MEMORANDUM

To: Docket EPA-HQ-OAR-2009-0924

From: Lisa Grogan-McCulloch, EPA/C limate Change Division and Ruth Mead and Amanda Baynham, ERG

Date: May 5, 2010

Subject: Summary of Comments on the Release of Reported Data Submitted in Response to EPA’s Request for Comments on the Proposed Mandatory Greenhouse Gas Reporting Rule Published April 10, 2009.

On April 10, 2009, EPA published a proposed rule (called the Mandatory Greenhouse Gas Reporting Rule) for collecting information to characterize and quantify greenhouse gas (GHG) emissions from a broad ra nge of industry sectors (see 74 FR 16448). The final rule was published on October 30, 2009 (see 74 FR 56260) and included regulations for stationary sources and manufacturers of heavy-duty and off-road ve hicles and engines. The reporting rules for stationary sources were publishe d in 40 CFR part 98 and apply to direct emitters of GHGs and to suppliers of products that when used may result in the release of GHGs into the atmosphere. Part 98 requires annual reporting of GHG emissions , verification data, and other supporting

information.

Following the publication of the proposed rule, EPA received a large number of comments both supporting and opposing the public release of da ta collected under 40 CFR part 98. These comments were submitted by a wide range of inte rested parties, including industry, state and local governments, private citizens, envir onmental organizations, and other nongovernment organizations. This memorandum provides a su mmary of the significa nt comments supporting and opposing the release of data reported under Part 98. The or iginal comment letters on which this summary is based are available online at www.regulations.gov in docket EPA-HQ-OAR2008-0508.

This memorandum does not provide responses to the comments. EPA has initiated a rulemaking to establish which Part 98 data elem ents will be made available to the public and

which data elements are entitle d to confidential treatment. In developing this rulemaking, EPA considered these comments. As part of th e rulemaking, if requested, EPA will hold a 60-day public comment period for interested parties to submit comments on the proposed confidentiality determinations. After the 60-day public comment period has ended, EPA will address all significant comments regarding confidentiality and public access to the reported data before finalizing the confidentiality de terminations. All significant pub lic comments and our responses to those comments will be published in a separate comment response document.

11. Public Comments Supporting Release of Part 98 Data

States, local governments, tribes, environmen tal groups, and private citizens generally supported the release of Part 98 data. Many commenters suggested EPA make Part 98 data broadly available to the public and other government agencies (including state and local government). Some commenters recommended all data be made public. For example, EPA received over 15,000 letters from me mbers of the Sierra Club stat ing their support for releasing

all Part 98 data. Others recommended EPA releas e as much data as possible and suggested that

all data that was not confidential should be made available to the public. A few commenters identified specific types of data they believed sh ould be released. However, most commenters supporting the release of Part 98 data submitted ge neral statements that Part 98 data should be made public and did not specify a ny particular types of data they believed should be released.

One commenter stated that EPA should make the da ta readily accessible to the public so that the public would not have to file Freedom of Inform ation Act (FOIA) requests to access the data. Other commenters argued that s ections 114 and 208 of the Clean Air Act mandate public access

to all relevant data.

Many commenters, including some commenters from industry, supported the release of data on the amount and type of GHGs emitted by direct emitters. However, there was disagreement on the level of detail that should be released. For example, some commenters supported the release of detailed information that includes unit- specific emissions information reported for individual processe s and combustion units. Others argued that only facility-level emissions information should be made public. Seve ral commenters stated that release of detailed

data on emissions would be useful to state re gulators and local governments because the data would inform future policies and assist with the implementation of GHG emission reduction plans. Several states and one organization representing tribes e xpressed interest in having Part 98 data and specifically requested that EPA ma ke the data readily accessible to them.

There was also some disagreement on what type of data should be considered “emission

data”. 1 Some argued that the term “emission data” s hould be broadly interpreted and that all of the information gathered under Part 98 should be considered to be “emission data” and hence not

entitled to confidential tr eatment. For example, one commente r suggested that a ll data collected

under Part 98 should be considered “emission data” unless the reporting party could “make a clear and convincing showing that the data does not bear upon the ca lculation of its emissions.” This commenter argued that information requir ed by a given method, incl uding verification data, records kept by the facility, and any audit-genera ted data, meets the definition of “emission data”

in 40 CFR 2.301 because this information is “n ecessary to determine” emissions under that method and therefore is subject to disclosure. This commenter also noted that EPA’s 1991 guidance notice (56 FR 7042, February 21, 1991) ha d previously defined emission data very broadly. Others suggested that “emission data” should include the emissions and the data used as inputs to calculate the emissi ons One commenter also suggeste d that for fuel suppliers, the GHGs reported and the data used to calculate the GHGs should be considered “emission data”. This commenter argued that future GHG regulat ion could make product ma nufacturers (such as fuel and industrial GHG suppliers) responsible fo r holding allowances for the emissions released

1 “Emission data” is defined in 40 CFR 2.301(a)(2)(i). In accordance with the section 1 14(c) of the Clean Air Act,

emission data cannot be held confidential.

2when their products are com busted or used downs tream. This commenter also stated that EPA should anticipate this type of regulatory structure by making a determination that productionrelated information submitted by suppliers is just as much “emission data” as data provided by users of these products. Other commenters r ecommended a narrower interpretation of “emission data” for both direct emitters and suppliers that would include only the amount and type of each

GHG emitted.

Although several commenters noted that some Part 98 data was sensitive or proprietary in nature, one commenter was concerned that busi nesses would try to broaden the definition of

what constitutes confidential business informa tion. This commenter recommended EPA resist industry efforts to broaden the definition of c onfidential business information (CBI). This commenter acknowledged that some data could be confidential and suggested that in cases where detailed data reported by a fac ility legitimately constitutes confidential information, EPA should aggregate the data in ways that would enable public disclosure. Anot her commenter suggested confidential data could be protected by releasi ng the data aggregated by geographic location. This commenter further recommended EPA aggreg ate data by zip code or community, rather than by larger geographical areas, such as by stat e or region. Another co mmenter suggested that little, if any, of the reported da ta should be considered CBI.

Many commenters cited strong public interest in both the emissions and verification data as their reason for recommending the release of Pa rt 98 data. One commenter stated that the public should have access to facility-level info rmation because “global warming is a matter of vital public concern.” Some comm enters argued that releasing as much data as possible would ensure transparency and promote public confiden ce in the accuracy of the data. One commenter commended EPA for statements supporting transparency that were included in the preamble to the proposed rule, but suggested EPA also includ e text in the rule that makes clear EPA’s commitment to transparency. One commenter st ated that allowing broad access to the data would enable independent analys ts to offer feedback on the ru le’s implementation. Another commenter suggested EPA set up a website that allows the public to browse both current and

historical data for individual enti ties so that the public and othe r interested parties could better track changes in GHG emissions. In a letter submitted to EPA in February 2009, four members of the U.S. Congress also urged EPA to establis h a publicly available database of emissions, but did not specify what data should be included or the level of detail.

Some commenters suggested th at public disclosure of th e data would ensure public accountability and would provide an additional driver for companies to voluntarily reduce

emissions. Others stated that GHG emissions info rmation is useful to the investment community for assessing a company’s future liabilities and regulatory risks related to Climate Change. These commenters specifically requested EPA make facility and supplier identifier information, such as the company name and address, avai lable to the public. These commenters argued facility identification data was necessary for inve stors and other interested parties to aggregate GHG emissions data at the corporate level.

A few commenters stated that making the Part 98 data broadly available to the public would be consistent with commitments by the Pr esident and EPA Administrator to transparency and public access to government information. On e commenter stated that transparency was a

3long standing public policy. Others argued that re leasing Part 98 data woul d be consistent with other program s, such as the Acid Rain progr am and the European Union Emissions Trading System (EU-ETS).

2. Public Comments Opposing Release of Part 98 Data

Opposition to making Part 98 data broadly ava ilable to the public came primarily from businesses and industry organizatio ns. Several expressed concern that Part 98 did not already address the confidentiality of the reported data or provide details on the steps EPA would take to protect confidential information. Many comme nters submitted general statements that

confidential data should not be made public, but did not specify which data elements should be

afforded confidential treatment. Many of those that did identify specific data elements as confidential did not provide detail s about why the data was sensitive or how the release of the data would harm their businesses’ competitive position.

The following paragraphs summarize the spec ific concerns regarding the release of various types of reported data. W ith the exception of the missing data 2 and vendor and/or process-specific data submitted in Best Av ailable Monitoring Method (BAMM) Extension Requests, the following paragraphs cover all of the 22 data categor ies in the proposed rule. No

commenters claimed as confidential data elemen ts reported for missing data periods or BAMM Extension Requests. The provisions for Best Available Monitoring Methods (BAMM) were not included in the April 10, 2009 proposal.

Facility and Unit Identifier Information for Suppliers and Direct Emitters. In general, most commenters, including suppliers and direct em itters subject to Part 98, did not object to the public disclosure of facility and unit identify ing information (e.g., facility name, physical address, emission unit I.D., and emissions unit descriptions). However, one commenter, representing farmers and ranchers, expressed pa rticular concerns about making the name and physical address of facilities public. This comm enter was concerned about biosecurity and other potential threats. This comm enter requested that the names and addresses of reporters under Part 98 not be released to the public. The commenter argued that there was no benefit to releasing this information to the public because GHG emissions have a global impact and do not have a unique local or regional im pact relative to the point wh ere they are released. Some commenters stated that, in general, detailed process-related information, which could be interpreted to include process unit level identif iers and emissions unit descriptions, should be protected as confidential because its release would potentially provide insight into processes design and other information that would infringe on business confidentiality.

Emissions Reported By Direct Emitters. Various direct emitters covered by Part 98, requested that reported GHG emissions be consider ed confidential informa tion, especially at the unit or process level. Severa l commenters suggested that unit level emissions information for

2 The missing data category contains Part 98 reported for periods during which monitoring data is not collected in accordance with the monitoring provisions of the rule (e.g., during periods when a flow monitor, weighing scales or other device is not broken). The reporting requirements for periods of missing data vary by subpart and include requirements to report the length of time during which monitored data was not collected, the reason for not collecting the data, and the number of times during the year when substitute values were used to calculate emissions.

4direct em itters should not be reported, but could be kept on record if needed for verification purposes. These commenters requested that only facility level emissions should be reported.

Some commenters also argued EPA had not adequately de monstrated the need for GHG

emissions information at the unit level. Thes e commenters also questioned whether EPA has the authority to collect GHG emissions information at the unit level. Many commenters expressed concern that facility and unit-level emissions information would provide competitors with

information that could be used to determine othe r proprietary information about a facility. One commenter suggested that emissions data could be used in a re verse engineering analysis to determine production or output rates, capacity, utilization rates, effi ciency, and the use of certain processes or emission controls (e.g., certain types of boilers or pro cess heaters, sorbent types). For example, one commenter noted that through separate reporting of process and combustion

CO 2 emissions by direct emitters, one can back-calcula te the efficiency of a production process. The commenter stated that process efficiency is critical to a business’s competitive position and therefore should not be revealed in reports acces sible to domestic and international competitors

or the business’s customers. A nother commenter noted that separate reporting of process and combustion emissions for each unit at a facility w ould reveal the energy intensity of each unit at a facility and of the facility as a whole. The commenter argue d that the energy intensity data, particularly for industries that are energy intensive, is consider ed proprietary information. The commenter suggested that report ing total GHG emissions for the f acility would satisfy the EPA’s need for this information, while protecting the pr oprietary nature of en ergy intensity data.

Greenhouse Gases Reported By Supplie rs of Fuels and Industrial GHGs . Under Part 98, suppliers of fuel products, industrial GHGs, and CO 2 are required to report the annual quantity of each GHG that could be emitted from the complete combustion, oxidation, or use of the products they supply to the economy during the calendar y ear. Suppliers expresse d concern that public disclosure of these data could be used to derive the information on the process used to manufacture a product, customer ba se, market share, and similar data that could be used to deduce cost and pricing structures . One commenter added that public disclosure of sensitive data may discourage off-shore suppliers and customers from doing business with U.S.-based companies.

Data From Direct Emitters Us ed as Inputs to Equations. Many commenters suggested that the information used as inputs to emission equations, such as unit-specific fuel usage, raw material composition, and unit-spec ific throughput data, was sensi tive information not generally made available to the public. Fo r example, some commenters stated that detailed process-related information used as inputs to equations should be held confidential b ecause its release would provide insight into producti on capacity, energy use, raw ma terials, productivity, product chemistry, chemical and technical processes used by facilities, and other information that would infringe on business confidentiality. A few comm enters specifically noted that reporting each type of fuel combusted in a unit could reveal sensitive information such as the way in which a facility utilizes certain processes. Other comm enters claimed that unit-level information (which includes data used as inputs to equations) woul d reveal production cap acity, energy intensity, productivity and other key business m easures of reporting entities.

Some commenters argued that data used as inputs to emission equations are not “emission data” and should be eligible for confidential treatment. One commenter stated that if

5EPA believes the requested inform ation could be considered “emission data”, then Part 98 exceeds EPA’s authority by establishing an unreas onably broad definition of “emission data”.

Another commenter claimed that because the GHG emissions will be reported, the information

used to calculate GHG emissions would not be “n ecessary to determine emissions” and therefore

does not meet the definition of “emission dat a”. Other commenters suggested EPA could exercise discretion in its interp retation of “emission data” such th at only the annual calculated emissions and monitoring results would be consid ered to be “emission data” and that all other data, including those used to calculate the emissi ons, should be afforded c onfidential treatment. Several suppliers were also in favor of classifyin g data used as inputs to equations as confidential information. One supplier noted that public disc losure of carbon content of fuels would divulge sensitive information related to marketing and di stribution of products. Ot her commenters stated more broadly that releasing any unit- or product-specific information discloses sensitive information regarding production and raw materials.

Quantities and Composition of Products Produced and Raw Materials Processed

. Various commenters requested th at product and raw material in formation reported by suppliers

and direct emitters should be held confidential. Most of this data is used as inputs to emission equations. As discussed above, direct emitters were concerned that product and raw material information reported under Part 98 could be used by competitors to harm their competitive position by revealing operational strengths and w eaknesses, and deducing pricing structures.

Many suppliers suggested that facility-level production and throughput data should be treated as confidential. Specifi cally, suppliers expressed concerns that releasi ng throughput data would divulge highly sensitive information related to ownership interests and facility-specific processes and business practices. One comm enter added that equipment and technology providers could use this information to quantify operational capabilities , which could be used against reporting parties in negotiating upgrad es or replacement equipment. The product characteristics (e.g., carbon conten t) were also a concern among commenters who noted that any information specific to the production of a particul ar product could be used to reverse engineer the production processes. Severa l commenters stated that EPA s hould be consistent with other

federal data collection and re lease programs (e.g., Energy Information Administration) that consider similar production inform ation to be confidential.

Many commenters suggested that data on the amount and composition of materials received by suppliers should also be held confidential. Most of these commenters argued that disclosing the annual quantities of fuel supplie s and feedstocks, in ge neral, could provide competitors with a detailed understanding of a facility’s operational capacity, limits

, bottlenecks

, and ability to reconfigure their processes in response to market changes. One commenter noted that public disclosure could er ode the proprietary value of s uppliers’ sourcing activities and contractual relationships. Other commenters s uggested EPA should be consistent with other

federal data collection and re lease programs (e.g., Energy Information Administration) that consider similar information from fuel suppliers confidential. In genera l, suppliers expressed

concern that the release of f acility-level information on the amount and characteristics of feedstocks would harm the comp etitive position of reporters.

6Emission Factors Used To Calc ulate GHGs Reported by Suppliers . Some commenters suggested that site-specific emission factors used to calculate the reported GHGs should be

considered confidential information. These comm enters argued that releasing emission factors would disclose information on product characteristics. One commenter noted that public disclosure of carbon content would divulge sens itive information related to marketing and distribution of products.

Unit/Process “Static” and Operating Characteristics . Many direct emitters suggested that data related to operating characteristics (i.e., information that changes over time, such as operating hours and number of operating kiln) should be held confidential. Some commenters suggested that static characteristic s (i.e., information that does not change over time, such as the maximum capacity of individual combustion units and production processes) reported by direct

emitters should be treated as CBI. While a few dire ct emitters indicated that release of this type of data could harm their competitive position, they did not provide supporting details on why or how release of this type of data would harm their competitive position. Many suppliers also recommended that unit-specific static and operating data be held confidential. For example, one commenter stated that data requested by subpart OO, such as transformation efficiency of production processes, are confidential and reveal information about manufacturing processes that a company has developed, and release of such information would give an advantage to competitors.

Calculation Methodology and Methodological Tier . One commenter specifically requested that the methods used to calculate CO 2 emissions for each type of fuel combusted, and if applicable, the monitoring and reporting methodology from 40 CFR part 75 used to measure

CO 2 emissions, should be afforded confidential tr eatment. The commenter argued that this information is not necessary for EPA to determine emissions since the emissions have already been determined and reported to EPA. The comm enter also suggested that it was not necessary to make this type of information available to the public. They argued that the information could be maintained at the facility and made availa ble to EPA when needed for verification purposes.

Calibration and Test Methods . A few commenters suggested calibration and test methods

be afforded confidential treatment. One co mmenter listed the method used for determining carbon content as one of many data elements that would cause harm to its members’ competitive positions. Similarly, another commenter listed mete r calibration methods as one of several data

elements that should be cla ssified as confidential.

Supplier Customer and Vendor Identifying Information . EPA received many comments on the confidential nature of customer-specifi c delivery information, such as information on individual customers that receive fossil fuels or industrial GHGs from the reporting suppliers,

and the facilities to which i ndustrial GHGs are sold or tran sferred for transformation or destruction. The commenters suggested that this information can be used to disclose the customer base, market share and similar data that can be used to deduce cost and pricing structures, as well as competitive strategies of a company. The commenters added that off-shore suppliers and customers may choose not to do busi ness with U.S.-based companies if they know this type of information will be made available to the public.

7Comments on EPA’s Handling of Confidential Data: Some commenters recommended that EPA undertake a rulemaking to make “class determinations” for specific types of data elements. For example, glass manufactures reco mmended a “class determination” be made that production data submitted by glass manufacturers (including the amount of cullet and amount and type of each carbonate used) would be held confidential. These commenters argued that this approach would eliminate the need for individual facilities to prepare documentation supporting their confidentiality requ ests for each annual report.

A few commenters were concerned that EPA would not adequately protect information

that is confidential business information or trade secrets. One commenter cited four court cases

related to disclosure of information entitled to confidential treatment 3 and argued that these cases show that EPA has not adequately protected CBI in the past. This commenter expressed concern that the confidentiality of information reporte d to EPA could be compromised by independent contractors employed by the Agency to review data and conduct inspections and by former government employees who transfer to jobs in the private sector. Some commenters argued that facilities should not be required to submit information that is e ligible for confidential treatment

and that an alternative arrangement could be established wher eby facilities would maintain the confidential records at the facility and make them available to EPA when necessary.

3. Public Comments on Previous Legal Cases

The decisions in RSR Corporation v. EPA , 588 F. Supp. 1251 (N.D. Tex. 1984) and

NRDC v. Leavitt , 2006 WL 667327 (D.D.C. 2006) were disc ussed by several commenters on the proposed rule. A brief summary of these co mments is included in this section.

In RSR Corporation v. EPA , the court considered the issu e “whether EPA’s determination that the documents in question are “emission data ,” which are subject to disclosure under CAA section 114 (42 U.S.C. §7414 and regulations pr omulgated pursuant thereto) was arbitrary, capricious and an abuse of discretion.” ( RSR Corporation v. EPA , 588 F. Supp. at 1254). A number of commenters argued that the RSR deci sion supports a narrow interpretation of the term

“emission data” and that much of the data reported under Part 98 was not “necessary to

determine” 4 the characteristics of any emissions becau se alternative methods could be used to determine emissions. However, others argued that the RSR decision does not support a narrow interpretation of “emission data” because Part 98 provides various methods to determine emissions. These commenters argued that once a facility selects a method the information required by that method, including verification and audit generated data, is “necessary to

determine” emissions under the selected method. Th ey stated that the rule’s methodologies are collectively “necessary to determine” national GHG emissions accurately across the economic sectors being monitored. They further argued that all data us ed to verify the emissions are

“emission data” and should not be el igible for confidential treatment.

3 The four court cases cited by this commenter include: Monsanto Co. v. Ruckelshous , 753 F.2d 649 (8 th Cir. 1985); Chevron Chemical Company v. Costle , 641 F.2d 104 (3 rd Cir.) cert. denied, 452 U.S. 961 (1981); Bunker Co. Lead

and Zinc Smelter v. EPA , 658 F.2d 1280 (9 th Cir. 1981); and U.S. v. Stauffer Chemical Co

. , 684 F.2d 1174 (6 th Cir. 1982).

4 The phrase “necessary to determine” is part of the definition of “emission data” at 40 CFR 2.301(a)(2)(i).

89 In NRDC v. Leavitt , NRDC sought judicial review of EPA’s refusal to release certain data that were subject to a Freedom of Information Act request by NRDC for documents concerning stockpiles of methyl bromide. Quoting NRDC v. Leavitt, several commenters stated that this case supports the conc lusion that information reporte d by suppliers (e.g., fuel production and distribution data) is information about “produ cers of materials that will later contribute to

emissions” and therefore is not “emission data”. 5 They argued that data on the amount and composition of products reported by suppliers shoul d not be considered “emission data” because, like the methyl bromide case, the suppliers ar e not responsible for the ultimate release of emissions from the use of their products. Howeve r, other commenters argued that this case is not germane because the regulatory regime for me thyl bromide is different from the potential regulatory regime for reducing GHG. These comme nters argued that Title VI of the Clean Air Act regulates production and not emissions a nd that future GHG regulations will focus on regulating GHG emissions and in some cases will make product manufacturers (such as upstream fuel suppliers and other upstream ma nufacturers) responsible for holding allowances for the future emissions when their products are combusted or used.

5 Natural Resources Defense Council v. Leavitt, 2006 WL 667327 at *4.