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U.S. ENVIRONMENTAL PROTECTION AGENCY

Public Hearing

Greenhouse Gas Mandatory Reporting Rule

1:32 p.m. to 2:49 p.m.

Thursday, February 3, 2011

United States Environmental

Protection Agency

1310 L Street, N.W.

Washington, D.C.
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C O N T E N T S

PAGE

Welcoming Remarks

Pamela Franklin, Presiding Officer............3

Introductory Remarks

Pamela Franklin...............................3

Public Comments

Leslie Ritts,

National Environmental Development Group......6

Lorraine Gershman,

American Chemistry Council...................14

Karin Ritter,

American Petroleum Institute.................23

Craig Segall, Sierra Club......................32

R. Gillem Lucas, Recovery IR...................48

Mandy Warner, Environmental Defense Fund ......60
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1 P R O C E E D I N G S

2 Welcoming Remarks

3 MS. FRANKLIN: Good afternoon. I’d like

4 to begin this afternoon’s public hearing. My

5 name is Pamela Franklin and I will be providing

6 some brief remarks before we begin the formal

7 hearing itself. On behalf of the Environmental

8 Protection Agency and the Office of Air and

9 Radiation, the Office of Atmospheric Programs and

10 the Climate Change Division, I’d like to welcome

11 you to today’s public hearing.

12

13 Introductory Remarks

14 The purpose of this hearing is to receive

15 oral testimony from interested parties in

16 response to the Call for Information on Inputs to

17 Emission Equations that we published on December

27t h 18 , 2010. We are only taking comment on the

19 Call for Information in this hearing today.

20 Again, my name is Pamela Franklin. I’m a

21 team leader in the Climate Change Division and I

22 will be the presiding officer for a short portion
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1 of today’s hearing after which point my

2 colleague, Jessica Gordon, the Climate Change

3 Division’s legal advisor, will the presiding

4 officer. I’m also joined on the panel today by

5 Jennifer Bowman, the program analyst with the

6 Climate Change Division.

7 EPA is using its authority under Section

8 114 of the Clean Air Act to collect data from

9 stationary sources. We are conducting this

10 hearing in accordance with the Clean Air Act

11 under which EPA provides interested persons the

12 opportunity for the oral presentation of views

13 and arguments as well as the opportunity to

14 submit written comments. This hearing provides

15 the form for these oral presentations. We are

16 having this hearing recorded and the transcript

17 will be available for public inspection and

18 copying in EPA’s Air and Radiation docket, Docket

19 number EPAHQOAR2010-0964. The transcript will

20 also be available electronically on their

21 Regulations.gov website.

22 This hearing will be conducted informally
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1 and formal rules of evidence do not apply.

2 However, as presiding officer, I am authorized to

3 strike from the record statements which are

4 deemed irrelevant or needlessly repetitious and

5 to enforce reasonable limits on the duration of

6 statements of any witness.

7 Witnesses will be allowed to make oral

8 statements which they may later expand in writing

9 for the record. Witnesses are requested to state

10 their names and affiliation prior to making their

11 oral statements. When a witness has finished his

12 or her presentation, members of this panel may

13 ask the person questions concerning the issues

14 raised in the testimony. If your oral comments

15 are different from your written comments, we ask

16 that you submit your written comments directly to

17 the docket. Comments will be taken in the same

18 order as registration and I’ll just over that

19 order right now. First we will have Leslie

20 Ritts, second Lorraine Gershman, third Karin

21 Ritter, fourth, Craig Segall, fifth, R. Gillem

22 Lucas and sixth, Mandy Warner. To begin, I would
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1 like to ask Leslie Ritts to come to the front for

2 your presentation. Thank you.

3 MS. RITTS: Thank you. I’m Leslie Ritts.

4 I’m the Counsel for the National Environmental

5 Development Group’s Clean Air Project. NEDA/CAP

6 is a multi-section manufacturing coalition. We

7 were formed in 1979 to address clean air

8 implementation issues and offer a balanced

9 perspective on protecting the environment while

10 giving appropriate attention to issues that

11 manufacturers face in the global economy.

12 We appreciate the opportunity to testify

13 on the need for rescinding the requirement for

14 EPA’s collection of confidential business

15 information that companies use to calculate

16 greenhouse gas emissions under the Mandatory

17 Recordkeeping and Reporting Rule. At this

18 juncture, we appreciate that agency officials

19 have recognized that the release of this

20 information over its website could harm

21 individual companies and the domestic economy,

22 and therefore have decided to investigate further
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1 whether the collection of this information – the

2 importance of collecting this information

3 outweighs compromising economic interests of

4 manufacturers in their proprietary processes and

5 raw material use.

6 NEDA/CAP submits to EPA that the

7 critically sensitive nature of information about

8 processes, raw materials and production rates

9 used to calculate GHGs, which EPA’s proposed July

7

t h 10 rule would have made available instantly over

11 the agency’s website, would substantially harm

12 the U.S. economy. If it is posted by the Agency,

13 competitors at home and abroad can and will use

14 this information to steal trade secrets on

15 proprietary processes through reverse engineering

16 and to engage in price fixing by calculating

17 production costs to undercut competitors in the

18 marketplace. I will use three examples to

19 illustrate how sensitive this information is and

20 how it can be used in an anticompetitive manner.

21 The first example comes from the aluminum

22 industry. For each of these I’ll describe the
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1 process and then I’ll describe how greenhouse

2 gases are calculated and then talk about the

3 implications. For aluminum, aluminum is made by

4 dissolving aluminum oxide in molten cryolite at

5 1740 degrees Fahrenheit and using electrolysis to

6 produce pure aluminum from the alumina ore. The

7 process takes place in electrolyte cells or

8 “pots” where carbon cathodes form the bottom of

9 the pot and act as a negative electrode. Carbon

10 anodes which are the positive electrodes are held

11 at the top of the pot and are consumed during the

12 process when they react with oxygen coming from

13 the alumina. So, as the aluminum is produced,

14 the carbon forms C02 that is released from the

15 process and emitted to the atmosphere. The

16 formula is pretty simple. It’s two molecules of

17 alumina or aluminum oxide, plus carbon yields

18 four molecules of aluminum and three molecules of

19 CO2. Note that this is basically the same

20 formula used to calculate GHGs reported to EPA.

21 In other words, GHG emissions reported to EPA are

22 calculated from net carbon anode consumption per
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1 ton of aluminum produced times the ton of

2 aluminum produced during the year. And I’ve

3 given you the equation for that in the testimony

4 I handed to the EPA people. It’s essentially

5 carbon dioxide equals the net carbon times the

6 production. You guys are probably too young – at

7 least Jennifer and Jessica are – do you know who

8 Boris and Natasha are? Okay. Boris and Natasha,

9 the industrial spies, will use this information.

10 Annual aluminum production and carbon consumption

11 are key indicators of economic performance for

12 aluminum smelters and thus knowledge of these

13 performance indicators can be used to determine a

14 smelter’s operating costs, raw material

15 requirements and/or energy demands. Some

16 aluminum companies (though not necessarily Alcoa,

17 NEDA’s member) would consider production data and

18 carbon consumption to be competitively sensitive

19 because this information can be used in product

20 pricing and negating purchase prices for raw

21 materials and energy contracts.

22 In the paper industry we’ll turn to, a
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1 typical pulp and paper mill produces pulp by

2 blending wood chips with a caustic solution and

3 cooking them. The caustic solution dissolves

4 roughly half of the wood material during the

5 cooking process freeing up wood into pulp fibers.

6 The pulp fibers are washed, bleached if needed,

7 and sent to a paper machine to make the desired

8 consumer product.

9 The residual caustic solution is washed

10 from the pulp and is referred to as black liquor.

11 The black liquor is evaporated to remove most of

12 the water and then sent to a recovery boiler for

13 combustion. This concentrated black liquor which

14 contains half the wood’s organic material is

15 combusted to produce steam for more wood cooks.

16 The inorganic chemicals are collected at the

17 bottom of the boiler as smelt, recovered and

18 reused to make more of caustic solution.

19 Subpart AA, Equation AA-2 of EPA’s GHG

20 Mandatory Reporting Rule requires recovery

21 boilers to report GHG emissions by using the

22 black liquor solids in the GHG calculation. The
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1 BLS or black liquor solids is a measure of the

2 organic portion of the black liquor all of which

3 came from the wood, and the black liquor solids

4 also represent half of the total wood used during

5 the cooking process. Knowing the black liquor

6 solids value directly provides the wood usage,

7 and hence the annual production of the facility.

8 The actual percent of the organic materials in

9 the black liquor solids is easily determined by

10 the final product type, for instance the paper

11 products versus cardboard versus tissue which

12 each have a unique BLS percentage content.

13 GHG MRR rule also requires reporting of

14 annual fuel use. Fuel costs by fuel type are

15 readily available. Therefore, a cost efficiency

16 value can be determined using the total cost of

17 the fuels and the production (for instance, the

18 dollar per ton of product). Information

19 containing cost per unit of production is highly

20 confidential. Also, fuel usage data provides

21 energy information for each type of fuel.

22 Therefore, energy efficiency values can also be
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1 determined.

2 For this reason, pulping companies guard

3 both process information and energy efficiency

4 information from competitors. Industrial spies,

5 Boris and Natasha, can take information about

6 inputs to the digester and energy use, and use it

7 along with production rates to calculate mill

8 yields; this information in turn can be taken to

9 a competitor who can use it to optimize its pulp

10 production processes, removing the competitive

11 advantage the reporting company currently enjoys.

12 Turn to the semiconductor industry – to

13 understand how the semiconductor industry regards

14 the sensitivity of raw material and production

15 information and how it guards it from the public.

16 In this process involving hundreds of

17 photographic and chemical processing steps in

18 which electronic circuits are gradually created

19 on wafers made of pure silicon and other

20 semiconducting material. Each step has a

21 specifically defined chemical “recipe” that

22 defines the precise chemical use and other
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1 process conditions that are required to produce

2 the nanometer scale features on a modern

3 semiconductor chip.

4 A most critical proprietary step, this

5 process includes etching circuitry by exposing

6 the semiconductor wafer to a bombardment of ions

7 that are usually a plasma of reactive gases,

8 generally fluorocarbons to dislodge portions of

9 the material from the exposed surface. The

10 fluorocarbons used are inputs into calculating

11 GHGs released from a fab. Companies put

12 tremendous amounts of research and development

13 resources into developing these process steps and

14 consider them highly confidential. The

15 electronics sector reporting rule would require

16 semiconductor manufacturers to disclose

17 information about the type and quantity of raw

18 materials and usage in calculating GHG emissions.

19 The release of such information poses

20 significant risks to a semiconductor company’s

21 competitive position in a very fast moving

22 industry where piracy by other nationalized
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1 industries in the world is well-recognized.

2 In closing, NEDA/CAP will be submitting

3 comments on the issues raised – this should be

the July 7t h and July 27t h 4 notices further

5 discussing why information is so sensitive and

6 will harm manufacturing companies if it is

7 published, and also addressing how EPA can verify

8 calculations without this information or third

9 party verification. We also will be submitting

10 additional information to the record on why we

11 disagree with EPA on its definition of emissions

12 related information. My contact information is

13 there. Thank you very much.

14 MS. FRANKLIN: Thank you.

15 MS. RITTS: Do you have any questions?

16 MS. FRANKLIN: I don’t.

17 MS. RITTS: Thank you very much.

18 MS. FRANKLIN: For our next speaker I

19 invite Ms. Lorraine Gershman.

20 MS. GERSHMAN: Good afternoon. My name

21 is Lorraine Gershman and I’m speaking on behalf

22 of the members of the American Chemistry Council.
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1 ACC represents the leading companies engaged in

2 the business of chemistry.

3 We appreciate and strongly support EPA’s

4 review of its proposal for the treatment of CBI

5 in the Mandatory Reporting Rule for greenhouse

6 gas emissions.

7 ACC has been very concerned about how EPA

8 will treat CBI and we continue to be concerned

9 due to none of the July 2010 proposals being

10 finalized at this point. Because EPA proposed

11 its rule only after finalizing the Mandatory

12 Reporting Rule, we were not able to fully

13 consider possible alternative reporting options

14 that might have protected more sensitive

15 information of CBI. We welcome EPA’s decision to

16 defer the reporting of inputs to emissions

17 equations and its call for information to afford

18 all stakeholders the necessary time to fully

19 evaluate how these inputs and other sensitive

20 data should be treated.

21 In its proposed CBI rule, EPA has

22 interpreted the term “emission data” far more
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1 broadly than is necessary to achieve the goals of

2 this reporting rule. “Emission data” should be

3 interpreted as the information needed to

4 determine emissions, not each and every piece of

5 information or data upon which emissions might be

6 calculated. We believe that past EPA practice

7 and case law support a narrow interpretation of

8 “emission data.”

9 EPA should follow the model established

10 in other reporting systems when determining what

11 information should be publicly available. Both

12 EPA’s TRI and California’s greenhouse gas

13 reporting system release basic facility

14 information along with total emissions data.

15 Neither system requires the reporting or the

16 release of sensitive information such as inputs

17 into equations used to calculate emissions. TRI

18 has been an effective reporting system for almost

19 25 years in large part because it is periodically

20 revised to address concerns about the reporting

21 burden while maintaining the quality and utility

22 of the data base.
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1 The TRI data available to the public

2 includes detailed information on both the

3 facility and its emissions. Facilities can use

4 direct measurement, monitoring data, emissions

5 factors, engineering estimates, and/or mass

6 balance calculations in order to determine

7 emissions, which closely mirror the various

8 calculation methods in the mandatory reporting

9 rule. Facilities are required to report only the

10 principal calculation method that was utilized,

11 and the measured/calculated emissions data for

12 each chemical.

13 EPA’s TRI recordkeeping requirements are

14 detailed and underlying data must be available

15 for inspection by EPA as requested. In the TRI

16 program, EPA struck a sound balance between the

17 limited data that must be submitted to EPA and

18 the bulk of the data that remains onsite and is

19 not made public. We find no reason for EPA to

20 depart from this approach in the implementation

21 of the mandatory reporting rule. EPA has

22 presented no compelling reason why inputs to the
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1 emissions calculations are now considered to be

2 “emissions data” and therefore not subject to CBI

3 protection, when those same inputs are not

4 publicly reported under TRI. Both TRI and the

5 mandatory reporting rules allow the release of

6 emissions data to the public and have been or

7 will be used to inform EPA policy. There is no

8 justification for EPA to require facilities to

9 now release sensitive information that would

10 compromise the business competitiveness of those

11 facilities.

12 Furthermore, both the TRI and the

13 Mandatory Reporting Rule require a senior company

14 official to sign off on the facility reports.

15 These senior officials are responsible for

16 insuring that the information submitted is

17 accurate and complete or face potential

18 penalties. Facilities have every incentive to

19 submit accurate data under both the TRI and the

20 Mandatory Reporting Rule. In both cases, EPA has

21 the ability to audit facility data to check for

22 accuracy and completeness.
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1 EPA’s proposal to establish “inputs to

2 emissions equations” as a data field and to

3 classify these inputs as “emissions data” is a

4 dangerous expansion of what constitutes “emission

5 data.” These “inputs” are data elements related

6 to process and operational information, such as

7 fuels, raw materials, unit throughput, production

8 rates, operating data, process data and so on,

9 and are not necessary to determine the identity,

10 amount, frequency or other characteristics of any

11 emission which has been emitted by the source.

12 Nor are these inputs necessary to identify the

13 source and distinguish it from other sources.

14 The inputs must be determined to be CBI protected

15 because they reveal sensitive business

16 information that if publicly disclosed would

17 divulge methods or processes entitled to

18 protection as trade secrets.

19 In CBI proposal, EPA cited the need to

20 include the “inputs to emission equations” as

21 “emissions data” primarily to enable emissions

22 verification, as well as to support analysis of
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1 greenhouse gas emissions for future policy and

2 program development. However, the Mandatory

3 Reporting Rule requires facility self4 certification with EPA emissions verification.

5 Nowhere in the Mandatory Reporting Rule does it

6 state or suggest that EPA is now ceding its

7 emissions verification responsibility to the

8 public. To now imply that the public needs

9 access to the inputs in order to verify emissions

10 data is without merit. Only potential

11 competitors will be mining the inputs data and it

12 will not be to verify the reported emissions of

13 that facility, but rather to steal trade secrets.

14 EPA acknowledges that production and

15 throughput data that are not used as inputs to

16 emissions equations should be CBI. EPA proposes

17 to determine these data elements are entitled to

18 confidential treatment because disclosure of

19 these production and throughput data is likely to

20 cause substantial harm to the competitive

21 position of businesses required to report these

22 data elements. EPA explains that by having such
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1 production and throughput data, competitors would

2 be able to gain insight into a firm’s operational

3 strengths and weaknesses. EPA also reasons that

4 having information about production quantities of

5 each product and the product mix of a firm may

6 enable competitors to determine the type of

7 production processes used, as well as to

8 reasonably infer the types and approximate

9 amounts of feedstocks consumed.

10 Indeed, ACC agrees with EPA’s assessment

11 that such information should be classified as

12 CBI. Yet EPA is requiring the same information

13 be publicly available under a number of subparts

14 when a facility must use this information as an

15 input into calculating emissions.

16 In other words, if a facility has a

17 process that is amenable to a CEMS, its

18 production and throughput data will not be

19 considered by EPA to be emissions data and it

20 will be protected as CBI. But a facility whose

21 process is not amenable to a CEMS and uses

22 production and throughput data to calculate its
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1 emissions, those facilities will suffer the

2 consequences of EPA releasing this sensitive

3 information to the public. There is no

4 justification for EPA’s determination that the

5 use of this data is emissions data. The FTC in

6 comments submitted to EPA on this proposal was

7 also concerned about the potential public release

8 of this sensitive information. President Obama’s

9 recent Executive Order “Improving Regulation and

10 Regulatory Review” states that “Our regulatory

11 system must protect public health, welfare,

12 safety and our environment while promoting

13 economic growth, innovation, competiveness, and

14 job creation.” Having EPA reveal to the public

15 sensitive data that are inputs to emissions

16 equations would stifle American competitiveness,

17 and is inconsistent with the spirit and letter of

18 this Executive Order.

19 Finally, facilities have always had the

20 opportunity to flag sensitive data as CBI in

21 submittals to EPA and have such data protected

22 from the public. However, under the CBI
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1 proposal, by making sweeping determinations on

2 data in advance, EPA has taken away the ability

3 for facilities to identify sensitive information

4 and make the requisite showing to EPA that the

5 information should be protected. At the very

6 least, we request to this traditional and sound

7 practice.

8 Thank you. And ACC will be submitting

9 comments.

10 MS. FRANKLIN: Thank you very much.

11 Unfortunately, I need to depart. My colleague,

12 Ms. Jessica Gordon, will resume the duties of the

13 presiding officer at this point. And we would

14 like to invite Karin Ritter as the next speaker.

15 MS. RITTER: Okay. Good afternoon. My

16 name is Karin Ritter. I’m a manager with the

17 regulatory and scientific affairs department of

18 the American Petroleum Institute. The American

19 Petroleum Institute is the premier trade

20 association in the oil and natural gas industry

21 with 450 member companies engaged in all aspects

22 of the industry.
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API submitted comments on September 7t h 1 ,

2 2010, addressing EPA’s original proposal of July

3 7, 2010 and followed up with additional comments

4 on October 14, 2010. API is pleased today to

5 provide preliminary comments regarding the change

6 to the reporting date for “inputs to the emission

7 equations” data elements required under the

8 greenhouse gas reporting program and EPA’s call

9 for information to examine potential business

10 harm to reporters. In addition, API also has CBI

11 concerns that go beyond the inputs to emission

12 equations category as discussed in comments that

were submitted yesterday February 2n d 13 . API

14 expects to submit additional comments, as well as

15 more specifically address EPA’s call for

16 information, by the end of the comment period of

17 March 7, 2011.

18 API and its member companies welcome the

19 EPA’s interim final rule to defer until August

20 31, 2011 the reporting deadline for calendar year

21 2010 data elements that are “inputs to emission

22 equations.” API also welcomes EPA’s proposed
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1 rule that would further defer the reporting

2 deadline for designated data elements until March

31s t 3 , 2014 allowing time to address important

4 issues related to the reporting of confidential

5 business information. As API’s prior comments

6 demonstrate, the “inputs to emission equations”

7 contain highly sensitive operational information

8 that is CBI. For example, the quantity of fuel

9 combusted in each combustion unit or group of

10 combustion units is not information that is

11 routinely reported in other greenhouse as

12 reporting programs and it’s not currently

13 available to the public. Under the California,

14 for example, under the California mandatory

15 greenhouse reporting rule, fuel quantity for each

16 combustion device is recognized as CBI.

17 API has four concerns with respect to CBI

18 as follows:

19 First, API is concerned that EPA’s

20 compilation and proposed reporting deferral of

21 the data elements that are “inputs to emission

22 equations” is not as comprehensive as EPA may
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1 have intended. Multiple data elements that were

2 originally categorized by EPA as “inputs to

3 emission equations” in its July 7, 2010 proposed

4 CBI rulemaking are not included in either the

5 interim final or the proposed deferral actions.

6 Again, API provided detailed information

7 regarding these omissions in comments we

8 submitted yesterday. And by these omissions, EPA

9 might be contributing to an inadvertent

10 disclosure of confidential information when

reporters comply with the upcoming March 31s t 11 ,

12 2011 reporting deadline for calendar year 2010

13 data. API urges that consistent with the

14 Agency’s stated intent, all data elements in the

15 “inputs to emission equations” category be

16 included in EPA’s final rule on the deferral.

17 Second, EPA has not yet addressed the

18 confidentiality concerns of suppliers nor has it

19 categorized the data elements that pertain to the

20 promulgated subparts RR and UU for Carbon Dioxide

21 Injection and/or Carbon Capture and

22 Sequestration. In its September 7, 2010 comments
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1 API members expressed concern that some of the

2 suppliers reporting requirements could reveal

3 process-specific information and production

4 volumes, thus providing competitors with data

5 about sensitive process capabilities and

6 operational limits and market capabilities and

7 engagements. For these reasons, API has

8 previously stated that petroleum fuel refiners,

9 importers and exporters should not have to report

10 to EPA on petroleum feed stock and product

11 volumes or unit-specific greenhouse gas emissions

12 and process data unless assured of the

13 confidentiality of these data. However, these

14 data elements are not addressed either in the

15 interim deferral to August 31, 2011 nor in the

16 proposed deferral of certain data elements to

17 March 2014. So unless EPA promptly issues final

18 determinations that these data elements are

19 confidential, the Agency should take urgent

20 action to defer reporting of these data elements

21 to prevent commercial harm to companies resulting

22 from the revelation of competitive and
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1 confidential data.

2 Third, API is deeply concerned that EPA

3 has not finalized its confidentiality

4 determination for other Direct Emitter data

5 elements that are also not included in the

deferral to August 31s t 6 or the proposed deferral

to March 31s t 7 , 2014. In its comments of September

8 7, 2010, again, API expressed primary concerns

9 about two data categories: (1) the “inputs to

10 emission equations,” and, (2) the “unit/process

11 operating characteristics that are not inputs to

12 emission equations.” So to illustrate the

13 importance of providing CBI protection to data

14 elements in both categories, let’s consider

15 reporting under Subpart C for Combustion Sources

16 using either a Tier 2 or a Tier 3 methodology.

17 Reporters are required to report the quantity of

18 each fuel combusted, along with the higher

19 heating value, carbon content and molecular

20 weight of each fuel. If disclosed, this

21 information along with the identification of

22 maximum heat rate capacity of each combustion
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1 unit would provide competitors valuable trade

2 information by divulging utilization rates of

3 combustion units. Knowing the combustion unit

4 capacity, competitors could then estimate the

5 production output of individual combustion units

6 and entire facilities. Competitors could use

7 this information to evaluate whether a facility

8 could increase production and market share with

9 its current capacity or is already at its maximum

10 production and would need to invest capital to

11 expand capacity in order to produce more. Having

12 such information could help competitors make

13 competitive decisions on expanding their own

14 production rates or altering their pricing

15 strategies to the detriment of the reporting

16 company. Yet, neither the interim final rule nor

17 the proposed rule, address CBI concerns beyond

18 the “inputs to emission equations” data elements

19 category. API and its members would like to

20 reiterate that it is critically important that

21 EPA strictly protect the confidentiality of

22 sensitive business information and consider, at a
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1 minimum, immediate deferment of reporting for all

2 data elements included in industry’s previous

comments on the proposed CBI July 7t h 3 , 2010, until

4 a final CBI rule is promulgated. All these data

5 elements should be immediately deferred until

August 31s t 6 , 2011 and they should also be included

7 in the proposed rule providing reporting deferral

until March 31s t 8 , 2014.

9 Fourth, EPA has not finalized its action

10 on the proposed CBI rulemaking originally

11 initiated in July 2010, and companies seeking to

12 have their confidential information protected,

13 would have to resort to a case-by-case CBI

14 application in order to protect their data and

15 still be in compliance with the reporting

16 deadline. Categorical CBI designations were

17 developed to avoid the need for company-by18 company, element-by-element applications for CBI

19 designation which is tedious, burdensome and time

20 consuming, if it could be accomplished at all.

21 At this time, a case-by-case request for CBI

22 protection may be virtually impossible given the
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1 massive amounts of data that must be reported

under a very fast-approaching March 31s t 2 deadline.

3 In addition, such requests may also be difficult

4 or even impossible, because EPA has mandated that

5 all reporting be via an electronic reporting tool

6 (e-GGRT) with its associated web-forms, which

7 have yet to be released in final form. Since we

8 have not been able to test, or even view, the e9 GGRT forms it is not clear whether there is an

10 option for manually selecting a field indicating

11 that CBI protection is requested for a specific

12 data element, or whether the system recognizes

13 only pre-set categorical flags when introduced by

14 EPA. Practically speaking, if such a CBI field

15 exists, given the fact that a typical refinery

16 would possibly be submitting thousands of data

17 points, reporters may not have a way to assert

18 CBI protection for such a large number of data

19 points on an individual basis.

20 In summary, EPA ought to recognize that

21 API’s members – if not all of industry – need

22 sufficient time to use the electronic reporting
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1 tools after EPA’s release of the final version of

2 thse tools, and to review the not-yet-released

3 final CBI designations, before they can properly

4 report under the greenhouse gas reporting rule

5 while at the same time protect the

6 confidentiality of these sensitive data. In view

7 of the imminent March 31, 2011 reporting

8 deadline, API urges EPA to immediately defer

9 until August 31, 2011, reporting for data

10 elements that were noted as potential CBI in the

11 September 27, 2010 API comments on the proposed

12 July 7, 2010 rule. API further requests that EPA

13 amend its December 27, 2010 proposed rule and

14 further defer said data elements to March 31,

15 2014, to enable adequate time to address all

16 pending CBI actions.

17 MS. GORDON: Thank you.

18 MS. RITTER: Are there any questions?

19 MS. GORDON: No. Thank you. Our next

20 three speakers in order will be Craig Segall, R.

21 Gillem Lucas and Mandy Warner.

22 MR. SEGALL: Thanks for spending this
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1 afternoon with us. It’s a pleasure for

2 everybody. You can sense the sort of electricity

3 in the room. I’m Craig Segall. I’m a project

4 attorney with the Sierra Club and I’m very

5 grateful for you – both for the work you’re doing

6 and for holding the hearing. So I’ll try to

7 spare you just reading straight through this and

8 hand it to you later. So let me hit the

9 highlights. First of all, as you know, the

10 greenhouse gas reporting program is an

11 extraordinarily impressive effort. When

12 reporting kicks in from most sources a few weeks

13 from now, it will give us the clearest national

14 picture ever of the origins of the warming

15 pollution, information central in our view – and

16 I think most people’s – making good policy. But

17 thanks to the proposed rule issued today, neither

18 EPA nor the public may see thousands of crucial

19 data points until 2014. The duration and scope

20 of this delay is practically unwarranted and

21 raises substantial legal questions. We believe

22 EPA can substantially reduce and perhaps
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1 eliminate any such delay with their careful

2 review of the data in question.

3 So let me start with first principles.

4 Congress has twice directed the Agency to put

5 reporting in place for, quote, “all sectors of

6 the economy of the United States not later than

7 June 26, 2009.” Similarly in the Clean Air Act,

8 Congress made the clear choice that all emission

9 data that’s data necessary to calculate emissions

10 simply has to be reported to the public. The CBI

11 question does not enter into it. And where CBI

12 does enter into it, that is not emission data.

13 The presumptions is very, very strongly in favor

14 of disclosure.

15 All of which is to say I think there are

16 genuine questions whether or not this delay is

17 legal at all and whether or not you can be

18 thinking about these questions at all. Congress

19 has been very clear that the atmosphere as a

20 public commons is a matter of vital public

21 concern. The public deserves to know who’s

22 polluting it. And that’s really what’s at stake
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1 here. So in our view, delaying in reporting for

2 five years past Congress’s deadline for more than

3 thirty sectors including the industries which are

4 the largest carbon polluters is more or less

5 unsupportable. We’re aware of course that

6 companies will report their final emissions

7 figures. But given that those figures are

8 reached through a system of equations, reporting

9 only the final figures gives us basically a black

10 box rule. It’s unverifiable. It’s far less

11 useful. It’s not consistent with Congress’s

12 mandate.

13 What’s particularly troubling about all

14 of this of course is that the proposed delay

15 arises from industry comments raising what EPA

16 itself as only, quote, “potential problems,”

17 offered, quote, without, quote, “sufficient

18 specificity.” Some members of industry are

19 worried as we’ve seen today about reporting’s

20 impacts on competitiveness, but still, even in

21 what I think referred today, cannot really say

22 how, certainly for the vast majority of data
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1 points identified. These concerns should not

2 lead EPA, therefore, to a lengthy three-year

3 blanket hold on reporting of these thousands of

4 data points for at least four reasons. So I,

5 like everyone else, have a numbered list.

6 First, these late-raised concerns are not

7 news. Listening to the testimony today, I’m

8 reminded of the scene in Casablanca where the

9 police are shocked, shocked, that gambling is

10 occurring in a casino. Industry has known since

11 the reporting rule was proposed almost two years

12 ago that they would be reporting using emissions

13 equations, and that inputs to these equations

14 would likely be deemed reportable emission data

15 as they are naturally necessary to calculating

16 emissions. EPA’s choice, moreover, to use

17 equations rather than broadly to require direct

18 measurement was welcomed by many industries as a

19 less expensive alternative to direct measurement.

20 It was pretty broadly hailed in fact. Having

21 taken this deal, industry cannot now demand that

22 they not only be allowed to escape directly
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1 measuring its pollution, that even be given a

2 pass in showing its work as it completes

3 equations-based reporting. Emissions reporting

4 just cannot be a black box system. Industry can

5 choose between direct reporting and emissions

6 equations, but it cannot choose [inaudible]

7 emissions equations without meaningful

8 verification of public disclosure. If large

9 polluters wish otherwise, they had ample reason

10 and chance to raise these concerns long ago.

11 They are not now entitled to a panicked three

12 more years of delay in relation to rules and

13 results they’re familiar with at the latest in

14 2009.

15 Second, even supposing that we had some

16 delay, the length of the delay is unconscionable.

17 First of all, as a practical matter, the climate

18 crisis is getting worse every day. We’re already

19 well above safe levels of carbon in the

20 atmosphere and excellent data is needed to solve

21 it as Congress recognized. We can’t wait three

22 years or if these delays stray on as delays often
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1 do once begun, for verifiable information on the

2 country’s biggest sources of carbon pollution.

3 As I’ve said, the EPA was directed to develop the

4 entire reporting system in December of 2007.3837

5 It had a proposed rule done again for the entire

6 system in April of ’09, less than a year and a

7 half later, and a final rule by December of 2009.

8 If EPA can develop the entire system in two

9 years, it does not need three years to make small

10 adjustments to it.

11 This is particularly so because for the

12 most part, EPA has already defined much of the

13 universe of reporting options for a given sector.

14 This would be the tier-based system we’re

15 familiar with in the rule. There are not

16 entirely new emissions equations out there that

17 will entirely avoid sensitive information – even

18 if EPA looks for them for the next three years

19 although there may be a few small tweaks which we

20 think could be made more quickly. If a polluter

21 does not like reporting using equations, its

22 solution is obvious, and requires no delays or
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1 changes to the rule. It should install direct

2 measurement technology instead and solve its

3 problems itself.

4 Third, deferring reporting of emissions

5 equations raises substantial verification

6 concerns. Without underlying emissions equation

7 data, it will be very difficult to verify whether

8 emissions have been reported correctly, or also

9 importantly, how to fix problems even if they are

10 identified. EPA has recognized this problem in

11 its proposed rule, and suggested that it might

12 step-up site visits to compensate, but this

13 solution is not particularly comforting.

14 Initially to our knowledge, EPA

15 enforcement staff and funding had originally

16 intended to conduct only limited site visits,

17 essentially spot checks. If EPA now tends to

18 expand this program, it will need to show that it

19 has the resources to visit all, or a very

20 substantial fraction, of deferred reporters.

21 Initially, I’d note it’s not at all clear that

22 industry really wants that level of industry site
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1 visits either which seems like the natural

2 alternative if they aren’t happy with the current

3 system. But even supposing EPA can essentially

4 visit all sites regularly and annually, it’s not

5 at all clear that EPA can meaningfully conduct

6 the verifications it would have to do without

7 creating public records of precisely the

8 information which it’s trying to avoid collecting

9 in the first place by deferring reporting of

10 recording data. Perhaps there is some way for

11 reporters not actually to have to write down what

12 they verify or to share it with EPA to determine

13 systems and problems in reporting. That could be

14 done, but it’s essentially a system of blinded

15 inspectors. It’s unlikely to produce meaningful

16 verification data or useful accuracy so there’s

17 not a lot of point in doing it although I

18 supposed it’s better than nothing if we have to

19 settle for it.

20 So, [inaudible] EPA is trying to avoid a

21 Congressional determination that it needs to

22 report all this data to the public. You can’t
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1 very well avoid it by spending extra resources

2 and saying they have to look at the data

3 themselves. It will just be a hassle and runs

4 into the same legal problems EPA is wrestling

5 with.

6 Now fourth, getting to the meat of this,

7 to the extent that industry has raised

8 substantive concerns, they’re far more minor than

9 EPA’s broad exclusions suggest. So we’re now

10 analyzing the exclusions in detail and I’m sure

11 some preliminary conclusions now which will be

12 followed by at this point blocks and blocks of

13 spread sheets come March. So generally speaking,

14 the deferrals are far broader than they need to

15 be. As far as I can tell, the system used to

16 reach them was more or less deferring reporting

17 of all equations data or things that plausibly

18 could be emissions equations and inputs. That’s

19 a very different question than what’s not already

20 publicly available and/or what is not at all

21 competitively relevant.

22 And for that matter, let me say
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1 initially, because this is not how we treat CBI

2 claims in the typical case-by-case system. One

3 looks in great detail at them, the presumption is

4 strongly for disclosure and only then are they

5 considered to be blocked from reporting. What’s

6 not done generally is to respond to sort of

7 general industry concerns and shunt off a large

8 part of the data indefinitely. In other words, I

9 think the deferral functionally treats emission

10 data as CBI for the near term in ways – on the

11 basis of far less evidence – for far more

12 information than would be required for case-by13 case reporting.

14 So having a look at this – broad classes

15 of data are already publicly available and we can

16 show that. In subpart C, for instance, EPA

17 proposes deferring reports on the heat input and

18 even the quantity of the fuel used in essentially

19 all industrial boilers. This data in fact is

20 very often already available in Title V and state

21 operating permits. We have quite a sheaf of

22 them. It’s not confidential. Likewise, turning
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1 to cement, another big emitter, EPA has proposed

2 deferring reporting on clinker and cement kiln

3 dust production, that our experts were able to

4 find in, I think, about a week almost all that

5 data in public permits and databases. The same

6 story in iron and steel: EPA reacted to industry

7 by proposing to defer reporting of the mass of

8 fuels used in the process, but our engineers

9 could, again, find this data in public permits

10 and public permit applications.

11 I could go on, so I will. In the oil and

12 gas sector, EPA proposed deferring reporting of

13 the number and fuel use of pneumatic devices that

14 vent high-global-warming-potential methane to the

15 atmosphere. These component counts in fact, have

16 no competitive relevance and both component

17 counts and the fuel use rates of these systems

18 regularly appear in air permits and are provided

19 to federal, state and local agencies for royalty

20 and tax reporting purposes. I can report similar

21 conclusions on EPA’s proposed deferrals on, for

22 instance, in the oil and gas sector, acid gas
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1 removal vents, tank emissions, well venting,

2 including for exploration well venting where if

3 there weren’t any putative concerns about any one

4 well, [inaudible] largely solves of doing basin

5 level reporting, so you’re reporting [inaudible]

6 basin it’s not a problem.

7 So these are just highlights. There are

8 a lot more and we will provide you a point-by9 point analysis of them showing that a vast

10 majority of this information is either already in

11 public view albeit scattered in ways that are far

12 less useful than EPA’s collection will create,

13 and much of the remainder do not raise

14 competiveness concerns.

15 So upshot is that on analysis, many of

16 the, quote, “potential problems” polluters

17 identified don’t actually exist to the extent

18 they can even be legally considered or as a

19 matter of equity should be considered two to

20 three years down the line from the development of

21 the system. And this isn’t surprising. Industry

22 has a long, long history of misusing confidential
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1 business information claims because it would

2 rather not tell its public what it’s doing to its

3 air. I recently, for instance, ran across air

4 permit applications for large refineries in Texas

5 that they put in confidentiality claims for --

6 marked, you know, bright red confidential stamps

7 – textbook values for hydrocarbon heat contents,

8 the emissions rates of the facilities which, I

9 think, are hard to see as non-emission data, and

10 most memorably, the EPA’s own public AP-42

11 emissions factors which industry felt very

12 strongly were competitively sensitive. There are

13 a lot of things industry would rather not share,

14 but which are plainly public.

15 So in view of all this, our

16 recommendations are straightforward:

17 First, placing the burden of proof

18 squarely on industry, as it has to its credit in

19 the call for information, EPA should conduct a

20 thorough review of which data elements have been

21 compellingly shown to raise competitiveness

22 concerns before it finalizes the deferral rule.
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1 Doing so will almost certainly allow EPA to

2 significantly limit the scope of the role, if it

3 is finalized at all.

4 Second, if reporters are granted any

5 deferral, EPA should very strongly consider

6 requiring them to use third-party verification

7 services for the duration of the delay. I’m

8 aware that’s a significant change in EPA’s

9 system, but to the extent that no one’s seen that

10 verification data, and EPA’s only doing spot11 checks, someone needs to be doing thorough

12 reviews. And there enough third-party verifiers

13 around from other reporting systems, we think, to

14 make that a manageable change especially in your

15 two or three-year delay if it stretches on that

16 long.

17 Third, though, any delay should be

18 minimal. These companies really do have it in

19 hand to solve their own problem. We would say

20 that EPA should seriously consider simply

21 requiring companies which don’t wish to report

22 their emissions equation inputs to switch to
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1 direct measurement as soon as possible. That

2 should take at most about a year assuming that

3 you start in the next reporting cycle. So,

4 again, not we think, a major problem – certainly

5 not worth a delay twice as long as it took to

6 write the rule.

7 In conclusion, EPA and the public are on

8 the verge of benefiting from the Agency’s

9 genuinely hard work. And I don’t want to

10 shortchange [inaudible] criticism of this

11 proposal. I think it’s misguided, but I think

12 the rule as a whole is quite remarkable. And it

13 would really be a pity at this point a few months

14 away from seeing its fruits to pull back and put

15 the rule into what will initially be a three-year

16 delay, what will likely strike longer and create

17 a continuing target for industry to come up with

18 putative competitiveness concerns that delay the

19 vital interest that public has in knowing what’s

20 happening to its atmosphere. Thanks.

21 MS. GORDON: Thank you. Next. R. Gillem

22 Lucas, please.
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1 MR. LUCAS: I don’t think I can talk that

2 fast. How long do I have?

3 MS. GORDON: I’m sorry?

4 MR. LUCAS: How long do I have?

5 MS. GORDON: A reasonable period of time.

6 MR. LUCAS: Oh, okay. So be reasonable.

7 MS. GORDON: Yes.

8 MR. LUCAS: We will be submitting the

9 written comments before the deadline. But the

10 reason I’m here today is to highlight something

11 which is very simple. I’m a registered

12 professional engineer in California and Maryland,

13 and at one point in my life from 1990 to 1994 I

14 managed the air emissions testing group for the

15 largest air environmental company in the United

16 States, Research-Cottrell, and I’m very familiar

17 with the challenges of measuring much of

18 anything, either indoors or outdoors.

19 But that’s not why I’m here today. I’m

20 the CEO of a company called Recover, IR. And we

21 are, we believe, the premier company in the

22 United States for aerial infrared measurements of
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1 energy theft in the United States. And I’m only

2 going to address my comments relative to subpart

3 NN and the punch line here – and then I’ll tell

4 you a little bit more about the punch line – is

5 that if there is not a validation or sampling of

6 the major cities in the United States, that

7 probably the total greenhouse gas impact will be

8 in error by 1 to 3 percent. That’s relative to

9 all of the measurements.

10 A couple of benchmarks that are important

11 and relevant – the Department of Energy’s EIA

12 changed their corrective measurements for

13 balancing the measurements that they receive and

14 for some reason, late in 2008, 2009, they started

15 getting very large errors. And as reported on

16 the EIA site, they have errors now in the range

17 of 35 billion cubic feet per month natural gas

18 error. That’s the equivalent – the heating

19 equivalent of six days of oil from Saudi Arabia.

20 But they’ve changed the calculation method. So

21 if you can’t get the right answer, you change the

22 equation. That’s not my number, that’s the EIA
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1 number and certainly if the EPA and the EIA are

2 collecting information, the numbers should be

3 consistent. Neither the EIA, nor the EPA in the

4 current ruling, requires reporting of theft rates

5 including bypass theft. Now, you might say, what

6 is bypass theft? Bypass theft is a situation

7 where an industrial, commercial or residential

8 facility actually puts a pipe around their meter

9 and the meter reader comes out and reads a value

10 but it has correlation with how much gas they’re

11 using. There have been people that have been

12 taken to court. There are apartment buildings,

13 there are industrial buildings where this has

14 been in evidence and found out but it’s very hard

15 for utilities to detect especially when the

16 movement in the United States is to go both for

17 gas and electric meters that are remote sensors,

18 read through the internet and no one will ever go

19 there, no one will ever see these bypass thefts.

20 And so if you just take the EIA number of

21 what they’re already reporting as an error in the

22 number of standard cubic feet per month of
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1 natural gas, it’s very easy to hide what we are

2 conservatively predicting as the theft rate in

3 the United States of 14 billion cubic feet per

4 month. That’s about the equivalent of somewhere

5 between on an annual basis, 30 to 45 days of oil

6 from Saudi Arabia which is a significant

7 contributor to the natural gas.

8 Now, if we say okay, well, why would I

9 say such an outrageous thing that the theft rates

10 are so high? My company – we conducted an aerial

11 infrared survey of the city of Detroit – 84,000

12 acres. And the reason this is important is that

13 from my personal experience, you cannot go out

14 and measure every meter accurately especially

15 when most of the residential meters and many of

16 the meters on commercial and industrial buildings

17 are neither pressure compensated nor temperature

18 compensated. That means they read in error by

19 design especially when it’s the cold months when

20 the gas usage rates are the highest. What we’ve

21 found, actual findings, in Detroit – we found

22 that nearly 20 percent of the residents in the
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1 city of Detroit were stealing natural gas and 94

2 percent of them were stealing electricity. So if

3 you don’t collect the information about the

4 thieves, you can’t add it up from the meters and

5 you can hide it in the calculations, then the

6 error begins to appear. So that just in the city

7 of Detroit, that was about $75 million. You say,

8 well, why aren’t the gas companies interested in

9 collecting this problem? The reasons are that

10 since the deregulations of the utilities, the

11 electric companies and the gas companies, most of

12 them have become bill takers and caretakers of

13 the distribution systems in the cities. So they

14 don’t have a financial interest to go out and

15 find the thieves because it’s expensive, they

16 don’t have any budget, they don’t have any people

17 to run around and also in a lot of places where

18 the gas is being stolen, it’s dangerous – drug

19 addicts, dogs. But it’s not just in the low

20 income homes. There are people who have

21 installed bypasses in very expensive homes maybe

22 to heat their swimming pool so it’s not detected
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1 because it’s expensive to heat a swimming pool.

2 So we looked at a conservative estimate

3 of looking at about the top 15 states only – not

4 the whole United States – and we looked at just

5 saying maybe they had 5 percent, but we believe

6 that the numbers are actually much higher than

7 that. And why would I think they’re much higher

8 than that? Yesterday in the Wall Street Journal

9 and today on television they quoted the same

10 information that as of today, as of the most

11 recent measurements, 14 percent of the people in

12 the United States are on food stamps. And say,

13 well, what does that have to do with anything?

14 Last year, the amount of money that the United

15 States government paid for low income heating

16 assistance program was $5.1 billion. In many

17 places, that only covered 25 percent of the

18 applicants. This year the projected number for

19 the low income heating assistance program will go

20 down – $3.3 billion. And that means more people

21 that won’t have a heating assistance program, so

22 what will they do? They’ll probably steal more
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1 natural gas.

2 So when you look at the total emissions,

3 the equivalent emissions from the different fuel

4 sources, what you find is about 21 to 22 percent

5 of the weighted number comes from natural gas.

6 However, it’s interesting to look at the numbers

7 published by the EIA and the EPA and the numbers,

8 the percentages, have not substantially changed

9 in eight years. Maybe they didn’t, but in the

10 last years as you’re probably well aware, the

11 cost per cubic foot of natural gas has dropped

12 significantly which means that more people are

13 going to natural gas for heating and for use and

14 for cars and lots of different things like that.

15 So what we should be seeing, especially with the

16 increase in fracking which is another source of

17 emissions – we see that the use of natural gas is

18 going up, so what we should expect is that we may

19 go from 21 to 23 or 24 percent over the next few

20 years and that means that an error of about 5

21 percent to 15 percent error in the natural gas

22 emissions rate will equate to about 1 to 3
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1 percent when we look overall. This is not

2 insignificant.

3 And then if you look at the numbers in

4 the new rule, NN, it talks about calculating the

5 value associated with the complete, 100 percent

6 combustion of natural gas. But most heating

7 systems, they’re not efficient and the energy

8 thieves – they don’t really care about how well

9 it’s hooked up. We’ve seen garden hoses used on

10 some homes. We’ve seen pipes that are not the

11 right kind of pipes, holes in the pipes and

12 consequently, we’re leaking natural gas unburned

13 to the atmosphere and the impact on the

14 atmosphere is 30 times greater for methane than

15 it is for CO2.

16 And also then separate issues associated

17 with this new rule is a difficulty for the

18 natural gas local distribution companies to

19 report because there is a requirement in there to

20 report the BTU content of the gas that’s burned,

21 but the truth of the matter is that that number

22 can vary by over 10 percent variance in the BTU
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1 content, but they really don’t have an accurate

2 way to measure that. And then also a thing

3 that’s perhaps as significant is that when you

4 look at gas going in the ground into storage,

5 coming back out of storage, variances in the

6 static pressure in the line that might vary by

7 hundreds of pounds per square inch difference and

8 temperature variances that are moving around a

9 lot, then the accuracy of any report is going to

10 be a challenge. So in conclusion, we think that

11 there should be a change in the rule which at a

12 minimum requires the major metropolitan areas and

13 surrounding high density areas to measure natural

14 gas theft because our experience is in Detroit

15 specifically, that when they thought they had

16 about 5 percent theft, they actually had 20

17 percent. So in most cities because they don’t

18 look, they don’t have any budget and they don’t

19 have any people to go look, they don’t have a

20 clue what the real number is and neither does

21 anyone else. And also they don’t have an

22 accurate way to find out who might be stealing
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1 gas through a bypass.

2 In conclusion if you look at the – say,

3 well, how can you measure bypass theft – well, if

4 the billing records show that a home or a

5 residence is using very little natural gas, but

6 the building is very hot, there’s something that

7 doesn’t correlate. So we can actually measure

8 the temperature of the buildings, correlate that

9 with the building records and figure out what’s

10 reasonable or unreasonable. So we hope that the

11 EPA will seriously consider at a minimum

12 validation and verification of energy theft

13 rates.

14 MS. GORDON: Sir, thank you. Before you

15 step down, actually I do have a question if you

16 don’t mind.

17 MR. LUCAS: Sure.

18 MS. GORDON: Thank you. Thank you for

19 your comments and we’ll have the appropriate

20 person take a look at them. I wonder if you

21 assert a connection between your comments and the

22 deferral of inputs to emission equations for
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1 direct emitters?

2 MR. LUCAS: Yes. There’s a correlation.

3 And the correlation is – there are two things

4 that I mentioned – one was the inability to

5 correlate actual meter measurements which are in

6 the rule with inaccuracy in those meter

7 measurements. As a registered professional

8 engineer in mechanical engineering, I have a

9 great understanding of how most meters work. And

10 the truth of the matter is that most meters

11 probably are never calibrated before they’re

12 installed and there’s no protocol or practice to

13 go out and check the calibration. Some of these

14 meters have things inside that can break and fall

15 off. Some of them have things that can change by

16 erosion. So when you look at the equations that

17 you’re going to use, then there has to be

18 something in the equations that says how big is

19 my error for what I’m collecting, and will it

20 impact my whole number? Now, if the errors – if

21 you use the theory of central tendency which

22 means if I pick a lot of things and I average
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1 them together, even though I have errors, I will

2 be accurate. But if on average, the average

3 error is the same direction, then they will all

4 be in error. So that means that when I look at

5 this whole spectrum of things – and we created a

6 flow chart of all the reporting requirements and

7 the two things that are missing that are very

8 significant even if you don’t consider energy

9 theft is lost gas. And the computation of lost

10 gas with all these different things where you

11 measure them – especially when you think about

12 independent gas suppliers sometimes supplying gas

13 through the local distribution companies, some

14 are providing it directly to very large

15 industrial companies and utilities – and you look

16 at it as a giant math equation, if you don’t

17 understand the magnitude of the errors in what’s

18 being reported, then you’re just kind of kidding

19 yourself. And so there needs to be a validation

20 of how much could it be off if certain things

21 stacked up in a certain way?

22 Then the second thing is if I looked
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1 individually at the accuracy of what’s being

2 reported, then that’s another error. Then if I

3 take who’s reporting it and what’s in it for

4 them, I would humbly submit based on my personal

5 experience in lying and cheating by people who

6 are reporting to the Clean Air Act, that there

7 needs to be some sort of validation that says is

8 this even in the range of reason or did somebody

9 sit in their office, not even look at much, add

10 up the numbers and send them in? So if there’s

11 no real incentive for the companies that are

12 supplying, distributing and using the gas and

13 they don’t understand where their errors are,

14 then you have a lovely rule which seems like it’s

15 going to do something special, but it’s just a

16 bunch of hooey.

17 MS. GORDON: Thank you. And our next and

18 final speaker will be Mandy Warner.

19 MS. WARNER: Good afternoon. My name is

20 Mandy Warner. I’m a policy analyst with

21 Environmental Defense Fund. On behalf of

22 Environmental Defense Fund and our more than
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1 700,000 members nationwide, I sincerely thank you

2 for the opportunity to testify today.

3 Emissions data is the cornerstone of

4 effective air quality management. EPA’s Final

5 Mandatory Greenhouse Gas Reporting Rule found

6 that emissions data is essential to sound policy

7 explaining that, quote, “accurate and timely

8 information on greenhouse gas emissions is

9 essential for informing many future climate

10 change policy decisions.” An effective emissions

11 reporting program promotes transparency, raising

12 awareness of emissions among reporting facilities

13 and other stakeholders and contributing to

14 efforts to identify and carry out reductions.

15 Indeed, in section 114 of the Clean Air Act,

16 Congress recognized the critical importance of

17 publicly-available emissions data, mandating that

18 emissions data “shall be available to the public”

19 and providing that such data will not be entitled

20 to confidential treatment. Consistent with this

21 emphasis on disclosure, EPA has frequently

22 reiterated that the Reporting Rule must promote
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1 accurate, transparent, and publicly available

2 data in order to, quote, “promote public

3 confidence in the data and enable the public,

4 industry, NGOs, and other stakeholders to better

5 understand the sources of greenhouse gas

6 emissions and the factors that affect the

7 quantities of greenhouse gases emitted.”

8 In this Call for Information, EPA is

9 soliciting additional information on data

10 facilities provide as, quote, “inputs to

11 emissions equations.” Under the Clean Air Act

12 and EPA’s implementing regulations, this data

13 falls squarely within the definition of

14 “emissions data” and therefore must be disclosed.

15 In its Confidential Business Information proposed

16 rule, the Agency recognized as much and proposed

17 to treat, quote, “inputs to emissions equations”

18 as “emissions data.”

19 The Agency nonetheless seeks information

20 on whether public disclosure of such data might

21 result in competitive harm to businesses, noting

22 that, although it received significant public
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1 comments to this effect, most commenters’ claims

2 on competitive harm were broad and over

3 generalized. In gathering this information, we

4 encourage the Agency to rely only on specific,

5 particularized evidence of competitive harm, and

6 we note that covered businesses are best situated

7 to provide this evidence and should be required

8 to do so to sustain any claims of competitive

9 harm. Even if the Agency obtains evidence of

10 competitive harm, however, this evidence cannot

11 overcome EPA’s statutory and regulatory mandate

12 to disclose all emissions data. Indeed, EPA must

13 disclose this data regardless of information it

14 obtains through this call for information.

15 If the Agency determines that the

16 mandatory disclosure of any such data elements

17 does result in competitive harm, EPA may provide

18 facilities with alternative means to calculate

19 emissions and to demonstrate compliance. Any

20 such alternative compliance pathways must result

21 in data that are at least as comprehensive and

22 accurate as the data obtained under the
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1 procedures EPA has already finalized. One

2 potential solution would be to allow facilities

3 to rely instead on continuous emission monitors

4 (CEMS) to measure emissions. The Agency has

5 indicated that many commenters support this

6 course of action, and if EPA is concerned that

7 competitive harm may result from the mandatory

8 disclosure of “inputs to emissions equations,”

9 EDF encourages the Agency to rely on CEMS as an

10 alternative to ensure that emissions data is

11 fully disclosed.

12 Finally, EDF notes that in another

13 action, the Agency has proposed to defer

14 reporting of “inputs to emission equations” for

15 three years. We respectfully request that EPA

16 decline to take this action so that policymakers

17 and the public at large have access to high18 quality, transparent greenhouse gas emissions

19 data for “all sectors of the economy,” as

20 required under the Clean Air Act and as Congress

21 twice commanded.

22 I would like to again thank you for the
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1 opportunity to testify concerning this important

2 proposal, and EDF looks forward to providing the

3 Agency with more detailed information on the

4 public availability of certain inputs to

5 emissions equations in our written comments.

6 Thank you.

7 MS. GORDON: Thank you. Because we

8 announced in the notice on this hearing that the

9 hearing would remain open until five o’clock, –

10 MR. SEGALL: Can we go through it again?

11 MS. GORDON: -- people who continue to

12 arrive, if there are any, will still have the

13 opportunity to comment and if there’s anyone else

14 in the room who has not yet commented and would

15 like the opportunity, may have one. Barring

16 that, we will adjourn. Those who wish to remain

17 on the chance that someone else comes in and

18 wishes to comment, may do so. We will hear those

19 comments if that happens. Thank you very much.

20 [Whereupon, at 2:49 p.m., the Public Meeting

21 concluded.]

22