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MEMORANDUM 

To: Docket EPA-HQ-OAR-2010-0929 

From: Jessica Gordon, EPA/Climate Change Division 

Date: August 18, 2011

Subject: Process for Evaluating and Potentially Amending Part 98 Inputs to Emission Equations

In the December 27, 2010 proposal to defer reporting of inputs to emission equations 

under 40 CFR part 98 (Part 98), EPA expressed its intent to further evaluate the inputs to 

equations to determine which, if any, could result in competitive harm if made publicly available

and to take any further action if necessary, including potentially amending calculation methods 

and/or verification approaches under Part 98. 75 FR 81350, 81354-55. This memorandum 

describes this evaluation process in more detail.

Step 1: Determine whether each input is already publicly available.

Review comments on the proposed deferral rule and call for information indicating public 

availability or non-availability of each input. Review cited sources to confirm availability or 

non-availability.

Where commenters reported data as publicly available, determine the extent of availability 

and whether the available data is identical to the input in question. 

Where a given input is publicly available only for a subset of reporters, determine whether 

this comprises sufficient public availability.

As appropriate, conduct additional searches of sources such as federal and state databases, 

voluntary reporting program databases, Title V operating permits, and National Emission 

Standards for Hazardous Air Pollutants (NESHAPs) dockets. 
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Step 2: For inputs that are not publicly available, evaluate whether release of the 

information is likely to result in substantial competitive harm.

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Identify inputs that are identical or comparable to data elements categorized as CBI or nonCBI in the May 26, 2011 final CBI rule (both within and across source categories). 

Determine whether the rationale behind categorizing these data elements as CBI or non-CBI 

applies to the identical or comparable inputs. 

Review comments on the deferral proposal, call for information, and other notices including 

the Part 98 proposal, July 7, 2010 CBI proposal and July 27, 2010 supplemental CBI 

proposal. 

 For each input, identify whether release of the input itself would cause harm or 

whether harm would be caused by the use of inputs in combination. If the latter, 

investigate whether the harm can be alleviated by public availability of only certain 

inputs (i.e., those deemed most important for verification). 

To identify, evaluate, and address potential harm, conduct a full market analysis for each 

source category, as the potential for information disclosure to harm competition depends 

largely on the structure of the affected market and type of information disclosed. 

 Ascertain whether disclosure of information has the potential to undermine 

competition within an industry (the potential impact may be greater with more 

homogenous input mix, production processes, and output) which could allow 

competitors to ascertain the relative strength of their market position and to identify 

sources of competitive advantage (or disadvantage) among competitors. 

 Ascertain whether disclosure of information may lead to collusion (coordinated 

interaction), including through reviewing comments submitted by the Federal Trade 

Commission and others.

 To determine the possible degree of harm, analyze factors including, but not limited 

to, assessment of market transparency, entry barriers, concentration, homogeneity of 

products, product substitutability, elasticities of demand, and market shares (as proxy 

for predicting harm).

 Where a given input is publicly available only for a subset of reporters, determine 

whether this demonstrates that public availability of the input for the remaining 

sources would be unlikely to cause substantial competitive harm.

 

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In consultation with EPA’s Office of General Counsel.
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Step 3: For inputs that are likely to cause substantial competitive harm if disclosed, 

evaluate potential alternative calculation methods and direct monitoring.

Identify and evaluate potential alternative calculation methods.

 Identify potential calculation methods.

o Methods suggested by commenters on the Call for Information.

o Greenhouse gas (GHG) calculation methods previously considered for each 

subpart but not adopted in the final GHG Reporting Rule. Identify these methods 

by reviewing the proposed and final GHG Reporting Rule preambles, public 

comments on the proposal, the GHG Reporting Rule Technical Support 

Document, and the 2008 “Review of Existing Programs” memorandum.

o Determine whether previously-examined programs and protocols have been 

updated since development of Part 98 methods. Review programs and protocols 

including:

- Annual Inventory of U.S. GHG Emissions and Sinks

- Federal programs (e.g., Climate Leaders protocols, Department of Energy 

(DOE) 1605(b) reporting, other EPA and DOE voluntary GHG reduction 

programs)

- The Climate Registry (TCR) and state programs (e.g., California Climate 

Action Registry (now the “Climate Action Registry”); California Air 

Resources Board (CARB) cap and trade program)

- Regional programs (e.g., Regional Greenhouse Gas Initiative (RGGI); 

Western Climate Initiative (WCI) – since harmonized with the GHGRP)

- 2006 Intergovernmental Panel on Climate Change (IPCC) Guidelines

- European Union Emissions Trading System (EU ETS) and country-specific 

GHG reporting programs (e.g., Australia, Canada)

- World Resources Institute/World Business Council for Sustainable 

Development (WRI/WBCSD) protocols

- Industry trade groups 

 Identify and review GHG programs and protocols that were created after initial GHG 

Reporting Rule development (e.g., The Climate Action Reserve) and determine whether 

they incorporate any novel GHG monitoring and calculation methods. Review identified 

alternative calculation methods:

o Ensure that methods calculate GHG emissions to a level of accuracy consistent with 

the transparency and accuracy goals of Part 98.

o Assess whether any inputs to alternate calculations would be sensitive (replicating the 

steps described above).

o Evaluate practicability and cost as described below.
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Evaluate the use of Continuous Emissions Monitoring Systems (CEMS):

 For source categories already permitting use of CEMS for some calculations, 

evaluate whether CEMS could replace or serve as an alternative to current 

calculation methods. For example:

o If a subpart allows CEMS to calculate CO2 but requires facilities to calculate 

emissions of other GHGs using sensitive inputs, evaluate whether CEMS are 

also available and applicable to calculate emissions of the other GHGs. 

o If a subpart allows CEMS for some types of process units or emission points 

within the process/source category, but for others rely on calculations using 

inputs likely to cause substantial competitive harm if released, evaluate 

whether CEMS are also available and applicable to calculate emissions from 

the other processes. 

 For source categories not yet permitting use of CEMS, evaluate whether CEMS 

could replace or serve as an alternative to any calculation methods in the subpart. 

o For both types of source categories listed above, assess whether it would 

be technically and economically feasible to require facilities to use CEMS, 

or to give them the choice between using CEMS and reporting potentiallysensitive inputs: 

- Analyze whether CEMS is technically applicable to the range of 

processes and emission stream characteristics within the industry. For 

example, could vent stream composition potentially corrode 

monitoring instruments or interfere with measurement accuracy and 

are there CEMS that function well in those applications?

- Reevaluate public comments on CEMS submitted on the Part 98 

proposal, July 7, 2010 CBI proposal, and July 27, 2010 supplemental 

CBI proposal.

- Analyze the accuracy and uncertainty of CEMS measurements.

- Estimate the capital and annual costs of CEMS, considering all 

pollutants and locations that would need to be monitored and all 

required calibrations, relative accuracy audits, and other quality 

assurance, operation and maintenance procedures.

- Evaluate the burden of requiring CEMS on small entities. 

 Evaluate practicability and cost as described below.

For both potential alternative calculation methods and direct measurement with CEMS, 

evaluate practicability and costs.

 For each source category, analyze whether suggested methods could be applied to all 

facilities in the source category or whether they would be technically appropriate for 

only a subset of facilities.

 Estimate the testing and monitoring costs of the methods and compare these estimates 

to the costs of the current methods and others considered during rule development.
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o In developing the GHG Reporting Rule, one factor in identifying the 

appropriate reporting method was to compare the change in uncertainty with 

the change in costs associated with different emission measurement/estimation 

techniques. Where an uncertainty analysis was undertaken for the GHG 

Reporting Rule, evaluate the relationship between uncertainty and costeffectiveness of the existing Part 98 methods as compared to other methods 

considered during Rule development phases (2009 and 2010) and methods 

suggested in response to the Call for Information. Specifically, analyze the 

relative accuracy, uncertainty and costs of the suggested methods compared to 

current reporting methods and others considered during rule development. 

Evaluation factors include but are not limited to: measurement accuracy for 

measured inputs; uncertainties in assumptions used in the calculation 

equations; quality and representativeness of any suggested emission factors; 

emissions variability over time and among facilities and processes as it relates 

to any suggested calculation method. Determine uncertainties in the overall 

methods via error propagation or Monte Carlo assessment and report them as 

the 95% confidence interval. In addition to this quantitative assessment on 

these source categories, perform a qualitative uncertainty assessment for all 

sources.

- To evaluate the trade-off between cost and uncertainty across the 

alternative methods, develop three measures (i.e., metrics) of costeffectiveness. (This is the same approach undertaken to develop the final

Greenhouse Gas Reporting Rule and can be re-evaluated to include all 

reporting methods now under consideration.)

Incremental cost. This is the total national private cost difference 

between the options. 

Average cost per percentage point uncertainty. This can compare 

the average cost per percentage point uncertainty across 

the various alternative methods. The percentage point uncertainty 

is an emissions weighted average across the sectors for which we 

have uncertainty estimates for different reporting methodologies. 

Marginal cost per percentage point reduction in uncertainty. This 

compares the cost of reducing the coefficient of variation by 1%. 

For example, this could determine the incremental cost per percent 

point uncertainty reduced in going from the current reporting 

method to an alternative method. 

- In general, the results of this uncertainty cost-effectiveness analysis can be 

used in conjunction with other considerations such as consistency with 

other regulations and the burden on small entities to evaluate how the new 

reporting methods under consideration compare to the existing methods. 
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Step 4: Evaluate potential alternative verification methods.

Identify and evaluate potential verification methods (by subpart).

 Review methods suggested by commenters on the Call for Information.

 Identify and evaluate other verification approaches.

 Ensure that methods verify GHG emissions to a level of accuracy consistent with the 

transparency and accuracy goals of Part 98.

 Estimate the implementation costs of the potential verification approaches and 

evaluate the trade-off between cost and uncertainty as described above.

- Calculate change in industry costs relative to current verification approach. 

- Estimate relative uncertainty of the verification approaches (using quantitative 

or qualitative analyses).

 Determine steps and timeline needed to implement the feasible verification methods.

Step 5: Based on the evaluations described above, should EPA determine that collection of 

certain inputs is not necessary, EPA may propose to amend Part 98.