Clean Air Rule: Greenhouse Gas Emissions Reporting ... · Clean Air Rule: Greenhouse Gas Emissions Reporting . Verification Program . Manual . September 2017 . Publication no. 17-02-011

Clean Air Rule: Greenhouse Gas Emissions Reporting Verification Program Manual September 2017 Publication no. 17-02-011

Publication and Contact Information This report is available on the Department of Ecology’s website at https://fortress.wa.gov/ecy/publications/SummaryPages/1702011.html For more information contact: Department of Ecology Air Quality Program - Climate Policy Section P.O. Box 47600 Olympia, WA 98504-7600

Phone: 360-407-6814 Email: [email protected]

Washington State Department of Ecology o Headquarters, Olympia 360-407-6000 o Northwest Regional Office, Bellevue 425-649-7000 o Southwest Regional Office, Olympia 360-407-6300 o Central Regional Office, Yakima 509-575-2490 o Eastern Regional Office, Spokane 509-329-3400 Accommodation Requests: To request ADA accommodation, call Ecology at (360) 407-6800, 711 (relay service), or (877) 833-6341 (TTY).

https://fortress.wa.gov/ecy/publications/SummaryPages/1702011.html

mailto:[email protected]

Clean Air Rule: Greenhouse Gas Emissions Reporting

Verification Manual

Air Quality Program

Washington State Department of Ecology Olympia, Washington

i

Table of Contents Page

List of Figures and Tables............................................................................................................... ii Figures....................................................................................................................................... ii Tables ........................................................................................................................................ ii

Introduction .................................................................................................................................... iii

Definitions........................................................................................................................................1

Washington state GHG emissions reporting ....................................................................................4

Clean Air Rule .................................................................................................................................4 Clean Air Rule exemptions.........................................................................................................4

Verifier certification.........................................................................................................................5 Verification body certification ...................................................................................................5 Individual verifier certification ..................................................................................................6 Maintaining active certification .................................................................................................7 Certification status .....................................................................................................................7

Subcontractors..................................................................................................................................8

Verification standards ......................................................................................................................8

Types of verification ........................................................................................................................9

Initiating verification services ........................................................................................................10 Conflict of interest self-evaluation ...........................................................................................10 Notice of verification services ..................................................................................................12

Verification services ......................................................................................................................12 Verification plan ......................................................................................................................12 Planning meetings with facility ................................................................................................13 Site visit(s) ................................................................................................................................13 Review of reporter’s operations, product data, emissions and other information ..................13 Sampling plan ..........................................................................................................................14 Data checks ..............................................................................................................................15 GHG emissions report corrections ..........................................................................................16 Findings ...................................................................................................................................16 Log of issues .............................................................................................................................16 Material misstatement assessment ...........................................................................................17 Review of missing data substitution .........................................................................................17

Completion of verification services ...............................................................................................18 Verification report ...................................................................................................................18 Internal review by independent verifier ...................................................................................19 Verification statement ..............................................................................................................19

Changing verifier or verification body ..........................................................................................19

Conflicts of interest ........................................................................................................................20 Conflict of interest mitigation plan ..........................................................................................20

ii

Monitoring conflict of interest situations .................................................................................21

Recordkeeping ...............................................................................................................................22

Deadlines........................................................................................................................................22

List of Figures and Tables

Figures Page

Figure 1. General process for verification body certification. ....................................................... 6 Figure 2. General process for individual verifier certification. ..................................................... 7 Figure 3. Flow chart for determining minimum level of verification required. ............................ 9 Figure 4. General process for verification of GHG emissions reports. ....................................... 10

Tables Page

Table 1. Facilities required to report emissions to both Ecology and EPA ................................. 22 Table 2. Transportation fuel suppliers and facilities only required to report to Ecology ............ 23

iii

Introduction This document is intended to provide guidance to verifiers for verification of greenhouse gas (GHG) emissions from facilities participating in the Clean Air Rule (WAC 173-442). Unlike the regulation itself, this guidance does not have the force of law. It is not intended to and cannot establish new mandatory requirements beyond those already in the regulation, and it does not supplant, replace or amend any of the legal requirements of the regulation. Conversely, omission or truncation of regulatory requirements does not relieve operators of their legal obligation to fully comply with all requirements of the regulation.

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Definitions

Adverse verification statement: A verification statement rendered by a verification body attesting that the verification body cannot say with reasonable assurance that the emissions data report is free of material misstatement, or that the emissions or covered product data submitted in the emissions data report contains correctable errors and is not in conformance with the requirements of WAC 173-441 to fix such errors. This definition applies to the emissions data verification statement and the product data verification statement. ANSI: American National Standards Institute. CARB: California Air Resources Board. Carbon dioxide equivalent or CO2e: A metric measure used to compare the emissions from various greenhouse gases based upon their global warming potential. Ecology uses the global warming potential values listed in WAC 173-441-040 to determine the CO2 equivalent of emissions.

Clean Air Rule and CAR: Washington state’s program (WAC 173-442) to cap and reduce GHG emissions from significant in-state stationary sources, petroleum product producers, imports and distributors, and natural gas distributors operating within WA.

Conflict of interest: A situation in which a person or body is unable or potentially unable to render an impartial verification statement, or the person or body’s objectivity in performing verification services is or might be otherwise compromised. Correctable errors: Errors that affect covered emissions data, non-covered emissions data, or covered product data in the emissions data report that result from a nonconformance with WAC 173-441. Differences that, in the professional judgment of the verification team, are the result of differing but reasonable methods of truncation or rounding or averaging, where a specific procedure is not prescribed in the regulation, are not considered errors and therefore do not require correction. Covered GHG emissions: Includes covered stationary source GHG emissions, covered petroleum product producer or import GHG emissions, and covered natural gas distributor GHG emissions. Exemptions are listed in WAC 173-442-040. Covered natural gas distributor GHG emissions: CO2 emissions that result from the complete combustion or oxidation of products covered under WAC 173-441-120. This includes natural gas and natural gas liquids listed under 40 C.F.R. Part 98, Subpart NN and emissions voluntarily reported under chapter 173-441 WAC. Covered party: the owner or operator of a stationary source located in Washington, petroleum product producer in Washington or importer to Washington, or natural gas distributor in Washington.

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Covered petroleum product producer or importer GHG emissions: CO2 emissions that result from the complete combustion or oxidation of products covered under the Suppliers of Petroleum Products, 40 C.F.R. Part 98, Subpart MM, source category listed in WAC 173-441-120. This includes emissions voluntarily reported under chapter 173-441 WAC using methods established in WAC 173-441-120. Covered stationary source GHG emissions: GHG emissions from source categories listed in WAC 173-441-120. This includes emissions voluntarily reported under chapter 173-441 WAC using methods established in WAC 173-441-120. Discrepancies: Any differences between the reported covered emissions or covered product data and the third-party verifier's review of the same covered emissions or covered product data for a data source or product data. Ecology: The Washington state Department of Ecology.

Facility: Any physical property, plant, building, structure, source, or stationary equipment located on one or more contiguous or adjacent properties in actual physical contact or separated solely by a public roadway or other public right of way and under common ownership or common control, that emits or may emit any greenhouse gas, unless otherwise specified in any subpart of 40 C.F.R. Part 98 as adopted by September 1, 2016. Operators of military installations may classify such installations as more than a single facility based on distinct and independent functional groupings within contiguous military properties. All source categories in WAC 173-441-120 are considered facilities even if the source category name includes the word "supplier."

Greenhouse gas, greenhouse gases, GHG, and GHGs: Includes carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride. Beginning on January 1, 2012, "greenhouse gas" also includes any other gas or gases designated by Ecology by rule in Table A-1 in WAC 173-441-040. Material misstatement: Any discrepancy, omission, or misreporting, or aggregation of the three, identified in the course of verification services that leads a verification team to believe that the total reported covered emissions (metric tons of CO2e) contains errors greater than or equal to 5%, as applicable, in an emissions data report. Material misstatement is calculated separately for covered emissions and covered product data. Misreporting: Duplicate, incomplete, or other covered emissions the third-party verifier concludes should, or should not, be part of the annual GHG report or duplicate or other product data the verifier concludes should not be part of the annual GHG report. NAICS: North American Industry Classification System. Nonconformance: Failure to use the methods or emission factors specified in WAC 173-441 to calculate emissions, or the failure to meet any other requirements of WAC 173-441 or WAC 173-442.

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Omissions: Any covered emissions or covered product data the third-party verifier concludes must be part of the annual GHG report, but were not included by the reporting entity in the annual GHG report. Operational control: The authority to introduce and implement operating, environmental, health and safety policies for a facility. Positive verification statement: A verification statement rendered by a verification body attesting that the verification body can say with reasonable assurance that the submitted emissions data report is free of material misstatement and that the emissions data report does not contain correctable errors. This definition applies to the emissions data verification statement and the product data verification statement. Product data: Data related to a facility's production that are part of the annual GHG report. Reasonable assurance: High degree of confidence. Total reported covered emissions or total reported covered product data: The total annual reporting entity covered emissions or total reported covered product data for which the third-party verifier is conducting an assessment.

4

Washington state GHG emissions reporting

WAC 173-441 establishes Washington state’s mandatory GHG reporting requirements. Facilities that emit at least 10,000 metric tons CO2e per year in Washington and suppliers of liquid motor vehicle fuel, special fuel, or aircraft fuel that provide products equivalent to at least 10,000 metric tons CO2e per year in Washington are required to report their GHG emissions to Ecology. Washington's applicable emissions and calculation methodologies are based on EPA’s 40 C.F.R. Part 98.

Clean Air Rule

In September 2016, the Clean Air Rule (WAC 173-442) was enacted to cap and reduce greenhouse gas emissions from significant stationary sources, natural gas distributors, and petroleum product producers, importers and distributors operating within Washington. The Clean Air Rule covers two-thirds of all in-state GHG emissions including a wide array of public and private sector parties. In 2017, the compliance threshold is set at 100,000 metric tons CO2e annually. Every three years, the threshold lowers by 5,000 metric tons and more facilities are required to reduce their emissions. The threshold reaches 70,000 metric tons CO2e in 2035 and remains stable. Facilities covered by the Clean Air Rule need their annual GHG emissions report verified by an approved third party.

Clean Air Rule exemptions

The following emissions reported under Washington’s GHG reporting program are exempt from the Clean Air Rule (WAC 173-442-040). Emissions exempt from the Clear Air Rule do not need to be 3rd party verified. Covered GHG emissions do not include:

• The following subparts referenced in Table 120-1 in WAC 173-441-120: o Manure Management: Subpart JJ. o Suppliers of Coal-Based Liquid Fuels: Subpart LL. o Suppliers of Industrial Greenhouse Gases: Subpart OO. o Importers and Exporters of Fluorinated Greenhouse Gases Contained in Pre-

Charged Equipment or Closed-Cell Foams: Subpart QQ. • Carbon dioxide from industrial combustion of biomass in the form of fuel wood, wood

waste, wood by-products, and wood residuals, as provided in RCW 70.235.020(3). • Carbon dioxide that is converted into mineral form and that is not emitted into the

atmosphere. • Emissions from a coal-fired baseload electric generation facility in Washington that

emitted more than one million tons of greenhouse gases in any calendar year prior to 2008, as provided in RCW 80.80.040(3).

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Covered GHG emissions from petroleum product producers or importers do not include: • Carbon dioxide emissions that would result from the complete combustion or oxidation

of the following products as specified in 40 C.F.R. Part 98, Table MM-1, as adopted by May 1, 2016:

o Kerosene-type jet fuel. o Residual fuel oil No. 5 (a.k.a. navy special). o Residual fuel oil No. 6 (a.k.a. bunker C). o Petrochemical feedstocks: Naphthas (< 401 °F). o Petrochemical feedstocks: Other oils (> 401 °F). o Lubricants. o Waxes. o Asphalt and road oil.

• Carbon dioxide emissions that result from the complete combustion or oxidation of products when all of the following occur:

o The products are exported from Washington. o Final destination of the product is outside of Washington. o The GHG emissions associated with exported petroleum products are voluntarily

reported in compliance with chapter 173-441 WAC. Covered GHG emissions for a natural gas distributor do not include:

• Emissions from the combustion, oxidation, or other use of products supplied to a covered party or voluntary party that has an emission reduction requirement.

• Units or processes exempted in due to inclusion in the Clean Power Plan. Stationary sources included in the Clean Power Plan (40 C.F.R. Part 60 Subpart UUUU) will be considered to comply with the requirements of this chapter at the beginning of the first compliance period of the Clean Power Plan provided that:

• EPA has approved Washington's implementation plan for the Clean Power Plan. • The approved implementation plan requires greater GHG emissions reduction than

required under 40 C.F.R. Part 60, Subpart UUUU. • When a unit within a covered party's facility is subject to the Clean Power Plan, then only

the GHG emissions from that unit(s) are covered under this subsection. Verifier certification

Individual verifiers and verification bodies must both be certified by Ecology to verify GHG emissions reports submitted by facilities subject to the Clean Air Rule.

Verification body certification

Verification body certification requires: • Registering as a third-party verifier with Ecology. • Current recognition as a third party verifier under at least one of the following

greenhouse gas programs: o CARB's Mandatory Reporting of Greenhouse Gas Emissions program. o ANSI’s Accreditation Program for GHG Validation/Verification Bodies.

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o Other GHG verification programs approved by Ecology. • Employ at least two lead verifiers certified by Ecology. • Maintain at least US $4 million of professional liability insurance. • Provide proof of procedures or policies that support ongoing verification training for

staff. • Disclose all judicial proceedings, enforcement or administrative actions filed against the

organization within the last 5 years. • Provide proof of policies and mechanisms that prevent conflicts of interest and identify

and resolve potential conflicts of interest.

Figure 1. General process for verification body certification.

Individual verifier certification

Individual verifier certification requires: • Registration as a third-party verifier with Ecology. • Current recognition as a third party verifier in CARB’s Mandatory Reporting of

Greenhouse Gas Emissions program or employment by a verification body recognized in ANSI’s Accreditation Program for GHG Validation/Verification Bodies or another GHG verification program approved by Ecology.

• Completion of Ecology training and demonstration of knowledge of Washington’s GHG and CAR reporting protocols.

• Being employed or subcontracted by an Ecology approved verification body.

Additional requirements for individual verifiers working with a verification body recognized by a GHG program other than CARB’s Mandatory Reporting of Greenhouse Gas Emissions program:

• Bachelor’s degree or equivalent in science, technology, business, statistics, mathematics, environmental policy, economics, or financial auditing; or work experience or personal development activities that provide the applicant with the communication, technical and analytical skills necessary to conduct verification.

• At least two years of full-time work experience in emissions data management, emissions technology, emissions inventories, environmental auditing, or other technical skills necessary to conduct verification.

VB submits application to Ecology

Ecology denies application or requests more

information

Acceptable?Yes Ecology

grants certification

Ecology publishes list of certified VBs online

No

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• Registration with a verification body recognized by a GHG program other than CARB’s Mandatory Reporting of Greenhouse Gas Emissions program.

• For certification as a Lead Verifier, an individual must additionally: o Have at least four years of work experience as a project manager or lead.

Two of those years can be graduate level work in the development of greenhouse gas or other air emissions inventories or work as a lead environmental data or financial auditor in the private sector.

• For specialized sector certification, an individual must: o Have at least two years of professional experience in the sector in which

seeking certification. o Registration with a verification body that holds certification in the same

sector.

Figure 2. General process for individual verifier certification.

Maintaining active certification

Ecology certification is valid for a period of three years. To maintain certification, an individual must complete Ecology trainings as required. A certified individual or verification body can reapply for certification if the applicant has not been subject to enforcement action. All verifier requirements must be met for certification renewal.

Certification status

• A verification body must notify Ecology within 30 days when it no longer meets the requirements for certification.

• Ecology may review and, for good cause, including violation or similar action in a similar GHG system, modify, suspend, or revoke Ecology certification of a verification body or an individual verifier.

• A certified verification body or individual verifier may request to voluntarily withdraw its certification by providing a written request to Ecology.

Applicant submits

application to Ecology

Ecology invites

applicant to attend training

Applicant attends

training and takes exam


information

Ecology grants certification as 3rd

party verifier

Ecology publishes list of certified 3rd

party verifiers online

Acceptable?

Acceptable?

Yes

Yes

No

Assessment by Ecology

No

8

• Within five working days, a verification body or individual verifier must notify all facilities for whom it is providing verification services, or has provided verification services within the past 6 months, of its suspension or revocation of accreditation/certification.

• Within 15 working days, a verification body or individual verifier must provide written notice to Ecology of the corrective action in any other voluntary or mandatory GHG program. That notification must include reasons for and type of corrective action. The verification body or verifier must provide additional information to Ecology upon request.

Subcontractors

• All subcontractors must be certified by Ecology to perform verification services. • The verification body assumes full responsibility for verification services performed by

subcontracted verifiers. • Subcontracted verifiers cannot further subcontract or outsource verification services for a

facility. • The verification body is responsible for demonstrating an acceptable level of conflict of

interest between its subcontractor and the facility for which it will provide verification services.

• The verification body may not use a subcontractor as the independent reviewer.

Verification standards

The third-party verifier must certify that annual GHG reports meet the following conditions: • Annual GHG reports must meet the relevant requirements and methods in Chapter 173-

441 WAC. • The absolute value of any discrepancy, omission, or misreporting, or combination of the

three, must be less than five percent of the total reported covered emissions (metric tons of CO2e) or the verification will result in an adverse verification statement. This standard also separately applies to covered product data in the annual GHG report.

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Types of verification

Figure 3. Flow chart for determining minimum level of verification required.

Full verification: • Required at least once every three reporting years. • The first year of third-party verification for a facility. • Requires a site visit.

Less intensive verification: • A reporting facility may choose to obtain less intensive verification services for the

remaining two years in the three-year period as long as: o No year in the three-year period has an adverse verification statement. o The third-party verifier can provide findings with a reasonable level of assurance. o There has not been a change in the third-party verifier. o There has not been a change in operational control of the facility. o There has not been a significant change in sources of emissions.

A difference in emissions of greater than twenty-five percent relative to the previous year's emissions is considered significant unless that change can be directly shown to result from a verifiable change in product data.

• Allows for less detailed data checks and document reviews of the annual GHG report based on the analysis and risk assessment in the most current sampling plan developed as part of the most current full verification.

• Does not require a site visit.

Adverse statement in 3-year period?

Change in operational control of facility?

Less Intensive Verification

No

Yes

Change in verifier?

Yes

No

Yes No

Significant change in sources or emissions?

Difference in emissions >25% relative to preceding year is significant unless change can be directly shown to

result from a verifiable change in product data

Provide findings w/ reasonable assurance?

Full VerificationYes

Yes

No No

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Initiating verification services

Figure 4. General process for verification of GHG emissions reports. VB = verification body; COI = conflict of interest.

Conflict of interest self-evaluation

A verification body must be authorized in writing by Ecology to provide verification services before the body can begin any work related to verification. To obtain authorization the verification body must submit to Ecology a self-evaluation of the potential for any conflict of interest that the verification body, related entities, or any subcontractors performing verification services may have with the facility for which it will perform verification services. Conflict of interest self-evaluations must identify:

• If the potential for conflict of interest is high, medium or low (see page 20 for more information on criteria for determining the potential for conflict of interest).

• Whether the verification body, related entities, or any member of the verification team has previously provided verification services for the facility or related entities and, if so, include a description and years of service.

• If any member of the verification team, verification body, or related entity who has engaged in services of any nature with the facility or related entities either within or outside Washington during the previous five years. If services other than Ecology verification services have previously been provided, the following information must also be submitted:

o The nature and location of the work performed for the facility or related entity and whether the work is similar to the type of work to be performed during verification, such as emissions inventory, auditing, energy efficiency, renewable energy, or other work with implications for the facility’s greenhouse gas emissions.

VB submits COI Self-

Evaluation to Ecology

Ecology provides written

authorization to proceed


information

VB submits Notice of

Verification Services to

Ecology

Acceptable?

No

Yes

VB can begin services 10

working days after Ecology

receives Notice

ID scope of verification

services, contract

with facility

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o The nature of past, present or future relationships of any member of the verification team, verification body, or related entities with the facility or related entities including: Instances when any member of the verification team, verification body, or

related entities has performed or intends to perform work for the facility or related entities.

Identification of whether work is currently being performed for the facility or related entities, and if so, the nature of the work.

How much work was performed for the facility or related entities in the last five years, in dollars.

Whether any member of the verification team, verification body, or related entities has contracts or other arrangements to perform work for the facility or a related entity.

How much work related to greenhouse gases the verification team has performed for the facility or related entities in the last five years, in dollars.

o Explanation of how the amount and nature of work previously performed is such that any member of the verification team’s credibility and lack of bias should not be under question

• A list of names of the staff that would perform verification services for the facility, and a description of any instances of personal or family relationships with management or employees of the facility that potentially represent a conflict of interest.

• Other circumstances known to the verification body or facility that could result in a conflict of interest.

Ecology will review the self-evaluation submitted by the verification body and determine whether the verification body is authorized to perform verification services for the facility. If Ecology determines that:

• There is a high potential for conflict of interest, the verification services may not proceed. • There is a low potential for conflict of interest, verification services may proceed. • The verification body and verification team have a medium potential for a conflict of

interest, Ecology will evaluate the conflict of interest mitigation plan (see page 20 for more information on conflict of interest mitigation plans), and may request additional information from the applicant to complete the determination. In determining whether verification services may proceed, Ecology may consider factors including, but not limited to the:

o Nature of previous work performed. o Current and past relationships between the verification body, related entities, and

its subcontractors with the facility and related entities. o Cost of the verification services to be performed.

• These factors when considered in combination demonstrate an acceptable level of potential conflict of interest, Ecology will authorize the verification body to provide verification services.

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Notice of verification services

A notice of verification services must be submitted to Ecology before beginning verification services for a facility. The notice of verification services must include:

• A list of staff designated to provide verification services as part of the verification team. o Name of each designated staff member, the lead verifier, and all subcontractors. o Description of roles and responsibilities each member will have during

verification. • Documentation that the verifiers have the skills required to provide verification services

for the reporting facility. o When required, show that the verification team includes at least one member

certified as a sector specialist. • General information on the facility including:

o Name of facility and other locations that will be subject to verification services. o Facility contact name, address, telephone number, and e-mail address. o Industry sector and NAICS code for the reporting facility. o On-site visit date(s), if required, with facility address and contact info. o A brief description of expected verification services, including expected

completion date. If any of the information in the notice of services changes after the notice is submitted to Ecology, the verification body must notify Ecology and submit an updated conflict of interest self-evaluation. The form needs to be submitted as soon as the change is made and at least five working days before the verification services start date. If information in the notice of services changes during the verification process, the verification body must notify Ecology. In either instance, the conflict of interest must be reevaluated and Ecology must approve changes in writing. In the event that the conflict of interest statement and the notice of verification services are submitted together, verification services cannot begin until ten working days after Ecology provides written authorization to the verification body that the potential for conflict of interest is acceptable.

Verification services

Verification plan

The verification team must develop a verification plan based on: • Information from the facility including:

o Facility boundaries, operations, emissions sources, product data, and electricity or fuel transactions as applicable.

o Training or qualifications of personnel involved in developing the emissions data report.

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o Methodologies used to quantify and report greenhouse gas emissions, product data, fuel transactions, and associated data.

o Information about the data management system used to track greenhouse gas emissions, product data, fuel transactions, and associated data.

o Previous verification reports. • Timing of verification services including:

o Dates of proposed meetings and interviews with reporting facility personnel. o Dates of proposed site visits. o Types of proposed document and data reviews. o Expected date for completing verification services.

Planning meetings with facility

The verification team must discuss with the facility the scope of the verification services and request information and documents needed for initial verification services. The verification team must review the documents submitted and plan and conduct a review of original documents and supporting data for the emissions data report.

Site visit(s)

At least one certified verifier from the verification team, including the sector specific verifier, if applicable, must make at least one site visit, during each year full verification is required. If the facility is a supplier of petroleum products or of natural gas and natural gas liquids, the third-party verifier must visit the headquarters or other location of central data management. During the site visit, the third-party verifier must:

• Confirm that all applicable emissions are included in the annual GHG report. • Check that all sources specified in the annual GHG report are identified appropriately. • Review and understand the data management systems used by the owners or operators to

track, quantify, and report GHG emissions and, when applicable, product data and fuel transactions. The third-party verifier must evaluate the uncertainty and effectiveness of these systems.

• Interview key personnel. • Make direct observations of equipment for data sources and equipment supplying data for

sources determined to be high risk. • Assess conformance with measurement accuracy, data capture, and missing data

substitution requirements. • Review financial transactions to confirm fuel, feedstock, and product data, and

confirming the complete and accurate reporting of required data such as facility fuel suppliers, fuel quantities delivered, and if fuel was received directly from an interstate pipeline.

Review of reporter’s operations, product data, emissions and other information

The verification team must review facility operations to identify applicable GHG emissions sources and product data. This must include a review of the emissions inventory and each type of emission source to ensure that all covered sources are properly included in the emissions data

14

report. This must also include a review of the product data to ensure that all covered product data are included in the emissions data report. The verification team must also ensure that the reported current NAICS code(s) accurately represents the activities.

Sampling plan

The verification team must develop a sampling plan that: • Is based on a strategic analysis developed from document reviews and interviews to

assess the likely nature, scale and complexity of the verification services for a facility. The analysis must review the inputs for the development of the submitted emissions data report, the rigor and appropriateness of data management systems, and the coordination within the facility’s organization to manage the operation and maintenance of equipment and systems used to develop emissions data reports.

• Includes a ranking of emissions sources by amount of contribution to total CO2e emissions for the facility, and a ranking of emissions sources with the largest calculation uncertainty. The verification team must also include a ranking of the product data by units specified in the appropriate section of this article and a ranking of the product data with the largest uncertainty. As applicable and deemed appropriate by the verification team, fuel transactions must also be ranked or evaluated relative to the amount of fuel exchanged and uncertainties that may apply to data provided by the facility.

• Includes a qualitative narrative of uncertainty risk assessment in the following areas: o Data acquisition equipment. o Data sampling and frequency. o Data processing and tracking. o Emissions calculations. o Product data. o Data reporting. o Management policies or practices in developing emissions data reports.

After completing the analyses, the verification team must include in the sampling plan a list of the following:

• Emissions sources, product data, and/or transactions that will be targeted for document reviews, and data checks, and an explanation of why they were chosen.

• Methods used to conduct data checks for each source, product data, or transaction. • A summary of the information analyzed in the data checks and document reviews

conducted for each emissions source, product data, or transaction targeted.

The sampling plan list must be updated and finalized prior to the completion of verification services. The final sampling plan must describe in detail how the identified risks were addressed during the verification. The verification team must revise the sampling plan to describe tasks completed by the verification team as information becomes available and potential issues emerge with material misstatement or nonconformance with the requirements of this article.

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Data checks

To determine the reliability of the submitted emissions data report, the verification team must use data checks. Such data checks must focus on the largest and most uncertain estimates of emissions, product data, and fuel transactions. The verification team must:

• Use data checks to ensure that the appropriate methodologies and emission factors have been applied for the emissions sources and fuel transactions.

• Use data checks to ensure the accuracy of covered product data. • Choose data checks for emissions sources, product data, and fuel transactions data, as

applicable, based on their relative contributions to emissions and the associated risks of contributing to material misstatement or nonconformance, as indicated in the sampling plan.

• Use professional judgment in the number of data checks required for the team to conclude with reasonable assurance whether the total reported covered emissions and covered product data are free of material misstatement. At a minimum, data checks must include:

o Tracing data in the emissions data report to its origin. o Looking at the process for data compilation and collection. o Recalculating emission estimates to check original calculations. o Reviewing calculation methodologies used by the facility for conformance with

this article. o Reviewing meter and fuel analytical instrumentation measurement accuracy and

calibration. • Review the following information when conducting data checks for product data, if

applicable: o Product inventory and stock records. o Product sales records and contracts. o Onsite and offsite product delivery records. o Purchase and delivery records for inputs to product(s). o Product measurement records. o Other information or documentation that provides financial or direct measurement

information about total product(s) reported. • Ensure, through the use of data checks, that there is reasonable assurance that the

emissions data report meets the requirements of WAC 173-441 and WAC 173-442. • Confirm the following information is correctly reported, if applicable:

o For facilities that combust natural gas, natural gas supplier customer account number, service account identification number, or other primary account identifier(s).

o For suppliers of natural gas, end-user names, account identification numbers, and natural gas deliveries in MMBtu.

o Energy generation and disposition information. • Compare its own calculated results with the reported data in order to confirm the extent

and impact of omissions and errors. o Discrepancies must be investigated. o The comparison of data checks must also include a narrative to indicate:

Sources, product data, and transactions were checked.

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Types and quantity of data that were evaluated for each source, product data, and transaction.

Percentage of reported emissions covered by the data checks. Percentage of product data covered by the data checks. Any separate discrepancies that were identified in emission data or

product data.

GHG emissions report corrections

Owners or operators subject to GHG emissions report verification must correct errors in their annual GHG report. Corrections are required if errors are identified by the third-party verifier, the owner or operator, Ecology, or the EPA. The owner or operator must fix all correctable errors that affect covered emissions, non-covered emissions, or covered product data in the submitted emissions data report, and submit a revised emissions data report to Ecology. Failure to do so will result in an adverse verification statement. Failure to fix correctable errors that do not affect covered emissions, non-covered emissions, or covered product data represents a nonconformance with WAC 173-441 but does not, absent other errors, result in an adverse verification statement. Corrections to the annual GHG report or verification report must be submitted to Ecology no later than forty-five days after discovery of the error.

Findings

To verify that the emissions data report is free of material misstatements, the verification team must make its own determination of emissions for checked sources and product data. The verification team must also determine whether there is reasonable assurance that the emissions data report does not contain a material misstatement in GHG emissions reported for the facility, on a CO2e basis and/or a material misstatement in product data for the facility, using the units required by WAC 173-441. To assess conformance, the verification team must review the methods and factors used to develop the emissions data report for adherence to the requirements of WAC 173-441 and ensure that other requirements of WAC 173-441 are met.

Log of issues

The verification team must keep a log of issues identified in the course of verification activities that may affect determinations of material misstatement and nonconformance. The issues log must identify the regulatory section related to the nonconformance, if applicable, and indicate if the issues were corrected by the facility prior to completing the verification. Any other concerns that the verification team has with the preparation of the emissions data report must be documented in the issues log. The log of issues must indicate whether each issue has a potential effect on material misstatement, nonconformance, or both.

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Material misstatement assessment

Assessments of material misstatement are conducted independently on total reported covered emissions and total reported covered product data. In assessing whether an emissions data report contains a material misstatement, the verification team must separately determine whether the total reported covered emissions and total reported covered product data contain a material misstatement using the following equation(s):

% 𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒 (𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒) = |𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑|+|𝑜𝑜𝑜𝑜𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑜𝑜𝑑𝑑𝑑𝑑|+|𝑜𝑜𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑜𝑜𝑑𝑑𝑚𝑚𝑑𝑑𝑑𝑑𝑚𝑚|𝑚𝑚𝑜𝑜𝑚𝑚𝑑𝑑𝑡𝑡 𝑑𝑑𝑑𝑑𝑑𝑑𝑜𝑜𝑑𝑑𝑚𝑚𝑑𝑑𝑑𝑑 𝑑𝑑𝑜𝑜𝑐𝑐𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑 𝑑𝑑𝑜𝑜𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑜𝑜𝑑𝑑𝑑𝑑

× 100 % 𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒 (𝑝𝑝𝑒𝑒𝑒𝑒𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑝𝑝𝑑𝑑𝑝𝑝𝑑𝑑) = |𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑|+|𝑜𝑜𝑜𝑜𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑜𝑜𝑑𝑑𝑑𝑑|+|𝑜𝑜𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑜𝑜𝑑𝑑𝑚𝑚𝑑𝑑𝑑𝑑𝑚𝑚|

𝑚𝑚𝑜𝑜𝑚𝑚𝑑𝑑𝑡𝑡 𝑑𝑑𝑜𝑜𝑐𝑐𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑 𝑑𝑑𝑑𝑑𝑜𝑜𝑑𝑑𝑝𝑝𝑑𝑑𝑚𝑚 𝑑𝑑𝑑𝑑𝑚𝑚𝑑𝑑× 100

The absolute value of any discrepancy, omission, or misreporting, or combination of the three, must be less than five percent of total reported covered emissions (metric tons of CO2e) or verifier cannot be reasonably assured that the annual GHG report is free of material misstatement and the verification will result in an adverse verification statement.

When evaluating material misstatement, verifiers must deem correctly substituted missing data to be accurate, regardless of the amount of missing data. The omissions variable does not apply to excluded covered product data, such that excluded covered product data are not considered in the material misstatement assessment.

Review of missing data substitution

If a source selected for a data check was affected by a loss of data used to calculate GHG emissions for the data year, the verification team must confirm that the reported emissions for that source were calculated using the applicable missing data procedures, or that an approved interim data collection procedure was used for the source. The verifier must note the date, time and source of any missing data substitutions discovered during the course of verification in the verification report.

• If 20% or less of any single data element used to calculate emissions is missing, and emissions are correctly calculated using the missing data requirements, these emissions will be considered accurate and as meeting the reporting requirements for that source.

• If greater than 20% of any single data element used to calculate emissions is missing or any combination of data elements is missing that would result in more than 5% of a facility’s emissions being calculated using missing data requirements, the verifier must include a finding of nonconformance with the required emissions calculation methodology as part of the verification statement.

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Completion of verification services

Verification report

The verification body must provide an annual GHG emissions verification report to the facility and Ecology. Full and less intensive verification reports must be in a format specified by Ecology and contain:

• Documentation identifying the facility reporting emissions and the scope of emissions verified in the report.

• Documentation identifying the third-party verifier, including the names, roles, and sector specific qualifications (if any) of all individuals working on the verification report.

• Documentation demonstrating and certifying that the following requirements have been met:

o An owner or operator must not use the same third-party verifier (either body or individuals) for a period of more than six consecutive years. The owner or operator must wait at least three years before using the previous third-party verifier to verify their annual GHG reports.

o An owner or operator and third-party verifier must certify that there is not a conflict of interest in verifying the annual GHG report.

• A verification plan that details the data and methodologies used to verify the annual GHG report and schedule describing when the verification services occurred. This must include a sampling plan that describes how the third-party verifier prioritized which emissions to verify and a summary of the data checks used to determine the reliability of the annual GHG report. Full verification requires a more complete sampling of data and additional data checks than less intensive verification.

• Documentation of the third-party verifier's review of facility operations to identify applicable GHG emissions sources and product data. Any applicable GHG emissions sources or product data not included in the annual GHG report must be identified. The third-party verifier must also ensure that the reported NAICS code(s) accurately represents the activities on-site.

• Documentation of any corrections made to the annual GHG report. • Documentation supporting the third-party verifiers' findings evaluating if the annual

GHG report is compliant with the following requirements. This documentation must include a log of issues identified in the course of verification, their potential impact on the quality of the annual GHG report, and their resolution.

o Annual GHG reports must be consistent with the relevant requirements and methods in WAC 173-441.

o The absolute value of any discrepancy, omission, or misreporting, or combination of the three, must be less than five percent of total reported covered emissions (metric tons of CO2e) or the verification will result in an adverse verification statement. This standard also separately applies to covered product data in the annual GHG report.

• The individuals conducting the third-party verification must certify that the verification report is true, accurate, and complete to the best of their knowledge and belief.

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Full verification reports must also include information about the required on-site visit, including date(s) and a description of the verification services conducted on-site.

Internal review by independent verifier

The independent reviewer serves as a final check on the verification team’s work to identify any significant concerns, including errors in:

• Planning. • Data sampling. • Judgment by the verification team that are related to the draft verification statement.

The independent reviewer must maintain independence from the verification services by not making specific recommendations about how the verification services should be conducted. The independent reviewer will review documents applicable to the verification services provided, and identify any failure to comply with requirements of this article or with the verification body’s internal policies and procedures for providing verification services. The independent reviewer must agree with the verification findings before the verification statement(s) can be issued. An independent reviewer is a lead verifier within a verification body who has not participated in conducting verification services for a facility, offset project developer, or authorized project designee for the current reporting year who provides an independent review of verification services rendered to the facility. The independent reviewer is not required to meet the requirements for a sector specific verifier. A verification body may not use a subcontractor as the independent reviewer.

Verification statement

The verification body must provide an annual GHG emissions verification statement and product data verification statement to the facility and Ecology, attesting whether the verification body has found the submitted report free of material misstatements, and whether the report is in conformance with the requirements of WAC 173-441 and WAC 173-442. Ecology retains full authority in determining if an annual GHG report contains a discrepancy, omission, or misreporting, or any combination of the three that impacts the verification status of the annual GHG report. Ecology may issue an adverse verification statement for an annual GHG report even if the annual GHG report has received a positive verification statement from the third-party verifier. Ecology may also issue an adverse verification statement for:

• Failure to submit a complete annual GHG report in a timely manner. • Failure to complete third-party verification. • Other forms of noncompliance.

Changing verifier or verification body

An owner or operator must not use the same third-party verifier (either body or individuals) for a period of more than six consecutive years. The owner or operator must wait at least three years before using the previous third-party verifier to verify their annual GHG reports.

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The six year period begins on the date the facility first contracts for any third-party verifications, validations, or audits under any protocols, for the scope of activities or operations for the emissions data report, and ends on the date the final verification statement is submitted. The six year limit does not reset upon a change in facility ownership or operational control.

Conflicts of interest

The following conflict of interest provisions apply to verification bodies, lead verifiers, and verifiers certified by Ecology to perform verification services for facilities. Any individual person or company that is hired by a facility to contract with a verification body on behalf of the facility is subject to the conflict of interest assessment. In such instances, the verification body must assess the potential conflict of interest between itself and the contracting entity as well as between itself and the facility, and must also address the potential conflict of interest between the contracting entity and the facility, including a written assessment provided and signed by the contracting entity. Conflict of interest is reviewed at the facility operator level. The operator is the entity having authority to implement operational, environmental, health and safety policies. Depending on the organization, operational control may be at the facility or corporate level. The potential for a conflict of interest must be deemed to be high when:

• The third-party verifier and facility share any management staff or board of directors membership, or any of the senior management staff of the facility have been employed by the third-party verifier, or vice versa, within the previous five years.

• Any employee of the third-party verifier, or any employee of a related entity, or a subcontractor who is a member of the verification team has provided services to the facility within the previous five years, except verification services within the time periods in which the facility is allowed to use the same verification body.

• Any staff member of the third-party verifier provides any type of incentive to a facility to secure a verification services contract.

The potential for a conflict of interest is deemed low when: • No potential for a high or medium conflict of interest is found. • Verification services are provided within the allowed six year period or after a three year

break.

The potential for a conflict of interest is deemed medium when: • There are any instances of personal or familial relationships between the members of the

verification body and management or staff of the facility. • Verification team member provided insignificant services to the facility within the last

five years.

Conflict of interest mitigation plan

If a verification body identifies a medium potential for conflict of interest and intends to provide verification services for the facility, the verification body must submit, in addition to the conflict of interest self-evaluation, a plan to avoid, neutralize, or mitigate the potential conflict of interest situation. At a minimum, the conflict of interest mitigation plan must include:

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• A demonstration that any individuals with potential conflicts have been removed and insulated from the project.

• An explanation of changes to the organizational structure or verification body to remove the potential conflict of interest. A demonstration that any unit with potential conflicts has been divested or moved into an independent entity or any subcontractor with potential conflicts has been removed.

• Any other circumstance that specifically addresses other sources for potential conflict of interest.

Ecology will evaluate the conflict of interest mitigation plan and determine whether verification services may continue.

Monitoring conflict of interest situations

If the potential for a conflict of interest arises after verification services have begun, the verification body must monitor and immediately disclose the information to Ecology in writing. This disclosure must include a description of actions that the verification body has taken or proposes to take to avoid, neutralize, or mitigate the potential for a conflict of interest. The verification body must continue to monitor arrangements or relationships that may be present for a period of one year after the completion of verification services. During that period, within 30 days of the verification body or a verification team member entering into a contract with the facility or related entity for which the body has provided verification services, the verification body must notify Ecology of the contract and the nature of the work to be performed, and revenue received. Ecology will determine the level of conflict, if the facility must re-verify their emissions data report, and if certification revocation is warranted. The verification body must notify Ecology, within 30 days, of any emerging conflicts of interest while verification services are being provided.

• If Ecology determines that a disclosed emerging potential conflict is medium risk and this risk can be mitigated, the verification body is deemed to have met the conflict of interest requirements and can continue to provide verification services to the facility and will not be subject to suspension or revocation of certification.

• If Ecology determines that a disclosed emerging potential conflict is medium or high risk and this risk cannot be mitigated, the verification body will not be able to continue to provide verification services to the facility, and may be subject to suspension or revocation of certification.

The verification body must report to Ecology any changes in its organizational structure, including mergers, acquisitions, or divestitures, for one year after completion of verification services. Ecology may invalidate a verification finding if a potential conflict of interest has arisen for a member of the verification team. In such a case, the facility must be provided 90 days to complete re-verification.

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If the verification body or its subcontractor(s) are found to have violated the conflict of interest requirements of this article, Ecology may rescind certification of the body, its verifier staff, or its subcontractor(s).

Recordkeeping

WAC 173-441-050(6) requires that certain records are retained. All required records must be retained for at least three years from the date of submission of the annual GHG report for the reporting year in which the record was generated. Within five working days of a written request by Ecology, the third-party verifier (if applicable) must provide available information about verification services and correspondence related to the emissions data. Ecology's determinations of the verification status of each report are public information. All confidential data used in the verification process will remain confidential. The owner or operator must maintain documentation to support revisions made to the initial emissions data report. Documentation for all emissions data report submittals must be retained by the reporting entity for ten years.

Deadlines

The third-party verifier must submit a verification report and verification statement to Ecology no later than one hundred fifty days after the GHG emission report submission due date for the facility for GHG emissions occurring in the previous calendar year.

Table 1. Facilities required to report emissions to both Ecology and EPA

Date Deadline

January 1, 2017 First compliance period begins

March 31, 2017 2016 GHG emissions report

January 30, 2018 Ecology issues emission reduction regulatory order

April 2, 2018 2017 GHG emissions report

August 30, 2018 Verification of 2017 GHG emissions report





December 31, 2020 Submission and verification of compliance report

January 1, 2020 Second compliance period begins

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Table 2. Transportation fuel suppliers and facilities only required to report to Ecology

Date Deadline

January 1, 2017 First compliance period begins

October 31, 2017 2016 GHG emissions report

January 30, 2018 Ecology issues emission reduction regulatory order


March 30, 2019 Verification of 2017 GHG emissions report





July 28, 2021 Submission and verification of compliance report

January 1, 2020 Second compliance period begins

Documents

Clean Air Rule: Greenhouse Gas Emissions Reporting ... · Clean Air Rule: Greenhouse Gas Emissions Reporting . Verification Program . Manual . September 2017 . Publication no. 17-02-011