B-318944

November 13, 2009

The Honorable BarbaraBoxer
Chairman
The Honorable James M. Inhofe
Ranking Minority Member
Committee on Environment and PublicWorks
United States Senate

The Honorable Henry A.Waxman
Chairman
The Honorable John L. Barton
Ranking Minority Member
Committee on Energy and Commerce
House of Representatives

Subject: Environmental Protection Agency: Mandatory Reporting of GreenhouseGases

Pursuant to section801(a)(2)(A) of title 5, United States Code, this is our report on a major rulepromulgated by the Environmental Protection Agency (EPA), entitled MandatoryReporting of Greenhouse Gases (RIN: 2060-AO79). We received the rule on September 28, 2009. It was published in the Federal Register as a final rule on October 30, 2009. 74 Fed. Reg. 56,260.

The final rule requires reporting of greenhouse gas (GHG)emissions from all sectors of the economy.Specifically, the rule requires the reporting of the GHG emissions thatcould result from the combustion or use of fossil fuel or industrial gas thatis produced or imported from upstream sources such as fuel suppliers, as wellas reporting of GHG emissions directly emitted from facilities (downstreamsources) through their processes and/or from fuel combustion, as appropriate. Vehicle and engine manufacturers are alsorequired to report emissions rate data on the heavy-duty and off-road enginesthey produce. The rule also establishesappropriate thresholds and frequency for reporting. The rule requires reporting of annual emissionsof carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O),sulfur hexafluoride (SF₆), hydrofluorocarbons (HFCs),perfluorocarbons (PFCs), and other fluorinated gases (e.g., nitrogentrifluoride (NF₃) and hydrofluorinated ethers (HFEs)). It also includes provisions to ensure theaccuracy of emissions data through monitoring, recordkeeping, and verificationrequirements. The rule applies tocertain downstream facilities that emit GHGs (primarily large facilitiesemitting 25,000 metric tons or more of CO₂ equivalent (CO₂e)GHG emissions per year) and to most upstream suppliers of fossil fuels andindustrial GHGs, as well as to manufacturers of vehicles and engines. Reporting is at the facility level, exceptcertain suppliers and vehicle and engine manufacturers report at the corporatelevel.

Enclosed is our assessment of the EPAs compliance withthe procedural steps required by section 801(a)(1)(B)(i) through (iv) of title5 with respect to the rule. Our reviewof the procedural steps taken indicates that EPA complied with the applicablerequirements.

If you have any questions about this report or wish tocontact GAO officials responsible for the evaluation work relating to thesubject matter of the rule, please contact Shirley A. Jones, Assistant GeneralCounsel, at (202) 512-8156.

signed

Robert J. Cramer
Managing Associate General Counsel

Enclosure

cc: Nicole Owens
Director, Regulatory
Management Division
Environmental Protection Agency

ENCLOSURE

REPORT UNDER 5 U.S.C. sect.801(a)(2)(A) ON A MAJORRULE
ISSUED BY THE
ENVIRONMENTAL PROTECTION AGENCY
ENTITLED
"MANDATORY REPORTING OF GREENHOUSE GASES"
(RIN: 2060-AO79)

(i) Cost-benefit analysis

The Environmental Protection Agency (EPA) analyzed the costsand benefits of this final rule. EPA estimatesthat the total national annualized cost for the first year will be $132 million,and the total national annualized cost for subsequent years will be $89million. Of these costs, roughly 13percent fall upon the public sector for program administration in the firstyear, while 87 percent fall upon the private sector. General stationary combustion sources, whichare widely distributed throughout the economy, are estimated to incurapproximately 26 percent of costs in the first year; other sectors incurringrelatively large shares of costs are pulp and paper manufacturing (9 percent)and vehicle and engine manufacturers (9 percent).

EPAidentified several potential benefits of this final rule. According to EPA, a mandatory reportingsystem will benefit the public by increased transparency of facility emissionsdata and will benefit the government when it develops future greenhouse gas(GHG) emission policies. EPA identifiedbenefits for industry including the value of having independent, verifiabledata to present to the public to demonstrate appropriate environmentalstewardship and having a better understanding of emission levels and sources toidentify opportunities to reduce emissions.

(ii) Agency actions relevant to the RegulatoryFlexibility Act, 5 U.S.C. sections603-605, 607, and 609

EPA determined that this final rule will not have asignificant economic impact on a substantial number of small entities.

(iii) Agency actions relevant to sections 202-205 ofthe Unfunded Mandates Reform Act of 1995, 2 U.S.C. sections1532-1535

EPA determined that this final rule contains a federalmandate that may result in expenditures of $100 million for the private sectorin any one year. EPA also determinedthat the expenditures for state, local, and tribal governments, in theaggregate, will be approximately $12.1 million per year. Accordingly, EPA prepared a writtenassessment under the Act. EPA initiatedan outreach effort with the governmental entities affected by this ruleincluding state, local, and tribal officials.EPA stated that it identified and considered a reasonable number ofregulatory alternatives. Finally, EPAdetermined that this rule does not impose any implementation responsibilitieson state, local, or tribal governments, and it is not expected to increase thecost of existing regulatory programs managed by those governments.

(iv) Other relevant information or requirements underacts and executive orders

Administrative Procedure Act, 5 U.S.C. sections551 etseq.

EPA published the proposed rule on April 10, 2009. 74 Fed. Reg. 16,448. EPA held two public hearings and receivedapproximately 16,800 written public comments.EPA also met with over 4,000 people and 135 groups. EPA responded to comments in the finalrule. 74 Fed. Reg. 56,269369.

Paperwork Reduction Act, 44 U.S.C. sections3501-3520

EPAdetermined that this final rule contains information collection requirementsunder the Act. The informationcollection requirements have been submitted to the Office of Management andBudget (OMB) for review. EPA plans tocollect economy-wide data on facility level GHG emissions. EPA projected the cost for non-federalrespondents to be $86.3 million and the hour burden to be 1.21 million hoursper year.

Statutory authorization for the rule

EPA promulgated this final rule under sections 114 and 208of the Clear Air Act. 43U.S.C. sections7414, 7542.

National Technology Transfer and Advancement Act of 1995,15 U.S.C. sect. 272 note

EPA determined that this final rule involves technicalstandards and will use more than 60 voluntary consensus standards from 10different voluntary consensus standards bodies to help facilities monitor,report, and keep records of GHG emissions.By incorporating voluntary consensus standards into this final rule, EPAstates that it is both meeting the requirements of the Act and presentingmultiple options and flexibility for measuring GHG emissions.

Executive Order No. 12,866 (Regulatory Planning andReview)

EPA determined that this rule is economically significantunder the Order because it is likely to have an annual effect on the economy of$100 million or more. EPA submitted thisrule to OMB for review.

Executive Order No. 12,898(Environmental Justice)

EPA has determined that thisfinal rule will not have disproportionately high and adverse human health orenvironmental effects on minority or low-income populations because it does notaffect the level of protection provided to human health or the environment. EPA also concluded that this final rule doesnot affect the level of protection provided to human health or the environment becauseit is a rule addressing information collection and reporting procedures.

Executive Order No. 13,045 (Childrens Health)

EPA determined that this rule is not subject to the Order becauseit does not establish an environmental standard intended to mitigate health orsafety risks.

Executive Order No. 13,132 (Federalism)

EPA determined that this final rule does not havefederalism implications and that it will not have substantial direct effect onthe states, the relationship between the national governments and the states,or on the distribution of power and responsibilities among the various levelsof governments under the Order.

Executive Order No. 13,175 (Consultation and Coordinationwith Indian Tribal Governments)

EPA determined that this final rule does not have tribalimplications under the Order. EPA didseek opportunities to provide information to tribal governments andrepresentatives during the development of the rule.

Executive Order No. 13,211 (Energy Supply)

EPA determined that this final rule is not a significant energyaction under the Order because it is not likely to have a significant adverseeffect on the supply, distribution, or use of energy. Further, EPA concluded that this rule is not likelyto have any adverse energy effects.