reported. For each of the above facility categories, Subpart W outlines a list of specific emitting component types (such as vent stacks, pneumatic pumps, and storage tanks) whose emissions must be monitored and reported. 

Methodology. For each of the component types identified in the rule, Subpart W specifies which GHGs must be monitored (methane, CO2, or N2O) and provides a methodology for estimating or measuring those emissions.  Subpart W generally allows the estimation of emissions (using engineering calculation techniques or an assumed emission factor approach) for most components.  However, Subpart W does require fugitive emissions from certain types of facilities to be detected using one of several approved techniques, including optical gas imaging and the use of handheld vapor analyzers.  In addition, Subpart W requires many covered facilities to carry out detailed "component counts" for use in estimating fugitive emissions. 

Compliance date. Data collection under Subpart W must begin January 1, 2011.  Until June 30, 2011, certain types of facilities subject to Subpart W may use "best available monitoring methods" in lieu of the required Subpart W methodologies for certain emitting components.  Facilities may petition EPA on a case-by-case basis to extend this deadline  to December 31, 2011. 

OVERVIEW OF SUBPARTS I, L, DD, QQ, AND SS The second rule finalized by EPA requires reporting of emissions of fluorinated GHGs emitted from (or, in some cases, supplied by) electronics manufacturing (Subpart I), fluorinated gas production (Subpart L), electrical equipment use (Subpart DD), electrical equipment manufacture and refurbishment (Subpart SS), and importers and exporters of pre-charged equipment and closed-cell foams (Subpart QQ).  Like Subpart W, these subparts were originally proposed in March 2009, but were not finalized as part of the GHG Reporting Rule.  Monitoring under these five subparts will begin on January 1, 2011.  Certain facilities covered by these subparts may use "best available monitoring methods" in lieu of required measurement methodologies until June 30, 2011. 

CONCLUSION These new reporting rules will take effect in less than eight weeks.  Owners and operators of facilities that are potentially covered by the new reporting requirements will need to work expeditiously to determine whether their facilities exceed the emission thresholds that trigger reporting requirements under the new subparts.  In addition, covered facilities - even those planning to use "best available monitoring methods" until June 30, 2011 - need to be prepared to properly monitor and record all data called for in the above rules, as well as obtain any equipment or procure any monitoring services that will be required once fully compliant monitoring becomes required. 

Petitions for judicial review of these rules must be filed no later than 60 days after the rules are published in the Federal Register. In the preamble to both rules, EPA notes that there may be a "significant delay" in publication due to the complex charts and equations that will be included in the regulations. 

Van Ness Feldman closely monitors federal and state developments on climate change, air quality, and energy policy, and is in a strong position to provide expert analysis and advice on emerging legislation and regulatory activity, the surrounding policy and political debate, and the implications for your organization.  If you would like more information, please contact Kyle DanishStephen Fotis, or any member of the firm's Climate Change practice at (202) 298-1800.  Those interested in on-going coverage of climate change policy developments may wish to subscribe to the weekly Climate Change Policy Update here.

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