# Mandatory Greenhouse Gas Reporting Rule: EPA's Response
to Public Comments

Volume No.:47

Subpart KK—Suppliers of CoalJune 2010



# Subpart KK—Suppliers of Coal

U. S. Environmental Protection Agency Office of Atmosphere Programs Climate Change Division Washington, D.C.iii FOREWORD

This document provides EPA’s responses to public comments on EPA’s Proposed Mandatory Greenhouse Gas Reporting Rule. EPA published a Notice of Proposed Rulemaking in the Federal Register on April 10, 2009 (74 FR 16448). EPA received comments on this proposed rule via mail, e-mail, facsimile, and at two public hearings held in Washington, DC and Sacramento, California in April 2009. Copies of all comments submitted are available at the EPA Docket Center Public Reading Room. Co mments letters and transcripts of the public hearings are also availa ble electronically through h ttp://www.regulations.gov by searching

Docket ID EPA-HQ-OAR-2008-0508.

Due to the size and scope of this rulemaking, EP A prepared this document in multiple volumes, with each volume focusing on a different broad subject area of the rule. EPA has made the final decision not to include suppliers of coal in the Mandatory Gree nhouse Gas Reporting Rule at this time. Therefore, this volume of the document only provides EPA’s responses to public comments received related to whether Suppliers of Coal – Subpart KK, 40 CFR 98, should be included as a source category in the final rule.

Each volume provides the verbatim text of comments extracted from the original letter or public hearing transcript. For each comment, the name and affiliation of the commenter, the document control number (DCN) assigned to the comment letter, and the number of the comment excerpt is provided. In some cases the same comment excerpt was submitted by two or more commenters either by submittal of a form letter prepared by an organization or by the commenter incorporating by reference the comments in anothe r comment letter. Rather than repeat these comment excerpts for each commenter, EPA ha s listed the comment excerpt only once and provided a list of all the commenters who su bmitted the same form letter or otherwise incorporated the comments by reference in table(s) at the end of each volume (as appropriate).

EPA’s responses to comments are generally pr ovided immediately following each comment excerpt. However, in instances where several co mmenters raised similar or related issues, EPA has grouped these comments together and provide d a single response af ter the first comment excerpt in the group and referenced this response in the other co mment excerpts. In some cases, EPA provided responses to specific comments or groups of similar comments in the preamble to the final rulemaking. Rather than repeating those responses in this document, EPA has referenced the preamble.

While every effort was made to include the releva nt comments related to the inclusion of 40 CFR Part 98, Subpart KK—Suppliers of Coal in th is volume, some comme nts inevitably overlap multiple subject areas. For comments that over lapped two or more subject areas, EPA assigned the comment to a single subject category based on an assessment of the pr inciple subject of the comment. In some instances, a partial response wa s previously provided in the relevant response to comment volume and EPA demurred on that pa rt of the comment relating specifically to Subpart KK. EPA is here including responses to those comments insofar as related to whether suppliers of coal should be incl uded in the rule. For this r eason, EPA encourages the public to read the other volumes of this document with subj ect areas that may be re levant to 40 CFR Part 98, Subpart KK—Suppliers of Coal.iv The primary contacts regarding questions or comments on this document are:

Carol Cook (202) 343-9263

U.S. Environmental Protection Agency Office of Atmospheric Programs Climate Change Division

Mail Code 6207-J 1200 Pennsylvania Avenue, NW Washington, D.C. 20460

ghgreportingrule@epa.govv 

### TABLE OF CONTENTS

Section Page

1. COMMENTS SUPPORTING GHG REPORTING FOR CO AL SUPPLIERS ................... 1

2. COMMENTS OPPOSING GHG REPO RTING FOR COAL SUPPLIERS ........................ 21 

### SUBPART KK—SUPPLIERS OF COAL

1. COMMENTS SUPPORTING GHG RE PORTING FOR COAL SUPPLIERS

Commenter Name: Craig Holt Segall

Commenter Affiliation: Sierra Club

Document Control Number: EPA-HQ-OAR-2008-0508-0635 Comment Excerpt Number: 49

Comment: We strongly support EP A’s efforts to establish accurate emissions figures from coal mines. We also strongly support EPA’s proposal to require coal suppliers – including all active coal mines – to estimate and report CO 2 emissions from the coal produced from mines. We agree that requiring active coal mines to supply this information will provide “valuable information to EPA and stakeholders in the development of cl imate change policy and programs.” For example, since many coal mines in the West remove fede rally-owned coal with the U.S. government’s permission, requiring coal mines to estimate CO 2 emissions from the combustion of mined coal may enable the federal government to better und erstand and mitigate its contribution to global climate change. EPA’s caref ul description of how CO 2 emissions from coal suppliers is especially helpful given that at least one fede ral agency recently t ook the entirely unsupported position that it is “impossible” to quantify such emissions. [footnote: See, U.S. Forest Service, Environmental Assessment, Federal Coal L ease COC-61357 Modificat ion, Tract 4 (Aug. 2008) at 24 (“It is impossible to quantif y emissions related to coal that is burned at coal fired power plants with regard to the coal in [a proposed federal coal] lease modification as it will be mixed with other less compliant coals all over the Un ited States to meet air quality standards.”) (available at http://www.fs.fed.us/r2/gmug/po licy/minerals/bowie/Bowie_Lease_Mod_EA.pdf) (Ex. 44).]

Response: Please see Section III.D of the preamble fo r EPA’s rationale for its final decision not to require reporting from coal supp liers at this time, specifically w ith respect to other information available to EPA for informing the development of future climate policy and programs under the

CAA.

Commenter Name: Jeff A. Myrom

Commenter Affiliation: MidAmerican Energy Holdings Company

Document Control Number: EPA-HQ-OAR-2008-0508-0581.1 Comment Excerpt Number: 45

Comment: EPA requests comment on the inclusi on of active underground and surface coal mines, coal importers, coal exporters, and waste coal reclaimers, and th e exclusion of offsite preparation plants, coke importers and coke manu facturing facilities, and coal rail transporters from reporting requirements under proposed 40 CFR part 98, subpart KK (page 16565). MidAmerican agrees that the inclusions a nd exclusions as proposed are reasonable.

Response: Please see Section III.D of the preamble fo r EPA’s rationale for its final decision not to require reporting from coal suppliers at this time.Commenter Name: E. Levin

Commenter Affiliation: Drexel University

Document Control Number: EPA-HQ-OAR-2008-0508-0256.1 Comment Excerpt Number: 4

Comment: The requirement for essen tially every party involved in the coal manufacturing process to report to these new guidelines is needed if the intent of the new rule, the desire to collect data truly representative of the GHG emissions, is to be fulfilled.

Response: Please see Section III.D of the preamble fo r EPA’s rationale for its final decision not to require reporting from coal suppliers at this time.

Commenter Name: David Rich

Commenter Affiliation: World Resources Institute (WRI)

Document Control Number: EPA-HQ-OAR-2008-0508-0642.1 Comment Excerpt Number: 5

Comment: WRI agrees with EPA’s proposal to c over both downstream emitters and upstream emitters (e.g. fuel suppliers, industrial GHG suppliers, mobile source manufacturers), despite this resulting in double reporting. Di fferent policies will require di fferent types of data. Some policies will target upstream sources; other policies will target downstream sources; and certain policies (e.g. a federal cap-and-trade program) will likely target both types of sources. Collecting both upstream and downstream emissions data will ensure that all future policy options are supported by the necessary emissions data. Therefor e, WRI agrees with EPA that it is necessary and appropriate to require reporting from suppliers of coal, coal-based liquid fuels, petroleum products, natural gas and NGLs, industrial GHGs, and CO 2 ; and manufacturers of mobile sources and engines.

Response: The general comment regarding so-calle d double counting emissions was addressed in the 2009 final rule and is not being revisite d here. While the Agency is not taking a position on the specific policy and programs to be info rmed by data collected under the MRR, EPA’s final decision is to not include coal suppliers in the final rule, the rationale for which can be found in Section III.D of the preamble.



### 2. COMMENTS OPPOSING GHG RE PORTING FOR COAL SUPPLIERS

Commenter Name: Marcelle Shoop

Commenter Affiliation: Rio Tinto Services, Inc.

Document Control Number: EPA-HQ-OAR-2008-0508-0636.1 Comment Excerpt Number: 27

Comment: We have a strong interest in the appr oach EPA is proposing for requiring coal suppliers to report on downstream emissions. The f act that EPA also will collect essentially the

same emissions data from downstream sources raises questions about the rationale and the details of the requirements themselves. While we understand that EPA is attempting to draft a rule in the absence of a specific regulatory fr amework, we believe it is useful to recognize the trends in the climate change policy proposals bei ng discussed at the federal level. To date many

2of these hav e proposed to place the compliance obligation upstream on the liquid fuel producer given the number of downstream emissions sour ces (such as transportation). Under those circumstances the need for upstream reporting pr ogram is critical to policy implementation. However, in the case of emissions from coal combustion, the policy pr oposals have focused instead on the emissions sources. There appears to be little rationale for requiring coal suppliers to report on downstream emissions. Although EPA s uggested that the appr opriations legislation was the basis for its proposal, EPA has not adequately explained how the multiple data sources will benefit the overall program and policy goals.

Response: While the Agency is not taking a positi on on the specific policy and programs to be informed by data collected under the MRR, please see Section III.D of the preamble for EPA’s

rationale for its final decision not to require reporting from co al suppliers at this time.

Commenter Name: Shannon Lucas

Commenter Affiliation: Texas Mining and Reclamation Association (TMRA)

Document Control Number: EPA-HQ-OAR-2008-0508-1028.1 Comment Excerpt Number: 4

Comment: Coal mines associated with mine-mouth power plants should be exempted from the mandatory GHG reporting rule. Although TMRA belie ves that any policy reasons for mandating reporting from the coal mining i ndustry fail to justify the regul atory burden, these policy reasons become even less significant when dealing with coal mines associated with mine-mouth power plants. Most of Texas's lignite mines supply 100% of the lignite produced coal for a single power plant that has been specifically designed to combust the coal pr oduced at that mine. Most minemouth lignite mines sell 100% of the lignite prod uced to the associated power plants. Texas lignite generally has a high moisture content, wh ich means that the lignite must be combusted

near the coal mine in order to be used economically. It is th erefore impractical for lignite produced at many coal mines in Texas to be used at any location other than its associated power plant. TMRA recommends that coal mines that ar e associated with and s upply all coal to a single power plant be exempted from the reporting requir ements because the mine’s sole customer will report GHG emissions data more accurately.

Response: Please see Section III.D of the preamble fo r EPA’s rationale for its final decision not to require reporting from coal suppliers at this time.

Commenter Name: John W. Fainter

Commenter Affiliation: Associaton of Electric Co mpanies of Texas (AECT)

Document Control Number: EPA-HQ-OAR-2008-0508-0833.1 Comment Excerpt Number: 2

Comment: AECT opposes coal producers having to re port GHG emissions that will result when their coal is combusted in electric generating un its that are subject to the Acid Rain Program AECT believes EPA has not adequately supported the proposed requirement that a producer of coal would have to report the GHG emissions that will result from the combustion of its coal in an electric generating unit that is subject to the Acid Rain Program. Since all of the GHG

emissions that result from the combustion of a coal producer's coal in such an electric generating unit will be monitored and reported by the owner or operator of that unit, requiring the coal producer to report the same GHG emissions that will result from such combustion would result

3in double reporting of the GHG e missions. Doubl e reporting would not only be unnecessary, it would also falsely indicate that GI-IG emissions relating to the combustion of coal in electric generating units are twice as high as they truly are. AECT requests that EPA exempt each coal producer from the GHG reporting ru les relative to the GHG emissions from the combustion of any of its coal in an electr ic generating unit that is subj ect to the Acid Rain Program.

Response: The general comment regarding so-calle d double counting emissions was addressed in the 2009 final rule and is not being revisited here. Nonetheless, at this time, EPA’s final

decision is to not include coal s uppliers in the final rule, the ra tionale for which can be found in Section III.D of the preamble.

Commenter Name: Benjamin Brandes

Commenter Affiliation: National Mining Association (NMA)

Document Control Number: EPA-HQ-OAR-2008-0508-0466.1 Comment Excerpt Number: 34

Comment: Congress has left to the EPA Administrator the disc retion to require upstream reporting in circumstances wher e appropriate justification exists to impose monitoring and reporting burdens on certain source categories to obtain an identifiable benefit. NMA believes that no such justificat ion exists for proposed source categor y KK - Suppliers of Coal. NMA also believes that EPA currently has access to data that can provide the estimated CO 2 emission potential of coal sufficient to meet EPA’s stat ed goals. Finally, NMA believes that the costs and burdens placed upon the mining indus try to deliver the data mandated by EPA in the proposal far outweigh any identifiable policy benefit, and like ly will only lead to confusing and misleading conclusions. For these reasons, NMA requests th at EPA remove source category KK from the proposed reporting rule. EPA should create an ex emption from the reporting requirements for suppliers of coal to end us ers that will report emissions of combusted coal under the requirements of this proposal. The overwhelming majority of coal produced in the U.S. is

combusted to create electric ity by facilities that will, or already do, report actual CO 2 emissions from that process. There is no additional policy or environmental gain to come from requiring suppliers to calculate the imputed CO 2 emissions from coal in which the actual emissions will be accurately and readily monitored and reported by the end user. Some NMA members run mine mouth operations at which virtually 100 percent of the coal produced is supplied to an adjacent power plant that is equipped to monitor emissi ons from the stack. Requiring supplier reporting in this instance would likely lead to varying da ta sets that will not accurately inform policy decisions, and will impose burdensome costs that will ultimately be passed on to consumers by way of rate increases. NMA recognizes that non-mi ne mouth operations pote ntially deliver coal to a variety of customers, some of which potenti ally will not be required to report emissions in accordance with this proposal. If coal suppliers are nonetheless required to calculate imputed emissions from at least the portion of their product that isn’t put into el ectric generation, they should be allowed to use weighing and coal qualit y equipment and procedures that they already have in place with end users through contract ual agreements. Because price is determined by coal weight and quality, end us ers have a strong economic intere st in ensuring the accuracy of the data they receive from vendors. Therefore, NMA urges EPA to make clear that reporting entities may rely on company records and commerc ial records (including co al delivery contracts and invoices) to determine and record consumption.

4Response: Please see Section III.D of the preamble fo r EPA’s rationale for its final decision not to require reporting from coal supp liers at this time. Note that co st and burden are not reasons for EPA’s decision to exclude subpart KK from the MRR at this time.

Commenter Name: Benjamin Brandes

Commenter Affiliation: National Mining Association (NMA)

Document Control Number: EPA-HQ-OAR-2008-0508-0466.1 Comment Excerpt Number: 29

Comment: EPA states in the preamble that one of its three goals in the proposed reporting rule is to create requirements consistent with ex isting programs, and to use existing GHG emission data and reporting methodologies to reduce th e burdens on impacted entities. 74 Fed. Reg. 16,456. NMA believes that requiring coal supplier repo rting directly contradicts this goal.

Response: Please see Section III.D of the preamble fo r EPA’s rationale for its final decision not to require reporting from coal suppliers at this time.

Commenter Name: Shawn Glacken

Commenter Affiliation: Luminant

Document Control Number: EPA-HQ-OAR-2008-0508-0549.1 Comment Excerpt Number: 3

Comment: Luminant believes that all of the proposed sampling and analysis requirements are duplicative, burdensome, and unnecessary for surf ace coal mining like Luminant's which in its entirety supplies fuel only to electric generati ng units with EPA Acid Rain certified continuous

emission monitors for CO 2 . Under the proposed rule, analytic al instrumentation costs alone would likely exceed $250,000 for Luminant. Additiona l significant costs of compliance with the proposed rule would include sampling equipment and the sample preparation, analysis, reporting and record keeping. This increase in expense would provide no additiona l information regarding

CO 2 emissions associated with the coal produced in its surface mine s since all of the CO 2 from this coal is already reported to EPA when it is burned in Luminant's electric generating units.

Luminant therefore recommends that surface coal mines that report their coal production to the EIA and who only supply coal to electric ge nerating units (EGUs) under the EPA Acid Rain Program should be exempt from EPA's requi rements under the final Greenhouse Gas Reporting Rule. Luminant's surface coal mining operations cu rrently supply all of its production to nine coal-fired Electric Generating Units (E GUs) that are all equipped with CO 2 monitors under EPA's Acid Rain Program, which has been ope rational since 1995. These monitors are required to be tested and certified under EPA protocol an nually. The testing information and all of the data collected from these monitors are reported to the EPA, as required under the Acid Rain program. Luminant's recommended solution is to exempt the CO 2 reporting under this rule for

surface coal mines that send all of their coal production to Acid Rain Program EGUs. As a broader alternative, Luminant would suggest exempting CO 2 reporting for the coal sent from any mine to Acid Rain Program E GUs. Congressional guidance, refe renced in Section 1.C. of the proposed rule, provides the Agency flexibility an d does not require a one-s ize-fits-all approach.

All of the relevant information needed from surface coal mines could be determined by EPA using the information contained in the curren tly required. EPA and EIA reports. Any additional information does not justify the added expense of complying with the proposed rule or justify more sampling, analysis, and reporting.

5Response: Please see Section III.D of the preamble fo r EPA’s rationale for its final decision not to require reporting from coal supp liers at this time. Note that co st and burden are not reasons for EPA’s decision to exclude subpart KK from the MRR at this time.

Commenter Name: Dennis R. James

Commenter Affiliation: North American Coal Corporation (NAC)

Document Control Number: EPA-HQ-OAR-2008-0508-1082.1 Comment Excerpt Number: 1

Comment: The proposed rule defines (in part) Source Category KK – Suppliers of Coal as any company who produces and supplies coal, in excess of 100,000 tons per year. All of NAC’s lignite coal mines produce in excess of 100,000 tons per year and would be required to report “potential” emissions under the rule . In addition, most of our cust omers are electrical generating stations and will be required to report their CO 2 emissions from combusting our coal. This is upstream and downstream reporting and it will result in double counting the same coal because it is reported by two separate sources. While Congress opened the potential for upstream and downstream (double) reporting, they did not require it. Whether to incorporate double report was left to the discretion of the Administrator. Sp ecifically, in the 2008 Consolidated Appropriations Act, EPA was directed by Congress to: “develop a nd publish a draft rule not later than 9 months after the date of enactment of this Act, and a fina l rule not later than ]8 months after the date of enactment of this Act, to require mandator y reporting of GHG emissions above appropriate thresholds in all sectors of the economy of the United States.” The explanatory statement accompanying the act stated: “The agency is further directed to include in its rule reporting of emission resulting from upstream production and dow nstream sources, to the extent that the Administrator deems it appropriate.” Upstream and downstream reportin g is a reasonable approach to quantifying US greenhouse gas emissions in certain circumstances, for instance with respect to emissions related to transportati on fuels. Upstream reporting in the case of transportation fuels is reasonable because suppl ier reporting would capture transportation fuel use by innumerable users (e.g., millions of au tomobile drivers who do not hit the 100,000 ton threshold) whose use would go unreported if only downstream reporting were required. Downstream reporting in the case of transportati on fuels is also reasonable because some end users do exceed the 100,000 ton per year reporting th reshold in the aggregate, but do not acquire 100,000 tons from each of their sources of supply. Understanding these different sources could be important to making future policy decisions . Coal, on the other hand, has a very different consumption profile in the United States. With in the US, there are le ss than 1,500 mines above the threshold limit of 100,000 tons per year. Virtually all of the coal produced and consumed in the U.S. goes to large facilities that will also be required to report GHG under the proposed rule. Thus, in the case of coal, EPA will have a 99 to 100 percent “duplication” overlap of data (by EPA’s own assessments). On this subject, the rulemaking’s RIA states: “Under this option, the total number of facilities affected is approximately 32% lower than the proposed option, and the private sector costs are appr oximately 26% lower than the proposed option. The emissions coverage remains largely the same as the propos ed option although it is important to note that some process related emissions may not be capture d due to the fact that downstream combustion sources would not be covered under this option. A source with process emission plus combustion emissions would only have to report their proc ess emission, thus the exclusion of downstream combustion could result in some sources being un der the threshold.” This statement appears to mean that EPA recognizes that in cluding coal suppliers as a s ource category is unnecessary and duplicative. If the only issue is that some process emissions would be under the threshold and

6lost, then it should be the threshold that is m odified, not the inclusion of a problem atic, related source category. NAC believes that double reporting in respect of co al is an inherently flawed system that will cause confusion and minimize the usefulness of the reported data for many reasons, including the following: (1 ) Many coal mines supply coal to more than one plant or user in a calendar year. Just as many coal users/plants receive coal from more than one mine in a year, often blending coal from multiple mines at any given time to achieve desired combustion characteristics. This situation makes it impossi ble to identify the poten tial emissions reported by a supplier with actual emissions reported by a generator. If reported emissions cannot be compared on an as reported faci lity-by-facility basis, then th e collection of double data is an exercise in increased regulatory burden and complica tion. (2) In the case of co al, there is little to no risk that upstream reporting risks no repor ting because downstream reporting only is sufficient. All or nearly all power generation facilities that use coal exceed the reporting threshold. (3) The proposed rule requires suppl iers of coal to re port the amount of CO 2 the coal would emit, assuming 100 percent combustion. No pow er plant or other coal user is perfectly efficient. There are several Laws of Thermodynamics that say perfect effi ciency is impossible. Therefore, suppliers of coal will be reporting more CO 2 than can actually be emitted, creating an inherent inaccuracy in the data. For these and other reasons, NAC respectf ully suggests that the Administrator consider removing the source categor y of suppliers of coal (Subpart KK) from the rule before it is finalized. If the potential emissions from coal are not reported, the EPA will not lose any CO 2 inventory as the facilities actually generating the CO 2 will be reporting anyway. Removal of the source category will simplify EPA’s data handling burdens and will improve accuracy and public confidence in the data. This more accurate, simplified data would then be a better guide to national policy decisions.

Response: The general comment regarding so-calle d double counting emissions was addressed in the 2009 final rule and is not being revisited here. Nonetheless, at this time, EPA’s final

decision is to not include coal s uppliers in the final rule, the ra tionale for which can be found in Section III.D of the preamble.

Commenter Name: Fredrick Palmer and Dianna Tickner

Commenter Affiliation: Peabody Energy

Document Control Number: EPA-HQ-OAR-2008-0508-0552.1 Comment Excerpt Number: 3

Comment: EPA obviously does not need coal suppliers to report the imputed emissions of their coal when combusted in order for the Agency to determine those combustion emissions. EPA, of course, recognizes that, under curr ent reporting requirements and th e reporting requirements that will be imposed by the rule, EPA will have deta iled and specific information as to the CO 2 emissions that will result when the coal is combusted by utilities and industrial and manufacturing facilities. As EP A states, "[u]nder the regulations , affected EGUs must submit detailed quarterly and annual CO 2 emission reports, using standa rdized electronic reporting formats." 74 Fed. Reg. at 16459/1. EPA describes th is data as "high quality." Id. at 16459/2. Although EPA does not provide its specific rationale for requiri ng coal supplie r reports of imputed emissions, Peabody assumes that EPA's r eason may be that it wishes to identify the specific mines supplying the carbon in the coal being combusted by partic ular utilities. Peabody

surmises that EPA believes that this information would be useful in assessing costs under various

CO 2 regulatory scenarios, which assessments coul d include determining how coal production and deliveries may change under a given set of regulations depending on the carbon content of

various coals. If this is indeed EPA's rationale , the Agency, in order to justify coal supplier

78 reporting, must explain why existing informati on is not sufficient for these analyses. As explained in the TSD, utilities currently report to the Energy Information Administration ("EIA") their coal purchases by origin mines, setting fo rth the quantity and quality of the coal, including heating value (BTUs). TSD at 29-36. Thus, EPA already has access to information as to how much coal is being produced at each mine, the ut ilities to which it is being supplied and in what quantity and quality, including heating value. Alt hough heating value is not exactly the same as carbon content, the U.S. Geologica l Service ("USGS") in its Nati onal Coal Quality Inventory, as the TSD explains, found a strong correlation between heat cont ent and carbon content by coal rank. This information allowed USGS to develop factors converting various heat content levels of coal to carbon content, as set forth in the TS D, Appendix 3. In addition, as EPA is aware, EIA developed CO 2 emission factors for coal by rank and state of origin. See Hong and Slatick,

Carbon Dioxide Emission Factors fo r Coal (1994), available at www.eia.doe.gov/cneaf/coal/quarterly/CO 2 _article/CO 2 .html. EPA used these factors, as set forth in EIA Table FE4, in the proposed rule to an alyze appropriate reporti ng thresholds for coal suppliers. 74 Fed. Reg. at 16565, Table KK-1. At anot her point in the preamble, EPA states that it considered but rejected use of the USGS and EIA factors, as well as factors available from the International Panel on Climate Change, because "[e]xisting information on the variability of

carbon content for coal ... indicate that default va lues introduce considerable uncertainty into the

emissions calculation. Id. at 16567/ 1. But EPA fails to explain what the uncertainty is and why it forecloses useful analysis of potential CO 2 regulations. This contrasts with EPA's discussion of its consideration of an option to report indirect emissions from electricity purchases, where EPA appears to endorse the use of cal culated factors to estimate emissions and notes their use by other regulators. Id. at 16473/1-2. Moreov er, since 93 percent of coal is combusted in EGUs, and since

EGUs monitor their CO 2 emissions through continuous emissions monitors and report that information to EPA, the Agency can easily veri fy that there is only a small variation in CO 2 emissions between units burning coals of the sa me rank despite a wide variation of coal suppliers/locations. Similarly, leading congressional proponents of GHG legislation understand that emissions factors are appropriate fo r regulatory purposes. For instance, Section 783(b)(2)(A)(ii)(1) of the recently reported Wa xman-Markey American Clean Energy and Security Act of 2009 provides that "[t]he Administ rator shall determine th e amount of fossil fuelbased electricity delivered at retail by each el ectricity local distribution company, and shall use appropriate emission factors to calculate carbon dioxide emissions associated with the generation of electricity." (Emphasis added.) In fact, EPA routinely uses the EIA 002 emission factors, as

well as other available informati on about coal, including th e utility coal purcha se reports to EIA, in very significant regulatory analyses through the Agency's use of th e Integrated Planning Model ("IPM"). As EPA is well aware, the IPM is a major tool that the Agency has used to analyze the economic effects of such major rulemakings as the Clean Air Mercury Rule and the Clean Air Interstate Rule, as well as in five analyses of various proposed congressional GHG legislation, including one that EPA just completed in April 2009. See http://www.epa.gov/clinnatechange /econornics/economicanalyses.ht nnl. As EPA stated in its just-completed preliminary analysis of th e recent Waxman-Markey discussion draft of CO 2 regulation: * EPA uses the Integr ated Planning Model (IPM) to an alyze the projected impact of environmental policies on the elect ric power sector in the 48 conti guous states and the District of Columbia. * IPM is a multi-regional, dynamic, deterministic, linear prog ramming model of the U.S. electric power sector. * The model provides forecasts of least-cost capacity expansion, electricity dispatch, and emission control strategies for meeting energy demand and environmental, transmission, dispatch, and reliability constraints. * IPM can be used to evaluate the cost and emissions impact of proposed policies to limit emissions of sulfur dioxide (SO2), nitrogen oxides (NOx), carbon diox ide (002), and mercury (Hg) from the electric power sector. * The IPM was a key analytical tool in developing the Clean Air Interstate Regulation (CAIR) and9 the Clean Air Mercury Rule (CAMR). * IPM prov ides both a broad and detailed analysis of control options for major emissions from th e power sector, such as power generation adjustments, pollution control acti ons, air emissions changes (national, regional/state, and local), major fuel use changes, and economic impacts (c osts, wholesale electrici ty prices, closures, allowance values, etc.)." See EPA Analysis of the Waxman-Markey Discussion Draft, Appendix, at 94, available at http:// www.epa.gov/climatechange/econonn ics/pdfs/VVM-Analysis.pdf. The IPM uses a variety of publicly-available and re ported data about util ity coal purchases to establish a 2006 base year, referred to by EPA as the National Electric Energy Data System (NEEDS) 2006. See http://www.epa.gov/airmarkt/ progsregs/epa-ipm/index.html#newbc. This data allows the model to determine, for the base year, where each EGU pu rchases coal, the coal quality and its delivered price. Using this info rmation and other inputs, EPA can then model the effect a given change in regulatory policy may have on operation of EGUs –which units will close, which units will operate more or less, wh ich units will install pollu tion control equipment, which units will purchase emission allowances, which units will fuel-switch, etc. Based on reported information on the heating value of coal being supplied to each unit, the model uses the

EIA CO 2 factors to determine the CO 2 emissions for such unit for the 2006 base year and for regulatory-change scenarios. EPA's use of the IPM to assess the cost of im portant regulations has been upheld by judicial decisi ons reviewing such regulations . See Appalachian Power Co. v. EPA, 249 F.3d 1032, 1052-1053 (D.C. Cir. 2001). At th e request of Congress, the EIA also produces analyses of proposed CO 2 legislation, and it also uses the CO 2 emissions factors set forth in Hong and Slatick, Carbon Dioxide Emissi on Factors for Coal. These factors are also commonly applied elsewhere in indu strial studies. It may be true that there is some level of imprecision in the EIA CO 2 factors, but such imprecision does not justify requiring coal suppliers to supply the imputed emissions data proposed to be required here, for a number of reasons. First, the data EPA seeks will itself be imprecise. EPA asks that the data be reported based on an assumption that all th e carbon in the coal will be co mpletely oxidized. In the real world, the carbon in coal is not completely oxidi zed in the coal combustion process. Peabody has not done a calculation as to what percent of carb on in coal is fully oxidized, but if EPA believes that the imprecision in the EIA CO 2 factors is greater than th e imprecision introduced by its assumption of 100% oxidation, the Agency must produce a quantified reas on for that belief. Second, the IPM uses numerous inputs that are likely far more imprecise than the EIA CO 2 factors. As just one example, the model makes assumptions as to coal and rail prices, even though it does not have access to actual pricing da ta. Similarly, the uncertainty in the forward natural gas price curves used in the model is mu ch higher than the uncerta inty in the relationship between coal heating and carbon content. Thir d, the carbon content of coal is not the predominate factor in determining the actual CO 2 emissions that coal-fired generation will produce. By far, the dominant factor is the efficiency of the unit. A large part of that efficiency is how well a particular coal burns in a particular boiler for reasons that have nothing to do with carbon content. For instance, a unit designed for bituminous coal will not efficiently burn

subbittuminous coal and vice-versa. Some subbi ttuminous coals burn well in some units designed for subbittuminous coal and some don''t burn as well, depending on a number of quality characteristics of the particul ar coal. As a result, although in formation on carbon content may, on some theoretical level, be useful, it will not allow EPA to accurately determine what the CO 2 emissions of a particular coal at a particular unit will be. Fourth, coal from different mines is

often blended either at a transl oading facility or at a powerpl ant, making it impossible in these

cases to match the CO 2 emissions reported by the generator with the imputed CO 2 emissions reported by the mine operators. Apart from the si gnificant imprecision that this fact introduces into any analyses EPA would conduct using the co al supplier data, considerable confusion will likely result from the mismatch of utility and coal supplier CO 2 emissions data. In sum, not only has EPA not made the case for why it needs the im puted emissions data from coal suppliers, sucha case cannot be m ade. EPA has relied on the IPM to determine the cost of some of the most significant regulations the Agency has issued, and it has similarly relied on that model to analyze highly complex congressional legisla tive proposals that would regulate CO 2 emissions far into

the future. The IPM model uses the EIA 002 emis sion factors, and thos e factors should be sufficient enough for future analysis. If EPA belie ves otherwise, it must specifically identify why

it thinks the IPM and the use of emission factors are no longer suffi cient for future analysis. This is particularly the case given EPA's statement that one of its three goals in the reporting rule in general is to "[c]reat e reporting requirements that are c onsistent with existing GHG reporting programs by using existing GHG emission estimati on and reporting methodol ogies and to reduce reporting burden, where feasible." 74 Fed. Reg. at 16456/3. Requiring co al supplier reporting directly contradicts this goal.

Response: Please see Section III.D of the preamble fo r EPA’s rationale for its final decision not to require reporting from coal supp liers at this time, specifically w ith respect to other information available to EPA for informing the development of future climate policy and programs under the

CAA.

Commenter Name: Terry L. Steinert

Commenter Affiliation: Koch Carbon LLC

Document Control Number: EPA-HQ-OAR-2008-0508-0392.1 Comment Excerpt Number: 1

Comment: EPA has significantly underestimated the regulatory burden that the Proposed Rule would impose on coal exporters. In its Preamble to Subpart KK, EPA explains that it had included coal exporters in the Proposed Rule so that it may balance the tota l supply of coal into the U.S. economy against the coal that leaves the countr y. 68 Fed. Reg. at 16564. But as EPA also acknowledges, the amount of coal exported from the United States is quite small, less than

5% or 60 million tons of the 1.16 billion tons of co al produced in the United States each year. Id. and Suppliers of Coal Technical Suppor t Document ("TSD"), EPA-HQ-OAR-2008-0508-037 (using 2007 data). Given that exports represent su ch a small portion of the U.S. coal supply, EPA has justified including exporters in the detailed repor ting regime of Subpart KK on the basis of its understanding that exporters al ready calculate the quantity and heat value of the coal they export, meaning that Subpart KK would impose only "a minimal additional burden" on them. 68 Fed. Reg. at 16564. But EPA's assumption is un fortunately incorrect. While exporters do currently receive certain informa tion about the quantity and heat value of the coal they export, the data they maintain are not consistent with th e much more substantial information specified in the proposed Subpart KK, nor is the Subpart KK in formation readily available to exporters. For example, Subpart KK requires expo rters to report "the total an nual quantity in tons of coal exported from the United States by rank and by coal producing company and mine." Id. at 16713 (proposed section 98.376(d)). The Proposed Rule specifi es that this quantity is to be determined using the reports exporters ar e already required to submit to U.S. Customs. Id. at 16712 (proposed section 98.374(d)). But while the U.S. Customs reports do provide information about the quantity of coal in a shipment, they do not, as EPA indicates, correspond with the information exporters would be required to submit under the proposed Subpart KK. First, Customs reports do not include the source company or mine for the coal in any given shipment. Indeed, it would be impractical to do so becau se a single shipment may be comprised of coal

from different sources and it is not at all clear how coal exporters can provide this information due to the commingling of domestic coal prior to export. Second, the quantities reported in U.S. Customs reports are often not derived from NIST- calibrated scales, which is the only method of

10m easurement specified for the proposed Subpart KK. See Suppliers of Coal TSD at p. 27. Rather, it is far more common for load size to be assessed for both Customs and Census Bureau reports using a vessel survey – th e process of determining cargo wei ght by measuring the draft of a vessel. Shifting to the NIST-calibrated scale method specified in the TSD would necessitate a total revamp of the industry's vessel loading pr ocedures and cause sign ificant additional cost burdens on exported coal.

Response: At this time, EPA’s final decision is to not include coal suppliers in the final rule, the

rationale for which can be found in Section III.D of the preamble. Note that cost and burden are

not reasons for EPA’s decision to exclude subpart KK from the MRR at this time.

Commenter Name: Benjamin Brandes

Commenter Affiliation: National Mining Association (NMA)

Document Control Number: EPA-HQ-OAR-2008-0508-0466.1 Comment Excerpt Number: 33

Comment: NMA believes that EPA has grossly underestimated the costs and other burdens to which coal suppliers will become subject if this proposal is finalized. EPA identifies that nearly half of the active coal mines in the U.S. produ ce less than 100,000 short tons of coal in a given year. TSD, Appendix A. EPA proposes that these "small" mines choose to report in accordance with either methodology 1 or 2, or follow th e procedures outlined in Methodology 3. The majority of these small mines do not necessarily use ASTM sampling procedures or weigh coal in accordance with NIST Handbook 44, as is proposed in Methodology 3. 74 Fed. Reg. 16,567. In fact, much of the product information from th ese mines is calculated at the point of delivery, and not, as EPA supposes, at the mi ne itself. Coal is sampled in various ways based primarily on the mode of transportation utilized to ship it, and is set out in contracts between the supplier and the customer. ASTM procedures utilize conveyor belt loading, but many f acilities, particularly those that ship coal by barge or truck, use front end loading machines and never utilize a conveyor system. The cost to these mines to come into compliance with ASTM procedures would be significant. EPA does not contemplate for the capital expenditures associated with purchasing samplers and conveyor belt scales co nsistent with ASTM. Additionally, many mines would be required to add laborat ory technicians, mechanics and other personnel to comply with new regulations. Although large producers would be able to absorb these costs more easily, hundreds of small producers would be significantly impacted. In order to obtain more precise information regarding the capital costs small co al mining operations will absorb if the proposed reporting rule is finalized, NMA hired John K. Alderman, President of Advanced Coal Technology (ACT), Inc., to prepare a cost estimat e. NMA has attached Mr. Alderman’s analysis as Appendix A.[SEE APPE NDIX A OF DCN # EPA-HQ-OA R-2008-0508-0466.1] Based on his professional experience, Mr. Alderman estima ted that the majority of mining operations producing less than 500,000 tons of coal per year do not currently maintain the equipment and personnel needed to comply with ASTM sta ndards and NIST code. According to the MSHA

database to which EPA refers in the proposed reporting rule , 1,079 of the 1,365 of the operating mines in 2007 produced less than 500,000 tons of coal. 74 Fed. Reg. 16,564. Mr. Alderman further estimated that the capital costs that unequ ipped operations would be required to absorb in order to comply with EPA’s proposed pro cedures would range from $489,000 to $555,000 in initial expenditure, with an estimated total a nnual operating cost of $246,000. This information is in stark contrast to EPA’s estimates in its Regul atory Impact Analysis th at labor costs to mines will be $6,800 per entity in the first year and $2,500 in subsequent years. EPA further estimates that the annualized capital expenditures for mines will be less than $5 per year. NMA believes

11that EPA has grossly underestim ated all costs to mines associated with this proposal, particularly with respect to small operations that are pres ently unequipped to meet EPA’s proposed reporting requirements. These are not negligible costs for mining operations producing smaller amounts of coal. The vast majority of these small mines are stand alone, independent ope rations that will not benefit from the larger corporate structure of some companies, nor will they benefit from location within a cluster of other operations that could potentially pool resources. Undertaking these capital expenditures will cut into increasingly thin profit margins and will likely get passed on to end users and the pub lic by way of rate increases. NMA believes the ACT report demonstrates that EPA has drastically underestimated the costs of compliance for small mining operations.

Response: Please see Section III.D of the preamble fo r EPA’s rationale for its final decision not to require reporting from coal supp liers at this time. Note that co st and burden are not reasons for EPA’s decision to exclude subpart KK from the MRR at this time. The general comment regarding small business impacts was addressed in the 2009 final rule and is not being revisited

here.

Commenter Name: John W. Dwyer

Commenter Affiliation: Lignite Energy Council (LEC)

Document Control Number: EPA-HQ-OAR-2008-0508-0422.1 Comment Excerpt Number: 1

Comment: LEC is commenting specifically on a fundame ntal flaw in the proposed rule ... the requirement that coal mines and coal combusti on facilities will be requi red to report greenhouse gas (GHG) emissions for the same coal produc t. This “double reporting” from upstream and

downstream sources will add unnecessa ry operation costs to the price of lignite coal sold to our customers. In turn, these increased costs will ul timately be paid by consumers of electricity and the various products produced by the coal ga sification facility. The concept of upstream reporting from suppliers origin ated in FY 2008 Appropriations Act where Congress directed EPA to: “...publish a ... final rule ... to require mandatory reporting of greenhouse gas emissions above appropriate thresholds in all sectors of the economy of the United States.” Congress, however, did not mandate double reporting, but rather left it to the EPA Administrator’s discretion. The EPA states in the preamble that it is requiring upstream reporting from suppliers of industrial gases and fossil fuel s to avoid requiring reporting from “hundreds of thousands” of emission sources. EPA, however, does not distinguish transportation fuel fr om mines that supply lignite for electricity generation or coal gasification ac tivities. Lignite coal is distinguishable from other fossil fuels because nearly all of th e lignite produced in North Dakota is combusted by large facilities generating electri city or in the coal gasificati on process. More specifically, approximately 79 percent of North Dakota lignite coal is used to gene rate electricity, 13.5 percent is used to generate s ynthetic natural gas, and 7.5 percen t is used to produce fertilizer products (anhydrous ammonia & ammonium sulfate) . Less than 1% is used as a home heating fuel, as fertilizer and for oil well drilling mud. With over 99 pe rcent of lignite being used by regulated combustion facilities, vi rtually all emissions created by the combustion of lignite will be accurately monitored and reported downstream at the point of combustion. The LEC does not believe that EPA’s justification for requiri ng upstream reporting from transportation fuel suppliers adequately app lies to suppliers of coal. In orde r to comply with the Congressional intent of the explanatory statement accompanying the approp riations act referenced above, EPA should provide source specific ju stification for requiring upstream reporting, and eliminate such requirements where no justification can be reason ably made. In the case of lignite coal, the

12proposed rule’s upstream and downstream reporti ng requirements will result in unnecessary double counting of the same CO 2 emissions reported by two sepa rate sources, and unnecessary monitoring costs to collect data covering minus cule secondary uses of the product. Double reporting is inherently flawed for another reason. The proposed rule requires suppliers of lignite to report the amount of CO 2 the lignite would emit, assuming 100 percent combustion. No power plant or other lignite user is perfectly efficien t. As such, North Dakota lignite mining companies will be reporting more GHG emissions than can actually be emitted, creating an inherent inaccuracy in the data. For these reasons, the LE C urges the EPA to eliminate Subpart KK from the rule. If the potential emissions from lignite are not reported, the EPA will not lose any GHG inventory since lignite combusti on facilities will report actual CO 2 emissions. Furthermore, removal of the source category will simplify EP A’s data handling burdens and will improve accuracy and public confidence in the data.

Response: The general comment regarding so-calle d double counting emissions was addressed in the 2009 final rule and is not being revisited here. Nonetheless, at this time, EPA’s final

decision is to not include coal s uppliers in the final rule, the ra tionale for which can be found in Section III.D of the preamble. Note that cost and burden are not reasons for EPA’s decision to exclude subpart KK from the MRR at this time.

Commenter Name: John R. Evans

Commenter Affiliation: LyondellBasell Industries

Document Control Number: EPA-HQ-OAR-2008-0508-0718.1 Comment Excerpt Number: 8

Comment: LyondellBasell believes that the proposed rule would result in significant double counting of emissions if implemented as curren tly written. This would in turn lead to an inaccurate and misleading inventory. Several sec tions of the proposed Mandatory Reporting Rule overlap and require reporting of potential or phantom emissi ons which are not actually, but rather, could be emitted. These sections include: subpart KK (supplier of coal); subpart LL (supplier of coal based liquid fuels); subpart MM (suppliers of petroleu m products); subpart OO (suppliers of industrial greenhouse gases); and su bpart PP (suppliers of carbon dioxide). As currently crafted, the Mandatory Reporting Rule requires that supplie rs of coal report CO 2 emissions from what might be the complete co mbustion or oxidation of all coal supplied. These emissions would overlap completely with emissions reported by all faciliti es that actually burn coal as fuel. The clearest example of this is th e electric generation facil ities (covered in subpart D). This would result in a double counting of greenhouse gas emissions. Also, phantom emissions from coal not burned for fuel, but used for other purposes, would also be erroneously reported. Similarly, suppliers of coal based liquid fuels are also required to report CO 2 emissions as if their products were completely combusted or otherwise oxidized. This would again result in the double counting of emissions, first by the supplie r of coal based liquid fuels, and again by the entity that actually burned the coal-based li quid fuel. Similar issues arise when quantifying emissions from suppliers of petroleum products and natural gas and natural gas liquids. As required by the proposed mandatory reporting rule, suppliers of these products must report CO 2 emissions as if the products were completely co mbusted or oxidized, whethe r they actually are or not. Furthermore, the proposed ru le requires that all products, bot h fuel and recognized feedstock volumes be used to calculate potential CO 2 emissions. There are several problems with this approach. First, the re porting of phantom CO 2 emissions from suppliers of petroleum, natural gas and natural gas liquid fuels will be double counted with the direct emissions reported from those sources who actually combust these products as fuel. Second, reporting phantom emissions from

13natural gas, natural gas liquids, and petroleum pr oducts used as feed stocks assumes the carbon in these product streams will be emitted as greenhouse gasses and does not recognize the fact that they will, in fact, be sequestered in products. The follo wing example illustrates the double (and triple) counting issues associated with the proposed Mandatory Reporting Rule: According to §98.402(a), "Natural gas processi ng plants must report the CO 2 emissions that would result from the complete combustion or oxidation of the annual quantity of propane, butane, ethane,

isobutene and bulk NGLs sold or delivered for use o ff site." In this particular case, NGL’s (raw and fractionated) are imported into a feedstoc k purification unit in an olefins plant. The purification unit processes the NGL ’s. Some compounds are sent to the olefins plant as feedstock and some are sold to third parties as either fuel or feedstock dependi ng on current economics. Normally, feedstock is the economi cally preferred option. If the third party sales go into the fuel market, the buyer is usually a large fuel supplier or user. Mul tiple counting of CO 2 occurs in this example as outlined below. The CO 2 from the imported NGL’s would be reported by the supplier even though none of this NGL is directly combusted. The CO 2 from processed NGL’s and sold

as feedstock would also be reported, again, none of the NGL is directly combusted. The CO 2 from the processed NGL’s sold as fuel would like ly be reported again if sold to another supplier before reaching a customer who would legitimately report CO 2 emissions from the combustion of the fuel. It is clear from this example that the proposed mandatory re porting rule would result in the multiple counting of GHG emissions, produc ing an inflated and in accurate inventory. In the proposed rule, EPA also requires that s uppliers of industrial GHG and carbon dioxide report

emissions as if the total CO 2 production volume were emitted into the atmosphere. Once again, this methodology does not recognize the fact that a majority of the CO 2 produced in an ethylene oxide plant is sold as a product, sequestered into products, and as a result is not emitted into the atmosphere. Due to the identified multiple counting issues associated with requesting emissions data from sources listed in subparts KK th rough PP, LyondellBasell proposes that only direct emissions be requested and reported in the Ma ndatory Reporting Rule. Requesting only direct

emissions of GHG will result in a more accurate a nd credible inventory, a nd will also reduce the administrative and reporting bur den on the regulated community.

Response: The general comment regarding so-calle d double counting emissions was addressed in the 2009 final rule and is not being revisited here. Nonetheless, at this time, EPA’s final

decision is to not include coal s uppliers in the final rule, the ra tionale for which can be found in Section III.D of the preamble. Note that cost and burden are not reasons for EPA’s decision to exclude subpart KK from the MRR at this time.

Commenter Name: Shannon Lucas

Commenter Affiliation: Texas Mining and Reclamation Association (TMRA)

Document Control Number: EPA-HQ-OAR-2008-0508-1028.1 Comment Excerpt Number: 3

Comment: Suppliers of coal should not be includ ed as a source category because any reported data would be inherently inaccurate and duplicat ive of reliable data currently reported by the electricity generation industry. The proposed ru lemaking requires coal mines to report the

amount of C02 that would be emitted from the combustion of the coal, assuming 100%

combustion of the coal. A 100% combustion rate of coal is impossible to achieve at any power plant or other consumer of coal. The data produ ced by this reporting rule would be inherently inaccurate; TMRA is concerned th at the bad data set produced could later be inappropriately used against the coal industry and would run coun ter 10 the overall goals of this effort. Further, by EPA’s own estimates, 99% to 100% of the emissions that would be reported under this rule

14would be reported by the users of the coal. TMR A believes that any policy justifications for requiring double reporting from the coal mining industry are not supported in light of (1) the regulatory burden placed on this industry and (2 ) the fact that actual GHG emissions can only be determined by examining the efficiency of th e combusting unit. TMRA recommends that the Administrator·consider removing the source categor y of suppliers of coal (Subpart KK) from the proposed rule.

Response: The general comment regarding so-calle d double counting emissions was addressed in the 2009 final rule and is not being revisited here. Nonetheless, at this time, EPA’s final

decision is to not include coal s uppliers in the final rule, the ra tionale for which can be found in Section III.D of the preamble.

Commenter Name: See Table 4

Commenter Affiliation: NPRA

Document Control Number: EPA-HQ-OAR-2008-0508-0433.2 Comment Excerpt Number: 16

Comment: Due to the identified multiple counting issu es associated with requesting emissions data from sources listed in subparts KK thr ough PP, NPRA proposes that only direct emissions be requested and reported in the Mandatory Repo rting Rule. Requesting onl y direct emissions of greenhouse gases will result in a more accurate a nd credible inventory and will also reduce the administrative and reporting burden on the regu lated community. In the rule preamble, EPA recognizes the potential of emissions double-co unting by stating, “There is inherent doublecounting of emissions in a program that includes both upstream and downstream sources.” (p. 16466) NPRA believes that the proposed rule would result in signifi cant double-counting of

emissions. This would in turn lead to an inaccura te and misleading inventory. Several sections of the proposed Mandatory Reporting Rule overlap a nd require reporting of potential or presumed emissions which are not actually, but rather c ould potentially, be emitted. These sections are listed below. 1) Subpart KK – Supplier of Coal 2) Subpart LL – Supplier of Coal Based Liquid Fuels 3) Subpart MM – Suppliers of Petroleum Products 4) Subpart NN – Suppliers of Natural Gas and NGLs (natural gas liquids) 5) Subpart OO – Suppliers of Industrial Greenhouse Gases 6) Subpart PP – Suppliers of Carbon Dioxide As currently crafted, the Mandatory Reporting Rule requires that suppli ers of coal report the CO 2 emissions from what might be the complete combustion or oxidation of all coal supplied. Th ese emissions would overlap completely with emissions reported by all facilities that actually burn coal as fuel. The clearest example of this is the electric generation facilities (covered in su bpart D). This would resu lt in a double-counting of greenhouse gas emissions. Also, presumed emissions from coal not burned for fuel, but used for other purposes, would also be erroneously repo rted. Similarly, suppliers of coal-based liquid fuels are also required to report CO 2 emissions as if their product were completely combusted or otherwise oxidized. This would again result in the double-counting of emissions, first by the supplier of coal based liquid fuel s, and again by the entity that actually burned the coal-based liquid fuel. Similar issues arise when counting emissions from suppliers of petroleum products, natural gas and natural gas liquids. As required by the proposed mandatory reporting rule, suppliers of these products must report CO 2 emissions as if the products were completely combusted or oxidized, whether they actually are or not. Furthermore, the proposed rule requires that all products, both fuel and recognized feedstock volumes, be used to calculate potential CO 2 emissions. There are several problems with this approach. First, the reporting of presumed CO 2 emissions from suppliers of petroleum, natura l gas and natural gas liquid fuels will be doublecounted with the direct emissions reported from those sources that act ually combust the fuel.

15Second, reporting presum ed emissions from natu ral gas, natural gas liquids and petroleum products used as feedstocks assumes the carbon in these product streams will be emitted as greenhouse gases and does not recogn ize the fact that they will, in fact, be sequestered into products. The following example illustrates the doubl e- (and triple-) counting issues associated with the proposed Mandatory Reporting Rule: Ac cording to §98.402(a), "N atural gas processing plants must report the CO 2 emissions that would result from the complete combustion or oxidation of the annual quantity of propane, but ane, ethane, isobutene and bulk NGLs sold or delivered for use off site.” In this particular ca se, NGL’s (raw and fractiona ted) are routed into a feedstock purification unit in an olefins plant. The purifica tion unit processes the NGL’s. Some compounds are sent to the olefins plant as feedstoc k and some are sold to third parties as either fuel or feedstock depending on current economic s. Normally, feedstock is the economically preferred option. If the third party sales go into the fuel market, th e buyer is usually a large fuel supplier or user. Mul tiple counting of CO 2 occurs in this example as outlined below. The CO 2 from the routed NGL’s would be reported by th e supplier even though none of this NGL is directly combusted. The CO 2 from processed NGL’s sold as feedstock would also be reported; again, none of the NGL is directly combusted. The CO 2 from the processed NGL’s sold as fuel would likely be reported again if sold to anothe r supplier before reachi ng a customer who would legitimately report CO 2 emissions from the combustion of the fuel. It is clear from this example that the proposed mandatory reporting rule woul d result in the multiple counting of greenhouse gas emissions, producing an inflated and inaccurate inventory.

Response: The general comment regarding so-calle d double counting emissions was addressed in the 2009 final rule and is not being revisited here. Nonetheless, at this time, EPA’s final

decision is to not include coal s uppliers in the final rule, the ra tionale for which can be found in Section III.D of the preamble.

Commenter Name: Shawne C. McGibbon

Commenter Affiliation: Small Business Administration (SBA)

Document Control Number: EPA-HQ-OAR-2008-0508-0979.1 Comment Excerpt Number: 3

Comment: While most small entities w ill not be subject to the GHG reporting rule on the basis of the reporting threshold, thousands of small entities will still be covered. These entities include small businesses (e.g., small pulp and paper facil ities, small coal mining operations). [footnote: The great majority of the coal mines in the Un ited States are operated by small businesses; 48% of U.S. mines produce 100,000 tons of coal or less per year. The National Mining Association has informed Advocacy that it expects GHG repor ting requirements to add $7.00 per ton to the cost of small mining operations (or as much as $700,000 per year).] and small communities (e.g., municipal utilities). Both “ups tream” GHG sources such as small coal mining operations and “downstream” GHG sources such as small paper mills would have to measure and report their emissions. Because the small coal operation has to report on estimated emissions from the coal it produces while the paper mill would report on emissi ons from boilers actually burning the coal, there will be double counting of the GHG emissions . Virtually all of the GHG emissions from coal should be accurately captured by downstr eam facilities when the coal is combusted. Therefore, EPA should clarify that coal mini ng operations, and possibly other small upstream GHG sources, should not have to report GHG emi ssions estimates because it is overwhelmingly likely to lead to double-counting. EPA should also exclude the smallest coal mines and other upstream sources that contribute insignificantly to coal, petroleum, natural gas, and other energy source production in the U.S. Alternatively, EP A should allow such upstream sources to use

16sim plified reporting methods designed to ex clude GHG emissions that are counted by downstream sources during combustion.

Response: The general comments regarding so-called double counting emissions and small business impacts were addressed in the 2009 fi nal rule and are not being revisited here. Nonetheless, at this time, EPA’s final decision is to not include coal suppliers in the final rule,

the rationale for which can be f ound in Section III.D of the pream ble Note that cost and burden

are not reasons for EPA’s decision to exclude subpart KK from the MRR at this time.

Commenter Name: Fredrick Palmer and Dianna Tickner

Commenter Affiliation: Peabody Energy

Document Control Number: EPA-HQ-OAR-2008-0508-0552.1 Comment Excerpt Number: 2

Comment: EPA’s generic rationale for upstream repor ting is that "[i]n many cases, the fossil fuels and industrial GHGs supplied by producers a nd importers are used and ultimately emitted by a large number of small sources, particularly in the commercial and residential sectors (e.g., HFCs emitted from home AC units or GHG emissions from individual motor vehicles). To cover

these direct emissions would re quire reporting by hundreds or thous ands of small facilities." The Agency says that to avoid this onerous impact, the rule requires reporting by the far more limited number of "the suppliers of i ndustrial gases and the suppliers of fossil fuels." Id. at 16466/1. Although this generic rationale for upstream reporting makes sense in the context of transportation fuel suppliers and chemical suppliers , it does not logically a pply to coal suppliers. As EPA recognizes, there are more than 1300 coal suppliers who will be required to report under the rule, and many of these are small businesses, and some are very small indeed. See TSD, Appendix 1. Moreover, unlike the case in the transportation i ndustry, there is obviously nothing impracticable about requiring those who act ually combust the coal to report their CO 2 emissions. Ninety-three percent of the coal produced in this country is com busted by electric utilities, TSD at 6, Ex. 2, who already report their CO 2 emissions to EPA and who w ill continue to be required to do so under the proposed rule. Almost all of the balance of coal producti on is sold to industrial and manufacturing companies, id., which w ill also be required to report their CO 2 emissions under the proposed rule. Additionally, utilities report their coal purchases to the Energy Information Administration, incl uding information on the origin mine, the tonnages purchased

and the heat content. Id. at 29-36. Similarly, although EPA recognizes the obvious and almost complete double-counting of CO 2 emissions that the rule woul d produce when applied to coal suppliers, its justification for this double-counting applies to transportation fuel suppliers and not to coal suppliers. EPA states th at "[p]olicies such as low-carbon fuel standards can only be applied upstream." Id. at 16466/2. Low-carbon fuel standards, however, a pply to transportation fuel, not coal. The only other rationale that EP A supplies for upstream reporting of imputed emissions – in a half paragraph discussing EPA’s legal authority –leaves coal suppliers to guess why and how such reporting is jus tified, why the availability of da ta from existing sources is not sufficient, and even whether EPA is referring to coal suppliers. EPA refers to the possible usefulness of imputed emissions data in esta blishing New Source Review Standards or Best Available Control Technology st andards "for some combusti on sources," but doesn’t say whether this includes coal combustion sources and, if so, how and why the data would be useful and not duplicative of existing data. Similarly, EP A states that reporti ng of imputed emissions would be useful in developing non-re gulatory approaches to controlling CO 2 emissions, but again the Agency does not say whether it is referring here to controlling CO 2 emissions from burning coal and, if so, how and why the data would be useful. Id. at 16455. In sum, EPA’s

17f ailure to define the factors it relies on to apply its di scretion to determine whether upstream coal supplier reporting is "appropria te" and reasonable, and its fail ure to provide a rationale for requiring such reporting specifically by coal suppliers, renders the proposal legally defective. Peabody urges EPA to further consid er whether it truly needs the data it seeks to mandate from coal suppliers and, if so, to explain its reason ing. The term "appropriate" as used in the joint accompanying statement should be interpreted to requi re a balancing of benefits and costs. In the context here, EPA must balance th e need by the Agency for the data required to be reported in the proposed rule with the costs to coal suppl iers of acquiring the data, reporting it, and otherwise complying with the rule . Determining whether it is r easonable to apply Section 114(a) to require upstream coal supplie r reporting should similarly turn on a balancing of these benefit and cost factors. Peabody believes that the balanc e of these factors tips st rongly against requiring coal supplier reporting.

Response: The general comment regarding so-ca lled double counting emissions and small business impacts were addressed in the 2009 fi nal rule and are not being revisited here. Nonetheless, at this time, EPA’s final decision is to not include coal suppliers in the final rule,

the rationale for which can be f ound in Section III.D of the preambl e. Note that cost and burden

are not reasons for EPA’s decision to exclude subpart KK from the MRR at this time.

Commenter Name: Kathy G. Beckett

Commenter Affiliation: West Virginia Chamber of Commerce

Document Control Number: EPA-HQ-OAR-2008-0508-0956.1 Comment Excerpt Number: 24

Comment: The West Virginia Chamber is very concer ned about the impact th is rule could have upon coal production for the state. Issues have been raised by the coal industry concerning double reporting of the CO 2 emissions produced by the combustion of coal and the upstream reporting by coal suppliers of hypot hetical GHG emissions. Nearly all of the coal produced in the U.S., will be combusted by large facilities, and th erefore nearly all emissions from the entire product will be accurately monito red and reported downstream at the point of combustion. The Chamber supports the position that requiri ng mandatory reporting of estimated CO 2 emissions from upstream coal suppl iers is inappropriate.

Response: The general comment regarding so-calle d double counting emissions was addressed in the 2009 final rule and is not being revisited here. Nonetheless, at this time, EPA’s final

decision is to not include coal s uppliers in the final rule, the ra tionale for which can be found in Section III.D of the preamble.

Commenter Name: Robert E. Murray

Commenter Affiliation: Murray Energy Corporation

Document Control Number: EPA-HQ-OAR-2008-0508-1577 Comment Excerpt Number: 14

Comment: Coal is unique in this Rule in that both mines and combustors of coal must report their GHG emissions, leading to significant and unnecessary double repo rting. This poses a significant problem. First, it assumes that all coal mined is burned. This is not the case. The National Mining Association estimat es that a little over ninety-thr ee percent (93%) of coal is combusted for electricity generation. EPA incorre ctly assumes that one hundred percent (100%)

18is used by downstream users in this fashion. The very nature of combusti ng coal for electricity generating purposes varies widely in efficiency from plant to plant. Downstream entities will have very different numbers from upstream en tities such as Murray Energy. When the numbers do not match up, this will result in unnecessary investigations and legal fees on behalf of covered entities and the American taxpayer, and provides little-to -no benefit to the public. This rule also requires Murray Energy to track where our mined coal is being used. This is practically impossible. We have contracts with a numbe r of power-generating entities who operate numerous power plants. When they take delivery of our coal, they alone determine which of their facilities will ultimately receive and later use our coal. After the point of delivery, utilities will often ship the coal to a different facility than we anticipated. These power generators are not supplied by us exclusively, so it will be even more difficult for upstream and downstream numbers to correspond. The utilities alone are in the only position to know which coal they utilize at which facility, which is the principle determination of the CO 2 e. Then there is the inherent problem of double reporting: Havi ng two sets of numbers will only confuse and misinform the general public, businesses and policymakers on the amount of GHGs in our economy. As a mining company, we cannot ensure that our coal is being combusted for electricity or industrial purposes, so our upstr eam and their downstream numbers will not equate, and those looking at data will assume that th ey are not double counted. EPA should drop this double-counting and focus entirely at the po int of GHG emission for coal combustion.

Response: The general comment regarding so-calle d double counting emissions was addressed in the 2009 final rule and is not being revisited here. Nonetheless, at this time, EPA’s final

decision is to not include coal s uppliers in the final rule, the ra tionale for which can be found in Section III.D of the preamble.

Commenter Name: Benjamin Brandes

Commenter Affiliation: National Mining Association (NMA)

Document Control Number: EPA-HQ-OAR-2008-0508-0466.1 Comment Excerpt Number: 25

Comment: CO 2 emissions produced by the combustion of co al in electric generating units will be reported to EPA in accordance with other pr ovisions of this proposal. Additionally, most remaining users of coal will similarly report under the rule. Therefore, virtually all of the actual

GHG emissions associated with the U.S. coal production will be accurately monitored and reported at the point of com bustion. Aside from the apparent redundancy of requiring upstream reporting by coal suppliers of hypothetical GHG emissions from combustion, the usefulness of collecting and providing this information is dilute d for several reasons. Fi rst, the proposed rule assumes 100 percent combustion by downstream consumers. Because no electric generating facility is 100 percent efficient, an inherent in accuracy in the data will be created wherein the estimated emissions from the coal product will exceed the actual emissions at the point of combustion. The type of combustion unit(s) and me thod of operation at a particular generating facility will have a profound effect upon the nature and efficiency of combustion. Second, because virtually every electric generating facility will produce GHG emissions in excess of the proposed threshold, all of the actual emissions from coal su pplied for that purpose will be captured by downstream reporting. Third, coal mini ng companies often supply coal to multiple customers, and electric generati ng facilities often receive coal from a variety of vendors. Coal from one supplier is often combin ed with coal from another s upplier. This scenario makes it impossible to correlate the estimated emissions from the upstream coal supply with the actual emissions of that coal downstream at the poi nt of combustion. The only rationale EPA provides

1920 for requiring upstream reporting seems to apply sp ecifically to transporta tion fuel and industrial GHG suppliers. Certainly, upstream production reporting might prove useful in certain sectors to ensure that the majority of GHG emissions ar e accurately accounted for in the inventory. Requiring upstream reporting of imputed emissions from gasoline and other transportation fuels by suppliers, for instance, may be appropriate because those fuels are combusted in large measure by sources (such as automobiles) th at are not subject to downstream reporting requirements. EPA identifies this very scenar io in the preamble. 74 Fed. Reg. 16,466. EPA states in the preamble that it is re quiring upstream reporting from su ppliers of industrial gases and fossil fuels to avoid requiring reporting from "hundreds or thousands" of emission sources. EPA does not distinguish, however, between transpor tation fuel and entities that supply coal for electric generation and other purposes covered by the proposal. Coal is distinguishable from other fossil fuels. Nearly all of the coal produced in the U.S. will be combusted by large facilities to generate electricity, and th erefore nearly all emissions fr om the entire product will be accurately monitored and reporte d downstream at the point of combustion. NMA believes that requiring coal producers to estimate the GHG em issions of their product downstream, while simultaneously requiring electric generating facilitie s to report the actual emissions at the point of combustion, will unavoidably result in unnec essary and superfluous double counting. NMA does not believe that EPA’s justification for requiring upstream reporti ng from transportation fuel suppliers applies to suppliers of coal. In orde r to comply with the Congr essional intent of the explanatory statement accompanying the approp riations act referenced above, EPA should provide source specific justification for re quiring upstream reporting, and eliminate such requirements where no justification can be reas onably made. For these reasons, NMA believes

that the Administrator should determine that requiring mandatory reporting of estimated CO 2 emissions from upstream coal suppliers is in appropriate. Requiring upstream reporting for coal suppliers will be burdenso me on NMA members, and wi ll produce confusing and nonrepresentative data, given that accurate reporti ng of actual emissions can be easily contributed by electric generating facilities and ot her sources covered under this proposal.

Response: The general comment regarding so-calle d double counting emissions was addressed in the 2009 final rule and is not being revisited here. Nonetheless, at this time, EPA’s final

decision is to not include coal s uppliers in the final rule, the ra tionale for which can be found in Section III.D of the preamble. Note that cost and burden are not reasons for EPA’s decision to exclude subpart KK from the MRR at this time.