1 TABLE OF CONTENTS

CHAPTER 1 LEGAL

................................ ................................ ................................ ................... 2
1.1 Authority to regulate carbon dioxide

................................ ................................ .................... 2
1.2 Authority to regulate EGUs

................................ ................................ ................................ . 63
1.3 Authority to regulate states' energy markets

................................ ................................ ... 178
1.4 Combined categories and codification in the CFR

................................ .......................... 232
1.5 Affected sources and applicability

................................ ................................ ..................... 244

1.5.1 EGU sources

................................ ................................ ................................ ..................... 247

1.5.2 Non

- EGU sources

................................ ................................ ................................ ............. 247
1.5.3 Affected entities under Building Block 2

................................ ................................ ....... 322
1.5.4 Affected entities under Building Block 3

................................ ................................ ....... 328
1.5.5 Affected entities under Building Block 4

................................ ................................ ....... 332

1.5.6 Other

................................ ................................ ................................ ................................ . 3372 CHAPTER 1 LEGAL

1.1 AUTHORITY TO REGULAT E CARBON DIOXIDE

Comment 1 : EPA authority to regulate GHG

Commenter s stated that EPA's proposals for major expansions of state energy efficiency and renewable energy programs interfere with traditional state authority in energy planning and appear to be well beyond the agency's authority under the CAA. The commenter s state d that the Supreme Court's recent decision on the GHG permitting rule contains strong cautionary language that the court would take a skeptical view of an overly expansive interpretation of EPA's authority to regulate GHG.

Response 1 : We disagree with this comment. In section V. of the preamble, we explain that the EPA’s approach in this rulemaking does not interfere with traditional state authority in energy planning and is not inconsistent with the Supreme Court’s recent decision on the GHG permitting rule.

Comment 2 : Commenters stated that EPA has the legal mandate and the authority to limit the emission of GHG and it certainly has the moral responsibility to do so. Commenter s state d that first, th e Supreme Court has made it quite clear that EPA does have authority to regulate C O 2 emissions and greenhouse gas emissions under the Clean Air Act. But , the commenters added, the Supreme Court has not given EPA a roving mandate to do whatever it thinks be st. Commenters stated that in a recent case the Supreme Court again reminded EPA that anything it does to reduce greenhouse gases must fit within the statutory structure. Commenters stated t he provision that EPA is now relying on is very clearly designed t o get individual plants to reduce their emission rates. That's the way it's been used for almost 40 years. Commenters stated t hat's the only way to read the statute. Commenters added that by adopting this very aggressive and expansive interpretation of its own power the courts are almost certainly likely to strike that
down. Commenters stated that people will spend an enormous amount of time and effort trying to figure out and comment on this proposal , an d at the end of the day it is highly unlikely that it
will ever be implemented. Commenter s state d the Supreme Court has upheld the authority of the EPA to regulate carbon emissions on three separate occasions since 2007. Commenter s state d the
Cl ean Power Plan is a major policy decision, and ideally, EPA woul d have a legislature addressing that issue. Nonetheless, it's clear the EPA has the authority to regulate greenhouse gases and pollutants under the Clean Air Act and under the Massachusetts versus EPA case since the endangerment filing in December, 2009. C ommenter s state d they support the Environmental Protection Agency's authority to implement standards that limit carbon pollution from existing
sources. Commenter s state d the EPA is well within its right to take such action. It can set standards to reduce carbon pollution from power plants. Commenter s state d that they support EPA's authority to regulate greenhouse gases under the Clean Air Act, as determined by the3 Supreme Court in Massachusetts v. EPA (2007) and subsequently affirmed in AEP v. Connecticut (2011).

Response 2 : Some of these statements are supportive of the rule and we appreciate them. We disagree with commenters’ statement s that section 111(d) is limited t o getting individual sources to reduce their emission rate. We explain in section V. of the preamble our authority under section 111(d) and (a)(1) to include building blocks 2 and 3 as part of the BSER. We also disagree with commenters’ statements that EPA should recommend a preferred path to meet the emission guidelines, such as a revenue neutral carbon tax. The states’ obligation is simply to meet the emission guidelines, and they enjoy broad discretion in choosing the means to do so.

Comment 3 : Commente rs state d that EPA has authority to regulate air pollution, including
GHG. Commenters cite d Massachusetts v. EPA, and c ommenter s state d that after
that decision, it was determined that the EPA has the authority under the Clean Air Act (CAA) to regulate gre enhouse gases, including CO2. Commenter s continue d , stating that pursuant to the Supreme Court's ruling of Massachusetts v. EPA, it is clear that the EPA has the authority to regulate greenhouse gases since they fit well within the CAA's definition of an "air pollutant."
Commenters added a number of States, including Massachusetts, petitioned the EPA to begin regulating CO2 and other greenhouse gases because they argued climate change was a problem likely to endanger the public health. However, commenters stated, the EPA contended that they lacked the authority to regulate greenhouse gases because they were not pollutants as defined
under the CAA. Further, commenters stated the EPA argued that even if they did have the authority to regulate greenhouse gasse s, it was within the EPA's discretion to choose which pollutants to regulate, and those they chose not to. Finally, commenters stated, the EPA argued that the Petitioners lacked standing to sue because they could not show that greenhouse gases
had harmed t hem. Commenters stated d espite the EPA's assertions, the Supreme Court held that Massachusetts did have standing because, as a sovereign they had a special duty to protect their
citizens. Additionally, the commenters added, the Supreme Court found that the Clean Air Act does indeed give the EPA the authority to regulate greenhouse gases and greenhouse gases fit well within the CAA's "capacious definition of air pollutant"(127 S. Ct. 1438 (2007)).

Commenters state d that EPA has the legal authority to regulat e GHG emissions, explaining that Massachusetts v. EPA (2007) SCOTUS directs EPA to determine whether GHGs endanger public health and welfare, and if so, to regulate them pursuant to the Clean Air Act; Endangerment Finding (2009); Supreme Court has upheld E PA's authority and obligation to regulate GHGs pursuant to the Clean Air Act in every subsequent challenge to date.

Response 3 : These comments are supportive of this rule and we appreciate them.

Comment 4 : Commenter s state d that the Clean Air Act provide s a comprehensive scheme for regulating air pollutants from stationary sources. See So. Coast Air Quality Mgmt. Dist. v. EPA, 472 F.3d 882, 886 (D.C. Cir. 2006). Section 111(d) of the Act, 42 U.S.C. 7411(d), plays an important role by enabling EPA and stat es to control existing

- source pollution not regulated under the National Ambient Air Quality Standards (NAAQS) program (sections 108

- 110, 424 U.S.C. 7408

- 7410) or the National Emissions Standards for Hazardous Air Pollutants (NESHAP) program (section 112, i d. 7412). Under this scheme, commenters stated, EPA must regulate existing power plant CO2 emissions under section 111(d) of the Act because (1) such emissions are not regulated as a NAAQS pollutant or as a hazardous air pollutant; and (2) EPA has moved
fo rward with regulating CO2 emissions from new power plants. Commenter s remark ed that

s ome critics of the Proposed Rule contend that EPA lacks the authority under section 111(d) of the Act to regulate non

- hazardous pollutants (such as CO2) from power plants because EPA is regulating hazardous pollutants (such as mercury) from power plants under a section 112. (See, e.g., Pet. for Review at 1, 23, 28, West Virginia et al. v. EPA, No. 14

- 1146 (D.C. Cir. Aug. 1, 2014); see also Br. for Amici West Virginia et al. at 4

- 15, In Re: Murray Energy Corp., No. 14

- 1112 (D.C. Cir. June 25, 014); see also, e.g., William J. Haun, The Clean Air Act as an Obstacle to the Environmental Protection Agency's Anticipated Attempt to Regulate Greenhouse Gas Emissions from Existing Po wer Plants, The Federalist Soc'y (Mar. 2013); Brian H. Potts, The President's Climate Plan for Power Plants Won't Significantly Lower Emissions, 31 Yale J. Reg. Online 1, 9 (Aug. 22, 2013). Commenters stated n ot only does such an interpretation defy common sense, it is based on a reading of only part of the 1990 amendments to section 111(d).
Commenters stated t he flawed nature of this incomplete reading is further demonstrated by the fact that it effectively wo uld nullify section 111(d), given that section 112 regulates emissions of hazardous pollutants from over one hundred source categories. Even the language these critics rely on, when read in proper context, supports EPA's authority to promulgate the Clean P ower Rule. See Whitman v. Am. Trucking Ass'n, 531 U.S. 457, 471 (2001) (concluding Clean Air Act provision unambiguous in light of statutory and historical context); see also, e.g., Zuni Pub. Sch. Dist. No. 89 v. Dep't of Educ., 550 U.S. 81, 89

- 100 (2007) (considering legislative history and purpose of statute to discern legislative intent)." A. A Proper Interpretation of the Statute Requires Giving Effect to Both of the 1990 Amendments to Section 111(d). Commenter s state d that when Congress amended the Cle an Air Act in 1990, it enacted two differently worded amendments to section 111(d)

- including one that clearly authorizes the regulation proposed here.
Commenters stated b oth amendments appear in the Statutes at Large, but the U.S. Code language erroneously does not reflect the fact that two amendments were enacted into law. Commenters
stated EPA's proposal to regulate CO2 from existing power plants is lawful under the 1990 amendments, as enacted. Commenters stated u nderstanding the two amendments requires a brief background on section 111(d)'s place in the Clean Air Act's comprehensive scheme. Commenters
stated Section 111(d) is one of the Act's three primary avenues to regulate existing stationary

sources. Commenters stated t he two other avenues

- the NAAQS o f section 108 and 110; and the
hazardous

- air

- pollutants program of section 112

- address emissions of certain listed pollutants. Commenters stated Section 111(d), by contrast, more broadly authorizes EPA to establish standards for any emissions from existing sources that endanger public health or welfare but that are not regulated under the other two programs. (Section 111(b) mandates standards for new and modified sources, and section 111(d) mandates standards for existing
sources if those standards "would a pply if [the existing sources] were a new source." 42 U.S.C. 7411(b), (d).) Thus, commenters added, these provisions collectively "establish[] a comprehensive program for controlling and improving the nation's air quality." See Luminant
Generation Co. v. E PA, 675 F.3d 917, 921 (5th Cir. 2012) (internal quotation omitted).5 Commenters stated b efore the 1990 amendments, section 111(d)(1) required that state plans address "any air pollutant which is not included on a list published under Section 7408(a)," i.e., NAAQS, "or 7412(b)(1)(A) of this title," a cross

- reference to the previous version of section
112's hazardous

- air

- pollutants program. See 42 U.S.C. 7411(d) (West 1977). Commenters stated Section 111(d) thus functioned to mandate the regulation of air poll utants from existing stationary sources that were not otherwise covered by the NAAQS or the hazardous

- pollutants

program. Commenters stated i n 1990, after EPA's delays in listing (and thereby regulating) hazardous air pollutants "proved to be disappointing ," Sierra Club v. EPA, 353 F.3d 976, 979

- 80 (D.C. Cir. 2004), Congress extensively amended section 112 to change its regulatory approach. Rather than relying on EPA's listing of hazardous air pollutants to trigger their regulation under
section 112

- somethi ng EPA had rarely done

- Congress instead listed 189 hazardous air pollutants itself and directed EPA to list categories of major sources and area sources for each of these pollutants and then to establish emission standards for each source category. 42 U.S. C. 7412(b)(1), (c)(1), (d)(1). (EPA retained the authority to list additional pollutants for regulation under section 112, either on its own or in response to a petition to modify the list. See 42 U.S.C. 7412(b)(2), (3).) Commenters stated Congress amended section 111(d)'s preexisting reference to section 112 to conform it to these structural changes. However, commenter stated, different conforming language from the House and Senate bills amending section 111(d) was included in the final legislation without being reconciled in conference. Commenters stated b oth amendments were signed into law by the President and appear in the Statutes at Large, but only the House amendment appears in the U.S. Code. Commenters stated t he Senate amendment simply replaces the former cross

- reference to section 7412(b)(1)(A), which was eliminated by the 1990 amendments, with a new cross

- reference to that section's replacement, section 7412(b): it thus requires section 111(d) standards for "any air pollutant (i) for which air qual ity criteria have not been issued or which is not included on a list published under section 108(a) or section 112(b)." Pub. L. No. 101

- 549, S. 302(a), 104 Stat. 2399, 2574 (1990). Thus, commenters stated, the Senate amendment preserves section 111(d)'s lo ngstanding role as a source of regulation for pollutants (such as CO2) that are not otherwise regulated under the NAAQS or the hazardous

air

- pollutants program. Commenters stated t he House amendment replaces the section 112 cross

reference with different l anguage: it requires section 111(d) standards for "any air pollutant (i) for which air quality criteria have not been issued or which is not included on a list published under section 108(a) or emitted from a source category which is regulated under sectio n 112 of
this title." Pub. L. No. 101

- 549, S. 108(g), 104 Stat. 2399, 2467 (1990). As explained below,
commenters stated that language, like the Senate amendment, can be read to preserve section 111(d)'s application to non

- NAAQS and non

- hazardous air pollu tants such as CO2. See infra
Section II.C. Commenters stated that even if the House amendment were interpreted in the way opponents have urged, that language would not control. Commenters stated b ecause both amendments were enacted into law, it is necessar y to consider the effect of the Senate amendment, which, as EPA recognized in the Proposed Rule, would indisputably authorize the Rule. See 79 Fed. Reg. at 34,844; see also Citizens to Save Spencer County v. EPA, 600 F.2d 844, 872 (D.C. Cir. 1979) (where C ongress "drew upon two bills originating in different Houses and containing provisions that, when combined, were inconsistent in respects never reconciled in conference...it was the greater wisdom for [EPA] to devise a middle course...to give maximum6 possi ble effect to both"). Commenters stated i t is well

- established that the text of the Statutes at Large (which contains both amendments enacted by Congress and signed by the President) governs when it is inconsistent with the U.S. Code. United States Nat'l B ank of Or. v. Indep. Ins. Agents of Am., 508 U.S. 439, 448 (1993) ("[D]espite its omission from the Code [a provision] remains on the books if the Statutes at Large so dictates.").(See also United States v. Welden, 377 U.S. 95, 98 n.4 (1964), and sources c ited (unless codification enacted into positive law, where language of Statutes at Large and U.S. Code are inconsistent, "recourse must be had to the original statutes themselves" and discrepancy in U.S. Code "should be given no weight").)
Commenters state d t he fact that the Office of Law Revision Counsel simply was unable to execute the Senate amendment because the House amendment, which appeared earlier in the legislation, had already resulted in striking the same text, (The House Amendment appears one
hu ndred and seven pages before the Senate amendment in the 1990 legislation. See Pub. L. No.
101

- 549, S. 108, 302(a), 104 Stat. 2399, 2467, 2574 (1990)) does not change the longstanding principle of law that the Statutes of Large, not the U.S. Code, controls when the text of the two differs. Additionally, the commenters stated, there is no basis to treat one amendment as more substantive than another. As explained above, the commenters stated the substantive changes Congress made in 1990 were to section 112, not to section 111(d). Commenters stated t he amendments at issue here alter section 111(d)'s cross

- reference to section 112 in response to the structural changes to section 112 , a nd both amendments appeared under similar catch

- all headings in the House Conference Report, adopted by the House and Senate (H.R. Conf. Rep.
101

- 952, at 50, 122 (1990)): "Conforming Amendments" (Senate) and "Miscellaneous Guidance" (House). See Pub. L. No . 101

- 549, sections 108, 302(a), 104 Stat. 2399, 2467, 2574 (1990). Commenters added the legislative history indicates that Congress intended the Senate's amendment to section 111(d) to be in the final bill. Commenters stated that a fter the House
amended t he Senate's bill and deleted the Senate's seven "Conforming Amendments" (including the revision to section 111(d)), the Conference Committee added the Senate's conforming amendments back in to the final bill. Compare S. 1630, 101st Cong. (as passed by Hous e, May 23, 1990) with Pub. L. No. 101

- 549, section 302(a), 104 Stat. 2399, 2574 (1990). Thus, commenters stated, both the House amendment and Senate amendment are law and both authorize the Clean Power Rule EPA has proposed here. B. Public Policy, EPA's Lo ngstanding Practice, and Other Provisions of the Act Support an Interpretation of Section 111(d) That
Authorizes the Clean Power Rule. Commenter s note d that an interpretation that would prohibit regulation of CO2 from power plants and other existing statio nary sources under section 111(d)
would have far

- reaching consequences that cannot be reconciled with the Clean Air Act's broad protective purposes. Commenters stated s ources that emit hazardous air pollutants, and that thus could be regulated under sectio n 112, also emit a broad range of other pollutants, including CO2.
Commenters stated t he implication of a reading that precludes 111(d) regulation of any pollutant (here, CO2) that may be emitted from a 112(c)

- listed source category but is not actually

reg ulated under section 112 demonstrates the fallacy of such an interpretation: EPA would have to either choose to use section 112 to address dangers associated with power plant hazardous air pollutants (such as harm caused by eating mercury

- contaminated fish ) or to use section 111(d) to address the "serious and well recognized" climate

- change harms caused by CO2 emissions from power plants. See Massachusetts, 549 U.S. at 521; 79 Fed. Reg. at 34,833. Commenters stated7 that under such an interpretation it could not choose to do both. (Such an interpretation could have adverse public health and environmental impacts apart from hampering efforts to curb CO2 from the largest sources of that pollutant because EPA has used section 111(d) to regulate other harmful pol lutants, such as sulfuric acid mist and fluoride compounds, that are emitted from sources regulated under section 112. See infra, note 23.) Commenters stated i t makes no sense that Congress would have directed EPA to make such a choice in a statute designe d to protect public health and welfare. Commenters stated t he Act's principal purpose to "protect and enhance the quality of the Nation's air resources," 42 U.S.C. 7401(b)(1), would hardly be served if EPA were limited to regulating only one set of dangero us pollutants, but not another, from the most serious polluters in the country. In particular, commenters stated, such an interpretation would exclude the largest sources of CO2 from regulation under section 111(d) by virtue of the fact that
those sources

- such as power plants, petroleum refineries, and cement plants

- are already regulated under section 112 due to their emission of hazardous air pollutants. Commenters stated

t his new gap in regulation would undermine an obvious function of section 111(d) that the Supreme Court recognized in AEP v. Connecticut: namely, to "provide[] a means to seek limits on emissions of carbon dioxide from domestic power plants." 131 S. Ct. at 2537

- 38. Commenter
stated n othing in the legislative history of the 1990 amendments suggests that Congress intended such a radical result when it replaced section 111(d)'s cross

- reference to the hazardous

- air

pollutant program. Commenters stated i n both the House and the Senate, these minor changes to section 111(d) were made without any debate or discussion, strongly suggesting that the purpose of both amendments was to preserve section 111(d)'s role to fill the gap where emissions are unregulated under the other programs. Indeed, commenters stated, in compiling the legislative history of the 1990 amendments, the Congressional Research Service transcribed the Clean Air Act, as amended, by including both the House and Senate versions of the amendments to section 111(d) with the notation that the amendments are "duplicative" and simply use " different language [to] change the reference to section 112." A Legislative History of the Clean Air Act Amendments of 1990, vol. 1 at 46 & n.1 (1993). Commenters stated s ilence in legislative history accompanying a subtle legislative change indicates that Congress did not intend to alter the preexisting scheme significantly. See United States v. Neville, 82 F.3d 1101, 1105 (D.C. Cir. 1996).(See also Dir. of Revenue of Mo. v. CoBank ACB, 531 U.S. 316, 323 (2001) (declining to conclude conforming amendment s ubstantively altered states' taxing power "because there is no indication Congress intended to change the taxation of banks for cooperatives with the 1985 amendments"))

. Commenters added a s the Supreme Court has stated, Congress "does not...hide elephants in mouse

- holes." Whitman, 531 U.S. at 468. Thus, commenters stated, EPA's interpretation of section 111(d) properly rejects the "anomalous effect" of the reading proffered by the Proposed Rule's opponents, which would force EPA to select only one set of ha rmful pollutants to regulate based "simply on the fortuity that [these pollutants] share [] a source." Desert Citizens Against Pollution v. EPA, 699 F.3d 524, 527

- 28 (D.C. Cir. 2012) (rejecting petitioners' "linguistically possible" view of statute and uph olding EPA's interpretation).
Commenters stated r eading section 111(d) to permit regulation of CO2 from power plants, where CO2 emissions from power plants are not regulated under section 112, also is consistent with EPA's longstanding regulation (both bef ore and after the 1990 amendments) of source categories under section 111(d) and section 112.(See, e.g., 61 Fed. Reg. 9,905 (Mar. 12, 1996) & 40 C.F.R.8 pt. 63, subpt. AAAA (regulating landfills under section 111(d) for methane and non

- methane organic compo unds and under section 112 for vinyl chloride, ethyl benzene, toluene, and benzene); 42 Fed. Reg. 12,022 (Mar. 1, 1977) & 40 C.F.R. pt. 63, subpt. BB (regulating fluorides from phosphate fertilizer plants under section 111(d) and regulating hydrogen fluori de and other pollutants under section 112)) Commenters stated EPA's practice is supported by the plain language of other provisions of section 112 as amended in 1990, which further evidences Congress' understanding that different emissions from the same so urce categories could be regulated under both sections 111 and 112.(The D.C. Circuit in New Jersey v. EPA, 517 F.3d 574 (D.C. Cir. 2008), did not reach the question whether, if a source is listed under section 112, EPA lacks authority to regulate that sour ce under section 111(d). Instead, because the court determined that EPA's delisting of power plants from section 112 was improper, and "under EPA's own interpretation" it could not use section 111(d) to regulate mercury (a section 112

- listed hazardous air pollutant) from this section 112

- listed source category, the court concluded that the section 111(d) rule was invalid. Id. at 583.) For example, commenters stated, Congress directed EPA to keep its lists of source categories "consistent" between sections 1 11 and 112. 42 U.S.C. 7412(c)(1); see also id. 7412(d)(7) ("No emission standard or other requirement promulgated under this section shall be interpreted . . . to diminish or replace the requirements of a more stringent emission limitation or other applica ble requirement established pursuant to section 7411"). Commenters stated Congress' intent to avoid duplicative regulation is maintained fully by precluding the use of section 111(d) to regulate emissions from existing sources if those
same emissions are b eing regulated under section 112. Commenters stated Congress simply did not intend to sacrifice comprehensive public health protections by forgoing regulation of harmful
but non

- hazardous air pollutants from source categories that happen to also emit a haz ardous air pollutant. C ommenters stated t he House a mendment d oes n ot s trip EPA's a uthority to r egulate
CO2 e missions u nder Section 111(d). Commenter s stated that the House amendment is subject to multiple interpretations and therefore even viewed in isolat ion would not preclude regulation of CO2 from power plants. Commenters stated, i n light of the statutory context, it may be viewed as a shorthand way of preserving section 111(d)'s traditional role as a source of authority to regulate
emissions not covered by the NAAQS or the hazardous

- air

- pollutant programs. Commenters
stated f or sources subject to regulation under section 111(b), the House amendment requires performance standards: "for any existing source for any air pollutant (i) for which air quality

cr iteria have not been issued or which is not included on a list published under section 7408(a) or emitted from a source category which is regulated under section 7412 [i.e., the hazardous

- air

pollutants program]." Commenters stated t he phrase "which is reg ulated under section 7412" could be read as modifying both "any air pollutant" and "source category," thus referring to those emissions that are actually subject to section 112 emissions standards because (a) the pollutant is "regulated under section 7412"

- i.e. listed as a hazardous air pollutant, and (b) the source category for that pollutant is "regulated under section 112

- i.e. listed as a source category subject to section 112 regulation. Read this way, commenters added, the House amendment is a shorthan d way of

cross

- referencing section 112 to clarify that section 111(d) only precludes regulation of a pollutant from a specific source category (e.g., mercury from power plants) if those emissions are actually regulated under section 112.(So read, the House amendment would even authorize section 111(d) standards for listed hazardous air pollutants, so long as they are emitted from9 sources that are not regulated under section 112 for those pollutants.) Commenters stated

c onsistent with the purpose of the Act and 1990 amendments overall, this interpretation of the House amendment would preserve section 111(d)'s role in the Act's comprehensive scheme by authorizing standards for emissions not otherwise regulated under the Ac t, and there would be no bar to EPA's promulgation of CO2 standards under section 111(d). Indeed, commenters stated, any reading of section 111(d) that is consistent with its gap

- filling role in the Act's comprehensive scheme must authorize EPA to regulate CO2 emissions from existing power plants because those emissions are not otherwise regulated under the Act. Commenter s summarize d , stating that because CO2 emissions from existing power plants are not regulated as criteria pollutants or hazardous air poll utants, and because EPA has moved forward with regulation of power plant CO2 emissions under section 111(b), EPA has authority to promulgate the Proposed Rule.

Response 4 : EPA agrees that it has the authority to promulgate regulations addressing CO2
emiss ions from existing power plants under section 111(d). EPA’s discussion of this issue is in Section IV of the preamble.

Comment 5 : Commenters state d that in light of the recent Supreme Court decision in the UARG v EPA case, they question EPA's authority for the proposed Clean Power Plan, which would "bring about an enormous and transformative expansion in EPA's regulatory authority without clear congressional authorization."(UARG v. EPA et al., 134 S. Ct. at 2444.)

Commenter s state d EPA can regulate GHGs, b ut only within the narrow limits of what Congress
has authorized under the CAA. Commenter s explain ed that Congress created a number of different regulatory programs with carefully defined limit and some of these programs can be used to regulate GHGs, but EPA may only do so in a way that complies with the limits established by Congress. Commenter s add ed the recent Supreme Court decision makes this point quite clearly, citing on June 23, 2014, the Court issued its UARG v. EPA decision.

Response 5 : We disagre e with these comments. We discuss our authority to promulgate this rule, including why this rule is not inconsistent with the U.S. Supreme Court’s decision in UARG
v. EPA , in section I V of the preamble and Section XXII of the Legal Memo

.

Comment 6 : Commenter s state d that the industry interpretation of Section 111(d) is textually and logically flawed, and must be rejected. Commenter s explain ed that the structure and context of the 1990 Amendments signal the opposite concern: that EPA was not proceedin g diligently enough to limit harmful air pollution, and in rejecting an interpretation put forth by some industry advocates that would prevent EPA from regulating under section 111(d) all "HAP or

non

- HAP emitted from a source category regulated under secti on 112," EPA has affirmed that [s]uch a reading would be inconsistent with the general thrust of the 1990 amendments, which, on balance, reflects Congress' desire to require EPA to regulate more substances, not to eliminate EPA's ability to regulate large categories of pollutants like non

- HAP. Furthermore, c ommenter s add ed , EPA has historically regulated non

- HAP under section 111(d), even where those non

HAP were emitted from a source category actually regulated under section 112. See, e.g., 4010 CFR 62.1100 (California State Plan for Control of Fluoride Emissions from Existing Facilities at Phosphate Fertilizer Plants). Commenter s stated they do not believe that Congress sought to eliminate regulation for a large category of sources in the 1990 Amendments and our proposed interpretation of the two amendments to section 111(d) avoids this result. (70 Fed. Reg. 16,032 (Mar. 29, 2005) Commenter s continue d , stating that the Supreme Court has held that, where dealing with conflicting statutory provisions, it is app ropriate to adopt a construction that is
"more consonant with the functions sought to be served by the Act" and that does not "impute to Congress a purpose to paralyze with one hand what it sought to promote with the other." Clark v.
Uebersee Finanz

- Korp, 332 U.S. 480, 489 (1947); see also Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. Ruckelshaus, 719 F.2d 1159, 1165 (D.C.Cir.1983) ("A statute should ordinarily be read to effectuate its purposes rather than to frustrate them."). Here, commenters stated, the en ds that the Act seek to advance are the protection of public health and welfare from air pollution, a goal clearly disserved by an interpretation that would bar EPA from curbing harmful CO2 pollution under section 111(d). 42 U.S.C. S.7401(b)(1). Commenters stated t o read the statute as foreclosing existing

- source standards of performance for any pollutant emitted by a source category regulated under section 112 would, as a practical matter, render section 111(d) inoperative as to virtually all pollutants, s ince the sources regulated under section 112 emit virtually every pollutant imaginable that might be subject to section 111(d) standards.
Commenters stated t he industry reading would thwart the Act's

- and section 111's

- core purpose of protecting public health and welfare, see S. 7401(b)(1), 7411(b)(1)(A), since it would allow entire classes of pollutants (in this case, CO2) to go unregulated, no matter how harmful to the public health and welfare they may be. Commenter s argue d that to imply that Congress gave EPA the choice of regulating power plant emissions of either CO2 or mercury, but not both, makes a mockery of the statute and its goal of protecting the public health and welfare.
Commenter s continue d , stating that the industry reading of section 111(d) would not even serve the purpose that some industry advocates have attributed to it "avoiding duplicative regulation of pollutants that are already being regulated under sections 108 or 112" because CO2 is not being regulated under either of those two other sections. Thus, commenters stated, the net result of such a misguided reading would be no regulation of CO2 emissions from existing power plants under any Clean Air Act program. Commenters stated t o a llow such a harmful pollutant to fall through the regulatory cracks based on the mere fortuity that EPA has decided to control emissions of some other pollutant from that source not only contravenes the Act's and section
111's health

- and

- welfare protective purpose, but also makes no sense. Commenters stated t ime and again, the Supreme Court has declined to interpret statutes "including the Clean Air Act" in such a fashion. See e.g., Engine Mfrs. Assn. v. South Coast Air Quality Management District,
541 U.S. 246, 255 (2004) (rejecting reading that "would make no sense"); Desert Citizens Against Pollution v. EPA, 699 F.3d 524, 527

- 28 (D.C. Cir. 2012) (EPA permissibly rejected interpretation that "would have the anomalous effect of changing the required stringe ncy of non

S. 112(c)(6) HAPs at a given area source . . . simply on the fortuity that the non

- S. 112(c)(6) HAPs in question shared a source with one or more S. 112(c)(6) HAPs") (emphasis added);
Roberts v. Sea

- Land Services, 132 S. Ct. 1350, 1359

- 60 (2012 ) ("Under Roberts' reading, two employees who earn the same salary and suffer the same injury on the same day could be entitled to different rates of compensation based on the happenstance of their obtaining orders in11 different fiscal years. Commenter s clo se d , stating they can imagine no reason why Congress would have intended, by choosing the words "newly awarded compensation," to differentiate between employees based on such an arbitrary criterion.").

Response 6 : EPA agrees with these comments that the S ection 112 Exclusion in section 111(d) is not properly read to preclude EPA from promulgating regulations addressing CO2 emissions from existing power plants under section 111(d). EPA’s discussion of this issue is in Section IV of the preamble.

Comment 7: Commenter s state d that EPA's flexible, cost

- minimizing approach to setting performance standards for existing power plants is consistent with over thirty years of EPA Clean Air Act practice, under administrations of both parties, and opponents of the Clean Power Plan have argued that EPA is taking unprecedented and unwarranted steps to regulate carbon dioxide under the Clean Air Act, including: instituting statewide limits on the rate of emissions, when the statute refers to limits on sources; imposing regu lations that will result in a shift of the
balance of fuels used to produce electricity; considering demand

- side energy efficiency measures in analyzing how states can meet the requirements of the Act; applying performance standards to existing sources tha t are regulated under the hazardous air standards; and accounting for co

benefits, such as the reductions in harmful particulate matter that will occur in tandem with greenhouse gas reductions, in the rule's cost

- benefit analysis. However, c ommenter s provi de d comments they believe will show EPA has repeatedly undertaken similar approaches to Clean Air Act regulation under both Republican and Democratic administrations, and the comments will also address why the EPA's flexible, cost

- minimizing approach is pr eferable to a strict, technology

- based standard and suggest some ways in which EPA could make the program even
more efficient. Commenter s list ed 5 themes: I. Substantial precedent exists for statewide limits, including trading, where the statue refers to c onstraints on individual sources II. Substantial precedent exists for programs under Clean Air Act that influence the type of fuel used for the production of electricity III. Substantial precedent exists for Clean Air Act regulatory programs that incorpora te energy efficiency, including demand

- side efficiency, into compliance options IV. Substantial precedent exists to interpret the "Section 112 Exclusion" as consistent with the Clean Power Plan V. Consistent with longstanding regulatory best practices, EPA is justified in counting all significant co

- benefits and qualitative benefits of the Clean Power Plan.
Commenter s continue d , stating that EPA, scholars, and advocates offer a variety of compelling arguments based on the section's text, structure, and legi slative history

- as well as judicial principles of statutory interpretation and agency deference

- that strongly support the agency's authority under Section 111(d) to regulate greenhouse gases from existing power plants, because greenhouse gases from pow er plants are not hazardous pollutants regulated under Section 112.(See, e.g., Avi Zevin, Dueling Amendments: The Applicability of Section 111(d) of the Clean Air Act to Greenhouse Gases (Policy Integrity Working Paper, 2013) (reviewing the legislative his tory and implications of various approaches to statutory interpretation), available at http://policyintegrity.org/files/publications/2014

- 5_Zevin.pdf .) These comments build on t hose compelling arguments in support of the agency's authority, by exploring EPA's regulatory history of interpreting the dueling amendments in Section 111(d). Commenter s add ed that President12 George H.W. Bush's EPA Viewed the Section 112 Exclusion as Focused on Pollutants, Not Source Categories. In a May 1991 proposal of emissions guidelines for municipal solid waste
landfills

- just six months after the passage of the 1990 Clean Air Act Amendments and their dueling provisions

- EPA defined the scope o f Section 111(d) as excluding only certain pollutants, not entire source categories: When an NSPS has been promulgated under section 111(b) for a category of sources, section 111(d) of the CAA requires that States submit plans
which establish emission stan dards for existing sources and provide for implementation and enforcement of emission standards for the designated pollutant. In general, commenters stated, a designated pollutant is one that may cause or contribute to endangerment of public health or
welf are but is not hazardous within the meaning of section 112 of the CAA and is not controlled under sections 108 through 110 of the CAA.(Standards of Performance for New Stationary Sources and Guidelines for Control of Existing Sources: Municipal Solid Waste Landfills, 56 Fed. Reg. 24,468, 24,469 (May 30, 1991)) Commenters stated t he proposed rule never discusses the dueling amendments or any controversy around the scope of Section 111(d), even though it mentions the option of alternatively regulating landfil ls under Section 112. (Id. at 24,474 ("EPA was cognizant that section 112 of the CAA (which can be used to develop NESHAP) could have been used. However, given the uncertainty and difficulty in setting standards under section 112, EPA decided to proceed wi th standards development under section 111.")) Commenters stated

u nder the Bush Administration's definition, EPA today would clearly have authority to regulate greenhouse gases from existing power plants, since greenhouse gases "contribute to endangerment of public health or welfare but [are] not 'hazardous' within the meaning of section 112 of the CAA and [are] not controlled under sections 108 through 110." Commenter s continue d , stating that President Clinton's EPA Continued Reviewing Section 111(d) Plans for

c ategories a lso r egulated u nder Section 112, and c ontinued a p ollutant

- f ocused v iew of the

e xclusions. Commenters stated that i n 1998, the Clinton EPA issued hazardous air pollutant standards under Section 112 for pulp and paper producers, including K raft pulp mills.(National Emission Standards for Hazardous Air Pollutants for Source Categories: Pulp and Paper Production, 63 Fed. Reg. 18,504 (Apr. 15, 1998); see 40 C.F.R. pt. 63 subpt. S.) Commenters
stated i n the rulemaking, EPA did not indicate any p otential conflict with its existing Section 111(d) guidelines on total reduced sulfur from Kraft pulp mills, which EPA had issued in 1979.(Kraft Pulp Mills; Final Guideline Document, 44 Fed. Reg. 29,828 (May 22, 1979).)
Commenters stated that m oreover, Pre sident Clinton's EPA continued to review and approve state implementation plans for Kraft pulp mills and their total reduced sulfur emissions under Section 111(d), as evident by the approval of Maryland's plan in 1999, despite the separate
Section 112 stan dards applicable to the source category for different pollutants.(Approval and Promulgation of State Air Quality Plans for Designated Facilities and Pollutants; Maryland; Proposed Revision to Section 111(d) Plan Controlling Total Reduced Sulfur Emissions f rom Existing Kraft Pulp Mills, 64 Fed. Reg. 59,718 (Nov. 3, 1999). The fact that the Section 111(d) regulations predated the Section 112 regulations, and not vice versa, could be significant, though the legal grounds for any such distinction are unclear.) Commenters stated President Clinton's EPA also continued work on the municipal solid waste landfill regulation first proposed by the previous administration, and continued to view the scope of Section 111(d) as excluding only certain pollutants, not entire source categories. Commenters stated that i n a 1995 background13 report, EPA's Office of Air Quality Planning and Standards focused on the seemingly more limiting House amendment and initially concluded that future regulation of landfill gas under
Section 1 12 could preclude the proposed regulation under Section 111(d). I mportantly, though, commenters added, "landfill gas" is a complex mix of pollutants that includes hazardous
substances. Commenters stated t he report goes on to explain, "Some components of la ndfill gas are not hazardous air pollutants listed under section 112(b) and thus will not be regulated under a section 112(d) emissions standard," implicitly leaving such non

- hazardous pollutants for Section 111(d) regulation.(Office of Air Quality Plannin g and Standards, EPA

- 453/R

- 94

- 021, Air Emissions from Municipal Solid Waste Landfills' Background Information for Final Standards and Guidelines (1995).) Commenters stated w hen the emissions guidelines on landfill gas were finalized the following year, EPA did not discuss the scope of Section 111(d), even as the agency indicated that it might issue hazardous air pollutant standards for landfills in the future.(Standards of Performance for New Stationary Sources and Guidelines for Control of Existing Sources : Municipal Solid Waste Landfills, 61 Fed. Reg. 9905, 9906 (March 12, 1996) ("[M]ercury might be emitted from landfills. The EPA is still looking at the possibility and will take action as appropriate in the future under [Section 112].")) Commenters stated w hen EPA finally proposed hazardous air pollutant standards for landfills in the final months of the Clinton administration, the rule explicitly indicated that the Section 111(d) emissions guidelines would continue to apply: "The additional [Section 112] requirements [are] above and beyond the [Section 111] EG/NSPS....[T]hese landfills continue to remain subject to the provisions of the EG/NSPS as applicable."(National Emission Standards for Hazardous Air Pollutants: Municipal Solid Waste Landfills, 65 Fed . Reg. 66,672, 66,674

- 75 (Nov. 7, 2000); see also I d. at 66,678 ("Landfills are already regulated in the EG/NSPS under authority of section 111. . . . Therefore, the proposed rule contains the provisions of the EG/NSPS, plus the provisions discussed above from section 112.")) Commenters stated t he Clinton EPA even more directly continued taking a pollutant

- focused approach to the Section 112 exclusion in proposing Section 111(d) guidelines for medical waste incinerators: [C]ontrol under section 111(d) is ap propriate when the pollutant may cause or contribute to endangerment of public health or welfare but is not known to be 'hazardous' within the meaning of section 112 and is ...not emitted from 'numerous or diverse' sources as required by section 108." (Pro posed Standards of Performance for New Stationary Sources and Emission Guidelines for Existing Sources: Medical Waste Incinerators, 60 Fed. Reg. 10,654, 10,657 (Feb. 27, 1995). The rule was proposed jointly under sections 111(d) & 129.) Commenter s conclude d that under any of the Clinton administration's interpretations, EPA today could regulate greenhouse gases from existing power plants under Section 111(d).
Commenter s stated, regarding President George W. Bush's EPA Continued the Clinton
Administration's Approaches to Sections 111 and 112, that much like under President Clinton, President George W. Bush's EPA continued to review and approve states' Section 111(d) plans for Kraft pulp mills, even though pulp and paper plants were also regulated under Sectio n 112.(Approval and Promulgation of Air Quality Implementation Plans; Maine; Total Reduced Sulfur from Kraft Paper Mills, 68 Fed. Reg. 23,209 (May 1, 2003); Approval and Promulgation of State Air Quality Plans for Designated Facilities and Pollutants; Comm onwealth of Virginia; Control of Total Reduced Sulfur from Pulp and Paper Mills, 72 Fed. Reg. 59,017 (Oct. 18, 2007). Commenters stated u nder the Bush Administration's view, the continued applicability of14 pre

- 1990 Section 111(d) guidelines after subsequent regulation under Section 112 may present a different case than what EPA faces today with the Clean Power Plan, when Section 112 regulation of power plants predates the proposal to use Section 111(d) for greenhouse gases. See Regulating Greenhouse Gases un der the Clean Air Act, 73 Fed. Reg. 44,354, 44,493 (July 30, 2008) (asking for comments on "the continued validity of the section 111(d) regulations" if "we were to promulgate a section 111(d) emission standard and then subsequently take action under
secti ons 108 or 112 such that we could not promulgate a section 111(d) standard had we not already done so."). The grounds for any such legal distinction are unclear.) Commenters stated Bush's EPA also finalized hazardous air pollutant standards for landfills, which had been proposed in the Clinton administration's final days. Commenters stated that j ust as in the Clinton proposal, the final hazardous air pollutant standard indicated that the Section 111(d) emissions guidelines would continue operating.(National Emission Standards for Hazardous Air Pollutants: Municipal Solid Waste Landfills, 68 Fed. R eg. 2227, 2229 (Jan. 16, 2003) ("[Qualifying sources] would continue to be subject to the EG/NSPS as applicable, plus additional requirements imposed [under section 112].").) To that end, commenters added, after the final hazardous air pollutant standard w as published, EPA continued reviewing state plans for landfill gas under Section 111(d), explaining that the approvals were "based on section 111(d) requirements of the Act, not sections 110 and 112."(Approval and Promulgation of State Air Quality Plans fo r Designated Facilities and Pollutants, Commonwealth of Pennsylvania; Control of Landfill Gas Emissions from Existing Municipal Solid Waste Landfills, 68 Fed. Reg. 74,868, 74,868 (Dec. 29, 2003); see also 68 Fed. Reg. 37,421, 37,422 (June 24, 2003) ("A des ignated pollutant means any air pollutant . . . which is not included on a list published under section 108(a) or section 112(b)(1)(A) of the Act.")) Commenters stated that i n 2005, the George W. Bush administration decided to delist power plants from Sect ion 112 and regulate their mercury emissions under Section 111(d) instead. Commenters stated t hough the D.C. Circuit eventually struck down the plan on unrelated grounds, the rulemakings show that EPA grappled with the dueling
amendments and came down firm ly in favor of harmonizing the amendments [Delisting Rule, Revision of December 2000 Regulatory Finding on the Emissions of Hazardous Air Pollutants From Electric Utility Steam Generating Units and the Removal of Coal

- and Oil

- Fired Electric Utility Steam Generating Units From the Section 112(c) List, 70 Fed. Reg. 15,994, 16,031 (Mar. 29, 2005) ("The canon of statutory construction that calls for harmonizing conflicting statutory provisions, where possible, and adopting a reading that gives some effect to b oth provisions is not controlling here because that canon applies where two provisions of a statute are in conflict, not where two amendments to the same statutory provision are in conflict. Nevertheless, we have attempted to follow the general principles underlying this canon of construction. . . . While it appears that the Senate amendment to section 111(d) is a drafting error and therefore should not be considered, we must attempt to give effect to both the House and Senate amendments, as they are both p art of the current law.") (emphasis added).] through a reasonable reading [Id. at 16,032 ("This is a reasonable interpretation of the amendments to section 111(d) because it gives some effect to both amendments. . . . [T]he question is not whether commente rs have [also] identified a reasonable construction of section 112(d). Rather, the issue is whether our construction is a permissible one.").] of ambiguous language, [Id. at 16,031 ("Although we recognize that the phrase 'a source category' is susceptible to different interpretations, in that it could conceivably15 mean one or many source categories, we believe that our interpretation is a permissible construction.").] offering an interpretation that focuses on pollutants, not category

- wide exemptions,[Id. at 16,031

- 32 ("Where a source category is being regulated under section 112, a section 111(d) standard of performance cannot be established to address any HAP listed under section 112(b) that may be emitted from that particular source category.").] and that respects both the "general thrust" of congressional intent [Id. at 16,032 ("[T]he general thrust of the 1990 amendments . . . on balance, reflects Congress' desire to require EPA to regulate more substances, not to eliminate EPA's ability to regulate large categories of pollutants like non

HAP.").] and regulatory history.[Id. ("Furthermore, EPA has historically regulated non

- HAP under section 111(d), even where those non

- HAP were emitted from a source category actually regulated under section 112. See, e.g. , 40 CFR 62.1100 (California State Plan for Control of Fluoride Emissions from Existing Facilities at Phosphate Fertilizer Plants).").] For example, the agency noted that, "EPA has historically regulated non

- HAP under section 111(d), even where
those non

- H AP were emitted from a source category actually regulated under section 112."[Id.] Ultimately, EPA changed the definition of "designated pollutants" (i.e., those pollutants subject to Section 111(d)), finally replacing the pre

- 1990 version but maintaining its essential scope and confirming that Section 111(d) can regulate pollutants emitted by source categories regulated under Section 112 so long as those particular pollutants are not listed under Section 112.[Standards of Performance for New and Existing S tationary Sources: Electric Utility Steam Generating Units, 70 Fed. Reg. 28,649 (May 18, 2005).] Commenter s conclude d that applying that definition today, EPA would be authorized to regulate greenhouse gases from existing power plants. Commenters stated a s a coda to the Bush administration's work on Section 111(d), in its advanced notice of proposed rulemaking on greenhouse gases in 2008, EPA explained that Section 111(d) "provides a 'regulatory safety net' for pollutants not otherwise subject to major

regu latory programs under the CAA. Section 111 provides EPA and states with significant discretion concerning the sources to be regulated."[Regulating Greenhouse Gases under the Clean Air Act, 73 Fed. Reg. 44,354, 44,418 (July 30, 2008); see also I d. at 44,421 ("[L]isting an air pollutant as a HAP under section 112(b) generally precludes regulation of that air pollutant from existing sources under section 111(d).")] Commenter s state d that President Obama's EPA
Continues a Pollutant

- Focused Reading of the Sectio n 112 Exclusion and explains that President Obama's EPA already settled on its view of the scope of Section 111(d), back in 2012.
Commenters stated i n returning to Section 112 for regulation of mercury from power plants, EPA changed the definition of "desi gnated pollutants" but again kept the focus of the exemptions on particular pollutants, and not entire source categories.(National Emission Standards for
Hazardous Air Pollutants From Coal

- and Oil

- Fired Electric Utility Steam Generating Units and
Standard s of Performance for Fossil

- Fuel

- Fired Electric Utility, Industrial

- Commercial

Institutional, and Small Industrial

- Commercial

- Institutional Steam Generating Units, 77 Fed. Reg. 9304, 9447 (Feb. 16, 2012) ("(a) Designated pollutant means any air pollutant, the emissions of which are subject to a standard of performance for new stationary sources, but for which air quality criteria have not been issued and that is not included on a list published under section 108(a) or section 112(b)(1)(A) of the Act."). Not e this reverts back to the pre

- 1990 definition, and as such refers to a section of the statute (section 112(b)(1)(A)) that in fact no longer exists.) Commenters stated t his focus is consistent with how each of the previous three16 presidential administratio ns

- going back to just months after the dueling amendments were passed

- have interpreted the scope of the Section 112 exclusion.

Response 7 : EPA agrees that the Section 112 Exclusion in section 111(d) is not properly read to preclude EPA from promulgatin g regulations addressing CO2 emissions from existing power plants under section 111(d). EPA’s discussion of this issue is in Section IV of the preamble.

Comment 8: Commenter s state d that EPA has the authority to regulate greenhouse gas
emissions from exist ing power plants under section 111(d) of the Clean Air Act, explaining that Section 111 of the Clean Air Act (CAA or Act) authorizes EPA to promulgate regulations for the categories of stationary sources that EPA determines contribute significantly to "air pollution which may reasonably be anticipated to endanger public health or welfare."(42 U.S.C. S. 7411(b)(1) Commenter s cite d the Supreme Court in Massachusetts v. EPA held that greenhouse gases (GHGs) are an "air pollutant" under the CAA.(549 U.S. 497 (2 007)) Commenter s also
cite d where American Electric Power Co. v. Connecticut, the Court declined to find a common law of nuisance for power plants upon the recognition that EPA was moving forward to exercise its authority to regulate GHGs from power plants under the appropriate authority of section 111 of the Act.(131 S. Cr. 2527 (2011)) Commenter s state d that the Court also affirmed EPA's authority to regulate sources of GHGs in Utility Air Regulatory Group v. EPA.( 1 34 S. Cr. 2427 (2014)) Under the Act, c ommenter s explain ed , once EPA promulgates standards of performance for new sources under section 111(b), section 111(d) requires EPA to establish a procedure similar to the State Implementation Plan (SIP) process, under which each state is required to
subm it a plan to EPA that "establishes standards of performance for any existing source for any air pollutant (i) for which air quality criteria have not been issued or which is not included on a list published under section 7408 (a) of this title or emitted f rom a source category which is regulated under section 7412 of this title but (ii) to which a standard of performance under this section would apply if such existing source were a new source."(42 U.S.C. section 7411(d)(1).)
Commenter s contend ed that the pl an must also provide for the implementation and enforcement of such standards of performance. (Id.)

Response 8 : EPA agrees that it has the authority to promulgate regulations addressing CO2 emissions from existing power plants under section 111(d). EPA’s d iscussion of this issue is in Section IV of the preamble.

Comment 9 : Commenter s state d that Section 111(d) requires action on GHG emissions from EGUs, regardless of whether EGUs are subject to hazardous air pollutant ("HAP") regulations.
Commenter s' explan ation for this position follows :

a ) The 1990 Clean Air Act Amendments contained two different amendments providing
for changes to the same statutory language in section 111(d)(1). Prior to 1990, section 111(d) clearly mandated action to control dangerous air pollutants from existing sources if those emissions were not already regulated under section 108 or section 112, for source categories regulated under section 111(b): "The Admin istrator shall prescribe regulations which shall establish a procedure similar to that provided by section 7410 of this title under which each State17 shall submit to the Administrator a plan which (A) establishes standards of performance for any existing so urce for any air pollutant (i) for which air quality criteria have not been issued or which is not included on a list published under section 7408(a) or 7412(b)(1)(A) of this title, but (ii) to which a standard of performance under this section would apply if such existing source were a new source. In 1990, Congress enacted two amendments to section 111(d)(1)(A)(i) addressing the same issue

- when regulation under section 112 would supplant regulation under section 111(d). Some amendment to section 111(d) was necessary because the 1990 amendments deleted section 112(b)(1)(A), which was the subsection of section 112 that section 111(d)'s had

cross

- referenced since 1970. Bills originating in each chamber amended section 111(d)'s cross

reference to section 112(b) (1)(A) in different ways, and Congress ultimately enacted, and the President signed, a conference bill containing both amendments. The amendment originating in the House revised section 111(d)(1)(A)(i) by striking the words "or 112(b)(1)(A)" and inserting in their place the following phrase: "or emitted from a source category which is regulated under
section 112." Congress also enacted an amendment originating in the Senate that revised the same subsection by striking the reference to "112(b)(1)(A)" and ins erting in its place "112(b)." The House amendment is located in section 108 of the Statutes at Large (under "Miscellaneous Guidance"); the Senate amendment is found in section 302 (under "Conforming Amendments").
The text and structure of the Act in the Statutes at Large (104 Stat. 2399) are the same as in the public law passed by both chambers and signed by President George H.W. Bush (101 P.L. 549). The Office of the Law Revision Counsel codified only the House amendment in the United
States Code, 42 U.S .C. 7411(d)(1)(A)(i). The codifier's notes to this section state that the Senate amendment "could not be executed." Regardless, the Statutes at Large

- not the United States
Code

- controls here. The Statutes at Large constitute the legal evidence of the l aws for code titles that have not been enacted into positive law. Because Title 42 of the United States Code has not been enacted into positive law, the legal evidence of the relevant law is the statutes at large, which contains both amendments.

b ) The Se nate amendment clearly requires 111(d) regulation of CO2 from EGUs. The Senate amendment is clear and consistent with the historic role of section 111(d) as a "backstop" to ensure protection of public health from existing

- source emissions not regulated und er section 112 or section 110. Read with the rest of section 111(d), the Senate amendment continues the longstanding policy of covering all non

- HAP, non

- criteria pollutants under section 111(d). The amendment was necessary to conform to the conference comm ittee's amendments to section 112(b). Previously, section 112(b)(1)(A) required EPA to publish a list of HAPs it intended to regulate under section 112. The 1990 amendments removed subsection 112(b)(1)(A) entirely. The new section 112(b)(1) establishes an initial list of over 180 HAPs and section 112(b)(2)

- (3) gives EPA authority to both add new HAPs to the list and to de

- list certain HAPs. The Senate amendment simply updated EPA's section 111(d) authority to reflect the amended list of HAPs regulated under section 112.

While some have argued that EPA should disregard the text of the Senate amendment because its status as a "conforming amendment" renders it a poor indication of congressional intent and a likely scrivener's error, the Senate amendment cannot be disregarded. The D.C. Circuit has18 looked to conforming amendments in other statutes and given full effect to "the plain meaning of the statutory language in which Congress has directly expressed its intentions." Washington Hospital Center v. Bowen, 795 F.2d 139, 149 (D.C. Cir. 1986); see also CBS v. FCC, 453 U.S. 367, 381 ("Perhaps the most telling evidence of congressional intent, however, is the contemporaneous [conforming] amendment"). Further, the Senate amendment does not resemble
a scrivener's err or at all. A scrivener's error is "a mistake made by someone unfamiliar with the law's object and design," United States Nat'l Bank v. Independent Ins. Agents of Am., 508 U.S. 439, 462 (1993), and produces language with "no plausible interpretation," Willi ams Cos. v. FERC, 345 F.3d 910, 913 n.1 (D.C. Cir. 2003). The Senate amendment is plainly not a scrivener's error. In keeping with the same protective statutory structure that Congress first crafted in the 1970 Clean Air Act, the Senate amendment has the e ntirely coherent purpose and effect of updating the section 111(d) cross

- reference in light of amendments to section 112 that rendered the previous cross

- reference meaningless by deleting previous sub

- paragraph 112(b)(1)(A). Furthermore, because the text o f the Senate amendment is unambiguous, EPA "can remain agnostic on the question whether Congress intentionally left [that] particular language in [the] statute or simply forgot to take it out. The suggestion that Congress may have 'dropped a stitch,' is no t enough to permit [EPA] to ignore the statutory text." See United States ex rel. Totten v. Bombardier Corp., 380 F.3d 488, 496 (D.C. Cir. 2004) (quotations and citation omitted). There is no exception here to the rule requiring EPA "to give effect, if pos sible, to every word Congress used." See Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979).

c) The House amendment is most reasonably read to require regulation of CO2 emissions from EGUs. In contrast to the Senate amendment, the House amendment is subje ct to multiple interpretations. The ambiguous House amendment would require EPA's expert interpretation even if Congress had not also amended identical language in section 111(d) through the Senate amendment. See Chevron, U.S.C., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 843 (1984). Because the Senate amendment unambiguously commands regulation of non

- HAP pollutants such as CO2, and because the House amendment is reasonably interpreted (even without reference to the Senate Amendment) to permi t such regulation, EPA plainly has authority to regulate CO2 emissions under section 111(d), and the agency need not resolve here whether there are scenarios in which some pollutant or source might be regulable under one amendment but not the other, and ho w to resolve that problem. i. The House amendment provides for regulation of emissions that are not controlled under the hazardous air pollution program. The House amendment is subject to multiple readings that would require regulation of
CO2 from sources like EGUs. As changed by the House Amendment, section 111(d) requires EPA to prescribe existing source regulations "for any air pollutant (i) for which air quality criteria have not been issued or which is not included on a list published under section 740 8(a) or emitted from a source category which is regulated under section 112 of this title." (emphasis added). The most reasonable interpretation of the House amendment is to construe it to not authorize regulation under 111(d) as to particular pollutants t hat are actually regulated under Section 112(n) as to the source category in question. On this interpretation, Congress intended to safeguard section 111(d)'s gap

- filling role by expanding the scope of the section to cover HAP
emissions that would otherwis e be unregulated under sections 112 or section 111(d). Readings of19 the House amendment offered by parties seeking to block regulation of CO2 under Section 111(d) have asserted that the provision necessarily bars regulation of any and all pollutants
emitted by any source that is regulated under Section 112, even if it the specific pollutant in question is not a HAP and is therefore not regulated under 112. But the text of section 112 is readily susceptible to reasonable interpretations under which the sectio n 112

- related exclusion from section 111(d) regulation is pollutant

- specific. EPA may interpret the House amendment by resolving ambiguity in the phrase "emitted from a source category which is regulated under section 112." A source category is "regulated" under section 112 not in the abstract, but with respect to particular pollutants. The term "regulated" can therefore be read to mean "regulated with respect to that pollutant under section 112," rather than "regulated as to any pollutant under
section 112 ." In other words, the House text could reasonably be understood to mean either (1) that EPA may not use section 111(d) when the source category is "regulated under section 112 for the pollutant in question," i.e., the same pollutant that is the candidate for regulation under section 111(d), or (2) that EPA may not use section 111(d) when the source category is "regulated under section 112 for any pollutant." The former is a sensible interpretation of the ambiguous term "regulated," and one that fits with a context that includes pollutant

- specific phrasing of section 111(d) and a reference to a statutory provision, section 112, that "regulates" only hazardous pollutants. While the latter interpretation is plausible as a matter of ordinary understanding, it i s not inevitable

- and, as explained below, its practical consequences are starkly discordant with the statutory structure and purpose. Furthermore, it is common and proper under the Clean Air Act to construe potentially broad statutory language in light o f the context in which the language appears, in order to produce a result that fits with the purpose and mechanics of the particular program in question. See Utility Air Regulatory Grp. v. EPA, 134 S. Ct. 2427, 2440 (2014) ("UARG") (citing numerous instanc es in which EPA has narrowed term "any air pollutant" to fit with context). A pollutant

- specific reading of the Section 111(d) exclusion is easily permissible given the context here. The House language may also be read to authorize EPA to regulate any air pollutant which is not a criteria pollutant and "any air pollutant [which is regulated under section 112] . . . which is not . . . emitted from a source category which is regulated under section 112." Under Young v. Community Nutrition Institute, an agency has discretion under Chevron to determine which terms are the object of a dangling modifier. 476 U.S. 974, 891 (1986) (granting Chevron deference to FDA's interpretation concerning which term was modified by a dangling participle in the Federal Food, Drug , and Cosmetic Act, even though a contrary "reading of the statute may seem to some to be the more natural interpretation"). Here, EPA can effectuate legislative intent by reading "which is regulated under section 112" to modify both "any air pollutant" an d "source category." Alternatively, the language "any air pollutant . . . emitted from a source category which is regulated under section 112" could be read to refer to hazardous air pollutants. This reading derives from the statutory context, in which haz ardous air pollutants are the only pollutants regulated under section 112. As noted above, the Supreme Court has recently emphasized that the broad term "any air pollutant" as used in the Clean Air Act can take meaning from the context in which it is used. See UARG, 134 S. Ct. at 2440 (citing instances in which EPA has narrowed term "any air pollutant" to fit with context, such as EPA's having construed various provisions of section 111 that reference "any air pollutant" as limited to pollutants "for which EPA has promulgated new source20 performance standards"). Here, it is logical to understand Congress to have wanted to preclude section 111(d) regulation based on section 112 regulation only as to pollutants that are actually (or at least potentially) regula ted under section 112. Moreover, under this interpretation, the House amendment would have essentially the same meaning as the Senate amendment and continue Congress' longstanding policy of using section 111(d) to control dangerous pollution
that is not co ntrolled under the criteria pollution provisions or section 112 ii. The legislative history of the House amendment supports a narrow reading of the section 111(d) exclusion. Reading the House version of the section 111(d) exclusion in a pollutant

- specific way is not only consistent with the language of the statute, but also promotes the purpose that EPA has reasonably attributed to the House amendment, namely, expand[ing] EPA's authority under section 111(d) for regulating pollutants emitted from particular source categories that are not being regulated under section 112,

- thereby protecting against a regulatory gap that would provide no controls against HAP emissions from certain sources not regulated under section 112.
The version of the 1990 Clean Air Act Amendments that initially passed the House clarifies the purpose of the House amendment to section 111(d). As EPA has explained, the House amendment first passed the House in a bill that included several new opportunities for EPA to
exercise discretion in whether to regulate HAP emissions under section 112. That bill would have provided EPA significant additional discretion regarding when to promulgate regulations under section 112. Perhaps most importantly, the House bill would have allowed EPA to decline to regulate source categories under section 112 if EPA determined they were "already adequately controlled under this Act or any other Federal statute or r egulation." Furthermore, the House bill would have made regulation of non

- major sources under sectio n 112 entirely discretionary. In this context, EPA reasonably noted the likelihood that "the House did not want to preclude EPA from regulating under section 111(d) those pollutants emitted from source categories which were not actually being regulated und er section 112." Even under the conference bill that became law, the prospect of certain HAP emissions not being regulated under section 112 may have motivated the expansion of section 111(d) to cover certain dangerous HAP emissions that might
otherwise es cape regulation, and that would not have been subject to section 111(d) standards as it was framed prior to 1990. The purpose of the House amendment is further illuminated by its context in the House bill as introduced. The House had initially proposed an overhaul of section 112 under which EPA would only be required to promulgate regulations for half the source categories it determines to be major and area sources of HAPs. EPA would have been required to review the remaining fifty percent of listed source categories, and "designate the additional categories and subcategories [the EPA Administrator] finds, in his discretion, warrant regulation
under this section." This proposed system clearly entailed the potential for major sources of HAPs to escape regulat ion under section 112. Aware of this looming gap, the House proposed expanding section 111(d) to avoid leaving HAP emissions from numerous major sources unregulated. Interpretations that allow section 111(d) to continue providing for non

- HAP regulation whe re needed to protect public health and welfare are true to the Clean Air Act's overarching structure for existing

- source regulation. In addition to precluding any gaps in the regulatory framework for dangerous pollution from existing sources, these reading s of the House amendment effectuate Congress desire to make the CAA more protective through each revision. If EPA interprets the House amendment in this fashion, there will be no conflict in how the21 House and Senate amendments apply to the present rulemaki ng. These readings have the benefit of not creating a bizarre and harmful gap in coverage of harmful pollutants that is entirely out of step with the tenor of the Act's regime and of the 1990 amendments. These interpretations are
true to the Clean Air Act' s overarching structure for existing

- source regulation, as they allow section 111(d) to continue providing for coverage of non

- HAP emissions where needed to protect public health and welfare. These pollutant

- specific readings of the House amendment are
als o consistent with the Supreme Court's observations about section 111(d) in American Electric Power Company v. Connecticut, 131 S. Ct. 2527 (2011). The Court described section 111(d)'s exclusions by stating: "There is an exception: EPA may not employ sectio n[111(d)] if existing stationary sources of the pollutant in question are regulated under the national ambient air quality standard program, sections[108,110], or the hazardous air pollutants program, section [112]. Id. at 2537, n.7. This statement reflect s the understanding that the exclusion for emissions regulated under section 112 works in parallel with the exclusion for emissions regulated under the NAAQS program. Indeed, the Court indicated that these exclusions comprise a single exception to section 111(d). There is no question that sources subject to regulation for criteria pollutant emissions under the NAAQS program are also subject to regulation for other emissions under section 111(d). Similarly, there should be no question that sources are subjec t to regulation for pollution that is not controlled by the HAPs program, even where sources are also regulated under section 112. iii. In context, the House amendment cannot plausibly be read to end section 111(d)'s application to dangerous pollution that happens to be emitted by source categories regulated under section 112. Although the House amendment might be read

- acontextually

- to diminish the scope of section 111(d), such a reading is inconsistent with the structure, purpose, and legislative history o f the Clean Air Act. Although, as demonstrated above, there are multiple ways to read the House amendment to continue 111(d)'s role as a backstop against unregulated, dangerous pollution, other readings of this ambiguous amendment have been proposed that w ould fundamentally alter the role of section 111(d). The most expansive reading of the House amendment would exclude from section 111(d) all pollutants emitted by sources that are regulated by section 112

- even when those pollutants are emitted by a source not regulated under section 112. This reading would effectively nullify section 111(d) because there are few (if any)

non

- HAP pollutants that are not emitted by sources in one of the dozens of source categories regulated under section 112. More vitally, th is would leave a host of dangerous air pollutants wholly unaddressed by the Clean Air Act. This is made clear by the fact that none of EPA's pre

1990 emission guidelines could now be promulgated under such a regime, leaving communities vulnerable to pollut ants such as sulfuric acid mist, reduced sulfur compounds, and fluoride. Some have argued that the House amendment must be read to exclude any regulation of all source categories regulated under section 112. Even EPA has opined that "a literal" reading of
the House amendment would exclude non

- HAPs from regulation under section 111(d). But no party has offered a plausible explanation for how Congress could have intended to obliterate the scope of section 111(d) through the House amendment. There is no eviden ce that it was Congress' intent to drastically roll back the protections in section 111(d). If Congress had intended such a radical departure from the statutory structure of the CAA, Congress would have made it explicit in the statute or some member would have at least mentioned it in the extensive legislative history of the 1990 amendments to the CAA. See Chisom v. Roemer, 501 U.S. 380,22 396 n.23 (statutory interpretation that would work a sweeping and unorthodox change warrants skepticism). There is simply no evidence in the face of the statute or its legislative history that Congress intended such a major change in policy. Since Congress gave no indication regarding its intention to repeal the protections it established in 1970, reading such a repeal into an ambiguous statute would be strongly disfavored. Here, as noted above, there are other provisions
of the 1990 amendments

- including section 112(d)(7)

- that affirmatively indicate that Congress did not intend for section 112 regulations to displace or alter section 111 standards and Clean Air Act permitting programs. A broad reading of the exclusion in the House amendment would create a hole in the Clean Air Act that is not only sweeping, but also highly anomalous. First, it is fanciful to believe Congress s ilently worked a major rollback of section 111(d) that is so jarringly discordant with the protective thrust of the 1990 Clean Air Act Amendments. It is simply not credible that Congress purposefully opened a major loophole

- completely counter to
the histor ic role of section 111(d)

- that would leave dangerous air pollutants entirely unregulated, even as it strengthened environmental controls and systematically limited EPA's discretion to leave air pollution unregulated, purposely opened an unprecedented gap i n the Clean Air Act's framework for stationary

- source regulation. This reading also assumes that Congress created this unprecedented loophole surreptitiously, leaving major categories of pollutants wholly unregulated for the first time since 1970, at the s ame time that the supporters of the 1990 amendments uniformly praised the bill for strengthening the Clean Air Act. Second, this reading of the House amendment would insert an exclusion into section 111(d) that is unlike any other in
the Clean Air Act. Con gress has never allowed sources to release unlimited quantities of some pollutants simply because they must control other pollutants. Cf. Desert Citizens Against Pollution v. EPA, 699 F.3d 524, 527

- 28 (D.C. Cir. 2012) (holding that EPA reasonably rejected petitioners interpretation of the Clean Air Act, which "would have the anomalous effect of changing the required stringency" for certain hazardous air pollutants at a given source "simply on the fortuity" of the source's other emissions). Third, any attemp t to actually implement the broad exclusion reveals additional anomalies. Even under the most expansive reading of the House amendment, pollutants are only excluded from regulation under 111(d) if EPA happens to regulate a source under section 112 first. I f EPA first regulates a source category under section 111(d) and then regulates the same source category under section 112, section 112(d)(7) provides that the HAP regulation does not diminish or replace the existing 111(d) standards. It is
inconceivable t hat Congress would prohibit section 111(d) standards "simply on the fortuity" of EPA's timing for promulgating standards under section 112. Accord Desert Citizens Against Pollution, 699 F.3d at 527

- 28. One company has developed a theory that attempts to ex plain how Congress could have intended to weaken section 111(d) in 1990: that Congress sought to strengthen section 112 without imposing "double regulation" on any source category. This account is entirely unfounded. First of all, the Clean Air Act is full of examples of instances in which Congress, in the interest of protecting public health and welfare, subject pollution sources to multiple, overlapping requirements for the same pollutants. See, e.g., 42 U.S.C. 7475(a) (noting that sources subject to stat ionary source permitting requirements (and "best available control technology" requirement) also must comply with applicable increments and air standards under, as well as any applicable performance standards under section 111); Id. section 7416 (expressly preserving state regulation of stationary sources except where less stringent that Clean23 Air Act requirements). The 1990 legislative history makes clear that House members were aware that, under the House bill, stationary sources would continue to be regu lated under multiple
sections of the Clean Air Act. Most important, it is not double regulation for different pollutants from a single source category to be regulated under different regulatory programs. The notion that subjecting a source to regulation fo r some pollutant should immunize it from regulation as to other pollutants is odd and altogether alien to the CAA's protective design. The CAA framework often provides separate but complementary regulatory frameworks to address different types of pollution emitted by the same sources. Criteria pollutant standards also apply to the same sources whose emissions of hazardous air pollution are addressed by Section 112. For instance, the CAA's Prevention of Significant Deterioration program requires new major em itting facilities to use the "best available control technology: for criteria pollutants, in addition to any standards promulgated under section 111(b) or 112. Nor do any of the CAA's stationary source provisions exclude sources from regulation because the y are regulated under other federal environmental laws. In summary, there is no reason to believe that the House amendment should be read to eviscerate section 111(d) and the House amendment can easily be read to preserve the gap

- filling
role of section 11 1(d) in the Clean Air Act's regulatory framework. 4. EPA can reasonably harmonize the two amendments to section 111(d) by adopting one of several reasonable interpretations of section 111(d), all of which require EPA to regulate non

- HAP pollutants like
CO2 . a. Where one amendment clearly requires regulation of CO2 emissions from EGUs and another amendment's treatment of such emissions is ambiguous, EPA must interpret the two amendments harmoniously. The two amendments to section 111(d)(1)(A)(i) created a st atutory ambiguity regarding the pollutants regulated under section 111(d). This ambiguity requires EPA's expert interpretation. See Chevron, 467 U.S. at 837. EPA's expert interpretation of section 111(d) must be guided by the rule that "[t]he provisions of a text should be interpreted in a way that renders them, compatible, not contradictory. EPA can reconcile the two amendments and interpret section 111(d) to require standards to address CO2 emissions from EGUs. b ) Any conflict in the section 111(d) can be resolved by reasonably harmonizing the House and Senate amendments. In the proposed rule, EPA has reasonably harmonized the text of the House and Senate amendments, through the following interpretation: "Where a source category is regulated
under section 112, a section 111(d) standard of performance cannot be established to address any HAP listed under section 112(b) that may be emitted from that particular source category." This interpretation follows the case law regarding when and how to harmonize confl icting statutory provisions. The D.C. Circuit has given EPA detailed instructions on "its responsibility to harmonize the statutory provisions" of the Clean Air Act when two provisions conflict and the statute does not plainly indicate which provision shal l prevail. See generally Citizens to Save Spencer Cnty v. EPA, 600 F.2d 844 (D.C. Cir. 1979) (upholding EPA's harmonization of sections 165 and 168 of the 1977 Clean Air Act, which were drawn from "two bills originating in different Houses and containing p rovisions that, when combined, were inconsistent in respects never reconciled in conference); explained in NRDC v. Thomas, 805 F.2d 410, 436 n.39 (D.C. Cir. 1986) ("[T]his court held that the agency had broad latitude to harmonize two Clean Air Act provisi ons that facially dealt with the same issue differently."); see also Appalachian Power Co. v. EPA, 249 F.3d 1032, 1043

- 44 (D.C. Cir. 2001) ("Lest it obtain a license to rewrite the statute an agency alleging a scrivener's error "may deviate no further from the statute than is needed to24 protect congressional intent.") (quotations and citation omitted). The court explained that the maximum possible effect should be afforded to all statutory provisions . . .if the inconsistent provisions point generally in a c ommon direction.

- Spencer Cnty, 600 F.2d at 870

- 71; cf. United
States v. Colon

- Ortiz, 866 F.2d 6 (1st Cir. 1989) (reading language out of a statute, where language inserted through a drafting error directly required the opposite outcome from what Congress had mandated elsewhere in the text). Harmonization of the House and Senate amendments to section 111(d) is appropriate because the two amendments point in a common direction. EPA has previously interpreted the House amendment to reflect the "House's appare nt desire to increase the scope of EPA's authority under section 111(d) and to avoid duplicative regulation of HAP for a particular source category." As EPA explained in its proposal for the Clean Air Mercury Rule, the House amendment can be reasonably int erpreted to reflect a desire to expand the pollutants that EPA could regulate under section 111(d) so that EPA had authority to regulate HAPs emitted from source categories that were not actually being regulated under section 112 (such as existing area sou rces of HAPs that did not meet the statutory criterion in section 112(c)(3)). Similarly, the Senate amendment serves the general purposes of preserving EPA's authority to regulate non

- HAPs under section 111(d) and avoiding duplicative regulation
of HAPs. T hat is, the Senate's conforming amendment was necessary to give EPA authority to regulate any delisted HAP under section 111(d). In addition, the Senate amendment avoids duplicative regulation of HAPs because it prevents EPA from regulating any HAP that is listed for regulation under section 112. In harmonizing the House and Senate amendments to section 111(d), "it is appropriate for the agency . . .to look for guidance to the statute as a whole and to consider the underlying goals and purposes of the legis lature in enacting the statute, while avoiding unnecessary hardship or surprise to affected parties." Spencer County, 600 F.2d at 871 (footnote omitted). In the proposed rule, EPA has properly adhered to these principles in interpreting section 111(d). Fir st, EPA concluded that it would be unreasonable to allow an expansive reading of the House amendment to prevail over the Senate amendment because such an interpretation would be inconsistent with "Congress' desire in the 1990 CAA Amendments to require the EPA to regulate more substances, and not to eliminate the EPA's ability to regulate large categories of air pollutants." Further, prohibiting the regulation of non

- hazardous but dangerous pollutants from existing sources because hazardous emissions from th ose sources is appropriately regulated under Section 112 would expose American communities to health

- and
welfare

- harming pollutants clearly in conflict with Congress' effort in the Clean Air Act to protect Americans from harmful pollution. Thus, EPA has p roperly effectuated Congress' underlying goals and purposes in the Clean Air Act and subsequent amendments. Second, EPA reasoned that reading section 111(d) to exclude any air pollutant from a source category regulated under section 112 would be inconsiste nt with "the fact that the EPA has historically regulated non

- hazardous air pollutants under section 111(d), even where those air pollutants were emitted from a source category actually regulated under section 112." EPA's interpretation ensures the agency' s continued ability to effectively protect public health and the environment, whereas interpreting the 1990 amendments to drastically curtail the agency's longstanding authority under section 111(d) would cause unexpected harm. EPA's interpretation of sect ion 111(d) is sound for several additional reasons. First, in accord with the interpretative canons against implied amendments and repeals, EPA has not read the 1990 amendments to repeal25 section 111(d)'s application to non

- HAP emissions from sources regula ted under section 112. Reading the House amendment as certain court challengers have urged would deprive section 111(d) of most, if not all, of its traditional effect as a backstop that allows regulation of harmful pollution not covered under section 110 a nd 112. In the context of CO2 emissions, this interpretation would not only preclude regulation of CO2 emissions from the power sector; it would similarly bar any regulation in all other sectors of the nation's most significant sources of CO2, because, lik e power plants, these categories too are regulated under section 112. EPA data confirms that even outside the power sector

- the chief emitters of CO2 among stationary sources are subject to HAP regulation under section 112. According to EPA's Facility Level Information
on Green h ouse gases Tool (FLIGHT), the non

- power subsectors of the economy that emitted more than 10 million metric tons of CO2 in 2013 were: Petroleum refineries; natural gas processing; natural gas transmission/compression; other petroleum a nd natural gas systems; petrochemical production; hydrogen production; ammonia production; other chemicals; iron and steel production, other metals; cement production; lime manufacturing; pulp and paper; other paper products; food processing; manufacturing ; ethanol production; and other. All of the major
CO2

- emitting source categories in the defined subsectors on this list are regulated under section 112. (The "other" category likely includes many source categories regulated under section 112). Because of t he sheer number of section 112

- listed source categories, and the fact that they include most of the largest pollution sources, the suggested readings would likely have similarly dramatic effects on section 111(d)'s coverage as to other dangerous, but not h azardous, pollutants. "[I]t is well settled that amendments by implication (like repeals by implication) are disfavored." Natural Resources Defense Council, Inc. v. Hodel, 865 F.2d 288, 318 (D.C. Cir. 1988). "[A]bsent a clearly expressed congressional inte ntion, repeals by implication are not favored." See Branch v. Smith, 538 U.S. 254, 273 (2003); see also Natl Assn of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 664 n.8 (2007) ("It does not matter whether this
alteration is characterized as an am endment or a partial repeal."). Congress expressed no clear intention to drastically narrow the scope of section 111(d), given the plain text of the Senate amendment, the categorization of the House amendment as "Miscellaneous Guidance," the legislative hi story's silence on such a repeal, and the general thrust of the 1990 amendments to broaden regulation of air pollutants. EPA has properly refrained from interpreting the House amendment to require such a change because Congress "does not alter the fundamen tal details of a regulatory scheme in vague terms or ancillary provisions

- it does not, one might say, hide elephants in mouseholes." Whitman v. Am. Trucking Ass'ns, 531 U.S. 457, 468 (2001). Guided by the canon against implied repeals, the Supreme Court ha s held that an agency may read a
later

- enacted provision to not override an existing, express statutory mandate. See Nat'l Ass'n of Home Builders, 551 U.S. at 666 (approving a harmonizing interpretation of the Endangered Species Act, where one of the act's provisions directly conflicted with a clear mandate in the Clean Water Act). If there is any conflict between the pre

- 1990 text of the CAA and the 1990 amendments, EPA cannot assume Congress' intended to repeal longstanding mandates in the Act
unless that intention is clearly expressed. In the 1990 amendments, Congress did not clearly signal its intent to repeal section 111(d)'s application to non

- HAPs emitted by sources regulated under section 112, as the Senate amendment directs EPA to continue applying section 111(d) to these pollutants. EPA's interpretation of section 111(d) appropriately harmonizes the House and26 Senate amendments because it does not allow the House amendment to override the existing, express statutory mandate to regulate under section 111(d) any air pollutant that is not regulated under the NAAQS program or section 112. Similarly, Watt v. Alaska illustrates how the canon against implied repeals can guide EPA in its duty "to give effect to each [amendment] if [it] can do so while preserv ing their sense and purpose." See 451 U.S. 259, 267 (1981). That case examined two statutory provisions that, by their plain terms, gave conflicting instructions regarding the distribution of mineral revenue from all federal wildlife refuges. The Court

exa mined the later

- enacted statute (the 1964 amendments to the Wildlife Refuge Revenue Sharing Act) for "clearly expressed congressional intention" to repeal the prior law, and found none. 451 U.S. at 273. The Court harmonized the conflicting provisions by re ading the latter

enacted law to apply only to mineral revenues from the class of wildlife refuges that motivated congressional action in 1964. That is, the Court read the latter

- enacted provision to establish the

revenue

- distribution formula for mineral re venues from lands acquired for wildlife refuges, reasoning that the purpose of the 1964 amendments was to facilitate acquisition of lands for wildlife refuges. 451 U.S. at 272. EPA's proposed interpretation of section 111(d) is entirely
consistent with the Court's approach in Watts. EPA has interpreted the House amendment to refer to the class of pollutants that motivated the amendment: pollutants that were actually regulated under section 112. EPA has previously concluded that "the House's amendment to

sec tion 111(d) could reasonably reflect its effort to expand EPA's authority under section 111(d) for regulating pollutants emitted from particular source categories that are not being regulated
under section 112." This conclusion is supported by reading the House amendments to section 111(d) together with the House's proposed amendments to section 112. As discussed above, the House bill proposed giving EPA discretion to not regulate sources under section 112 in specific circumstances. While the House's propos ed amendment to section 112 might have diminished the scope of regulation under that section, the House expanded the scope of section 111(d) and avoided creating a gap in the statutory framework for existing

- source regulation. In this rulemaking, EPA has h armonized the House and Senate amendments to ensure the section 111(d) exclusion only applies to pollution that is actually regulated under section 112, thus giving an effect to both the House and Senate amendments that serves their respective purposes.
Se cond, EPA's proposed interpretation of section 111(d) is consistent with that section's role in the structure of the Clean Air Act. Section 111(d) provides for controlling dangerous existing

source pollution that would otherwise escape regulation, where EP A has regulated a source category under section 111(b) after finding that the category of sources causes, or contributes significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare. In short, the section fills g aps in the Act's framework for existing stationary sources that cause or contribute significantly to harmful air pollution. Because section 112 does not require EPA to regulate HAPs from all sources, some sources may emit dangerous amounts of hazardous pol lutants even after EPA fully implements section 112. EPA's harmonization of the conflicting amendments would allow section 111(d) to play its gap

- filling role for uncontrolled sources of hazardous air pollution (as well as for non

- hazardous but dangerous p ollutants emitted by sources that are regulated under Section 112). Third, EPA's proposed approach is consistent with the canon that exemptions from regulation should be construed narrowly. See Comm'r v. Clark, 489 U.S. 726 (U.S. 1989). ("In construing pro visions . . . in which a general statement of policy27 is qualified by an exception, we usually read the exception narrowly in order to preserve the primary operation of the provision"); see Phillips, Inc. v. Walling, 324 U.S. 490, 493 (1945) ("To
extend an exemption to other than those plainly and unmistakably within its terms and spirit is to abuse the interpretative process and to frustrate the announced will of the people."). Here, because the amendments exempt certain pollutants from regulation, any ambi guity in the amendments should be construed in favor of limiting the range of pollutants that are exempted As the expert agency responsible for implementing the Clean Air Act, EPA is uniquely aware that narrowing the scope of section 111(d) would significa ntly harm public health and welfare, and that these harms are contrary to the purposes of the Act. See 42 U.S.C. 7401(b)(1). A court would properly defer to EPA's regulatory expertise in determining whether EPA has reasonably harmonized the differing 1990 amendments to section 111(d). See Nat'l Ass'n of Home Builders, 551 U.S.at 666 (upholding EPA's expert harmonization of conflicting statutes, where the agency could not simultaneously obey the differing mandates set forth in [the two provisions and "the st atutory language . . . does not itself provide clear guidance as to which command must give way"). c. There are additional ways to harmonize the amendments that are
consistent with the language and purpose of 111(d).The most straightforward way of
harmoniz ing the two amendments is to interpret the ambiguous House amendment to be consistent with the crystal

- clear Senate amendment with respect to the question presented here

i.e., EPA may, under section 111(d), regulate a non

- HAP pollutant that is emitted from source category whose HAP emissions are regulated under section 112(d). As demonstrated above, there are multiple reasonable readings of section 111(d) as amended by the 1990 House language that would allow EPA to proceed with regulating CO2 emissions fro m EGUs. An alternative means of doing so would be to interpret the 1990 amendments as having included two different versions of 111(d), one reflecting the direction provided by House amendment and one the Senate amendment. Under this approach, the statute contains, with the Senate amendment, a separate, affirmative command to regulate all non

- NAAQS, non

- 112(b)

- listed pollutants. Each amendment mandates that EPA "shall prescribe regulations" for a set of air pollutants. 42 U.S.C. 7411(d)(1) (emphasis added). Neither purports to negate regulatory obligations required by other provisions of the statute. Thus, even if the House amendment is read to exclude EGUs (and to direct regulation of sources not regulated under 112), the two amendments set out compatible

a nd additive commands to regulate (EPA must issue guidelines for all non

- NAAQS pollutants not on a 112 pollutant list, and for sources of all non

- NAAQS pollutants not regulated under 112). This reading allows EPA to "give effect to both" provisions, see Mor ton v. Mancari, 417 U.S. 535, 551 (1974), by doing what is required by either of the amendments. Some commentators have suggested that the two 1990 amendments should both be given effect and that, if both are incorporated into the statute, the resulting la nguage can be read to deny EPA authority to act here. The premise that both amendments can be combined together and read as a single statutory command is problematic, since both provisions direct that the same language in the preexisting legislation be str icken; and neither amendment refers to or purports to take account of the other. There is no evidence that either house of Congress, in fact, legislated with the expectation that its change to section 111(d) would be combined with another change. The

statu te does not provide any definitive guidance for how to incorporate the different chambers, instructions; efforts to combine the language of the two amendments into a workable whole have28 a kind of artificiality in light of the strong indications that Congre ss did not actually make any decision that the two amendments were meant to operate together. But, contrary to the premise of the some supporters of this approach, the proper way to combine the amendments yields an approach that is grammatical, that attemp ts to heed Congress' instructions closely as possible; and that yields a result that is consonant with the statute. The House and Senate amendments can be effectuated together as follows: First, both amendments would strike out the preexisting
reference to "112(b)(1)(A)." The House amendment would then insert "or emitted from a source category" at the point in the text where "or 112(b)(1)(A)" was removed. The Senate amendment would require "112(b)" to be inserted at the point in the text where "112(b)(1)(A) " was removed, immediately after the original "or" that the House Amendment replaced. The combined section would read: "The Administrator shall [establish emission guidelines] for any existing source for any air pollutant . . . which is not included on a l ist published under section . . . 112(b) emitted from a source category which is regulated under section 112 of this title." The resulting amended statute would direct EPA to regulate all pollutants that are not criteria pollutants or emitted by

source cat egories listed under section 112 and actually regulated under that section. Thus, reading the language added by the House and Senate amendments together yields a meaning that is coherent and maintains section 111(d)'s role in protecting human health and th e environment. Any permissible harmonization of the House and Senate amendments must achieve the purpose of section 111(d), which is ensuring that dangerous pollution from existing industrial sources does not escape regulation. EPA cannot adopt an interpre tation of section 111(d) that creates a gaping, inexplicable hole in the CAA's framework for regulating existing industrial sources. The commentators' alternative "harmonization" fails this basic requirement. 5. If harmonizing the amendments were not possi ble, any reasonable interpretation of section 111(d) would still allow EPA to regulate CO2 emissions from EGUs. If harmonizing the amendments were impossible, EPA could rely on several canons of statutory interpretation to resolve any conflict in section
1 11(d). Under any available rule of construction, section 111(d) controls dangerous non

- HAP emissions regardless of whether they come from source categories that are subject to regulation under section 112. EPA's application of these canons to interpret con flicting provisions would be entitled to deference. First, as EPA observed, "[t]he ambiguities stem from apparent drafting errors that occurred during enactment of the 1990 CAA Amendments." If conflicting language in section 111(d) is a result of a mistake , that mistake must have been the House amendment's exclusion of "sources" regulated under section 112 instead of "emissions" regulated under section 112. As described above, the apparent purpose of the House amendment to section 111(d) was to avoid creati ng a gap in the statutory structure for controlling emissions from existing sources; if the conference committee had adopted the House's amendments to section 112, an amendment to section 111(d) would have been necessary to ensure that EPA had authority to regulate existing

- source HAP emissions that EPA chose to not regulate under section
112. Giving effect to the narrow interpretation of the House amendment does not promote the House's (and Congress') manifest intention to control all dangerous air polluti on from existing sources. In contrast, the Senate amendment clearly retains EPA's authority to ensure effective regulation of dangerous non

- HAP pollutants from existing sources under section 111(d) as a complement to regulation of HAPs under section 112. A ccordingly, if EPA's attempts at harmonizing the amendments had failed, EPA could have shown that "Congress did not mean29 what it appears to have said" in the House amendment and that "as a matter of logic and statutory structure, it almost surely could not have meant it." See Engine Mfrs. Ass'n v. EPA, 88 F.3d 1075, 1089 (D.C. Cir. 1996). In such situations, EPA can interpret section 111(d) "by disregarding an obvious mistake. See Bohac v. Dept of Agric., 239 F.3d 1334, 1338 (Fed. Cir. 2001); see also Am. P etroleum Inst. v. SEC, 714 F.3d 1329, 1336

- 37 (D.C. Cir. 2013) (refusing to interpret a scrivener's error as indication that Congress intended to depart from a longstanding statutory scheme). If the two amendments were deemed incompatible, EPA could then c hoose which amendment is controlling, the agency has discretion in reading section 111(d) to effectuate congressional intent. See Appalachian Power Co., 249 F.3d at 1044 n.3 ("[W]hen there are multiple ways of avoiding a statutory anomaly, all equally cons istent with the intentions of the statute's drafters (and equally inconsistent with the statute's text), we accord standard Chevron step two deference to an agency's choice between such alternatives.") (quotation omitted); see also Abdelqadar v. Gonzales, 413 F.3d 668, 673 (7th Cir. 2005) (noting that judges cannot generally engage in "repair work" to rescue Congress from its drafting errors, "but agencies charged with superintending a comprehensive scheme traditionally have been afforded additional
latitud e"). In the context of the CAA's carefully crafted framework for controlling all dangerous emissions from existing sources, it would be implausible to read section 111(d) to let certain dangerous pollution go unregulated simply because EPA controlled other pollution from the same sources. Second, if one of the amendments must prevail over the other, the canons against implied repeal and amendment hold that the Senate amendment must control. EPA cannot presume that Congress intended to repeal its authority t o regulate non

- HAPs from sources regulated under section 112 unless Congress intention to do so is clear and manifest. See Watt, 451 U.S. at 267. Where there are two amendments to the same language, and those two amendments point in different directions, t here is no "clear and manifest" intention. The Senate amendment is substantively similar to prior law and, therefore, should be given effect if EPA cannot discern Congress' clear and manifest intent to substantively change section111(d). Third, "[t]he esta blished rule is that if there exists a conflict in the provisions of the same act, the last provision in point of arrangement must control." Lodge 1858, American Fed. of Govt Employees v. Webb, 580 F.2d 496 (D.C. Cir. 1978). This rule applies regardless of whether the conflicting provisions are in the same statutory section. See, e.g., Merchants' Natl Bank v. United States, 214 F. 200, 205 (2d Cir. 1914); Mobile v. GSF Properties, Inc., 531 So. 2d 833, 837

- 38 (Ala. 1988). Under this rule, the Senate amendme nt controls over the House amendment because it appears later in the Statutes at Large. Finally, giving effect to the Senate amendment would allow EPA to avoid an absurd result. See American Water Works Assn v. EPA, 40 F.3d 1266, 1271 (D.C. Cir. 1994) ("wh ere a literal reading of a statutory term would lead to absurd results, the term simply has no plain meaning and is the proper subject of construction by the EPA and the courts) (quoting Chemical Mfrs. Assoc. v. Natural Resources Defense Council, 470 U.S. 116, 126 (1985)). Reading section 111(d) to exclude from control the dangerous (though not hazardous) emissions from all sources regulated under section 112 would exclude myriad of the country's most significant sources of air pollution and profoundly unde rmine one of the Clean Air Act's basic mechanisms for protecting human health and the environment. Regardless of whether this broad exclusion is a "more natural reading" of the House amendment, EPA cannot give 111(d) a meaning that is at odds with Congress ional intent. See id. (citing Young v.30 Community Nutrition Inst., 476 U.S. 974, 980 (1986)). EPA cannot give effect to a reading of the House amendment that would render the Senate amendment ineffective in nearly any
situation. See United States v. Coatoam , 245 F.3d 553, 557

- 58 (6th Cir. 2001) (refusing to adopt a defendant's literal reading of a statutory provision, which would have rendered another subsection surplusage in the vast majority of cases, where the government asserted that Congress
made a draf ting error when it amended the statute). (References 322 Pub. L. 101

- 549, section 108, 104 Stat. at 2467. Id., section 302, 104 Stat. at 2574. Some commentators have suggested
that codification decisions of the House Office of the Law Revision Counsel are entitled to some form of deference. However, the Office is not the expert agency charged with administering the CAA, and therefore not entitled to Chevron deference regarding the interpretation of that statute. Chevron, 467 U.S. at 844 ("We have long recog nized that considerable weight should be accorded to an executive department's construction of a statutory scheme it is entrusted to administer, and the principle of deference to administrative interpretations has been consistently followed by this Court w henever decision as to the meaning or reach of a statute has involved reconciling conflicting policies, and a full understanding of the force of the statutory policy in the given situation has depended upon more than ordinary knowledge respecting the matte rs subjected to agency regulations."). Accordingly, the Office does not even purport to interpret or amend the law in the codification process: "The translations and editorial changes made to
sections of non

- positive law titles are purely technical and do not change the meaning of the law." Office of the Law Revision Counsel, Detailed Guide to the United States Code Content and Features, available at http://uscode.house.gov/detailed_guide.xhtml. Even where there are plain errors in grammar, punctuation, or spelling, the Office does not correct them in the text of the code, but merely inserts a footnote indicating the probable error. Id. The Office of the Law Revision Counsel could not purport to determine the text of section 111(d) without running afoul
of t he Supreme Court's jurisprudence on the separation of powers. Expunging the text of the Senate amendment from section 111(d) is a legislative act that can only be accomplished through the legislative process. See INS v. Chadha, 462 U.S. 919, 952

- 54 (1983) ("Amendment and repeal of statutes . . . must conform with [the bicameralism and presentment requirements of] Art. I.") "Congress must abide by its delegation of authority until that delegation is legislatively
altered or revoked." Id. at 955. 1 U.S.C. sec tions 112, 204(a); U.S. Nat. Bank of Oregon v. Indep. Ins. Agents of Am., Inc., 508 U.S. 439, 448 (1993); United States v. Welden, 377 U.S. 95, 98 n.4 (1964). Stephan v. United States, 319 U.S. 423, 426, (1943). See Office of Law Revision Counsel, United S tates Code, listing titles that have been enacted into positive law with an asterisk, http://uscode.house.gov/browse.xhtml . See, supra, note 325; Clean Air Act Amendments, 104 Stat. 2399, 2467, 2474 (199 0). See also Owner

- Operator Indep. Drivers Assn v. Landstar Sys., 622 F.3d 1307, 1327 (11th Cir. 2010) ("There is no reason for this Court to rewrite a statute because of an alleged scrivener error unless a literal interpretation would lead to
an absurd re sult."); Lewis v. Alexander, 685 F.3d 325, 351

- 51 (3d Cir. 2012) (regardless of whether statutory text was the result of a drafting error, it was not a mere scrivener's error fit for judicial correction because Congress could have rationally chosen to enac t the text at issue); Nijjar v. Holder, 689 F.3d 1077, 1084 (9th Cir. 2012) (same). Pet. for Extraordinary Writ, 6, Murray Energy Corp. v. EPA, No. 14

- 1112, (D.C. Cir. June 18, 2014) (Doc. 1498341); Brief of Amici Curiae West Virginia, et al., 2, Murray En ergy Corp. v. EPA, No. 14

- 1112 (D.C. Cir. June31 25, 2014) (Doc. 1499435). Revision of December 2000 Regulatory Finding on the Emissions of Hazardous Air Pollutants From Electric Utility Steam Generating Units and the Removal of
Coal

- and Oil

- Fired Electric Utility Steam Generating Units From the Section 112(c) List, 70 Fed. Reg. 1594, 16031 (Mar. 29, 2005). Id. HR 3030, section 301, reprinted in 1990 CAA Leg.
Hist. 3737 at 3933. "The Administrator may designate a category or subcategory of area sources
that he finds, based on actual or estimated aggregate [sic] emissions of a listed pollutant or pollutants in an area, warrants regulation under this section." Id., 1990 CAA Leg. Hist. 3737 at 3933. In contrast, the conference bill required EPA to regulate certa in "area source emissions of the 30 hazardous air pollutants that present the greatest threat to public health in the largest
number of urban areas." Pub. L. 101

- 549, section 301, 104 Stat. at 2537 (codified at 42 U.S.C.

- 7412(c)(3). 70 Fed. Reg. at 16031 . Section 112 does not mandate controls for all source categories that emit HAPs. For instance, section 112 does not provide for the regulation of HAPs from oil and gas wells outside of certain metropolitan areas, unless those sources meet the statutory de finition for "major sources." 42 U.S.C. section 7412(n)(4)(B). Also, section 112 requires EPA to regulate non

- major sources "representing 90 percent of the [non

- major] source emissions of the 30 hazardous air pollutants that present the greatest threat to public health in the largest number of urban areas," but otherwise only provides for regulation of non

- major sources of HAPs if EPA determines they present[] a threat of adverse effects to human health or the environment (by such sources individually or in the aggregate) warranting regulation under this section. Id. section 7412(c)(3). Major sources are generally stationary sources with the potential to emit "10 tons per year or more of any hazardous air pollutant or 25 tons per year or more of any combinat ion of hazardous air pollutants." Id. 7412(a)(1). H.R. 3030,

- 301 (introduced July 27, 1989, and referred to the Committee on Energy and Commerce), reprinted in 1990 CAA Leg.
Hist. at 3936

- 37. Id. at 1990 CAA Leg. Hist. at 3937. It may also be noteworthy that neither the House bill nor conference bill posed any equivalent need to expand section 111(d) to cover criteria pollutants. This is likely due to the different nature of HAPs and criteria pollutants. Very small doses of HAPs can cause adverse impacts on public health and sources of HAPs impose the greatest burdens on nearby communities. Consequently, addressing HAP impacts requires controlling all major sources of HAPs. In contrast, the NAAQS program gives states discretion
over which sources of criter ia pollutants should be subject to regulation because states can adequately protect public health so long as they ensure ambient concentrations do not exceed the NAAQS. See EPA, National Emission Standards for Hazardous Air Pollutants (NESHAP), http://www. epa.gov/ttn/atw/mactfnlalph.html (listing the nearly 200 source categories and subcategories affected by standards set under section 112). When Congress enacted the 1990 Clean Air Act Amendments, EPA had only issued four 111(d) emission guidelines, address ing total reduced sulfur from kraft paper mills, fluoride emissions from aluminum reduction plants, fluoride emissions from phosphate fertilizer plants, and sulfuric acid mist from sulfuric acid production units. Each of these source categories is now regu lated under section 112 except for sulfuric acid production units. Yet sulfuric acid mist is emitted by other sources regulated under section 112, such as EGUs. See 76 Fed. Reg. 24976, 25,064 (May 3, 2011). Pet. for Extraordinary Writ, 6, Murray Energy Corp. v. EPA, No. 14

- 1112, (D.C. Cir. June 18, 2014) (Doc. 1498341). Proposed National Emissions Standards for Hazardous Air Pollutants; and, in the Alternative, Proposed Standards of Performance for New and Existing Stationary Sources:3 2 Electric Utility Steam Generating Units, 69 Fed. Reg. 4652, 4685 (Jan. 30, 2004). In fact, however, a "literal" reading of section 111(d), both before and after the 1990 amendments would require section 111(d) regulation even for HAPs. That is because the exclusions for criteri a pollutants and HAPs are structured as a mandate to regulate various classes of pollutants separated by an "or" in the alternative for which air quality criteria have not been issued or which is not included on a list published under section 7408(a) or 74 12(b)(1)(A) of this title. The canon disfavoring implied repeals is discussed in section I.N.4.b. See, e.g., Remarks of Rep. Dingell during the House Debate on the Conference Report, reprinted in 1990 CAA Leg. Hist. at 1187 ("America already has the toughe st air quality laws in the world. With this act, we will be raising our standards even higher. We will also be fulfilling our responsibility to the American people who have told us that they are willing to make some sacrifices in pursuit of a cleaner
envir onment."); Remarks of Rep. Green during House Debate on the Conference Report, reprinted in 1990 CAA Leg. Hist. at 1180 ("Mr. Speaker, the conference report before us today will help us to fulfill our promise to the American people of a clean, safe environ ment. Although some . . . may argue that the costs of enacting this bill are too great, I contend that the costs of not enacting clean air legislation this year are greater still."). Pet. for Extraordinary Writ, 6, Murray Energy Corp. v. EPA, No. 14

- 1112, (D.C. Cir. June 18, 2014) (Doc. 1498341). "Under H.R. 3030, states would be required to submit to EPA comprehensive permit programs for regulating stationary sources. The permitting requirements would extend to sources that are subject to new source perfo rmance standards, emission standards for hazardous air pollutants, requirements for preventing significant deterioration (PSD) of air quality, nonattainment new and existing source review, and acid deposition controls under Title V. They also apply to all sources of air pollution emitting over 100 tons a year. House Debate on H.R. 3030 (May 21, 1990), reprinted in 1990 CAA Leg. Hist. at 2566. 42 U.S.C.

- 7475(a)(4). For certain sources regulated under other acts, the 1990 amendments required EPA to consider the efficacy of those regulations before issuing regulations under section 112. As amended in 1990, section 112 does not require EPA to regulate sources and substances regulated by the Nuclear Regulatory Commission if "the regulatory program established b y the Nuclear Regulatory Commission pursuant to the Atomic Energy Act for such category or subcategory provides an ample margin of safety to protect the public health." 104 Stat. at 2542 (codified at 42 U.S.C. section 7412(d)(9)). In addition, Congress pro vided that "In the case of any category or subcategory of sources the air emissions of which are regulated under subtitle C of the Solid Waste Disposal Act, the Administrator shall take into account any regulations of such emissions which are promulgated u nder such subtitle and shall, to the maximum extent practicable and consistent with the provisions of this section, ensure that the requirements of such subtitle and this section are consistent." 104 Stat. at 2560 (codified at 42 U.S.C.

- 7412(n)(7)). See also Scialabba v. Cuellar de Osorio, 134 S. Ct. 2191, 2203 (2014) (plurality opinion); Id. at 2219 n. 3 (Sotomayor, J., joined by Breyer, J., dissenting). Antonin Scalia and Bryan A. Garner, Reading Law: The Interpretation of Legal Texts (2012) at 180; id. ("The imperative of harmony among provisions is more categorical than most other canons of construction because it is invariably true that intelligent drafters do not contradict themselves (in the absence of duress). Hence there can be no justification fo r needlessly rendering provisions in conflict if they can be interpreted harmoniously."); see also Ricci v. DeStefano, 557 U.S. 557, 579

- 83 (2009) (where provisions of33 Title VII 'could be in conflict absent a rule to reconcile them," Court adopted construc tion that "allows the [provision at issue] to work in a manner that is consistent with other provisions of Title VII"); Watt v. Alaska, 451 U.S. 259, 267 (1981) (construing potentially discordant statutory provisions "to give effect to each if [it] can do so while preserving their sense and purpose"). EPA, Legal Memorandum for Proposed Carbon Pollution Emission Guidelines for Existing Electric Utility Generating Units' (2014) at 26. Over the span of a decade, EPA has interpreted
the House and Senate amendme nts to section 111(d) consistently in each of the two rulemakings where they were at issue. Courts should give significant weight to EPA's unwavering interpretation of section 111(d). See Good Samaritan Hospital v. Shalala, 508 U.S. 402, 417 (1993) ("[T]he consistency of an agency's position is a factor in assessing the weight that position is due."). 69 Fed. Reg. at 4685. EPA, "Legal Memorandum for Proposed Carbon Pollution Emission Guidelines for Existing Electric Utility Generating Units" at 26

- 27. Id. S ee EPA FLIGHT, available at http://ghgdata.epa.gov/ghgp/main.do . 40 CFR sections 63.640 et seq & 63.1560 et seq (NESHAPs for petroleum refineries, including units used for hydrogen production); sections 6 3.760 et seq (NESHAP for oil and natural gas production facilities, including facilities that process natural gas and certain compressors); sections 63.1270 et seq (NESHAP for natural gas transmission and storage facilities); subparts F, G, H & I (NESHAPs for the synthetic organic chemical manufacturing industry, including manufacturing of certain petrochemical products); sections 63.11400 et seq (NESHAP for carbon black production area sources, which manufacture "petrochemical products); sections 63.2430 e t seq (NESHAP for miscellaneous organic chemical manufacturing, which includes units classified under 1997 NAICS code 325, such as ammonia manufacturing); sections 63.11494 et seq (NESHAP for chemical manufacturing area sources, which includes units classi fied under 1997 NAICS code 325); sections 63.7680 et seq (NESHAP for iron and steel foundries); sections 63.7780 et seq (NESHAP for integrated iron and steel foundries); 63.10880 et seq (NESHAP for iron and steel foundries area sources); sections 63.1340 e t seq (NESHAP for the Portland cement manufacturing industry); sections 63.7080 et seq (NESHAP for lime manufacturing plants); sections 63.440 et seq (NESHAP for the pulp and paper industry); sections 63.7480 et seq (NESHAP for industrial, commercial, and institutional boilers and process heaters that are major sources of HAPs); sections 63.11193 et seq (NESHAP for industrial, commercial, and institutional boilers and process heaters that are area sources of HAPs); sections 63.6080 et seq (NESHAP for statio nary combustion turbines); sections 63.6580 et seq (NESHAP for reciprocating internal combustion engines). Boilers, turbines, engines, and process heaters are the main sources of CO2 emissions from the food processing, manufacturing, and ethanol
subsectors . See EPA, Who Reports, ttp://www.ccdsupport.com/confluence/pages/viewpage.action/pageId=93290546 (explaining that facilities in the food processing, manufacturing, and ethanol subsectors are required to report emissions from stationary combustion if they meet an emissions thresh old); 40 CFR section 98.30 ("Stationary fuel combustion sources include, but are not limited to, boilers, simple and
combined

- cycle combustion turbines, engines, incinerators, and process heaters."). For instance sources in the "other chemicals" category m ay be regulated under section 112 as part of the Chemical manufacturing Industry (area sources) source category, subpart VVVVVV or Miscellaneous Organic Chemical Production and Processing source category, subpart FFFF.34 Public Law 101,549, 4108(g), 104 Stat . at 2467 (Nov. 15, 1990). Under the Mineral Leasing Act of 1920, ninety percent of federal oil and gas revenue goes to the states and ten percent to the U.S. Treasury, whereas 1964 amendments to the Wildlife Refuge Revenue Sharing Act require
twenty

- five percent of the revenue from refuge resources (including "minerals") to goes to counties and seventy

- five percent to the Department of Interior. The Court explained that the purpose of the 1964 amendments was to distribute more revenue to counties "as compe nsation for loss of taxable properties that have been acquired by the Federal wildlife refuge system." 451 U.S. at 270. The Court observed that "Congress might be expected to have mentioned a change" that would have increased federal revenues, especially w hen Congress was concerned that the Department have sufficient funds to make the increased payments mandated by the amendments." 451 U.S. at 271. 70 Fed. Reg. at 16031. As discussed above, section 112 does not provide for regulation of certain area sources in the oil and gas sector and regulation of HAPs from many area sources is discretionary under section 112. Indeed, the savings clause enacted as part of the 1990 amendments indicates that Congress recognized the importance of section 111(d) in controllin g dangerous pollutants and did not want such regulation to be ousted lightly or by mere implication. That savings provision provides that "[n]o emission standard or other requirement promulgated under this section [112] shall be interpreted, construed, or applied to diminish or replace the requirements of a more stringent emission limitation or other applicable requirement established pursuant to Section 111 [and other programs]." 42 U.S.C. 7412(d)(7). See William J. Haun, The Clean Air Act As an Obstacle t o the Environmental Protection Agency's Anticipated Attempt to Regulate Greenhouse Gas Emissions from Existing Power
Plants 10

- 11 (Federalist Society 2013), available at http://ww w.fed

soc.org/library/doclib/20130311_HaunEPAWP.pdf . In contrast, the approach urged by Haun, supra, results in a formulation that would restrict section 111(d) to "any air pollutant . . . which is not included on a list published under section 7408(a) or 112(b) [Senate amendment] or emitted from a source category which is regulated under section 112 [House amendment] of this title[.]" Haun at 10 (emphasis added by Haun). However such an interpretation would be properly interpreted, it clearly does not fait hfully implement the amendments, since it results in smuggling in an extra "or" that Congress did not enact. The House Amendment struck one "or" (by striking "or section 112(b)(1)(A)"), and the Senate Amendment did not add any "or's." Yet the Haun approach manages to yield a new "or," by disregarding the instruction in the House amendment to strike the preexisting "or". See Scialabba, 134 S. Ct. at 2203 (plurality opinion); Id. at 2219 n. 3 (Sotomayor, J., joined by Breyer, J., dissenting) (agreeing with pl urality that where agency cannot "simultaneously obey" two statutory commands, "it is appropriate to defer to the agency's choice as to which command must give way"). 79 Fed. Reg. at 34853. If the inclusion of the House amendment did not create ambiguity i n the statutory text, the plain language of the statute would control despite any errors in the drafting process. See Lamie v. United States Trustee, 540 U.S. 526, 542 (2004) ("If Congress enacted into law something different from what it intended,
then it should amend the statute to conform it to its intent. It is beyond our province to rescue Congress from its drafting errors, and to provide for what we might think . . . is the preferred result."). But here, it is impossible for EPA to give effect to the House amendment without violating the mandate in the Senate amendment. As explained above, EPA may also respond to this scrivener's error by interpreting the House amendment in a way that gives it some effect but35 avoids an absurd result. See United States ex rel. Holmes v. Consumer Ins. Group, 318 F.3d 1199, 1209 (10th Cir. 2003) ("Under the doctrine of scrivener's error, a court may give an unusual (though not unheard

- of) meaning to a word which, if given its normal meaning, would produce an absurd and arg uably unconstitutional result."). These canons are discussed supra, section I.N.4.b, because they demonstrate that

- if harmonization is possible

- EPA's harmonization
is reasonable. Both the Senate amendment and then

- effective law excluded the current list of HAPs from regulation under section 111(d). The rationale for giving effect to the last provision in order of arrangement is that the last expression of the legislative will must prevail: "[O]ne, for being earlier or later in position, must be deemed to re nder the other nugatory, or repeal it. The decisions are to the effect that the provision which is latest in position repeals the other. Being later in position, the prevailing provision is deemed a later expression of the legislative will. This
rule and t he reason for it have been criticized, because, all the provisions of an act being adopted at the same time, there is no priority in point of time on account of their relative positions in the statute. This is strictly true; but, in the reading of a bill, matter near the close may be presumed to revive the last consideration, and, if assented to, is a later conclusion." Sutherland, Statutes and Statutory Construction (2d ed. 1904) vol. 2, section 349. This rationale applies despite the fact
that the two rel evant sections of the Statutes at Large amend the same statutory provision.

Response 9 : EPA agrees that it has the authority to promulgate regulations addressing CO2 emissions from existing power plants under section 111(d). EPA’s discussion of this issue is in Section IV of the preamble.

Comment 10 : Commenters state d that the EPA has no statutory authority, granted by Congress, to regulate CO 2 or any other "greenhouse gas" as a pollutant.

Response 10 : We disagree with this comment. In section IV of the preamble for this rule, we explain EPA’s authority under the CAA to regulate CO 2 and other greenhouse gases.

Comment 11 : Commenters stated the proposal is outside the bounds of the Clean Air Act itself and adds that this proposal must be withdrawn.

Respons e 11 : We disagree with this comment. In other parts of the record for this rulemaking, we explain that this rule’s impacts on electricity consumers are limited, the benefits of this rule in reducing the adverse impacts on climate change of CO 2 emissions, a nd the legal authority for
this rule.

Comment 12 : Commenter s stat ed that EPA ’ s attempt to reduce CO2 emissions from existing
coal

- fired EGUs under Section 111(d) violates the plain language of that section. As recorded in the official United States Code, Section 111(d) prohibits EPA from regulating "any pollutant . . . from a source category which is regulated under Section 112." (42 U.S.C.

- 7411(d) (2006); see
also 1 U.S.C.

- Section 204(a) (2006) (providing that the Code of Laws of the United States

cur rent at any time "shall . . . establish prima facie the laws of the United States . . . .").)The Supreme Court has expressly recognized this prohibition, stating definitively in American Electric Power Co. v. Connecticut that "EPA may not employ Section [1 11](d) if existing36 stationary sources of the pollutant in question are regulated under the national ambient air quality standard program, S. [108

- 110], or the 'hazardous air pollutants' program, Section [112]. See Section [112](d)(1).(131 Supreme Court 252 7, 2537 n.7 (2011)) This definitive statement from the Supreme Court effectively resolves the matter. In 2012, EPA promulgated the Mercury and Air Toxics Standard,(Fed. Reg. 9304 (February 16, 2012)) which regulated emissions of mercury
and other hazardous pollutants from new and existing coal

- and oil

- fired EGUs under Section 112 of the Clean Air Act. According to the plain language of the statute, then, once EPA promulgated the Mercury and Air Toxics Standard, the Agency relinquished its authority to subj ect existing coal

- and oil

- fired EGUs to regulation under Section 111(d). The Proposed Rule is thus facially invalid because it seeks to regulate sources

- existing coal

- fired EGUs

- that are already subject to regulation under Section 112. To the extent E PA argues that the Supreme Court's definitive statement regarding Section 111(d) is dictum because that issue was not directly before the Court in American Electric Power, we note that under the law of the D.C. Circuit, even "dicta of the United States Sup reme Court should be [considered] very persuasive." (Gabbs Exploration Co. v. Udall, 315 F.2d 37, 39 (D.C. Cir. 1963); see also Bangor Hydro

- Elec. Co. v. FERC, 78 F.3d 659, 662 (D.C. Cir. 1996) (stating that "Supreme Court dicta ten[d] to have somewhat gre ater force" that dicta from other courts)) EPA would be bound by the plain language of the Clean Air Act's prohibition even if the Supreme Court had not yet so clearly recognized it. EPA itself correctly acknowledges that the Proposed Rule is invalid under a "literal reading" of Section 111(d).(Legal Memorandum for Proposed Carbon Pollution Emission Guidelines for Existing Electric Utility Generating Units ("Legal Memo") 26 (June 18, 2014), available at http://www2.epa.gov/sites/production/files/2014

- 06/doc uments/20140602

- legal

memorandum.pdf.) Nevertheless, EPA apparently believes the Section's explicit prohibition is made ambiguous by a clerical mistake in the 1990 Amendments to the Clean Air Act. Before the 1990 Amendments, Section 111(d) barred EPA from regulating, under that Section, ": any air pollutant . . . included on a list published under . . . [Section] 112(b)(1)(A)." (42 U.S.C. S.7411(d) (1987)) Two provisions in the 1990 Amendments purported to alter that language. The first provision, drafted i n the House, replaced the cross

- reference to S.112(b)(1)(A) with the language that now appears in the U.S. Code and that is cited by the Supreme Court in American Electric Power, forbidding EPA from regulating emissions of "any pollutant . . . from a sourc e category which is regulated under Section 112." (Pub. L. No. 101

- 549, S. 108, 104 Stat. 2399 (1990)) The second provision, drafted in the Senate, struck S.[112](b)(1)(A) and inserted "in lieu thereof S. [112](b)." (Id. at S. 302(a)) Rushing to file its c onference report after an all

- night meeting, the House

- Senate Conference Committee included both amendments in the version of the 1990 Amendments that was ultimately passed by both houses of Congress and signed into law by the President. The House provisio n of Section 111(d) prohibiting double regulation of sources is the law under longstanding rules for resolving drafting inconsistencies and clerical errors in federal legislation. A longstanding rule of legislative draftsmanship dictates that conforming am endments be applied after substantive amendments. Congress placed the Senate amendment with other amendments expressly designated as "Conforming Amendments." Congress's decision to label the Senate amendment as a "conforming amendment," and to lump
the ame ndment with a host of other conforming amendments, conclusively demonstrates that the Senate amendment was a clerical revision, not intended to affect the substance of Section 111(d).37 The House amendment, on the other hand, is clearly substantive. A close analysis of the text of the amendment reinforces the conclusion that the Senate amendment is clerical. Conforming amendments are, by definition, non

- substantive. They are: amendment[s] of a provision of law that [are] necessitated by the substantive amendm ents or provisions of the bill. The designation includes amendments, such as amendments to the table of contents, that formerly may have been designated as clerical amendments.(Senate Legislative Drafting Manual S. 126(b)(2)(A); see, e.g., I.N.S. v. Stevic , 467 U.S. 407, 428 (1984) ("The amendment . . . was explicitly recognized to be a mere conforming amendment, added "for the sake of clarity," and was plainly not intended to change the standard."); Dir. of Revenue of Mo. v. CoBank ACB, 531 U.S. 316, 323 ( 2001) (conforming amendment was "merely . . . technical," rather than substantive)) The function of the Senate amendment was to update Section 111(d)'s existing language to reflect changes made by other provisions of the 1990 Amendments. A few of those pro visions replaced Section 112(b)(1)(A) "the subsection cross

- referenced in Section 111(d)" with Sections 112(b)(1), 112(b)(2), and 112(b)(3). The Senate amendment sought to accommodate those changes by "striking" Section 111(d)'s cross

- reference to Section 112(b)(1)(A) and inserting "in lieu thereof S. [112](b)." (Pub. L. No. 101

- 549, S. 302(a)) It is thus plainly clerical or conforming. The House amendment significantly and deliberately alters the scope of Section 111(d). Whereas the pre

- amendment version o f Section 111(d) allowed EPA to regulate certain emissions from source categories regulated under Section 112,(See 42 U.S.C.

- Section 7411(d) (1987)) the House amendment expressly precludes EPA from using Section 111(d) to regulate any emissions from sour ce categories regulated under Section 112. (Pub. L. No. 101

- 549, S. 108, 104 Stat. 2399 (1990)) The substantive character of the House amendment is confirmed by its placement amidst a series of other obviously substantive amendments in the Statutes at Larg e.(See Beecham v. United States, 511 U.S. 368, 371 (1994) ("That several items in a list share an attribute counsels in favor of interpreting the other items as possessing that attribute as well.")) The House's substantive amendment eliminates the statutor y cross

- reference that the Senate's conforming amendment was intended to update, because it replaces the cross

- reference with an entirely new substantive limitation on EPA's authority. Without a cross

- reference to update, the Senate amendment is superfluou s, enacting nothing. The U.S. Code version of Section 111(d) accordingly notes that the Senate's clerical change "could not be executed."
Inclusion of the Senate amendment in the final version of the 1990 Amendments was thus a
mistake. EPA itself has descr ibed the Senate amendment as a drafting error" that "should not be considered." (70 Fed. Reg. 15,993, 16,031 (Mar. 29, 2005)) Longstanding judicial and legislative practice support this plain text reading of the U.S. Code. In Chickasaw Nation v. United Sta tes, for example, the Supreme Court concluded that "a failure to delete an inappropriate cross

reference" in a statute was "simply a drafting mistake" that "d[id] not warrant rewriting the remainder of the statute's language."(534 U.S. 84, 90

- 91 (2001); se e also U.S. Natl Bank of Or. v. Indep. Ins. Agents of Am., Inc., 508 U.S. 439, 462 (1993) (unanimous court disregarded placement of quotation marks in statute when, after reviewing in detail the statute's "structure, language, and subject matter," it concl uded that the statute's "true meaning" was "clear beyond question," and that "the placement of the quotation marks in the [statute] was a simple scrivener's error, a mistake made by someone unfamiliar with the law's object and design")) Circuit courts

acro ss the country have similarly held that, where a mistake in correcting a cross

- reference38 conflicts with the statute's substantive provisions, the mistake should be treated as "the result of a scrivener's erro[r] and not construed as "creating an ambiguity. " (Am. Petroleum Inst. v. SEC, 714 F.3d 1329, 1336

- 37 (D.C. Cir. 2013); see also United States v. Coatoam, 245 F.3d 553, 557 (6th Cir. 2001) (declining to give effect to erroneous statutory cross

- reference); In re Chateaugay Corp., 89 F.3d 942, 954 (2d Cir . 1996) (same); King v. Hous. Auth., 670 F.2d 952, 954 n.4 (11th Cir. 1982) (same).) On the dozens of occasions where simultaneously

- enacted substantive and conforming amendments have applied to the same statutory language, the Office of the Revisor
of Sta tutes has refused to give effect to the conforming amendment, without exception. Indeed, even though such errors are relatively common in complicated pieces of legislation, Congress and the courts appear not to have ever given effect to one. Nevertheless, EPA insists the Senate amendment must be given effect on the ground that federal agencies are obligated to give substantive effect to all language in the Statutes at Large.(Legal Memo 26) EPA does not attempt to square its reading with the judicial and leg islative precedents that preclude giving effect to drafting errors.(See supra notes 12

- 15 and accompanying text ) Nor does EPA suggest a principled means of distinguishing between the Senate amendment and the hundreds of other drafting errors interspersed throughout the U.S. Code.(See supra note 14 and accompanying text.) Although no court or agency has ever given effect to such errors, EPA would require courts and agencies to do so for each of the hundreds of erroneous clerical amendments heretofore
denied effect. In light of the foregoing, EPA's attempt to give meaning to both amendments is misguided. Only the House's has any effect. Even accepting there is something to reconcile, EPA's attempt goes badly astray, because under any proper harmonization of t he two versions, the existence of the House amendment explicitly forecloses adoption of the Proposed Rule.(Pub.
L. No. 101

- 549, S. 108) It is undisputed that the plain text of the House amendment curtails EPA's authority to regulate pollutants emitted by s ources regulated under Section 112. Put another way, Section 111(d) cannot provide a statutory basis for the Proposed Rule unless EPA demonstrates both that the Senate amendment must be given effect (which, as we have shown, cannot be done), and that givin g effect to the Senate amendment makes it impossible to give full effect at the same time to the House amendment's plain language. EPA has not made this showing, and it cannot make this showing, because the two amendments can be harmonized in way that give s full effect to both. The limitations in the House and Senate amendments are entirely compatible with one another.(See, e.g., William J. Haun, The Clean Air Act as an Obstacle to the Environmental Protection Agency's Anticipated Attempt to Regulate Greenh ouse Gas Emissions from Existing Power Plants, THE FEDERALIST SOC'Y (Mar. 2013); Brian H. Potts, The President's Climate Plan for Power Plants Won't Significantly Lower Emissions, 31 YALE J. REG. ONLINE 1, 9 (Aug. 22, 2013).) The House amendment forbids EP A from regulating, under Section 111(d), any pollutants emitted from sources in a source category already regulated under Section 112 (Pub. L. No. 101

- 549, S. 108); the Senate amendment forbids EPA from regulating, under Section 111(d), any hazardous air p ollutants, whether or not they are emitted from a source in a category regulated under Section 112.(Id. at Section 302(a)) Nothing in either restriction on EPA's authority forecloses full enforcement of the other. Rather, EPA may give maximum effect to bot h limitations by reading the two amendments as jointly prohibiting EPA from regulating under Section 111(d) any hazardous air pollutants already regulated under Section 112, as well as any emissions of any pollutants from a source in "a39 source category whi ch is regulated under Section 112." (42 U.S.C.

- 7411(d)) A venerable maxim of statutory construction requires courts and agencies to give effect, whenever possible, to all of the language in a statute.(Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979); U nited States v. Menasche, 348 U.S. 528, 538 (1955); Ward v. Race Horse, 163 U.S. 504, 508 (1896)) EPA's reading gives meaning only to the Senate amendment (and then only to portions thereof, as we explain next), entirely ignoring the House's. Because it is possible to give concurrent effect to all of the language in the House and Senate amendments, as we have shown above, EPA must do so. Of course, giving effect to the House amendment's express terms renders the Proposed Rule invalid, because the Proposed R ule purports to regulate, under Section 111(d), emissions of pollutants from sources (coal

- fired EGUs) in a source category (the category of coal

- and oil

fired EGUs) already regulated under Section 112 by virtue of the Mercury and Air Toxics
Standards. Ra ther than adopt this straightforward reading of the two amendments, EPA has propounded its own, novel interpretation of Section 111(d). Under EPA's interpretation, Section 111(d) would prohibit regulation of 'any [hazardous air pollutants] listed under Sec tion 112(b) that may be emitted from a particular source category . . . regulated under Section 112." (Legal Memo 26) Somewhat remarkably, EPA's interpretation ignores the explicit limitations set out in both of the amendments it purports to construe. Cont rary to the House's substantive amendment

- which explicitly bars any regulation under Section 111(d) of any existing sources already regulated under Section 112

- EPA's interpretation would allow such regulation so long as the pollutant is not regulated u nder Section 112. Contrary to the Senate's conforming amendment

- which appears to forbid regulation of any hazardous air pollutant under Section 111(d)

- EPA's reading would permit such regulation of the hazardous air pollutant so long as the emitting

sou rce is not regulated by Section 112. Without any support, EPA suggests the express limitations in the House and Senate amendments negate one another. But, as the Supreme Court very recently made clear, "an agency may not rewrite clear statutory terms to su it its own sense of how the statute should operate." (Util. Air Regulatory Grp. v. EPA, 134 S. Ct. 2427, 2446 (2014) Because it is possible to read Section 111(d) in a way that gives maximum effect to both the House and Senate amendments, EPA must do so. T he unambiguous effect of such a reading is to prohibit EPA from regulating, under Section 111(d), emissions of any air pollutant from sources in a category that is already regulated under Section 112. The Proposed Rule violates this prohibition, and thus S ection 111(d) cannot supply the statutory basis for enacting it. As there is no other source of authority, EPA must abandon the Proposed Rule to the extent that it purports to regulate sources already regulated under Section 112

- here, coal

- fired EGUs. To determine whether an agency's interpretation of a statute is valid, courts employ the familiar framework from Chevron, U.S.A. v. Natural Resources Defense Council, Inc.(467 U.S. 837, 842

- 43 (1984) and its progeny. The first step in that framework asks "wh ether Congress has spoken to the precise question at issue." (Id. at 842) If so, the agency must give effect to Congress's expressed intent.(Id.) If the statute is ambiguous or silent on the question at issue, however, courts ask whether the ambiguity or s ilence is the product of an implicit delegation of interpretive authority to the agency by Congress.(United States v. Mead Corp., 553 U.S. 218, 226

- 27 (2001)) If not, courts will afford the agency's interpretation of the statute only the modest deference o utlined in Skidmore v. Swift & Co.(Id. at 234

- 35 (citing Skidmore, 323 U.S. 134, 139

- 40)) If the ambiguity or silence is the product of an implicit delegation of authority to the agency, then and only then,40 under the second Chevron step, will courts defer to the agency's interpretation if that interpretation is reasonable.(Chevron, 467 U.S. at 843) EPA's interpretation of Section 111(d) fails at each step in the Chevron analysis. Even if the House and Senate amendments render Section 111(d) ambiguous, the P roposed Rule is still invalid. To justify the Proposed Rule, EPA has adopted an interpretation of Section 111(d) that departs substantially from Section 111(d)'s text. For that reason, the validity of EPA's interpretation of Section 111(d) hinges on its re ceiving the substantial deference afforded under Chevron. Such deference, however, is unwarranted here and almost certainly will not be accorded by the reviewing courts. Not every statutory question gives rise to Chevron deference. As Chief Justice Roberts stated just this past Term, "Direct conflict [between statutory provisions] is not ambiguity, and the resolution of such a conflict is not a statutory construction but legislative choice. Chevron is not a license for an agency to repair a statute that doe s not make sense." ( Scialabba v. Cuellar de Osorio, 134 S. Ct. 2191, 2214 (2014) (Roberts, C.J., concurring)) Rather, Chevron deference is appropriate only when it is clear Congress meant for the alleged ambiguity in the statute to "be resolved, first and foremost, by the agency, and desired the agency (rather than the courts) to possess whatever degree of discretion the ambiguity allows." (Smiley v. Citibank (S.D.), N.A., 517 U.S. 735, 740

- 41 (1996); see also Am. Bar Assn v. F.T.C., 430 F.3d 457, 469 (D.C . Cir. 2005) ("The deference mandated by Chevron comes into play . . . only if the reviewing court finds an implicit delegation of authority to the agency.")) In other words, Chevron deference only applies where there is intent to delegate to the agency th e authority to interpret. In Section 111(d), there is no evidence that Congress drafted and passed the House and Senate amendments with the intention of creating an ambiguity that it meant for EPA to interpret. Rather, as EPA has acknowledged,
inclusion of the Senate amendment was an inadvertent "drafting error." (70 Fed. Reg. 15,993, 16,031 (Mar. 29, 2005).) A drafting error cannot supply a basis for affording Chevron deference, since, by definition, a mistake conveys no congressional intent at all "delega tory or otherwise.(See Appalachian Power Co. v. EPA, 249 F.3d 1032, 1043

- 44 (D.C. Cir. 2001) ("Lest it obtain a license to rewrite the statute, however, we do not give an agency alleging a scrivener's error the benefit of Chevron step two deference, by whi ch the court credits any reasonable construction of an ambiguous statute.")) Without Chevron deference, EPA's interpretation of Section 111(d), which either concededly conflicts with the statute's plain language or simply ignores one house's amendment in f avor of another's, cannot survive. Cases like National Association of Home Builders v. Defenders of Wildlife (551 U.S. 644 (2007)) and Citizens to Save Spencer County v. EPA(600 F.2d 844 (D.C. Cir. 1979)) are not to the contrary. National
Association of Ho mebuilders involved separate statutes addressing separate problems through "seemingly categorical" and, at first glance, irreconcilable "legislative commands." (551 U.S. at 661) The Court ultimately deferred to an agency interpretation reconciling the two statutes, largely because of the interpretive canon disfavoring repeal by implication.(Id. at 662

- 69) That canon is not applicable in these circumstances, so neither is the deference afforded under National Association of Homebuilders. Spencer County invol ved two distinct Sections of the Clean Air Act that appeared to set out different effective dates affecting construction of major pollution

- emitting facilities.(600 F.2d at 852

- 53) Not only has the D.C. Circuit subsequently cabined that decision,(See Georg etown Univ. Hosp. v. Bowen, 821 F.2d 750, 757 n.11 (D.C. Cir. 1987) ("The decision in Spencer County is not only extremely limited, but the narrow exception41 that it purports to recognize has never been accepted by any other panel of this court.")) but Spen cer County, like National Association of Homebuilders, addressed circumstances fundamentally dissimilar to those surrounding Section 111(d). With Section 111(d), two separate versions of a single section of a public law purport to address, in vastly differ ent ways, the very same language in a single subsection of a statute. Those facts bear little resemblance to the facts in National Association of Homebuilders and Spencer County, both of which involved ambiguities created by different sections of the U.S. Code. There is, in short, no basis for affording EPA's interpretation of Section 111(d) Chevron deference. Without such deference, EPA's interpretation of Section 111(d) cannot be sustained, as it is manifestly contrary to the statute's express terms. Defe rence under step two of Chevron would be inappropriate here even had Congress delegated to EPA authority to interpret any alleged ambiguity in Section 111(d), because EPA's interpretation is profoundly unreasonable. "Under the second step of Chevron, [cour ts] will only defer to [an agency's] interpretations if they are reasonable and consistent with statutory purpose."(GTE Serv. Corp. v. F.C.C., 205 F.3d 416, 422 (D.C. Cir. 2000); see also FDIC v. Philadelphia Gear Corp., 476 U.S. 426, 439 (1986) (agency in terpretation "may certainly stand" where it "is consistent with congressional purpose")) Yet EPA's construction of Section 111 contravenes even EPA's own understanding of congressional intent. As EPA admits, a central purpose of the 1990 Amendments was "to change the focus of Section 111(d) by seeking to preclude [Section 111(d)] regulation of those pollutants that are emitted from a particular source category that is actually regulated under Section 112," so as to preclude "duplicative or overlapping regul ation." (70 Fed. Reg. 15,993, 16,031 (Mar. 29, 2005)) Despite this understanding, EPA now proffers a reading of Section 111(d) that contravenes that congressional intent. Section 111(d)'s prohibition against double

- regulation of existing sources is part of a carefully considered regulatory scheme concerning emissions from stationary sources. The existing scheme avoids subjecting existing sources to both new national standards for
emissions under Section 112 and new state

- by

- state standards under Section 111 . Unlike newly

constructed sources, which may be designed and constructed in compliance with both Section 111 and Section 112, the imposition of additional regulatory burdens on existing sources sacrifices fairness and all but ensures creation of a huge st randed asset problem. The problems presented by double regulation of existing sources are starkly illustrated by this Proposed Rule. As we discuss in Section I.D.3 below, many coal

- fired EGUs have invested hundreds of millions of dollars in pollution contr ols to comply with the Mercury and Air Toxics Standard, which was promulgated just two years ago pursuant to Section 112. It has been estimated that implementation of that rule will cost those plants more than $9 billion annually.(EPA, Regulatory Impact An alysis for the Final Mercury and Air Toxics Standards 3

- 13 (Dec. 2011),
available at http://www.epa.gov/ttn/ecas/regdata/RIAs/matsriafinal.pdf ) Under the double regulation threatened by this Proposed Rule, however, many of these facilities will be forced to shut down entirely, or curtail their generation so significantly that their continued operation is no longer economically viable. There will be no opportunity to recover the substa ntial investments
made in state

- of

- the

- art pollution controls. This defies all reason and fairness, and is plainly contrary to congressional intent. Additionally, existing sources that were built under a different regulatory regime may lack the technologic al or financial flexibility to comply with two separate
sets of rules

- one under Section 111(d) cost of compliance against maximum achievable42 reductions.(42 U.S.C.

- 7411(a)(1), 7411(d), 7412(d)) By requiring that regulation of existing
sources occur eith er under Section 112 or under Section 111(d), Congress deliberately avoided imposing two independent regulatory regimes on existing sources, recognizing that such duplicative efforts could transform these assets into liabilities. EPA's proposal to impose d ouble regulatory burdens on existing sources is contrary to existing law and public policy. Section 111(d)(1)(A) directs that EPA require States to establish standards of performance for "any existing source for any pollutant . . . to which a standard of p erformance would apply if such source were a new source." (42 U.S.C.

- 7411(d)(1)(A) (emphasis added)) EPA therefore may not issue regulations under Section 111(d) to regulate emissions from existing sources until it has adopted standards of performance un der Section 111(b) for pollutants from new sources within the same source category.

Response 12 : EPA disagrees that it may not promulgate regulations addressing CO2 emissions from existing power plants under section 111(d). EPA’s discussion of this issue is in Section IV of the preamble. Further, EPA’s views on argument s presented by the commenters, including commenters’ discussion of the AEP opinion and of the Senate amendment, are also discussed in EPA’s briefs in the Murray Energy and West Virginia case s, No. 14

- 1112 , No. 14

- 1146, and No.
14

- 1151 ( D.C. Cir.).

Comment 13 : Because no valid predicate Section 111(b) rule exists for CO2 emissions from
coal

- or gas

- fired power plants, the Proposed Rule exceeds EPA's authority under Section 111(d). EPA claims that two new proposed rules will independently satisfy Section 111(d)'s predicate rule requirement if they are finalized.(Legal Memo 12

- 13) The first of the proposed rules (the Proposed New Source Rule) would establish standards of performance for greenhou se gas emissions from new electric utility generating units.(Standards of Performance for Greenhouse Gas Emissions from new Stationary Sources: Electric Utility Generating Units, 79 Fed. Reg. 1,430 (Jan. 8, 2014)) The second proposed rule (the Proposed Mod ified and Reconstructed Source Rule) would set standards of performance for emissions of greenhouse gases from certain modified and reconstructed electric utility generating units.(Carbon Pollution Standards for Modified and Reconstructed Stationary Source s: Electric Utility Generating Units, 79 Fed. Reg. 34,960 (June 18, 2014)) These two proposed rules for new and modified and reconstructed sources, however, are themselves invalid. EPA first claims that its Proposed New
Source Rule is a sufficient Section 111(b) predicate rule because the Proposed New Source Rule sets standards of performance governing CO2 emissions from new coal

- and gas

- fired power plants. But EPA's analysis on this point is fatally flawed, because the Proposed New Source Rule
does not es tablish a valid: standard of performance" for coal

- fired EGUs. Instead, it proposes to require the implementation of a technology "carbon capture and storage (CCS)" that has not been adequately demonstrated as required by statute. Section 111(a)(1) of the Clean Air Act defines "standard of performance" as: A standard for emissions of air pollutants which reflects the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any non

- air quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated.(42 U.S.C.

- 7411(a)(1) (emphasis added)) A system of emission43 reductions is "adequat ely demonstrated" when it "has been shown to be reasonably reliable, reasonably efficient, and . . . reasonably expected to serve the interests of pollution control without becoming exorbitantly costly in an economic or environmental way." (Essex Chem.
Corp. v. Ruckelshaus, 486 F.2d 427, 433 (D.C. Cir. 1973)) An emissions standard based on technology not fitting within that definition cannot be a "standard of performance" and, thus, cannot serve as a valid Section 111(b) predicate rule. EPA's Proposed New S ource Rule relies on partial implementation of CCS, a system that has not been "adequately demonstrated," at coal

fired EGUs. That means the Proposed New Source Rule does not set out a valid standard of performance, and thus the whole Proposed New Source R ule is invalid. Because an invalid rule cannot serve as the necessary Section 111(b) predicate for the Proposed Rule, the Proposed Rule cannot be sustained. EPA must develop a new NSPS before it may proceed with any existing source emission guideline. Comm enter s stated that with its proposed regulation of CO2 emissions from existing fossil fuel

- fired EGUs, EPA has grossly overstepped its lawful authority under CAA Section 111(d). Fundamentally, EPA has erred in three ways: first, by attempting to
define BSE R to include things other than technological or operational measures that can be applied to each affected facility in the designated category; second, by going well beyond its statutorily

- specified, limited role of defining BSER; and third, by usurping the States' role of establishing and applying the standards of performance and thereby eviscerating the cooperative federalism principles enshrined in CAA Section 111(d).

Response 13 : We disagree with these comments. We have valid bases for the section 111(b) rulemaking for CO 2 emissions from newly constructed, modified, and reconstructed affected EGUs, as we explain in that rulemaking. In section V. of the preamble for this rule, we explain our authority for the BSER we are adopting in this rulemaking, includ ing our and the states’ respective roles. Furthermore, this rule is consistent with the principles of cooperative federalism embodied in portions of the Clean Air Act, for reasons discussed in section 1.2 of this response to comments, as well as in the Leg al Memorandum accompanying the final rule.

Comment 14 : Commenters contend ed that EPA lacks authority to regulate CO2 under Section 111(d)., explaining that previous EPA rules and court decisions define the limits of EPA's rulemaking authority under section 111(d), and the Clean Power Plan ignores these limits. First,
the c ommenter s argue d that UARG v. EPA sets guideposts for the CPP: In UARG v. EPA, the Supreme Court addressed the validity of a series of rules issued by EPA in regard to its regulation of gr eenhouse gas ("GHG") under the CAA. (The Supreme Court held in 2007 that EPA could regulate GHG under the CAA. See Massachusetts v. EPA, 549 U.S. 497 (2007).
Commenters stated EPA then issued four rules to regulate GHGs from motor vehicles and large
statio nary sources. First, EPA ruled that GHGs may reasonably be anticipated to endanger public health or welfare (the "Endangerment Finding"). See 74 Fed. Reg. 66,496 (Dec. 15, 2009). Second, EPA issued emission standards to regulate GHG emissions from motor ve hicles (the "Tailpipe Rule"). Third, EPA ruled that regulating GHGs from motor vehicles triggered the PSD and Title V permitting requirements for stationary sources (the "Triggering Rule"). Fourth, EPA limited the Triggering Rule requirement to larger stat ionary sources (the "Tailoring Rule").
Commenters stated t he Court held that EPA cannot regulate CO2 in a way that is inconsistent44 with the CAA. Commenters said that a ccording to the Court, neither the CAA nor Massachusetts v. EPA requires the regulation o f GHGs at stationary sources, and a source cannot trigger certain permitting requirements solely because of GHG emissions. Commenters stated t he Court held that EPA could not "bring about an enormous and transformative expansion in EPA's regulatory
authori ty without clear congressional authorization." (134 S. Ct. 2427, 2444 (2014)) Commenters
stated t he direct holding of UARG was that the CAA does not compel EPA to regulate CO2 as a pollutant for all purposes and any regulation must comport with the statute. Commenters stated

t he Court decided it would be unreasonable for EPA to exercise its interpreti ve authority to regulate CO2 in a way that is inconsistent with the statute. (Id at 2443

- 44) Commenters stated

t he Court identified the New Source Performance. Commenters stated s tandards in section 111(b) as an example of when limitations on the scope of pollutants subject to the program are needed to enable sensible regulation and avoid a radical transformation in the program that renders it unworkable as written.(Id. at 2440, 2442). Second, commenters stated, the CPP violates the limits of statutory inte rpretation established in UARG v. EPA: EPA's Proposed Rule violates the limits of statutory interpretation annunciated in UARG because it exceeds any level of authority that can be supported by a fair reading of section 111(d). Commenters stated that i n UA RG, the Supreme Court addressed a situation

- similar to EPA's efforts to promulgate the CPP through a distorted interpretation of section 111(d)

- in which EPA attempted to "tailor" an unambiguous provision in the CAA to accommodate EPA's regulation of CO2 as a pollutant.
Commenters stated f inding that congressional authorization was needed for this expansion of EPA's authority, the Court further noted that it greets "with a measure of skepticism" an agency's attempt" to discover in a long

- extant statute an un heralded power to regulate a significant portion of the American economy." (Id.) Commenters stated t he CPP represents a similar effort to expand EPA's authority that should be greeted with an even greater measure of skepticism. Third, commenters stated, th e absence of previous section 111(d) regulations is telling: Section 111(d) is a little used provision of the CAA. Commenters stated that a lthough S

. 111 was part of the CAA as originally adopted, EPA has regulated pollutants under the provision on only fi ve occasions in the past forty

- four years. (EPA has promulgated six regulations pursuant to S. 129 of the Clean Air Act pertaining to existing solid waste incinerators. Section 129 directs EPA to utilize the procedures set forth in section 111(d) to set em ission standards for a specific list of pollutants, not including carbon dioxide, that otherwise could not be regulated under section 111(d). See 42 U.S.C. 7429.) Commenters stated f our of these regulations were promulgated within the Act's first ten years , and the most recent regulation was adopted nearly two decades ago in 1996. (See 40 C.F.R. 60.30c et seq. (Dec. 19, 1995) (regulating landfill gases from municipal solid waste landfills); 45 Fed. Reg. 26,294 (Apr. 17, 1980) (not codified) (regulating
fluo ride emissions from primary aluminum plants); 44 Fed. Reg. 29,828 (May 22, 1979) (not codified) (regulating total reduced sulfur from kraft pulp mills); 40 C.F.R. 60.30d et seq. (Dec. 19, 1995) (regulating sulfuric acid mist from sulfuric acid plants); 42 Fed. Reg. 12,022 (Mar. 1, 1977) (not codified) (regulating fluoride emissions from phosphate fertilizer plants).) Moreover, commenters added, all of these existing section 111(d) regulations were based on measures achievable by individual units. Commenters stated t he performance standards for each of these five regulations focus on stack emission limits, expressly limiting emissions per unit of input or
output. Commenters added n one of the standards include "outside

- the

- fence" measures or45 industry

- wide "bui lding blocks." Commenters stated n one of them imposed state

- wide emission targets or were based on a requirement for existing sources to cease or reduce operations.
Commenter s conclude d , stating that this history of EPA's use of its section 111(d) authorit y shows that the CPP represents an extraordinary expansion of the authority actually exercised by EPA under section 111(d).

Response 14 : We disagree with these comments. We discuss our authority to promulgate this rule, including why this rule is not incon sistent with the U.S. Supreme Court’s decision in UARG
v. EPA , in section IV of the preamble. Moreover, for the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is
reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

Comment 15 : Commenters state d

, it appear s that legal issues remain regarding the EPA's authority to regulate CO2 from existing power plants under the Clean Air Act (CAA), section 111(d).

Response 15 : This comment is not specific enough to merit a response.

Comment 16 : Commenter s state d that while gree nhouse gases ("GHGs") are pollutants for some purposes, they fall outside that term at other points in the statutory scheme. Commenters stated

a s for the current rulemaking, GHGs are not pollutants for purposes of Section 111(d) New
Source Performance Stan dards. Commenter s explain ed *(verbatim) that Section 111 is home to the New Source Performance Standards ("NSPS") regulatory scheme. Commenters stated i t requires that States submit to the EPA "a procedure for implementing and enforcing standards of perfor mance for new sources located in such State." 42 U.S.C. section 7411(c)(1). Commenters
stated t he procedure for existing sources is analogous but follows "a procedure similar to that provided by section 7410," under which the States develop performance sta ndards and implementation plans for a covered "air pollutant," taking into account the "remaining useful life of the existing source." Id. section 7411(d)(1). Commenters stated Section 111's procedures are inconsistent with the regulation of GHGs. Specific ally, commenters stated, the focus on State

by

- State regulation is an important indication that Section 111 is best interpreted as applicable only to pollutants with localized effects. Commenters stated t his feature is especially apparent in
Section 111's cross

- reference to Section 110. Commenters stated a s the District of Columbia Circuit has explained, Section 110 "provides the framework" for States to adopt plans for implementing National Ambient Air Quality Standards ("NAAQS"). Texas v. EPA, 726 F.3d
18 0, 183 (D.C. Cir. 2013). Commenters stated t hat framework is inherently and pervasively focused on localized harms. Id. (citing Section 110 to explain how States "determine, based on local conditions and needs, how to implement the NAAQS and related requir ements" (emphasis added)). Elsewhere, commenters stated, Section 111 confirms the analogy to the NAAQS structure and its focus on localized pollutants. In describing the process for prioritizing pollutants, commenters stated, Section 111 instructs EPA to c onsider "the extent to which each such pollutant may reasonably be anticipated to endanger public health or welfare." 42 U.S.C. section 7411(f)(2)(B). Commenters stated t his language mirrors the charge in Section 109 to46 consider "anticipated" harm to "publ ic health or welfare" in setting NAAQS standards. Id. section 7409(b). Commenters stated g iven the textual parallel between Sections 109 and 111, which is more meaningful than the CAA's "profligate use" of "air pollutant," UARG, 134 S. Ct. at 2441, the two provisions should be read to address the same type of pollutant. Commenters
stated a s the NAAQS guidelines make plain, those are pollutants with localized impact on health and welfare, not globally

- dispersed pollutants like greenhouse gases. Commenters stated r eliance on structure to clarify which pollutants fall within a CAA provision is a technique drawn directly
from UARG. 134 S. Ct. at 2240

- 41 (citing examples of EPA narrowing the meaning of "pollutant," including in the context of NSPS regulations u nder Section 111). Commenters stated

a fter UARG, the Agency cannot simply rely on its existing GHG regulations promulgated under Section 202(a)(1) to assert a similar scope of authority under Sections 110 or 111. Commenters
stated t he UARG decision is also relevant in several further respects. First, commenters stated, UARG held that EPA cannot invoke the general Prevention of Significant Deterioration ("PSD") provisions of the Act to regulate "millions" of existing facilities that simply draw electricity f rom the grid. Id. at 2444 (holding that such expansive regulation "falls comfortably within the class of authorizations that we have been reluctant to read into ambiguous statutory text."); I d. at 2448 (explaining that regulation under the PSD program "may not be used to require reductions in a facility's demand for energy from the electric grid."). Commenters stated t his holding regarding the PSD program is important for establishing structural limitations on the regulation of pollutants under Section 111 as well. Commenters stated PSD permits are required for pollutants regulated under the NAAQS provision in Section 110, and Section 111 expressly borrows from the NAAQS provision. Commenters stated g iven this statutory family tree, the UARG Court's
"relucta n[ce]" to authorize bold new regulatory structures should apply with equal or even greater force to the current proposed rulemaking. Second, commenters stated, the UARG Court identified several obstacles based on factual differences between global pollutan ts like GHGs and traditional localized pollutants. Commenters stated t he Court quoted the Agency's recognition that regulating GHGs would effect an "unprecedented expansion of EPA authority'" due to the gases' ubiquity. Id. at 2436 (quoting 79 Fed. Reg. at 44,355). Moreover, the commenters added, because the Agency's factual premise for regulating greenhouse gases is that they operate on a global scale

- combining from sources around the world and with effects on the entire planet's climate

- the Court highligh ted the Agency's recognition that regulation would be "relatively ineffective at reducing greenhouse gas concentrations.'" Id. (quoting 79 Fed. Reg. at 44,355). Commenters stated a s a result, the Court noted the difficulty of applying the Best
Available Co ntrol Technology ("BACT") provisions of the CAA to greenhouse gases, based on the requirement that the regulator consider "ambient air quality at the proposed site and in areas which may be effected by emissions." Id. at 2449 n.9 (quoting 42 U.S.C. section 7475(e)(1); emphasis added). Commenters stated w hile the Court reserved judgment on that topic, the obstacle it identified is at the forefront of this case, and it weighs heavily against stretching the
location

- specific program in Sections 110 and 111 to include a pollutant that is inherently global, not local, in character. Commenter s posit ed that the Agency's proposal does not to explain how Section 111(d) allows the regulation of greenhouse gases at all. Commenters stated w hile GHGs are a pollutant unde r the Act's most general definition, UARG's central holding is that they do not therefore automatically fall within every other use of the term "pollutant" in the statute.47 Commenters stated b ecause Section 111 specifically refers to the location

- specific s cheme for enforcing NAAQS standards, which expressly involves the States in regulating the conventional pollutants to which it applies, it is best interpreted to exclude all regulation of GHGs.
Commenter s close d , stating that these features confirm that th e Supreme Court's reluctance to discover an "unheralded power to regulate a significant portion of the American economy" in long

- standing statutes prevents the cornerstone statutory discovery underlying the current proposal. UARG, 134 S.Ct. at 2444 (quotat ion omitted).

Response 16 : We disagree with these comments. We discuss our authority to promulgate this rule, including why this rule is not inconsistent with the U.S. Supreme Court’s decision in UARG
v. EPA , in section IV of the preamble. Moreover, for th e reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is
reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legisla tive history.

Comment 17 : Commenter s state d with the CPP, EPA has issued what really is another ANPR because the brief proposed rule

- 9 pages of the thousands of pages of preamble, legal justification, and technical support documents

- does not provide notice to electric generators as
to what this rule requires. Commenter s add ed that for example, nowhere in the rule does EPA mention "building blocks" or "heat rate improvement" or "redispatch", yet these concepts are key to the CPP, intended to be used and incorporated by states into state plans, an d integral to an understanding of what states and the existing EGU source category are expected to do. Relying solely on the proposed rule language, no one could possibly understand the CPP as EPA has
defined it.

Response 17 : The discussion in the preamble provides the adequate notice.

Comment 18 : Commenter s state d that the 1990 Clean Air Act Amendments did not change the

gap

- filling nature of Section 111(d), so as to preclude EPA's actions here. Commenter s explained that Section 111(d) of the Clean Air Act before 1990 authorized EPA to regulate "any air pollutant which is not included on a list published under section 7408(a) or 7412(b)(1)(A) [112(b)(1)(A)] of this title."(See 42 U.S.C.

- 7411(d).) Commenters stated w hen Congress
amended the Act in 1990, it made a significant overhaul to section 112, to provide for more effective regulation of hazardous air pollutants emitted by stationary sources. Specifically, commenters stated, Congress, dissatisfied with EPA's delay in regulating toxic air pollut ants, restructured section 112. Commenters stated that a mong other changes, Congress replaced section 112(b)(1)(A), which had required EPA to list hazardous air pollutants that it intended to regulate, with new section 112(b), in which Congress listed 189 substances as hazardous air pollutants.( See Pub. L. 101

- 549, S 301, 104 Stat. 2531 (1990); see generally White Stallion Energy Ctr., LLC v. E.P.A., 748 F.3d 1222, 1229 (D.C. Cir. 2014) (discussing 1990 amendments to section 112)) Commenters stated that a f ter this amendment, the original reference to section 112(b)(1)(A) in section 111(d) no longer made sense, thereby necessitating a technical update.(See Id.) Commenters stated b oth Houses of Congress proposed housekeeping amendments to section 111(d). Comm enters stated t he Senate bill struck S.112(b)(1)(A) and48 replaced it with S. 112(b), the new section providing the list of hazardous air pollutants. (S. 1630, as passed by the Senate on April 3, 1990, S. 305(a), reprinted in U.S. SENATE COMM.
ON ENVT. & PUB . WORKS, LEGISLATIVE HISTORY OF THE CLEAN AIR ACT AMENDMENTS OF 1990, at 4534 (1993))) Commenters stated t he House bill struck S.112(b)(1)(A) and replaced it with the phrase "emitted from a source category which is regulated under section 112." (S. 1630, a s passed by the House of Representatives on May 23, 1990, S. 108(f), reprinted in VOLUME I: LEGISLATIVE HISTORY OF THE CLEAN AIR ACT AMENDMENTS OF 1990, at 1979 (1993)) Commenter s continue d , stating that the Senate

originated language requires EPA to regulate air pollutants subject to regulation under section 111(b), excluding air pollutants regulated under section 112(b). Commenters stated t he amendment from the House excludes any pollutant s "emitted from a source category which is regulated under section 112." Commenters stated t he amendments were not discussed in committee hearings, floor debates, or in conference. Commenters stated that s ubsequently, both were enacted and signed into law

, and o nly the House amendment appears in the U.S. Code, but Supreme Court precedent accords the codification "no weight." (United States v. Welden, 377 U.S. 95, 98 n.4 (1964)) Thus, commenters stated, the Statutes at Large, which include both amendments, c ontrol in this situation. (See Stephan v. United States, 319 U.S. 423, 426 (1943) (finding that "the [United States] Code cannot prevail over the Statutes at Large when the two are inconsistent); U.S. National Bank of Oregon v. Independent Insurance Agents of America, Inc., 508 U.S. 439, 448 (1993)(the Statutes at Large are "legal evidence of the laws))
Commenters stated t his legislative oddity does not preclude EPA regulation of greenhouse gases under section 111(d). Commenters stated b oth amendments must be given effect unless there is some demonstrable significant defect, such as scrivener's error. Commenters stated the Senate
amendment

- which plainly permits greenhouse gas regulation

- cannot be ignored. Commenters
stated w hile language may be disregard ed as a scrivener's error where it has "no plausible interpretation", (Williams Companies v. FERC, 345 F.3d 910, 912 n.1 (D.C. Cir. 2003).) or "produce[s] a result demonstrably at odds with the intentions of its drafters," (Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 571 (1982)) the Senate amendment bears neither of those characteristics, as it reasonably retains EPA's longstanding authority under section 111(d) to regulate non

- criteria and non

- hazardous pollutants. Moreover, c ommenter s remark ed , ex cluding greenhouse gases (or any other pollutant that is neither regulated under section 112 nor sections
108

- 109) is in conflict with the plain language of the statute, as it would render the Senate amendment meaningless.(New York v. EPA, 443 F.3d 880, 88 7 (D.C. Cir. 2006) ([C]ourts must give effect to each word of a statute.)) Commenters stated t he Senate amendment mandates EPA to regulate greenhouse gases, as they do not fall under section 108 or section 112(b) of the Clean
Air Act. Commenters stated e ve n if the two amendments are interpreted as inconsistent, EPA must attempt to give effect to both, rather than simply discarding one.(See Morton v. Mancari, 417 U.S. 535, 551 (1974) (quoting United States v. Borden Co., 308 U.S. 188, 198 (1939)) (finding th at absent "clear and manifest" congressional intention to contrary, the rule is to give effect to both provisions). Commenters stated i n Citizens to Save Spencer County v. EPA, the agency was confronted with seemingly inconsistent amendments in the Clean A ir Act, and that
also were never reconciled in conference. 600 F.2d at 872. Commenters stated t he D.C. Circuit explained that EPA's task, under Chevron, v. NRDC, 467 U.S. 837, 842 (1984), was "to pursue a49 middle course that vitiates neither provision but i mplements to the fullest extent possible the directives of each," and courts needed only to assess whether the agency had "effected an appropriate harmonization of the conflicting provisions while remaining within the bounds of that agency's statutory auth ority." Spencer County, 600 F.2d at 871. Commenters said t he court also noted that "maximum possible effect should be afforded" to both provisions and "none of those provisions rendered null and void". ( Id. at 870. Section 111(d)'s two amendments also

crea te the type of ambiguity that EPA may reasonably resolve.) Commenter s continue d , stating that the House amendment can be read as consistent with the Senate amendment, to preclude a source category from regulation under section 111(d) for a pollutant only w hen that source category is regulated under section 112 for that same pollutant. Thus, commenters stated, because section 112 is not used to regulate sources for their greenhouse gases, EPA is free to regulate those emissions under section 111(d).(Even if the Senate amendment were disregarded, the House amendment by itself has several different readings that would permit greenhouse gas regulation. The House amendment excludes pollutants "emitted from a source category which is regulated under section 112." The only reading that bars greenhouse gas regulation is one that presumes any source category already regulated under section 112 for any type of pollutant is foreclosed from regulation under section 111(d). Because EPA already regulates the sources that

e mit greenhouse gases for hazardous air pollutant emissions under section 112, this reading of the House amendment would preclude section 111(d) regulation for those sources. But such a reading leads to a puzzling result: it wholly exempts sources from bein g regulated for dangerous pollutants based on those sources already being regulated for other unrelated pollutants. See Desert Citizens Against Pollution v. EPA, 699 F.3d 524, 527

- 28 (D.C. Cir. 2012) (rejecting petitioners' interpretation of statute that w ould have had the "anomalous effect of changing the required stringency" for a given source's emissions "simply on the fortuity" of other emissions from that source). More troubling still, this reading would essentially strip section 111(d) of any
real eff ect, because many large industrial sources are regulated for hazardous air pollutants under section 112. In theory, then, those sources would be outside the scope of section 111(d), which would raise the question of what exactly the provision is supposed t o regulate. Cf. Davis County Solid Waste Management v. EPA, 101 F.3d 1395, 1404 (D.C. Cir. 1996) ([I]t is of course a well

established maxim of statutory construction that courts should avoid interpretations that render a statutory provision superfluous.)) Commenters stated t he House amendment therefore can be read merely to state in different terms the same meaning as the Senate amendment. Commenters
stated t he overall structure of the Clean Air Act and the legislative history of the 1990 Amendments suppor t this reading. Commenters stated t he 1990 Amendments

- particularly the significant changes made to section 112

- were part of an effort to strengthen and update the air pollution regulatory scheme, marked by increased controls, gap

- filling, and decreased EPA authority to allow regulatory evasion; certainly not a legislative attempt to scale back on regulation, or to create holes or gaps in the regulatory structure for some pollutants. Commenters
stated i n revising section 111(d), Congress most likely mean t only to update the language to comport with the overhaul of section 112. Indeed, the House amendment is found under the heading "Miscellaneous Provisions" and the Senate amendment under "Conforming Amendments."(Pub. L. No. 101

- 549, S. 108, 302(a), 104 St at. 2399, 2467, 2547 (1990).)
Commenters stated c oupled with the signed bill containing an explanatory footnote describing50 the two amendments as "duplicative," both changes to section 111(d) appear to be simply
different versions of the same technical edit

. ( ENVIRONMENT AND NATURAL RES. POLICY DIV., LIBRARY OF CONGRESS, A LEGISLATIVE HISTORY OF THE CLEAN AIR ACT AMENDMENTS OF 1990, at 46 (1998).) Commenters stated t hat edit was to ensure continued application of section 111(d) to regulate air pollutants tha t are neither criteria pollutants nor hazardous pollutants under the new section 112(b). Commenter s stated that in any event, construing the two amendments as prohibiting greenhouse gas regulation under section 111(d) is the least rational approach as well as the least reflective of congressional intent.
Commenters stated C ongress surely could not have desired to effect a sweeping, substantive change to the provision by exempting a large class of pollutants in an otherwise stylistic updating effort, all wit hout the benefit of any debate or discussion. Commenters stated t his would be especially inconsistent with the general drafting of the Clean Air Act, given that Congress did make a number of major, substantive changes to the statute in the 1990 Amendments, like section 112, but when it did so, those changes were not quietly tacked on to a housekeeping bill.
Commenters stated Congress "does not, one might say, hide elephants in mouseholes." (Whitman v. Am. Trucking Assns, 531 U.S. 457, 468 (2001)) Commenter s close d , EPA's interpretation maintains the longstanding purpose of section 111(d) in controlling dangerous pollutants not otherwise regulated under other sections of the Clean Air Act. EPA's resolution of this ambiguity sufficiently harmonizes the two amendments and is a permissible construction
that merits Chevron deference.

Commenter s add ed that Congress' systematic approach to Sections 110, 111(d), and 112 allows these sections to sections to form an orderly framework. Sections 110 and 112 focus on s pecific classes of pollutants and section 111(d) acts as a gap

- filler, addressing dangerous pollution not regulated under the sections tailored to address hazardous and ambient air pollution problems.
Commenter s explain ed that the legislative history of th e 1970 Clean Air Act confirms that this complementary framework was deliberate: It should be noted that emission standards for pollutants which cannot be considered hazardous (as defined in section 115 [the precursor to section 112]) could be established u nder section 114 [the precursor to section 111(d)]. Thus

, commenters stated, there should be no gaps in control activities pertaining to stationary source emissions that pose any significant danger to public health or welfare.

Response 18 : EPA agrees that it has the authority to promulgate regulations addressing CO2 emissions from existing power plants under section 111(d). EPA’s discussion of this issue is in Section IV of the preamble.

Comment 19 : Commenter s stated that while their agency takes no positio n on whether EPA should establish a NAAQS for greenhouse gas emissions, the agency is concerned that a CAA Section 111 (d) action is prohibited because GHGs have constructively been listed under CAA
Section 108. As a result of the EPA's Title II rulemaking

, c ommenter s concluded , all of the conditions precedent to list greenhouse gases under CAA Section 108 appear to have already
been met. Commenter s agree d with arguments made by the Sierra Club in NRDC v. Train (1976)
when the Sierra Club succeeded in forci ng EPA to define a NAAQS for lead under substantially similar facts, explaining that in that case, as is the case now, EPA has made an endangerment51 finding under Title II of the CAA; second, EPA found then for lead, and found now for GHGs,
that both are em itted from numerous or diverse mobile or stationary sources. Commenter s add ed that the court in NRDC v. Train (1976) found that once the first two provisions under Section 108(a)(1) are met, the third provision is constructively satisfied. Commenter s conclude d that
because all three criteria under Section 108 are satisfied, EPA is prohibited from regulating GHGs under Section 111(d).

Commenter s state d that carbon dioxide is not listed as a criteria pollutant for regulation under
Clean Air Act section 108. Commenter s remark ed that NCDENR next argues that "[s]ection 111(d) also prohibits regulating pollutants listed under section 108," and "all of the conditions necessary to list greenhouse gases under section 108 have already been met."(D. van der Vaart Testimony at 6, Attachment 4. ), but NCDENR's argument is premised on a flawed syllogism and notes that NCDENR has explained its assumption that EPA's 2009 finding that carbon dioxide (in combination with other greenhouse gasses) endangers public health an d welfare automatically resulted in a section 108 listing in this way: (1) "[s]ection 111(d) prohibits regulating pollutants listed under section 108"; (2) "[a] pollutant must be listed under section 108 when three criteria are satisfied"; and (3) "[t]hose criteria were satisfied when EPA published its endangerment finding under section 202." (Id.) NCDENR is incorrect legally and factually.
Commenter s argued that the 2009 "endangerment" finding was made under the mobile source provisions of section 202 of t he Clean Air Act as a necessary first step toward regulating motor vehicle emissions of greenhouse gasses, and the "endangerment" finding by itself does not cause a pollutant to be listed under section 108, even if all of the other prerequisite criteria ne cessary for listing a criteria pollutant have been met. (On the other hand, the endangerment finding satisfies one of the criteria for developing new source performance standards which is a prerequisite to development of standards of performance for existi ng sources. See Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, 79 Fed. Reg. 34,829, 34,841

- 34,844 (June 18, 2014).) Commenter s stated that a listing decision requires a distinct, affirmative action by EPA subject to all of the public participation and review requirements of the Administrative Procedures Act, and in this instance, EPA has not, in fact, listed or even proposed listing carbon dioxide or other greenhouse gases as criteria pollutants
unde r Clean Air Act section 108. Contrary to NCDENR's argument, Commenter s argue d , there is no legal or factual impediment to EPA's proposal to establish performance standards for power plant carbon dioxide emissions.

Response 19 : EPA agrees with the commenter s who state that listing a pollutant under section 108 is a distinct step that cannot occur “constructively” but only through an affirmative action of the EPA which would be published in the Federal Register. This is in fact confirmed by the case cited by the commenters who believe constructive listing has occurred. In NRDC v. Train , 545 F.2d 320 (2d Cir. 1976), the court concluded that the requirements for listing lead as a pollutant under section 108 had been met, and therefore directed EPA to take the ad ditional step of listing
lead. Current circumstances are further distinguishable from those of NRDC v. Train because the prerequisites for listing GHG as a pollutant under Section 108 have not been met. For example, the existing endangerment finding for G HG is specifically for emissions from motor vehicles52 under CAA section 202. See 74 FR 66496 (Dec. 15, 2009), 1 although the scientific record underlying that endangerment finding may be relevant to future endangerment findings under other statutory provisions. An endangerment finding cannot be made “constructively” but rather is entrusted to the judgment of the Administrator. See Zook v. EPA (D.C. Cir. No. 14

- 5187, April 24, 2015).

We discuss our authority to promulgate this rule in section IV of the preamble.

Comment 20 : Commenters stated that EPA's proposal to regulate emissions of carbon dioxide from existing coal

- fired power plants is a permissible interpretation of Clean Air Act section 111(d). Commenter s state d that in the months leading up to a nd following EPA's June 2, 2014 announcement of the proposed Clean Power Plan, representatives from North Carolina's Department of Environment and Natural Resources ("NCDENR") have questioned the legal basis for the proposal in presentations to various fed eral and state legislative and executive
committees and in oral and written statements to EPA. Commenter s explained that in its legal critiques, NCDENR has raised three basic arguments: (1) EPA cannot regulate power plant
carbon dioxide emissions under Cle an Air Act section 111(d) because EPA has promulgated emission standards for power plant hazardous air emissions under section 112; (2) EPA cannot use section 111(d) to limit carbon dioxide emissions because it already is listed as a criteria pollutant und er section 108; and (3) section 111(d) requires controls on emission sources only, and does not authorize "beyond the fence line" compliance flexibility. [NCDENR also has argued that EPA cannot establish guidelines for regulating existing power plant sourc es of carbon dioxide under section 111(d) because EPA's proposed standards of performance for new power plant sources under section 111(b) are unlawful. We do not address this mistaken contention here, but incorporate by reference our comments in the rulem aking docket for the new source standards under section 111(b).] Commenter s state d that each of these arguments is flawed and describes how EPA interprets section 111(d) to limit development of standards of performance for specific pollutants regulated und er section 112, rather than for entire categories of sources regulated under that section and that EPA's interpretation is a permissible construction that, in fact, is the most natural reading of the statute and best effectuates each of the statutory provi sions. Commenter s continue d , stating that NCDENR's argument that carbon dioxide is listed under section 108 is false EPA has not listed carbon dioxide as a criteria pollutant. And EPA's broad interpretation of "best system of emission reduction" to include beyond

- the

- fence

line compliance approaches is a logical and permissible reading of these generically defined statutory terms. To demonstrate the flaws in NCDENR's legal critique, Commenter s briefly outlined the applicable statutory and regulatory framewo rk for section 111 before addressing NCDENR's specific criticisms: A. Statutory and regulatory framework. Commenter s state d that Clean Air Act section 111 directs EPA to establish "standards of performance" limiting emissions of harmful air pollutants in t hree phases. First, commenters stated, EPA must identify categories of stationary sources that cause or contribute significantly to "air pollution which may

1 In addition, EPA recently proposed an endangerment finding for emissions from certain aircraft engines under CAA section 231. See 80 FR 37758 (July 1, 2015).53 reasonably be anticipated to endanger health or welfare." 42 U.S.C section 7411(b). Second,

comment ers stated, EPA must establish national standards of performance for new sources in each such category. Finally, commenters stated, once EPA has developed standards of performance for new sources in a category, it must then prescribe regulations under which states develop standards of performance for existing sources in the same source category. Id. section 7411(d). Commenter s note d that Section 111(d) provides that EPA "shall prescribe regulations which shall establish a procedure . . . under which eac h State shall submit [to EPA] a plan which . . . establishes standards of performance for any air pollutant . . . to which a standard of performance under this section would apply if such existing source were a new source." Id. (emphasis added). Commenters stated Congress exempted two categories of air pollutants from this mandate: any air pollutant (1) for which air quality criteria have been issued or which is listed under section 108(a); or (2) which is emitted from a source category covered under the
ha zardous air pollutant provisions of section 112. Id. Commenters stated n either exemption applies here. Commenter s state d that the guidelines set minimum required emissions limitations based on the best adequately demonstrated systems of emission reductions . Id. at section 60.22(b). Commenters said s tates then have flexibility to tailor their own plans to implement the standards of performance, so long as they meet or are equivalent to EPA's emission guideline. Id.
Commenters stated EPA's implementing regula tions also provide for case

- by

- case variances from an emission guideline to allow for "significantly more reasonable" compliance options, 40 C.F.R. section 60.24(f)(3), such as where necessary to take into account the remaining useful life of an existing s ource that would be subject to the performance standard. 42 U.S.C. section 7411(d)(1)(B). Commenter s remark ed that although EPA promulgated its guidelines for implementing section 111(d) in 1975, the agency has issued few performance standards for existing sources. Thus, commenters stated, while this is EPA's default approach, it has not been extensively elaborated or refined through a long history of prior rulemakings, and nothing in the Clean Air Act requires EPA to adhere rigidly to this approach for eac h air pollutant or each existing source category. In fact, commenters stated, EPA may adopt any reasonable approach to develop, issue, and implement existing source standards, so long as they meet the minimum requirements of the Clean Air Act and the agenc y adequately explains its approach and rationale through appropriate notice and comment rulemaking. See, e.g., FCC v. Fox Television Stations, Inc. 566 U.S. 502, 515 (2009) (an agency may change its position so long as it provides "good reasons" for doing so). Commenter s contend ed that in this instance, EPA's rationale for using 111(d) as a legal basis to establish guidelines of performance for existing power plant sources of carbon dioxide is fully consistent with the Clean Air Act, EPA's implementing regu lations, and past practice.

Response 20 : We generally agree with this comment.

Comment 21 : Commenters state d the CPP is inconsistent with the statutory text of Section 111(d), and that EPA cannot overlook the fact that Section 111(d) actually provides a very specific and unambiguous grant of authority to EPA. (Commenter s quote d 42 USC section 7411(d)1()(A) and ( B).) Commenter s continue d , stating that EPA's reliance on this provision for implementing CO2 emissions from power plants is problematic for a few reasons. First,54 commenters stated, section 111(d)(1)(A) requires that the use of the language "any air pollut ant" was intended to encompass carbon dioxide. Commenters stated i n Massachusetts v. EPA, the United States Supreme Court held that greenhouse gas ("GHG") emissions from motor vehicles are "air pollutants" under section 202(g) of the Clean Air Act, going s o far as to say that "air pollutant" included "all airborne compounds of whatever stripe."(549 U.S. 497 (2007))
Commenters stated Massachusetts triggered a heightened desire for EPA regulation of CO2 emissions from the power sector and breathed new life in to efforts to require EPA to undertake such regulation. Previously, commenters stated, this agency has declined to regulate GHG emissions, finding that none of the approaches to reducing CO2 were well

- suited to regulation by the EPA specifically acknowledg ing as early as 2003 that the Department of Energy was better equipped to set efficiency standards for products such as air conditioners and appliances and that "Any widespread effort to switch away from fossil fuels in either sector would likewise require a wholesale transformation of our methods for producing power and transporting goods and people" and it is "hard to overstate the economic significance of making these kinds of fundamental and widespread changes in basic methods of producing and using ene rgy."(68 Fed. Reg. 52,922) Commenter s continue d , stating that the Supreme Court's decision in Massachusetts and the subsequent "Endangerment Finding"(74 Fed. Reg. 66,496 (2009)) cannot stand for the proposition that the reduction of CO2 emissions is necess ary at all costs. Commenters stated

w hat Massachusetts did stand for was the proposition that EPA could not simply decide not to act for policy reasons but "must ground its reasons for action or inaction in the statute."(Ibid at 535) Commenters stated i n M assachusetts, the question was one of whether the EPA was fulfilling its duty under CAA section 202. By contrast, commenters stated, the pendulum has now swung in the other direction and EPA is attempting to enact rules that far exceed the
statutory text o r any statutory duty. Commenter s add ed that relying on the expansive definition of air pollutant found in section 202(g) ("all airborne compounds of whatever stripe"), the EPA attempted to require best available control technology ("BACT") and "major sourc e" permits on the basis of CO2 emissions pursuant to several enforcement provisions that referenced "any air pollutant". Commenters stated i n Utility Air Regulatory Group v. EPA (573 U.S.__ (2014)) the Court upheld the EPA's authority to require "anyway so urces" to obtain PSD and Title V permits but declined to give EPA the wide latitude it had assumed in "tailoring" those statutory provisions to suit its policy objectives. Commenters stated that i n light of UARG, EPA is required to give a "reasonable, cont ext

- appropriate meaning" to the regulation it wishes to enforce. (Id.) Commenter s remark ed it is worthy of note that similar to its BSER analysis conducted by EPA in the proposed CPP, the UARG Court acknowledged EPA's intention that improvements in EE woul d be the foundation of GHG BACT pursuant to section 7602.
Commenters stated t he Court acknowledged this but did not decide whether BACT could be used to force improvements in EE, stating only that BACT was already limited to control technology
that "did no t require a fundamental redesign of the facility" and that the record did not reflect that EPA's demands would be of a significantly different character than those traditionally associated with PSD review or that BACT is "incapable of being sensibly applie d to greenhouse gases. (Id.)
Commenters stated LPSC submits that this is indication that EPA's deference is not unlimited on these issues and BSER in section 111(d), likewise, cannot force the type of fundamental changes proposed herein. Commenter s state d that assuming for arguments sake that CO2 meets the55 definition of any air pollutant for the purposes of section 111(d), EPA still has to overcome a number of statutory hurdles to make the CPP fit within the plain text of the statute. Specifically,

commente rs stated, section 111(d)(1)(A)(i) explicitly prohibits the regulation of source category[ies] regulated under section 112. Commenters said t he Supreme Court in Am. Elec. Power, Inc. v. Connecticut, 131 S. Ct. 2527, 2537 n.7 (2011), stated "EPA may not emp loy [section 111(d)] if existing stationary sources of the pollutant in question are regulated under . . . the 'hazardous air pollutants' program, [section 112]. Nevertheless, commenters stated, on February 16, 2012, EPA finalized section 112 regulations o n "stationary sources" that included
coal

- fired power plants. See 77 Fed. Reg. 9,304 (Feb. 16, 2012). Commenters stated t hose very same plants are included in the CPP despite their being explicitly prohibited and that such explicit prohibition has been ack nowledged by the United States Supreme Court. Commenter s close d , stating that even if EPA could overcome the aforementioned statutory prohibition, which we do not think it can, there is yet another requirement: that the source category is one regulated
und er the new source performance standards found in section 111(b).

Response 21 : We disagree with these comments. We discuss our authority to promulgate this rule, including why this rule is not inconsistent with the U.S. Supreme Court’s decision in UARG

v. EPA , in section IV of the preamble. Moreover, for the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is
reasonable and within the scope of EPA’s authority in light of the statutory tex t, statutory context, statutory purpose, and legislative history.

Comment 22 : Commenter s state d that according to a study by NERA Economic Consulting (NERA), nineteen states have passed or are considering laws or resolutions expressing opposition to the EP A's Clean Power Plan. Commenter s explain ed that attorneys general from twenty states are on record opposing EPA's proposal, and fifteen governors, including the Governor of North Carolina, have sent letters to the President stating that the EPA does not ha ve the legal authority to regulate CO2 emissions from coal

- fired plants, and it is reported that thirteen states have joined in litigation to challenge the EPA's proposal. Commenter s , which
represent ed and protect ed the energy interests of scores of manufa cturers with plants throughout North Carolina, share d NC DENR's and Duke's views, as well as the opposition expressed by the aforementioned attorneys general and governors. Commenter s remark ed that due to the legal flaws of the EPA's plan, court challenges are anticipated, and c ommenter s explained that states shouldn't be forced to act until all court challenges are over.

Response 22 : For the reasons explained in the preamble, the deadlines established by the Agency are reasonable

.

Comment 23 : Commenter s stated that they do not believe that CAA Section 111 provides EPA with the authority to authorize requirements for such measures under standards set pursuant to
that section.

Commenter s state d that this proposal is an unprecedented use of an [uncommon] pro vision of the
CAA.56 Commenter s add ed the unprecedented nature and expansive scope of the Proposal demonstrate how far from EPA's delegated authority the Agency has attempted to travel. Commenters stated Section 111(d) does not authorize EPA to regulate ent ire sectors of the economy. Commenters
said a s the U.S. Supreme Court recently noted "[w]hen an agency claims to discover in a long

extant statute an unheralded power to regulate 'a significant portion of the American economy,' ... we typically greet its a nnouncement with a measure of skepticism. We expect Congress to speak clearly if it wishes to assign to an agency decisions of vast 'economic and political significance.'"

Response 23 : We disagree. We discuss our authority to promulgate this rule, including why this rule is not inconsistent with the U.S. Supreme Court’s decision in UARG v. EPA , in section IV of the preamble. For the reasons discussed in section V.A. and V.B. of the preamble and in th e Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

Comment 24 : Commenter s state d that EPA claims its autho rity to reduce CO2 emission is
unlimited.

Commenter s state d that the Proposed Rule is the first time EPA has ever attempted to broaden jurisdiction under the CAA using this 'entity with obligations' legal term and concept.

- Emission
standard means in addi tion to the definition in Section 60.21, any requirement applicable to any affected entity other than an affected source that has the effect of reducing utilization of one or more affected sources, thereby avoiding emissions from such sources, including, f or example, renewable energy and demand

- side energy efficiency measures requirements. Similarly,

c ommenter s remark ed , this is the first time EPA has ever applied such a broad meaning to the term emissions so as to include 'any standard.' Commenter s stated that under these proposed definitions, EPA's authority under the CAA is absolutely unlimited, and anything involved in electric generation and use would be regulated by the CAA, and any requirement for such 'affected entity' constitutes an 'emission limita tion' over which EPA purports to have authority.
Commenter s close d , stating that overall, the proposal converts the Section 111(d) requirement that standards of performance be established by states by source category for affected emitting sources, into a m echanism to regulate a combination of emitting sources and non

- emitting facilities/entities by means of standards that go far beyond limiting emissions.

Response 24 : We disagree. As we explain in section V. B. of the preamble and in the Legal Memorandum, we have refined our analysis of the BSER, and we do not believe our interpretation will lead to unreasonable future actions for this or any other source category. In accordance with our interpretation, we undertake a pollutant

- specific and source

- categor y

- specific evaluation. As a result, the BSER is unique to each industry and even may be different for new and existing sources.57 Comment 25 : Commenter s state d that the CAA is designed to protect the environment and promote a strong economy. (See CAA Purpos es 42 U.S.C. section 7401), and Congress set forth several clear regulatory paths in the CAA for regulating stationary sources, and power plants are stationary sources. The primary regulatory paths for stationary sources are to: 1. Set ambient air quality standards, requiring each state to address in whatever way makes sense for its local economy the achievement of the ambient standard; and 2. Set source

- specific technology

- based limits for industry sectors that contribute significantly to air pollution. Co mmenter s remark ed that the source specific standards support the attainment and maintenance of NAAQS, but the two programs are administered quite differently and that neither pathway can perfectly regulate GHGs but aspects of both can provide a useful fram ework for constructing a new pathway.
Commenter s stated that EPA is legally constrained to act within those two pathways, separate though they are, and cannot administratively create a hybrid program not authorized by Congress by simply borrowing what "mak es sense" for GHGs. Commenter s posit ed that the CPP is legally flawed because it attempts to regulate a transition to a lower carbon economy by blending two separate regulatory pathways in the CAA, and by trying to regulate in this way, EPA has created a rule without the needed legal underpinn ings. Commenter s explained that the source of GHG reductions is irrelevant, and a rule that simply targets one sector, without appropriate offsets and true flexibility, cannot pass legal muster. Commenter s state d that allowing states to choose their regula tory pathway supports the rightful balance of power Congress granted in the CAA and protects global resources, allowing for a gradual transformation to a lower carbon economy without unnecessarily jeopardizing a long history of providing reliable, affordab le electricity to

power our economy. (The CAA, as amended, gave the Administrator ... the authority to promulgate national ambient air quality standards (NAAQS). Primary air quality standards were to be set at a level to protect public health ... . Each st ate then had to adopt a SIP that provided for the "implementation, maintenance, and enforcement" of the primary standard ... For stationary sources, states were expected to set emissions limits to be enforced by civil and criminal sanctions. Although the 1 970 Amendments emphasized that air pollution prevention and control remained the "primary responsibility of states and local governments, and made the states fully responsible for directing and coordinating all intrastate control activities, EPA was to be in charge of the air pollution control program... The 1970 CAA Amendments required the federal government to promulgate standards for new stationary sources but the states could regulate existing sources in order to meet SIP requirements. Reitze, Arnold W. Jr., Air Pollution Control Law: Compliance and Enforcement. (Environmental Law Institute. September 2001), p. 16. The CAA Amendments of 1977 made major changes to the CAA while retaining the fundamental approach of the 1970 statute. Under the 1970 Amendme nts, SIPs were required to include emission limitations and other measures necessary to attain and maintain primary air quality standards... CAA section111, dealing with new source performance standards (NSPS), was modified to require the use of the "best technological system of continuous emissions reduction" ... . This requirement applied to "new sources" [including modifications]. Because new sources are regulated more stringently than existing sources, the point at which a repair becomes a
modification and triggers the more stringent regulations became important. Id. at 18. While the 1977 Amendments made the CAA significantly longer and more complex, it continued to use the ambient air quality standards approach. However, the mandated use of end of the s tack58 technology

- based controls made the CAA a philosophical hybrid with overlapping environment

based and technology

- based requirements. Id. at 19.) Commenters stated EPA's 2013 Greenhouse Gas Inventory Report, http://epa.gov/climatechange/ghgemissions/usinventoryreport.html , notes the following five broad sectors and the percentage of U.S. GHG emissions: Transportation, 32%; Industry, 20%; Commercial and Residential, 10%; Agri culture, 10%; and Electricity, 32%. Globally, GHG emissions are similarly split among multiple broad sectors: Forestry, 17%; Waste and wastewater, 3%; Energy supply, 26%; Transportation, 13%; Commercial and Residential, 8%; Industry, 19%; and Agriculture, 14%. http://epa.gov/climatechange/ghgemissions/global.html . In short, commenters said, all sectors contribute and control of only one sector, without broad offset options, simply tips a blind eye to the physical reality of the carbon cycle. Commenter s add ed that unlike the criteria pollutants, EPA has never claimed that CO2 has a direct toxic effect

on human health, and a lthough EPA's strategy is bold, creating a hybrid of NAAQS regulatio n and source

- specific Section 111 regulation, such creativity is without legal authority.

Response 25 : We disagree. For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history. Moreover, t o the extent this comment objects to the portfolio approach, the EPA is not finalizing the proposed “portfolio” approach and will not accept state plans that attempt to impose emission standards or other CAA compliance oblig ations on entities other than affected EGUs. The state measures approach provides a path for a state to achieve the emission performance level as expressed as a state goal in a way that avoids placing enforceable emission standards on affected EGUs (unless and until the backstop is triggered). States will have a wide range of flexibility in choosing how to demonstrate their affected EGUs are meeting a state goal.

Comment 26 : Commenters state d CAA Section 111(d) prohibits EPA from issuing regulations governi ng a pollutant that is "emitted from a source category which is regulated under Section 7412 of this title, ." and because CO2 is emitted from coal

- fueled EGUs, and because coal

- fueled EGUs are regulated by EPA under Section 112 through EPA's Mercury Air T oxics (MATS) regulation, EPA may not regulate CO2 emissions from coal

- fueled EGUs under CAA Section 111(d).

Response 26 : We disagree

. We discuss our authority to promulgate this rule, including why this rule is not inconsistent with the U.S. Supreme Court’ s decision in UARG v. EPA , in section IV of the preamble and section XXII of the Legal Memo

.

Comment 27 : Commenter s state d the proposed regulations are almost contrary to the Clean Air Act, which requires the EPA to establish a "procedure" under which each state shall develop a plan for establishing and implementing standards of performance for existing sources within the

sta te. Commenter s elaborate d , stating that existing EPA regulations provide that states may adopt "less stringent emissions standards" based on factors such as "unreasonable cost of control" among other factors, and the Clean Air Act and the EPA's own existin g regulations recognize
that the States are best suited to address carbon dioxide emissions. Commenter s urge d EPA, in59 developing guidelines for regulating carbon dioxide emissions from existing power plants, to respect Pennsylvania's primacy and to rely on Pennsylvania regulators to develop performance standards for carbon dioxide emissions that take into account the unique policies, energy needs, resource mix, and economic priorities of our state.

Response 27 : We disagree with this comment. In section V of the preamble for this rule and section VII of the Legal Memo , we discuss the respective roles of the EPA and states under CAA section 111(d).

Comment 28 : Commenter s state d that even if EPA has the authority to issue CAA section 111 (d) regulations governi ng CO 2 emissions from coal

- fueled EGUs, the Proposed Rule impermissibly intrudes upon Colorado's express authority under CAA section 111 (d) to
"establish" state

- specific standards of performance. Commenters stated u nder CAA section 111(d), EPA's authority is limited to adopting a "procedure" under which "each State shall submit to the Administrator a plan which (A) establishes standards of performance"

. Commenters stated t he Proposed Rule is far more than procedural. Rather, commenters stated, the Proposed Rule would usurp Colorado's CAA and state law authority to "establish" performance standards by dictating what the standards must be. Additionally, commenters stated, EPA has structured the Proposed Rule in a way that would prevent Colorado from consideri ng "the remaining useful life of the existing source" in applying a state

- established performance standard. [CAA 111(d)(1)(B); 79 Fed. Reg. at 34,925] Commenter s stated that the Proposed Rule is not consistent with the language, context, legislative history, and consistent past administrative interpretation of CAA section 111(d). Instead, commenters added, the Proposed Rule is built on new and redefined terminology never before used in the CAA section 111 (d) program.
Commenters stated that f or the first time, EPA seeks to set state

- by

- state "goals," which equate to or carry the burden of legally enforceable mandates for states, including Colorado. However,

commenters sta ted, EPA lacks the authority under either CAA section 111(d) or EPA's CAA section 111(d) regulations to set binding statewide "goals." Notably, commenters stated, the term "goal" is not even used in the CAA or EPA's implementing regulations. S imilarly, com menters stated, for the first time, EPA defines a "system" of emission reduction in the form of a mandate which governs the amount of time EGUs within the regulated source category are allowed to operate. Forcing coal

- fueled EGUs to retire prematurely or t o reduce operation is not a "system" of emission reduction under CAA section 111 (d). Commenter s add ed that the new "interpretation" of CAA section 111(d) set forth in the Proposed Rule encourages Colorado to submit a plan that contains what EPA calls "por tfolio" measures. Commenters stated t hese measures would be used, for instance, to dramatically increase the use and deployment of renewable energy and EE throughout the state, targeting Colorado citizens and businesses as necessary agents in the reduction of electric consumption. However, commenters stated upon EPA approval of a Colorado CAA section 111(d) Plan, these measures would become "federally

enforceable" against those agents (citizens and businesses) required to implement them.
Commenter s argue d t hat the CAA section 111 (d) does not provide EPA the authority to create federally enforceable obligations on entities that do not own or operate facilities within the regulated source category but rather, CAA section 111 authorizes standards to be set for facilities60 within EPA

- listed source categories. Commenters urged CAA section 111 does not apply to, nor can it permissibly reach, any other facilities or entities that are not part of the listed source
category.

Response 28 : We disagree. For the reasons d iscussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative histor y. Moreover, t o the extent this comment objects to the portfolio approach, the EPA is not finalizing the proposed “portfolio” approach and will not accept state plans that attempt to impose emission standards or other CAA compliance obligations on entities other than affected EGUs. The state measures approach provides a path for a state to achieve the emission performance level as expressed as a state goal in a way that avoids placing enforceable emission standards on affected EGUs (unless and until the bac kstop is triggered). States will have a wide range of flexibility in choosing how to demonstrate their affected EGUs are meeting a state goal.

Comment 29 : Commenter s state d EPA has provided little or no information regarding what authority it's relying on to institute such an expansive regulatory regime and how it intends to proceed if it is not approved in individual states' implementation plans.

Response 29 : We disagree w ith this comment. As explained in the preamble, w e discuss in detail our legal authority for this rule, and we explain that we are not authorizing a portfolio approach. We also explain our process concerning a federal plan, and, separately, we have

propose d a federal plan.

Comment 30 : Commenter s state d EPA has the ability to require a contingency plan in accordance with Section 172(c)(9) of the Clean Air Act. According to Section 172(c)(9) of the Clean Air Act, EPA shall require nonattainment plans to inclu de "implementation of specific measures to be undertaken if the area fails to make reasonable further progress [in obtaining a NAAQS]." Commenter s reques t ed EPA to identify the specific authority that allows EPA to require a contingency plan under Section 111(d) of the Clean Air Act. Commenters stated

a lthough EPA does not describe this measure as a "contingency plan," it appears that "corrective measures" are functionally identical to the contingency plans provided under Section 172(c)(9)
of the Clean Air Act, which is inapplicable to plans under Section 111(d).

Response 30 : The EPA disagrees that corrective measures in this rule are functionally identical to part D contingency measures. Under Part D, contingency measures are not expected to fully bring the area into attainment. In fact, this would not be possible given the difficulty of predicting in advance exactly what measures would be needed to fully attain. A better analogue in Part D for the corrective measures in these guidelines is the primary way P art D addresses failure to attain: the state is required to revise its plan in various ways within a certain time in order to bring about attainment. See, e.g., section 179(d). This is analogous to what we are requiring for corrective measures.61 Comment 31 : Commenter s state d EPA should be aware that any plan developed by LDEQ or the state of Louisiana must be consistent with and will be constrained by Act 726 of the 2014 Regular Legislative Session.

Response 31 : We appreciate this information. Under the CAA , Lou i siana and all other states and other affected jurisdictions are subject to the requirements of this rule notwithstanding any state laws that may limit a state’s ability to comply with this rule

.

Comment 32 : Commenter s state d EPA has not clearly identified it's authority to require, mandate, or otherwise implement and enforce renewable energy standards or demand

- side energy efficiency standards, i.e., Building Blocks 3 and 4 of EPA's proposed Clean Power Plan.
Commenters state d t hese building blocks are clearly beyond the fence line of any given electric generating unit, and EPA also has not clearly identified for Nebraska where these authorities lie; therefore, it is unclear under what authority pursuant to the Clean Air Act E PA is using to develop the Best System of Emission Reduction using all of the building blocks. Commenter s explain ed that in Nebraska, the NDEQ does not have the authority to mandate renewable energy
standards or demand

- side energy efficiency standards. Com menters stated i mplementing these measures would require action by the Nebraska Legislature granting the NDEQ this authority, and there is no guarantee this authority would be granted. In fact, commenters stated, the members of the 103rd Nebraska Legislatu re, Second Session, approved Legislative Resolution 482, requesting that the EPA issue emission reduction goals based only on measures achievable within the fence line of regulated sources. [LR 482 http://nebraskalegi lature.gov/] Commenters
stated t he pro posed Clean Power Plan therefore establishes goals that would be unachievable by the NDEQ and the State of Nebraska.

Response 32 : We disagree with this comment. As we explain in the preamble, we are not requiring, mandating, or otherwise implementing or e nforcing renewable energy standards or
demand

- side energy efficiency standards.

Comment 33 : Commenter s state d the authority of FERC is strictly limited to transmission and wholesale sales of electricity in interstate commerce, and the State of Utah retain s broad and exclusive regulatory authority over retail sales and service, local distribution service, and the need for, and siting of, generation facilities. Commenter s add ed Utah exercises that authority by (1) direct regulation of the investor owned util ity's facilities, services, and rates, and (2) providing for the creation of state or local public power utilities and electric cooperatives that are largely self

- governed and accountable to the customers in the communities they serve.
Commenter s remark ed that although without clear authority, and in conflict with existing governance and regulatory matters, EPA would assume total autonomy in the electric utility industry with the finalization of the proposed rule, and EPA would be asserting newfound
authori ty to become the primary regulator of electric power within the United States, including regulating (i) the dispatch of electric generation, (ii) the amount of renewable power to be constructed and integrated, and (iii) requiring customers to limit their e lectricity consumption.
Commenter s contend ed that the EPA's proposal does not appreciate that Utah's utility regulatory62 commission lacks the authority to implement several building blocks with respect to public power utilities and undermines the governance policies of public power and local control.

Response 33 : We disagree with commenters. CAA section 111(d)(1) requires the EPA to promulgate regulations under which states submit state plans regulating “any existing source” of certain pollutants “to which a standard of performance would apply if such existing source were a new source” and “provides for the implementation and enforcement of such standards of performance.” Affected EGUs, including municipalities and electric cooperatives, are subject to air qu ality requirements, including meeting such standards of performance that a state may establish to meet emissions performance levels that the EPA determines are achievable under CAA 111(d). We give states and affected EGUs flexibility in determining how the y meet these requirements. No state or affected EGU must implement the precise measures included in the building blocks in order to do so. The agency recognizes that states must have legal authority to implement approvable state plans. In the event that st ates lack the necessary state

- law authority to implement a plan, the EPA will implement a federal plan for that state under section 111(d)(2). Further, we note that we are not including building block 4, demand

- side energy efficiency in the final rule. Fin ally, for reasons that we fully explain in preamble section V.B. and the legal memo, we are within our legal authority and the final rule is consistent with past EPA practice and interpretation in setting standards of performance.

Comment 34 : Commenter s st ate d that EPA's inclusion of EE and RE measures is inconsistent with the principle of "cooperative federalism," that the CAA establishes a cooperative framework whereby EPA and the states work in partnership to achieve air quality objectives, and that the CAA's "cooperative federalism structure is a defining feature of the statute." See, e.g., GenOn REMA, LLC v. EPA, 722 F.3d 513, 516 (3d Cir. 2013). (internal quotations emitted).
Commenter s add ed that when enacting this law, Congress found that "air pollution prevention ... and air pollution control at its source is the primary responsibility of states and local governments" and that federal financial assistance and leadership is essential for the development of cooperative federal, state, regional, and local programs to prevent and control air pollution." 42 U.S.C. Section 7401(a)(3); 42 U.S.C. Section 7401(a)(4). Comment ers argue d that EPA, in the CPP, does more than encourage or promote state ac tions

- it federalizes them, and EPA is building bold assumptions regarding EE and RE, beyond

- the

- unit measures traditionally regulated at the state or regional level, into each state goal calculation, effectively requiring states to utilize these beyond

- th e

- unit measures to achieve the standard. Commenters stated
b esides being simply unnecessary, another major problem exists with it

- by requiring states to
include their state

- regulated EE and RE programs into its federally

- enforceable state plan, EPA
effec tively subjects state programs to federal enforcement. Commenter s state d the EE programs and many of the RE programs have to date been wholly state programs, and by regulating state

run EE and RE programs, which it argues affect CO2 emissions from the sour ce category by reducing demand of electricity generated from fossil

- fuel fired EGUs, EPA is not respecting the state's explicit authority to regulate its own retail electricity demand.

Response 34 : We disagree with this comment. In section V of the preambl e for this rule, we discuss the respect ive roles of the EPA and the states under CAA section 111(d). In addition,63 under this rule, the EPA would not exert CAA enforcement authority over any entity other than
affected EGUs and would be limited to enforcing the emission standards applicable to the affected EGUs, and thus this rule does not require that state s make their EE or RE programs federally enforceable

.

With regard to the inclu sion of EE and RE programs in BSER, we first note that we are no longer including building block 4, demand

- side EE, in the BSER. While affected EGUs can utilize EE

as a compliance measure to meet require d emission reductions, it is not a component of BSER.
Nex t, we reiterate that states and affected EGUs are not required to implement the building blocks in order to meet the required emission reductions. States have considerable flexibility in
how they design state plans. As we explain in sections V.A. and V.B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. That is, EPA is responsible for determining the level of emi ssion limitation from the source category, while states have the responsibility of assigning emission requirements to their sources that will ensure their achievement of that level of emission limitation. States may fulfil their responsibility by
establish ing emission standards or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emission reduction measures, including measures that are not part of the BSER. For the reasons discussed in section 1.2 of this response to comments, as well as in the Legal Memorandum accompanying the final rule, this approach is consistent with the principles of cooperative federalism embodied in some portions of the Clean
Air Act.

1.2 AUTHORITY TO REG ULATE EGUS

Comment 1: Commenters stated, EPA correctly concludes that section 111(d) requires the regulation of carbon pollution from any existing EGU that would, if it were "new", be covered by any 111(b) rulemaking establishing carbon pollution standards for EGUs. Commenters said, notwithstanding the unambiguous statutory language supporting EPA's conclusion, some industry commenters question whether the section 111(b) standards for modified and reconstructed EGUs would independently require regulation of carbon pollution fro m existing EGUs under section 111(d). Commenters said, in a joint comment filed in this docket, a number
of trade and business associations claim that the structure of section 111 demonstrates that Congress intended that existing sources would not be regul ated unless EPA first established standards of performance for all new sources (newly constructed, modified, and reconstructed). Commenters said, these commenters further assert that such an interpretation of the statute is necessary to avoid the "nonsensi cal outcome" where existing sources become subject to regulation before EPA finalizes standards for newly constructed sources.

Commenters stated, such arguments ignore the text of section 111(d), which compels EPA to regulate existing sources that would b e covered by a section 111(b) standard if they were "new
sources"

- a term that expressly encompasses modified or newly constructed sources, and encompasses "reconstructed" sources under EPA's well

- settled interpretation of the term64 "construction" in the s tatutory definition of "new source." Commenters said, nothing in the text of section 111(d) states or implies that EPA must defer regulation of existing sources that would be subject to a section 111(b) standard if they undertook modification or reconstruc tion until such time as EPA has established a section 111(b) standard for newly constructed sources in the same category. Commenters said, on the contrary, the text and structure of section 111 demonstrate that Congress was urgently concerned with identify ing and regulating categories of sources contributing significantly to air pollution reasonably "anticipated to endanger public health or welfare." Commenters said, delaying regulation of existing sources until after the promulgation of standards for all p ossible forms of "new" sources within a category would be inconsistent with ensuring that all sources of dangerous pollution

- even existing sources

- are controlled once identified. Commenters said, finally, the regulation of existing sources under 111(d) whi le 111(b) standards for newly constructed sources are pending does not produce a
"nonsensical outcome."

Commenters stated, the text and structure of section 111 demonstrate that a category of sources must be subject to 111(d) regulation if the category wou ld be subject to any 111(b) standard. Commenters said, as noted above, section 111(a) explicitly provides that a "new source" includes "any stationary source" that undertakes "construction or modification" after the proposal date of a standard of performan ce applicable to that source. Commenters said, section 111(d), in turn, directs EPA to ensure that state plans establish standards of performance for "any existing source . . . to which a standard of performance . . . would apply if [that] existing source were a new source." Commenters said, this structure clearly contemplates that the regulation of existing sources in a category is triggered by the potential applicability of section 111(b) standards to either newly constructed or modified sources in that s ame category. Commenters said, although Congress did not expressly include reconstructions in the definition of "new source," it is nonetheless clear that Congress contemplated more than one type of "new" source would be subject to 111(b) standards, and th erefore that 111(d) standards for a category could be required as a result of EPA establishing 111(b) standards for any of the multiple possible types of "new source." Commenters said, consequently, now that EPA has proposed standards of performance
for mo dified and reconstructed EGUs, existing EGUs would satisfy the statutory and regulatory definitions of a "new source" if they were to undertake modification or reconstruction. Commenters said, the modified and reconstructed source standards thus serve as a separate and wholly sufficient predicate for the 111(d) standards for existing sources.

Commenters stated, by contrast, the statutory text provides no support for the alternative view advanced by some industry commenters, which is that state plans may onl y regulate existing EGUs after promulgation of standards for new, modified, and reconstructed sources of the same type. Commenters said, if Congress had intended that section 111(d) requirements only apply to sources for which all possible section 111(b) s tandards have been promulgated, it would have so stated. Commenters said, instead, Congress provided that a "new source" is one that undertakes "construction or modification" after the proposal of an applicable standard of performance, and did not require that EPA establish a single standard of performance for the different contemplated forms of "new" sources. Commenters said, on the contrary, the statute expressly65 provides EPA with discretion to establish different standards under section 111(b) for the

mu ltiple possible types of "new" sources, by authorizing EPA to distinguish between different types and classes of sources within a category. Commenters said, thus, because Congress clearly established that there are multiple avenues through which a source m ay be "new" for the purpose of applicability of a 111(b) standard, the mandate in section 111(d) to regulate existing sources that would be subject to 111(b) standards if they are "new" is triggered by an applicable standard of performance for either newly constructed, reconstructed, or modified sources.

Commenters stated, EPA's position is also fully consistent with the purpose of section 111, whereas the position advanced by industry commenters would undermine the statutory purpose. Commenters said, the p urpose of section 111, as demonstrated by its text and structure, is curbing the emission of harmful pollutants from categories of stationary sources identified as significantly contributing to dangerous pollution; this purpose is fulfilled through a statu tory structure that ensures that air pollution emitted by both new and existing sources in those categories are regulated. Commenters said, to address pollution from the category effectively, and to fulfill Section 111's technology

- forcing mandate, EPA mus t promptly establish standards under section 111(b) for newly constructed, reconstructed, and modified sources in each listed category. Commenters said, yet where existing sources are responsible for the vast majority of the pollution generated by the cate gory, as is the case with respect to carbon pollution from power plants (and many other source types), establishing section 111(d) regulation is an even more urgent task to fulfill the Act's fundamental purpose of protecting human health and welfare.
Comme nters said, for this reason, section 111(d) requires EPA to ensure that standards of performance under section 111(d) are established for existing sources, which are defined as "any stationary source other than a new source." Commenters said, because the g oal of this statutory framework is ultimately to ensure that Americans are protected from dangerous air pollution through standards addressing the entire category, it would frustrate that purpose to delay the regulation of existing sources until standards of performance have been established for all forms of new sources. Commenters said, conversely, interpreting section 111(d) as requiring the regulation of existing sources that would be subject to a 111(b) standard of performance if they were any form of " new source" is consistent with section 111's clear purpose of ensuring that emissions from the entire category become subject to pollution standards.

Commenters stated, contrary to industry assertions, the regulation of existing sources under 111(d) while 111(b) standards for newly constructed sources are pending does not produce a "nonsensical outcome." Commenters said, EPA's approach ensures that existing sources, responsible for the vast majority of the carbon pollution generated by this category of sour ces, would be subject to standards requiring the abatement of that pollution once there is a section 111(b) standard for any "new source" of the same type. Commenters said, this approach is wholly consistent with the unambiguous text of section 111(d) and comports with the Act's fundamental purpose of protecting Americans from dangerous air pollution.

Commenters stated, the text, structure, and purpose of Section 111 unambiguously require state plans to cover any existing EGU that would be subject to a sect ion 111(b) standard if it were to66 be newly built, modified, or reconstructed. Commenters said, industry commenters' misguided view that EPA is barred from issuing emission guidelines for existing EGUs until it promulgates
standards for all new sources is i nconsistent with the statute and would frustrate the core purposes of section 111.

Commenters stated, because EPA' interpretation that 111(d) requirements continue to apply to sources that later modify or reconstruct does not rely on defining those sources as continuing to be "existing" sources, the proposed 111(b) standards of performance for modified and reconstructed EGUs are in no way standards for "existing" sources. Commenters said, thus, because the proposed standards are clearly standards of perform ance for "new" sources, fitting the definition of section 111(a)(2), the standards for modified and reconstructed EGUs are a sufficient predicate for the regulation of existing sources under section 111(d).

Response 1: EPA agrees that a standard of perform ance for either modified sources or reconstructed sources may serve as a sufficient predicate for regulation under section 111(d). This issue is discussed more fully elsewhere in this Chapter in response to comments stating that
such standards are not a su fficient predicate.

Comment 2 : Commenter s stated that the statutory language of Section 111(d) is a product of differing House and Senate versions and that under the Senate version, unless a particular air pollutant emitted by existing sources was regulat ed by one of several other listed CAA provisions, existing sources emitting that pollutant could be regulated under Section 111(d). The

commenter s stated that in contrast, the House version prohibits existing sources from being regulated under Section 111( d) if the existing sources are regulated under Section 112; under prevailing rules of legislative construction and case law regarding harmonization of conflicting statutory provisions, the House provision controls. The commenter s stated that effective in 2 012, EPA already regulates coal

- fired power plants under section 112 in the Mercury and Air Toxics Standard; therefore, EPA has no authority to regulate existing coal

- fired power plants a second time under Section 111(d). The commenter s stated that, also, section 111(d) requires EPA to issue a valid new source performance standard under Section 111(b) before issuing an existing
source standard.

Response 2 : We disagree with this comment. We respond to the two arguments made by

commenter s in our responses to other comments in this section and in section 1.1 of the RTC.

Comment 3 : EPA prohibited from setting ESPS for sources regulated under section 112

Several commenters stated that 111(d) prohibits EPA from promulgating existing source

pe rformance standards for source categories that have already been regulated under Section 112.

Commenter s stated that despite the clarity provided in a literal reading of 111(d), EPA argues that the statute's prohibition is ambiguous due to a clerical mist ake in the 1990 CAA
Amendments. The commenter s stated that although both the House and Senate versions were included in the 1990 Amendments, the Senate's version contained the error and it was the House67 version that was published in the U.S. Code. The comm enter s stated that the House version controls over the Senate's because of longstanding and well

- established rules for resolving legislative drafting inconsistencies and clerical errors in federal legislation. The commenter s stated that in direct conflict with the House amendment version that bans any regulation under Section 111(d) of existing sources already regulated under Section 112, EPA's interpretation would permit regulation as long as the pollutant itself is not regulated under Section 112 because CO2 was not itself regulated under the Mercury and Air Toxics Standard, only hazardous air pollutants from coal

- and oil

- fired EGUs. The commenter s stated that additionally, in direct conflict with the Senate's version, which prohibits regulation of any HA P under Section 111(d), EPA's interpretation would permit regulation of a HAP under Section 111(d) if Section 112 does not regulate the HAP and the emitting source. The commenter s stated that despite EPA's erroneous attempt at claiming that the limitations in these amendments negate each other, it is possible, and therefore mandatory, to read the versions as prohibiting EPA from regulating emissions of any pollutant from sources in a category that is already regulated under Section 112 under its authority i n Section 111(d).

Commenter s stated that 111(d) prohibits EPA from promulgating existing source performance standards for source categories that have already been regulated under Section 112. C ommenter s stated that in 2012, EPA issued the Mercury and Air T oxics Standards under section 112 to regulate emissions from coal

- fired EGUs; thus, the CPP attempts to unlawfully and duplicatively regulate coal

- fired EGUs.

Response 3 : EPA disagrees that it may not promulgate regulations addressing CO2 emissions from existing power plants under section 111(d). EPA’s discussion of this issue is in Section IV of the preamble.

Comment 4 : Commenter s disagreed that EPA has the authority to e nforce emission rate goals at
individual affected sources. The commenter s stated that the Act reserves to the States the authority to establish, implement, and enforce standards of performance at individual affected sources. [42 USC 7411(d)(1)(A),(B)] The commenter s stated that the EPA only has the authority to "prescribe" and "enforce" a State plan when a State fails to submit a "satisfactory" plan. [42 USC 7411(d)(2)(A),(B)]

Response 4 : We disagree with this comment. CAA sections 111(d)(2)(B) and 113(a)

– (h) authorize the EPA to enforce the provisions of a state plan, regardless of whether the state fails to submit a satisfactory plan or fails to enforce that plan. Section 113 does not distinguish between implementation plans under Sections 110 and 111(d) . Section 304 of the CAA provides similar enforcement authority to citizens.

Comment 5 : Commenters stated that the regulatory framework the EPA has established is very workable and that the regulations are on solid technical and legal footing.

Response 5 : We appreciate this comment

.68 Comment 6 : Commenter s state d that the Clean Power Plan is clearly legal. The 1970 Clean Air Act, as interpreted by the Supreme Court in both 2007 and 2014, clearly gives the EPA, you all, the authority to regulate carbon polluti on from existing power plants. Commenter s add ed that although the two versions of CAA section 111 passed by the House and Senate introduce potential ambiguity, the EPA is entitled to substantial deference in interpretation of that ambiguity, and Commenter s agree d with the EPA's interpretation that it can regulate CO2 emissions from EGUs under section 111(d) given that CO2 is not listed as a HAP or otherwise regulated under section 112.

Commenter s state d that the EPA reasonably interprets the provisions ide ntifying which air pollutants are covered under Section 111(d) to authorize the EPA to regulate carbon emissions
from fossil fuel

- fired EGUs, that the drafting errors that occurred during enactment of the 1990 CAA Amendments do not call EPA's legal authori ty into question. Commenter s said both houses of Congress passed an amendment to Section 111(d) (166 Pub. L. No. 101

- 549, 108(g), 104 Stat. at 2467 (Nov. 15, 1990)) and the two versions differed from and conflicted with each other, creating ambiguity. Comm enter s stated as they were not reconciled during the House

- Senate Conference Committee, both were approved by both houses and enacted into law

- one in title I of the bill, the other in title III of the bill (both amendments were to be codified in Section 111(d)).(167 The Senate version would exclude the regulation of any pollutant which is included on a list published under [Section] 112(b). Pub. L. No. 101

- 549, 302(a), 104 Stat. at 2574 (Nov. 15, 1990)) Commenter s agree d with the EPA that the enacted law, with both conflicting and thus ambiguous amendments, signed by the President (as recorded in the U.S. Statutes at Large) is controlling, not the U.S. Code that inaccurately presents only one of the two amendments.
Commenter s said under such circumstances, the EPA may reasonably construe the provisions of Section 111(d) to authorize regulation of carbon thereunder. Commenter s stated before the 1990 CAA Amendments, Section 111(d)(1) read: The Administrator shall prescribe regulations . . . for any existing s ource for any air pollutant for which air quality criteria have not been issued or which is not included on a list published under Section 7408(a) or 7412(b)(1)(A) [S. 112(b)(1)(A)] of this title, but to which a standard of performance under this Section w ould apply if such existing source were a new source. . .(168 42 U.S.C. 7411(d) (1970)) Commenter s

state d that in this version, there was a provision (Section 112 Exclusion) excluding from regulation, pollutants that were provided in Section 112. Commenter s said the 1990 CAA Amendments altered the Section 112 Exclusion ambiguously because there were two different
versions both enacted into law. Commenter s stated as presented in the U.S. Code, the House written version of Section 111(d)(1) reads: The Adminis trator shall prescribe regulations . . . for any existing source for any air pollutant for which air quality criteria have not been issued or which is not included on a list published under Section 7408(a) of this title or emitted from a source category wh ich is regulated under Section 7412 [Section 112] of this title but to which a standard of performance under this Section would apply if such existing source were a new source, and provides for the implementation and enforcement. . .(169 42 U.S.C. 7411, 11 1(d)(1))
Commenter s continue d , stating that the conflict in interpreting the statute comes from the revision of the Section 112 Exclusion defining one category of air pollutants that are emitted from a source category which is regulated under [Section 112] as excluded from regulation.69 Commenter s said this alters the Section 112 Exclusion from applying to Section 112 pollutants to categories of sources that emit those pollutants. Commenter s stated therefore, the U.S. Code
version can be constructed to read t hat the provision (Section 112 Exclusion) precludes GHGs because they are emitted from EGUs and those regulated entities are a source category regulated
under Section 112. ( "Electric utility steam generating unit

- The term "electric utility steam generati ng unit" means any fossil fuel fired combustion unit of more than 25 megawatts that serves a generator that produces electricity for sale. ) Commenter s stated a unit that cogenerates steam and electricity and supplies more than one

- third of its potential el ectric output capacity and more than 25 megawatts electrical output to any utility power distribution system for sale shall be considered an electric utility steam generating unit." 42 U.S.C. 7412(8) (1970)) Commenter s said that under this construction, th e Section 112 Exclusion would be read to exclude almost every pollutant from regulation under Section 111(d), as it would be challenging to identify any pollutant that is not emitted from at least one source category that is regulated under Section 112.
Co mmenter s stated this circular construction of Section 111(d) would render itself ineffective, and as such, can be neither a reasonable construction nor the intent of Congress. Commenter s said such an unreasonable construction can only be derived by looking at only the text of Section 111(d) as presented in the U.S. Code, but this does not accurately reproduce the Section 112 Exclusion as enacted by Congress and signed by the President in the 1990 CAA Amendments.
Commenter s said the Senate written version re ads as follows: The Administrator shall prescribe regulations . . . for any existing source for any air pollutant for which air quality criteria have not been issued or which is not included on a list published under Section 7408(a) or 7412(b) [Section 112 (b)] of this title, but to which a standard of performance under this Section would apply if such existing source were a new source. . . S.1630.ENR, 101st Cong. (1990).
Commenter s believe d this version simply revises the list of pollutants to which it refe rs because in the 1990 CAA Amendments, Congress amended Section 112 to include a statutory list of hazardous air pollutants for EPA to regulate, as opposed to relying on the EPA to develop its own list and states that as shown, these two versions conflict and are thus ambiguous.
Commenter s said the controlling statement of the Section 112 Exclusion, found in the U.S. Statutes at Large, has both conflicting versions (each passed by each house of Congress) and is thus ambiguous. Commenter s stated under these circumstances, the EPA may reasonably construe the Section 112 Exclusion to allow for and authorize the regulation of GHGs under Section 111(d). Commenter s stated in doing so, it would not be reasonable to give little or no
effect to the Senate version and instead defer entirely or almost entirely to the House version because a strict reading of the House version would mean that the EPA could not regulate any air pollutant from a source category regulated under Section 112 and would render Section 111(d)
in effective, which was not the intent of Congress. Commenter s stated moreover, Congress desired the 1990 CAA Amendments to require the EPA to regulate more substances, and not eliminate the EPA's ability to regulate large categories of air pollutants.(See 70 Fed. Reg. 16031

- 32) Commenter s further said , the EPA has historically regulated non

- hazardous air pollutants under Section 111(d), even where those air pollutants were emitted from a source category actually regulated under Section 112. Commenter s remark e d that the EPA reasonably interprets the provisions identifying which air pollutants are covered under Section 111(d) to authorize the EPA to regulate carbon emissions from fossil fuel

- fired EGUs

, and the EPA has reasonably70 interpreted the ambiguous Sectio n 112 Exclusion in a manner to give effect to both amendments, and thus the apparent intent of Congress. Commenter s stated specifically, the EPA has interpreted the Section 112 Exclusion to mean that [w]here a source category is regulated under
Section 112 , as Section 111(d) standard of performance cannot be established to address any hazardous air pollutants listed under Section 112(b) that may be emitted from that particular source category. Commenter s conclude d , stating that EGUs are a source category th at is regulated under Section 112, but GHGs are not a hazardous air pollutant regulated under Section 112, and accordingly, the Section 112 exclusion in Section 111(d) does not apply to GHGs, and 111(d) does not preclude the EPA from establishing guideline s covering GHGs from EGUs, and, therefore, this interpretation authorizes the EPA to establish Section 111(d) guidelines for GHG emissions from EGUs, and this interpretation is reasonable and entitled to deference.
Commenter s stated this authority is not d ivested by the fact that the EPA has regulated EGU emissions of mercury and other hazardous air pollutants under Section 112 under the agency's established construction of the ambiguous provisions in Section 111(d)(1)(A)(i) that identify air pollutants sub ject to Section 111(d).

Response 6 : EPA agrees that it has the authority to promulgate regulations addressing CO2 emissions from existing power plants under section 111(d). EPA’s discussion of this issue is in Section IV of the preamble.

Comment 7 : Commenter s state d that while section 111(d) gives states broad flexibility in implementing standards applicable to existing sources, the EPA is ultimately responsible for ensuring that state programs will achieve the standards of performance specified in t he section 111(d) emission guideline document. Commenter s said Section 111(a) of the CAA defines the term "standard of performance" as: "[A] standard for emissions of air pollutants which reflects the degree of emission limitation achievable through the ap plication of the best system of emission reduction [(BSER)] which (taking into account the cost of achieving such reduction and

any non

- air quality health and environmental impact and energy requirements) the Administrator determines has been adequately de monstrated."42 U.S.C. S. 7411(a)(1). Commenter s explained
that this definition applies to both new sources (governed by section 111(b)) and existing sources (governed by section 111(d)), and thus, while there are no judicial decisions interpreting the term "standard of performance" in the context of section 111(d), case law interpreting it in the context of section 111(b) is instructive. Commenter s cite d the D.C. Circuit's interpretation of section 111(a), summarizing that "the system [] must be adequately demonstrated, and the standard [] must be achievable." Essex Chemical Corp. v. Ruckelshaus, 486 F.2d 427, 433 (D.C. Cir. 1973), cert. denied, 416 U.S. 969 (1974). In determining whether a system of emission limitation is "adequately demonstrated," the D.C. Circuit has clarified that "[s]ection 111 looks toward what may fairly be projected for the regulated future, rather than the state of the art at present . . . ." Portland Cement Assn v. Ruckelshaus, 486 F.2d 375, 391 (D.C. Cir. 1973). Commenter s stated

" 'Adequately demonstrated;' does not mean that existing [plants] must be capable of meeting the standard." Nat'l Asphalt Pavement Assn v. Train, 539 F.2d 775, 785 (D.C. Cir. 1976) (citing Portland Cement Assn, 486 F.2d at 391). Commenter s said the standard "does not require that a [facility] be currently in operation which can at all times and under all circumstances meet the71 standards." Essex Chemical Corp., 486 F.2d at 433, 436 (identifying BSER as a technology that had only been implemented at one plant i n the U.S. at the time of testing, but that found support in literature and in foreign implementation). Commenter s conclude d that the EPA may specify a standard of performance which is not routinely in use within the industry, provided the
effectiveness of the system may reasonably be expected based on the performance of its component parts in other settings.

Response 7 : These comments are supportive of this rule, we appreciate them, and to the extent we agree with the points made, we have incorporated thos e points into our rationale.

Comment 8 : Commenter s stated that the proposed Clean Power Plan is consistent with Section 111(d) and other applicable provisions of the CAA, along with the EPA's implementing regulations at 40 CFR 60.22(a). Commenter s state d t hat recent court cases, including rulings by the U.S. Supreme Court in Massachusetts v. EPA and American Electric Power Co. v. Connecticut, affirm that the EPA has the authority to regulate GHG emissions from EGUs.
Commenter s stated Congress also gave the EPA authority under Section 111(d) to determine the
BSER and directed the EPA to evaluate whether state implementation plans are "satisfactory."
Commenter s stated that the EPA makes it clear in the preamble that the proposed rule only
establishes a state e mission target rate and that the states have flexibility to implement any combination of the measures that constitute BSER, or include measures that were not part of the EPA's BSER determination, as long as the state can demonstrate that the applicable tar get rate will be met or exceeded with equivalent measures. Commenter s stated that the proposed Clean Power Plan satisfies the emission guideline requirements contained in the existing regulations by including information for states to develop compliance pl ans, analysis of the building blocks that comprise BSER, state goals based on BSER, the time in which compliance can be achieved, as
well as other information. Commenter s referr ed to a more detailed discussion of NEE's views on the consistency of the proposed Clean Power Plan with the EPA's authority under the CAA in
their comments

.

Commenter s stated that in earlier comments to the EPA, Alabama's Governor's office and the
Alabama D epartment of Environmental Management (collectively, "the Administration") questioned the legal basis for the proposal. ( See, e.g., Alabama's Opposition to U.S. EPA's Clean Power Plan, Testimony by Blaine Galliher, Senior Advisor to Governor Robert Bentley,
available at http://governor.alabama.gov/newsroom/2014/07/governor

- bentley

- sends

- senior

advisor

- te stify

- epas

- public

- hearing

- clean

- power

- plan

- regulations/ ). Commenter s remark ed that Alabama is one of 12 states that brought suit against the proposal, notwithstanding the legal hurdles to challenging a non

- final rule.(Neela Banerjee, 12 States sue the EPA over proposed power plant regulations, L.A. Times (Aug. 4, 2014), available at http://www.latimes.com/business/la

- fi

- epa

- lawsuit

- 20140805

- story.html , and that the
Adminis tration's legal critique involves two basic arguments: (1) the EPA cannot regulate power plant carbon dioxide emissions under Clean Air Act section 111(d) because the EPA has promulgated emission standards for power plant hazardous air emissions under sect ion 112; and (2) section 111(d) requires controls on emission sources only, and does not authorize "beyond the fence line" compliance flexibility. (Id.) Commenter s stated first, the EPA interprets section72 111(d) to limit development of standards of perform ance for specific pollutants regulated under section 112, rather than for entire categories of sources regulated under that section. Commenter s stated the EPA's interpretation is a permissible construction that, in fact, is the most natural reading of the statute and best effectuates each of the statutory provisions, and second, that the EPA's broad interpretation of "best system of emission reduction" to include beyond

- the

- fence

line compliance approaches is a logical and permissible reading of these gener ically defined statutory terms. Commenter s explained that Section 111(d) provides that the EPA "shall prescribe regulations which shall establish a procedure . . . under which each State shall submit [to the EPA] a plan which . . . establishes standards of performance for any air pollutant . . . to which a standard of performance under this section would apply if such existing source were a new source."(Id.) Commenter s continue d , explaining that Congress exempted two categories of air pollutants from this m andate: any air pollutant (1) for which air quality criteria have been issued or which is listed under section 108(a); or (2) emitted from a source category covered under the hazardous air pollutant provisions of section 112.(Id.), and neither exemption ap plies
here.

Commenter s continue d , stating that the EPA has for some time encouraged states to include energy efficiency programs that reduce emissions into their State Implementation Plans (SIPs).(See the EPA Roadmap for Incorporating Energy Efficiency an d Renewable Energy (EE/RE) Policies and Programs in State Implementation Plans (SIPs) and Tribal Implementation Plans (TIPs). Incorporating and explaining a number of previous EPA guidance documents: "SIP
Credits for Emission Reductions from Electric

- Secto r Energy Efficiency and Renewable Energy Measures" (August 2004), which explains how to quantify and include emission reductions from EE/RE measures in SIPs; "Incorporating Emerging and Voluntary Measures in State Implementation Plans" (September 2004), wh ich encourages the development of voluntary and emerging measures that can be included in SIPs; and "Incorporating Bundled Measures in a State Implementation Plan" (August 2005), which explains how states can identify individual voluntary and emerging meas ures and "bundle" them in a single SIP submission.), and these SIP

approved programs are an example of an outside the fence tool used by states across the country to cost effectively reduce not only greenhouse gases, but other pollutants as well. Commenter s said state and regional programs, such as the Regional Greenhouse Gas Initiative, which create CO2 budget trading programs are another example of outside the fence line programs that have been incorporated in the EPA

- approved SIPs. Commenter s said clearl y states have the authority to adopt and implement these kinds of programs and the EPA has the authority to recognize these SIP programs under the concept of best system of emission reduction. Commenter s stated furthermore, utilities and ratepayers should embrace these programs as a lower cost alternative to within the fence line regulation.

Response 8 : These comments are supportive of this rule, we appreciate them, and to the extent we agree with the points made, we have incorporated those points into our rationale.

Comment 9 : Commenter s stated case law interpreting the term 'standard of performance' is thus far limited to cases involving new source performance standards, and the commenter s agree with the EPA's assessment that standards for existing sources must be sensitive to the relatively73 greater costs that existing facilities may face in implementing pollution control technology, as compared to new sources. Nonetheless, the commenter s b elieve d that the EPA would be within its statutory authority to promulgate more stringent limits than those contained in the Proposed Rule while allowing industry sufficient flexibility to absorb costs.

Response 9 : We appreciate this comment. We have deter mined that the limits promulgated are consistent with the BSER, as discussed in the preamble for this rule.

Comment 10 : Commenter s stated that t he EPA is faced with a conundrum. Commenter s said it cannot, in one fell swoop, regulate the grid. Commenter s st ate d that first, the Agency's authority under the regulatory framework of the CAA focuses on 'new' sources and 'existing' sources.

Commenter s state d the EPA provides no statutory support or Congressional directive for its affirmative action energy policie s. Commenter s said also undefined is how such incentive encouragement becomes legally enforceable. (Presumably, the state would financially penalize certain activities so as to encourage the EPA

- favored activities, or the state would have to financially incentivize the EPA

- favored activities, which is certainly beyond the scope of the CAA, let alone Section 111(d).)

Commenter s stated that further, the EPA sets aside all of the historic Section 111 concepts, principles, rules, and interpretations reached over 45 years o f practice. Commenter s said under the CPP, emission units are not subject to a source

- specific emissions standard; states are.
Commenter s stated that such enforcement would effectively 'federalize' state initiatives and policy decisions that are beyond the EPA's direct reach under the CAA. Commenter s stated the
actions of non

- emitting unit owners and consumers 'reduce' emissions from emitting units.
Commenter s said the 'standard of performance' becomes a suite of actions mandated by the states to change beh avior of the general public rather than a rate or mass cap imposed on specific existing units or even a technology, which one might expect from a 'standard of performance.'

Commenter s said in short, the EPA cannot find in its historic practice a way to tu rn the entire 'integrated grid' into a single source category. Commenter s state d so it just creates a new way of thinking. Commenter s state d as the Supreme Court noted in Utility Air Regulatory Group v. EPA, 573 U.S. 2427 (2014), new regulatory powers are simply not discovered in a 45

- year

- old

statute.

Commenter s stated that when the CAA was promulgated in 1970 or even, perhaps, in 1990, when Congress amended the CAA, Congress did not foresee the perceived need to define and regulate greenhouse gas emission s, a global pollutant, and did not draft a statute to accommodate
such a rule. Commenter s said this unforeseen circumstance does not allow the EPA to bend the Act to suit its needs nor to expand the congressionally

- mandated scope of the agency's authority.
Commenter s stated in evaluating the validity of the Federal Reserve's interpretation of the Bank Holding Company Act in Dimension Financial, the Supreme Court observed that:74 Congress defined with specificity certain transactions that constitute banking su bject to regulation. The statute may be imperfect, but the [Federal Reserve] Board has no power to correct flaws that it perceives in the statute it is empowered to administer. Its rulemaking power is limited to adopting regulations to carry into effect th e will of Congress as expressed in the statute. If the Bank Holding Company Act falls short of providing safeguards desirable or necessary to protect the public interest, that is a problem for Congress, not the Board or the courts, to address.

Commenter s s tated that similarly here, just because the Clean Air Act is an imperfect vehicle for the regulation of greenhouse gases does not give the EPA the right to expand its authority to include wholesale energy market regulation that is the sole domain of FERC. Commenter s said by granting itself this authority, it is essentially "fixing" the statute so that it may shoehorn a regulatory policy into an act that Congress did not design for such a policy. Commenter s stated that according to the Supreme Court in Dimen sion Financial, if the Clean Air Act "falls short of providing safeguards desirable or necessary to protect the public interest, that is a problem for Congress," not for the EPA to address.

Response 10 : We disagree. We discuss our authority to promulgate t his rule, including why this rule is not inconsistent with the U.S. Supreme Court’s decision in UARG v. EPA , in section IV of the preamble and section XXII of the Legal Memo . For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is
reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history. To the extent this comment objects to the portfolio approach, which the EPA is not finalizing, the comment is moot.

We also disagree that we are expanding our authority to include wholesale energy market regulation. Our emission guide lines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. Moreover, these emission guidelines provide states with the flexibility to establish, implement , and enforce standards of performance and do not intrude on the regulatory domain of FERC or the states. It cannot be said that because environmental requirements may have an effect on the wholesale energy market that the EPA is therefore intruding into e nergy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Congress expressly identified power plants as a priority source category for regulation under CAA section 111.

Comment 11 : Commenter s state d that the CAA gives the EPA powe r to regulate new sources; however, the proposed rule is establishing jurisdiction over existing sources and by extending its jurisdiction over existing sources, the EPA is violating the Tenth Amendment of the U.S. Constitution, which reserves powers not d elegated to the U.S. to the States. Commenter s add ed that since the existing sources were not regulated by the federal government originally, then the States are protected by the Constitution from regulation now, and therefore, the proposed rule
violates t he 5 U.S. Code

- 706(2)(B) because it is contrary to a constitutional right.75 Commenters state d that the Proposed Rule relies upon states to implement far

- reaching emission reduction measures that the EPA itself has no authority to implement, and that the EPA is forcing states to adopt these emission reduction measures in two ways: 1) the EPA proposes to impose state goals that are so stringent that states will have no choice but to implement beyond

- the

- fence emission reduction measures to attain the goals, and 2) if a state submits a plan that the EPA finds unsatisfactory, the EPA proposes to impose a federal plan on the state. 79 Fed. Reg. at 34,900. Commenter s remark ed that because of the stringency of the state goals, the federal plans will require state legislative action to establish the beyond

- the

- fence emission reduction measures necessary to achieve the state goals. Commenters stated b oth scenarios constitute an unlawful commandeering of state resources, rendering the Proposed Rule illegal. Commenter s explain ed that it is well

- established that the Tenth Amendment prohibits federal agencies from usurping the authority of states, Printz v. United States, 521 U.S. 898, 925 (1997); states also may not be forced to administer federal programs. New York v. United States, 505 U.S. 144, 188 (1992). Indeed, commenters stated, courts have rejected a previous attempt by the EPA to hijack
state action. Commenters stated that i n the 1970s, EPA attempted to commandeer states into implementing federal transportation control plans. Commenter s said courts rejected the EPA's regulations, holding that the EPA could not require states to prescribe auto emissions testing, monitoring and retrofit programs, or to designate preferential bus and carpool lanes. Commenter s stated the U.S. Courts of Appeals for the Fourth and Ninth Circuits invalidated the EPA's regulations on statutory grounds to avoid constitutional issues(EPA's interpretation of the CAA is contrary to the doctrine of constitutional avoidance, dictating that fede ral statutes should not be interpreted so broadly as to raise constitutional concerns about Congress' authority under the Commerce Clause. See Solid Waste Agency of Northern Cook County v. United States Army Corps of Engineers ("SWANCC"), 531 U.S. 159, 173 (2001)) see Maryland v. EPA, 530 F. 2d 215, 226 (4th Cir. 1975); Brown v. EPA, 521 F. 2d 827, 838

- 42 (9th Cir. 1975); and the U.S. Court of Appeals for the District of Columbia Circuit ("D.C. Circuit") invalidated the regulations
on both constitutional an d statutory grounds, see District of Columbia v. Train, 521 F. 2d 971, 994 (D.C. Cir. 1975).(Commenter s stated after the U.S. Supreme Court granted certiorari to review the statutory and constitutional validity of the regulations, the EPA declined to defen d
them. Commenter s said instead, the EPA rescinded some of the regulations and conceded the invalidity of those that remained. Commenter s stated accordingly, the Supreme Court vacated the opinions below and remand for consideration of mootness. See EPA v. Brown, 431 U. S. 99 (1977)). Commenter s state d that in striking down the EPA's transportation regulations, which were promulgated as Fede ral Implementation Plans under Section 110 of the CAA, the D.C. Circuit observed that, "[h]ad Congress intended to adopt the novel approach of empowering a federal agency to order unconsenting states to enact state statutes and regulations, thereby

convert ing state legislatures into arms of the EPA, it most likely would have made that intent clear in the statute." Train, 521 F.2d at 984. Commenter s said just as Congress authorized no such approach under Section 110, it authorized no such approach under Sect ion 111.
Commenter s said to the contrary, the EPA's authority under Section 111(d) is based on its authority under Section 110: the EPA must "establish a procedure similar to that provided by
section 7410 of this title under which each State shall submit t o the Administrator a plan which (A) establishes standards of performance and (B) provides for the implementation and76 enforcement of such standards of performance," 42 U.S.C. section 7411(d)(1) (emphasis added), and "prescribe a plan for a State in cases w here the State fails to submit a satisfactory plan as he would have under section 7410(c) of this title in the case of failure to submit an implementation plan." Id. section 7411(d)(2)(A) (emphasis added). Commenter s stated that not only would the Proposed Rule commandeer state action as a result of the stringency of the goals, courts already have specifically rejected the EPA efforts to effectuate state legislative and regulatory action through the imposition of a state plan under Section 110, upon which E PA's Section 111(d) plans
would be modeled. Commenter s stated that the Proposed Rule is an improper and illegal commandeering of state authority, and cannot be finalized as proposed.

Commenter s state d that applying Section 111(d) to these source categorie s will impose unprecedented burdens on State permitting agencies given the large number of existing sources. The Section 111(d) program would be implemented primarily by the States, which would have to address all covered sources within their jurisdiction. Commenter s stated that this would be a significant undertaking, as the EPA envisions that States will adopt a "portfolio approach" that extends far beyond the regulated source categories, and, in addition to regulating existing fossil
fuel

- fired EGUs, Sta tes will be obligated to develop implementation plans that address the entire electricity sector, including renewable energy, nuclear energy, and even consumer choices through demand

- side energy efficiency programs. By doing so, c ommenter s remark ed , the EP A would effectively be commandeering States programs such as RPSs and EERSs that are based on traditional powers exercised by the States, and it is fundamentally inconsistent with the principles of cooperative federalism on which the CAA is based

- as well as the Tenth
Amendment

- for the EPA to effectively mandate the manner in which States exercise their own authority. See Sections VI.B.

- C., infra. Commenter s add ed that even putting this aside, State permitting agencies are already struggling under the adm inistrative burdens of existing federal programs including GHG permitting programs, NESHAPs, and revised NAAQS and, in many cases, the agencies lack the capacity and resources to implement an additional complex and expansive permitting program such as that envisioned by EPA in the proposed Section 111(d)
standards. Commenters contend ed that it would be irresponsible for the EPA to impose such a regulatory burden on the States, particularly without a clear mandate from Congress to do so.

Commenter s stated e ven if the EPA has the authority to regulate existing electric generating units ("EGUs") under Section 111(d) of the Clean Air Act, the proposed rule is a complicated system of various implementation measures that makes the development of a legally enforce able state plan difficult, if not impossible.

Commenter s stated i f the EPA were granted legislative authority by Congress to preempt state regulation of these matters, the method of implementation presented within the Proposed Carbon
Rule would be deficie nt because it thrusts the burden of regulation back upon the states.

Response 11 : The EPA disagrees with these commenters’ assertions that this action violates the federal

- state balances embodied in either the U.S. Constitution or the Clean Air Act. As an initial matter, to the extent this comment objects to the portfolio approach, which the EPA is not finalizing, the comment is moot.77 With respect the constitutional issue, f or reasons discussed in the Legal Memorandum , this rule does not violate constitutio nal principles of federalism embodied in the Tenth Amendment. Additionally , a federal plan would not unconstitutionally “commande er” state policies such as RPSs because the existence of a federal plan does not inherently require state governments to contin ue implementing those policies. Furthermore, commenters are incorrect in their claim that regulation of CO2 emissions of affected EGUs

— or of existing EGUs at all

— is beyond the constitutional reach of the federal government

. 2

With respect to comments that t his rule violates principles of cooperative federalism under the Clean Air Act, the EPA believes that commenters are similarly mistaken. The EPA agrees that the CAA

— particularly section 110

— establishes a state

- federal partnership based on cooperative feder alism. The EPA has explained its view of the cooperative

- federalism structure of the CAA in other actions. 3 EPA also believes that many of the principles embodied in section 110 are reflected in section 111(d). For example, both sections provide states the initial opportunity to develop a plan that satisfies applicable requirements, and for EPA to review the sufficiency of those plans and prescribe a federal plan applicable in states where the state plan is insufficient.

In the context of section 110, the D.C. Circuit has described the Train

- Virginia line of cases as erecting a “federalism bar” that constrains EPA’s authority with respect to evaluation of SIPs. 4 Some of the commenters selectively quote Train for the proposition that under section 110, the EPA is relegated to a secondary role with little ability to ensure that SIPs meet statutory requirements. Setting aside the fact that Train predated substantive revisions to the CAA that altered the Act in wa ys relevant to that case’s interpretation of section 110, 5 the Train Court noted that EPA has the authority under section 110 to ensure a SIP complies with CAA

2 See, e.g. , FERC v. Mississippi , 456 U.S. 742, 757

– 58, 766

– 67 (1982) (citing Nat’l League of Cities v. Usery , 426 U.S. 833, 845 ( 1976 ) ) (noting that private businesses “necessarily are subject to the dual sovereignty of the government of the Nation and of the State in which they reside,” and upholding the federal government’s Commerce Clause autho rity against a Tenth Amendment challenge); Hodel v. Va. Surface Mining & Reclamation Ass’n , 452 U.S. 264, 282 (1981) (“the power conferred by the Commerce Clause [is] broad enough to permit congressional regulation of activities causing air . . . pollution . . . that may have effects in more than one State”); United States v. Lopez , 514 U.S. 549 (1995) (“[w]here economic activity substantially affects interstate commerce, [federal] legislation regulating that activity will be sustained”).

3 See, e.g. , 80 FR 33840, 33876

– 79 (June 12, 2015).

4 See

, e.g. , Michigan v. EPA , 213 F.3d 663, 687 (D.C. Cir. 2000 ). The Train

- Virginia line of cases are named for the U.S. Supreme Court case Train v. Natural Resources Defense Council,
Inc

. , 421 U.S. 60 (1975), and the D.C . Circuit case Virginia v. EPA

, 108 F.3d 1397 (D.C. Cir. 1997)

.

5 See 80 FR at 33877 & n.82.78 requirements. 6 Furthermore, interpreting the current version of CAA section 110, the U.S. Suprem e Court recently noted that the cooperative federalism embodied in section 110 is not a free

- floating principle, but rather is grounded in the text of section 110 itself. 7 The Court affirmed EPA’s authority to reasonably interpret the requirements of SIPs contained in the Act, and to evaluate the sufficiency of those SIPs against the relevant requirements. 8

The touchstone of the cooperative

- federalism concept outlined in the Train

- Virginia line of cases is that, under the authority of section 110, the EPA may not legally or functionally require a state to adopt a “specific” control measure in its SIP. 9 The cases do not stand for the broader proposition that 110 imposes no limits on state discretion, or that EPA is prohibited from interpreting basic requirements of the Act or reviewing SIP submissions for compliance with those requirements.

This view of what cooperative federalism requires under section 110 is consistent with Train

, where the U.S. Supreme Court stated that the EPA “is relegated by the [1970] Act to a secondary role in the process of determining and enforcing the specific, source

- by

- source emission limitations which are necessary if the national standards it has set are to be met.” 10 It is also consistent with the Virginia decision, where the D.C. Circuit held that the EPA cannot under section 110 functionally require states to “adopt[] part icular control measures” in a SIP but must rather ensure that states have a meaningful choice among alternatives. 11 Moreover, it is consistent with the D.C. Circuit’s view in Michigan v. EPA , interpreted and applied those precedents to require that the budg ets established by EPA in an emission trading program must provide “ the covered states real choice with regard to the control measure options available to them to meet the budget requirements.” 12 It is similarly consistent with the D.C. Circuit’s

6 See 80 FR at 33877

– 78 (discussing Train , 421 U.S. at 79).

7 EPA v. EME Homer City Generation, L.P. , 134 S. Ct. 1584

, 1600

– 01 (2014).

8 See id. at 1593 (2014) (citing Chevron , U.S.A., Inc. v. Natural Res. Def. Council, Inc. , 467 U.S. 837 (1984)) ; see also Mich. Dep ’ t of Envtl. Quality v. Browner , 230 F.3d 181, 184

– 85 (6th Cir. 2000) ( “ Although states are given broad authority to design programs, the EPA has the final authority to determine whether a SIP meets the requirements of the CAA. ” )

.

9 See 78 F R 12460 at 12489 & nn.89

– 90.

10 421 U.S. at 79 (emphasis added).

11 Virginia v. EPA , 108 F.3d 1397, 1415 (D.C. Cir. 1997) (holding that functionally, in that case,

“ EPA ’ s alternative is no alternative at all ” ); see also Appalachian Power Co. v. EPA , 249 F.3d 1032, 1047 (D.C. Cir. 2001) (citing Virginia , 108 F.3d at 1406, 1410) ( “ We did not suggest [in Virginia ] that under § 110 states may develop their plans free of extrinsic legal constraints. Indeed, SIP development . . . commonly involves decisionmaking subject to various legal constraints. ” ).

12 213 F.3d 663

, 687 (D.C. Cir. 2000 ) (emphasis added).79 opinion i n Appalachian Power Co. v. EPA , that Virginia “ disapproved the EPA’s plan to reject SIPs that did not incorporate particular limits upon emissions from new cars.” 13

Setting aside the different focuses of sections 110 and 111(d), it is clear that this rule w ould does not transgress those cooperative federalism principles. As described throughout the final rule preamble of the CPP, the types of state plans described in this rule provide each state significant flexibility in assigning the emission performance o bligations to its affected EGUs in the form of standards of performance as long as the required emission performance level is met. This flexibility allows states to take local circumstances and state policy goals into account in determining how to reduce e missions from their affected sources, provided the plan meets minimum federal requirements. Each state has discretion to determine the appropriate measures to rely upon for its plan. The state may adopt measures that assure achieve ment of the requisite
CO 2 emission performance rate or state goal by the affected EGUs, and is not limited to the measures that the EPA identifies as part of the BSER.

Simply put, this rule does not establish specific emission standards for sources, and leaves states “real choic e” in how to apply the broad goals of section 111(d) to the specific sources in their

states. Far from encroaching upon or trampling the principles of cooperative federalism underlying the CAA, this rule provides a paradigmatic example of cooperative feder alism. This issue is further addressed in VIII of the Legal Memorandum accompanying the final rule.

Comment 12 : Commenter s stated t hat regulated performance standard can only be imposed on the "sources" that actually emit a regulated pollutant. Commenter s said emissions from any aspect of the source are to be controlled by performance standards at the source. Commenter s stated that the approach in the Proposed Plan diminishes demand, prematurely terminates operational useful life of a generating facility, imposes performance standards on the entire energy supply chain and does not lie within the authority of the EPA, but rather the legislative and regulatory of the United States Congress.

Response 12 : The final rule addresses concerns of this comment by li miting regulatory requirements to affected EGUs. The final rule does not include demand

- side energy efficiency as part of the BSER, and takes steps, described in the proposal preamble, to minimize the problem
of stranded assets.

Comment 13 : Commenter s stat ed Congress intended Section 111(d) to be a state

- driven process, rather than be the subject of federal command

- and

- control dictate. Commenter s said the Section 111(d) proposal is unlawful because it abrogates states' right under Section 111(d) to state

- dr iven
emission standards.

Commenter s stated section 111(d) grants states the prerogative of 'submit[ting] to the Administrator a plan which . . . . establishes standards of performance for . . . existing source[s] . . . .' C.A.A. 7411(d)(1)(A), 42 U.S.C. 74 11(d)(1)(A). Commenter s said in so doing, Congress unquestionably intended for states to be the regulators exercising discretion in establishing

13 249 F.3d 1032, 1047 (D.C. Cir. 2001) (citing Virginia , 108 F.3d at 1410) (emphasis added).80 emission standards, specifically authorizing states to consider such factors as the remaining
useful life of a given source in the standard

- setting process. See I d. Commenter s stated in contrast, Congress limited the EPA's role to a subsidiary procedural role 'prescrib[ing] regulations which shall establish a procedure' for plan submission and determining whether a

state 's submitted plan is satisfactory. See I d.; see also C.A.A . 111(d)(2), 42 U.S.C. 7411(d)(2).

Commenter s stated the proposal exceeds the proper scope of the EPA's authority by proposing binding, inflexible emission rate limits in the aggregate for a state's entire power sector.
Commenter s said pursuant to the Sect ion 111(d) proposal, once these 'goals' are finalized, states will have no authority to change them, despite Section 111(d)'s express grant of authority to the states to consider factors such as the remaining useful life of sources in establishing standard s. Commenter s said the EPA does not and cannot identify anything in Section 111(d) or elsewhere in the text of the Clean Air Act that authorizes it to displace states' legal authority to establish
emission standards. Commenter s stated as a result, the Sect ion 111(d) proposal cannot be reconciled with the EPA's limited statutory authority and the statutory rights specifically
afforded to states.

Response 13 : We disagree with this comment. In the preamble for th is rule, we discuss the respective roles of the EPA and the states under CAA section 111(d), the application of the “remaining useful life” provision in section 111(d)(1), and the state goals.

Comment 14 : Commenter s state d the proposed rule exceeds Congress' authority under the commerce clause, citing in Sebelius, the United States argued that an individual mandate to buy health insurance falls within the Commerce Clause power because "the uninsured as a class are active in the market for health care, which they regularly seek and obtain," and the mandate regulates how individuals finance their participation in that market. 132 S.Ct. at 2589.
Commenter s continue d verbatim, the Court disagreed, finding that the federal government cannot regulate such individuals as a class because most individuals su bject to the mandate "are not currently engaged in any commercial activity involving health care." Sebelius at 2590; see
also I d. at 2589 ("[t]he Framers gave Congress the power to regulate commerce, not to compel it.") (emphasis in original ). Commenters s tated that i n another case, the Court explained that "[w]here economic activity substantially affects interstate commerce, legislation regulating that activity will be sustained." United States v. Morrison, 529 U.S. 598, 610 (2000) (emphasis added) (citati on and punctuation omitted). Commenters stated t here is a substantial difference between regulating activities underway and compelling new investments. Commenters stated EPA may regulate emissions from new or existing sources, but EPA may not constitutiona lly require companies to build new generation not otherwise planned. Commenters stated a lthough EPA argues that affected EGUs may be compelled to participate in the markets for redispatch, renewable energy and demand

- side efficiency because the electric po wer industry is integrated, 79 Fed. Reg. at 34836; EPA Legal Memorandum at 71, this is the same argument rejected in
Sebelius that Congress may compel individuals to participate in the health insurance market
because those individuals do or will participat e in the health care market. Commenters stated that

a s the Court in Sebelius explained, "that does not mean the compelled purchase of the first is properly regarded as a regulation of the second. No matter how "inherently integrated" health81 insurance and h ealth care consumption may be, they are not the same thing . . ." Sebelius, 132
S.Ct. at 2591. Commenters stated that j ust as health care and health insurance are different activities, the construction, operation or funding of NGCC, renewable generation fa cilities, and
demand

- side efficiency programs are different activities than operating an affected facility. The Proposed Rule compels [ c ommenter s ] to engage in commerce by effectively requiring it

to install new generating units or purchase additional capa city from NGCC, nuclear or renewable
sources. Commenter s stated they are obligated by their requirements contracts with their members to provide certain amounts of electricity, and they ha ve sufficient generation capacity to do so. By restricting c ommenter s ' ability to operate fossil fuel

- based generation units, the rule impairs their ability to satisfy their contractual obligations. Commenter s stated they may not have sufficient NGCC, nuclear or renewable capacity to replace generation that becomes
unavai lable as a result of the pending rule, and, as noted in Section IV of these comments, the

c ommenter s may be constrained in their ability to redispatch those resources across the eastern
and w estern connections. Commenter s stated to ha ve no plans to add capacity serving the
western connection because they ha ve excess fossil fuel

- bas ed capacity there. Commenter s may nonetheless be forced to engage in compelled commerce to avoid breaching its contracts, which Congress has no authority to co mpel and EPA has no authority to impose. The fact that

c ommenter s already ha ve some NGCC, nuclear and renewable capacity does not bring the compelled purchase of additional capacity within the bounds of the Commerce Clause because participation in the mark ets for NGCC, nuclear and renewable electricity would not be triggered by c ommenter s ' activity in those markets but rather because of their activity in the markets for
fossil fuel

- based generation.

In addition to unlawfully compelling commerce, commenters stated the proposal to regulate beyond the fence line lacks a reasonable connection between the regulatory means selected by EPA and the asserted goal of reducing pollution from existing sources , and t his presents a separate violation of the Com merce Clause. FERC v. Mississippi, 456 U.S. 742, 754 (1982).

Response 14 : We disagree with this comment. With respect to commenters’ first argument that the proposed rule “exceeds Congress’ authority under the Commerce Clause,” we reiterate that
CAA sectio n 111(d) emission guidelines do not require affected sources to implement any particular system of emission reduction, let alone the BSER . As we explain in section V. of the preamble for this rule, an emission guideline reflects the degree of emission limitation achievable through the application of the BSER and is provided to states for the development of state plans

. State plans e stablish standards of performance for existing sources and may take into account (among other factors) the remaini ng useful life of an existing source when applying a standard of performance to any particular source. E ven if a particular control technology, such as a scrubber, were identified as the BSER, the EPA could not require affected sources to install that part icular control technology as a requirement of an emission guideline . The same is true here . T he final
rule does not compel affected sources to implement any one of the building blocks

, let alone all
three.

We also disagree that the situation in National Fe deration of Independent Business v. Sebelius

, 132 S. Ct. 2566 (2012), is analogous to regulation under CAA section 111. Sebelius concerns the82 scope of Congress’ authority under the Commerce Clause to enact legislation that requires, in part, most individuals to maintain “minimum essential” health insurance coverage. Id. at 2580. Importantly, the Court observed that “[t]he individua l mandate, however, does not regulate existing commercial activity. It instead compels individuals to become active in commerce by purchasing a product, on the ground that their failure to do so affects interstate commerce.” Id. at 2587. This, the Court ex plained, was not granted to Congress through the Commerce Clause. Id.
at 2589.

The Court also rejected the Government’s argument that health insurance and health care financing are “inherently integrated,” which the Government argued justified the individ ual mandate as within the scope of regulation of health care markets. The Court explained that “[t]he proximity and degree of connection between the mandate and the subsequent commercial activity is too lacking to justify an exception of the sort urged by the Government. The individual mandate forces individuals into commerce precisely because they elected to refrain from commercial activity.” Id. at 2591. Therefore, “[s]uch a law cannot be sustained under a clause authorizing Congress to ‘regulate Commerce .’” Id.

The regulation of air pollution under the CAA, on the other hand, is well within the scope of Congress’ powers to authorize. See, e.g.

, Miss

. Comm ’ n on Envtl

. Quality v. EPA , No. 12

- 1309, pp. 74

- 80 (D.C. Cir. June 2, 2015) (“[t]here is no doubt that the general regulatory scheme of the
Clean Air Act has a substantial rel ation to interstate commerce.”). Further, whereas the Court in
Sebelius was concerned about compelling individuals to “ become active in commerce,” each of
the affected sources sub ject to regulation in accordance with this rule are already engaged in existing commercial activity

– specifically, it is not their failure to engage in interstate commerce that is at issue here, rather it is the manner in which they engage in it that is s ubject to regulation under CAA section 111(d)

.
As an additional matter, the fact that the utility power sector is physically interconnected is not used to justify the scope of Congress’ Commerce Clause authority; instead, the unique
characteristics of the industry are relevant in evaluating whether the building blocks are adequately demonstrated for this source category. Nothing in Sebelius precludes the EPA from considering the physical interconnectedness of the utility power sector when evaluating pollut ion
reduction measures that are available to sources for purposes of CAA section 111(d). With respect to commenters’ second argument that the proposal to regulate beyond the fence line lacks a reasonable connection between the regulatory means selected by EPA and the asserted goal of reducing pollution from existing sources , in section V. of the preamble for this rule we explain
how the BSER is related to emission reductions from the affected EGUs. Finally, for the reasons stated in section V of the preambl e for this rule, the regulatory means identified by EPA and permitted by Congress under section 111(d) (establishing state

- specific CO 2 goals reflecting CO 2 performance rates based on the BSER ) are more than reasonably connected to the ends of reducing CO 2 emissions

. As a matter of federal constitutional authority , it is sufficient to note that CAA section 111(d) is directed at reducing emissions, and that CO 2 emissions in particular have substantial interstate impacts as described in section II.A of the fi nal rule preamble. See
Hodel v. Va. Surface Mining & Reclamation Ass’n , 452 U.S. 264, 282 (1981) (“the power83 conferred by the Commerce Clause [is] broad enough to permit congressional regulation of activities causing air . . . pollution . . . that may have effects in more than one State”). Accordingly, there is clearly a rational basis for concluding that the BSER as defined in section V of the preamble will reduce CO2 emissions from affected EGUs. Even assuming arguendo that some individual component of the emission guidelines was not directly related to a valid congressional goal

— a concern not actually present here

— “ [i] t is enough that the challenged provisions are an integral part of the regulatory program and that the regulatory scheme when
considered as a whole satisfies this test.” FERC v. Mississippi , 456 U.S. 742, 757 n.22 (1982) (quoting Hodel v. Indiana , 452 U.S. 314, 329 n.17 (1981)) ; Miss. Comm’n on Envtl. Quality v.
EPA , No. 12

- 1309, pp. 74

- 80 (D.C. Cir. June 2, 2015) (“[t]here is no doubt that the general regulatory scheme of the Clean Air Act has a substantial relation to interstate commerce.”).

Comment 15 : Commenter s state d case law interpreting section 110 of the Act, which governs the requirements of state implementation plans (SIPs) to att ain and maintain national ambient air quality standards (NAAQS), helps illustrate why the Proposed Rule exceeds the Agency's authority. Commenter s continue d , stating that courts have explained that states are "given wide discretion in formulating" their SI Ps under section 110, Union Elec. Co. v. EPA, 427 U.S. 246, 250 (1976), and made clear that EPA's role is "confine[d]

- to the ministerial function of reviewing [SIPs] for consistency with the Act's requirements," Luminant Generation Co. v. EPA,
675 F.3d 9 17 (5th Cir. 2012). Commenter s add ed that EPA, on the other hand has "no authority to question the wisdom of a State's choices of emission limitations if they are part of a plan
which satisfies the standards of 110(a)(2)." Train v. NRDC, 421 U.S. 60, 79 (1 975), and Section 110 places more constraints on state discretion than does Section 111(d). Commenters stated y et not even Section 110 would allow EPA to establish state

- specific CO2 emission goals as part of
a SIP. Commenter s conclude d that the Agency certainly cannot establish such binding emission requirements for the states under Section 111(d), and believes the Proposed Rule is plainly
inconsistent with the Act.

Response 15 : We disagree with this comment for the reasons stated in ou r response in section
1.2 regarding cooperative federalism under the CAA, as well as in section VIII of the Legal Memorandum accompanying the final rule

. Furthermore, commenters are simply incorrect that
section 110 categorically prohibits the EPA from int erpreting the permissible end goals states

must meet. See, e.g. , EPA v. EME Homer City Generation , L.P. , 134 S. Ct. 1584, 1600

– 01 (2014) ; Michigan v. EPA

, 213 F.3d 663, 687 (D.C. Cir. 2000). However, the EPA agrees that CO2 is not a criteria pollutant regulated under section 110.

Comment 16 : Commenter s stated n otwithstanding the EPA's apparent recognition (consistent with the statutory framework) of the determination of performance standards on the one hand and alternative compliance measures available to the states on the other, the EPA has suggested, particularly through the NODA, that any technology or other emission reduction strategies that may be relied upon by a state in meeting its com pliance obligation must in turn be incorporated
into the BSER determination. Commenter s said such analysis (which may be reflective of distinct state policy objectives or compliance alternatives) cannot comport with the statutory requirements governing the determination of BSER for a source category based on the standards84 of performance that are achievable by the sources in that category on a national level.
Commenter s stated to ensure adherence to the framework mandated by Section 111(d), the EPA

must ensu re that the final CPP rule preserves to the states the flexibility to find creative solutions for curtailing GHG emissions without a corresponding adjustment to the initial BSER determination because of the availability of such strategies. Commenter s state d therefore, it is essential that the EPA clarify through the CPP that states shall have the full range of flexibility afforded by the CAA in developing their state plans. Commenter s said this flexibility should include an allowance for emerging measures i nvolving the voluntary participation of sources of
GHG emissions that are not affected sources under the CPP. Commenter s acknowledge d that Section 111(d) contemplates that state plans implementing the emission guidelines must establish regulatory obligations for the affected source category, and does not afford the states the flexibility to instead impose on distinct sources or source g roups the obligation to satisfy the emission reduction burden intended for the sources subject to the BSER determination.
Commenter s stated however, Section 111(d) in no way limits the flexibility otherwise available
to states under Title I of the CAA to a llow regulated sources to satisfy their compliance obligations through voluntary emission reductions from non

- regulated sources. Commenter s said indeed, Section 111(d) of the CAA specifically references Section 110 of the statute, and notes that, once the EPA determines BSER for the given source category and establishes standards of performance reflective of the BSER, the states are to follow a "procedure similar to that provided by [CAA section 110] which each State shall submit to [EPA] a plan." 42 U.S.C. section 7411(d)(1).

Response 16 : EPA is not finalizing the proposed “portfolio” approach, and will not accept state plans that attempt to impose emission standards or other CAA compliance obligations on entities
other than affected EGUs. The state measur es approach provides a path for a state to achieve the emission performance level as expressed as a state goal in a way that avoids placing enforceable emission standards on affected EGUs (unless and until the backstop is triggered). States will
have a wid e range of flexibility in choosing how to demonstrate their affected EGUs are meeting a state goal.

Comment 17 : Commenter s state d EPA's proposal does not set forth guidelines applicable to existing sources at all but instead, EPA seeks to create a state

- wi de emission bubble by reviewing the generation mix in each state and establishing an emission rate limit applicable to each state, not to the sources themselves. As a result, c ommenter s continued , EPA is actually proposing to regulate the state, not the so urce but states are not an "existing source" as defined by CAA section 111(a)(3) and (6). Commenter s stated they are not a "building, structure, facility, or installation which emits or may emit any air pollutant..." 42 U.S.C. section 7411(a)(3). Commenter s stated EPA is attempting to "change the basic unit to which the [standard applies]...from a single building, structure, facility, or installation the unit prescribed in
the statute" to a state

- wide bubble. ASARCO Inc. v. EPA, 578 F.2d 319, 327 (D.C. Cir. 1978) but the "agency has no authority to rewrite the statute in this fashion." Id. Commenters stated i n ASARCO, the Court expressly rejected EPA's attempt to regulate emissions from an entire plant by creating a bubble around it and placing a cap, rather than just the emitting source.85 Commenter s continued , stating that now, in its Proposed Rule, EPA is attempting to expand the bubble concept rejected in ASARCO to encompass each state, and in fact the entire country
under the assumed interconnection of the national grid, and this effort is unlawful under ASARCO, a case EPA does not mention, much less distinguish, in its Legal Memorandum. See EPA Legal Memorandum.

Response 17 : We disagree. Commenters misconstrue the mechanisms by which standards of performan ce are applied to individual sources under CAA section 111(d). Pursuant to section 111(d), the EPA develops emission guidelines that reflect the degree of emission limitation achievable through the application of the BSER determined in accordance with sect ion 111(a)(1). These guidelines do not impose any requirements on an existing source. Instead, they are used by the states to develop plans, which establish standards of performance for existing sources within a state’s jurisdiction and provides for the im plementation and enforcement of such standards. In applying a standard of performance to any particular source, state plans may consider the remaining useful life, among other factors, of an existing source. States may also establish more stringent standar ds as authorized under section 116.

State plans are then provided to the EPA for review as indicated in section 111(d)(2). While section 111(d)(2) explains that such plans must be “satisfactory,” Congress did not provide any explicit criteria to guide our review. Nevertheless, we explained in the preamble to our section 111(d) implementing regulations that “it seems clear that some substantive criterion was intended to govern not only the Administrator’s promulgation of standards but also [her] review
of St ate plans.” 40 F.R. at 53342. We believe that providing each state with an emissions budget is consistent with ensuring maximum flexibility in assigning standards of performance to individual sources but also provides states with guidelines for submitting a satisfactory plan. In this way, a satisfactory state plan may adjust emission limits for each affected facility on a case

by

- case basis so long as the overall state emissions budget is not exceeded. This ensures that the overriding purpose of section 111 to protect public health and welfare is properly balanced with the cooperative intent of section 111(d).

Commenters appeal to Asarco, Inc. v. EPA , 578 F.2d 319 (D.C. Cir. 1978), is also without merit.
Asarco neither construed the definition of standard of performance nor did it address the regulation of existing sources under section 111(d). Specifically, in Asarco , the D.C. Circuit held only that the CAA precluded the EPA from allowing sources to avoid regulation under section 111(b) by employing the so

- c alled “bubble concept,” i.e. , an approach that “treat[s] a combination of facilities as a single source” in order to “allow a facility whose emissions are increased by alterations to avoid complying with the applicable NSPS as long as emission
decreases fr om other facilities within the same ‘source’ cancel out the increase from the altered facility.” Id. , at 326. Asarco did not address whether an emission guideline promulgated in accordance with section 111(d) could include a state emissions budget. Moreove r, this rule neither combines sources nor directly imposes any requirements on the sources themselves.

Furthermore, Asarco was decided before the Supreme Court’s decision in Chevron v. NRDC

, which held that EPA’s plantwide definition is a permissible const ruction of the statutory term86 “stationary source.” In Chevron , the Court reversed the D.C. Circuit’s rejection of the bubbling concept in which the D.C. Circuit based its decision on two of its precedents, including Asarco

. Accordingly, we do not agree t hat Asarco is persuasive in light of the Supreme Court’s decision
in Chevron

. Nevertheless, this rule does not combine sources or impose any requirements on
other entities. The only entities subject to this rule are the individual sources themselves.

Comment 18 : Commenter s state d that the proposed rule disregards the FPA, and therefore, an additional reason for rejecting EPA's expansive reading of Section 111(d) is the conflict it
creates with other federal statutes. Commenters stated a mong those is t he Federal Power Act ("FPA"), which regulates the interstate electricity market and assigns responsibility for that market to either the Federal Energy Regulatory Commission ("FERC") or the States.
Commenter s state d that the FPA does not authorize EPA to r egulate which producers may sell electricity and in what quantity, explaining that the FPA designates FERC as the agency responsible for regulating interstate trade in electricity. 16 U.S.C. section 824. Commenter s continued (verbatim) a s the DC Circuit ha s explained, "[u]nder the Federal Power Act ... the [Federal Energy Regulatory] Commission is generally charged with regulating the transmission and sale of electric power in interstate commerce." Electric Power Supply Ass'n v. Fed. Energy Reg. Comm'n, 753 F.3d 216, 219 (D.C. Cir. 2014). Commenters said that i t shares that authority only with the States, which retain authority to regulate retail transactions in electricity under the FPA. Id. at 221 ("States retain exclusive authority to regulate the retail market."). Accordingly,
commenters stated the Supreme Court has recognized that FERC has "exclusive authority" over the wholesale power market, and its "exclusive jurisdiction applies not only to rates but also to power allocations that affect wholesale ra tes." Miss. Power & Light Co. v. Mississippi, 487 U.S. 354, 371 (1988) (emphasis added). Commenters stated EPA's proposed rule disregards the FPA's assignment of authority. Commenters stated t he focus of the proposed rule's so

- called BSER is on changing th e supply of energy, with the recognized effect of changing its price. Commenters
stated t he very premise for EPA's proposed rule is that "[t]he electricity system is physically interconnected ... and operated on an integrated basis," 79 Fed. Reg. 34,857, t hus allowing the Agency to alter the entire supply of electricity through seemingly abstract rules imposed at the highest level of generality. Commenters stated that a s the proposal's routine references to substitution between EGUs (including non

- use) reve al, the proposed rule's essence is regulation of the entire "electricity system" of generation, transmission, and consumption. For example,
commenters stated EPA anticipates that "construction and operation of new NGCC capacity will
be undertaken as a meth od of responding to the proposal's requirements," I d. at 34,876 (emphasis added), and it also recognizes that this change to electricity generation will raise the cost of electricity, id. At 34,876

- 77. At the very least, commenters stated, FERC must confir m that EPA's proposed rule will not have a negative impact on grid reliability and the supply of electricity. EPA has attempted no such coordination, preferring instead to rely on an overly generous interpretation of Section 111(d). Commenters stated w here federal statutes confer authority on one agency, others may not functionally usurp it through ambitious interpretations87 of their own governing statutes. See, e.g., Hunter v. FERC, 711 F.3d 155, 157

- 60 (D.C. Cir. 2013) (rejecting FERC's attempt to regulate matters committed to the CFTC's exclusive jurisdiction); Chamber of Commerce v. Reich, 74 F.3d 1322, 1333

- 34 (D.C. Cir. 1996) (rejecting agency action purportedly based on the Procurement Act when it conflicted with the longer

standing and more topical Na tional Labor Relations Act). Commenters stated t his is particularly true where the assertion of new power allegedly lies in a later

- enacted law that does not expressly repeal or curtail the older provision. Hunter, 711 F.3d at 160; see also Traynor v.
Turn age, 485 U.S. 535, 547 (1988) (citing the "cardinal rule ... that repeals by implication are not favored"). In the current situation, commenters stated, the "cardinal rule" is in full effect: Congress enacted the FPA in 1920, and the CAA in 1955. Commenter s stated t he two laws can coexist peacefully, and they have for decades , and added that o nly EPA's new interpretation of Section 111(d) threatens to encroach on FERC's responsibility for regulating the electricity market. Cf. Hunter, 711 F.3d at 160 ("But [the latter

- enacted statute's] text fails to answer the question whether FERC may intrude upon the CFTC's exclusive jurisdiction. Commenters said
b ecause FERC is free to prohibit manipulative trading in markets outside the CFTC's exclusive jurisdiction, th ere is no irreconcilable conflict between the two statutes and therefore no repeal by implication"). Commenters stated t his unnecessary conflict within the federal government is further evidence that EPA lacks authority to administer a system of state

- leve l regulations governing the production, transmission, and consumption of electricity. In addition , commenters stated that creating a different federal agency charged with regulating the nation's electricity supply, the FPA poses another obstacle to EPA's c urrent proposal: it expressly preserves States' authority to regulate the consumer energy market. 16 U.S.C. section 824(a) (confining federal regulation of the electricity market "only to those matters which are not subject to regulation by the States"). C ommenters stated that l ike the Clean Air Act, the FPA creates a federal

- state partnership for the accomplishment of its goals. Commenters stated t he FPA gives to the federal government (FERC) control of the wholesale market for electricity, while States re tain authority to regulate consumer

- level transactions. Id. (citing 16 U.S.C. section 824(b)(1)). Commenters
stated that i n Electric Power Supply, the federal government attempted to regulate consumers' decisions regarding electricity consumption by "lurin g" additional electricity to market with subsidies funded by additional charges during peak hours. Id. at 223. Commenters stated d espite FERC's effort to fit within its regulatory mandate, the court concluded that the "lures" at issue were "part of the retail market" because they "involve[d] retail customers ... and the levels of retail electricity consumption." Id. Commenters stated t he same reasoning applies to EPA's effort to regulate the actions of retail electricity customers by encouraging them to buy less electricity.
Commenters stated that i n fact, the proposed rule aims to accomplish its goals through the same
mechanism as El ectric Power Supply, namely creating regulatory burdens intended to entice energy producers to supply electricity from different EGUs. E.g., 79 Fed. Reg. 34,857.
Commenters stated that w hile the earlier case involved luring additional energy onto the grid at certain times of day, the current rule attempts to lure energy from preferred sources. Commenters
stated that i n both instances, that conduct encroaches on States' regulatory domain under the FPA, and if not the domain of state regulators then certainly the domain of FERC. Indeed, EPA recognizes that its proposed rule duplicates measures already taken by the States. E.g., I d. at 34,858 (admitting that "[m]ore than half the states already have established some form of state

-88 level renewable energy requirem ents," 30 States have nuclear EGUs, and "[m]ore than 40 states already have established some form of demand

- side energy efficiency polices"); I d. a t 34,851 (describing the purpose of "block 4" as "increasing state demand

- side energy efficiency efforts" (em phasis added)). Commenters stated t he proposed rulemaking therefore crosses lines not only between EPA and FERC but also between the federal and state governments. Commenters said

w here, as here, such lines are drawn by statute, they cannot be redrawn via agency regulations.
Commenters stated u nder the Federal Power Act, States have the primary authority to regulate the generation and sale of electricity to consumers. Commenters stated w here the federal government is involved, its authority runs through FER C, not EPA. Commenters stated t he latter agency must confine itself to traditional end

- of

- stack BSER rather than imposing macro

- level regulations that functionally usurp authority left to FERC and to the States.

Commenter s state d that the EPA lacks the sta tutory authority to regulate electricity generation, transmission or distribution, explaining that Congress granted these authorities to the Federal Energy Regulatory Commission (FERC) and to the states under the Federal Power Act. Commenters stated EPA's statutory authorities under Title I of the CAA are limited to regulation of air pollutants, and by establishing mandatory goals that presume the application of state authority over non

- emitting electric generators, EPA has overstepped the bounds of the CAA and encroached upon legal authorities the Congress has clearly left to the states.

Response 18 : We disagree that we are expanding our authority to include wholesale energy market regulation or state retail regulation . Our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. Moreover, these emission guidelines provide states with the flexibility to establish, implement, and enforce standards of performance and do not intrude on the regulatory domain of FERC or the states. It cannot be said that because environmental requirements may have an effect on the wholesale energy or retail markets that the EP A is therefore intruding into energy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Congress expressly identified power plants as a priority source category for regulation under CAA section 111. Further, we note that the EPA is not including building block 4, demand

- side energy efficiency, as a component of BSER in the final rule. Additionally, t his rule does not regulate renewable energy sources. It identifies the BSER for affected sources, which entails substitute generation to zero

- emitting generators, but it does not impose emissions requirements on such sources. Finally, we note that the EPA has considered reliability issues in developing this final rule. For a more comprehensive discussion of reliability issues, as well a s the EPA’s coordination with both FERC and DOE, please see preamble section VIII.G.2.

Comment 19 : Commenter s stated the EPA's use of beyond

- the

- unit measurements appears to be outside the scope of Section 111(d). Commenter s said for example, the rule would regulate renewable energy sources and energy efficiency although neither are a source category nor meet the definition of "stationary source" because they do not emit any air pollutant. Commenter s stated accordingly, the E PA should address these questions regarding the use of beyond

- the

- unit

measures.89 Response 19 : We disagree with this comment. In the preamble for this rule, we explain that this rule does not regulate renewable energy sources or energy efficiency, and that the BSER may include measures that are not subject to regulation.

Comment 20 : Commenter s said the EPA is not authorized by Congress under the CAA to pick winners and losers in the energy markets.

Response 20 : We disagree that we are expanding our authorit y to include wholesale energy market regulation nor are we picking winners or losers in energy markets . Our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. Moreover, these emission guidelines provide states with the flexibility to establish, implement, and enforce standards of performance and do not intrude on the regulatory domain of FERC or the states. It cannot be said
that b ecause environmental requirements may have an effect on the wholesale energy market that the EPA is therefore intruding into energy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Congress expressly identified power plants as a priority source category for regulation under CAA section 111.

Comment 21 : Commenter s state d the Clean Air Act does not allow the EPA to regulate greenhouse gas emissions from existing coal

- fired power plants under Section 111(d) because
coal

- fired power plants are already regulated by the EPA under Section 112 of the Clean Air Act.
Commenter s stated that recently, attorneys general from nine states filed an amicus brief to stop
EPA's proposal for this very reason, saying that the proposal violates the li teral terms of the
Clean Air Act. Commenter s add ed that even if the EPA believes it has the basic authority to regulate, Section 111(d) allows EPA to set emission standards based solely on emission reductions that can be achieved inside the fence; however, this proposal requires substantial
reductions outside the fence. Commenter s close d stating that last year, before the proposal

was issued, attorneys general from 17 states warned EPA that the agency does not have authority

to require emission reductions o utside the fence.

Commenter s state d EPA lacks the legal authority to adopt that Rule.

. . . EPA offers only one legal basis for the Rule: the rarely invoked Section 111(d) of the Clean Air Act ("CAA"). See 42 U.S.C; 7411(d). Commenters stated t he problem is that Section 111(d) affirmatively excludes precisely what EPA is attempting to do in the Proposed Rule. Commenter s explain ed that EPA lacks authority under the plain text of Section 111(d), as it appears in the US Code, to promulgate the Proposed Rule. Commenters stated Section 111(d) expressly prohibits EPA from regulating "any air pollutant... emitted from a[n] [existing] source category which is regulated under [the national emission regime in Section 112 of the CAA]." 42 U.S.C. 7411(d).
Commenters st ated g iven that EPA has imposed extensive and onerous regulations on existing
coal

- fired power plants under Section 112, the agency cannot now use Section 111(d) to require regulation of CO 2 emissions from those same existing plants. Commenter s continue d that this conclusion is apparent and EPA concedes in its Legal Memorandum that a "literal reading" of Section 111(d) prohibits the Proposed Rule. Mern. 26; see also 70 Fed. Reg. 15,994, 16,032 (Mar. 29, 2005) (EPA making the same admission in a prior rulem aking). Commenter s continue d90 stating that the only textual justification that EPA's Legal Memorandum offers for departing from the "literal" terms of Section 111(d) is unpersuasive. Commenter s explain ed that the Agency relies entirely on a one sentence clerical entry in the 1990 Amendments to the Clean Air Act that was not codified in the U.S. Code but appears in the Statutes at Large and that EPA has admitted that entry was clearly a mistake because it sought to make a technical correction rendered moot by another amendment. See 70 Fed. Reg. at 16,031 (describing the entry as a "drafting error"), Nevertheless, commenter s said , EPA now claims that it must give meaning to this mistake and, as a result, has announced an interpretation of Section 111(d) that directly conflicts with the language in the U.S. Code. Commenters stated EPA's interpretation rewrites Section 111(d) from a prohibition on the regulation of "any air pollutant . . . emitted from a

source category which is regulated under [Section 112]," as stated in the U.S. Code, to a more limited prohibition on the regulation of "any hazardous air pollutant" emitted from such a source category. Commenter s explained that this sort of reasoning would be w rong under any circumstance, but it is particularly improper here, where it is being offered as the justification for
what commenter s stated is one of the most costly regulations in this Nation's history.

Commenter s state d that the only authority invoked b y EPA for the requirements in the Proposed Rule is Section 111(d) of the Clean Air Act, a little

- used provision that grants EPA limited power to require States to regulate air pollutants from existing sources. Mem. 11

- 12.
Commenter s continue d that as it ap pears in the U.S. Code, Section 111(d) requires the EPA Administrator under narrow circumstances to "prescribe regulations which shall establish a procedure . . , under which each State shall submit to the Administrator a plan which establishes
standards o f performance" for certain existing sources and certain air pollutants. Among other things, commenter s stated , the statutory provision specifically excludes from the Administrator's authority the power to prescribe regulations relating to "standards of per formance for any existing source for any air pollutant ... emitted from a source category which is regulated under section 7412 of this title [i.e., Section 112 of the CAA]." 42 U.S.C. 7411(d), EPA admits in its Legal Memorandum for the Proposed Rule that "a literal reading of that language" means that "EPA c[an] not regulate any air pollutant from a source category regulated under section 112" of the Clean Air Act. Mem. 26 (emphasis added); accord 70 Fed. Reg. at 16,032 (EPA reaching the same conclusion). Commenter s state d that Section 111(d)'s plain text provides that if an existing source category is regulated under Section 112, that source category may not also be regulated under Section 111(d). Commenter s add ed that the regime codified in Sections 112 a nd 111 is part of a measured, coherent approach to regulating air pollutants from new and existing pollution sources. Section 112 of the Clean Air Act concerns national emissions standards for hazardous air pollutants ("HAPs") emitted from any number of ne w and existing sources. See 42 U.S.C. 7412. Whether a source category is regulated under Section 112 is generally dependent upon a number of factors. Id. 7412(c). With regard to coal

- fired power plants, c ommenter s posit ed that Congress specially provided t hat those sources need only be regulated under Section 112 if the Administrator finds such regulation to be "appropriate and necessary." Id. 7412(n).
Commenters stated Section 111(d) in turn addresses the emission of air pollutants emitted from existing so urces not regulated under Section 112. Specifically, commenters stated, when EPA has chosen not to regulate a source category nationally under Section 112, emissions from91 existing sources within that category must be subject instead to state

- by

- state emiss ion standards under Section 111(d), assuming certain other predicates have been satisfied. Commenters stated

t he rest of Section 111 , which is not at issue here, is not restricted by the scope of Section 112
and concerns national emissions standards for ai r pollutants emitted from new sources.
Commenter s added that in the present case, it is clear that EPA has no authority under Section 111(d) to regulate any "emission from coal

- fired power plants, including CO2 emissions. EPA categorized coal

- fired power p lants as part of a "source category" under Section 112 in 2000, see 65 Fed. Reg. 79,825, 79,826 (Dec. 20, 2000), and the D.C. Circuit in 2008 rejected EPA's attempt to withdraw that finding, see New Jersey v. EPA, 517 F.3d 574 (D.C. Cir. 2008). Then,

comme nters stated that in 2012, EPA imposed significant Section 112 restrictions on coal

- fired power plants, see 77 Fed. Reg. 9,304 (Feb. 16, 2012); 40 C.F.R. Part 63 subpart UUUUU, which the D.C. Circuit recently upheld, see also White Stallion Energv Ctr., LL C v. EPA, * F.3d._, 2014 WL 1420294 (D.C. Cir. Apr. 15, 2014). Commenter s stated that under the "literal" reading of Section 111(d), Mem. 26, these rules regulating existing coal

- fired power plants under Section 112 prohibit EPA from invoking Section 111(d ) to adopt the Proposed Rule.

Commenter s state d EPA's other policy argument is "the fact that the EPA has historically regulated non

- HAPs under Section 111(d), even where those air pollutants were emitted from a source category actually regulated under section 112." Mem. 26. Commenter s stated it is no answer to the unambiguous textual requirement in the 1990 Amendments to point to EPA's pre

amendment practice of regulating non

- HAPs under Section 111(d), explaining EPA once had the power of regulating existing source categories on separate regulatory tra cks, See Mem. 9

- 10 & n. 17, and when Congress amended the Clean Air Act in 1990 to require EPA to regulate more HAPs under Section 112, it paired that increased power with a textual limitation

---- embodied in Section 111(d) against using that enhanced autho rity to impose duplicative regulations on the same existing source categories. Commenter s stated that EPA's argument that the "literal" terms of Section 111(d) would prevent it from using a provision that it has only used to regulate "four pollutants from five source categories" in "forty years," Mem. 9, cannot provide a basis for disregarding the literal terms of the Clean Air Act.

Commenter s question ed EPA's authority under 111(d) to undertake such drastic measures to alter
the manner in which electric en ergy is produced in the US: t his concern is heightened Section 112 regarding regulation of major sources, such as power plants.

Commenter s state d the Clean Air Act forbids regulating sources under Section 111(d) if they are regulated under Section 112 of t he Act, and existing electric utility generating units are regulated
under Section 112.

Commenter s state d the proposed rule is unlawful because EPA has chosen to regulate coal

- fired power plants under Section 112 of the Clean Air Act, 42 U.S.C., 7412. Com menters stated Section 111(d) specifically prohibits EPA from invoking Section 111(d) where the "source category . . . is regulated under section [112]. . . ." 42 U.S.C., 7411(d)(1)(A)(i). Commenters
stated EPA should abandon its cynical attempt to evade t his specific prohibition on its authority found in the Clean Air Act's plain text.92 Commenter s state d the Supreme Court has explained, "EPA may not employ [Section 111(d)] if existing stationary sources of the pollutant in question are regulated under . . . the hazardous air pollutants program, [Section 112]." Am. Elec. Power Co., Inc. v. Connecticut, 131 S. Ct. 2527, 2537 n.7 (2011). Commenters stated t his unambiguous statutory prohibition is grounded in Congress's understanding that existing sources

- unli ke new sources

- should not be subject to double regulation, under two different regulatory regimes, in light of special concerns such as
reliance and sunk costs. Commenter s continue d , stating that in 2000, EPA took the discretionary step of classifying po wer plants as part of a "source category" under Section 112. 65 Fed. Reg. 79,825, 79,830 (Dec. 20, 2000). Then, in 2012, EPA imposed regulations on these power plants under Section 112. 77 Fed. Reg. 9,304 (Feb. 16, 2012). Commenter s stated that given that existing coal

- fired power plants are now extensively regulated under Section 112, what EPA has admitted are the "literal" terms of the Clean Air Act prohibit EPA's present effort to impose yet more onerous regulations on these same plants under Section 111 (d). Mem. at 26.

Commenter s stated if one were to accept EPA's assertion that it must give meaning to an impossible

- to

- execute clerical amendment, Mem. at 26, the proposed rule would still be
unlawful. Commenters stated that i f the conforming amendment is executed separately from the substantive amendment, two different prohibitions on EPA's Section 111(d) authority would
arise. Commenters stated that u nder one prohibition

- in text of the Clean Air Act as reflected in
the United States Code

- EPA would be prohibited from regulating under Section 111(d) any emissions from any source categories actually regulated under Section 112. Commenters stated
that u nder the "other" prohibition

- the one embodied by the conforming amendment

- Section 111(d) could not be used to regulate pollutants subject to regulation under Section 112, even if EPA has chosen not to regulate the particular source category at issue. (Given that EPA is not required to regulate all sources of Section 112

- regulated hazardous air pollutant s under Section 112, 42 U.S.C.

- 7412(k)(3)(B)(ii), this category would almost certainly leave some sources of hazardous air pollutants unregulated. Indeed, a special provision of Section 112 permits EPA significant leeway not to regulate power plants at a ll under Section 112. Id.

- 7412(n)(1)) Thus, commenters added, if EPA "give[s] effect, if possible, to every word Congress used," Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979), it would be prohibited from invoking Section 111(d) both to regulate any source categories actually regulated under Section 112 and to regulate any pollutants subject to regulation under Section 112. Accordingly, commenters stated, even if EPA's approach of executing the conforming amendment into a separate "version" of Section 111(d) were permissible

- which, to be clear, it is not

- this would not salvage the proposed rule.

Commenter s state d the Clean Air Act expressly prohibits EPA from regulating GHG emissions
from fossil fuel

- fired power plants under Section 111(d) because t hose source categories are already regulated under Section 112. Commenters stated Section 112 authorizes EPA to establish NEHSAPs to regulate hazardous air pollutants ("HAPs") from specific source categories.
Commenter s explain ed that the authority to regu late emissions from certain sources under Section 111(d) is, in turn, defined by the scope of Section 112., a n d the plain meaning of this provision prohibits EPA from promulgating emissions guidelines for existing sources under Section 111(d) if the source category is regulated under Section 112. Commenters stated t his93 straightforward interpretation of Section 111(d) has been supported by the courts and consistently implemented by EPA. Commenters stated EPA is proposing to regulate through this
action "exis ting electric generating units". Commenter s close d , stating that these same units are already regulated under 40 CFR 63 Subpart UUUUU, and as such, EPA is not allowed to regulate those same affected units under the provisions of 111(d).

Commenter s state d t hat the plain text of Section 111(d) expressly prohibits the agency from regulating any air pollutant emitted from a source category regulated under Section 112 of the CAA. "Given that EPA has imposed extensive and onerous regulations on existing coal

- fire d power plants under Section 112, the agency cannot now use Section 111(d) to require regulation of CO2 emissions from those same existing plants. This conclusion is so apparent," commenters

wrote , "that even EPA concedes in its Legal Memorandum that a lit eral reading of Section 111(d) prohibits the proposed rule."

Commenter s state d first that the statutory language of Section 111(d) is a product of differing
House and Senate versions. Commenter s said under the Senate version, unless a particular air pollut ant emitted by existing sources was regulated by one of several other listed Clean Air Act provisions, existing sources emitting that pollutant could be regulated under Section 111(d).
Commenter s stated in contrast, the House version prohibits existing sou rces from being regulated under Section 111(d) if the existing sources are regulated under Section 112. Commenter s stated that under prevailing rules of legislative construction and case law regarding harmonization of conflicting statutory provisions, the House provision controls. Commenter s said effective in 2012, the EPA already regulates coal

- fired power plants under Section 112 air toxics authority in the Mercury and Air Toxics Standard. Commenter s stated that therefore, the EPA has no authority to regu late existing coal

- fired power plants a second time under Section 111(d).
Commenter s said that second, Section 111(d) requires the EPA to issue a valid new source performance standard under Section 111(b) before issuing an existing source standard.
Comment er s stated that based on flaws in the proposed NSPS and modified/reconstructed source standard, it is doubtful that either of the provisions will be lawfully finalized. Commenter s said that therefore, the EPA has not satisfied this prerequisite to issue th e Section 111(d) rule.

Commenter s state d Section 111(d) prohibits EPA from adopting emission guidelines for existing sources from a source category when the Agency has already regulated that source category under section 112, adding EPA listed coal

- and oil

- fired EGUs as a "source category" unde r section 112 in 2000, and regulated emissions from these sources in 2012 under the Mercury and Air Toxics Standards ("MATS"). Commenters stated Section 111 is not ambiguous, and EPA therefore is not entitled to deference in interpreting that provision. Co mmenters stated t he plain language of the Act prevents EPA from regulating EGUs under section 111(d). Commenter s end ed , stating a drafting error in the 1990 CAA amendments does not vest the Agency with the authority it claims.

Commenter s state d because EPA has already promulgated a national emission standard for existing coal

- fired power plants under section 112, it may not promulgate the emission guidelines it has proposed here.94 Commenters stated that DEP questions EPA's authority to regulate CO 2 emission s from fossil

fuel fired EGUs under CAA Section 111(d). Commenters stated e xisting fossil fuel plants are currently regulated under Section 112 of the CAA. Commenters stated that i n February 2012, EPA promulgated a standard for mercury and certain other ai r toxins from fossil fuel power plants under the National Emission Standards for Hazardous Air Pollutants program authorized
under Section 112 of the CAA. Commenters stated Section 111(d) allows EPA to mandate
standards for emissions that are not "from a s ource category which is regulated under [Section 112]." Commenters stated DEP questions whether EPA has the authority to promulgate the proposed Clean Power Plan because the source category of fossil fuel power plants is now regulated under Section 112.

Co mmenter s stated that the EPA does not have the legal authority to promulgate this proposed regulation. Commenter s said Section 111(d) of the Clean Air Act, as it appears in the United States Code, clearly prohibits EPA from regulating "any air pollutant em itted from a source category which is regulated under [section 112 of the Clean Air Act]." In fact, commenters stated the EPA conceded this fact in New Jersey v. E.P.A.: T his requires vacation of CAMR's regulations for both new and existing EGUs. Commenter s stated EPA promulgated the CAMR regulations for existing EGUs under section 111(d), but under EPA's own interpretation of the section, it cannot be used to regulate sources listed under section 112; EPA thus concedes that if
EGUs remain listed under sect ion 112, as the commenters hold, then the CAMR regulations for existing sources must fall.

Commenter s stated the court clearly states that the EPA conceded the issue that section 111(d) could not be used to regulate air pollutants emitted from the regulat ed source category.
Commenter s said therefore, the EPA is legally barred by statute and by the legal theories of collateral estoppel or res judicata from now regulating greenhouse gas emissions from existing
sources covered under section.

Response 21 : EPA disagrees that it may not promulgate regulations addressing CO2 emissions from existing power plants under section 111(d). EPA’s discussion of this issue is in Section IV of the preamble. Further, EPA’s views on arguments presented by the commenters, inclu ding commenters’ discussion of the AEP opinion and of the Senate amendment, are also discussed in EPA’s briefs in the Murray Energy and West Virginia cases, No. 14

- 1112, No. 14

- 1146, and No.
14

- 1151 (D.C. Cir.).

Comment 22 : Commenter s state d that by going "outside the fence line" in setting standards, EPA developed standards for existing units that are more stringent than new source performance standards (NSPS) for new generating units, and this approach establishes a policy with no basis
in the statute or regulatory guidance.

Response 22 : We disagree with this comment. In section V. of the preamble for this rule we discuss the relative stringency of the section 111(b) and (d) rules.95 Comment 23 : Commenters state d EPA limit its BSER finding to measures that have been demonstrated as capable of being undertaken, achieved, and enforced by individual coal

- fired EGUs acting alone, and EPA should not consider, as part of the BSER, anything that would require sources to obtain or rely on offsite emission reductions to achieve compliance. Accordingly, c ommenter s conclude d , EPA should remove and/or replace the Proposed Rule's Building Blocks 2

- 4.

Response 23 : We disagree with this comment. We address this point in discussing our basis for building blocks 2 and 3 in section V of the preamble for this rule.

Comment 24 : Commenter s stated Section 111 governs 'affected sources,' not 'affected entities,' a
term that exists nowhere in Section 111. Commenter s said the EPA's authority extends to setting procedures for states to set standards of performance for affected sources, not re

- engineering the entire electric supply system in the U.S. The commenter s stated that the D.C. Circuit Court in 1978 limited Section 111 regulation to a single stationary source, ruling against ev en allowing the 'bubble' approach of including the entire plant as the 'source' to be regulated. If the courts have opined that a 'bubble' approach is illegal under 111

, the commenter s called into question the EPA's assertion of authority to regulate 'outs ide the fence' entities.

Response 24 : We disagree with this comment. The final rule limits the regulatory requirements to affected EGUs. As discussed in section V of the preamble for this rule, the EPA is establishing emission guidelines for states and is not overstepping its authority because it is not reengineering the entire electric supply system in the U.S.

Commenters appeal to Asarco, Inc. v. EPA , 578 F.2d 319 (D.C. Cir. 1978), is without merit.
Asarco neither construed the definition of standard of performance nor did it address the regulation of existing sources under section 111(d). Furthermore, Asarco was decided before the Supreme Court’s decision in Chevron v. NRDC , which held that EPA’s plantwide definition is a permissible construction of the statutory term “stationary source.” In Chevron , the Court reversed the D.C. Circuit’s rejection of the bubbling concept in which the D.C. Circuit based its
decision on two o f its precedents, including Asarco . Accordingly, we do not agree that Asarco is persuasive in light of the Supreme Court’s decision in Chevron

.
Even assuming arguendo that Asarco remains good law , the D.C. Circuit held only that the CAA precluded the E PA from allowing sources to avoid regulation under section 111(b) by employing
the so

- called “bubble concept,” i.e. , an approach that “treat[s] a combination of facilities as a single source” in order to “allow a facility whose emissions are increased by a lterations to avoid complying with the applicable NSPS as long as emission decreases from other facilities within the same ‘source’ cancel out the increase from the altered facility.” Id. , at 326. Asarco did not address whether a standard of performance co uld be based on a source’s ability to achieve on

site emission reductions by availing itself to off

- site measures. Nevertheless, this rule does not combine affected EGUs or impose any requirements on other “affected entities.”96 Comment 25 : Commenter s state d that paradoxically for a rule governing existing coal

- fired generation, three of the four "building blocks" used to identify state

- specific reduction targets consist of reductions projected from non

- coal generation options or other reduction measures.
Com menter s also addressed the issue of whether EPA may properly consider such "outside the fence" reductions in developing emission guidelines for coal

- fired power plants under Section 111(d). Commenter s add ed if one sets that issue aside, these particular bu ilding blocks provide scant basis for setting realistic emission reduction targets for Kentucky. Commenter s close d

, stating EPA's reliance upon these flawed factors exceeds its statutory authority

Commenter s state d EPA has chosen an unprecedented and legally unsupportable interpretation
of the Clean Air Act. Commenters ' organization s support ed the legal position enumerated by the Governors of 18 states in their 9 September 2014 letter to President Obama, which reads : "The unambiguous language of the CAA expressly prohibits EPA from using Section 111(d) to regulate power plants because EPA already regulates these sources under another section of the Act. Moreover, even if the Agency did have legal authority to regulat e power plants under 111(d), it overstepped this hypothetical authority when it acted to coerce states to adopt compliance measures that do not reduce emissions at the entities EPA has set out to regulate. Under federal law, EPA has the authority to regula te emissions from specific sources, but that authority does not extend outside the physical boundaries of such sources (i.e., "outside the fence"). In attempting to regulate outside the fence, the Agency's proposal not only exceeds the scope of federal law , but also, in some cases, directly conflicts with established state law. "

Commenter s stated t he fact is that in the proposed ESPS, the EPA asserts for the first time that it can look "beyond the fenceline" of "affected facilities" when it conducts a BSER analysis and incorporate emissions reduction opportunities that can be implemented by unrelated third parties.
Commenter s said the EPA's interpretation here is unlawful, arbitrary, and capricious because the EPA fails to provide a reasoned basis for chang ing its interpretation. See Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto, Ins. Co., 463 U.S. 29, 43 (1983) (In deciding whether an agency action is arbitrary and capricious, this Court considers whether "the agency [examined] the
relevant data and art iculate[d] a satisfactory explanation for its action including a 'rational' connection between the facts found and the choice made.") Commenter s stated although courts have acknowledged that "an agency is not locked into the first interpretation of a statu te it embraces," see Ramaprakashc v. FAA 346 F.3d 1122, at 1125 ("Agencies are free to change course as their expertise and experience may suggest or require."), the Supreme Court also has made clear that when an agency changes its course, it is "obligated to supply a reasoned analysis for the change." State Farm, 463 U.S. at 42. Commenter s said if an agency without explanation were to make an adjudication which is not consistent with the agency's previously established standards, the troubling question wou ld arise whether the agency has lawfully changed its standard, or whether it has arbitrarily failed to adhere to its standard, which it may not lawfully do. See Huntington Hosp., 319 F.3d at 79; see also Fox Television Stations, Inc. v. Fed.
Commc'ns Comm' n, 489 F.3d 444, 461 (2d Cir. 2007) rev'd and remanded on other grounds sub nom. F.C.C. v. Fox Television Stations, Inc., 556 U.S. 502 (2009). Commenter s stated in the97 proposed ESPS, the EPA fails to offer such a reasoned analysis and would be hard pressed to do so given the Clean Air Act's definition of "source" in Section 111.

Commenter s stated the EPA reaches far beyond the affected source category and requires emissions reductions that can only be met by looking beyond the sources that are the actual

s ubject of the regulation (fossil fuel

- fired EGUs) to the rest of the energy sector as well as consumer demand for electricity. Commenter s said in implementing this regulation, the EPA seeks to elevate itself to be the country's preeminent regulator of ener gy, which is not only well beyond its institutional competence, but also well beyond its authority in the Clean Air Act to address air pollution and in violation of numerous other federal and state laws.

Commenters state that EPA has intruded into regulato ry spheres where it has not jurisdiction and no expertise which has resulted in a proposal that will seriously harm markets and electricity reliability if implemented. For example, building block 2 is an unprecedented intrusion into areas
that the FPA has made exclusively subject to FERC’s jurisdiction.

Commenters state that the proposed rule is unlawful because it ignores a fundamental requirement of Section 111: that its standards regulate the emissions performance of (and are achievable by) individual s ources based on measures that can be incorporated into the design or operation of the source itself. This basic focus on individual sources is evident in the text of the statute itself and is a characteristic feature of every other Section 111 rulemaking.

Response 25 : We disagree with these comments. We discuss our basis for including the measures in building blocks 2 and 3 in the BSER in section V of the preamble for this rule, including our reasons for not limiting the BSER to the measures in building block 1, as well as why relying on these measures as the BSER does not represent over

- reaching. Further, the EPA is not intruding into FERC’s exclusive jurisdiction under the FPA. Our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. Moreover, these emission guidelines provide states with the flexibility to establish, implement, and enforce standards of performance and do not intrude on the regulatory domain of FERC or the states. It cannot be said that because environmental requirements may have an effect on the wholesale energy market that the EPA is therefore intruding into energy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Congress expressly identified power plants as a priority source category for regulation under CAA section 111.

Comment 26 : Commenter s stated w hile the EPA has the authority to provide flexible compliance options, the EPA's enfor cement authority under Section 111 is clearly limited to new and existing sources in the listed source categories. Commenter s said Section 111 certainly does not provide the EPA with the authority to impose enforceable obligations on entities that may be98 i nvolved in implementation of the "outside the fence" measures considered by the EPA in setting its proposed performance goals. Commenter s said therefore, to the extent that a regulated source adopts a compliance strategy involving implementation of "outsid e the fence" measures by non

jurisdictional entities, it is sufficient for a state implementation plan to provide federal enforceability for the performance goal imposed on the regulated source, rather than compliance measures performed by non

- jurisdiction al entities. Commenter s said the source (or state) relying on outside the fence reductions has the ability to make measures performed by non

- jurisdictional entities legally enforceable through the mechanisms of contract or agreed order. Commenter s stated h owever, any requirements for federal enforceability should be deemed satisfied so long as federally enforceable obligations in the nature of performance goals are placed on the state and regulated sources subject to the statutory requirements. Commenter s s tated to expand federal enforceability beyond those entities would exceed the scope of EPA's authority under Section
111.

Response 26 : In this rule, the EPA is not requiring or authorizing state plans to impose requirements on entities other than affected EGUs.

Comment 27 : Commenter s state d that a ''standard of performance" is a source

- specific limit, and the CAA defines "standard of performance" generally as "a requirement of continuous emission reduction, including any requirement relating to the operation or maintenance of a source to

ass ure continuous emission reduction." Commenters stated that i n section 111 specifically, a "standard of performance" is defined as "a standard for emissions of air pollutants which reflects the degree of emission limitation achievable through the applicatio n of the best system of emission reduction which (taking into account the cost of achieving such reduction and any non

air quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated." Comm enters stated c onsistent with the interpretation of "standard of performance" as a source specific requirement, Congress directed
that "in applying a standard of performance to any particular source" states may "take into consideration, among other factors , the remaining useful life of the existing source to which such standard applies. " Commenters stated that a standard of performance is "a requirement" which 111(d) contemplates states ''applying" to a "particular source." Commenter s then explained that

t his Proposed Rule would require compliance measures beyond the physical or legal control of the emission sources, and of the four measures, or BSER "building blocks" used by EPA to establish statewide standards of performance, only the first

- heat

- rate imp rovements at coal

- fired steam generating units

- may be executed at an affected source. Commenters stated t he remaining three "building blocks" involve shifting generation function from coal

- to gas

- fired plants, replacing fossil fuel generation with renewa ble energy resources, and avoiding generation through end

- use efficiency measures. Commenter s continued , stating that in the Proposed Rule, EPA interprets the use of "system" in "best system of emission reduction" to encompass
''outside

- the

- fenceline" meas ures. Commenters stated EPA reasons that a "system" is a ''set of things"; and, in turn, a "system of emission reduction" is a ''set of things" which an affected source may utilize to reduce CO 2 emissions. Commenters stated EPA presumes that reducing

gener ation and fuel use at an "affected EGU" would reduce the CO 2 emissions from an affected99 source. Commenter s argue d that EPA's interpretation of "system" conflicts with standard canons of statutory interpretation. Commenters said "The definition of words in isolation ... is not necessarily controlling." Rather, commenters added, interpretation of a word or phrase depends upon reading the whole statutory text, considering the purpose and context of the statute, and consulting any precedents or authorities that inform the analysis. " Here, in the context of emission controls, c ommenter s contend ed , the Clean Air Act consistently refers to "systems" as

source

- specific measures. There is no basis for departing from this usage in section 111(d).
Commenters stated EPA 's interpretation of "system" conflicts with the agency's past application of section 111(d). Commenter s remark ed that EPA's interpretation of "system" conflicts with precedent defining the scope of compliance measures contemplated by the CAA. Commenters

s tated t he D.C. Circuit previously rejected interpretations of "best system of emission reduction" that resulted in aggregate, facility

- wide, emission limits rather than an emission limit for
individual sources. Commenter s cite d in ASARCO v. EPA, the court invalidated EPA regulations that would "allow a plant operator who alters an existing facility in a way that increases its emissions to avoid application of the NSPSs by decreasing emissions from other facilities within the plant." Commenters stated t he court rejected EPA's assertion of " 'discretion' to define a stationary source as either a single facility or a combination of facilities," reasoning: EPA has attempted to change the basic unit to which the NSPSs apply from a single building, structure, fa cility or installation the unit prescribed in the statute to a combination of such units.
Commenters stated t he agency has no authority to rewrite the statute in this fashion. Commenters
added that h ere, by applying standards of performance to the entire p ower sector rather than individual "existing sources," EPA has asserted even broader authority. Commenters added i f EPA cannot apply performance standards to several sources at a single industrial site collectively, the narrower "best system of emission re duction" cannot be interpreted to encompass measures and emission limits applied to the entire electric utility sector. Commenter s

note d that since the publication of this Proposed Rule, the Supreme Court issued a decision noting limits on EPA's authority expand the scope of measures that may be required to achieve
an emission limit. Commenters stated that i n Utility Air, the Court upheld EPA's decision to require "best available control technology" (BACT) for greenhouse gases emitted by sources already oth erwise subject to prevention of significant deterioration (PSD) review. Commenters
stated t he Court observed that the petitioners' concerns about unbounded regulatory authority were mitigated by limitations on what EPA could reasonably require as BACT stat ing, "for one, BACT is based on 'control technology' for the applicant's "proposed facility," therefore it has long been held that BACT cannot be used to order a fundamental redesign of the facility."
Commenters stated t he Court's reasoning hinged on the p etitioners' failure to demonstrate that EPA would implement its proposal broadly and that the relevant emission standard, BACT, was limited. For several reasons, c ommenter s remark ed , the Supreme Court's observations with respect to BACT should inform the s cope of section 111 (d) "standards of performance."
Commenters stated b oth terms are "emission limitations." But , commenters added, BACT represents the most stringent limitation achievable, whereas "performance standards" represent the "best system ... ade quately demonstrated" after taking into consideration a number of
additional factors. Commenters stated BACT is stricter, authorizing EPA to apply more burdensome requirements, than a "standard of performance." Similarly, commenters stated, the100 statutory d efinitions of "emission limitation" and "standard of performance" indicate that BACT "emission limitations" encompass a broader range of measures than "standards of performance." Thus, commenters stated, any constraint on "emission limitation," and therefo re on BACT, to
inside

- the

- fenceline measures must apply to "standards of performance" as well. Commenter s posited that if EPA cannot define BACT to include measures applied to an entity other than the source, EPA cannot define section 111(d) standard of pe rformance to include a broader universe of compliance strategies.

Response 27 : We disagree. For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history. To the extent this comment objects to the portfolio approach, which the EPA is not finalizing, the comment is moot. Moreover, While EPA has generally recommended conducting a BACT analysis for each emissions unit, EPA stated clearly that “the CAA and EPA rules provide discretion for permitting authorities to evaluate BACT on a facility

- wide basis by taking into accoun t operation and equipment which may affect the environmental performance of the overall facility.” GHG Permitting Guidance at 23. Thus, EPA does not interpret the BACT provisions of the Clean Air Act to preclude considering beyond

- the

- unit control
tech niques. Moreover, in this context, EPA was considering the use of the term “facility” and “source” in the PSD provisions, not the term “system.”

This section of EPA’s guidance also explains that “a BACT analysis should not include (in Step 1 of the pro cess) energy efficient options that may achieve reductions in a facility’s demand for energy from the electrical grid but that cannot be demonstrated to achieve reduction in emission released from the stationary source (e.g. within the property boundary.” Id. at 24. However, this statement is based on EPA’s historical interpretation that the BACT requirement is “inapplicable to secondary emissions, which are defined to include emissions that may occur as a result of the construction or operation of a m ajor stationary source but do not come from the
source itself.” Id. This part of EPA’s guidance describes sources that consume power produced by other sources, where that power and the associated emissions are produced and released outside of the proper ty boundary of the facility consuming the power. This guidance thus generally covers product manufacturing facilities, not facilities that produce electrical power for

consumers. This element of EPA’s PSD guidance does not discourage PSD permitting
autho rities and applicants from considering measures that may be implemented outside of the fenceline of a stationary source but that result in a reduction of emissions inside the fenceline. There may be other reasons for not examining such measures closely or selecting them as BACT in a given case, but EPA has not interpreted the Act to preclude consideration of such options in the PSD program. Further, the focus of the PSD permitting is on construction of individual sources and the BACT analysis examines met hods that can be applied by a particular

source on a case

- by

- case basis. The BSER analysis considers an entire category of

sources. Thus, EPA’s interpretation of the PSD provisions does necessitate reading section 111101 to encompass only emission control measure that can be applied inside the property boundary, or fence line, of a facility.

Comment 28 : Commenter s stated o f the five source categories regulated solely under Section 111(d) (phosphate fertilizer plants, sulfuric acid plants, kraft pulp mills, primary aluminum plants, and municipal solid waste landfills), all of the emission guidelines were based on a BSER that was technological in nature. Commenter s said for example, the guideline for fluoride emissions from existing phosphate fertilizer plant s was based on the application of spray cross

flow packed scrubbers, and the guidelines for sulfuric acid mist emissions from sulfuric acid plants were based on the use of fiber mist eliminators. Commenter s stated in the preamble to the
final rule for sulf uric acid mist, the U.S. EPA stated that: "Section 111(d) requires emission controls based on the general principle of the application of the best adequately demonstrated control technology, considering cost." [42 FR 55796 (Oct. 18, 1977)]

Commenter s state d four source categories have also been regulated under Section 129, which requires the U.S. EPA to establish guidelines under Section 111(d) for certain solid waste
incineration units. Commenter s said under Section 129, the U.S. EPA must base the emission guidelines on levels reflecting the maximum degree of reduction in emissions and, similar to the previous Section 111(d) rules, the Section 129 emission guidelines were derived from the installation of control technologies on

- site. Commenter s said for exa mple, the guideline for municipal waste combustors is based on the application of various controls including spray dryers, fabric filters, and electrostatic precipitators, and the guideline for commercial and
industrial solid waste incineration units is ba sed on the use of wet scrubbers. [60 FR 65387 (Dec. 19, 1995); 65 FR 75338 (Dec. 1, 2000)] Commenter s stated the U.S. EPA allows municipal waste combustors to participate in averaging and trading programs to meet the nitrogen oxide emission requirements an d thus look for control methods beyond the fenceline, the actual requirements themselves were set on what could be achieved at the facility, unlike the current proposed guidelines. [See 60 FR 65402]

Commenter s stated other examples of beyond the fenceline controls that can be taken into account to meet emission guidelines are the guidelines for hospital/medical/infectious waste incinerators and the guidelines for commercial and industrial solid waste incinerati on units, both of which require that affected facilities submit a waste management plan that identifies both the feasibility and the methods used to reduce or separate certain components of solid waste from the
waste stream to reduce or eliminate toxic emi ssions from incinerated waste. Commenter s said while it is true that material separation is not a pollution control device and would be implemented off

- site, the U.S. EPA did not make material separation a part of the BSER and it
was not used to calculate the emission guideline. Commenter s said instead, it is more akin to other Section 111(d) procedural requirements such as performance testing and monitoring that are often included in Section 111(d) rules. Commenters stated a s with municipal waste
combustor NSPS, this is unlike the current proposed emission guideline for CO2 where the U.S.102 EPA factored in expansive measures such as re

- dispatching, increased renewables, and demand

side EE as part of the BSER itself.

Commenter s stated the U.S. EPA's most expan sive interpretation of the meaning of standard of performance under Section 111(d) was for mercury emissions from EGUs. [70 FR 28606 (May 18, 2005)] Commenter s said after delisting EGUs from Section 112(c), the U.S . EPA promulgated the Clean Air Mercury Ru le (CAMR). Commenter s stated CAMR established a national mercury emissions cap for new and existing EGUs. Commenter s stated the federal appeals court later held that U.S. EPA could not regulate mercury emissions under Section 111
because the initial delist ing of EGUs under Section 112 was unlawful. New Jersey v. EPA, 517 F.3d 574 (D.C. Cir. 2008) Commenter s said while defining a cap and trade program as the BSER seems a broad enough interpretation of standard of performance to justify the proposed emission guideline for CO2, there are important differences between the two.

Commenter s stated first, the cap and trade program created by CAMR was based on the availability and installation of control technology. Commenter s said the preamble to the final rule emph asized the fact that the BSER was a combination of the cap and trade mechanism and the technology needed to achieve the chosen cap level. In justifying the emission limits in CAMR, the U.S. EPA explained in the preamble that "the technologies necessary to achieve the emission cap limits . . . have been adequately demonstrated." Commenter s said therefore, CAMR
maintained the source

- specific technology

- based approach that is the foundation of Section 111.
Commenter s stated t his is unlike the proposed emission guideline for CO2 that defines the BSER as the four building blocks, which include measures such as demand

- side EE and re

- dispatching that have no underlying basis in the installation of control technologies onsite.

Commenter s stated secondly, the affecte d source under CAMR was defined as coal

- fired utility units for both Section 111(b) and Section 111(d). Commenter s said it was only the emission limits achievable by applying BSER to the affected sources that were used to calculate the emission guideline i n the form of a state emission cap. Commenter s stated and the cap and trade program, including the transfers of credits, was limited to affected sources. Commenter s said in the proposed emission guideline for CO2, the U.S. EPA has broadened who the rule ap plies to by including affected entities that are not a part of the Section 111(b) performance standard.
Commenter s said additionally, the U.S. EPA imposed obligations on sources comprising the entire power system in determining the BSER and the individual state emission guidelines; sources which it has no authority to regulate under Section 111.

Commenter s stated it is clear that CAMR, while broader than previous Section 111(d) rules, was still within the traditional interpretation of standard of performanc e based on source

- specific control technologies and limited to affected facilities. Commenter s said it in no way supports the U.S. EPA's current proposed emission guideline for CO2 that is based on measures imposed on entities beyond the scope of the propo sed Section 111(b) performance standard and outside of
the control of affected EGUs.103 Response 28 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

We disagree with commenters’ characterization of the BSER in the Clean Air Mercury Rule (CAMR). As discussed in the pream ble to this rule, CAMR was promulgated in 2005 under the EPA administration in place under President George W. Bush. The rule as commenters noted was based on the combination of the cap

- and

- trade mechanism and available control technologies. We disagree, h owever, that this combination maintains a “source

- specific technology

- based approach.”

Compliance with CAMR was designed to go into effect over two phases. The first phase established a mercury emissions cap at 38 tons per year based on a co

- benefit of co mpliance with the Clean Air Interstate Rule (CAIR). 70 Fed. Reg. 28606, 28618 (May 18, 2005). CAIR established a cap

- and

- trade program that would have significantly limited SO 2 and NO x emissions from the power sector. EPA determined that by regulating merc ury along with CAIR, significant mercury reductions would be achieved by air pollution controls designed to reduce
SO 2 and NO x . Id. at 28617.

The second phase established a mercury emissions cap at 15 tons per year, which exceeds the
level achievable sole ly as a co

- benefit of CAIR. Id. at 28619. By using an integrated planning model that looked at the national and unit levels of utility mercury emissions under different control scenarios, the EPA projected that sources would “install SCR [selective catalyt ic reduction] to meet their SO 2 and NO x requirements and take additional steps to address the remaining Hg [mercury] reduction requirements under CAA section 111, including adding Hg

specific control technologies (model applies ACI [activated carbon inject ion]), additional scrubbers and SCR, dispatch changes, and coal switching.” Id. Further, “[u]nder the cap

- and

trade approach,” the EPA projected “that Hg reductions result from units that are most cost effective to control, which enables those units that a re not cost effective to install controls to use other approaches for compliance including buying allowances, switching fuels, or making dispatch changes.” Id. Based on this analysis, the EPA determined that the BSER “refers to the combination of the cap

- a nd

- trade mechanism and the technology needed to achieve the chosen cap level.” Id. at 28620. By basing the cap in part on the trading program, EPA set the Phase II cap at a level commensurate with widespread implementation, including through dispatch chang es; whereas if the cap were based solely on the installation of control technologies, then the Phase II cap would not be cost

- effective for the source category and the emission limit could not be justified.

Lastly, because the final rule limits the regula tory requirements to affected EGUs we do not address commenters’ assertions that the rule includes “sources which [the EPA] has no authority to regulate under Section 111.”

Comment 29 : Commenter s state d that power plant carbon dioxide emissions are not regulated as hazardous air pollutants under Clean Air Act Section 112. Commenter s explained that the104 Alabama Governor's Office and Dept. of Environmental Management ("the Administration") mistakenly conten d that EPA is foreclosed from promulgating performance standards for power plant carbon dioxide emissions because power plant hazardous air pollutant emissions already are regulated under section 112. Commenters stated u nder the Administration's erroneous reading of the Clean Air Act, "[s]ection 111(d) expressly states that the EPA is prohibited from regulating any air pollutant emitted from an existing source category that is regulated under Section 112 of the Clean Air Act."(Galliher testimony, supra note 7, at 4) but this interpretation is not compelled by the language of the Act, its legislative history, or by fundamental principles of statutory construction. Commenters stated t o the contrary, the language, structure, and history of the Act support EPA's longstanding interpretation that the limitation in section 111(d) applies to hazardous air pollutants regulated under section 112, and not more broadly to the sources that
emit both hazardous and non

- hazardous air pollutants. Commenter s continue d , stating that the text of section 111(d) does not compel the result the Administration advocates. Commenters
stated t wo separate versions of section 111(d) were enacted into law during the 1990 amendments to the Clean Air Act, explaining that the House version pro hibited using section 111(d) to set standards for existing sources regulated under section 112.(See Brief of Respondent EPA, Part V, New Jersey v. EPA, 517 F.3d 574, 582 (D.C. Cir. 2008), available at 2007 WL 2155494). In contrast, c ommenter s explain ed , th e Senate version did not refer to sources regulated under section 112 at all. Commenters said that i nstead, it prohibited using section 111(d) to set standards for denominated hazardous air pollutants regulated under section 112.(Id.) Commenters stated tha t d espite the differences between the two versions, both were included in the Statutes at Large and became part of the Clean Air Act (Pub. L. No. 101

- 549, sections 108(g), 302(a)). Commenter s stated that EPA has consistently and appropriately adopted
the S enate version of the 1990 amendment to section 111(d) to preclude regulation of existing sources only with respect to hazardous air pollutants emitted from a source category covered under section 112.(See, e.g., Brief of Respondent EPA, Part V, New Jersey v. EPA, 517 F.3d 574, 582 (D.C. Cir. 2008) ("The section 111(d) exclusion only extends to hazardous air pollutants"), available at 2007 WL2155494. I n dicta, the D.C. Circuit Court of Appeals mistakenly characterized EPA as having conceded that section 111( d) precludes regulation of source categories regulated under section 112. New Jersey v. EPA, 517 F.3d at 582. The Court's observation was neither necessary to its decision nor was it accurate). Thus, c ommenter s conclude d , according to EPA's reasonable and uniform interpretation, regulation of carbon dioxide emissions from power plants under section 111(d) is appropriate, even though power plant hazardous air pollutant emissions are covered under section 112. Commenter s stated that EPA's interpretation is al so appropriate under the House version of section 111(d), which requires, in pertinent part, that: "each State shall submit to [EPA] a plan which (A) establishes standards of performance for any existing source for any air pollutant (i) for which air quali ty criteria have not been issued or which is not included on a list published under section 7408(a) of this title or emitted from a source category which is regulated under section 7412 of this title." (42 U.S.C. section 7411(d)(1) (emphasis added)) Commen ter s remark ed that it is true that the mandate of the statute is not entirely clear based on its terms, as it refers to any air pollutant as well as source categories of such air pollutants; the Administration appears to have seized on this ambiguity. Howe ver, c ommenter s continued , where, as here, Congress's intent is not clear on the105 face of a statute, EPA has discretion to interpret the statutory directives, and the agency's interpretation governs so long as it is reasonable (Chevron U.S.A. v. Natural Res . Def. Council, Inc., 467 U.S. 837, 863 (1984)), and EPA's interpretation of section 111(d) in the Clean Power Plan is both reasonable and consistent with the agency's prior construction of the statute.
Commenter s add ed that when interpreting a statute tha t is not clear based on its plain terms, it is appropriate to examine the legislative history to discern Congress' intent in enacting it.
Commenters stated t he legislative history for the 1990 amendments to section 111(d) supports EPA's reasonable interpre tation of the statutory provision (The 1990 amendments to section 112 responded to the failure of the original risk

- based approach in the 1970

- version of section 112. S. Rep. No. 101

- 228, reprinted in 1990 U.S.C.C.A.N. 3385, 3517. The 1990 amendments thus replaced the risk

- based system with a technology

- based approach that seeks to protect public health by ensuring that all new sources of hazardous air pollutants meet the same level of emission control that is achieved by the best

- performing sources for new sources, and the average level of emission control achieved by the top

- performers for existing sources. Id. at
3788

- 89). Commenter s state d that well

- established principles of statutory construction further demonstrate the propriety of EPA's construction o f these statutory provisions and offers the following reasons. Commenters stated f irst, EPA's interpretation of section 111(d) to limit regulation of hazardous air pollutants rather than source categories is a reasonable approach to harmonizing the House a nd Senate versions of the statute (See Citizens to Save Spencer County v. EPA, 600 F.2d 844, 872 (D.C. Cir. 1979)). Commenters stated that i n instances such as this, where EPA is interpreting a jurisdictional provision of a statute it administers, Chevron deference is especially appropriate (See City of Arlington v. FCC, 133 S. Ct. 1863, 1871 (2013)).
Commenters stated EPA's interpretation of section 111(d) to authorize standards of performance for air pollutants that would otherwise remain unregulated, whi le prohibiting duplicative regulation of hazardous air pollutants, is a "permissible construction of the statute" that should withstand review (Id. at 1874). Moreover, c ommenter s continue d

, stating the Administration's proffered interpretation of section 111(d) creates an unnecessary and undesirable Hobson's choice, in which EPA would be forced to decide between regulating categories of sources that emit hazardous air pollutants and regulating danger ous, non

- hazardous air pollutants that are also emitted by those source categories. In fact, commenters added, the Administration's approach would essentially nullify section 111(d). Given the long list of hazardous air pollutants in section 112(b), and th e large numbers of source categories that emit them, c ommenter s continue d stating , it is hard to think of an air pollutant that would fall within the scope of section 111 that is not also emitted by a source category subject to section 112 standards for ha zardous air
emissions. Commenters stated that i n contrast to this untenable construction, EPA's interpretation construes the statute as a whole to give meaning and effect to each provision (See FDA v. Brown and Williamson Tobacco Corp., 529 U.S. 120, 133 ( 2000)). Finally, c ommenter s conclude d , the Administration's reading of section 111(d) would yield absurd results by rendering that section superfluous, explaining that here again, EPA's consistently applied interpretation of section 111(d) reconciles a pot ential but avoidable conflict in a manner that gives meaning and effect to all pertinent provisions(See, e.g., Appalachian Power Co. v. EPA, 249 F.3d 1032, 1041

- 42 (D.C. Cir. 2001) (affirming EPA's reconciliation of potentially conflicting provisions of th e Clean Air Act under the doctrine against producing absurd results)). Thus, commenters stated, the Mercury106 and Air Toxics standards promulgated under section 112 are not an impediment to EPA's proposal to establish standards of performance for emissions o f non

- hazardous greenhouse gases like carbon dioxide from existing coal

- fired power plants.

Response 29 : EPA agrees with these comments that the Section 112 Exclusion in section 111(d) is not properly read to preclude EPA from promulgating regulations addr essing CO2 emissions from existing power plants under section 111(d). EPA’s discussion of this issue is in Section IV of the preamble.

Comment 30 : Commenter s stated Chevron addressed whether the EPA reasonably constructed the term 'stationary source' when it 'allow[ed] States to treat all of the pollution

- emitting devices within the same industrial grouping as though they were encased within a single 'bubble '

. Commenter s said at issue was an EPA rule, intended to incorporate an amendment to the Clean
Air Act, that allowed State[s] to adopt a plant

- wide definition of the term 'stationary source.'

Commenter s stated in determining whether the EPA's definition was proper, the Supreme Court articulated a test for 'review[ing] an agency's construction of the sta tute which it administers.'
Commenter s said first, the reviewing court must determine 'whether Congress has directly spoken to the precise question at issue.' If so, commenters added, the statute is unambiguous and both the agency and the court 'must give effect to the . . . expressed intent of Congress.'
Commenter s said Congressional intent can be discerned from either the plain language of the statute in question or the statute's legislative history. Therefore, the commenter s said it is
necessary to scrut inize a statute's legislative history to determine whether the statute is unambiguous on a particular point. Commenter s stated in Chevron, however, after looking to the statutory language as well as the legislative history, the Court found that "Congress d id not have a specific intention on the applicability of the 'bubble' concept in these cases".

Commenter s stated the Court then proceeded to the second part of the test. Commenter s said the second step mandates that if 'Congress has not directly addressed the precise question at issue'

- in other words, 'if the statute is silent or ambiguous with respect to the specific issue'

- the court should determine 'whether the agency's answe r is based on a permissible construction of the
statute.' Commenter s stated the Court explained that '[i]f Congress has explicitly left a gap for the agency to fill, there is an express delegation of authority to the agency to elucidate a specific provisio n of the statute by regulation. Commenter s said such legislative regulations are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute.'
Commenter s stated in other words, if Congress's intent is unclear, the agency may exercise its authority in accordance with any reasonable understanding of the statute.

Commenter s said to determine what would be a reasonable or permissible construction, a court looks to the purposes of and policies behind the statute (or part of the statute at issue) and whether the agency's definition addresses competing interests. Commenter s stated the Chevron Court found that EPA's 'definition is fully consistent with one of [the] concerns . . . that
motivated the enactment' of the amendmen t, and that 'the Administrator's interpretation represents a reasonable accommodation of manifestly competing interests and is entitled to107 deference: the regulatory scheme is technical and complex, the agency considered the matter in a
detailed and reasone d fashion, and the decision involves reconciling conflicting policies.' Therefore, the commenter s said the Court held that "the EPA's definition of the term 'source' is a permissible construction of the statute."

Commenter s stated in sum, Chevron requires that if congressional intent can be discerned from either the statute itself or the legislative history, the statute is unambiguous and an agency must follow Congress's intent. Commenter s said if, however, Congress's intent cannot be determined
either from a plain reading of the statute or the legislative history (with the importance of legislative history being hotly debated), the statute is ambiguous and the agency's reasonable interpretation must be honored, where the term 'reasonable' is defined in acco rdance with the purposes and policies behind the statute in question.

Response 30 : This part of the commenters’ comment does not require a response.

Comment 31 : Commenter s state d that the ESPS Proposal is prohibited by the plain text of Section 111(d); EPA's interpretation of the Statutes at Large as providing a means to circumvent the plain text of Section 111(d) in the U.S. Code is incorrect; a proper interpretation of the Statutes at Large shows that, as is reflected in the plain text of the U.S. Code , EPA lacks authority to promulgate the ESPS Proposal; and EPA's policy arguments for its interpretation of Section 111(d) are without merit. Commenter s support ed comments submitted by State of West Virginia, Office of the Attorney General

.

Response 31 : EP A disagrees that it may not promulgate regulations addressing CO2 emissions from existing power plants under section 111(d). EPA’s discussion of this issue is in Section IV of the preamble.

Comment 32 : Commenter s stated Section 111(d) limits EPA's role to one of procedure.
Commenters stated EPA may promulgate regulations to establish a "procedure" under which states submit implementation plans that establish standards of performance for existing sources subject to regulation under Section 111(d). Commenters stated that however, the states, in developing their implementation plans, are the ones on whom Congress conferred authority to actually establish "standards of performance" for existing sources. See 42 U.S.C. section 7411(d)(1) (directing EPA to "prescri be regulations which shall establish a procedure . . . under which each State shall submit to the Administrator a plan" that establishes standards of performance) (emphasis added). Commenters co mpare d section 7411(b)(1)(B) (directing EPA to "establish[] Fe deral standards of performance for new sources" directly) (emphasis added).
Commenter s continue d that the states are expressly authorized by the Clean Air Act to apply less stringent standards to individual sources or classes of sources. 42 U.S.C. section 7411(d)(1). In so doing, commenters added, states

- not the EPA

- consider cost, practical achievability, a source's "remaining useful life," and other source

- specific factors when applying these standards to particular sources. Id.; see also 40 C.F.R. section 60.24(f). Commenter s state d further that only when a state f ails to submit a satisfactory implementation plan that is, one that is unreasonable or fails to comport with the Act's statutory criteria is EPA authorized to perform its108 second function under 111(d)(2): directly prescribing binding standards for sources. See 42 U.S.C. section 7411(d)(2); see also 40 C.F.R. section 60.27(c)(3). Cf. Alaska Dept. of Envtl. Conservation v. EPA, 540 U.S. 461, 494 (2004) (ultimate issue in Prevention of Significant Deterioration program is whether state agency's determinations a re "reasonable, in light of the statutory guides and the state administrative record"). Comments posit ed that EPA's proposal sets a mandatory, binding "goal" for each state, in the form of an emission rate for the state's entire power sector. Under EPA's p roposal, commenters stated, once these "goals" are finalized, states will have no discretion to alter them. See, e.g., Proposal, 79 Fed. Reg. at 34,835 ("Once the final goals have been promulgated, a state would no longer have an opportunity to request tha t the EPA adjust its CO2 goal."), 34,897

- 98 (rejecting stakeholder suggestion that states be allowed to quantify levels of emission reduction or otherwise treat EPA's goals "as advisory rather than binding"), 34,892 ("As promulgated in the final rule follo wing consideration of comments received, the interim and final goals will be binding emission guidelines for state plans.").
Commenter s continue d , stating that even if a state can demonstrate that it cannot meet EPA's projected emission reductions by imple menting a particular aspect of the proposed "best system of emission reduction," EPA will not adjust the state's "goal" unless the state demonstrates that it cannot realize additional reductions from applying the other aspects of that "system" more

aggress ively, or from "related, comparable measures." Id. at 34,893. Commenter s stated the proposal thus violates Congress's unambiguously expressed intent in Section 111(d).
Commenter s state d that as the states exercise their authority to appropriately adjust EP A's "guidelines" for certain sources and classes of sources, the sources across a given state may in the end collectively emit a substance at a greater or lesser rate. Commenters stated there is nothing unusual about this result, because before now EPA has properly restricted its 111(d) regulations to set guidelines for source emissions not total state emissions. Commenter s continue d , stating that EPA attempts to justify this by reference to the statutory definition of "standard of performance" as "a standa rd for emissions which reflects the degree of emission limitation achievable through the application of the best system of emission reduction." 42 U.S.C. section 7411(a)(1) (emphasis added). Commenters stated EPA reads "degree" to mean "portion," and offer s the interpretation that "[t]hat degree or portion of the required emission performance level is, in effect, the portion of the state's obligation to limit its affected sources [aggregate, statewide] emissions that the state has assigned to each particula r affected source." Proposal, 79 Fed. Reg. at 34,891. Commenter s state d that the concept of a predetermined aggregate cap under which the state parcels out "portions" of its limitation obligation has no basis in the implementing regulations or EPA's past practice under 111(d), let alone in the Act itself. In essence, commenter s conclude d , here [rule] treats each state as nothing more than a giant source of carbon dioxide, and imposes on each state binding, inflexible emission limits.
Commenters stated t he so

- called "flexibility" offered to states here [rule] is no greater than the flexibility a regulated source always enjoys under the Clean Air Act, because individual sources can devise alternative methods to reach emission levels prescribed by EPA. See, e. g., 42 U.S.C. section 7411(b)(5), (h) (forbidding EPA to require installation of particular technological systems absent narrowly specified circumstances). Commenters said that states are entitled to flexibility not only in procedural means but also in sub stantive ends. Commenters stated EPA's proposal reverses this statutory scheme, promoting the agency to the role of setting binding,109 substantive standards in the first instance and relegating the states to a ministerial, administrative role. In this, comme nters stated, EPA claims the authority to strip states of their statutory discretion to take account of their unique circumstances, needs, and interests.

Response 32 : We disagree. As we explain in section VIII.D of the final rule preamble of the CPP, our emission guidelines provide the substantive criteria that are intended to govern the review of the Administrator’s review of state plans. The interim and final goals are intended to
reflect such substantive criteria.

Comment 33 : Commenter s state d if EPA ca n ever issue lawful Section 111(d) rules regulating
coal

- fired power plants

- that is, after first having withdrawn its regulation of those power plants under Section 112, and then having issued lawful regulations for new power plants under Section 111(b)

- EPA still must adopt a wholly different approach to Section 111(d) regulation than the one it takes in the present proposal. Commenters stated u nder this alternative, lawful approach, EPA would analyze the types of projects that could reduce greenhouse g as reduction at existing
sources of coal

- fired power plants by reference to Section 111's criteria, which considers such factors as cost and performance in arriving at guidelines about what emission rates are actually achievable as the "best system of emis sion reduction" for various categories and subcategories of
fossil

- fuel

- fired power plants. Commenters stated EPA has completed some of this work with its first "building block," efficiency improvements at power plants, but even that proposal is flawed
bec ause it overestimates the efficiency improvements that are available at individual power plants by considering this matter on a statewide basis. Commenters stated u nder this lawful approach, states would then establish and apply standards of performance to existing power plants, drawing on their local knowledge and considering the individual sources and classes of sources within their jurisdictions. Commenters stated t his approach would honor the proper roles of the federal and state governments and result in performance standards that are appropriate for and achievable by regulated sources.

Response 33 : We discuss our authority to promulgate this rule in section IV of the preamble. For the reasons discussed in section V.A. and V.B. of the preamble and in th e Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

Comment 34 : Commenter s state d EPA should honor the Act's core statutory limitations on its authority and formally determine that Section 111(d) standards are not appropriate for fossil fuel

fired power plants.

Response 34 : As discussed elsewhere, section 111(d) provides the EPA with authority to regulate CO 2 from affected EGUs notwithstanding that EPA has regulated emissions from those
sources under section 112.

Comment 35 : Commenter s state d EPA's authority under Section 111(d) is limited. Commenter s continue d , stating that EPA is empowered to "establish a pr ocedure similar to that provided by [section 110 of the Act (8 42 U.S.C. section 7410)] under which each s tate shall submit to [EPA]110 a plan which "establishes standards of performance" for existing sources within the state (emphasis added).(9 42 U.S.C. sec tion 7411(d)(1)) EPA can set substantive standards of performance only when a state fails to submit a "satisfactory" plan.(Id. section 7411(d)(2)(A).)
Commenters stated t he Act gives states, on the other hand, broad discretion to develop plans to implement section 111(d) standards of performance subject to a general requirement that the state's exercise of discretion be "satisfactory."(Id.) Commenter s continue d that for a plan to be satisfactory, it must include performance standards that are consistent wit h the definition of standard of performance in Section 111(a)(1), Id. section 7411(a)(1), and it must "provide[ ] for the implementation and enforcement" of the standards, Id. U.S.C. sections 7411(d)(1)(B). Moreover, commenters added, EPA must permit the s tate in applying a standard "to take into consideration, among other factors, the remaining useful life of the existing source to which the standard applies."(Id. Commenters c omments on remaining useful life here and in other sections
of these comments add ress economic and practical operational issues. Commenters also incorporate d by reference the detailed comments provided by UARG on remaining useful life issues as identified from the Proposed Rule and the Oct. 28 Notice of Data Availability, Carbon
Pollut ion Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, 79 Fed. Reg. 64,543 (Oct. 30, 2014) (NODA).) Commenters stated that a part from those statutory requirements, states have significant discretion to develop their pla ns, including discretion to adopt state plans that differ from EPA's emission guidelines. ( See 40 C.F.R.

- 60.24(f) (2014).) Commenter s state d the regulations make clear, however, that in contrast to the "emission standards" that states adopt, EPA's emissio n guidelines are not "legally enforceable."(State Plans for the Control of Certain Pollutants from Existing Facilities, 40 Fed. Reg. 53,340, 53,341 (Nov. 17, 1975).) Instead, commenters stated, EPA's emission guidelines are "only criteria for judging the a dequacy of State plans."(Id. at 53,343.) Thus, c ommenter s conclude d , the EPA cannot prescribe to states a standard of performance. Commenters added, t he binding state emission rates in the Proposal do precisely that.

Response 35 : As we explain in section VIII.D of the final rule preamble of the CPP, our emission guidelines provide the substantive criteria that are intended to govern the review of the Administrator’s review of state plans. The interim and final goals are intended to reflect such
substantive criteria.

Comment 36 : Commenter s state d that EPA does not have the authority to disregard the Clean Air Act's basic structure and eliminate the primacy and the discretion Congress afforded to the states in implementing any binding emission standards under Section 111(d). Commenter s state d that while touting the flexibility available to states, EPA provides only a bare bones description of how states might develop "satisfactory" plans to implement Section 111(d) requirements for existing EGUs. Commenter s ad d ed that this approach, which leaves states without sufficient guidance on many practical matters, also obscures the fact that the Proposed Rule would, in reality, improperly constrain state discretion under Section 111(d).

Response 36 : We disagree with th is comment. Section VIII. of the preamble for this rule provides more detailed guidance to the states. For the reasons discussed elsewhere, this rule does not improperly constrain state discretion.111 Comment 37 : Commenter s stated EPA does not have authority for the proposed beyond

- the

fence

- line approach, lacking the legal authority under the CAA to implement Building Blocks 2

- 4. Under Section 111(d)(2), EPA must develop an implementation plan to achieve the emission reduction targets in the event that a State fa ils to submit an implementation plan or submits a plan that EPA deems unsatisfactory. 42 U.S.C.

- 7411(d)(2). Commenters stated that h owever, as a federal agency, EPA has limited regulatory authority and can only exercise the power that has been delegated to it by Congress. See North Carolina v. EPA, 531 F.3d 896, 922 (D.C. Cir. 2008) ('Lest EPA forget, it is 'a creature of statute,' and has 'only those authorities conferred upon it by Congress'; 'if there is no statute conferring authority, a federal agenc y has none.' "(quoting Michigan, 268 F.3d at 1081)). Commenter s conclude d it is not enough for EPA to outline a plan showing how CO2 emissions from the electricity sector might be reduced. Commenters stated EPA must also demonstrate that it has the legal a uthority to implement the specific emission
reduction measures that it identifies. Commenters stated EPA cannot do so here. Commenters
stated w hile the CAA gives EPA authority to impose emission reduction obligations on affected EGUs that are part of the r egulated source category, it does not give EPA authority to implement the emission reductions that would be achieved through the other Building Blocks. Specifically,
commenters stated , EPA lacks authority to make dispatching decisions for a States' EGUs, t o mandate the continued operation of nuclear facilities, to impose s tate

- specific RPS programs, or to impose demand

- side energy efficiency requirements on electricity consumers. Because, as EPA acknowledges, commenters added, some combination of these acti ons are necessary to achieve each States' emission reduction target, it is clear that EPA lacks the legal authority to develop an implementation plan that can achieve the proposed standards of performance. Thus, to comply with its obligations under Section 111, commenters added, EPA must withdraw the rule and propose alternative emission reduction goals that can be achieved through emission reductions that EPA has the legal authority to implement. Nor, commenter s added , can EPA rely on the more expansive au thority retained by States as a means of achieving the proposed emission reduction targets. Commenters stated f irst, and most fundamentally, there is no guarantee that each State will submit an implementation plan, let alone one that EPA deems satisfactory . Given the complexities in EPA's proposal, commenters stated there is a significant likelihood that States will not be able to submit satisfactory implementation plans within the proposed time frames. Likewise, commenters stated given the controversial na ture of this rule, it is possible that some States may simply refuse to prepare an implementation plan at all. Under either scenario, commenters stated EPA has a statutory obligation to establish standards of performance and a federal implementation plan a nd, therefore, must design emission reduction targets that it is capable of implementing. Commenters stated s econd, EPA cannot use the CAA to require States to adopt implementation plans that include provisions that EPA lacks authority to impose. See North Carolina, 531 F.3d at 922 (EPA cannot require States to have SIP provisions mandating the retirement of Title IV trading allowances when EPA lacks the authority to terminate or limit such allowances). Commenter s conclude d that even if the States do have t he authority to implement Building Blocks 2

- 4, EPA cannot use the NSPS program to commandeer the States' authority by requiring them to do so.112 Commenters stated, in the context of the NODA, EPA identifies comments and related issues
that could have the eff ect of magnifying the concerns implicated by the Proposed Rule, virtually ensuring that the ultimate standards would (a) not meet the statutory requirement that the standards reflect demonstrated technology, (b) eliminate the flexibility necessary in the
d evelopment of state plans, and (c) dissociate the regulation from EPA's underlying statutory authority. Commenters said the NODA seeks comment on the opportunity for the displacement of fossil generation by RE and EE in a manner that could materially reduc e certain state emission goals. Commenters said any such suggestion ignores the statutory concepts underlying section 111(d) that require Emission Guidelines to reflect the BSER that has been adequately demonstrated for the category of regulated sources. C ommenters said theoretical implications for fossil generation are wholly unsupported by the record established by EPA in support of the Proposed Rule, and contrary to available facts from the energy sector. Commenters said for these reasons, the suggestion through the NODA of further reducing state targets by effectively requiring RE sources and EE to reduce fossil generation cannot be reconciled with the statutory directive that a system of emission reduction upon which the emission guidelines are based mu st be adequately demonstrated. Commenters said reliance on such theoretical displacement would all but eliminate any flexibility otherwise available to states in developing state plans because there can be no alternative compliance measures sufficient to a chieve the required state level
targets.

Response 37 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the stat utory text, statutory context, statutory purpose, and legislative history.

As we explain in sections V.A. and V.B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in thems elves require states or sources to implement the BSER. That is, EPA is responsible for determining the level of emission limitation from the source category, while states have the responsibility of assigning emission requirements to their sources that will ensure their achievement of that level of emission limitation. States may fulfil their responsibility by establishing emission standards or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emis sion reduction measures, including measures that are not part of the BSER.

EPA is not finalizing the proposed “portfolio” approach, and will not accept state plans that attempt to impose emission standards or other CAA compliance obligations on entities other than affected EGUs. The state measures approach provides a path for a state to achieve the emission performance level as expressed as a state goal in a way that avoids placing enforceable emission standards on affected EGUs (unless and until the back stop is triggered). States will have a wide range of flexibility in choosing how to demonstrate their affected EGUs are meeting a state goal.

Comment 38 : Commenter s state d that even if EPA possessed the requisite statutory authority, the agency lacks the u tility industry expertise to successfully remake an entire industry in its113 preferred image. Commenter s add ed that EPA's minimal coordination with FERC,(FERC cannot supply the missing jurisdiction as it is barred by statute from ordering any entity to const ruct a generator or from intruding into matters reserved for the states. 16 U.S.C. Section 824(a)

- (b); see, e.g., Elec. Power Supply Ass'n v. FERC, 753 F.3d 216, 224 (D.C. Cir. 2014); Conn. Dep't of Pub. Util. v. FERC, 569 F.3d 477, 481 (D.C. Cir. 2009); T ransmission Access Policy Study Grp. v. FERC, 225 F.3d 667, 718 (D.C. Cir. 2000) which does regulate the wholesale power industry, has been insufficient to craft a rule that will achieve its goals while ensuring continued electric reliability.

Response 38 : The EPA disagree s with this comment. The EPA explain s in the preamble for this
rule why it is acting within its statutory and is not attempting to remake an entire industry in its preferred image, along with the substantial consultations it has had with FERC and others

co ncerning reliability and other matters concerning the industry. For a more comprehensive discussion of reliability issues, please see preamble section VIII.G.2.

Comment 39 : Commenter s stated i n its Proposed Rule, the EPA has far exceeded its statutory authority granted by Congress in regulating existing source emissions under Section 111(d) of
the CAA. Commenter s said the EPA claims that Section 111(d) provides the necessary authority for it to promulgate the Proposed Rule, but this is pla inly erroneous. Commenter s stated Section 111(d)'s plain language does not provide the EPA authority for the Proposed Rule and its accompanying interpretation of BSER and drastic effect on the nation's electric power generation system but instead Section 1 11(d) clearly prohibits the EPA's proposal. Commenter s stated in its grant of authority, Congress has clearly and succinctly outlined the EPA's authority to regulate emissions from existing sources. Commenter s said first, the EPA must establish performance standards regulating CO2 emissions from new units in the source category before it may establish performance standards regulating existing sources in the same source category under Section 111(d). Commenter s said additionally, in this case, the EPA may no t regulate coal

- fired EGUs under the Proposed Rule because the EPA is prohibited by Section 111(d) from regulating source categories that are already regulated under Section 112. Commenter s stated when reviewing whether an agency's interpretation of a stat ute and its authority under the statute is valid, courts apply the framework from Chevron, U.S.A. v. NRDC , 467 U.S. 837, 842

- 43 (1984).
Commenter s said the courts will apply Chevron's familiar framework to determine if Congress has spoken to the specific i ssue at hand or whether the statute is ambiguous or silent on the question at issue and if that is the product of an implicit delegation of interpretative authority to the agency. United States v. Mead Corp. , 553 U.S. 218, 226

- 27 (2001). Commenter s stated that despite the EPA's best effort, under Chevron , the EPA's interpretation of Congressional language
and the EPA's self

- proclaimed authority under Section 111(d) should not be granted deference.

Response 39 : We disagree with this comment. We discuss in the preamble for this rule the timing of promulgation for a section 111(b) rule to serve as a predicate for a section 111(d) rule, the reasons why we have authority to promulgate this rule notwithstanding the fact that we have previously promulgated a rule under CAA section 112 for affected EGUs.114 Comment 40 : Commenter s state d that 1) EPA has never (validly) set section 111(d) requirements as anything other than specific emission rates for narrowly defined designated facilities; 2) even had that approach been validated, still it would have compelled no more than

source

- by

- source compliance with adjusted BSER: The rule, in effect, amalgamated the BSER performance of the designated facilities only; and 3) the "other grounds" on whic h the D.C. Circuit vacated CAMR was its holding that mercury (a pervasive HAP) should have been regulated under section 112, not section 111(d). And so as in New Jersey, c ommenter s conclude d , EPA appears to have detoured into section 111 by misreading the statutory map, which directs EPA instead to use sections 108

- 110 if and as appropriate to deal with pervasive air pollutants emitted from "numerous and diverse mobile and stationary sources." Commenter s add ed that never before has EPA used Section 111(d) f or a ubiquitous pollutant. Its previous uses over the last forty years have been directed at pollutants emitted by a few specialized industries (such as fluorides and landfill gases).

Response 40 : We disagree. We discuss our authority to promulgate this r ule in section IV of the preamble. For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutor y context, statutory purpose, and legislative history.

Comment 41 : Commenter s urge d EPA to reconsider the scope of its authority under Section 111(d)

Response 41 : The preamble and other supporting documents for this rule reflect our careful consideration of the scope of authority under section 111(d) and the implications of this rule for states such as Kentucky that rely on coal

- fired generation equipped with the la test pollution control technology.

Comment 42 : Commenter s stated t he limited scope of section 111 is confirmed by comparing that provision to other sections of the Act. Commenter s said where Congress has established other programs to create standards for new and existing sources, it has required that those standards apply on a source

- by

- source basis. Commenter s stated this is true for hazardous air pollutants regulated under section 112 of the Act, for visibility

- impairing pollutants regulated
pursuant to the BART provisions of the regional haze program, and it is true of the CAA's prevention of significant deterioration program, which requires new and modified sources to install "best available control technology" (BACT). Commenter s stated not only do thes e programs all apply on a source

- by

- source basis, they cannot require suspension or curtailment of operation.

Response 42 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is re asonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

Comment 43 : Commenter s said where Congress has authorized broader programs that do not rely on source

- specific s tandards, it has spoken clearly and in ways that fundamentally differ115 from the approach it took in section 111. Commenter s stated the Title IV acid rain program, for instance, created a cap

- and

- trade program for sulfur dioxide emissions that included expre ss directions as to how sources could comply with the program's avoided emission and renewable and efficiency

- based emission reduction requirements. Commenter s said similarly, the Act's NAAQS program requires EPA to set general standards to protect human h ealth and the environment and expressly authorizes states to impose any measures needed to achieve those
standards. Commenter s stated Section 111 contains nothing like the broad authorizations that characterize Title IV or the NAAQS provisions of the Act.

Response 43 : We disagree

. For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context , statutory purpose, and legislative history.

Comment 44 : Commenter s stated the CAA gives states, not the EPA, the authority to impose standards of performance under 111(d). Commenter s stated the EPA's regulatory authority under
CAA section 111(d) is limit ed to "establishing procedures" by which States establish standards of performance for existing sources. Commenter s said this stands in stark contrast to
CAA section 111(b), where the Administrator was given express authority to promulgate
substantive stan dards of performance for new sources. Commenter s said the EPA's authority to prescribe a plan that establishes standards of performance is limited to situations where a state fails to submit a satisfactory plan to EPA. Commenter s stated by proposing bindin g state emission rate targets, the EPA is usurping the States' authority, violating the cooperative federalism principles on which the CAA is based, and raising serious questions regarding state sovereignty under the 10th Amendment. Commenter s stated by at tempting to regulate electricity generation, including nuclear generation and renewable portfolio standards; electricity dispatching; and electricity consumers, the EPA is unlawfully exercising authority given to the
States in the Federal Power Act.

Respo nse 44 : We disagree with these comments. We have responded to each of them in the preamble for this rule . The EPA also disagrees with these commenters’ assertions that this action violates or even encroaches upon the federal

- state balances embodied in either the U.S. Constitution or the Clean Air Act. As discussed in the response in the above response in section
1.2 on coo perative federalism, and also in the Legal Memorandum sections VIII and X, this rule
is consistent with the traditional balance of federal

- state authority under the CAA and
Constitution.

Comment 45 : Commenter s stated to the extent that the EPA's regulation s purport to give the agency broad authority to set binding emissions targets, those regulations are inconsistent with the plain meaning of CAA section 111(d) and, therefore, unlawful. Commenter s said because the vast majority of the Associations' members have never been subject to regulation under
CAA section 111(d), they have not previously been injured by the EPA's CAA section 111(d) regulations and have had no opportunity to challenge them.116 Response 45 : We disagree with this comment concerning our autho rity. While we are not re

opening the 1975 regulations, in response to comments, we explain in the preamble why they give the EPA broad authority to determine the BSER and, based on that, statewide emission
limitations for sources in the state.

Comment 46 : Commenters state d EPA falls back in its Legal Memorandum to an erroneous prior analysis that the Agency conducted in 2005, in which it concluded that Section 111(d) is actually "ambiguous" and therefore subject to the agency's "reasonable" interpretation. Mem. 8,
26. Commenter s explained that 2005 analysis which was part of a rule under Section 111(d) that the D.C. Circuit vacated in New Jersey v. EPA, 517 F.3d 574 based its conclusion entirely upon a clerical entry in the 1990 Amendments to the Clean Air Act that was not codified in the U.S. Code but appears in the Statutes at Large. According to EPA, commenter s added , the 1990 Amendments included two entries relevant to Section 111(d), and both entries appear in the Statutes at Large, but o nly the first amendment described by EPA as the "substantive" one was incorporated into the U.S. Code, and EPA argues that the mere existence of the second, clerical amendment creates an ambiguity sufficient to call into doubt the language of Section 111(d ) in
the U.S. Code. Commenter s believe d EPA's attempt to displace the plain terms of Section 111(d) was wrong in 2005 and remains so today. Commenter s describe d why they believe the clerical "Drafting Error" in the 1990 Clean Air Act Amendments does not cr eate an ambiguity in the terms of Section 111(d). They explain that the one

- sentence clerical entry referred to by EPA falls far short of the showing necessary to cast doubt on the plain terms of Section 111(d) as they appear in the U.S. Code. Commenters s tated t he "Code of Laws of the United States current at any time shall . . . establish prima facie the laws of the United States." l U.S.C. 204(a).
Commenters stated a s "prima facie" evidence, the language of Section 111(d) in the U.S. Code is displaced on ly where the U.S. Code is "inconsistent" with the Statutes at Large. [See Stephan v. United States, 319 U.S. 423, 426 (1943).], and there is no inconsistency here. Commenter s continue d that a review of the two relevant entries in the Statutes at Large reve als that the clerical entry does not create an ambiguity or inconsistency, but rather is

- as even EPA has
admitted

- a "drafting error [that] should not be considered." [70 Fed. Reg. at 16,031.]
Commenter s state d that the first relevant entry appears in t he Statutes at Large among a list of other entries making substantive amendments to Section 111 prior to these amendments in 1990, Section 111(d) had prohibited EPA from requiring state

- by

- state regulation of any air pollutant on the list of HAPs published under Section 112(b)(1 )(A); this particular amendment made a significant substantive change by replacing the reference to "112(b)(1)(A)" with the language that now appears in the U.S. Code emitted from a source category which is regulated under
section 1 12." Pub. L. No. 101

- 549, 108(g), 104 Stat. 2399, 2467 (1990); and as a result, the restriction in Section 111(d) changed from one focused on HAPs regulated under Section 112 to one focused instead on source categories regulated under that section. Comment er s continued
that the second relevant entry appears much later in the Statutes at Large among a list of purely clerical changes entitled "Conforming Amendments." (Pub, L. No. 101

- 549, 302(a), 104 Stat. 2399, 2474 1990). Commenter s cite d the Senate's Legis lative Drafting Manual, stating the "Conforming Amendment[s]" are "amendment[s] of a provision of law that [are] necessitated by the substantive amendments or provisions of the bill." Senate Legislative Drafting Manual117 126(h)(2)(A); they effectuate the sor ts of ministerial changes required to clean up a statute after it has been substantively amended; and thus, conforming amendments "include[] amendments, such as amendments to the table of contents, that formerly may have been designated as clerical
amendme nts." Id. Commenter s continue d that consistent with its description as a conforming amendment, this particular entry sought simply to bring up to date the cross

- reference in Section 111(d) to Section 112(b)(1)(A); other amendments to the Clean Air Act in 1 990 had eliminated Section 112(b)(1)(A) entirely and replaced it with Sections 112(b)(1), 112(b)(2), and 112(b)(3).
Commenter s contended that this clerical amendment was designed solely to account for those changes, and specifically, it provided that "Sect ion 111(d)(1) of the Clean Air Act is amended by striking '[112](b)(1)(A)' and inserting in lieu thereof '[112](b)." Pub. L. No. 101

- 549. 302(a).
Commenter s conclude d that unlike the substantive amendment described above, this non

substantive amendment would not have changed the restriction in Section 111(d) from its pre

1990 focus on hazardous air pollutants regulated under Section 112. Commenter s continue d

, stating t hat in light of the substantive amendment, however, the second non

- substantive amendment was clearly an unnecessary mistake or, as EPA has put it, a "drafting error", and when the conforming amendment is applied after the substantive amendment, as is requi red by the very nature of conforming amendments, there is no clerical correction left to make because
the cross

- reference to 112(b)(1)(A) has already been removed by the substantive amendment.
Commenter s stated that this is consistent with the codifier's n otation in the U.S. Code that the clerical amendment "could not be executed," Revisor's Note, 42 U.S.C. 7411. Commenter s conclude d that where a conforming amendment is entirely unnecessary, it is rightly understood as a clerical mistake that need not be gi ven any effect. See Am, Petroleum Inst. v. SEC, 714 F.3d 1329, 1336

- 37 (D.C. Cir. 2013). Commenter s posited that EPA has correctly recognized as much,

- noting in 2005, for example, that the clerical entry "is a drafting error and therefore
should not be c onsidered"

- but it then wrongly determined that it nevertheless "must attempt to give effect to both the [substantive] and [clerical] [entries], as they are both part of the current law." 70 Fed. Reg. at 16,031; accord Mem. 21 (recognizing "apparent draft ing errors during enactment of the 1990 CAA Amendments"). Commenter s stated this is a fundamental flaw impacting EPA's analysis. As the D.C. Circuit recently explained, c ommenter s continue d , where a mistake in renumbering a statute and correcting a cross

- r eference conflicts with substantive provisions of that statute, the mistake should be considered most likely "the result of a scrivener's error" and should not be treated as "creating an ambiguity." Am. Petroleum, 714 F.3d at 1336

- 37,
and under this reason ing, c ommenter s stated it is clear that the clerical entry simply "should not be considered," as EPA originally concluded. 70 Fed. Reg. at 16,031. At the very minimum,

c ommenter s stated the existence of such a non

- substantive, "drafting error" is not enoug h to overcome the fact that language codified in the U.S. Code is "prima facie" evidence of "the laws
of the United States." I U.S.C. 204(a). Commenter s stated that EPA asserts that the non

substantive and substantive amendments

-- if each were implemented into Section 111(d)'s prior text standing alone

- would create two separate versions of Section 111(d). Mem. 24.
Commenter s explain ed that the first version incorporates only the non

- substantive amendment and, therefore, retains the pre

- 1990 prohibition on regulating HAPs under Section 111(d), regardless of whether the source category emitting those HAPs is regulated under Section 112, and the second version is the one that actually appears in the U.S. Code and substantively118 changes the prohibition to forbi dding EPA from regulating under Section 111(d) any air pollutants emitted by any existing source regulated under Section 112. Mem. 24. Commenter s
argue d that this approach of treating both amendments as, in effect, creating two different version of 111(d) directly contradicts EPA's concession that the inclusion of the non

- substantive entry in the Statutes at Large was merely a clerical "drafting error." Commenter s stated that critically, the only evidence EPA may use in its attempt to rebut the terms of Sec tion 111(d) as expressed in the U.S. Code is the Statutes at Large, see Stephan, 319 U.S. at 426, and the Statutes at Large simply do not reflect two separate versions of Section 111(d). Rather,

c ommenter s argue d these reflect only two amendments

- one a substantive change and one a mere clerical entry

- and the clerical entry is rendered moot by the substantive amendment.

Commenter s add ed that EPA's final conclusion from its line of reasoning is not sound, expl aining that EPA erroneously concludes that since the Senate language was included in the final bill even if by mistake, the Agency must "consider" that language. Commenter s continue d that as seen, however, EPA is free

- indeed, is compelled

- to disregard the Senate language precisely because it was a "drafting error."(66 Am. Petroleum Inst., 714 F.3d at 1336

- 37) In any
event, c ommenter s remark ed , EPA did not realize that it could have given both the House and Senate language meaning in the manner posited by th e Federalist Society paper without eviscerating the House language, and in sum, EPA cannot manufacture ambiguity where it does not exist, it cannot invent meaning for statutory text which is not based on the text itself, and EPA does not have authority to regulate EGU emissions of CO2 under Section 111(d).

Commenters state d that EPA's policy arguments create no ambiguity in Section 111(d), explaining that EPA's policy arguments against the "literal" terms of Section 111(d) also cannot generate an ambiguity where none exists in the plain statutory text. Commenter s explain ed that as a threshold matter, even if EPA were correct, the "literal" terms of Section 111(d) produce overly harsh results for EPA's regulatory authority, and EPA may not "redraft a statute in order to avoid what the agency characterized as the 'absurd results' that would flow from the statute's language" where it is, as here, "not inconceivable that Congress meant what the statute says." Assn of Am. RRs, V. Surface Tramp, Rd, 162 F.3d 101, 1 05 (D.C. Cir. 1998) (quoting Mova Pharmaceutical Corp. v. Shalala, 140 F.3d 1060, 1072 (D.C. Cir. 1998)). Commenter s concluded that EPA's policy arguments miss the mark because the "literal" terms of Section 111(d) are part of a rational regulatory scheme. Commenter s continued that this regime avoids subjecting existing sources to both new national standards for hazardous pollutants under Section 112 as
well as new state

- by

- state standards under Section 111, while permitting regulation under both
Section 11 1 and Section 112 of new sources. Unlike with new sources, c ommenter s explain ed

, the imposition of additional regulatory burdens on existing sources raises questions of fairness and lost investments, as existing sources that were built under a different re gulatory regime may or may not have the technological or financial ability to come into compliance with two sets of new rules, and both Sections 112 and 111(d) recognize that the cost of compliance must be weighed against maximum achievable reductions. See 42 U.S.C. 741 i(a)(l), 7411(d), 7412(d). In establishing this regime, under which regulation of existing sources occurs either under Section 112 or Section 111(d), c ommenter s contend ed that Congress properly determined that requiring119 the same existing sou rce categories to comply with two functionally

- independent regulatory regimes would threaten these sources' economic viability, and cites EPA's recent regulations on
coal

- fired power plants which will cost those plants more than $9 billion dollars per year , See EPA, Regulatory Impact Analysis for the Final Mercury and Air Toxics Standards at 3

- 13 (Dec. 2011). Commenter s state d that the Proposed Rule would subject those same plants to billions of dollars of additional costs, through the imposition of duplica tive regulatory requirements, forcing many of those plants to close, and that is the exact scenario Congress intended to avoid when it amended Section 111(d). Commenter s close d , stating that in light of this understanding, EPA's policy arguments in favor o f ignoring Section 111(d)'s plain language are insubstantial, EPA first claims that a "literal reading" of Section 111(d) would be contrary to "Congress' desire in the 1990 CAA Amendments to require EPA to regulate more substances." Mem. 25

- 26. Commenter s
argue d that the mere fact that one of the broad purposes behind the 1990 Amendments was to require EPA to regulate more substances under Section 112 does not mean that Congress was not cognizant of other values, such as the need to avoid costly double regu lation, and

- as EPA stated in its 2005 analysis

- the text, structure, and history of the 1990 Amendments indicates a desire by Congress to limit EPA's ability to doubly regulate coal

- fired power plants. The discussion and ultimate adoption of Section 112 (n)(1)(A) "reveals" that Congress did not want to subject coal

fired power plants to "duplicative or otherwise inefficient regulation." 70 Fed. Reg. at 15,999.
Commenter s stated it is reasonable to understand Section 111(d) as seeking to forward this same general goal of avoiding duplicative regulation.

Commenter s state d EPA's effort to resolve the ambiguity is impermissible, explaining that even
if the clerical error created an ambiguity in Section 111(d)'s "literal" text, EPA's analysis would
still fail. Commenter s argued that the Agency's claim to some form of "deference" for its attempt to rewrite Section 111(d) is meritless, Mem. 12, explaining that courts defer to agencies u nder the test set forth in Chevron USA., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), because there is reason to believe that when Congress "left ambiguity in a statute," it "understood that the ambiguity would be resolved, first a nd foremost, by the agency, and desired the agency (rather than the courts) to possess whatever degree of discretion the ambiguity
allows." Smiley v, Citibank (South Dakota, NA., 517 U.S. 735, 740

- 741 (1996). Commenter s

state d that EPA could not argue that Congress intended EPA to resolve the import of Congress's inadvertent clerical "drafting error", and EPA does not so argue. Commenter s state d that EPA offers no justification for its assertion that it is entitled to deference on this issue, and does not

c ite to Chevron in its discussion of the issue. Commenter s continue d that EPA could not prevail under some other similar form of deference because it offers an "impermissible construction" of the supposedly ambiguous statute. Aid Ass'n for Lutherans v, US P ostal Serv., 321 F.3d 1166, 1178 (D.C. Cir. 2003). Commenter s argue d that EPA's interpretation of Section 111(d) as follows: "Where a source category is regulated under Section 112, a Section 111(d) standard of performance cannot be established to address any HAPs listed under section 112(b) that may be emitted from that particular source category" Mein. 26. is inconsistent with the substantive provision embodied in the U.S. Code, that EPA may not "establish[] standards of performance for any existing sourc e for any air pollutant emitted from a source category which is regulated under [Section 112 of the CAA]." 42 U.S.C. 7411(d) (emphasis added). Commenter s state d that120 EPA's proffered interpretation effectively replaces the term 'any air pollutant" with the term "hazardous air pollutant." Commenter s cite d in Chevron that an agency is not entitled to deference when its interpretation is so "manifestly contrary to the statute." Mayo Found, for Med. Eluc. & Research v. United States, 131 S. Ct. 704, 711 (2011); accord Petit v. U.S. Dept. of Educ., 675 F.3d 769, 785 (D.C. Cir. 2012). Commenter s close d , stating that if EPA wanted to give effect to its view of both the substantive and the clerical entries in the Statutes at Large

- which, as explained above, EPA cla ims create two versions of Section 111(d)

- without impermissibly changing the text of either, it could have done so. Commenter s state d one commentator has explained, all of EPA's textual concerns could be satisfied by interpreting Section 111(d) to prohibit the regulation of "any air pollutant ... which is not included on a list published under ...112(b) [revision of the prior version of Section 111(d) after inputting the clerical entry] or emitted from a source category which is regulated under section 112 [revision of the prior version of Section 111(d) after inputting the substantive entry]." [William J. Haun,
The Clean Air Act as an O bstacle to the Environmental Protection Agency s Anticipated Attempt to Regulate Greenhouse Gas Emissions from Existing Power Plants, 14 Engage: J. Federalist Soc'y Prac. Groups 35, 38 (Mar. 2013) (parentheticals revised).] Commenters stated EPA does

not a nd could not dispute that this is the only interpretation that gives full effect and meaning to every word of both "versions" of Section 111(d) that it believes the Statutes at Large embodies. Accordingly, commenters stated, to the extent EPA continues to reject the position that the non

substantive entry must be discarded as an inadvertent "scrivener's error[]"(see Am. Petroleum, 714 F.3d at 1337) the agency is to adopt this alternative interpretation. Commenter s stated that
EPA's refusal to advance or ac knowledge this alternative is unsurprising because under this approach, the Proposed Rule would still be unlawful and under this alternative interpretation, EPA would be prohibited from using Section 111 (d) both: (1) to require regulation of any HAP
liste d in Section 112(b), regardless of whether the HAP is being emitted from a source regulated under Section 112; and (2) to require regulation of any pollutant emitted from a source category that is regulated under Section 112. Commenters stated e ven under t his alternative reading EPA still cannot rely on Section 111(d) as a basis for the Proposed Rule because of the regulatory
scheme established under Section 112.

Commenter s state d EPA's only legal justification for departing from the Clean Air Act's "liter al" text is based upon what EPA has admitted was "a drafting error," see 70 Fed. Reg. 15,994, 16,031 (Mar. 29, 2005), which was properly excluded from the U.S. Code. Specifically, commenters stated, EPA claims that a single clerical entry in the 1990 Amend ments to the Clean Air Act somehow renders the plain text of the Act ambiguous and thus permits EPA to regulate.
Mem. at 25

- 27. Commenters stated t his argument cannot withstand scrutiny. Commenters stated

t he clerical entry upon which EPA bases its entire rule was a non

- substantive "conforming amendment," which was erroneously included in the 1990 Amendments to update a cross

reference to Section 112, tracking the rearrangement of that section elsewhere in the
Amendments. Commenters stated the 1990 Amendmen ts also fundamentally altered Section 111(d) and, in doing so, made the "conforming amendment" impossible to execute. Unsurprisingly, commenters stated EPA has not cited a single decision, from any area of law, giving any meaning to a clerical change that was rendered moot by a substantive amendment.121 See Mem. at 26

- 27. To the contrary, commenters stated controlling case law provides that where a mistake in renumbering a statute and correcting a cross

- reference conflicts with a substantive change, the mistak e should not be considered when construing the substantive provision. See, e.g., Am. Petroleum Inst. v. SEC, 714 F.3d 1329, 1336

- 37 (D.C. Cir. 2013).

Commenter s state d that the Legal Memorandum asserts that the inclusion of two conflicting
amendments crea tes an ambiguity such that the agency is permitted to "reasonably construe the Section 112 Exclusion to authorize the regulation of GHGs under section 111(d)." ( See Legal Memorandum at (See National Emission Standards for Hazardous Air Pollutants From Coal

- and
Oil

- Fired Electric Utility Steam Generating Units and Standards of Performance for Fossil

- Fuel

Fired Electric Utility, Industrial

- Commercial

- Institutional, and Small Industrial

- Commercial

Institutional Steam Generating Units, 77 Fed. Reg. 9,304 (Feb . 16, 2012)) Commenter s continue d , stating that EPA's confidence that both amendments must be given legal effect is misplaced, explaining that while substantive conflicts within a statute should be harmonized, it is
not clear that both the amendment in se ction 108(g) and the amendment in section 302(a) are substantive. Further, commenter s stated that the amendment originating in the House is
contained in section 108 of the 1990 Amendments with a collection of substantive amendments
titled "Miscellaneous Pr ovisions", and that this is contrasted to section 109, which is titled "Conforming Amendments." Commenter s state d that the amendment originating in the Senate is contained at section 302, titled "Conforming Amendments", and a mere conforming amendment
does not have true substantive effect, and so it should not be given equal weight to the clearly
substantive amendment at section 108. Commenter s add ed that the reading giving effect to only the House amendment is, in fact, supported by EPA's initial interpret ation of this statutory issue

years ago. Commenters stated that i n 1994, in a supporting document on regulation of Municipal Solid Waste Landfills under section 111(d), EPA had its first opportunity to interpret the
amendments and determined that "section 108(g) is the correct amendment" (EPA, Air Emissions from Municipal Solid Waste Landfills

- Background Information for Final Standards and Guidelines, Pub. No. EPA

- 453/R

- 94

- 021, at 1

- 5 (1994).) Commenter s remark ed that the Agency reasoned that section 302(a) was intended merely as a "simple substitution of one subsection citation for another, without consideration of other amendments of the section." (Id.) In other words, commenters said EPA prioritized the section 108(g) amendment over the section 302(a) amendment. However, commenters stated even if the appropriate treatment of two amendments to the same section is to attempt to read them together, it is also not clear that EPA's reading is reasonable. Commenters s tated e ach amendment could be read as intended to place a specific limit on the scope of section 111(d). When read together, therefore, c ommenter s stated it is only reasonable that they should each be viewed as placing independent limits on section 111(d). Commenters stated t he reading advanced by the Agency, however, reads the two amendments together to expand the scope of section 111(d) beyond what either of the individual amendments would have allowed individually. Commenter s state d that, in short, EPA r eads the amendments in such a way that if a pollutant is on the section 112 pollutant list and the relevant category is regulated under section 112 that only then will the Section 112 Exclusion apply, and Congress quite clearly did not intend to limit the effect of either amendment, and so any reasonable harmonization must read each as independent exclusions. Commenter s posit ed that122 there is no affirmative judicial precedent on if and how the conflicting amendments to section 111(d) should be harmonized,(EP A cites Supreme Court decisions in Massachusetts v. EPA, 549 U.S. 497 (2007), and Am. Elec. Power v. Conn., 131 S.Ct. 2527 (2011), in support of its authority to issue this regulation. Commenters stated n either opinion contains a holding clearly resolving this issue. M oreover, commenters stated, both opinions were issued before EPA's regulation of EGUs under section 112 and so were not required to consider the impact of the Section 112 Exclusion on the applicability of section 111(d).))

, nor any clear prece dent as to how to treat conflicting amendments generally. Commenter s conclude d that significant legal questions remain regarding EPA's authority to issue the proposed guidelines in the first instance.

Commenter s state d the only textual justification that EPA's Legal Memorandum offers for departing from the literal terms of Section 111(d) is unpersuasive, explaining the agency relies entirely on a one

- sentence clerical entry in the 1990 Amendments to the Clean Air Act that was
not codified in the U.S. Code but appears in the Statutes at Large. That entry, commenter s said

, even EPA has admitted, was clearly a mistake because it sought to make a technical correction rendered moot by another amendment. See 70 Fed. Reg. at 16,031 (describing the entry as a
draft ing error). Nevertheless, commenters stated EPA now claims that it must give meaning to this mistake and, as a result, has announced an interpretation of Section 111(d) that directly conflicts with the language in the U.S. Code. Commenters stated EPA's int erpretation rewrites Section 111(d) from a prohibition on the regulation of any air pollutant emitted from a source category which is regulated under [Section 112], as stated in the U.S. Code, to a more limited prohibition on the regulation of any hazardou s air pollutant emitted from such a source category.
Commenter s remarked that this sort of reasoning would be wrong under any circumstance, but it is particularly improper here, where it is being offered as the justification for one of the most costly regu lations in this Nation's history

. ( I d.) Commenter s continue d , stating that West Virginia and 11 other states have since sued EPA; to date, the agency has declined comment

, and urge d EPA to address the specific arguments against the legality of the proposed rule.

Commenter s state d EPA's interpretation of the Act i s inconsistent with the plain language of Section 111(d), which contains no ambiguity. Commenters stated c ourts grant agen cies deference in interpreting the meaning of ambiguous statutes. See, e.g., Chevron, U.S.A., Inc. v. Natural Res. Defense Council, 467 U.S. 837 (1984). Commenters added there is no ambiguity in section 111(d). Commenters stated Section 111(d) says plainly that EPA has no authority to regulate a source category already regulated under section 112. Commenter s explain ed that the basis of EPA's argument that section 111(d) is ambiguous is the existence in the Statutes at Large of two amendments to section 111( d) in the 1990 amendments to the Clean Air Act. Commenters
stated o ne amendment was a technical amendment not codified in the U.S. Code because it was obvious to the codifier that the substantive amendment that was enacted superseded and rendered

unnecessa ry the technical amendment. Commenters stated t he U.S. Code therefore notes that the clerical entry "could not be executed." Revisor's Note, 42 U.S.C. section 7411. Commenters
stated t he technical amendment included in the Statutes at Large sought to updat e a cross

reference to section 112(b)(1)(A) after section 112(b)(1)(A) was eliminated by another 1990
amendment to the Act. Commenters stated t his non

- substantive, ministerial revision was123 included in a section in the Statutes at Large entitled "Conforming Amendments." Clean Air Act Amendments, Pub. L. No. 101

- 549, section 302(a), 104 Stat. 2399, 2574 (1990). But

, commenters added, this revision was superseded and became moot when the second, substantive amendment to section 111(d) passed nearly two months later. H.R. 3030 (containing the substantive provision) passed on May 23, 1990, while S. 1630 (containing the ministerial cross

reference) passed on April 3, 1990. See H.R. REP. NO. 101

- 490, at 454 (1990), reprinted in 2 A
LEGISLATIVE HISTORY OF THE CLEAN AIR ACT AMENDMENTS OF 1990 ("Leg. History"), at 3021, 3478 (1993) (report to accompany H.R. 3030); S. 1630, 101st Cong. section 112(e)(4)

- (5)(D) (as passed by Senate, Apr. 3, 1990), reprinted in 3 Leg. History, at 4119, 4431

- 33. Commenter s remark ed that al though the technical amendment had a role to play prior to the substantive amendment to section 111(d) that was eventually adopted, once that amendment was adopted, inclusion of the technical amendment in the Statutes at Large was simply a "drafting

error, " as EPA has properly recognized. 70 Fed. Reg. 15,994, 16,031 (Mar. 29, 2005).
Commenters stated a s EPA stated, it was "hard to conceive that Congress would have adopted section 112(n)(1)(A), yet retained the [clerical] amendment to section 111(d)." Id. at 16,031.
Commenters stated i t does not conflict with and need not be reconciled with the substantive amendment which, in "a literal reading," EPA admits, means that the Agency "c[an] not regulate any air pollutant from a source category regulated under sec tion 112." EPA Legal Memorandum at 26 (emphasis added). Commenters stated t he Supreme Court has interpreted the provision in the same way: "EPA may not employ section 7411(d) if existing stationary sources of the pollutant in question are regulated under . . . the hazardous air pollutants program, section 7412." Am. Elec. Power Co. v. Connecticut, 131 S. Ct. 2527, 2537 n.7 (2011). And yet, commenters added, in an effort to expand its regulatory reach and to invoke judicial deference in doing so, the Agency attempts to fabricate ambiguity in the statute. Commenter s note d that the D.C. Circuit has explained that it will not "read[] too much into a mere clerical error" and notes that incorrect conforming amendments (or the lack thereof) are common and can often be "the result of a scrivener's error." Am. Petroleum Inst. v. SEC, 714 F.3d 1329, 1336, 1337 (D.C. Cir. 2013).
Commenters stated s uch errors should thus not be interpreted as giving rise to an "ambiguity."
Id. at 1336. Commenters stated EPA is not requir ed to reconcile obvious mistakes

- editorial vestiges that were never executed in the U.S. Code

- with substantive, intentional amendments to
the Act. Commenters stated EPA should simply disregard obvious mistakes in the Statutes at Large that, because the y were mistakes, "could not be executed" in the U.S. Code. Commenters
stated e ven if there were ambiguity in the presence of the two provisions in the Statutes at Large, however, agencies have deference only to interpret the ambiguous meaning of a statute, not to divine what the text of a statute actually is. In this case, commenters added, if there is any uncertainty at all (which there is not), it centers on what the language of the statute actually is: why Congress neglected to reconcile both a substanti ve and a superseded clerical provision before they were entered in the Statutes at Large. Commenters stated t he meaning of each of the substantive and clerical amendments is clear, not ambiguous. Commenters stated EPA inexplicably argues that both amendmen ts should be read together even when there is no doubt that Congress did not intend for a superseded technical amendment to remain in the statute. Disregarding this obvious intent, commenters stated the Agency insists it should "give some
effect to both am endments." EPA Legal Memorandum at 26. But , commenters stated, even if124 two provisions in a statute are irreconcilable, "Chevron is not a license for an agency to repair a statute that does not make sense." Scialabba v. Cuellar de Osorio, 134 S. Ct. 2191, 2 214 (2014) (Roberts, C.J., concurring). Commenters stated that i n other words, "[d]irect conflict is not ambiguity, and the resolution of such a conflict is not statutory construction but legislative
choice." Id. Commenters stated Courts will grant agencie s deference only "because we presume that Congress intended to assign responsibility to resolve the ambiguity to the agency." Id.
Commenters stated i f it is clear that Congress did not assign such responsibility to an agency, but merely made a drafting mis take (which it does with some frequency), it is equally clear that such mistakes do not confer to agencies the license to rewrite the statute. UARG v. EPA, 134 S. Ct. at 2446 ("[A]n agency may not rewrite clear statutory terms to suit its own sense of how the statute should operate."). Commenters stated EPA in fact cites no authority for the deference it implies it should receive to reconcile the "conflict" in section 111(d) it purports to have discovered.
Commenters stated that i n the litigation challengin g CAMR, however, which also attempted to regulate coal

- fired EGUs under section 111(d), EPA cited Citizens to Save Spencer County v. EPA, 600 F.2d 844 (D.C. Cir. 1979), to support its creative interpretation of section 111(d). Final Br. of Resp't EPA at 10 2

- 03, New Jersey v. EPA, 517 F.3d 574 (D.C. Cir. 2008) (No. 05

- 1097).
Commenters stated that t his is a very different situation from Citizens to Save Spencer County, where two different statutory provisions had different, mutually exclusive dates for regul atory action. Commenters stated t hose provisions could not be reconciled and the Agency was found to have reasonably "pursue[d] a middle course." Citizens to Save Spencer Cnty., 600 F.2d at 871. By contrast, commenters stated, the amendments at issue here can easily be reconciled, first and foremost by recognizing that the clerical amendment was inserted in the Statutes at Large by mistake and, therefore, should be disregarded. Commenter s posit ed that even if one desires to
infuse the clerical amendment wit h substantive intent, the two provisions are most clearly read as prohibiting the duplicative regulation of sources under both section 111(d) and section 112.

Commenter s state d that EPA's proposed construction does not accord with either provision or
with legislative intent. Commenter s remark ed that even if one were to attempt to treat the clerical amendment as substantive, as EPA does, the two provisions can be read in harmony, and one can easily give effect to both provisions, which when read together si mply say that no source category and no pollutant that are regulated under section 112 can be regulated under section
111. Commenters stated that i n other words, reading both amendments together, EPA is prohibited from regulating under section 111(d) any p ollutant or any source category that is regulated under section 112. Commenters stated t his construction is the only one that construes both provisions substantively and that is also faithful to the plain text of both. Commenters stated

t he substantive ame ndment in the Statutes at Large reads: "Regulation of Existing Sources. Section 111(d)(1)(A)(i) of the Clean Air Act . . . is amended by striking or 112(b)(1)(A) and inserting or emitted from a source category which is regulated under section 112. " Clean Air Act Amendments, Pub. L. No. 101

- 549, section 108(g), 104 Stat. 2399, 2467 (1990). Commenters
stated t he clerical amendment reads: "Conforming Amendments. (a) Section 111(d)(1) of the Clean Air Act is amended by striking 112(b)(1)(A) and inserting in li eu thereof 112(b)." Id. section 302(a), 104 Stat. at 2574. Commenter s state d that in the CAMR rulemaking, the Agency adopted an interpretation of the two amendments in its attempt "to give some effect to both."125 EPA Legal Memorandum at 26. Commenters stated i t proposes to do so again here, though with a slightly different hurdle to maneuver. Commenters stated i n CAMR, EPA sought to regulate a hazardous air pollutant under section 111(d), and as part of that effort, "delisted" the source category of coal

- and oil

- fired EGUs from regulation under section 112. Commenters stated that
i n 2005, EPA interpreted the two amendments together to mean: "Where a source category is being regulated under section 112, a section 111(d) standard of performance cannot be
establ ished to address any HAP listed under section 112(b) that may be emitted from that particular source category. Thus, commenters stated, if EPA is regulating source category X under section 112, section 111(d) could not be used to regulate any HAP emissions from that particular source category." 70 Fed. Reg. at 16,031

- 32. Commenters stated that in this interpretation, rather than giving effect to both amendments, the Agency in fact limited the reach of each and constrained its authority to regulate to a worl d much smaller than either the clerical or substantive amendment alone contemplated.(The substantive amendment addresses source categories, without regard to pollutant ("Universe A"). The clerical amendment, read substantively, addresses pollutants, withou t regard to source category ("Universe B"). By artificially merging the two, EPA created not Universe A + B, but Universe C, a potential regulated universe much smaller than either Universe A or Universe B, thereby ignoring the
intents of both amendments r ather than choosing to give effect to both or at least one.)
Commenters stated EPA thus gave effect to neither provision and proposes the same interpretation now. Commenters stated EPA ignores the statutory text, despite being required "to give effect, if possible, to every word Congress used." Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979). Commenters stated EPA did not then and does not now explain how altering the intent of both amendments by limiting their individual reaches "gave effect" to each am endment.
Commenters stated EPA's interpretation expressly contravenes the first amendment (under section 108(g) of the Statutes at Large, 104 Stat. at 2467) because it would allow EPA to regulate the same source category it is regulating under section 112. Commenters stated EPA's approach would also expressly contravene the second amendment (under section 302(a) of the Statutes at Large, 104 Stat. at 2574) because it would allow the Agency to use section 111(d) to regulate hazardous air pollutants from a so urce category that is not already subject to section 112
standards. But , commenters stated, perceived ambiguity or conflict "gives no license to a court or agency to indulge in unrestrained and fanciful flights of constructional imagination to arrive at

ar tful but artificially consistent interpretations." Citizens to Save Spencer Cnty., 600 F.2d at 870.
Commenters stated b esides limiting the universe of sources and gases that EPA can regulate under section 111(d) beyond what either the House or Senate inten ded with their amendments alone, Commenter s add ed , the Agency's interpretation also unreasonably constrains the plain meaning of the substantive amendment in the mistaken interest of giving some meaning to the clerical amendment, which again EPA admits was likely a non

- substantive "drafting error." 70 Fed. Reg. at 16,031. Commenters stated a lthough EPA argued that its 2005 interpretation "gives effect to the House's desire to increase the scope of EPA's authority under section 111(d) and to avoid duplicativ e regulation of [hazardous air pollutants] for a particular source category," id. at 16,032 (citing 136 Cong. Rec. H12911, 12934 (daily ed. Oct. 26, 1990)), it also acknowledged the interpretation "does not give full effect to the [substantive amendment], because a literal reading . . . would mean that EPA could not regulate [hazardous air pollutants] or non

-126 [hazardous air pollutants] emitted from a source category regulated under section 112," I d.
Commenter s state d that it is not surprising that Congress w ould have confirmed and clarified the limited reach of section 111(d). Commenters stated p rior to the 1990 Amendments, section 111(d) looked solely to whether the pollutant at issue was already regulated under section 108 or
section 112. Commenters stated w ith the 1990 amendments, section 112 was transformed from a little used provision into a comprehensive control technology program. See EPA, "Summary of the Clean Air Act," http://www2.epa.gov/ laws

- regulations/summary

- clean

- air

- act; H.R. REP.
NO. 101

- 490, at 151 (1990), reprinted in 2 Leg. History, at 3175; S. REP. NO. 101

- 228, at 148 (1990), reprinted in 5 Leg. History, at 8338, 8488. Commenters stated Congress fundamentally changed section 112 so that those standards now "apply to sources in a category . . . rather than to pollutants individually." S. REP. NO. 101

- 228, at 148 (1990), reprinted in 5 Leg. History at
8488. Commenters added that t o avoid onerous duplication, Congress then amended section 111, which is also technology

- based and also applies t o source categories rather than to pollutants. Commenters stated i f an entity is regulated under section 112, it cannot also be regulated under section 111(d). Commenter s stated that for all the reasons discussed above, EPA's interpretation of section 111(d) does not accord with either the plain statutory language or its legislative history. Commenters stated EPA lacks authority to regulate coal

- and oil

- fired EGUs under section 111(d). E PA must withdraw the Proposed Guidelines because they violate both the text and Congress's clear intent in the 1990 Amendments.

Commenter s add ed that even if it were appropriate for EPA to assume now that despite being a drafting error, the Senate amendmen t must be incorporated into Section 111(d), that does not mean that the House amendment cannot be given full effect, and even when faced with two equally applicable provisions, full effect should be given to each to the extent possible. See Watt v. Alaska, 451 U.S. 259, 267 (1981). Commenters stated EPA could give full effect to each provision by excluding from Section 111(d) any source category regulated under Section 112 and any pollutant listed in Section 112(b). Commenters stated that b y reading the two amendments in this light, EPA could give full effect to the plain meaning of each amendment in a manner consistent with Congress' intent. Commenter s continue d , stating when there are two acts upon the same subject, the rule is to give effect to both if po ssible.

- United States v. Borden Co., 308 U.S. 188, 198 (1939); see also Watt, 451 U.S. at 267 (an agency or court must read [two allegedly conflicting] statutes to give effect to each if [it] can do so while preserving their sense and purpose); Morton v. Mancari, 417 U.S. 353, 551 (1974).

Commenter s stated that the House amendment is consistent with the co

- benefits associated with regulating source under Section 112. Commenter s remarked it is clear as a policy matter that Congress, in the 1990 CAA amendme nts, was focused on avoiding unnecessary and duplicative regulation of emissions from stationary sources. Commenters stated that a s EPA has recognized, this is particularly true for EGUs. See 70 Fed. Reg. at 15,999 (asserting that Congress treatment
of EGU s reveals Congress recognition that Utility Units are a broad, diverse source category that is subject to numerous CAA requirements, including requirements under both Title I and Title IV, and that such sources should not be subject to duplicative or other wise inefficient regulation). Commenters stated p rohibiting EPA from regulating existing sources under both Sections 111(d)127 and 112 is consistent with the broader policy objective of avoiding duplicative regulation.
Commenters stated e mission controls desi gned to reduce emissions of one pollutant typically have the effect of reducing emissions of a much broader suite of pollutants. Thus, commenters stated, when EPA requires a facility to install the maximum achievable control technology (MACT) required unde r Section 112 to reduce target pollutants, there can frequently be little or no need for additional regulatory obligations for other pollutants under section 111(d) because applying the stringent MACT standard can have the effect of controlling many other common pollutants. Commenter s stated that the correlation between emission reductions of multiple pollutants is also central to EPA's practice of using surrogates as a means of controlling emissions of hazardous air pollutants. Commenters stated that u nder this approach, EPA may regulate [a] pollutant indirectly when its emissions are controllable by regulation of other pollutants.

- Natl Lime Assn v. EPA, 233 F.3d 625, 637 (D.C. Cir. 2000) (citing NRDC v. EPA, 822 F.2d 104, 125 (D.C. Cir. 1987). Thus, with respect to Section 112, commenters added, courts have held that EPA may use a surrogate to regulate hazardous air pollutants if it is reasonable to do so, and have repeatedly held that EPA can use non

- HAP criteria pollutants such as PM2.5 as surrogates for HAP pollutants under Section 112. Id. at 637

- 40; Sierra Club v. EPA, 353 F.3d 976, 984 (D.C. Cir. 2004). Commenter s posit ed that EPA's frequent reliance on co

- benefits and surrogates under Section 112 is consistent with policy underlying Congress' decisio n to foreclose regulation under Section 111(d) where a source category is regulated under Section 112 regulation of hazardous air pollutants from a source category under Section 112 can have the ancillary effect of reducing emissions of other non

- HAP pollu tants that might otherwise be regulated under Section 111(d). (Congress' decision to forbid additional regulation of Section 112 sources is also supported by the fact the preemption applies only to existing sources. Retrofitting existing sources with new p ollution control technology is extremely costly and will provide limited benefits since, in many cases, existing sources have a limited remaining useful life. In contrast, new sources, which have more flexibility to install pollution controls and longer

pr ojected useful lives, can be subject to both Section 112 MACT standards and standards of performance under Section 111(b). Likewise, existing sources that are regulated under Section 112 and elect to undergo a modification or reconstruction can also be sub ject to standards of performance under Section 111(b).)

Commenter s state d that units are already regulated under Section 112 of the Clean Air Act, and any difference in the Act's Section 111(d) provisions are due to a clerical error in the drafting of
the Senate version of the language. Commenter s explain ed that the House version found in the 1990 CAA Amendments substantively changes and expands the limitation on EPA's authority to propose rules under Section 111(d) on source categories already regulated under Section 112.
Commenters stated t he House Amendme nt can be found in the Statutes at Large, among all the other substantive amendments to the Act, and in contrast, the Senate version is merely a clerical amendment to reflect drafting changes in other provisions of the 1990 CAA Amendments in
order to accur ately reflect cross references. Further, c ommenter s add ed , the Senate Amendment can be found in a section of amendments specifically designated as "Conforming Amendments,"
which are non

- substantive. Commenter s conclude d that the House amendment, being a

su bstantive amendment, ultimately eliminates the cross

- reference that the Senate's conforming128 amendment was intending to update, and therefore, once the House amendment is applied, the Senate amendment is rendered unnecessary.

Commenter s remark ed verbatim "A s a matter of legislative history, the 1990 Clean Air Act Amendments began with the announcement of a Bush I administration proposal on June 12,
1989

. " "The Administration bill was introduced in the House as H.R. 3030 on July 27, 1989, by Representative Di ngell," with many co

- sponsors, "and in the Senate as S1490 on August 3, 1989, by Senator Chafee." S. 1490 did not advance. As first introduced, H.R. 3030 had both what
became Public Law 101

- 549, section 108(f) and section 112(n). In the July 24, 1989 draft , what became section 108(g) of the CAA was numbered as section 108(d). What ultimately became 42
U.S.C. 7412(n)(1)(A) was numbered at that time section 301(m). Thus, it can be seen that these two sections were substantively unchanged in H.R. 3030 from its introduction on July 27, 1989 through its passage on May 23, 1990. The most important committee report on H.R. 3030 is Report 101

- 490, dated May 17, 1990. Section 108(f) and section 301(l) of H.R. 3030, as passed on May 23, 1990, were reported on May 17, 1990 as previously quoted. In the title

- by

- title analysis, there was no discussion of section 108(f). Section 301(l) was discussed in these terms: Electric utilities. Under new section 112(l), the Administrator is directed to perform an
assessment of the h azards to public health which may reasonably be anticipated to result from emissions listed under this section from certain electric utilities after imposition of the requirements of this Act. The Administrator is directed to report the results of this stu dy to the Congress within three years after enactment. The Administrator shall develop and describe in his report to the Congress alternative control strategies for emissions from affected sources warranting regulation under this section. The Administrator is required to regulate such sources if he finds such regulation appropriate and necessary after considering results of the study. The report set forth the textual effect of section 108(f) on section 111(d) of the CAA using brackets and italics. Likewise, the addition of the language in section 301(l) to section 112 of the CAA was set forth in italics. Although there were floor Amendments on May 23, 1990, none of them pertained to sections 108(f) or 301(l) of H.R. 3030. However, it should be noted that the House, at the same time it was forbidding regulation of source categories under section 111(d) of the CAA that are regulated under section 112, passed a floor amendment entitled "INFORMATION GATHERING ON GREENHOUSE CASES [sic] CONTRIBUTING TO GLOBAL CLIMA TE CHANGE" which became section 715 of H.R. 3030 as passed. Consequently, it cannot be said that Congress was unaware of the possibility that other pollutants, such as GHGs, might warrant regulation under the CAA someday, even as Congress was opting to for eclose regulation under section 111 of source categories regulated under section 112, including, depending on EPA's decision with respect to section 112(n), electric utility generating units. On the Senate side, S. 1490 at sections 108(d) and 301(m) tracke d the provisions in H.R. 3030 that we have been considering. "The Senate Environmental Protection Subcommittee of the Committee on Environment and Public Works used S1630, an alternative clean air proposal introduced by Senator Baucus on September 14, 1989 , as its markup vehicle." Entitled "The Clean Air Restoration and Standards Attainment Act," S. 1630, as introduced, did not amend the CAA to broadly authorize national emission standards for existing sources under section 112, so there
was no occasion to reference sections 111(d) or 112 of the CAA. As characterized by Senator129 Baucus: "As a first major step toward controlling greenhouse gases, the bill require[d] cars to meet 'for the first time' a carbon monoxide standard." After markup, S. 1630 did have a section taken from S. 816 to address section 112. S. 816, introduced April 18, 1989, replaced the criteria for section 112 addressing extreme hazards with broader criteria and an initial statutory list like that now found at section 112(b) of the CAA. S. 816 also introduced the concept of regulating major and area sources. Boilers generally were intended to be within the regulated major source categories or subcategories. S ection 4(c) provided a conforming amendment that updated the section 111(d) referenc e to section 112: "Section 111(d)(1) of the Clean Air Act is amended by striking '112(b)(1)(A)' and inserting in lieu thereof '112(b).'" By continuing to exclude from section 111(d) of the CAA those pollutants regulated by section 112 while expanding the n umber of those pollutants and the criteria for adding new pollutants, S. 816 significantly reduced the reach of the section 111(b) program. S. 1630 was reported out of the Senate Environmental and
Public Works Committee as an omnibus clean air bill on Nove mber 16, 1989. That committee issued its Report 101

- 228 on December 20, 1989. The report contained the additional views of Senator Warner in which he regretted that the bill did not contain the utility study provisions of S. 1490. Senator Symms in his stat ement of minority views likewise regretted the additional duplicative regulation that S. 1630 would impose on utility power plant emissions without the benefit of the study proposed by the administration. The report depicted the textual change in
sections 111(d)(1) from "112(b)(1)(A)" to "112(b)." That change appeared in S. 1630 at section 305(a) under the heading "Conforming Amendments." S. 1630 was removed from the Senate floor on February 1, 1990 in the face of a veto threat. A redrafted S. 1630 was retu rned to the Senate floor on March 5, 1990. Under the title "Conforming Amendments," the following appeared: "Sec. 305(a) Section 111(d)(1) of the Clean Air Act is amended by striking '112(b)(1)(A)' and inserting in lieu thereof '112(b).'" This was necessar y because the section 112(b)(1)(A) r'gime was going away under S. 1630. Section 112(b)(1)(A) of the CAA had provided: "The Administrator shall, within 90 days after the date of the enactment of the Clean Air Act Amendments of 1970, publish (and shall from time to time thereafter revise) a list which includes each hazardous air pollutant for which he intends to establish an emission standard under this section." In its place, S. 1630 enacted a lengthy list of pollutants for EPA to regulate under the revamped section 112 and established broad criteria that covered pollutants that negatively affected human health or the environment, even if those pollutants were not extremely hazardous as previously required. "Debate on the compromise S1630 began on March 5 and continued to April 3, 1990." Over that period "the bill was changed substantially by 111 amendments," none of which were significant for this discussion. "S.1630, as amended, passed the Senate by a vote of 89 to 11 on April 3, 1990." Under the caption "Co nforming Amendments," section 305(a) provided "Section 111(d) of the Clean Air Act is amended by striking '112(b)(1)(A)' and inserting in lieu thereof '112(b).'" There was no equivalent to what became section 112(n) of the CAA. In conference, "[t]he House amendment to the text of the bill struck out all of the Senate bill after the enacting clause and inserted a substitute text." The Senate receded from its disagreement with the House by offering a substitute amendment as "a
substitute for the Senate bill a nd the House amendment." The Conference Committee Report expressly noted engagement with the electric utility requirement that became section 112(n) of the CAA. The revamped section 112 national emission standard program enacted by Public Law130 101

- 549, foun d in title III, "is a mixture of provisions from the House and Senate bills, with amendments." Section 302, entitled "Conforming Amendments," contained, as subsection (a), these provisions: "Section 111(d)(1) of the Clean Air Act is amended by striking '11 2(b)(1)(A)' and inserting in lieu thereof '112(b).'" Section 821 of Public Law 101

- 549 required information gathering on CO2. It is apparent from the legislative history that sections 108(g) and 301(n) of
Public Law 101

- 549 had been substantively related i n the House bill since being first proposed by the administration. It is also clear that, in conference, the Senate accepted the substantive policy reflected in those two provisions. The agreed policy was that regulation of existing EGU
sources under secti on 112 of the CAA would be studied with a decision to follow. The policy also included the intent not to regulate existing sources under section 111(d) if a decision were made to regulate those sources under section 112. This applied to existing sources in general and existing EGU sources in particular. The importance of the policy difference between H.R. 3030 and S. 1630 could not have been overlooked given the statements of Senators Warner and Symms in S. Rep. 101

- 228. Nor can it be said to have been over looked when the Senate adopted the House provision regarding the utility study in section 112(n). Indeed, Senator Chafee noted that in "amending section 111 of the Clean Air Act relating to new and existing stationary sources . . . [t]he Senate recedes to the House except that with respect to the requirement regarding judicial review of reports, the House recedes to the Senate and with respect to transportation planning, the House recedes to the Senate with certain modifications." Senator Durenberger also d escribed the "3

- year study of utility emissions followed by regulations to the extent the Administrator finds them necessary." Furthermore, given the requirement to gather data on CO2 "an historical precursor of regulation" Congress was on notice that sect ion 108(g)
of Public Law 101

- 549 would prevent regulation of CO2 from existing sources of EGUs under section 111(d) of the CAA if the decision were made to regulate those sources under section
112."

Commenter s continue d verbatim "What then is the legal significance of the inclusion of section 302(a) in Public Law 101

- 549, providing: "Section 111(d) of the Clean Air Act is amended by striking 112(b)(1)(A) and inserting in lieu thereof 112(b)"" Section 302(a) of Public Law 101

- 549 must be regarded as a mere conforming amendment, held over by inadvertence. Once the Senate consciously agreed to the policy reflected in sections 108(g) and 301(n), Congress could not have intended to adopt 302(a) instead of those two provisions. Hence the retention of section 302(a) was a drafting error, as EPA has previously said. Furthermore, the revisers' note to 42 U.S.C. S. 7411(d) correctly indicates that the command contained in section 302(a) cannot be executed. This is clearly right beca use the conforming amendment of section 302(a) cannot be given effect once the substantive amendment in section 108(g) is effectuated. As a consequence, with or without explicit drafting error analysis, 108(g) should be given effect because technical

or co nforming amendments are not to be deemed of equal dignity for purposes of statutory interpretation with the substantive provisions of a statute. In United States v. Electronic Data Systems Federal Corp., the Federal Circuit emphasized that it was inappropr iate "to give a technical amendment substantive effect that would undermine" the clearly expressed substantive intent of Congress. Rather, "[c]ongressional designation of an amendment as a 'conforming amendment' evidences legislative intent that the amendm ent should be read as non

- substantive,"131 and so should not be given an interpretation that works a substantive change to the law. The issue in Electronic Data Systems was "[w]hether the Brooks Act, 40 U.S.C. S. 759 (1982 & Supp. IV 1986), provides the Board with jurisdiction over Postal Service procurements of [automatic data processing equipment or] ADPE." The Brooks Act, enacted in 1965, gave the General Services Administration broad authority over procurement of ADPE on behalf of the federal government," including the Post Office Department and all other agencies listed in 40 U.S.C. S. 474. At the time of the Post Office Department's re

- organization as the Postal Service in 1970, Congress saw fit to provide generally that federal contracting law would not "apply to the exercise of the powers of the Postal Service," without reference to the Brooks Act. However, a "technical amendment" in the very re

- organization act that provided the Postal Service this independence substituted the "Postal Service" in place of "the Post Office Department" in 40 U.S.C. S. 474's list of agencies to which the Brooks Act applied. Reading the "technical amendment's" addition of Postal Service to the list in section 474 to be merely "an attempt to conform a previously existing stat ute that mentioned the Post Office Department," without substantive intent, the court noted "[t]he Postal Reorganization Act, moreover, itself contravenes the Board's reading of the
technical amendment because that Act omits the Brooks Act from the list of enumerated statutes applicable to the Postal Service" that were provided elsewhere in the Act. So the Federal Circuit resolved this plain language conflict by granting priority to the clearly expressed intent of Congress in the substantive amendments over any contrary apparent meaning suggested by the
technical amendments."

Commenter s continue d verbatim "With respect to drafting errors, the Supreme Court has held that the plain language of a provision may be ignored, for example, where "common sense

sugg ests that the cross

- reference is simply a drafting mistake, a failure to delete an inappropriate

cross

- reference in the bill that Congress later enacted into law," concluding that the language would not necessarily "creat[e] ambiguity, but [merely] reflect [] a mistake" by Congress. Where a conforming provision related to a portion of a bill that was substantively rejected is incongruently held over in the resulting Act, it may be fairly held that the legislative intention was to strike that conforming provi sion but that it was overlooked in error. The D.C. Circuit has previously dealt with scrivener's errors in the context of the Clean Air Act Amendments of 1990 and EPA's claim of Chevron deference. The portion of the 1990 Amendments scrutinized Appalachian Power had made various substitutions to cross

- referenced sections of the Clean Air
Act and in one had altered the cross

- reference to designate a subsection that had not previously
been cross

- referenced. Despite the plain language of the CAA, the court reco gnized that "[r]eading a statute contrary to its seemingly clear meaning is permissible "[i]f "the literal application of a statute will produce a result demonstrably at odds with the intentions of its
drafters."" " Because the statute "as written is at od ds with congressional intent" and there is "a convincing account of how [the error] came to be enacted" "there inadvertent substitution "in the course of a routine renumbering of statutory cross

- references"" the Court permitted EPA to
construe the amendmen ts "as if this 'inadvertence' had not occurred." An earlier opinion of the D.C. Circuit had adopted Step One analysis for analyzing the existence and effect of scrivener's errors, reserving Chevron step two for instances in which "there are multiple ways o f avoiding a statutory anomaly, all equally consistent with the intentions of the statute's drafters (and equally132 inconsistent with the statute's text)." Under either approach, EPA may not nullify the unambiguous language of section 108(g), a substantive a mendment that changes the pre

- 1990 law in anticipation of regulating EGUs under section 112, merely because of the presence of a
left

- over conforming amendment that was drafted prior to the Senate's acceptance of the House's approach to EGUs."

Commenter s continue d verbatim "At section III of its Legal Memorandum, EPA again seeks to explain away the legal obstacles to regulating source categories under section 111(d) of the CAA which are regulated under section 112. EPA begins by citing Massachusetts v. EPA for the proposition "that greenhouse gases (including CO2) are an air pollutant under the CAA." EPA then asserts that in American Electric Power, the Court expressed an "understanding that section 111, including section 111(d), applies to carbon dioxide e missions from those sources." This is an odd assertion to make given the fact that the Court assumed the very thing that EPA now takes such pains to attempt to refute; namely that "EPA may not employ 7411(d) if existing stationary sources of the pollutant in question are regulated under the National Ambient Air Quality Program, 7408

- 7410, or the hazardous air pollutants program, 7412. See 7411(d)(1)." Furthermore, the Supreme Court in UARG at footnote 5 of the majority opinion carefully noted
that whether C O2 may be regulated under section 111(d) is an open question. In discussing the drafting history of the 1990 Amendments to the CAA, EPA first says that the passage of both the House substantive amendments and the Senate conforming amendment "stem from appa rent drafting errors that occurred during enactment of the 1990 CAA Amendments, which revised section 111(d)." Then, EPA says this gives rise to "ambiguities" to a "conflict" allowing EPA to "reasonably construe the section 112 exclusion to authorize the r egulation of GHCs under section 111(d)." But as demonstrated above, where a drafting error can be identified, there is no conflict or ambiguity. Instead, the drafting error should be disregarded. EPA seeks to bolster its position by appealing to its statem ents from March 29, 2005. According to EPA, its interpretation best comports with congressional intent because "giv[ing] full effect to the House language" by accepting "a literal reading of that language would mean that the EPA could not regulate any air pollutant from a source category regulated under section 112, a result that would be inconsistent with (i) Congress' desire in the 1990 CAA Amendments to require the EPA to regulate more substances, and not to eliminate the EPA's ability to regulate large categories of air pollutants, and (ii) the fact that the EPA has historically regulated non

- hazardous air pollutants under section 111(d), even where those air pollutants were emitted from a source category actually regulated under section 112." But this m isapprehends clear congressional intent. Congress did not simply want "EPA to regulate more substances." Congress wanted EPA to regulate more substances under section 112 using national standards other than substances from EGUs. It left open the question w hether to regulate EGUs under section 112 at all. As a part of that legislative bargain, it was substantively agreed that source categories regulated under section 112 would not be regulated under section 111(d). This was Congress' substantive intent. In l ight of that intent, the conforming amendment was no longer conforming, but became a drafting error that is now due to be disregarded."133 Commenter s state d that even if these two versions are deemed to exist, the proposed rule fails principles of statutory construction. Courts and agencies must "give effect, if possible, to every word Congress used." Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979). Applying that standard to the present case would require an interpretation that gives effect to "every word" of both limitations. Here, the two limitations can be read together to prohibit EPA from regulating under Section 111(d) both any pollutant emitted from any source category already regulated under Section 112 and any hazardous air pollutant regardless of its source. See, e.g. Letter from
National Association of Manufacturers et al. to EPA 26

- 27 (July 25, 2012), available at http://www.nam.org/~/media/53e86e0 50c7a495a9cc84f9778balf10/association_ghg_nsps_co mments_june_25_2012.pdf. If EPA's erroneous view of the Statutes at Large is accepted, that would be the only proper interpretation and the proposed rule would still be prohibited.
Commenter s continue d , stating that EPA instead has constructed a new interpretation of Section 111(d), which improperly seeks to cut back on each limitation rather than incorporating both.

Commenter s add ed that the Senate amendment is only a clerical change and therefore mus t yield
to the House version. Commenters stated c onforming amendments are applied only after substantive amendments, which renders the Senate amendment superfluous.

Commenter s state d even if it were appropriate to treat the House and Senate amendments as in direct conflict, this would not create an ambiguity that EPA would be empowered to resolve, as there is no implied delegation from Congress to do so. "Direct conflict [between statutory provisions] is not ambiguity, and the resolution of such a conflict is not statutory construction but legislative choice. Chevron is not a license for an agency to repair a statute that does not make sense." Scialabba v. Cuellar de Osorio, 134 S.Ct. 2191, 2214 (2014) (Roberts, C.J., concurring).
Commenter s stated that EPA must therefore give effect the version of the statute published in the United States Code, which provides that "the Code of Laws of the United States current at any time shall...establish prima facie the laws of the United States..." 1 U.S.C. section 204( a) (2006). This prima facie evidence is displaced only where the U.S. Code is 'inconsistent' with the Statutes at Large. Here, c ommenter s remark ed , that is not true, when both the House and Senate amendments are given effect. Stephan v. United States, 319 U.S. 23, 426 (1943).

Response 46 : EPA disagrees that it may not promulgate regulations addressing CO2 emissions from existing power plants under section 111(d). EPA’s discussion of this issue is in Section IV of the preamble. Further, EPA’s views on arguments presented by the commenters, including commenters’ discussion of the AEP opinion and of the Senate amendment, are also discussed in EPA’s briefs in the Murray Energy and West Virginia cases, No. 14

- 1112, No. 14

- 1146, and No.
14

- 1151 (D.C. Cir.).

Comment 47 : Commenter s state d that EPA's Legal Memorandum correctly describes the history
of the different House and Senate

- enacted versions of Section 111(d)(1) (EPA, Legal Memorandum for Proposed Carbon Pollution Emission Guidelines for Existing Electric Utility Generating Units (June 2014), available at http://www2.epa.gov/sites/production/files/2014

- 06/documents/20140602

- legal

- memorandum.pdf, at 20

- 27)). Commenter s remark ed (verbatim) The House version (which is the version presented in the U.S. Code) p rovides for standards of134 performance for existing sources "for any air pollutant (i) [1] for which air quality criteria have not been issued or which is not included on a list published under [CAA section 108(a)] or [2] emitted from a source category which is regulated under [section 112]." Because power plants are a source category regulated under section 112 for mercury and other hazardous air pollutant ("HAP") emissions, see 77 Fed. Reg. 9,304 (Feb. 16, 2012) (final Mercury and Air Toxics ["MATS"] rule), some industry groups have argued that the foregoing language precludes EPA from issuing section 111(d) performance standards of performance for emissions of any pollutants (including CO2) from existing power plants. The Senate version, which also appears in the enacted (i.e., Statutes at Large) version of the 1990 amendments, requires standards of performance "for any air pollutant . . . which is not included on a list published under section 108(a) or 112(b) (1)(A)" of the Act. In the Legal Memorandum, EP A correctly concludes that the enactment of these conflicting versions creates an ambiguity that EPA is authorized to resolve under step 2 of the test articulated in Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837, 842

- 844 (1984) (Id. at 25). The agency then of fers a reasonable interpretation of the provisions as together excluding from regulation under section 111(d) not all pollutants, but only and specifically HAPs that are both listed under section 112(b) and emitted by sources (such as power plants) that ar e regulated under section 112 (Id. At 26

- 27). Under EPA's construction, therefore, the agency may not regulate power plant mercury emissions under section 111(d), since mercury is a listed HAP and power plants are regulated under section 112 by the MATS

ru le, but it must regulate power plant CO2 emissions under section 111(d), since CO2 is not a HAP listed under section 112(b), notwithstanding the MATS rule. EPA's proposed construction is consistent with the context and evolution of section 111(d), and it i s necessary to consider the 1990 Clean Air Act Amendments against this legal backdrop. See McFarland v. Scott, 512 U.S. 849, 856 (1994) ("Congress legislated against this legal backdrop . . . and we safely assume that it did not intend for the express requ irement of counsel to be defeated in this manner"). Historically, section 111 has served a gap

- filling function to ensure that EPA had a mechanism to regulate dangerous air pollutants that were not already covered under the criteria pollutant or HAP progra ms. Prior to the 1990 Amendments, the HAP exclusion under section 111(d) applied only to pollutants "not included on a list published under" Section 112" not to categories of sources that emitted those pollutants. 42 U.S.C. 7411(d)(1)(1977); Public Law 95

- 95. There is nothing in the structure or history of the 1990 Amendments to suggest that Congress meant to drastically broaden that exclusion, which has always functioned simply to ensure that EPA's section 111(d) rules do not encompass pollutant emissions already subject to regulation under Act's criteria pollutant or air toxics provisions for existing sources. EPA is therefore well within its authority to interpret the Amendments as preserving the function and scope of section 111(d) that existed prior to 1990, and is correct to interpret the statute to permit regulation of CO2 emissions from existing EGUs under section 111(d).

The industry reading also ignores clear statutory evidence that Congress intended sections 111 and 112 to work in unison, not dish armony. Congress expressly directed that the source categories to be regulated under section 112 be consistent with the list of source categories regulated under section 111. 42 U.S.C. 7412(c)(1). This cross

- reference would serve no purpose if Congress had intended that HAP regulations under section 112 would prohibit EPA from135 regulating any and all emissions, HAP and non

- HAP alike, from those sources under section 111(d). In this regard

- and in effectively dismantling an entire Clean Air Act program

- the industry reading would contravene the fundamental canon that statutes are to be construed to give all words and provisions effect. See, e.g., Northwest Austin Mun. Utility Dist. No. One v. Holder, 557 U.S. 193, 211 (2009) (rejecting statutory interpretati on that would render a provision "all but a nullity . . . It is unlikely that Congress intended the provision to have such limited effect.") (citation omitted); TRW v. Andrews, 534 U.S. 19, 29, 31 (2001) (rejecting reading that would "in practical effect" render statutory provision "entirely superfluous in all but the most unusual circumstances . . . . It is a cardinal principle of statutory construction that a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, senten ce, or word shall be superfluous, void, or insignificant. Were we to adopt Andrews' construction of the statute, the express exception would be rendered insignificant, if not wholly superfluous.") (citations and internal quotation marks omitted); Mayle v. Felix, 545 U.S. 644, 662 (2005) (rejects reading under which statutory limitations period "would have slim significance"). Along these same lines, the industry reading would effectively treat the 1990 Amendments as an implied repeal of section 111(d). Cour ts generally reject claims of implied repeal, and will only accept them when there is "overwhelming evidence" and "when the earlier and later statutes are irreconcilable." E.M. AG Supply v. Pioneer Hi

- Bred International, 534 U.S. 124, 137, 141

- 42 (2001) (c itations and internal quotation marks omitted). Neither condition applies in this instance. Nor is there any evidence that Congress meant to strip section 111(d) of its utility in such a cryptic manner. If Congress had meant to significantly restrict the a pplicability of section 111(d)(1), it would have said so clearly. See Board of Trustees v. Roche Molecular Systems, 131 S. Ct. 2188, 2198

- 99 (2011) ("[I]f Congress has intended such a sea change . . . it would have said so clearly");
Whitman v. Am. Truckin g Assns, 531 U.S. 457, 468 (2001) ("Congress . . . does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions

-- it does not, one might say, hide elephants in mouseholes."). This point is particularly salient in th e case of the 1990 Clean Air Act Amendments, which were universally understood to tighten, not loosen, the statute's pollution control measures. See, e.g., Remarks of President Bush Upon Signing S. 1630, 26 Weekly Comp. Pres. Doc. 1824 (Nov. 19, 1990) (rep rinting the President's signing statement of Nov. 15, 1990) ("This legislation isn't just the centerpiece of our environmental agenda. It is simply the most significant air pollution legislation in our nation's history, and it restores America's place as t he global leader in environmental protection."). To assert that a landmark bill praised for its environmental stringency actually eviscerates key provisions of the statute sub silentio borders on the absurd, and EPA is correct to reject this flawed reasoni ng in favor of a construction that actually advances the statute's goals. See Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 575 ("[I]nterpretations of a statute which would produce absurd results are to be avoided if alternative interpretations consi stent with the legislative purpose are available."); American Water Works Assn v. EPA, 40 F.3d 1266, 1271 (D.C. Cir. 1994) (where reading of statute would lead to absurd results, statute has no plain meaning and is proper subject of construction by agency and courts). In short, given the conflicting amendments, EPA is authorized to adopt a reasonable interpretation of the statute. Northeast Hosp. Corp. v. Sebelius, 657 F.3d 1, 11 (D.C. Cir. 2011) ("We are thus faced with two inconsistent sets of statutory

p rovisions. Northeast points us to provisions that tie entitlement to payment and state that once a136 person enrolls in Part C, payments are no longer made under Part A. The Secretary points us to other provisions that assume it is possible to be both entitle d to benefits under Part A and enrolled in Part C. Under these circumstances, we conclude that the Medicare statute does not unambiguously foreclose the Secretary's interpretation."); Chevron, 467 U.S at 842

- 43. And, for reasons stated above, EPA's interpr etation comports with the context, history, structure, and purpose of the Clean Air Act. As such, its construction should merit judicial deference in any legal proceeding challenging its authority to regulate CO2 emissions from existing EGUs under
section 111(d).

Alternatively, if the 1990 House and Senate language were to be deemed in irreconcilable conflict (i.e., if the conflicting amendments cannot both be given literal effect, and if EPA lacks authority to adopt a reasonable interpretation to resolve the conflict), then both chambers' 1990 amendments to section 111(d) must fail. In that scenario the language would revert to the pre

1990 version, which authorizes S.111(d) regulation of any air pollutant "for which air quality
criteria have not been issu ed or which is not included on a list published under section 7408(a) or 7412(b)(1)(A) of this title." Since CO2 are listed neither under S. 7408(a) nor S.7412(b), under this scenario as well EPA would be authorized to promulgate section 111(d) guidelines for

power

- plant CO2 emissions. Finally, even if the House amendment were deemed to be the only applicable amendment, the same outcome should obtain. First, the Supreme Court has recently noted EPA's practice of adopting context

- appropriate interpretation o f the Clean Air Act phrase "air pollutant." Utility Air Regulatory Group v. EPA ("UARG"), 134 S. Ct. 2427, 2439

- 42 (2014). For example, [t]he Act authorizes EPA to enforce new source performance standards (NSPS) against a pre

- existing source if, after prom ulgation of the standards, the source undergoes a physical or operational change that increases its emission of "any air pollutant." S. 7411(a)(2), (4), (b)(1)(B). EPA interprets that provision as limited to air pollutants for which EPA has promulgated new source performance standards. 36 Fed.Reg. 24877 (1971), codified, as amended, 40 C.F.R. 60.2; 40 Fed.Reg. 58419 (1975), codified, as amended, 40 C.F.R. 60.14(a). Id. 2440 (emphasis in original). Similarly here, a context

- appropriate reading of "any air po llutant," when used with the phrase "emitted from a source category which is regulated under section 7412," would encompass only an air pollutant listed under section 112 that is emitted from such a source category. Considered from another angle, sources a re not regulated in the abstract, but regulated with regard to specific pollutants. Hence, any interpretation of the phrase "regulated under section 7412" must include an implied phrase indicating what the source in question is being regulated with regard to. Under the industry interpretation, this implied phrase is "with regard to any pollutant," i.e., "emitted from a source category which is regulated under section 7412 [with regard to any pollutant]." A much more rational interpretation would
include the implied phrase "with regard to HAPs," i.e., "emitted from a source category which is regulated under section 7412 [with regard to any HAPs]," which not only effectuates rather than frustrates the purpose of the statute, as discussed above, but accords wit h the kind of contextually

- appropriate reading of the statute described in UARG. An examination of the historical context surrounding the House language militates in the same direction. Prior to the 1990 Amendments, EPA had been tasked with listing hazardo us air pollutants for regulation under section 112. The pre

- 1990 language of section 111(d) reflected this fact insofar as it137 referenced the "list published under section . . . 7412(b)(1)(A)." Frustrated with the agency's slow progress on this front, Congr ess took it upon itself to list 190 HAPs by statute and then delegated to EPA the authority and responsibility to regulate emissions of those HAPs on a

source

- by

- source basis. It is for this reason that the House amendment deleted the pre

- 1990
references t o the list of HAPs, which was now defined by statute rather than EPA regulation, and replaced it with a reference to source categories, which were now the subject of EPA regulation for the HAP emissions. Given this historical context, it is clear that the House language was meant to preserve the status quo, under which EPA could not regulate a source's HAP emissions under section 111(d) if it was already doing so under section 112, rather than silently introduce a
new and massive exclusion into the statute that effectively rendered section 111(d) a dead letter.

Second, the literal language of the House amendment favors EPA's interpretation of the statute. As EPA recently observed in a legal brief opposing the industry interpretation of section 111(d),

even if one disregards the Senate amendment and considers only the House amendment, as Petitioner and amici advocate, that text does not unambiguously say what Petitioner and amici believe it says. In fact, a truly "literal" reading (see Amici Br. at 4) result s in precisely the opposite conclusion (Response to Petition at 28, In re: Murray Energy Corp., No. 14

- 1112 (D.C. Cir. Nov. 3, 2014)). The relevant portion of section 111(d), as amended by the House, contains a string of three exclusionary clauses, separa ted from each other by "or": The Administrator shall prescribe regulations . . . under which each State shall submit to the Administrator a plan which establishes standards of performance for any existing source for any air pollutant [1] for which air qual ity criteria have not been issued or [2] which is not included on a list published under
section 7408(a) of this title or [3] emitted from a source category which is regulated under
section 7412 of this title . . . . 42 U.S.C. S. 7411(d)(1) (emphasis and i nternal numbering added). Because Congress used the conjunction "or" rather than "and," the three exclusions arguably should be viewed as alternatives, rather than requirements to be imposed simultaneously. See U.S. v. Woods, 134 S.Ct. 557, 567 (2013) ("Mo reover, the operative terms are connected by the conjunction "or." While that can sometimes introduce an appositive . . . its ordinary use is almost always disjunctive, that is, the words it connects are to 'be given separate meanings.'") (Merriam
Webster' s Dictionary defines "or" as "a function word [used] to indicate an alternative <coffee or tea> <sink or swim>." See Merriam Webster, Definition of "Or," http://www.merriamwebster.com/dictionary/or (last visited Nov. 19, 2014)). In other words,
section 111 (d) "literally" provides that the Administrator may require states to establish standards for an air pollutant so long as either air quality criteria have not been established for that pollutant, or one of the other two remaining criteria is met. Air quali ty criteria have not been issued for CO2. Thus, under a truly literal reading of section 111(d)(1) as amended by the House, whether power plants have been regulated under section 7412

- and for what pollutant

- is irrelevant: the CO2 regulations at issue a re authorized. To compound the ambiguity, the third exclusionary clause in the House's version of section 7411(d)(1), which provides the basis for the industry interpretation of section 111(d), differs from the first two in that it does not contain a
negat ive: [EPA may require states to submit plans establishing standards for] any air pollutant [1] for which air quality criteria have not been issued or [2] which is not included on a list published under section 7408(a) of this title or [3] emitted from a so urce category which is138 regulated under section 7412 of this title . . . . 42 U.S.C. 7411(d)(1) (emphasis and internal numbering added). The industry argument presumes that the negative from the second clause was intended to carry over into the third (i.e., implicitly inserting another "which is not" before "emitted from a source category"), but that is not what the text actually says; instead, it states that EPA may require standards for "any air pollutant . . . emitted from a source category which is regul ated under section 7412." 42 U.S.C. 7411(d)(1). Thus, read literally, the House's version of section 7411(d) means the exact opposite of what petitioners and amici argue, and provides that EPA may regulate emissions of a pollutant from a source category wh ere that category is regulated under section 7412. Other observers have made this argument as well: As amended by the House amendment language, S.111(d) would direct EPA to regulate, through state plans, "any air pollutant (i) for which air quality criteri a have not been issued or which is not included on a list published under Section 7408(a) of this title or emitted from a source category which is regulated under Section 7412 of this title . . . ." The use of the conjunction "or" to join the two
"which" c lauses in (i) is most naturally read such that only one of the "which" conditions must be met in order for EPA to have regulatory authority under S. 111(d). This reading would provide EPA authority to regulate an existing source for any air pollutant that is not a criteria pollutant, regardless of the meaning of the "or emitted" clause that is the subject of the two competing 1990 CAA Amendments (Nordhaus & Gutherz, Regulation of CO2 Emissions From Existing Power Plants Under S. 111(d) of the Clean Air Act: Program Design and Statutory Authority, 44 ELR 10,366, 10,377 n.89 (May 2014). Additional support for construing section 111(d) to permit standards of performance for such emissions appears in Konschnik, K., EPA's 111(d) Authority
Follow Homer and Avoid t he Sirens, LegalPlanet (May 28, 2014), http://legal

planet.org/2014/05/28/guest

- blogger

- kate

- konschnik

- epas

- 111d

- authority

- follow

- homer

- and

avoid

- the

- sirens/ (incorporated herein by reference)). As discussed above, the history, purpose,
and structure of th e Clean Air Act, of the 1990 Amendments, and of section 111(d) all persuasively show that EPA may regulate CO2 emissions from existing EGUs under section 111(d). Accordingly, under any acceptable heuristic, the Clean Power Plan is an appropriate
exercise o f EPA's authority under that provision of the statute and is on firm legal footing.

Response 47 : EPA agrees that it has the authority to promulgate regulations addressing CO2 emissions from existing power plants under section 111(d). EPA’s discussion of t his issue is in Section IV of the preamble.

Comment 48 : Commenters state d the decision to regulate existing power plants under Section 111(d) of the Clean Air act is not lawful because it violates the previsions set forth in the 5 U.S.
Code

- 706(2)(A),(B) ,(C), and (E). Commenters stated that 5 U.S. Code

- 706(2)(A) requires that the law not be arbitrary or capricious. Commenters stated that

, g enerally, laws require specific guidelines of how the regulated body should act in order to comply appropriately s o to avoid any violations. However, commenters added , the proposed rule is not clear as to what the states should specifically do in order to meet the goals of the EPA. Commenters stated that

, f or example, the EPA reads, "While this proposal lays out state

- specific CO 2 goals that each state is required to meet, it does not prescribe how a state should meet its goal." Commenters stated that
b efore issuing any type of regulation under Section 111, the EPA must first identify specific139 types of facilities (which are generally known as sources under the CAA) that, in the EPA's judgment, emit air pollution that endangers public health. Commenter s stated that as part of this process, the EPA creates sour ce categories and carefully defines the type of facilities that fall within these categories; however, specific types of facilities in the proposed rule that endanger public health were not mentioned. Commenter s add ed that climate change should be addresse d by Congress an d not by regulatory fiat via the EPA

.

Response 48 : The EPA disagrees with this comment. The commenter s assert in a conclusory fashion that the proposed rule violates each one of the standards of review in the APA. Not only
does the APA not apply to t his action, but the EPA’s final rule is reasonable, thorough, well

explained and well within the EPA’s statutory authority. The final rule provides ample guidance to states on ways to comply with the emission guidelines, including application of the BSER, other systems of emission reduction, trading, and the state measures approach. The commenters’ assertion that the EPA did not identify specific types of facilities that endanger public health is absurd. The final rule applies to existing steam el ectric generators and stationary combustion turbines, the largest sources of CO 2 emissions in the U.S. The final rule’s applicability provisions further describe which facilities are affected sources subject to the rule’s requirements.

Comment 49 : Commenter s caution ed EPA from reading the Supreme Court's decision in AEP v. Connecticut to grant EPA the authority to regulate GHGs under section 111(d), explaining that dicta in that case regarding the suitability of Section 111(d) in regulating GHGs wa s based on an erroneous paraphrase of the relevant statute. Commenter s added that decision was issued prior to EPA's regulation of electric generating units under Section 112.

Commenter s state d that the legal position stated by the 18 Governors is more ful ly developed in the challenge brought against EPA in the US Court of Appeals for the District of Columbia Circuit by a group of 12 State Attorneys General, led by Attorney General Patrick Morrisey of West Virginia [see Case No. 14

- 1146 ]

. Commenters stated i n their suit the AG's referred to the guidance rendered by the Supreme Court on June 20, 2011, in American Electric Power, Inc. v. Connecticut, 131 S. Ct. 2527 (2011) ("AEP"), that EPA could not regulate the same sources
under both Section 112 and Section 111(d) of the Clean Air Act. Commenter s continue d , stating Section 112 permits national regulations of sources of hazardous air pollutants. Commenters
stated Section 111(d), on the other hand, is a rarely used provision that grants EPA authority to requir e States to regulate emissions from existing sources on a state

- by

- state basis under certain narrow circumstances, but that expressly excludes from EPA's authority the power to regulate "any air pollutant ... emitted from a source category which is regulat ed under [Section 112]." 42
U.S.C. section 7411(d). Commenter s note d that in AEP, several parties brought a common law public nuisance action, seeking abatement of emissions of carbon dioxide. Commenters stated

t he Court held "that the Clean Air Act and th e EPA actions it authorizes displace any federal common law right to seek abatement" of such emissions. Commenters stated i n the course of explaining that EPA is required under Section 111(d) to regulate carbon dioxide emissions from existing sources unde r certain circumstances, the Court noted the Section 112 "exception" to the regulation of such existing sources under Section 111(d): "EPA may not employ ... 111(d) if existing stationary sources of the pollutant in question are regulated under ... the ' h azardous air1 40 pollutants' program, [Section 112]." Commenter s add ed that on February 16, 2012, EPA finalized a national emission standard for new and existing power plants under Section 112. Specifically, commenters stated EPA reaffirmed that power plants s hould be listed as a "source category" under Section 112. Commenters stated that i t then proceeded to impose under Section 112 onerous regulations on those plants, with which compliance will cost over $9 billion per year. As a result, commenters stated , th e Clean Air Act in Section 111, as interpreted by the Supreme Court in the AEP case, precludes additional regulation of existing power plants under Section 111(d).

Response 49 : EPA disagrees that it may not promulgate regulations addressing CO2 emissions from existing power plants under section 111(d). EPA’s discussion of this issue is in Section IV of the preamble. Further, EPA’s views on arguments presented by the commenters

, including
commenters’ discussion of the AEP opinion, are also discussed in EPA’s briefs in the Murray Energy and West Virginia cases, No. 14

- 1112 , No. 14

- 1146

, and No

. 14

- 1151 ( D.C. Cir.).

Comment 50 : Commenter s state d that in the 1990 Clean Air Act amendm ents, Congress took pains to ensure that its strengthening of section 112 would not inadvertently impair any of the Clean Air Act's other vital protections, and Congress explicitly provided in section 112 that "No emission standard or other requirement pro mulgated under this section shall be interpreted, construed or applied to diminish or replace the requirements of a more stringent emission limitation or other applicable requirement established pursuant to section [111] of this title, part
C or D of this subchapter, or other authority of this chapter or a standard issued under State authority." (31542 U.S.C.

- 7412(d)(7).) Consequently, commenters stated , EPA retains its obligation to

- for example

- regulate non

- HAPs as well as HAPs from new stationary source s under section 111(b), regardless of whether those sources are also regulated under section 112.
Commenters stated that s imilarly, states and EPA are required to ensure that state implementation plans under section 110 achieve attainment with National Ambient Air Quality Standards for criteria pollutants, even if those plans include requirements for existing sources
that are also subject to section 112 standards. Commenters stated Congress unambiguously intended for the requirements of section 110, 111 and 112 to continue operating in careful coordination to protect the public from all harmful pollutants emitted by stationary sources. Also,
commenters added that in the 1990 amendments, Congress also carved out one categorical exception from the seamless threefold framework for controlling stationary source emissions.
Commenters stated that b y enacting section 129, Congress cra fted a unique regime for one type
of source: solid waste incineration units. Commenters stated Congress decided to exclude these units from regulation under section 112 and instead subject them to tailored regulation under
sections 129 and 111. (Clean Air Act Amendments, Pub. L. 101

- 549,

- S. 305, 104 Stat. 2399, 2583 (1990) (codified at 42 U.S.C.

- 7429(h)(2)). Thus, commenters stated that in the only case where Congress excluded a class of sources from regulation under sections 110, 111(d), or 112
because other CAA controls were sufficient, it provided for rigorous, source category

- specific regulation elsewhere in the CAA. Commenter s state d that the treatment of EGUs is entirely different, explaining that Congress authorized regulation of EGUs under section 112 if EPA "finds such regulation is appropriate and necessary after considering the results of" a study of the141 health risks of EGU HAP emissions after the implementation of other CAA requirements. 42 U.S.C. section 7411(n)(1)(A). Commenters stated Congre ss did not remove EGUs from the tripartite framework for stationary source regulation, but allowed EPA to forego regulation of EGU HAP emissions if incidental control of HAPs through other CAA programs (such as the CAA cap

- and

- trade program to reduce acid rain, which only affects EGUs) rendered that regulation unnecessary. Commenters stated that i n deciding whether to regulate EGUs' HAP emissions, EPA was required to consider its study of the public health impacts of those HAP emissions; (42 U.S.C.

- 7412(n )(1)(A). Section 112(n) mandates three studies: EPA's study of the hazards EGU HAP emissions pose to public health after the imposition of other Clean Air Act requirements, which the agency must consider in its "appropriate and necessary" finding, S. 7412( n)(1)(A); an EPA study of EGU mercury emissions and technologies for controlling such emissions, S. 7412(n)(1)(B); and a National Institute of Environmental Health Sciences study on the threshold level of mercury exposure below which adverse human health e ffects are not expected, S. 7412(n)(1)(C). None of these studies non

- HAP emissions.) Commenters stated Congress did not require this study to analyze the public health impacts of non

- HAP pollution
from EGUs because the Act does not force EPA to choose betw een regulating non

- HAP emissions from EGUs under 111(d) or regulating HAP emissions under 112. Commenter s continue d , stating that the 1990 Clean Air Act Amendments also revised the Act to more effectively protect human health and the environment in several other important ways. For instance, commenters stated , Congress amended section 110 to authorize EPA to require SIP revisions that are necessary to adequately mitigate interstate pollution transport, (Id., S. 101, 104 Stat. at 2407 (codified at 42 U.S.C.

- 7410(k)(5))) and authorized EPA to apply certain sanctions if a state submits an inadequate SIP. (Id., S. 101, 104 Stat. at 2407

- 08 (codified at 42 U.S.C. S. 7410(m))) Commenter s stated the legislation introduced new landmark programs and strengthened ex isting programs, prompting President George H.W. Bush to declare: "This legislation isn't just the centerpiece of our environmental agenda. It is simply the most significant air pollution legislation in our nation's history, and it restores America's place as the global leader in environmental protection." (Remarks of President George H.W. Bush Upon Signing S. 1630, 26 Weekly Comp. Pres. Doc. 1824 (Nov. 19, 1990) (reprinting the President's signing statement of Nov. 15, 1990))

Response 50 : EPA agrees that i t has the authority to promulgate regulations addressing CO2 emissions from existing power plants under section 111(d). EPA’s discussion of this issue is in Section IV of the preamble.

Comment 51 : Commenter s state d the proposed rule is unlawful because EPA has not finalized Section 111(b) "new source" regulation of carbon dioxide emission from coal

- fired power plants, which is legally necessary before any Section 111(d) regulation of those plants. And given that the proposed Section 111(b) new source standa rds are patently unlawful, no such predicate is likely forthcoming.

Commenter s state d that the Proposed Section 111(d) Rule Is Illegal Because EPA Has Not Finalized any Lawful Rule for Equivalent New Sources, explaining that as EPA has acknowledged since 1975, this provision prohibits EPA from invoking Section 111(d) unless and142 until it ha s completed and finalized a lawful rule for "new sources of the same type." 40 Fed. Reg. 53, 340, 53,340 (Nov. 17, 1975); see also 39 Fed. Reg. 36,102, 36,102 (Oct. 7, 1974) (proposed rule) (predicates for use of 111(d) include "[a] standard of performance for affected facilities has been promulgated under section 111(b) of the Act") (emphasis added). Commenter s continued that put another way, promulgation of lawful new source performance standards is "a necessary predicate for the regulation of existing so urces" under Section 111(d). 79 Fed. Reg. 1,430, 1,496 (Jan. 8, 2014). Commenters stated that i n the present rulemaking, EPA claims that it will satisfy that "necessary predicate" through two proposed rulemakings, once they are finalized: (1) the proposed new source performance standards for new fossil fuel

- fired power plants ("New Source Rule"), 79 Fed. Reg. 1,430 (Jan. 8, 2014); and (2) performance standards
for modified and reconstructed fossil fuel

- fired power plants ("Modified Source Rule"). See Propos al, 79 Fed. Reg. 34,852 (June 18, 2014). Commenter s posit ed that EPA's arguments are flawed as a matter of law, and as a result the proposed Section 111(d) rule will be entirely
unlawful.

Commenter s state d they do not believe EPA promulgated an appropriate Section 111(b) standard of performance that is a necessary prerequisite for proposed Section 111(d) standards.
Commenters stated EPA does not have the legal authority to propose Section 111(d) standards without properly establishing Section 111(b) standar ds of performance.

Commenter s state d EPA lacks the sufficient legal prerequisites to propose and finalize the proposed guidelines, explaining that Section 111(d) makes clear that EPA may not finalize guidelines for an existing source unless new sources of the same type of entity are already subject to a section 111(b) performance standard. CAA section 111(d)(1). Commenter s explain ed that EPA's Subpart B regulations spell this requirement out in more detail and extend it to the proposal stage: Only "[c]oncur rently upon or after" standards have been proposed for "a designated pollutant from [new] facilities" may EPA propose draft emission guidelines for the same pollutant for "designated facilities." 40 C.F.R. section 60.22(a). Commenters stated that a "design ated facility" is an "existing facility" of the "same type" that is subject to a standard of performance under section 111(b). Id. Section 60.21(b); 40 Fed. Reg. at 53,341, and thus, in order for EPA to lawfully propose and finalize section 111(d) emission guidelines for EGUs, it first must have lawfully proposed and finalized standards of performance for new EGUs of the same type. Commenter s conclude d that t he legal prerequisites for lawful emission guidelines governing CO2 emissions from EGUs have not bee n met, and the Proposed Guidelines are therefore unlawful and may not be finalized.

Response 51 : We disagree with these comments. We explain in the preamble to the final rule the timing considerations for promulgation of a rule under section 111(b) for th at rule to serve as a predicate for a section 111(d) rule and why this section 111(d) rule has a valid predicate.

Comment 52 : Commenters state d that the proposed Section 111 (b) rule for new sources raises serious legal and technical questions about whether carbon capture and sequestration, explaining
that. Commenters stated i f the Section 111(b) rule fails, the necessary predicate for Section
11 1(d) rule for existing sources fails with it, and therefore, EPA must wait until the federal courts143 have assured the agency that its Section 111(b) approach for new EGU s is legally sound before it can finalize its Section 111(d) proposal.

Commenters state d that i n order for the EPA to require states to submit Section 111(d) plans to control emissions from existing sources in a particular industrial categories, the EPA must first have established lawful standards under Section 111(b) for new sources in that category. Commenters said the Section 111(d) proposal identifies two pending 111(b) proposals that have
not been finalized and are unlawful. Commenters also said the new

- source proposal is unlawful because it violates express restrictions on Section 111(b ) rulemakings imposed by the Energy Policy Act of 2005 by inappropriately considering certain government

- subsidized projects in the
Section 111 standard

- setting process. (See generally Comments of the Competitive Enterprise
Institute on Clear Air Act secti on 111(b) Carbon Pollution Standards (May 9, 2014).

Commenters stated the legal implication is critical since the EPA is barred from implementing an existing source rule under 111(d) without having successfully promulgated a new source standard under 111(b ).

Response 52 : We disagree with these comments. We explain the legal basis for the section 111(b) rule for newly constructed sources in the preamble for that rule, including addressing the
commenters’ concerns about EPA05 and CCS

.

Comment 53 : Commenter s also remark ed that EPA states that any EGU that becomes subject to a state plan under section 111(d) that subsequently undergoes a modification or a reconstruction must remain subject to the regulatory requirements of the state plan in addition to having to comply with EPA's requirements for modified and reconstructed EGUs under section 111(b). 79 Fed. Reg. at 34,962

- 63, 34,965, 34,969, 34,974

- 75, 34,987. Commenters strongly disagree d with
EPA's statement. Commenters stated t he CAA does not allow EPA to re gulate the same source as both an existing and new source. Commenters said a lthough a state may have authority under section 116 of the CAA to impose additional regulatory requirements on a modified or reconstructed source as a matter of state law, EPA can not compel states to regulate a given unit as both an existing and new source. Commenters stated under the plain language of the CAA, a source that is regulated under section 111(b) because it is a "new" source cannot simultaneously be subject to regulatio n under section 111(d) as an "existing" source under federal law, and vice
versa. Commenter s continued , stating that in this rulemaking, EPA states that "a modified or reconstructed source would be subject to both (1) the CAA section 111(d) requirements th at it had previously been subject to and (2) the modified source or reconstructed source standard being promulgated under CAA section 111(b)." 79 Fed. Reg. at 34,903. Likewise, commenters stated that in its proposed standards for modified and reconstructed EGUs under section 111(b), EPA asserts that "existing sources that are subject to requirements under an approved CAA section 111(d) plan would remain subject to those requirements after undertaking a modification or reconstruction." 79 Fed. Reg. at 34,974

. Commenters stated EPA claims that it can adopt this position because section 111 "is silent on whether requirements imposed under a CAA section 111(d) plan continue for a source that ceases to be an existing source because it modifies or
reconstructs." 7 9 Fed. Reg. at 34,904. Commenter s stated that this is simply incorrect, and states144 that Section 111 speaks clearly and directly to the issue. Commenters stated t he CAA states that "[t]he term "new source" means any stationary source, the construction or mo dification of which is commenced after the publication of regulations (or, if earlier, proposed regulations) prescribing a standard of performance under this section which will be applicable to such source." CAA section 111(a)(2). Commenters said Section 1 11(a)(6) states that "[t]he term "existing source" means any stationary source other than a new source." Commenter s posit ed that these definitions, by their own terms, are mutually exclusive, and thus, under section 111, an existing source is one that has commenced construction before the publication of regulations (or proposed regulations) applicable to new sources of the same type. Commenters stated s uch existing sources are subject to standards promulgated pursuant to section 111(d) of the Act.
Commenter s stated a new source can come into existence either through greenfield construction that commences after publication of proposed rules applicable to such new sources or through commencing at such time a reconstruction or modification of what would otherwi se be an existing source. (A physical or operational change that increases the capacity of an existing source to emit may trigger a "modification" analysis. See, e.g., 40 C.F.R. section 60.14. Replacement of components that involves investments exceeding 5 0 percent of the fixed capital costs of a comparable, entirely new facility triggers the reconstruction analysis. See I d. section 60.15(d)) Commenters stated t he critical fact here is that once a modification or reconstruction commences, the "existing" sou rce ceases to exist and a "new" source takes its place. Commenter s remark ed that new sources are subject to regulation pursuant to section 111(b), and under the CAA's explicit terms, section 111(d) cannot apply to sources subject to section 111(b).
Comment er s continue d , stating that EPA has long codified this strict division between existing and new sources in binding legislative rules governing CAA programs. Commenters stated that
f

or instance, modified and reconstructed sources are regulated as new source s under the CAA's new source "maximum achievable control technology" program pursuant to section 112(g)(2).
Commenters stated i n finalizing NSPS for Subpart Da units in 1998, the Agency emphasized that
the inclusion of modified sources in the definition of "new source" in section 111(a)(2) is a "clear statutory mandate." 63 Fed. Reg. at 49,448. Commenters stated EPA's newfound discovery of supposed statutory ambiguity cannot be reconciled with the Agency's longstanding implementation of the CAA. Ignoring th is clear statutory division, c ommenter s remarked , the Agency offers two policy reasons to justify some newly found statutory ambiguity and its proposal to subject new sources to both existing and new source regulatory requirements.
Commenters stated f irst, EPA claims that modified or reconstructed units should remain subject to the existing source program because "[u]ncertainty about whether units would remain in the program could be very disruptive to the operation of the program." 79 Fed. Reg. at 34, 904.
Commenters stated s econd, EPA argues that it should continue to apply the existing source program to modified and reconstructed sources because "potential discrepancies in the stringency of the two programs" might "creat[e] incentives for sources to s eek to avoid their obligations under a CAA section 111(d) plan by undertaking modifications." Id. Commenters stated b oth of EPA's concerns would be resolved by withdrawing the proposed standards for modified and
reconstructed EGUs. Commenters stated EPA ha s discretion not to impose NSPS for modified or reconstructed units and by choosing not to do so in this instance, it would avoid the concerns it has raised. Moreover, c ommenter s state d , even assuming that EPA's concerns are valid regarding145 disruption and uncertainty to the section 111(d) program over whether units would leave the program, this does not justify ignoring the plain language of the statute. Commenters said s tate plans devised with the correct statutory interpretation in mind can include provis ions to accommodate such changes. Indeed, commenters stated , EPA envisions many sources shutting down as a result of the Proposed Guidelines. RIA at 3

- 34, Tbl. 3

- 12. Commenters stated i f state plans can accommodate units leaving the program through cessati on of operations, there is no reason why they cannot accommodate the transition of modified or reconstructed units from the existing source program to the section 111(b) program for new sources. In addition, commenters stated , to the extent EPA has designe d a section 111(d) program that cannot function while adhering to the requirements of section 111(a)(2) and section 111(a)(6), it is EPA's proposal, not the CAA, that must be revised. See, e.g., ASARCO, 578 F.2d at 329 (where EPA is concerned about practic al application of proposed rule, solution is to alter standard). Commenters f inally
stated , although states can opt to impose additional requirements on modified and reconstructed EGUs as a matter of state law under section 116 of the Act, EPA cannot requi re the states to regulate a unit as both a new and existing source as this would violate the CAA. Commenter s stated it should also be noted that newly constructed EGUs that commence construction after January 8, 2014 (the date of publication of the propose d NSPS rule for new EGUs under section 111(b)) are outside of the section 111(d) program. Commenters stated t o the extent these newly constructed EGUs displace higher

- emitting generation units (such as an NGCC unit that replaces
a coal

- fired EGU), however, it would be permissible for a state that employs the rate

- based approach under section 111(d) to allow the megawatt hours generated by these newly constructed units to be included in the denominator for a state's rate, and this approach would be
similar t o how renewable energy and new nuclear units are treated in the Proposed Guidelines.
For states that use the mass

- based approach, the emissions from newly constructed units would not be included in the program at all. Commenter s continue d , stating that wit h regard to EPA's concern that there could be an incentive for sources to modify or reconstruct "to avoid their obligations under a CAA section 111(d) plan," 79 Fed. Reg. at 34,904, for the reasons explained above, a source that undertakes modifications or undergoes reconstruction after the date of the proposal of the applicable NSPS has no obligations under a section 111(d) plan by operation of the CAA; it could only have such obligations as a matter of state law at the state's discretion.
Commenters f urth er stated , to the extent EPA has proposed discrepancies in the new source and existing source programs that might create incentives the Agency dislikes, the solution is not rewriting the terms of the CAA. See UARG v. EPA, 134 S. Ct. at 2445 ("An agency has no power to "tailor" legislation to bureaucratic policy goals by rewriting unambiguous statutory terms."), and the reason for this discrepancy is EPA's decision to propose a section 111(d) program that bears no relationship to the requirements of section 111 or to any section 111 standard EPA has previously written. See, e.g., 61 Fed. Reg. 9905 (Mar. 12, 1996) (municipal solid waste landfills); 42 Fed. Reg. 55,796 (Oct. 18, 1977) (sulfuric acid production units).
Commenters stated i f EPA were to write a se ction 111(d) standard that complied with the CAA, this discrepancy would disappear. Commenter s conclude d , stating EPA's proposed interpretation of the CAA is inconsistent with the statutory text of sections 111(a)(2) and 111(a)(6) and is unsupported by rat ional policy considerations. Commenters stated EPA must, therefore, revise the Proposed Guidelines to conform to the CAA requirement that new sources subject to section146 111(b) requirements (including modified and reconstructed sources) cannot also be requi red to comply with section 111(d) state plans under the CAA.

Commenter s recommend ed EPA provide further justification for its position that existing EGUs initially subject to the Section 111(d) requirements would remain subject to these requirements if
lat er a unit is modified or reconstructed and becomes subject to the 111(b) rules governing
modifications and reconstructions.

Commenter s state d that in EPA's June 2014 proposed modification and reconstruction rule, the Agency proposes to keep modified and r econstructed sources in a state's section 111(d) plan if at the time of modification and reconstruction the source was subject to the state's section 111(d) plan: "For the reasons discussed in the Legal Memorandum . . . all existing sources that become
mod ified or reconstructed sources and which are subject to a CAA section 111(d) plan at the time of the modification or reconstruction, will remain in the CAA section 111(d) plan and remain subject to any applicable regulatory requirements in the plan, in add ition to being subject to regulatory requirements under CAA section 111(b)".(79 Fed. Reg. at 34,963/col. 1) Similarly,

c ommenter s observe d , in the proposed Section 111(d) guidelines, EPA restates this proposal, reiterating that the modified and reconstruct ed unit would be subject to Section 111(d) and Section 111(b) requirements simultaneously: "The EPA is proposing that an existing source that becomes subject to requirements under CAA section 111(d) will continue to be subject to those requirements even af ter it undertakes a modification or reconstruction. Commenters stated u nder this interpretation, a modified or reconstructed source would be subject to both (1) the CAA section 111(d) requirements that it had previously been subject to and (2) the modified source or reconstructed source standard being promulgated under CAA section 111(b) simultaneously with this rulemaking. Commenters stated that i t should be noted that this proposal applies to any existing source subject to any CAA section 111(d) plan, and not only existing sources subject to the CAA section 111(d) plans promulgated under this rulemaking."(79 Fed. Reg. at 34,903/col. 3) While c ommenter s understand the initial appeal of this proposal for purposes of ensuring continued emission reductions from existing units, c ommenter s stated EPA's proposal creates significant legal risk under the CAA. Commenter s explain ed that Section 111(a) is clear in
d efining a new source as "any stationary source, the construction or modification of which is commenced after the publication of regulations (or, if earlier, proposed regulations) prescribing a standard of performance under this section which will be applic able to such source."
Commenters stated Section 111(b)(1)(B) further requires EPA to establish separate standards for new sources within one year of listing the source category: "Within one year after the inclusion of a category of stationary sources in a list under subparagraph (A), the Administrator shall publish proposed regulations, establishing Federal standards of performance for new sources within such category." In contrast, c ommenter s remark ed , existing sources are clearly regulated
under Section 1 11(d), which requires EPA to establish "standards of performance for any existing source for any air pollutant" for which air quality criteria have not been issued or which is not included on a list published under Section 108 of the CAA or emitted from a source category which is regulated under Section 112 of the CAA, but "to which a standard of performance under this section would apply if such existing source were a new source."147 Commenter s argue d that EPA cannot regulate the same sources under both provi sions, stating
that the statute is clear "either a source is new subject to standards under Section 111(b), or a source is an existing source subject to standards under Section 111(d). Commenters stated t his separation is reinforced by the different criter ia guiding standard setting for new versus existing sources in each provision. Commenter s state d that EPA ignores the plain meaning and structure of section 111 by attempting to subject sources to both existing and new standards at the same time, and inste ad of proposing dual, simultaneous regulation of modified and reconstructed units that would increase legal risk for the rule, EPA should simply clarify that any physical or operational change undertaken to improve efficiency or comply with a state's Secti on 111(d) plan represents a pollution control project and is thus excluded from triggering modification.
Commenter s stated this would greatly simplify the program and largely address the problem of dual regulation. Commenter s state d that while existing sou rces traditionally have not triggered reconstruction as often as modification, Commenter s anticipated that many existing sources will opt to repower rather than build a new Greenfield plant. Commenters ' October 16, 2014, comments submitted in response to E PA's proposed rule for modified and reconstructed sources
recommend ed that the Agency finalize standards that are reflective of what repowered sources
can achieve. Commenter s remark ed that if EPA insists on proceeding with the more legally vulnerable appro ach of keeping reconstructed sources in Section 111(d), the Agency could simplify compliance by establishing that a reconstructed source's compliance with a state's 111(d) plan also satisfies Section 111(b) standards for reconstructed units. Alternatively,

c ommenter s state d , as noted above in the PSD/NNSR discussion, EPA has similar discretion not to impose NSPS for modified or reconstructed units, and in fact, EPA has previously decided not
to establish certain NSPS for modified or reconstructed units in s pecific source categories, including Asphalt Processing and Asphalt Roofing Manufacture (which exempts modified sources from the visible emission standard 40 C.F.R. 60.472(a)(3)) and Synthetic Fiber Production Facilities (that does not apply to modified fa cilities 40 C.F. R. 60.600(c)).
Commenter s posit ed that deciding not to impose standards on these units would prevent dual regulation.

Commenter s stated t he Proposal indicates that 'an existing source that becomes subject to requirements under CAA 111(d) w ill continue to be subject to those requirements even after it
undertakes a modification or reconstruction.' Commenter s said however, Section 111 is clear that (1) 'modified' units must be regulated as a 'new source' and (2) the definitions of 'new source' and 'existing source' are mutually exclusive

- one unit cannot be both. Commenter s stated a 'new source' is clearly de fined as 'any stationary source, the construction or modification of which is commenced after the publication of regulations (or, if earlier, proposed regulations) prescribing a standard of performance under this section which will be applicable to such so urce.' Commenter s said once an existing source is modified, it becomes a 'new source' by virtue of the language in Section 111(a)(1) that deems modified sources to be 'new sources.' Commenter s said under the EPA's own longstanding regulations, the same wou ld ordinarily be true of any reconstructed source an 'existing source,' on the other hand, is not defined directly, but only as 'any stationary
source other than a new source.' Commenter s stated Congressional intent to make these terms mutually exclusive c ould not be clearer

. Commenter s said to suggest that a source can be both is148 therefore directly inconsistent with the statute. Commenter s said the EPA offers nothing to support its interpretation that a source can be regulated as both a 'new source' and an 'existing source' simultaneously. Commenter s stated never in the history of the Clean Air Act has a source been classified under both 'new' and 'existing' categories at the same time, and the EPA should withdraw its attempt to do so from this Proposal.

Co mmenter s continued that duplicative regulation under Sections 111(b) and 111(d) is not permitted by the CAA, and EPA cannot regulate the same source under both CAA Section 111(b) and CAA Section 111(d). Commenter s explain ed that an EGU regulated under CAA Section 111(b) because it is a "new source"

- which modified and reconstructed sources are
defined to be

- cannot simultaneously be subject to regulation under CAA Section 111(d) as an existing source and vice versa. Commenters stated m odified or reconstruct ed sources that were previously subject to a state plan under CAA Section 111(d) cannot be required to continue to be covered by CAA Section 111(d), although states do have discretion to keep those sources in their CAA Section 111(d) plans if the states ch oose to do so.

Commenters state d EPA asked for comment on bringing Section 111(b) Standards into the Section 111(d) Program. Commenters state d Section 111 specifically prohibits combining the two programs when it states, "The term 'existing sources' means any stationary source other than
a new source." Commenters stated they believe that this provision is dispositive.

Commenters stated that the EPA should not attempt to regulate CO2 emissions for the same source under both section 111(b) and section 111(d) of the Clean Air Act. The commenters said considering how modified and reconstructed sources may already be drawn from the group of existing units that the EPA has proposed to regulate for CO2 emissions under Section 111(d), the
commenters recommend ed that the EPA simply exempt modified and reconstructed sources from CAA Section 111(b) regulation. The commenters said that states should retain the flexibility to exempt or assign regulatory applicability to modified and reconstructed sources for CO2
emissions . The commenters stated that if necessary, these state

- driven, flexible assignments could be proposed by the states in their 111(d) State Implementation Plans. The commenters said new NGCC or coal generating units regulated under Section 111(b) and subject to CO2 New Source Performance Standard (NSPS) requirements should not also be subject to regulation under Section 111(d) existing unit requirements.

Commenters stated t he CAA is clear that the EPA's choice of regulations under Section 111 is binary: the EPA may either (1) promulgate a federal standard of performance for new sources pursuant to CAA Section 111(b)(1)(B); or (2) prescribe regulations pursuant to Clean Air A ct Section 111(d)(1)(A) requiring states to submit a plan 'similar to Section 110' that adopts standards of performance for existing sources . Commenters said a source can be a 'new source' or an 'existing source,' but it cannot be both at the same time. Co mmenters stated the Act's binary division is then reemphasized in the definitions section of Section 111, which provides: (2) The term 'new source' means any stationary source, the construction or modification of which is commenced after the publication of regulations (or, if earlier, proposed regulations) prescribing a standard of performance under this section which will be applicable to such source. (6) The term149 'existing source' means any stationary source other than a new source. 42 U.S.C. Section
7411 (a)(4) & (6). Commenters stated the definitions are clear that an 'existing source' cannot be a 'new source' and therefore, regulation of the same source under Section 111, subsections (b) and (d) at the same time cannot be squared with the express languag e of the CAA. Commenters said this means that the suggestion in the Proposed Rule that: ' The EPA is proposing that an existing source that becomes subject to requirements under CAA section 111(d) will continue to be subject to those requirements even after it undertakes a modification or reconstruction. Under this interpretation, a modified or reconstructed source would be subject to both (1) the CAA section 111(d) requirements that it had previously been subject to and (2) the modified source or

reconstruc ted source standard being promulgated under CAA section 111(b) simultaneously with this rulemaking.' Commenters stated that 79 Fed. Reg. 34,903, col. 3, cannot be reconciled with the plain text of Section 111. Commenters said 'an agency has no power to 'ta ilor' legislation to bureaucratic policy goals by rewriting unambiguous statutory terms,' regardless of how desirable the agency believes such an interpretation may be. See UARG v. EPA, 573 U.S.

--- , slip op. at 21 (2014). Commenters stated the EPA's exist ing NSPS regulations also make this point. Commenters said they state, flatly, that 'an existing facility, upon reconstruction, becomes an affected facility,' 40 C.F.R. Section 60.15(a), and an 'affected facility means, with reference to a stationary sourc e, any apparatus to which [an NSPS] standard is applicable,' 40 C.F.R. Section
60.2 Affected facility . Commenters stated by contrast, the 111(d) implementing regulations in 40 C.F.R. Part 60, Subpart B provide that a "designated facility means any existing facility (see Section 60.2(aa)) which emits a designated pollutant and which would be subject to a standard of performance for that pollutant if the existing facility were an affected facility (see Section 60.2(e))." 40 C.F.R. Section 60.21(b) (emphasis a dded). Commenters said it is thus clear that a designated facility cannot also be an affected facility at the same time. Commenters stated the EPA has nowhere justified its sweeping change in interpretation that upends years of consistent application of Se ction 111 of the CAA. Commenters stated similarly, the EPA has nowhere supported its novel contention that a 'reconstructed facility' is still an existing facility. Commenters said this interpretation flatly contradicts 40 C.F.R. Section 60.15(a), which st ates that a facility that is reconstructed is an 'affected facility' (i.e., one subject to the NSPS standards, and not a 'designated facility'). Commenters stated the EPA's interpretation requires disregard of its own regulations

- regulations that the age ncy specifically stated are not open for comment and hence are not subject to change in this rulemaking.

Response 53 : The EPA is not finalizing the proposed on c e

- in

- always

- in approach, so these

comments are moot. Also see Section XXII of the L egal M emo randum regarding UARG.

Comment 54 : Commenters state d EPA's authority under section 111(d) is limited to issuing "emission guidelines" addressing factors relevant to the states' implementation of the BSER that has been adequately demonstrated to reduce CO2 emissions at a source (inside the fence).
Commenters note d that Section 111(d) specifically directs EPA to establish a procedure for states to submit plans establishing performance standards for existing sources. States possess
considerable discretion and flexibility under the Act in developing standards of performance based on EPA's emission guidelines. Commenters stated t o the extent EPA's guidelines are based150 on replacing equipment to improve the efficiency of the generating unit, EPA should clearly

exem pt such activities from being considered a "modification" for purposes of NSR permitting, particularly in light of EPA's Office of Enforcement and Compliance Assurance's previous focus on these type of projects in their enforcement cases. Commenters stated t hese projects have also been the target of third party citizen suits contending they represent violations of the NSR rules.

Response 54 : We disagree with this comment. We discuss in the preamble for this rule the implications of affected EGUs’ complianc e actions, including implementing building block 1 measures, for NSR.

Comment 55 : Commenter s stated EPA's fallback attempt to argue the Modified Source Rule could provide the "necessary predicate" for its section 111(d) proposal when the New Source Rule is held unlawful is a transparent and illegal end

- run around Section 111's text and structure.
See 79 Fed. Reg. at 34,852. Unsurprisingly, commenters stated EPA can point to no authority or prior examples to support such an approach, because it is plainly unlawful. Commenters stated

u nder Section 111(d)'s plain text, the predicate rulemaking must lawfully regulate equivalent "new" sources not simply equivalent modified or reconstructed sources only. See 42 U.S.C. section 7411(d)(1)(A)(ii). Commenters stated t he term "new source" is not ambiguous in this context. Instead, Section 111(a)(2) of the Act defines it as "any stationary source, the construction or modification of which is commenced after the publication of regulations (or, if earlier, proposed regulations) prescribing a standard of performance under this section which will be applicable to such sour ce." 42 U.S.C. section 7411(a)(2). Commenter s explain ed that as multiple submitted comments on the modified

- source proposal demonstrate, the EPA's position that Section 111's ostensible silence as to whether a source that undergoes modifications ceases

to be an existing source subject to 111(d) standards allows it to subject sources to both the 111(b)
modified

- source and 111(d) existing

- source regimes is unlawful. But commenters added such arguments from silence are an "untenable" means of proving agency au thority. See infra Section III; see also Aid Ass'n for Lutherans v. U.S. Postal Serv., 321 F.3d 1166, 1174

- 75 (D.C. Cir. 2003). Commenter s continue d that both the structure of Section 111 and its subsections defining "new" and "existing" sources make perfe ctly clear that these are mutually exclusive terms: an "existing" source that undergoes modifications becomes a "modified" source, which is treated as a "new" source for Section 111's purposes, and therefore falls under 111(b) alone. Commenter s conclude d t hat because EPA may not lawfully issue a Section 111(b) modified source rule that covers only modified sources, let alone impose both that rule and a 111(d) rule on existing sources that undergo modifications, the modified

- source rule will not and cannot p rovide a lawful predicate for the existing

- source rule.

Commenters state d the proposed NSPS is flawed with EPA suggesting that the Proposed Modified and Reconstructed Source Rule can serve as the requisite Section 111(b) predicate rule for the Proposed Rul e. (42 U.S.C.

- 7411(a)(2); Id. at S. 7411(a)(6)(emphasis added); Id. at S. 7411(a)(2); EPA expressly recognizes the perverse incentives its suite of proposed rules creates. 79 Fed. Reg. at 34,904 (explaining that one reason for EPA's otherwise inexplicabl e attempt to subject modified and reconstructed sources to the Section 111(d) standard "is to avoid creating incentives for sources to seek to avoid their obligations under a CAA section 111(d) plan by151 undertaking modifications. Commenters stated t he EPA i s concerned that owners or operators of units might have incentives to modify purely because of potential discrepancies in the stringency of the two programs, which would undermine the emission reduction goals of CAA section 111(d).").) Commenter s explain e d that EPA proposes to treat modified and reconstructed sources as being both new sources and existing sources at the same time and states this is impermissible under the plain terms of the statute, noting that under Section 111(a), the categories of new

s ources and existing sources are mutually exclusive, and a source may not belong to both categories at once. Commenter s conclude d that to the extent that EPA wishes to treat modified and reconstructed sources as existing sources subject to the proposed Sect ion 111(d) standard, it may not at the same time contend that they are new sources subject to a Section 111(b) standard, and that because this is hat EPA does, the modified/reconstructed source rule cannot serve as a predicate for issuance of the very same Section 111(d) standard to which those sources would be subject. Commenter s stated that the crux of the matter is that EPA may only categorize modified sources as either new or as existing; it may not treat such sources as both; and more specifically,
the Agency may not choose and treat modified sources as "new" for establishing a predicate rule, yet "existing" for purposes of subjecting them to continued regulation under the existing source
rule. Commenter s stated that if EPA opts to treat modified and re constructed sources as existing sources, then, contrary to EPA's assertions, the Proposed Modified and Reconstructed Source Rule cannot serve as the requisite Section 111(b), new

- source predicate rule for the Proposed Rule, and in either case, EPA cannot r egulate modified and reconstructed sources under the Proposed Rule.

Response 55 : EPA disagrees with these comments. Under section 111(d), EPA “shall prescribe regulations” with respect to emissions from existing sources if certain predicates are met. One of the predicates for regulation of a pollutant under 111(d) is that the pollutan t be one “to which a standard of performance under this section would apply if such existing source were a new source.” See section 111(d)(1)(A)(ii). Clearly, a standard for newly constructed sources is a “new source” standard that is a predicate for 111 (d) regulation. But “new source” is defined to also include a source “the modification of which is commenced after the publication of regulations (or, if earlier, proposed regulations) prescribing a standard of performance under this
section which will be applicable to such source.” Further, under EPA regulations in 40 CFR 60.15, sources that meet the definition of “reconstruction” in 40 CFR 60.15(b) are considered to be new sources. Thus, standards for any of these three types of sources are properly con sidered
to be “ new source ” standards, and any of these can serve as the predicate “new source” standard under section 111(d)(1)(A)(ii).

Further, with respect to the portions of this comment that concern the regulation of modified or
reconstructed sources u nder section 111(d) after they became subject to standards under 111(b), as explained in section VIII of the preamble, the EPA is not finalizing its proposal on that point

.

Comment 56 : Commenter s state d that EPA's authority under Section 111 (d) of the Cle an Air Act (the Act) is limited to regulating sources that would be regulated under Section 111 (b) of the Act if they were "new" sources.(See 42 U.S.C.A Section 7411 (d)(1) ("The Administrator shall prescribe regulations which shall establish a procedure ... under which each State shall ...152 establish[] standards of performance for any existing source ... to which a standard of performance under this section would apply if such existing source were a new source ... "))
Commenter s state that the source category subject to regulation under Section 111 is coal

- fired electric generating units. EPA's methodology sets emission reduction targets based on reductions purportedly achievable through re

- dispatch from coal to gas (Block 2), de velopment of renewable energy (Block 3), and implementation of energy efficiency measures (Block 4).
Commenter s state that these reductions cannot be achieved by actions taken at sources within the source category at issue and, thus, should not be consider ed in determining the best system of
emission reductions or as the basis for State

- specific emission goals under Section 111 (d).

Response 56 : We disagree with this comment. We discuss in section V. of the preamble for this rule our justification for inclu ding the measures in building blocks 2 and 3 as part of the BSER, including responding to the commenters’ comments.

Comment 57 : Existing guidelines under 111 (d) should not be set at a level more stringent than new source performance standards established f or the same source category under section 111(b)

Commenter s stated t he Proposed Emission Guidelines compound the problem created by establishing inequitable state carbon emissions goals by setting those goals for some states, including Virginia, at a level well below that which the EPA has proposed for new fossil fuel

fired electric generating units as NSPS under section 111(b) of the Act. Commenter s said the second paragraph of the EPA's "The Clean Air Act in a Nutshell: How It Works" from 2013 says, "The law calls for new stationary sources to be built with best technology, and allows less stringent standards for existing stationary sources." Commenter s stated an examination of the Congressional record indicates that this is how Congress intended section 1 11 to operate all along.

Commenter s stated the legislative history of section 111 implicitly makes clear that NSPS for
new sources under section 111(b) were intended to be more stringent than existing source Emission Guidelines under section 111(d), not th e other way around. Commenter s said the legislative history discusses in depth several reasons why NSPS should be more stringent than Emission Guidelines for existing sources under section 111(d). Commenter s stated these reasons include: 1) the fact it is more economical to install state

- of

- the

- art pollution control equipment on new sources than to retrofit it onto existing plants; 2) to spur the development of new technologies, and; 3) not to unduly hasten t he shut

- down of existing facilities. Congress stated:

[I]n establishing standards of performance based upon emission reduction realizable with the best technological system of continuous emission reduction, believes that it is prudent public policy to requ ire achievement of the maximum degree of emission reduction from new sources, while encouraging the development of innovative technological means of achieving equal or better degrees of control. (Emphasis added.)153 Commenter s stated Congress reiterated its d irective to the EPA that new sources should be more stringently regulated in the following Clarifying Statement to the legislative history of the 1977
Clean Air Act Amendments:

Clarification of Section 111(d). This section is also intended to clarify the b asis for standard

setting for existing sources under section 111(d) of the Act. Under the committee bill, the standards in the section 111(d) State plan would be based on the best available means (not necessarily technological) for categories of existing s ources to reduce emissions.

Commenter s stated taken in the context of the rest of section 111's legislative history, this statement clearly implies that the "best available means" requirement of section 111(d) did not have to include section 111(b)'s more rigorous technology mandate. Commenter s said Congress never contemplated a situation where it would be acceptable to impose a more stringent standard under section 111(d) than under section 111(b).

Commenter s stated the Proposed Emission Guidelines, howev er, fall into the trap Congress
meant section 111 to avoid. Commenter s said by setting the carbon emissions goals for some states at a level far below what the EPA has proposed for natural gas combined cycle (NGCC) units under section 111(b), the Proposed Emission Guidelines will hasten the shutdown of existing section 111(d) affected units and spur the construction of new NGCC plants.
Commenter s said this is not the result Congress intended when it drafted section 111.
Commenter s urge d the EPA to revise th e Proposed Emission Guidelines so that no state goal is set at a level lower than the rate established for new NGCC units under section 111(b).

Response 57 : We disagree that the section 111(d) standards are more stringent than the section 111(b) standards. We explain in the Legal Memorandum why the section 111(b) and (d)
standards are based on different determinations of the BSER.

Comment 58 : Commenter s state d EPA's proposed guidelines for existing power plant performance standards under the Clean Air Act S ection 111(d) are simply the most recent example of the Federal Government's usurping authorities properly delegated to the states.
Commenters concurr ed that EPA's proposal interferes with traditional state authority and energy planning and appears to be w ell beyond the agency's authority under the CAA.

Commenter s state d that EPA has improperly attempted to limit Section 111(d)'s expressed statutory authority, delegation of authority to the states, and in doing so, EPA's proposal not only rejects state disc retion under the Clean Air Act but jettisons decades of unquestioned precedent establishing state jurisdiction over electricity markets.

Commenter s stated t he CPP interprets the contours of Section 111(d) in a way wholly unsupported by the text of the statute. Commenter s said the CPP seeks to bring about major changes to Indiana's electricity sector using programs that have nothing to do with existing power plants. Commenter s provided examples including: uneconomic dispatch of natural gas

fired power pl ants, new investments in renewable energy, and overall reductions in electricity154 demand by Indiana businesses and households. Commenter s said each of these policies may or may not have merit, but they cannot be authorized by the federal CAA at the EPA's in sistence.
Commenter s said rather, decades of consistent law and precedent demonstrate that such policies are the exclusive province of the Indiana State Legislature and Indiana regulators as delegated.
Commenter s stated the CAA merely authorizes the EPA to craft a "best system of emissions reduction" at "existing sources," not to craft a statewide system to reduce emissions of a pollutant that happens to originate at power plants.

Commenter s state d that this rule bypasses the federal and state legislature, ties the hand of the Governor, and usurps my authority as a constitutional officer. Commenters concur r ed

.

Commenter s continue d , stating "The EPA's proposals for major expansions of state energy efficiency, renewable energy programs interfere with traditio nal state authority and energy planning and appear to be well beyond the agency's authority under the Clean Air Act." The

commenter s closed by stating they also feel that this should be in the hands of the President and the Congress and the Senate, not the EPA.

Commenters stated, t hese consequences, moreover, would all stem from a patently unlawful application of the Clean Air Act. Commenters stated EPA's proposal seeks to expand the scope of Section 111(d) in an unprecedented manner. Commenters stated i t w ould do so at the expense of state authority that is expressly identified and preserved in the Clean Air Act and in the unquestionable jurisdiction of states over intra

- state electricity markets. Commenters stated that it would do all of these things for n o discernible benefit.

Commenters state d that EPA's proposals for major expansion of state energy efficiency and renewable energy programs interfere with the traditional state authority to manage the plan and appear to be well beyond the agency's authority under the Clean Air Act. Commenter s continue that State legislatures have set renewable energy goals based on balancing local economic and
environmental considerations now and find that those judgments had been second guessed by
EPA. Commenter s add ed that Congress itself is not able to agree on national renewable energy targets. The EPA focused the rule only on actions to reducing emissions within plant programs.

Commenter s state d EPA has improperly attempted to limit Section 111(d)'s expressed statutory authority, delegation of authority to the states, and in doing so, EPA's proposal not only rejects state discretion under the Clean Air Act but jettisons decades of unquestioned precedent establishing state jurisdiction over electricity markets.

Commenter s state d t his rule bypasses the federal and state legislature, ties the hand of the Governor and usurps my authority as a constitutional officer.

Response 58 : We disagree. For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory p urpose, and155 legislative history. In section V. of the preamble for this rule, we also explain the respective roles of the EPA and the states under CAA section 111(d).

We disagree that we are expanding our authority to include wholesale energy market regula tion. Our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. Moreover, these emission guidelines provide states with the flexibility to establish, implement, and enforce standards of performance and do not intrude on the regulatory domain of FERC or the states. It cannot be said that because environmental requirements may have an effect on the wholesale energy market that the EPA is th erefore intruding into energy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Congress expressly identified power plants as a priority source category for regulation under CAA section 111. Finally, we note that, with
respect t o comments regarding demand

- side energy efficiency, the EPA is not including building block 4 as a component of BSER.

Comment 59 : Commenter s state d that states must have the opportunity to exercise the same authority as EPA, explaining that un der Section 1 11(b), traditional canons of statutory construction dictate that States exercise the same authority with respect to existing sources under Section 111(d) as EPA exercises with respect to new sources under Section 111(b). Commenters
stated Section 111(b) di rects EPA to establish[] Federal standards of performance for new sources within such category, while Section 111(d) directs States to establish standards of performance for any existing source to which a standard of performance would apply if such existing source were a new source. Commenters stated w hen identical words such as the direction to establish standards of performance are used in different subparts of the same statutory provision, the y must be given the same meaning. See Gustafson, 513 U.S. at 570; ACF Indus., Inc., 510 U.S. at 342; Retzlaf, 510 U.S. at 143. Thus, c ommenter s conclude d that when establishing standards of performance for existing sources under Section 111(d), States must be permitted to exercise the same authority that EPA exercises under Section 111(b): namely to conduct a BSER analysis, select the best system of emission reduction for a source category or subcategory, and then translate that into a source

- specific emiss ion standard

.

Commenter s state d the Proposed Rule disrupts the congressionally established and judicially recognized division of responsibility for implementing existing source standards under Section 111(d) of the Clean Air Act, and it conflicts with the Act by reducing states to secon dary partners with EPA, when, in fact, Congress intended states to take the lead. Commenter s explain ed that this flaw is evident in the general approach EPA proposes to take: first, in establishing the CO2 emission rate limits applicable to each state; and second, in the specific details of state plan implementation discussed throughout the Proposal.

Response 59 : We disagree with these comments for the reasons stated in our response to the previous comment in this section regarding coope rative federalism un der the CAA, as well as in section VIII of the Legal Memorandum accompanying the final rule. Furthermore, i n section V. of the preamble for this rule

, we also explain the respective roles of the EPA and the states under CAA section 111(d).156 Comment 60 : Com menter s state d that the U.S. EPA's proposed existing

- source rule overreaches far beyond the bounds established by the Clean Air Act, and it endeavors to impose "beyond the fenceline" regulations to revamp Ohio's entire electricity infrastructure

-- from po wer generation, to transmission, and even to consumption. Commenter s stated Congress did not intend for the Clean Air Act's relatively

- narrow Section 111(d) to be used as a mechanism for far

- reaching regulatory overhaul of the Nation's energy

- generation sector. Cf Whitman v. Am. Trucking Assn., Inc., 531 U.S. 457, 468 (2001) (EPA may not exercise broad regulatory control absent explicit statutory authority: "Congress, we have held, does not alter the fundamental details of a regulatory scheme in vague ter ms or ancillary provisions

- it does not, one might say, hide elephants in mouseholes."). Commenter s continue d , stating that the United States Supreme Court has echoed its concern with EPA overreach specifically in the context of U.S. EPA's desire to regulat e greenhouse gas emissions. UA.R.G. v. EPA, 134 S.Ct. 2427 (2014), explaining that in UA.R.G., the Supreme Court again emphasized that vast regulatory expansions should not arise from an agency's interpretation of an arguably ambiguous statute, but must in stead derive from "clear congressional authorization." Id. at 2444; accord Whitman, supra. Commenter s contend ed that the proposed rule ranges far beyond the authority that Congress has provided to U.S. EPA.
Commenter s continue d that as set forth more fully in the Brief for Petitioners recently filed by Ohio and its fellow Petitioners in State of West Virginia, et al. v. United States Environmental Protection Agency (D.C. Cir. No. 14

- 1146), U.S. EPA purports to rest its rulemaking authority
on a section of t he Clean Air Act (section 111(d)) that the EPA previously has described as designed to confront specific problems involving pollutants that are "highly localized and thus [where] an extensive procedure, such as the SIPS require, is not justified." 40 Fed. Reg. at 53,340; 53,342 (Nov. 17, 1975). Commenters stated u nder Section 111(d), "the number of designated facilities per state should be few," and the resulting state plans "much less complex than the SIPs" for criteria pollutants under Clean Air Act secti on 110. Id. at 53,345. Commenter s
argue d that Congress has not conferred upon U.S. EPA the power it seeks to wield here. Indeed, not only has Congress withheld such a sweeping grant of authority, it explicitly has outlawed what U.S. EPA now proposes

- the double regulation of sources under both Clean Air
Act section 112 and section 111(d).

Response 60 : EPA’s implementing regulations were issued pursuant to CAA section 111(d), which required the Administrator to establish a CAA section 110

- like procedure fo r states to submit plans, which establish, implement, and enforce standards of performance for existing sources in a CAA section 111(b) regulated source category . In accordance with CAA section 111(d) and pursuant to these implementing regulations, the EPA develops emission guidelines to assist states in preparing and submitting such state plans.

In the preamble to EPA’s implementing regulations, the EPA explained that “Section 111(d) of the Act was specifically designed to require control of pollutants wh ich are not presently considered ‘hazardous’ within the meaning of section 112 and for which ambient air quality standards have not been promulgated.” 40 Fed. Reg. at 53341. Thus, “Congress specifically recognized the need for control of a third category o f pollutants” even though “these pollutants might later be reclassified as hazardous or criteria pollutants.” Id. at 53342. Although the EPA157 observed that sometimes health and welfare problems caused by such pollutants may be “highly localized,” neither CA A section 111(d) nor the EPA’s implementing regulations restrict CAA section 111(d) to “localized” pollutants.

In response to comments that “argued that the nine months provided for development of State plans after promulgation of an emission guideline by EPA would be insufficient,” the EPA noted
that CAA section 111(d) plans would “[i]n most cases” be “less complex than the SIPs” and that “the number of designated facilities per State should be few.” Id. at 53345. Nevertheless, because

“ Congress provided only nine months for SIP development ,” the EPA saw no reason to lengthen
the nine

- month provision for purposes of CAA section 111(d). That said, EPA’s implementing regulations authorize the Administrator to extend the period for submission of any plan

, and she has exercised that authority for this rule.

Comment 61 : Commenter s state d that without direct Congressional authorization, EPA cannot exercise authority over state Public Utility Commissions (PUCs), state energy offices, or state energy policy, and EP A does not have the authority to dictate fuel use, require reduced utilization of units or require re

- dispatch as a compliance mechanism, mandate rules governing end use or mandate renewable requirements for states. Commenter s contend ed that EPA's
authorit y is limited to authorities provided by the CAA over pollution control at source specific fossil fuel units that "may emit any air pollutant."(42 USC Section 7411(a)(3))

Response 61 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

We disagree that we are expanding our authority to in clude wholesale energy market regulation

no r state retail regulation . Our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. Moreover, these emission guidelines provide states with the flexibility to establish, implement, and enforce standards of performance and do not intrude on the regulatory domain of FERC or the states. It cannot be said that because environmental requiremen ts may have an effect on the wholesale energy market that the EPA is therefore intruding into energy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Congress expressly identified power plants as a priority source category for regulation under CAA section
111.

Comment 62 : Commenter s state d that EPA's use of the words "guidance" and "information" throughout this regulation indicates that information is all that EPA is authorized to provide the States but EPA is not authorized by that regulation to issue emission "guidelines," like the present proposal, that contain binding state

- wide emission reduction goals and that are thus "guidelines" only in name. Commenter s stated that even if EPA has the authority to issue
CAA section 111(d ) regulations governing CO2 emissions from coal

- fueled EGUs, the Proposed Rule impermissibly intrudes upon Wyoming's express authority under CAA section 111(d) to
"establish" state

- specific standards of performance. Commenter s explained that under158 CAA sect ion 111(d), EPA's authority is limited to adopting a "procedure" under which "each State shall submit to the Administrator a plan which (A) establishes standards of performance .... ", and the Proposed Rule is far more than procedural. Rather, c ommenter s c ontended , the Proposed Rule would usurp Wyoming's CAA and state law authority to "establish" performance standards by dictating what the standards must be, and additionally, EPA has structured the Proposed Rule in a way that would prevent Wyoming from cons idering "the remaining useful life of the existing source" in applying a state

- established performance standard.

Commenter s state d what EPA calls "standards of performance" that it leaves to states to determine are not standards of performance within the meaning of CAA Section 111(a) and (d). Rather, c ommenter s remark ed , they are akin to state implementation plan measures that states must adopt to attain an EPA

- established NAAQS. Commenter s continue d , stating that under the Proposed Rule, whatever plan the state submits, however, must ensure that emissions from the regulated source category must decline to the level of EPA's specific goals, and thus, directly or indirectly, EPA is dictating the level of emission reduction regulated sources must make, and it has determined that level by applying the BSER factors. Commenter s conclude d that EPA is promulgating performance standards within the meaning of CAA Section l11(a) but c ommenter s explained that under CAA Section 111(d), however, Congress gave states, not EPA, authority to
establish those standards. Commenter s stated that given that the Proposed Rule gives EPA primary decision making at the expense of North Dakota, EPA claims of "state flexibility" are

not accurate.

Commenters add ed the EPA must recognize its own narrow authority to establish emissions guidelines under section 111(d) and, consistent with the cooperative federalism principle inherent in the CAA, state primacy to establish performance standards and develop state plans to satisfy the guidelin es.

Response 62 : We disagree with these comments. In the preamble for this rule, we explain the respective roles of the EPA and the states under section 111(d) and we explain the interpretation of the “remaining useful life” provision of section 111(d)(1) and how the states may rely on it.

Comment 63 : Commenter s stated these proposed rules leave no doubt that EPA's action under
Clean Air Act section 111

- and the Clean Air Act in general

- usurps Congressional authority and contravenes Congress's manifest com mitment to keeping coal as an important component of the nation's electricity mix

Response 63 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

EPA also disagrees with the characterization that coal will not remain an important part of the
nation ’ s energy mix.159 Comm ent 64 : Commenter s state d that the proposed rule's "outside

- the

- fence" emission
reductions from non

- affected sources and measures including re

- dispatching NGCC, RE, and EE would be necessary to meet the targets proposed for Pennsylvania. Commenter s said be cause of the potential effects on fuel diversity, energy prices, and other consumer effects, commenter s believe that such policy decisions are better left to the United States Congress or other elected
officials. Commenter s stated clearly, this is a concer n of the Pennsylvania House of Representatives and Senate, both of which passed legislation that was signed into law by the Governor of Pennsylvania. Commenter s said this legislation mandates that commenter s submit the proposed Section 111 (d) State Plan t o the General Assembly for their review and approval.

Response 64 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in ligh t of the statutory text, statutory context, statutory purpose, and legislative history. As explained in section VIII.B.1 of the preamble, we have provided adequate time for necessary state legislative processes.

Comment 65 : Commenters state d that in Utili ty Air Regulatory Group v. EPA, the Supreme Court cautioned against the kind of expansive interpretation of the CAA that pervades the CPP.
Commenter s explain ed that the Court has noted that an EPA interpretation of its authority would be unreasonable if "it would bring about an enormous and transformative expansion" in the EPA's regulatory authority without "clear congressional intent."(134 S. Ct. 2427,2444 (201 4).) "When an agency claims to discover in a long

- extant statute an unheralded power to regulate a significant portion of the American economy, we typically greet its announcement with a measure of skepticism."(Id. (quoting FDA v. Brown & Williamson, 529 U .S. 120, 159, 188 (2000)) (internal quotation marks omitted)) "We expect Congress to speak clearly if it wishes to assign to an agency decisions of vast 'economic and political significance."(Id.) Commenter s contend ed that the CPP seeks to do precisely wha t the Court has already rejected: to vastly expand the EPA's regulatory authority without Congressional approval by discovering in a "long extant statute an unheralded" power in section 111(d) of the Act. Commenter s said one of the Court's prior decisions addressing this issue offers the following caution to such an expansive interpretation of the Act: "[I]n [the] EPA's assertion of that authority, we confront a singular situation: an agency laying claim to extravagant statutory power over the national econ omy while at the same time strenuously asserting that the authority claimed would render the statute 'unrecognizable to the Congress that designed' it."(Utility Air Regulatory Group, 134 S. Ct. at 2444)" Commenter s stated further still, it is inconceivable that Congress would have intended for this rarely used provision of the Clean Air Act to empower the EPA to usurp state oversight of electricity markets. Commenter s stated as the Supreme Court explained, "Congress . . . does not
alter the fundamental deta ils of a regulatory scheme in vague terms or ancillary provision

- it does not, one might say, hide elephants in mouse holes."(Whitman v. Am. Trucking Assns., Inc. , 531 U.S. 457,468 (2001).

Response 65 : We disagree with this comment. In section s IV and V. of the preamble to this rule, and the Legal Memo, we explain our legal basis and, in light of the U.S. Supreme Court160 jurisprudence the commenters cite, why this rule is consistent with CAA authority and does not overstep the bounds of that authority.

Comment 66 : The commenters have identified other legal issues raised by the Clean Power Plan
that EPA should consider. Commenters said s pecifically, the regulation of existing sources through the Clean Power Plan seems to be premature ; s ee CAA section 111 ( d)( 1 )(A), 42
U.S.C. section 74 11 (d)( 1 )(A). Commenters said Section 111 (d)( 1 )(A)(ii) requires EPA to first finalize standards of performance for new sources before developing procedures for the submission of state plans for existing sources. Id. Commenters said m oreover, EPA has not yet made an endangerment finding as required by Section 111 (b)( 1 )(A) to support the proposed
Clean Power Plan ; s ee CAA section 111 (b)( 1 )(A); 42 U.S.C. section 7411 (b)( 1 )(A).

Response 66 : We disagree with these comments. We respon d to each of the points raised in the preamble for this rule.

Comment 67 : Commenter s dispute d EPA's suggestion that the ESPS can be revised to require
further reductions in the future. Commenter s stated that Section 111(d) standards to date have
been interpreted as a one

- time standard but EPA suggests in the Preamble that it can continually

re

- visit the existing unit standard in the future to obtain lower state emissions rates and tougher
standards. Commenter s explain ed that while Section 111(b) calls for revisiting new unit standards every 8 years, there is no such provision concerning existing u nits under Section 111(d), and EPA does not have the authority to continually force states to tighten the existing
unit standards.

Response 67 : This comment is outside the scope of this rulemaking.

Comment 68 : Commenter s remark ed about alternatives to federal enforcement of PUCN regulatory actions. Commenter s state d that to address the concerns set forth above, the Nevada Agencies suggest that the USEPA could avoid these issues by clarifying that its authority is limited to controlling emissions from affected sources. Commenter s believe d that an approach that is more aligned with the federal

- state partnership embodied in the Clean Air Act will make the final g oal federally enforceable, but would leave matters traditionally within state purview to
state enforcement. Commenter s add ed that States need the flexibility to be able to commit to achieving the targeted emission reduction goals without making the program s to achieve reductions themselves federally enforceable. Commenter s close d , stating that an implementation plan such as the state commitment approach outlined in the preamble (79 FR at 34901) would allow states the ability to timely react to ever

- changing markets or other circumstances.

Response 68 : The final rule limits federal enforceability to emission standards for affected
EGUs , whether in the context of an emission standard type plan, a state measure type plan, the federal backstop, or a federal plan

.

Comment 69 : Commenter s remark ed that states cannot be subject to citizen suits solely for failure to meet their state goals, citing Sierra Club v. Korleski, in which the Sixth Circuit161 explained that a state is liable to citizen suits when it acts as a po lluter rather than a regulator.(Sierra Club v. Korleski, 681 F.3d 342 (6th Cir. 2012); see Bennett v. Spear, 520 U.S. 154 (1997). In implementing state plans pursuant to the Proposed Rule, c ommenter s explained
that states are acting as regulators and, ther efore, would not be subject to citizen suits for failure to implement their state plans. Furthermore, commenters stated if a state has implemented all the measures in its state plan, the state has implemented the performance standard envisioned under
Secti on 111 regardless of whether the state achieves all of its expected emission reductions.
Commenter s posit ed that Section 111 of the CAA, unlike Section 110, does mandate that a state attain a uniform numeric emissions standard. Accordingly, commenters stat ed there would be no violation of a standard to support a citizen suit. Commenter s stated that courts may only enforce specific state plan strategies, and may not enforce a state plan's overall objectives or aspirational goals, which would bar citizen suit s against states for failing to meet their state goals (See, e.g., Bayview Hunters Point Community Advocates v. Metro. Trans., 366 F.3d 692 (9th Cir. 2003); Trustees for Alaska v. Fink, 17 F.3d 1209, 1212 (9th Cir. 1994)), and thus, citizen suits may be
br ought against entities regulated under the plan to enforce the measures in the plan, but citizens could not sue a state due to the failure of the state to meet its state emission reduction goal.

Response 69 : Section 304 of the CAA authorizes citizens to bring civil actions against any person who is alleged to have violated or to be in violation of “an emission standard or limitation” but does not authorize citizens to directly compel state action to implement the requirements of CAA section 111(d). The EPA therefore agrees with commenters that section 304 does not allow for a citizen suit against a state that fails to implement a section 111(d) state plan or fails to meet its emission goal, where the state has not itself taken on the obligation to meet an “emission standard or limitation.” Under the “emissions standards” approach, affected
EGUs

— and not states

— will be subject to citizen enforcement through section 304. Although states will be obligated to take c orrective measures for certain emission standards plan approaches if an implemented state plan fails to achieve required emission reductions, the EPA
does not believe this would constitute a “violation” of an “emission standard or limitation” for

purposes of section 304. Under the “state measures” approach, if the state plan fails to achieve required emissions reductions it will trigger a federally enforceable “backstop.” Emissions standards imposed under the backstop would be enforceable against affected E GUs under section 304. In the event a state fails to submit an approvable state plan, the EPA is authorized to impose a federal plan in the state’s place.

Comment 70 : Commenter s state d that in order to draft a FIP that incorporates EPA's proposed building blocks, EPA would have to order utility companies to dispatch their power plants differently than they do now; it would have to order utilities

- and likely others

- to build renewable resources in place of lower cost resources; it would have to order util ities to build or retain nuclear plants, and require state commissions to allow cost recovery for such plants in utility rates (or require the state legislature and governor's office to commit to subsidize such resources)

- actions backed by authority that is questionable, at best, and with federalism implications.162 Response 70 : This comment is beyond the scope of this rulemaking, which establishes EGs for state plans in the first instance. The EPA is proposing a federal plan to implement the EGs in a

separ ate action. While this comment is out of scope, we note that we disagree with the

commenter s that these are the types of actions that the EGs would compel the agency to take in order to achieve the emission performance rates in the EGs. The proposed federa l plan will be designed to achieve emissions reductions through the application of emission standards that apply to, and are enforceable against, the affected EGUs.

Comment 71 : Commenter s state d that inflexible emission limits are inconsistent with the state role defined by Congress in section 111(d). Commenter s explain ed that Section 111(d) establishes specific roles for EPA and states. Commenter s note d that EPA proposes specific mandatory "goal s," or target emission rates, for each state characterizing these numerical limits as 4'emission guidelines,"(EPA Legal Memorandum at 32. Compare 40 C.F.R. section 60.2 1 (d), discussed in EPA's Legal Memorandum at 31, with 42 U.S.C. section 7411(a) (EPA's d efinition of "emission guideline" is nearly identical to the statutory definition of "standard of performance" in section 111 of the Clean Air Act)) and EPA will not adjust the mandated emission rate where a state cannot implement one of the building block s, unless the state demonstrates that it cannot achieve the rate by other means

- by applying the other BSER building blocks more aggressively or through some other "related, comparable measures."(Proposed Rule, 79 Fed. Reg. at 34,893) Commenter s stated tha t once finalized, EPA does not intend to allow states to alter the target emission rates, (Proposed Rule, 79 Fed. Reg. at 34,835 ("Once the final goals have been promulgated, a state would no longer have an opportunity to request that the EPA adjust its C O 2 goal."); Id at 34,897

- 98 (rejecting suggestion that states be allowed to treat EPA's goals "as advisory rather than binding"); Id. at 34,892 (noting that the emission rates promulgated in the final rule will be binding emission guidelines for state plan s)) , and these inflexible emission limits are inconsistent with the state role defined by Congress in section 111(d).

Response 71 : We disagree with this comment. We discuss the state goals and our legal authority for them in the preamble for this rule.

Comment 72 : Commenter s state d EPA's ability to craft a rule that accounts for regional differences and the disproportionate impacts on coal producing states of regulating CO2 emissions from power plants is limited by its Clean Air Act authority.

Response 7 2 : We disagree. As we explain in section V of the preamble, section 111, including as interpreted by the D.C. Circuit, may be reasonably interpreted to authorize the EPA to take regional differences into account.

Comment 73 : Commenter s state d that the prop osed NSPS for new sources does not address the same type of facilities as the proposed guidelines. Commenter s explain ed that even if EPA could demonstrate that it proposed a lawful NSPS for new EGUs, which it cannot do, its Proposed
Guidelines do not addre ss the "same type" of facility that the proposed NSPS for new EGUs
would address. Commenters stated o n this basis alone the Proposed Guidelines lack the legal163 prerequisite that a standard of performance for the same type of facility will have been proposed concurrently with or before the section 111(d) proposal. Id. Commenters stated u nder the Agency's own Subpart B regulations, emissions guidelines may apply only to designated
facilities

- the same type of facility regulated under the new source NSPS rule. In this context,
commenters stated that would mean that EPA could propose emission guidelines only for fossil
fuel

- fired EGUs that meet the threshold requirements set forth in the new source NSPS proposal.
Commenter s state d that in the Proposed Guidelines , however, EPA never defines what the regulated "designated facility" would be. Commenters stated that i n an attempt to accomplish its novel, systems

- based approach to BSER, EPA dodges the question of what the "designated facility" is and instead has intro duced a new term: "affected entity." See, e.g., 79 Fed. Reg. at 34,951, Proposed 40 C.F.R. section 60.5740(a)(3) (State plans must identify "the state emission performance level for affected entities that will be achieved through implementation of the plan ."); I d., Proposed 40 C.F.R. section 60.5740(a)(3)(ii)(B) ("For a mass

- based CO2 emission performance level, the identified level of performance must represent the total tons of CO2 that will be emitted by affected entities during each plan performance per iod."). Commenters stated EPA defines "[a]ffected [e]ntities" to mean "any of the following: An affected EGU, or another entity with obligations under this subpart for the purpose of meeting the emissions performance goal requirements in these emission gui delines." Id. at 34,956, Proposed 40 C.F.R. section 60.5820 (emphasis added). Commenters stated t he CAA and EPA's Subpart B regulations prohibit EPA from expanding the universe of covered sources under section 111(d) beyond those regulated as new sources under section 111(b). CAA section 111(d)(1); 40 C.F.R. section 60.22(a). Commenter s remark ed that the Subpart B regulations limit EPA to proposing and finalizing emission guidelines for "designated facilities," not "affected entities," which EPA has
define d to be a world much larger than "designated facilities." See, e.g., 40 C.F.R. section 60.21(e) ("Emission guideline means a guideline set forth in subpart C of this part, or in a final guideline document published under section 60.22(a), which reflects th e degree of emission reduction achievable through the application of the best system of emission reduction which (taking into account the cost of such reduction) the Administrator has determined has been adequately demonstrated for designated facilities.") (second emphasis added); I d. section 60.22 (a) ("Concurrently upon or after proposal of standards of performance for the control of a designated pollutant from affected facilities, the Administrator will publish a draft guideline document containing infor mation pertinent to control of the designated pollutant [from] designated facilities."); I d. section 60.22(b)(5) ("The Administrator will specify different emission guidelines or compliance times or both for different sizes, types, and classes of designate d facilities when costs of control, physical limitations, geographical location, or similar factors make subcategorization appropriate."). Commenter s continue d , stating that EPA insists it is "following the requirements of" the Subpart B regulations and is not amending or reopening them, 79 Fed. Reg. at 34,844, and yet it fails to adhere to the most basic of the Subpart B requirements: identifying the regulated source category, which by law must be identical to the source category regulated under the sectio n 111(b) NSPS. In fact, commenters stated the very
first non

- definitional sentence of the Subpart B regulations states that EPA's guideline document must contain "information pertinent to control of the designated pollutant [from] designated
facilities." 4 0 C.F.R. section 60.22(a). Indeed, c ommenter s remark ed , the Proposed Guidelines164 would regulate sources that extend far beyond the coal

- and gas

- fired EGUs EPA would regulate under its January 2014 NSPS Proposal. Commenters stated EPA does at times use the term "affected EGU" but such term is not used interchangeably or as a synonym with the term "affected entity." Commenters stated i t is clear that EPA intends for the section 111(d) emission guidelines to apply to "affected entities," not only to "affected EGUs." See, e.g., 79 Fed. Reg. at 34,953, Proposed 40 C.F.R. section 60.5780(a) ("Your state plan shall include emission standard(s) that are quantifiable, verifiable, non

- duplicative, permanent, and enforceable with respect to each affected entity."); id. at 34,953

- 54, Proposed C.F.R. section 60.5780(f) ("An emission standard is enforceable against an affected entity if: (1) A technically accurate limitation or requirement and the time period for the limitation or requirement is specified; (2) Compliance r equirements are clearly defined; (3) The affected entities responsible for compliance and liable for violations can be identified; (4) Each compliance activity or measure is enforceable as a practical matter; and (5) The Administrator and the state maintai n the ability to enforce violations and secure appropriate corrective actions . . . ."). Commenters stated o nly after EPA discusses the requirement that state plans apply standards to "affected entities," EPA inserts a separate section in its proposed regu latory language discussing the "Applicability of State Plans to Affected EGUs." Id. at 34,954. Commenters said s tates must address emissions from affected EGUs in their state plans, but it is abundantly clear that EPA's design envisions emissions

- related

r equirements under section 111(d) applying to a much broader range of sources than the sources that would be regulated under its section 111(b) NSPS proposal. Commenters stated EPA explains in the preamble that state plans may apply "enforceable measures" t hat "are implemented by the state or by another entity" in addition to EGUs. Id. at 34,837; see also I d. at 34,853 ("Based on requests from stakeholders, the EPA is proposing that states be authorized to submit state plans that do not impose legal responsi bility on the affected EGUs for the entirety of the emission performance level, but instead, by adopting what this preamble refers to as a portfolio approach, impose requirements on other affected entities (e.g., renewable energy and
demand

- side energy eff iciency measures) that would reduce CO2 emissions from the affected EGUs."). Thus, c ommenter s conclude d , under EPA's Proposed Guidelines, the "designated facility" would be EGUs, the state (the entity to which EPA is in fact applying a numeric rate

based e missions goal), and other entities, including any "private or public third

- party entity." Id. at 34,917. Moreover, commenters stated , EPA has no authority, under either section 111(d) or the Subpart B regulations, to adopt nonnegotiable, binding "emission goals" for states as it proposes to do. Subpart B does not even mention the term "emission goal." Commenters stated
that b oth Subpart B and section 111(d) speak in terms of "standards of performance."
Commenters stated u nder section 111(a)(1), the standard of performance must reflect the degree
of "emission limitation" that is achievable with the BSER. Commenters stated u nder section 111(d), states are to establish standards of performance applicable to sources. Commenters stated EPA's convoluted approach d isregards both the statute and its own implementing regulations and would apply to states a binding emission limitation, and states would then be free to apply standards of performance to any "affected entity" it wishes, without fealty to the restriction t hat the regulated entity must be identical in the section 111(b) and section 111(d) regulations.
Commenters stated EPA's interpretation of its own regulations does not accord with the statute. Moreover, commenters added , because EPA acts contrary even to i ts own regulations, it is165 entitled to no deference in interpreting them. Finally, commenters stated , for the same reasons, EPA's proposal for modified and reconstructed sources under section 111(b) is also not sufficient to justify the section 111(d) propo sal. See 79 Fed. Reg. at 34,852 ("The EPA intends to complete two CAA section 111(b) rulemakings regulating CO2 from new fossil fuel

- fired EGUs and from
modified and reconstructed fossil fuel

- fired EGUs before it finalizes this rulemaking, and either
of th ose section 111(b) rulemakings will provide the requisite predicate for this rulemaking.").
Commenters stated a lthough the CAA defines the term "new source" to include a modified source, CAA section 111(a)(2), the Proposed Guidelines seek to regulate syste ms, states, and
sources other than individual EGUs. Commenters stated t he Proposed Guidelines define an "Affected Entity" as any entity with an enforceable obligation under a state plan. 79 Fed. Reg. at 34,956, Proposed 40 C.F.R. section 60.5820. Commenter s stated t his could include nearly any type of entity, "e.g., an entity that is regulated by the state, such as an electric distribution utility, or a private or public third

- party entity." Id. at 34,917. By contrast, commenters stated , the section 111(b) proposals for modified, and reconstructed facilities define the designated facility
as a fossil fuel

- fired EGU. Commenters stated t his is a mismatch , and added EPA cannot regulate a different type of source under section 111(d) than the type of source that is regulated as a new (or modified or reconstructed) source under section 111(b). Commenter s stated that because EPA has failed to meet these fundamental legal prerequisites for proposing and finalizing section 111(d) emission guidelines for CO2 emissions , the Proposed Guidelines are
unlawful and must be withdrawn.

Response 73 : The final rule does not authorize state plans to impose section 111(d) state plan requirements on entities other than affected EGUs; accordingly, the concerns commenter s
expresse d in this comment do not apply to this rule.

Comment 74 : Commenter s state d that by making regulation of existing sources contingent upon the promulgation of standards of performance for new sources, Congress made it clear that Section 111(d) is a supplement ary program that builds off of the standards of performance and BSER analysis applied to new sources. Yet, c ommenter s contend ed , EPA's Proposed Rule for existing sources diverges substantially from the framework created in its Section 111(b) proposal, and explain that because Section 111(b) and Section 111(d) both cross

- reference the same definition of "standard of performance" included in Section 111(a), EPA must apply the same methodology when conducting the BSER analysis for both existing and new sources

. Commenter s state d that this is not what EPA did in the proposed rule for existing sources, and EPA's proposed rule for new sources did not rely on the broad

- based portfolio approach presented by EPA in this proposed rulemaking but, instead, EPA's propose d rule for new sources appropriately limited itself to source specific technological means of reducing CO2 emissions

- it contained no "plant to plug" proposals like those included in Building Blocks 2, 3, and 4 of the current proposal.

Response 74 : We disa gree. We explain in the Legal Memorandum why the section 111(b) and (d) standards are based on different determinations of the BSER.166 Comment 75 : Commenters stated that requiring greater reductions from states that have already
reduced emissions is not consistent with the structure of the CAA. Nowhere in the Act is EPA authorized to require additional reductions from a source simply because it had already achieved
the de sired level of emission performance. Commenters stated i n a more traditional approach to section 111 standards, EPA would base standards on the emission rate achievable through the use of a particular control technology. Commenters stated i f a unit already had installed that control technology, it would be deemed compliant. Commenters stated t his would not be a free pass to the contrary, it would recognize that the source had invested in achieving the required emission performance goal early and, therefore, was achieving that goal. Commenters stated i n the proposed section 111(d) guidelines, however, reductions already achieved through state and utility investments in clean energy are not deemed compliant, but are, instead, met with standards that require ad ditional, more stringent reductions

.

Response 75 : The EPA recognizes the importance of early actions taken by states and industries to reduce emissions of greenhouse gases and the effect these actions have had on global emissions. However, the CAA does not require that emission guidelines under section 111 provide credit for actions that predate the EPA’s decision to regulate emissions from a source
category

– and commenters have not identified any provisions of the CAA to support this
contention. While tec hnology

- based standards may sometimes result in early

- acting facilities being deemed in compliance without further action, this is not a mandatory feature of emissions regulations generally or emission guidelines under section 111(d). Furthermore, trying t o account for all actions pre

- dating the emission guidelines that may have reduced a state’s or facility’s emissions would be impracticable here. In the final rule, the EPA is establishing uniform emission rates and state targets tailored to emission reduc tion opportunities available to states and sources through the application of the BSER. For a discussion of the EPA’s approach to early actions taken by states or affected entities after promulgation of the final rule but before the first compliance period , see the final rule preamble at section VIII.B.2.

Comment 76 : Commenter s state d the New Source Rule

- if finalized in anything like its proposed form

- will not be a lawful predicate for the proposed Section 111(d) rule. Commenter s explain ed that the New Source Rule is based upon EPA's claim that the "best system of emission
reduction" for carbon dioxide emission from coal

- fired power plants is partial carbon capture and storage (CCS). 79 Fed. Reg. at 1,430 but as 16 States explained in their comment lette r to EPA, CCS is not the "best system of emission reduction" because CCS has not been shown to be reasonably reliable, efficient, broadly available, or economically feasible in any commercial setting. Commenter s added that, as the States also explained, th e proposed New Source Rule violates the Energy Policy Act of 2005 because EPA's claim that CCS technologies have been "adequately demonstrated" is based on government

- funded projects that would not be economically viable without government funds; the 2005 Act expressly forbids EPA from relying on these projects when setting standards under Section 111. Finally, commenters stated

, the New Source Rule is arbitrary and capricious, as the States' c omment l etter articulated, because EPA's justifications for the rule are contrary to the agency's own predictions.167 Commenter s explained that EPA may not finalize guidelines for existing sources unless new sources of the same type of entity are already subject to a section 111(b) performance standard.
Commenters stated EPA's proposed NSPS for new coal

- fired EGUs fails to meet the statutory requirements for a standard of performance under section 111(b) of the Act because partial carbon capture and storage is not ad equately demonstrated and the proposed NSPS does not actually require a reduction in CO2 emissions. Commenters stated a s a result, the NSPS does not satisfy the legal prerequisite for the Proposed Guidelines.

Commenter s state d EPA's proposed NSPS for new Coal

- Fired EGUs is unlawful and cannot support Section 111(d) emission guidelines and explains that because EPA's proposed NSPS for
new coal

- fired EGUs fails to meet the statutory requirements for a "standard of performance" under section 111(b) of the Act , it cannot satisfy the legal prerequisite for the Proposed
Guidelines. Commenter s state d that the CAA requires a "standard of performance" to be "achievable" and based on a "best system of emission reduction" that must be "adequately
demonstrated" for sou rces within a category or subcategory. CAA section 111(a)(1).
Commenters stated t he BSER must be a design or process measure that is available for each source type to which the standard will apply. Commenters stated EPA's proposed NSPS for new Subpart Da f ossil

- fired units is based on the use of carbon capture and storage ("CCS"), a technology that, as UARG exhaustively demonstrated in its May 2014 comments to EPA on that proposed rule, is neither available nor adequately demonstrated. Furthermore, c ommente r s add ed , an NSPS must reduce emissions from a source by incorporating a system of continuous emission reduction into the design of the source itself. Commenters stated EPA's proposed NSPS for new Subpart Da sources failed this most basic test; the propose d Subpart Da standard would
not reduce emissions. Commenters stated t he proposed NSPS for new Subpart Da sources, which is based on one element of CCS, would mandate no reduction in the CO2 generated by a source. Instead, it merely requires that a new sour ce separate some percentage of the CO2 from its flue gas stream, without imposing any requirements regarding the CO2's ultimate fate. Commenters
stated t he proposed NSPS for new Subpart Da units is a "carbon separation" system, not a "carbon capture and se questration" system, and therefore it does not reduce emissions.
Commenters stated t he proposed 1,100 lb CO2/MWh standard merely reflects the amount of unseparated CO2 a source would be limited to releasing from its stack. Yet , commenters stated,
the total CO2 generated by the source would not change. Commenters stated t he remainder of the CO2 generated by the source and not emitted from the stack would be sent off

- site with the expectation that it would be sequestered. Commenters stated that it would not v iolate the proposed NSPS if 100 percent of the CO2 separated by the capture technology subsequently were released to the atmosphere. Thus, commenters stated , the proposed NSPS for Subpart Da units would not reduce emissions. Moreover, commenters stated , in the proposed NSPS for new EGUs, EPA failed to show that the proposed separation

- based standard is achievable for sources within the category as a whole because its limited discussion of achievability considers only integrated gasification combined cycle ( "IGCC") units, which make up only one type of source covered by the proposed standard. Commenters stated a standard based solely on "IGCC with a single

- stage [water gas shift] reactor and a two

- stage acid gas removal system," 79 Fed. Reg. at 1470, a form of pre

- combustion CO2 separation, cannot support a standard for pulverized coal168 ("PC") or circulating fluidized bed units, which require post

- combustion separation.
Commenters stated EPA did not analyze or even assert that the proposed separation standard is
achievable for coal

- fired units using post

- combustion capture methods. Commenters stated a ny standard that applies to PC units based on a finding that it is achievable with a technology that only IGCC units can use is contrary to law. Commenter s contin ue d that because there is no lawful proposed standard of performance for new coal

- fired EGUs, EPA lacks the legal prerequisite to propose or promulgate the Proposed Guidelines for those sources. Commenters
stated a standard of performance under section 111 (b) of the Act must be "achievable" and "adequately demonstrated" for sources in a source category. Commenters stated b ecause EPA's January 2014 NSPS Proposal for new sources is neither, the section 111(b) new source rule does not meet the requirements to be a standard of performance for new coal

- fired units. Commenter s conclude d that without an effective standard for new units, EPA cannot propose a standard for existing units. See CAA section 111(d)(1); 40 C.F.R. section 60.22(a).

Response 76 : We disagree with these comments. We explain in the section 111(b) rule our basis for the standards of performance we finalize in that rule and respond to all comments submitted on that rule. It is not necessary to respond substantively to comments concerning the vali dity of the section 111(b) rule in this rule.

Comment 77 : Commenter s state d that Section 111(d) of the Clean Air Act (CAA) contains clear and explicit language limiting EPA's regulatory authority to the EGU source(s) that 'emit or may emit any air polluta nt'. The c ommenter s add ed that the plain understanding of this statutory requirement of the CAA is that performance standards are to be only imposed on 'sources' that actually emit a regulated pollutant, i.e. fossil fuel

- fired EGU's. By historic regulatory precedent, the public, the commission and the industry have understood the source to be composed of the boiler, the turbine

- generator, prime movers, pollution controls and other associated auxiliary equipment generally situated within the fence line of a generating unit. Correspondingly,
commenters stated emissions from any aspect of the source are to be controlled by imposing performance standards on the source at the source. Commenter s stated this rule proposes and expects their commission to implement a ctions that go beyond the commission's authority as an entity created by statute. While EPA has insisted there is flexibility beyond the 4 Building Blocks, the c ommenter s stated the authority granted under the CAA and an understanding that
commission's aut hority and the Florida Department of Environmental Protection statutory authority leave us to achieve compliance with the rule only within the fence line of our generation facilities. Reviewing the policy models of EPA, along with our statutory requirement s, the commenters believe d that implementation of the Proposed Rule will require premature closure of our fossil fuel

- fired plants, will result in stranded costs of a very young fleet and will directly impact our ratepayers and will put the commission in c onflict with the Clean Water Act (CWA) and the proposed Waters of the United States Rule (WOTUS).

Response 77 : The final rule limits the federally enforceable emission limits to affected EGUs. We discuss in the preamble for this rule the steps we took in this rule to minimize the problem of169 stranded assets. With respect to concerns that some methods of compliance would implicate the Clean Water Act, this rule provides states with significant flexibility in developing emission standards for affected EGUs, a nd envisions that EGUs will have significant flexibility in determining how to comply with those emission standards.

Comment 78 : Commenter s state d that is effectively mandating fuel and generation unit design
choices for new EGUs constructed in the United States. Commenter s state d that the Clean Air Act enables EPA only to regulate pollution, not dictate fuel or design choices by industry, much less to the point of declaring coal

- and petcoke

- fired EGUs to be obsolete or banning new construction outright, a nd Congress never intended for the Clean Air Act to authorize EPA's extraordinary policy decisions to phase out entire sources of energy as proposed in this rulemaking. Commenter s contend ed that EPA seeks to assert regulatory authority over not only pollut ion, but energy as well.

Response 78 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statu tory context, statutory purpose, and legislative history.

Moreover, we disagree that we are expanding our authority to include wholesale energy market regulation. Our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. Moreover, these emission guidelines provide states with the flexibility to establish, implement, and enforce standards of performance and do not intrude on the regulatory domain of FERC or the states. It cannot be said that because environmental requirements may have an effect on the wholesale energy market that the EPA is therefore intruding into energy regulation. Certainly, in the legislative history of the 1970 CAA Ame ndments, Congress expressly identified power plants as a priority source category for regulation under CAA section 111.

Comment 79 : Commenter s state d verbatim EPA's policy against making Best Available Control Technology ("BACT") determinations that would "fundamentally redefine the nature of the source" also demonstrates the extent to which EPA's effort to use the word "system" to expand its authority into a nationwide bubble is unreasonable. EPA Office of Air Quality Planning and Standards, "PSD and Title V Permitting Guidance for Greenhouse Gases," EPA

- 457/B

- 11

- 001 at 26 (March 2011), citing In re Prairie State Generating Co., 13 E.A.D. 1, 23 (EAB 20 06).
Commenters stated that a ccording to EPA's guidance, "the option of using natural gas as a primary fuel would fundamentally redefine a coal

- fired electric generating unit" in most cases.
Id. at 27. Commenters stated the permitting agency therefore shou ld not require an entity that plans to construct or modify a coal

- based power plant to switch to natural gas. Id. Yet

, commenters stated the Proposed Rule would require owners and operators of existing fossil fuel

based plants to substitute NGCC, nuclear o r renewable generation capacity for their existing capacity, in whole or in part. Commenters stated t his effectively redefines the source, even if the new primary fuel is used at a different location. Commenters stated EPA's proposal therefore
represents a sharp departure from its own prior guidance, demonstrating the unreasonableness of EPA's interpretation of the word "system" in CAA Section 111(a)(1).170 Commenters stated that BSER must be applied directly to EGUs, explaining that EPA does not
consider the BACT requirement as a means to redefine the basic design of a source or change the fundamental scope of a project when considering available control alternatives. For example, commenters offered, EPA does not require applicants proposing to construct a coa l

- fired EGU to consider building a NGCC unit instead, and yet, building blocks 2 and 3 essentially constitute a fundamental change to coal

- fired EGUs by compelling states to shift generation to NGCC and
renewable sources.

Response 79 : For the reasons discu ssed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

N evertheless, commenters that contend this rule impermissibly “redefines” stationary sources have not demonstrated that the Clean Air Act contains a general prohibition on requiring a “redesign” or “redefinition” of individual regulated sources, or a catego ry of sources, through administrative rulemaking. The commenters have not cited an example where EPA applied such a limitation when setting emissions standards for an entire category of sources under section 111 or another provision of the Act. The comment ers cite only EPA’s guidance and past practice with respect to the issue of “redefining the source” in the distinct context of the PSD program, which
involves the case

- by

- case review of the construction of an individual stationary source. EPA does not agre e that its approach to the “redefining the source” question in the context of PSD permitting makes it impermissible or unreasonable for EPA to determine that building blocks 1, 2, and 3 constitute the BSER for existing sources covered by this rule. As othe r commenters have pointed out, there are distinctions between the PSD program and the CAA program EPA is implementing in this rule and the statutory provisions on which these programs are based. In addition, commenters that oppose the rule on this basis ha ve not accurately described EPA’s interpretation of the PSD provisions in the Act.

The CAA’s PSD program is administered primarily by state and local permitting authorities as individualized preconstruction requirement under CAA section 165. Pursuant to t his program, proposed new or modified major facilities in attainment/unclassifiable areas must undergo a

case

- by

- case permitting analysis to establish an achievable “emission limitation based on the maximum degree of reduction” for each pollutant regulated under the CAA, taking into account “energy, environmental, and economic impacts and other costs.” 42 U.S.C. § 7479(3). The BACT analysis also considers the “application of production processes and available methods, systems, and techniques, including fuel combustion techniques for control of each such pollutant.” Id. BACT is not applicable to unmodified existing sources nor is it applied on a source category basis.

The PSD BACT analysis typically proceeds in five steps. Commenters’ assertions relate to the first of these steps.

In the EPA’s PSD and Title V Permitting Guidance for Greenhouse Gases , we explain that the first step of the BACT analysis “is to cast a wide net and identify all control options with171 potential application to the emissions unit under review” and that this step “need not necessarily include inherently lower polluting processes that would fundamentally redefine the nature of the source proposed by the permit applicant.” Id. at 26. We also explain that “BACT should generally not be appli ed to regulate the applicant’s purpose or objective for the proposed facility.” Under this framework, our GHG Guidance states that “a permitting authority should look first at the administrative record to see how the applicant defined its goal, objectives, purpose or basic design for the proposed facility in its application.” Id. However, we clarify that the “EPA does not interpret the CAA to prohibit fundamentally redefining the source and has recognized that permitting authorities have the discretion to c onduct a broader BACT analysis if they desire. The ‘redefining the source’ issue is ultimately a question of degree that is within the discretion of the permitting authority.” Id. at 26

- 27. Thus, Commenters’ assertion that EPA has a policy “against making [BACT] determinations that would ‘fundamentally redefine the nature of the source’” overstates the nature of EPA’s guidance on this issue.

EPA agrees with the commenters who point out that the Agency’s policy concerning redefining
the source in the contex t of the PSD BACT analysis is not relevant for purposes of CAA section 111(d), which calls for a determination of BSER for a category of existing sources. As noted above, BACT determinations are case

- by

- case preconstruction requirements that require the
in stallation of the “best available control technology” at the time of construction of a new major emitting facility or as part of a major modification of an existing facility. Because BACT applies at the preconstruction stage on a case

- by

- case basis and gen erally requires the installation of control technology, it is appropriate (though not required) for a permitting authority to limit the scope of BACT to take into account the proposed purpose and design of such projects on a case

by

- case basis.

In contra st, section 111(d) expressly applies to “existing sources.” Developing an emission guideline generally applicable to existing sources within an entire category under CAA section 111(d) differs from the five

- step case

- specific analysis under CAA section 165 for assessing whether the best available pollution controls can be incorporated into a particular facility at the time it is newly constructed or undergoes a major modification.

Under CAA section 111(d), the Administrator identifies a list of adequately demonstrated control options in use by the industry, selects the best of those control options after considering cost and other factors, then selects an achievable limit for the category through the application of the BSER across the industry. States are s ubsequently responsible for developing plans based on an emission guideline and may take into account a source’s remaining useful life, among “other factors,” in applying a standard of performance to any particular source. The BSER for purposes
of section 111(d) is not limited to technology that can be built into a specific source because affected sources have already been constructed. Rather, it is generally based on pollution control systems that can be implemented by an existing source and need not neces sarily include retrofit
controls.

As we discuss at length in the preamble, owners/operators of existing steam EGUs have for many years employed generation shifts that are similar to building block 2, and, in fact, have in172 recent years shifted generation to NGCC units as a means of reducing emissions of air pollutants, including CO2. As we also discuss at length in the preamble, owners/operators of existing steam EGUs and NGCC units have also for many years invested in renewable energy and, in recent

year s, have done so for the purpose of reducing air pollutants, including CO2. Moreover, a survey of IRPs notes that many owners and operators of steam EGUs are planning to continue to shift more to NGCC generation and renewable energy in the future, and many owners and operators of NGCC generation are planning to invest more in renewable energy. In light of this history and current practice of EGUs implementing the same measures that are in building blocks 2 and 3, it is apparent that those measures are part o f the business purposes and objectives within the power sector. Accordingly, the BSER, which incorporates building blocks 2 and 3, cannot be said to force a fundamental redefinition of the business of generating electric

- power. Likewise,
it cannot be said that this rule forces a fundamental redefinition of the design of any particular

source.

EPA agrees that the requirements of section 111 and the PSD program are linked together in various ways. However, this linkage reflects Congress’ intention that thes e two programs work together to address different aspects of the air pollution problem. The linkage reflects Congressional intent for these program to complement each other, not for EPA to implement them in exactly the same way. The latter would be redun dant, and frustrate the distinct purpose for which each program was created. Notwithstanding the statutory linkages cited by commenters, the PSD provisions and section 111 are phrased fundamentally differently. BACT is prescriptive and BSER is open

- ended . For that reason alone, there is no basis to claim that they must be interpreted in the same way to limit controls to measures that can be implemented into the design or operations of the source. In addition, while standards promulgated under section
111 serve as the floor for BACT limits established under section 169(3), nothing in the Act requires that BACT limitations serve as the floor for emission guidelines under section 111.

Thus, EPA’s policies under CAA section 165 regarding the construction of in dividual sources are not controlling for purposes of establishing category

- wide standards for existing sources under CAA section 111(d). Even if the PSD “redefining the source” policies were applicable in this context, it would be within the Administrator ’s discretion to consider requiring a fundamental redesign of a newly constructed or modified sources. EPA’s case

- by

- case application of CAA section 165 in the PSD program does not limit the Administrator’s discretion in establishing an emission guideline for an entire category of existing sources under CAA section 111(d).

Comment 80 : Commenter s state d they read ESPS provisions on definition of standard of performance, source, and stationary source and authority specific to ESPS as limiting EPA's authority associated with ESPS limits to requiring certain measures that derive from the design and operation of a facility's air pollution control systems, but not to include measures designed to limit emissions primarily by the reduced operation of the affected st ationary source

Response 80 : We disagree with this comment. We discuss this comment in section V. of the preamble for this rule.173 Comment 81 : Commenter s stated a s the EPA acknowledges, a performance standard cannot impose unreasonable costs on industry. See Legal Memorandum at 37

- 38. Commenter s said the costs of performance standards under Section 111 cannot be "exorbitant," Essex Chemical Corp. v. Ruckleshaus, 486 F.2d 427, 433 (D.C. Cir. 1973), and cannot be "greater than the industry
could bear and surviv e," Portland Cement Ass'n v. EPA, 513 F.2d 506, 508 (D.C. Cir. 1975) (cited in Legal Memorandum at 38 n. 34). Commenter s said the Clean Air Act does not intend
such a result. Commenter s stated Section 111(d) is specifically directed at balancing costs of

c ontrols and the remaining useful life of existing sources against the benefits to be gained by regulation. Commenter s said this statutorily

- required balancing reflects Congress' intent to limit regulation of existing sources under the Act unless there are important health risks

- for example, the regulation of existing sources under Section 112's hazardous air pollutant provisions.
Commenter s said the pollutants regulated under Section 111(d) are not hazardous air pollutants, or even criteria pollutants, an d the structure of the statutory provisions recognizes that in the hierarchy of regulated pollutants, Section 111(d) pollutants are of a lesser priority. Commenter s stated thus, Congress certainly did not intend for the EPA to wield Section 111(d) in a man ner that would prematurely shutter existing, especially newly

- built, facilities.

Response 81 : We disagree that this rule imposes unreasonable costs on industry for the reasons discussed in the preamble.

Comment 82 : Commenter s stated f or the first time, the EPA seeks to set state

- by

- state "goals," which are really legally enforceable mandates for all states, including Wyoming. Commenter s said however, the EPA lacks the authority under either CAA section 111(d) or the EPA's
CAA section 111(d) regulations to s et binding statewide "goals." Commenters stated notably, the term "goal" is not even used in the CAA or the EPA's implementing regulations.

Response 82 : We disagree with this comment. We address the issues concerning state goals in the preamble. In additio n, we note that the implementing regulations do refer to the ability of states to set standards that are “equivalent” to the degree of emission limitation achieved by the BSER, which the agency is providing for here through the provision of “goals,” see 40 CFR 60.22(b)(5), so contrary to the commenter, this rule is consistent with the implementing regulations.

Comment 83 : Commenter s said similarly, for the first time, the EPA defines a "system" of
emission reduction to be mandated reductions in the amount o f time facilities within the regulated source category are allowed to operate. Commenter s stated forcing coal

- fueled EGUs to reduce operation (or retire) is not a "system" of emission reduction under CAA section 111(d).

Response 83 : For the reasons discuss ed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

Com ment 84 : Commenter s stated t he CAA envisions a far greater role for the states in designing and implementing Section 111(d) existing unit standards than has been afforded to the174 states by the EPA. Commenter s said the EPA's role is to establish a procedure, not a standard or state goal. Commenter s stated the statute assigns to the states specific authorities to "when applying a standard of performance to any particular source under a plan submitted" to take into consideration, among other factors, the remain ing useful life of the existing source to which such standard applies." Commenter s said this does not limit states to providing less stringent standards to plants that only have a few years left to operate. Commenter s stated it just as logically allows states to modify or postpone regulation of CO2 for plants that have long operating lives remaining or where applying the standards would result in an expensive, unwarranted plant closure that could compromise electric re liability and result in far higher consumer costs.
Commenter s stated forcing plants with useful remaining operating lives to close is completely contrary to the statutory requirement that directs the EPA Administrator to take into account "the remaining us eful lives of the sources in the category of sources to which such standard applies."
Commenter s stated it is worth noting that this section, in addition to directing the EPA to take this into account, also states that the EPA regulations "shall permit the state" to take these factors
into account. Commenter s said the EPA has inappropriately eliminated this statutory authority to allow states to take important factors into account concerning specific plant conditions in developing the state plan.

Response 84 : As we explain in section VIII.D of the final rule preamble of the CPP, our emission guidelines provide the substantive criteria that are intended to govern the review of the Administrator’s review of state plans. The interim and final goals are intende d to reflect such
substantive criteria.

Comment 85 : Commenter s stated the EPA has not issued "guidelines" to the states. Commenter s said the EPA asserts in the rule that the standards imposed on the states are mandatory, cannot be changed during the cours e of the program, and each state is required to develop a "federally enforceable" plan that must be achieved in the timetable set forth by the EPA. Commenter s stated the building blocks upon which the EPA bases the standards for most states are simply

unac hievable, and as importantly, leave no room for states to treat certain units differently or otherwise to modify the standards in a meaningful manner as provided by the statute.

Response 85 : As we explain in section VIII.D of the final rule preamble of th e CPP, our emission guidelines provide the substantive criteria that are intended to govern the review of the Administrator’s review of state plans. The interim and final goals are intended to reflect such
substantive criteria. Moreover, as explained in se ctions V.A. and V.B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. That is, EPA is responsible for determi ning the level of emission limitation from the source category, while states have the responsibility of assigning emission requirements to their sources that will ensure their achievement of that level of emission limitation. States may fulfil their respon sibility by establishing emission standards or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emission reduction measures, including measures that are not part of the BSER.175 Comment 86 : Comment er s stated the EPA's proposed system is not a definite or specific system but instead a listing of disparate items that largely do not even relate to the regulate source
category

-- coal

- fired EGUs . Commenter s stated this attempt to regulate outside its authoritative grant of Section 111(d) is a clear attempt to regulate the electric generation, transmission and consumption market in the United States and has been plainly prohibited by the Supreme Court.
See UA RG v. EPA , 134 S.Ct. 2427, 2444 (2014) (quoting FDA v. Brown & Williamson Tobacco Corp ., 529 U.S. 120, 159 (2000)) ("When an agency claims to discover in a long

- extant statute an unheralded power to regulate 'a significant portion of the American economy,' we typically greet its announcement with a measure of skepticism" and the Court will expect "Congress to speak clearly if it wishes to assign an agency decisions of vast economic and political significance.") Commenter s added this concept is strengthened when an agency lays claim to authority to regulate subjects traditionally left to States because "[a]bsent a clear statement of that purpose, [the court] will not presume Congress to have authorized such a stark intrusion into traditional state authority." Bond v. United States , 134 S. Ct. 2077, 2083 (2014).

Response 86 : EPA disagrees with this comment. For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is
reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history. Furthermore, we disagree that we are expanding our authority to include wholesale energy market regulation. Our emission guidelines simp ly reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. Moreover, these emission guidelines provide states with the flexibility to establish, implement, and enfo rce standards of performance and do not intrude on the regulatory domain of the states. It cannot be said that because environmental requirements may have an effect on the wholesale energy market that the EPA is therefore intruding into energy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Congress expressly identified power plants as a priority source category for regulation under CAA section 111.

Comment 87 : Commenter s stated t he new "interpretation" of CAA Section 111(d) se t forth in the Proposed Rule encourages the states to submit a plan that contain what the EPA calls "portfolio" measures. Commenter s said the measures would be undertaken by states or third parties and, upon the EPA's approval, would become enforceable aga inst those entities.
Commenter s stated CAA Section 111(d), however, does not provide the EPA the authority to create federally enforceable obligations on entities that do not own or operate facilities within the regulated source category. Commenter s stated rather, CAA Section 111 authorizes standards to
be set for facilities within the EPA

- listed source categories. Commenter s said it does not apply to any other facilities or entities that are not part of the listed source category.

Response 87 : To the exte nt that this comment relates to the proposed portfolio approach, this
comment is moot. The EPA is not finalizing the portfolio approach. Furthermore, under the final rule, EPA would be limited to enforcing the emission standards applicable to the affected
EGUs

.176 Comment 88 : Commenter s noted that fundamental to this proposed rulemaking is the EPA's authority to regulate CO 2 from EGUs unde r Section 111(d) of the CAA. The commenter s described that Section 111(d) requires states to submit plans that establish standards of performance for any existing source for any air pollutant for which air quality criteria have not
been issued or which is not included on a list published under Section 7408(a) or emitted from a source category which is regulated under Section 7412, but to which a standard of performance under Section 111 would apply if such existing source were a new source. The commenter s

n oted that air quality criteria have not been issued for CO 2 and CO 2 has not been included on a list published under Section 7408(a), so this leaves Section 7412, codified as Section 112 to be
considered. The commenter s noted that EPA recognizes that CO 2 is emitted from EGUs, which are also regulated under Section 112, and the EPA stated in its Legal Memorandum in support of the proposed rule:

"As presented in the U.S. Code, the Section 112 Exclusion appears by its terms to preclude from section 111(d) any p ollutant if it is emitted from a source category that is regulated under section 112. The U.S. Code version of 111(d) can be read to provide that the provision would not cover GHGs because GHGs are emitted from EGUs and EGUs are a source category regulated under section 112." (Legal Memorandum at 22.)

The commenter s noted that the EPA argued that this provision is ambiguous due to drafting errors arising from the 1990 CAA amendments (79 Fed. Reg. at 34853) and un

- reconciled
differences between the Senate an d House versions. Commenters stated t he EPA stated that the Senate amendment excluded regulation of any pollutant included on a list published under Section 112(b). Id. Commenters stated t his would mean that CO 2 is not excluded from regulation
under Sectio n 111(d) because it is not a hazardous air pollutant listed under Section 112, i.e.,
CO 2 is not a pollutant listed under Section 112(b). On the other hand, commenters stated , the House amendment excluded the regulation of any pollutant which is "emitted fr om a source category which is regulated under Section 112." Id. The commenter s argue d that the house
version would exclude CO 2 from Section 111(d) regulation because CO 2 is emitted from EGUs which are also regulated under Section 112. The commenter s note d that the EPA concludes that these amendments "conflict with each other and thus are ambiguous." Id. Then, commenters stated , the EPA states that it "may reasonably construe the provision to authorize the regulation of GHGs under CAA section 111(d)." Id.

T he commenter s assert ed that the EPA's discussion of its authority under this proposed rule states that the plain language of Section 111(d) can be interpreted to exclude regulation of CO 2 emissions from EGUs. The commenter s argue d that the EPA has chosen t o ignore that issue and move forward, referring to the U.S. Supreme Court's decision in American Electric Power Co. v. Connecticut. See American Electric Power Co. v. Connecticut, 131 S. Ct. at 2527 (2011). There,
commenters stated , the Court found that th e Clean Air Act and the EPA actions it authorizes displace any federal common law right to seek abatement of carbon

- dioxide emissions from
fossil fuel

- fired power plants." American Electric, 131 S. Ct. at 2537.177 C ommenter s argue d that the EPA contends that this decision was "premised on the Court's understanding that CAA section 111, including CAA section 111(d), applies to carbon dioxide emissions from those sources." 79 Fed. Reg. at 34853. C ommenter s stated the Court discussed the requirements of Section 111 and stated that if the EPA "does not set emissions limits for a particular pollutant or source of pollution, States and private parties may petition for a rulemaking on the matter, and EPA's response will be reviewable in federal court." American
Elect ric, 131 S. Ct. at 2538. Commenters stated t he Court then noted that the EPA was engaged in a Section 111 rulemaking to set standards for greenhouse gas emissions from fossil

- fuel fired power plants to settle litigation brought by the plaintiffs. Id. Comme nters stated, t he Court stated that the CAA "provides a means to seek limits on emissions of carbon dioxide from domestic power plants

- the same relief the plaintiffs seek by invoking federal common law." Id.
C ommenter s stated the Court here did not concl ude that such regulation was appropriate, only that the EPA had agreed to pursue regulation at the plaintiffs' behest and as such, federal common law was preempted.

The commenter s noted that in further discussion of its position on preemption of common law

, the Court stated:

"The critical point is that Congress delegated to EPA the decision whether and how to regulate carbon

- dioxide emissions from power plants; the delegation is what displaces federal common law. Indeed, were EPA to decline to regulate carbon

- dioxide emissions altogether at the conclusion of its ongoing section 7411 rulemaking, the federal courts would have no warrant to employ the federal common law of nuisance to upset the agency's expert determination." Id. at 2538

- 2539. (Emphasis add ed.)

C ommenter s argued that the Court's focus here is on displacement of nuisance common law, not on the propriety of the EPA's current proposed regulation. C ommenter s stated the Court even states that the EPA may decide not to regulate CO 2 from EGUs at all. The commenter s argued that recognized conflict in the statutory authority for such regulation is a good reason to make such a decision, and suggested that Congress can then decide whether it needs to change the statute to provide a path for regulation and, if such statutory action is taken, Congress can give the EPA direction on how to pursue that path. The commenter s argued that the EPA should not attempt to regulate in the way that it has until such Congressional action takes place.

Res ponse 88 : EPA has concluded that it has the authority to promulgate regulations addressing CO2 emissions from existing power plants under section 111(d). Further , EPA disagrees that it is required or appropriate for EPA to delay promulgating regulations ad dressing CO2 emissions from existing power plants until after Congress passes further legislation.

Comment 89 : C ommenter s argued that the EPA lacks statutory authority to issue the rule for several reasons. First, the commenter s noted that statutory langua ge of Section 111(d) is a product of differing House and Senate versions. Commenters stated u nder the Senate version, unless a particular air pollutant emitted by existing sources was regulated by one of several other listed Clean Air Act provisions, existing sources emitting that pollutant could be regulated under178 Section 111(d). Commenters stated that i n contrast, the House version prohibits existing sources from being regulated under Section 111(d) if the existing sources are regulated under Section
112. The commenter s argued that under prevailing rules of legislative construction and case law regarding harmonization of conflicting statutory provisions, the House provision controls. The

commenter s argued that because, effective in 2012, EPA already r egulates coal

- fired power plants under Section 112 in the Mercury and Air Toxics Standard, the EPA has no authority to regulate existing coal

- fired power plants a second time under Section 111(d).

Response 89 : EPA disagrees that it may not promulgate regul ations addressing CO2 emissions from existing power plants under section 111(d). EPA’s discussion of this issue is in Section IV of the preamble. Further, EPA’s views on arguments presented by the commenters, including
commenters’ discussion of how to reco ncile the House amendment and the Senate amendment, are also discussed in EPA’s briefs in the Murray Energy and West Virginia cases, No. 14

- 1112,
No. 14

- 1146, and No. 14

- 1151 (D.C. Cir.).

Comment 90 : C ommenter s argued that Section 111(d) requires EPA to is sue a valid new source performance standard (NSPS) under Section 111(b) before issuing an existing source standard. Based on flaws in the proposed NSPS and modified/reconstructed source standard, the

commenter s asserted that it is doubtful that either of t he provisions will be lawfully finalized, and therefore, EPA has not satisfied this prerequisite to issue the Section 111(d) rule.

Response 90 : Comments on the validity of the section 111(b) rulemaking for CO2 emissions from newly constructed, modified, an d reconstructed sources are discussed in that rulemaking, and are not relevant for this rulemaking.

Comment 91 : Some commenters stated there is nothing in CAA 111(d) that suggests that the EPA has the authority to set limits or require emission reductions for existing sources premised on the construction of new sources nor does EPA have the authority to require redispatch. Accordingly, the commenters asserted that the EPA is precluded from applying this approach in any final rule.

Response 91 : For the reaso ns discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative hi story.

1.3 AUTHORITY TO REG ULATE STATES' ENERGY MARKETS

Comment 1: Commenters stated because the EPA maintains that it has the authority to implement a federal plan in the event that the state does not produce a compliant plan within the proposed rule's timeframe, and because compliance with both the Arizona interim and final goals is impossible without resorting to not only Building Block 2 but also Building Blocks 3 and 4, any plan produced by the EPA utilizing the stated compliance targets will necessa rily require the179 EPA to venture into regulating renewables, demand side management, and resource portfolio planning. Commenters said none of these measures involve the emission of any sort of air pollutant and are, therefore, beyond the EPA's authority to regulate under the CAA.

Response 1: For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statuto ry context, statutory purpose, and legislative history.

As we explain in sections V.A. and V.B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require state s or sources to implement the BSER. That is, EPA is responsible for determining the level of emission limitation from the source category, while states have the responsibility of assigning emission requirements to their sources that will ensure their achie vement of that level of emission limitation. States may fulfil their responsibility by establishing emission standards or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emission reduction meas ures, including measures that are not part of the BSER.

EPA recognizes that each state has unique factual circumstances that will shape the development of a state’s plan. We look forward to working with the states to account for these factual
circumstances in developing satisfactory state plans.

Comment 2: Commenters stated Building Blocks 2, 3, and 4 of the proposed BSER contain measures well beyond the EPA's statutory authority. Commenters said yet, once the EPA approves a state plan, all of those measure s will nonetheless become federally enforceable. 42
U.S.C. section 4711(d)(2)(B). Commenters stated with this Proposed Rule, the EPA seeks to gain control over aspects of the economy that are not within its jurisdiction. Commenters stated Building Blocks 2 and 3 relate to replacing electricity produced by coal

- fired units with energy produced by natural gas

- fired units and RE facilities. Commenters said the EPA seeks to use these building blocks as a means to remove states' ability to control intrastate ele ctricity markets and to mandate that utilities dispatch electricity based on lowest carbon emissions. Commenters stated the EPA further uses these building blocks to exert authority over company

- level decisions regarding whether to invest resources in deve loping specific types of energy resources. Commenters stated with Building Block 4, the EPA intends to reduce carbon emissions through energy efficiency improvements made by end

- use consumers of electricity. Commenters said reductions in consumer energy co nsumption are personal choices made outside the purview of the CAA. Commenters stated the EPA cannot reasonably argue that Congress intended to allow the EPA to control such minutia about the personal lives of ordinary people when it drafted legislation to allow the EPA to control emissions from existing stationary sources.

Commenters stated the Supreme Court has shown no tolerance for agency overreach without clear Congressional approval. Commenters said Utility Air Regulatory Group at 2444 ("EPA's interpr etation is ... unreasonable because it would bring about an enormous and transformative expansion in EPA's regulatory authority without clear congressional authorization.")180 Commenters said the proposed BSER is beyond the jurisdiction of EPA and does not co mport with Section 111(d).

Response 2 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

To the extent this comment objects to the portfolio approach, which the EPA is not finalizing, the comment is moot. Likewise EPA is not including building block 4 in its BSER determination

.

Comment 3 : Commenters stated the EPA cannot set a performance standard for States that the agency itself lacks the authority to implement should States fail to submit a satisfactory implementation plan. Commenters stated the EPA cannot implement building b lock two because it does not have authority to make electricity dispatching decisions

- under the Federal Power Act ("FPA"), States are given authority to regulate electricity within their borders and have exclusive jurisdiction over the distribution of el ectricity to end

- use customers. Commenters said states also retain the authority to determine the rules for the operation of power plants within their borders. Commenters stated the EPA cannot implement the nuclear component of building
block three because the National Regulatory Commission ("NRC") has authority over permitting,

re

- permitting and commissioning of nuclear power plants and the EPA has no authority to extend the permitting life of a nuclear power plant and is equally misguided to assume that a ll existing nuclear plants will ultimately be relicensed by the NRC. Commenters stated the EPA cannot implement the renewable energy component of building block three because States, and not the federal government, have the authority to establish renewable portfolio standards ("RPS"). Commenters said the decision of whether or not to adopt, change, or abandon an RPS is reserved exclusively to the States and cannot be usurped by the EPA via the CAA. Commenters stated the EPA lacks authority to mandate demand

- side energy efficiency programs within States. Demand

side energy efficiency programs such as Energy Efficiency and Resource Standards (EERE) are programs that States have the sole authority to implement within their borders.

Response 3 : F or the reasons explained in the preamble, inclusion of building block 3 is consistent with EPA’s statutory authority. EPA has included neither EE n or nuclear in the final
BSER.

Comment 4: Commenters stated that EPA cannot set a performance standard for states that the agency itself lacks the authority to implement should states fail to submit a satisfactory implementation plan. Commenters asserted that EPA does not have the authority to implement building blocks two, three or four in a state and thus cannot impose these requirements. Commenters explained that EPA cannot implement building block two because it does not have authority to make electricity dispatching decisions. Commenters stated, under the Federal Power Act, states are given authority to regulate electricit y within their borders. Commenters noted, along these lines, states have exclusive jurisdiction over the distribution of electricity to end

- use customers. Commenters said states also retain the authority to determine the rules for the181 operation of power pl ants within their borders. Thus, commenters stated that EPA's reliance on building block two in setting performance standards exceeds its CAA authority. Commenters continued, stating that EPA cannot implement the nuclear component of building block three
b ecause the National Regulatory Commission (NRC) has authority over permitting, re

- permitting and commissioning of nuclear power plants. Commenters asserted that EPA has no authority to extend the permitting life of a nuclear power plant and is equally misg uided to assume that all existing nuclear plants will ultimately be relicensed by the NRC. Commenters said, equally, EPA cannot implement the renewable energy component of building block three because states, and not the federal government, have the author ity to establish renewable portfolio standards (RPS). Commenters noted that the decision of whether or not to adopt, change, or abandon an RPS is reserved exclusively to the states and cannot be usurped by the EPA via the CAA. Commenters continued, stating that EPA lacks authority to mandate demand

- side energy efficiency programs
within states. Commenters added that demand

- side energy efficiency programs such as Energy Efficiency and Resource Standards are programs that states have the sole authority to imp lement within their borders, and EPA's reliance on building block four in setting performance standards exceeds its CAA authority.

Commenters stated that EPA cannot implement the nuclear component of building block three because the National Regulatory Com mission ("NRC") has authority over permitting, re

permitting and commissioning of nuclear power plants. Commenters explained that EPA has no authority to extend the permitting life of a nuclear power plant and is equally misguided to
assume that all existi ng nuclear plants will ultimately be relicensed by the NRC, and equally, EPA cannot implement the renewable energy component of building block three because states, and not the federal government, have the authority to establish renewable portfolio standar ds ("RPS"). Commenters believed the decision of whether or not to adopt, change, or abandon an RPS is reserved exclusively to the states and cannot be usurped by the EPA via the CAA. Commenters stated that EPA's reliance on building block three in setting performance standards also exceeds its CAA authority. Commenters added that EPA lacks authority to mandate
demand

- side energy efficiency programs within states, explaining that demand

- side energy efficiency programs such as Energy Efficiency and Resource S tandards (EERE) are programs that states have the sole authority to implement within their borders. Commenters concluded this portion of their remarks, stating EPA's reliance on building block four in setting performance standards exceeds its CAA authority

.

Response 4: For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history. We also explain in section V.B. of the preamble why the BSER does not includ e demand

- side energy efficiency measures, accordingly, comments relating to building block 4 are moot.

As we explain in sections V.A. and V.B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. That is, EPA is responsible for determining the182 level of emissi on limitation from the source category, while states have the responsibility of assigning emission requirements to their sources that will ensure their achievement of that level of emission limitation. States may fulfil their responsibility by establishing emission standards or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emission reduction measures, including measures that are not part of the BSER.

Comment 5: Commenters stated that EPA must fully understand and base its rulemaking on the facts regarding this complex system. Commenters said that for the first time, EPA is proposing to move beyond its established precedent of basing performance standards under Section 111 on
"behind the fence" systems of emission reductions, to the "beyond the fence" system that take effect through and because of the integrated electric grid and its connected generators and loads

- that is, the bulk electric system. Commenters said EPA explicitly acknowledges th at it is depending on the BES and its integrated nature, both to operate the elements of EPA's BSER, and to be able to characterize them as a "system," as is required under Section 111(a). Commenters stated that in so doing, EPA has taken on the statutory burden outlined in the definitions of Section 111 (a). Commenters said that EPA must understand the interconnected and complex nature of the BES

- a system that sometimes is referred to as encompassing "the world's largest machine" [See, e.g., the United N ation's Sustainability Development Goal Working Group, "Technical Aspects of Grid Interconnection." 2006, available online: http://www.un.org/esa/sustdev/publications/energy/cha pter2.pdf . Also see The National Energy Technology Laboratory's (NETL) series, "Power Market Primers," which explores the complexity of the BES, focusing on the interaction between reliability, markets, and technology. NETL published the report in June 2013, public ation # NETL/DOE

- 2013/1617, available online

at www.netl.doe.gov/ .]

- well enough to take into account the myriad costs of using it to achieve such significant emission reductions, along with the many non

- air qualit y health and environmental impacts and energy requirements that are implicated by the modifications to it. Commenters said that an incomplete or inadequate understanding of the BES's reliability, system dynamics, interconnected grid operations, markets and the challenges of building, maintaining and coordinating power plant and energy transmission and delivery infrastructure cannot support a reasoned use of the BSER for the purpose of setting performance standards.

Response 5: We agree with the commenter th at it is important for the agency to have an understanding of the interconnected nature of the grid. This rule is based on just such an understanding.

Comment 6: Commenters argued that Congress has granted the authority to regulate the electric
system to FERC as the primary federal regulator of interstate wholesale rates, terms and conditions of operating the interconnected bulk power system. In addition, commenters said reliability is so important that in 2005 Congress approved the establishment of an ind ependent North American electric reliability organization (ultimately NERC) under the supervision of FERC. Commenters noted that NERC, together with eight regional reliability entities, develops reliability standards and conducts compliance and enforcement for the entire interconnected bulk183 power system. Therefore, commenters stated, the scope of BSER should not be defined so broadly that it extends into areas to which Congress has clearly delegated authority to other agencies.

Response 6 : As we explain in sections V.A. and V.B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. That is, EPA is responsible for dete rmining the level of emission limitation from the source category, while states have the responsibility of assigning emission requirements to their sources that will ensure their achievement of that level of emission limitation. States may fulfil their res ponsibility by establishing emission standards or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emission reduction measures, including measures that are not part of the BSER. Finally, with re spect to the nuclear issues that commenter raises, we note that we have not included nuclear generation as a component of building block 3 in the final rule. Further, we note that the EPA considered the interconnected nature of the electricity grid in stru cturing the final rule. For a comprehensive discussion of this issue, please see preamble section I.A., II.C., and discussions throughout preamble of the interconnected nature of the electricity grid

.

Comment 7 :

Commenters stated that EPA should re

- propose and address the concern that nothing in the Clean Air Act gives EPA the authority to specify the types of new generation resources that should be constructed to fulfill a utility's obligation to serve. Commenters said this authority has been specifically reserved to the states under the FPA, and no Congress has yet passed laws to establish national renewable portfolio standards. Commenters said however, EPA should allow states to examine the planned additions of renewable and other low

- or non

- emitting res ources under existing integrated resource plans and other siting or certification requirements, and use any approved, cost

- effective resource additions as creditable emission reductions, to facilitate the transition of the existing fleet to a cleaner, more modern system.

Response 7 : As we explain in sections V.A. and V.B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. That is, EPA is resp onsible for determining the level of emission limitation from the source category, while states have the responsibility of assigning emission requirements to their sources that will ensure their achievement of that level of emission limitation. States may fulfil their responsibility by establishing emission standards or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emission reduction measures, including measures that are not part of the BSER. Further, the EPA is in not determining what types of generation should be constructed to fulfill a utility’s obligation to serve. Rather, the EPA is determining the level of emission limitations from the source category.

Comment 8 : Commenters stated nucle ar and renewable generation cannot be part of BSER for several compelling legal reasons. Commenters said neither nuclear nor renewable sources fall184 within the target source category, and EPA's authority under Section 111 does extend beyond that category. C ommenters said BSER must reduce emissions within a source category and that replacing source category generation with zero

- emitting generation outside the source category is not BSER. Commenters said BSER cannot lawfully be "applied" outside of the "affect ed facility" within the specified source category

- here, fossil fuel

- fired EGUs. Commenters said fundamentally, BSER is directed at reducing emissions at an operating facility within a source category; therefore, BSER targeting facilities outside of the spe cified source category cannot serve as BSER for the source category. Commenters said EPA's inclusion of Building Block 3 as part of a BSER for fossil fuel

- fired EGUs is plainly unlawful.

Response 8 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.
EPA has not include d nuclear in the final BSER.

Comment 9 : Commenters urged EPA not to include energy efficiency as part of the emission rate goal setting methodology. Commenters said the ability to require reductions through energy efficiency measures is well outside the scope of EPA's authority under the CAA, which is limited to imposing controls at affected sources. Commenters said EPA fails to consider regional and state limitations on the potential for energy efficiency measures to achieve emission rate
reductions. Commenters said EP A's assumption that states can achieve a 1.5 percent annual energy efficiency improvement rate is erroneous and results in arbitrarily low emission rate goals.

Response 9 : As explained in section V.B. of the preamble, EPA has not included EE in the final

B SER.

Comment 1 0 : Commenters stated the decision to regulate existing power plants under Section 111(d) of the Clean Air act is not lawful because it violates the previsions set forth in the 5 U.S.
Code

- 706(2)(A),(B),(C), and (E). Commenters stated the 5 U.S. Code

- 706(2)(A) requires that the law not be arbitrary or capricious. Commenters stated that generally, laws require specific guidelines of how the regulated body should act in order to comply appropriately so to avoid any violations. However, comm enters added, the proposed rule is not clear as to what the states should specifically do in order to meet the goals of the EPA. Commenters stated that for example, the EPA reads, "While this proposal lays out state

- specific CO 2 goals that each state is r equired to meet, it does not prescribe how a state should meet its goal." Commenters stated before issuing any type of regulation under Section 111, the EPA must first identify specific types of facilities (which are generally known as sources under the CA A) that, in the EPA's judgment, emit air pollution that endangers public health. Commenters stated that as part of this process, the EPA creates source categories and carefully defines the type of facilities that fall within these185 categories; however, spec ific types of facilities in the proposed rule that endanger public health
were not mentioned. Commenters added that climate change should be addressed by Congress an don't by regulatory fiat via the EPA.

Response 1 0 : EPA disagrees with commenters contentio n that this rule is arbitrary and capricious or otherwise a violation of the provisions in 5 USC 706, and with commenters views on what is required in this rule. As discussed in various places in the preamble and elsewhere in response to comments, this ru le establishes certain requirements but also leaves states with significant flexibility in the development of their state plans, which is consistent with Congress's intent under section 111(d).

Comment 1 1 : Commenters stated that the radical nature of its proposal becomes all the more evident when one considers what will occur if a state does not submit an implementation plan, or if EPA finds a submitted plan unsatisfactory. Commenters said the Agency will then prescribe a federal implementation plan for th at state, as authorized by 42 U.S.C. section 7411(d)(2). Commenters said this plan would apply the range of "building blocks" to the state. Commenters said it would set binding emission limits for coal

- and gas

- fired power plants that would switch the way that sources are allowed to dispatch, set renewable portfolio requirements that would force electric utilities and others to develop renewable resources against their will in order to be allowed to continue operating existing coal

- fired assets, and set the same type of efficiency standards for consumers of electricity that the D.C. Circuit recently invalidated when FERC attempted to do so. Commenters said this total federal invasion of a state power sector would remove all pretexts and expose the true exten t of this proposal's violation of state authority. Commenters said while this would provide clarity, such a catastrophe for federalism is antithetical to the Constitution and cannot be justified under any provision of federal law.

Response 1 1 : With regard to energy efficiency, we are not including building block 4 as a component of BSER in the final rule. Additionally, we note that renewable energy is one potential measure that may be employed, consistent with the state flexibility principle that is
central to this program. This rule does not regulate renewable energy sources. It identifies the BSER for affected sources, which entails substitute generation to zero

- emitting generators, but it does not impose emissions requirements on such sources. At the poin t of implementation of the emission standard, either in a state or federal plan under section 111(d), the source still retains the flexibility to determine how it will meet the standard. Neither the state air regulator, nor the agency, will need to or be r equired to regulate specific dispatch decisions in order to meet the requirements of the final rule. For example, in a state implementing a mass

- based emission trading program, the agency’s determined emission performance levels may set the mass budget,
bu t the primary compliance obligation on the source is simply to hold allowances sufficient to cover emissions. Failure to do so could subject a source to state or federal CAA enforcement. But that need not involve the air regulator in any of the other choic es the owners and operators of the affected EGUs make regarding their operations or level of generation.

Comment 1 2 : Commenters stated EPA's reliance on demand response as part of the source of BB4 reductions is especially untimely since the D.C. Court of Appeals has recently found that186 the Federal Power Act does not grant the FERC authorities over demand response. Comme nters stated for EPA to establish an enforceable goal, based on the expected exercise of authority that Congress has reserved exclusively for states, is highly legally vulnerable.

Response 1 2 : We appreciate these comments but it is not necessary to substa ntively respond or make changes to the rule because the rule does not include demand

- side energy efficiency (building block 4) as part of the BSER or, therefore, as part of the goal calculations.

Comment 1 3 : Commenters described the allocation under the FPA of authority for overseeing the generation, transmission, distribution, and sale of electric energy. Commenters stated that FERC is responsible for transmission and sale at wholesale in interstate commerce, as specified in Section 201(a) of the FPA. C ommenters indicated that the states have authority over electric generation facilities, local distribution, retail sales of electricity, and intrastate transmission pursuant to section 201(b) of the FPA. Commenters stated that Section 201(a) of the FPA als o expressly states that federal authority "extend[s] only to those matters which are not subject to regulation by the States." Commenters also referenced Fed. Power Comm'n v. S. Cal. Edison Co., 376 U.S. 205, 218 (1964) and Ark. Elec. Co

- op. Corp. v. Ark. Pub. Serv. Comm'n, 461 U.S. 375, 377

- 78 (1983).

Commenters stated that the FPA establishes a "bright line" between federal and state roles governing the electric utility industry. Commenters referenced FPC v. SCE, 376 U.S. at 215 and quoted the court's fi nding : "Congress meant to draw a bright line easily ascertained, between state and federal jurisdiction . . . ." Commenters stated that the FPA's preservation of state regulatory authority of the electric utility industry is consistent with the Tenth Amend ment to the US Constitution, which declares that "[t]he powers not delegated to the US by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

Commenters concluded that under the proposed CPP, E PA has attempted to erase the "bright line" between state and federal authority in regulating electricity and therefore the EPA's proposal exceeds the Agency's authority.

Commenters stated that the local

- interstate division of responsibility between the St ates and FERC makes perfect sense; no central federal regulator can effectively regulate local generation and distribution throughout the US, and electricity service is not perfectly fungible or uniform. Commenters believed that even if the FPA did not gra nt the States primacy over local electricity markets, EPA's proposal would be ill

- advised and that because the States retain authority over the electric system, the proposed rule is unlawful.

Commenters claimed that the EPA has "read Section 111(d) to elim inate that bright line divide, and would confer upon the EPA the broad authority over matter long left to the States' authority that Congress has specifically chosen not to confer on FERC?" Commenters claimed that the proposed rule would improperly dictate to the States what mix of electric generating resources must be built, maintained, and operated. Commenters believed the proposal "flouts" the well

established division between retail and wholesale electric markets by, for instance, attempting to187 regulate the end

- use consume retail activity under building block 4. Commenters claimed that nothing in the D.C. Circuit's EPSA ruling delegates to the EPA the authority over retail activities that are currently solely within state jurisdiction. Commenters conclud ed that the proposed rule would eviscerate the regulatory compact between the federal government and states undergirding energy regulation for nearly 100 years, further confirming that the proposed rule is "improper."

Commenters stated that EPA's Proposed Guidelines ignore the division of responsibilities embodied in the FPA and attempts to claim state authority over generation, resource planning, and other matters for EPA. Commenters stated that the Proposed Guidelines would impermissibly inject EPA into t he separate spheres that the FPA has assigned to the states and to FERC. Commenters stated that EPA's Proposed Rule impermissibly interjects EPA into federal, state, and local regulatory spheres. The commenters concluded that the proposed rule is invalid

a nd should be withdrawn.

Response 1 3 : We disagree that we are expanding our authority to include wholesale energy market regulation or state retail regulation

. Additionally, we are not changing well

- established
divisions between retail and wholesale electri city markets. Our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. Moreover, these emission guidelines provide states with the fle xibility to establish, implement, and enforce standards of performance and do not intrude on the regulatory domain of FERC or the states. It cannot be said that because environmental requirements may have an effect on the wholesale energy market that
the E PA is therefore intruding into energy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Congress expressly identified power plants as a priority source category for regulation under CAA section 111.

Comment 1 4 : Commenters assert ed that the proposed CPP does not conflict with the FPA. Commenters said that no provision of the FPA limits the authority of EPA under the CAA to establish emission guidelines (or other emission standards or limitations) for EGUs and that no
such limitati on should be implied. Commenters noted that the D.C. Circuit court has dismissed past claims that the FPA exempts or displaces the nation's federal environmental laws. [See Monongahela Power Co. v. Marsh , 809 F.2d 41, 50 (D.C. Cir. 1987) (holding that hydr oelectric facilities licensed by FERC are still subject to Clean Water Act permitting requirements, because "...the Power Act does not provide adequate justification for ignoring the express and unambiguous directive of the subsequently

- adopted Pollution C ontrol Act Amendments."); cf. PUD No. 1 v. Wash. Dep't of Ecology , 511 U.S. 700, 723 (1994) (refusing to limit applicability of Clean Water Act requirements to hydroelectric projects licensed by FERC on the basis of "hypothetical" conflicts between the Cle an Water Act and FERC's authority under the FPA)].

Commenters noted that no aspect of the CPP requires EPA or the states to interfere with rates established by FERC. Commenters said the CPP guidelines, once implemented by the states, may have the effect of altering the generating costs of fossil fuel EGUs, with indirect or incidental impacts on wholesale sales or transmission rates that are subject to FERC jurisdiction.188 Commenters indicated that this is true of most pollution limitations placed on power p lants, and such effects do not present conflicts with FERC's authority under the FPA. Commenters said, FERC's recent Order No. 1000 recognizes that state and federal public policy requirements, such as renewable portfolio standards and emission limitations , can impact jurisdictional transmission rates, and requires that the impacts of those policies be taken into account in for regional transmission planning.

Commenters believed that policies to promote renewable energy or energy efficiency, or integrated r esource plans, which lie within the traditional authority reserved to the states under the FPA, have already been implemented in many states over the last several years. Commenters said, there is no doubt that such policies are fully consistent with the FP A, given the high standard that the Supreme Court has articulated for preemption under the FPA and the Natural Gas Act (NGA). Commenters further noted that the Supreme Court has held state regulations are only preempted by these statutes if "it is impossib le to comply with both state and federal law; [a] state regulation prevents attainment of FERC's goals; or [] a state regulation's impact on matters within federal control is not an incident of efforts to achieve a proper state purpose." [ Northwest Cent. P ipeline Corp. v. State Corp. Comm'n, 109 S.Ct. 1262, 1277 (1989). Although the holding in this case pertains to the Natural Gas Act, the federal courts typically interpret and apply the Natural Gas Act and the FPA in identical fashion. See Ark. La. Gas Co. v. Hall, 453 U.S. 571.] Commenters also said the Supreme Court has recognized that "every state statute that has some indirect effect on rates and facilities of natural gas companies is not preempted." Schneidewind v. ANR Pipeline Co ., 485 U.S. 293, 309 ( 1988).

Commenters also noted that the lower courts have found that states retain broad authority to regulate the type, quantity, and location of electricity generating resources within their borders. Commenters said FERC has repeatedly affirmed that state s have the authority to dictate the generation resources from which utilities may procure electric energy and, FERC's own administrative precedents have recognized that states retain authority to use a variety of regulatory tools, including taxes and subsi dies for particular fuels or generating types, to meet their electricity needs. Commenters said, Congress intended the FPA "to supplement, not limit, the reach of state regulation." Kentucky West Virginia Gas Co. v. Pennsylvania Pub. Util. Com'n

, 837 F.2d 600, 606 (3rd Cir. 1988).

Response 1 4 : We appreciate these comments and agree with commenters that the EPA’s actions in this final rule do not conflict with the Federal Power Act or FERC and state jurisdiction

.

Comment 1 5 : Commenters believed the proposal is based on authority that Congress has not granted to the EPA.

Commenters stated that the CPP goes beyond EPA's regulatory authority under the CAA. Commenters claimed that Congress never intended for the nation's energy resources, the production and distribution of electricity, or energy policy to be set through the C AA.189 Commenters stated that the CPP would dramatically expand EPA's authority. Commenters contended that "such a comprehensive alteration of the regulatory framework" must be addressed by Congress before its implementation. Commenters stated that Congress is required to provide an extremely clear statement of its intent to authorize such an intrusion on the state's traditional police powers.

Commenters quoted and/or cited the Supreme Court decision on the Tailoring Rule [Utility Air Regulatory Group v EPA, 134 S. Ct. 2427, 2444 (2014) (quoting FDA v. Brown & Williamson Tobacco Co., 529 U.S. 120, 159 (2000))]. Commenters drew parallels between the expansion of authority under the Tailoring Rule and the perceived expansion of authority under the
CPP. Commente rs quoted a portion or all of the following from the Tailoring Rule decision:

" EPA's interpretation is also unreasonable because it would bring about an enormous and transformative expansion in EPA's regulatory authority without clear congressional
authori zation. When an agency claims to discover a long extant statue an unheralded power to regulate a 'significant portion of the American economy' we typically greet this announcement with a measure of skepticism." Commenters also included further explanation from the Court's Tailoring Rule decision: "We expect Congress to speak clearly if it wishes to assign to an agency decisions of vast 'economic and political significance' ." Commenters also quoted the following cases as shown: Chisom v. Roemer, 501 U.S. 38 0, 396 n.23 (1991) (["In a case where the construction of legislative language such as this makes so sweeping and so relatively unorthodox a change as that made here, . . . judges as well as detectives may take into consideration the fact that a watchdog d id not bark in the night.") (quoting Harrison v. PPG Indus., Inc., 446 U.S. 578, 602 (1980) (Rehnquist, J., dissenting)); Aid Ass'n for Lutherans, 321 F.3d at 1175 ("Given the extremity of the effect that results from the Postal Service's interpretation, w e would expect to see some indication that Congress intended such an effect, but we find no[ne] in the statute . . . ."]).

Commenters indicated that the proposed CPP Rule's natural gas redispatch, energy efficiency, and renewable energy "building blocks" a re areas traditionally reserved to the sovereign authority of the states and that, to date, Congress has been unwilling to develop national renewable energy standards, recognizing the wide diversity of state laws in existence, and the disparate capability to deploy renewable resources among states.

Commenters indicated that States exercise virtually exclusive authority to regulate electricity generation, distribution, and consumption within their borders. Commenters stated that
if Congress intends to alter the 'usual constitutional balance between the States and the Federal Government,' it must make its intention to do so 'unmistakably clear in the language of the
statute.' [See e.g. Gregory v. Ashcroft, 501 U.S. 452, 460

- 61, 111 S. Ct. 2395, 2401, 115 L. Ed

. 2d 410 (1991) ((quoting Atascadero State Hospital v. Scanlon, 473 U.S. 234, 242 (1985)); see also Bond v. U.S., 134 S. Ct. 2077, 2089 (2014); Gregory v. Ashcroft, 501 U.S. 452, 460

- 61 (1991); City of Abilene v. FCC, 164 F.3d 49, 52 (1999)]. Commenters st ated that there is no "plain statement" by Congress that it intended EPA to have authority to interfere with State sovereign authority over electricity markets. Commenters stated that to the contrary, Congress190 expressly provided that States should determin e performance standards in the first instance and that the States had substantial flexibility to account for the economic impact such standards would have on existing sources. Commuters stated that in the absence of such clarity, courts "refer to basic pri nciples of federalism embodied in the Constitution to resolve ambiguity in a federal statute." Bond, 134 S. Ct. at 2090. Commenters further stated that in the absence of a clear congressional authorization, which does not exist here, EPA cannot infringe up on traditional state sovereign functions.

Commenters stated that Congress has not left any room for EPA to have anything whatsoever to
do with the bulk

- power system or the grid, not to mention to regulate, or redesign, or to affect the electric energy syst em.

Commenters indicated that the CAA allows EPA to regulate emissions of pollutants at their

sources

- but under Section 111(d) it must share that authority with the states. Commenters indicated that EPA's authority to regulate air pollution from stationa ry sources should not be read to cut across this complex scheme of federal and state regulations.

Commenters claimed that the proposed rule is intended to establish a National Energy Policy and that establishing an energy policy is the responsibility of Co ngress, and not the EPA. Commenters questioned the validity of the EPA's authority to establish a nationwide energy policy.

Commenters stated that EPA cannot require a fundamental redesign of the electricity generation and distribution system. Commenters s tated that because, under Prevention of Significant Deterioration BACT requirements, a source cannot be required to fundamentally redesign their facility, then, the EPA should not have the authority to fundamentally redesign the electricity generation and distribution system. Commenters cited the Supreme Court decision on the Tailoring rule at 18 134 S. Ct. 2427, 2448 (2014).

Commenters stated that Congress did not implicitly authorize EPA under the CAA to establish national and state energy policy. Comment ers indicated that when Congress added the Acid Rain Program to the CAA in 1990 that Congress was careful to preserve the existing authority of states and FERC over energy policy and that Congress explicitly prohibited EPA from intruding on the processes a lready in place for managing electricity rates and reliability. Commenters quoted: "Nothing in this section shall be construed as requiring a change of any kind in any State law regulating electric utility rates and charges or affecting any State law regar ding such State regulation or as limiting State regulation (including any prudency review) under such a State law. Nothing in this section shall be construed as modifying the Federal Power Act or as affecting the authority of the Federal Energy Regulatory Commission under that Act. Nothing in this subchapter shall be construed to interfere with or impair any program for competitive bidding for power supply in a State in which such program is established." (42 U.S.C. section 7651b(f)). Commenters stated that Congress' explicit prohibition of authority over energy rates and reliability to EPA in Title IV of the CAA proves the absurdity of any claim that EPA has the191 authority to regulate these same issues under the generic terms of Section 111(d) that say nothi ng about these matters.

Commenters contended that federal law may be interpreted to "reach into areas of State sovereignty" only where "the language of the federal law compels the intrusion" (i.e., City of Abilene v FCC, 164 F.3d 49, 52 (D.C. Cir. 1999), a nd Gregory v. Ashcroft, 501 U.S. 452, 460) and that there is nothing that can be gleaned from the text of Section 111 compelling such a result. Commenters also cited the Supreme Court finding (EDF v. EPA, 467 F.3d 1329, 1334 (D.C. Cir. 2006)) that in the c ontext of applying BACT, the states have the authority because they are best positioned to account for local circumstances that make a technology "unavailable" in a certain area; thus, the commenters claimed that the same holds true for establishing source emission standards based on BSER. The commenters claimed that the states' role in applying the BSER is a critical "safeguard" against overly

- stringent regulation of existing sources.

Commenters stated t he CAA establishes the right of states to set their o wn emission standards based on the EPA guidelines, and the EPA oversteps its authority by setting "binding" emission goals and compliance mechanisms. Commenters stated the EPA is barred by U.S. Supreme Court precedent from infringing upon a traditional st ate sovereign function unless Congress has adopted clear statutory language expressly authorizing the Agency to do so. Arkansas Elec. Co

op., 461 U.S. at 377. See New York v. United States, 505 U.S. 144, 112 S.Ct. 2408, 120 L.Ed.2d 120 (1992); see also " Federalism, State Sovereignty and the Constitution: Basis and Limits
of Congressional Power," Kenneth R. Thomas, Congressional Research Service (Updated June 17, 2005) at CRS

- 1.[7] Commenters said nothing in the CAA expressly authorizes the EPA to regula te the generation of electricity, the type of electricity, or other such energy regulatory matters traditionally reserved to states. Commenters stated the CAA delegates to the EPA the authority to establish procedures only, and reserves to the states the authority to set emission
standards. 42 U.S.C. 7411(d)(1)(A).

Commenters described how Section 111 confines EPA's authority to areas in which its expertise is greatest: emission reduction technologies, technology applicability, technology costs, and

ene rgy and environmental impacts associated with technology implementation.

Commenters stated that Congress delegated to EPA only the authority to regulate sources of air pollution under Section 111(d). Commenters quoted other court cases supporting their con tention that EPA has assumed authority that Congress did not intend. Commenters cited Michigan v. EPA, 268 F.3d 1075, 1082 (D.C. Cir. 2001): "Agency authority may not be lightly presumed." Also commenters quoted Ethyl Corp. v. EPA, 51 F.3d 1030, 1060 (D.C. Cir. 1995); Michigan, 268 F.3d at 1082: "Were courts to presume a delegation of power absent an express withholding of such power, agencies would enjoy virtually limitless hegemony, a result plainly out of keeping with Chevron and quite likely with the Co nstitution as well."

Commenters stated that courts recognize an implicit delegation of rulemaking authority only when Congress has not spoken directly to the extent of such authority, or has "intentionally left192 [competing policy interest] to be resolved by the agency charged with administration of the statute" quoting Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837, 865

- 866 (1984). Commenters also stated that the court in Bowen v. Georgetown Univ. Hosp. [Bowen v. Georgetown Univ. Hosp., 48 8 U.S. 204, 208 (1988)] spoke clearly to this point, stating that "it is axiomatic that an administrative agency's power to promulgate legislative regulations is limited to the authority delegated by Congress."

Commenters stated that any power given to EPA must be defined by statute and quoted Elec. Power Supply Ass'n v. FERC , 753 F.3d 216, 220 (D.C. Cir. 2014), stating that EPA "has no power to act unless and until Congress confers power upon it." Commenters stated that when EPA acts outside its statutory reach, its action is "plainly contrary to law and cannot stand, "[ Michigan v. EPA , 268 F.3d 1075, 1081 (D.C. Cir. 2001)].

Commenters stated that even assuming the statute is ambiguous enough to allow EPA to take such an expansive approach to its power ove r stationary source emissions, the presumption against federal intrusion onto a traditional state power requires that EPA proffer a clear statement to support its authority. Commenters contended that the CAA supplies no such clear statement
and concludes t hat EPA's assertion of authority is therefore impermissible in light of state responsibilities over electricity generation, distribution, and consumption.

Commenters stated that EPA argued in the proposal that Section 111(d) authorizes EPA to regulate inte r

- and intrastate generation, sale, and transmission of electric power because Congress did not expressly constrain it from doing so. Commenters countered by quoting U.S. v. Stauffer Chern. Co., 684 F.2d 1174, 1187 (6th Cir. 1982) and Erlenbaugh v. United States, 409 U.S. 239, 245 ( 1972): "[w]here a problem of interpretation was apparently not foreseen by Congress, it is appropriate to consult and be guided by those areas covering the same subject where the expression of legislative intent is clear." Com menters summarized these cases by stating that "statutes 'intended to serve the same function' are construed together." Commenters stated that when Congress passes new legislation, "it acts aware of all previous statutes on the same subject," quoting from Erlenbaugh, 409 U.S. at 244. Commenters contended that presumably Congress was aware of the FPA when subsequently enacting the CAA and Congress would not have granted EPA broader regulatory authority than that given to FERC without an explicit statement.

C ommenters stated that EPA's proposal attempts to use the CAA to override states' energy policies and impose a national energy and resource

- planning policy that picks winners and losers based solely on EPA's policy choices, forcing states to favor renewable energy sources and
demand

- reduction measures over fossil fuel

- fired electric production. However, commenters stated that the CAA generally and Section 111(d) specifically do not give EPA broad authority to reorganize states' economies.

Commenters stated t hat Congress clearly intended that the CAA be confined to the regulation of air pollution and not the energy sector writ large, which is under the statutory jurisdiction of193 FERC and the states. Commenters stated that until the CPP, the EPA has never attemp ted to use the CAA to compel States to pass specific energy statutes.

Commenters stated, the proposed rule is much different than EPA's preceding rules in the degree to which it intrudes into traditional utility system planning and its lack of flexibility. Commenters said, we are concerned that the dictates of this proposed rule will frustrate TVA's
least

- cost energy resource planning activities and make the energy TVA provides less affordable and less reliable. Commenters said, EPA has proposed a construct for this rule that necessitates the involvement of the states and EPA in energy resource planning and the operation and dispatch of energy resources. Commenters said, while some State entities may have experience in these matters, EPA does not. Commenters said, further, if the definition of "emission standard" is modified as EPA proposes, these activities will be made subject to enforcement by advocacy groups with agendas that ignore or are antagonistic to TVA's and other utilities' goal of providing relia ble and affordable electricity.

Response 1 5 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history. We do not agree that the EPA is setting a national energy policy through the Clean Air Act. We also disagree that we are interfering with FERC or state jurisdiction.

The EPA disagrees wi th commenters’ assertions that this rule violates the federal

- state balances embodied in either the U.S. Constitution or federal statutes. This rule does not upset traditional
balances between state and federal authority

. Our emission guidelines simply ref lect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. Moreover, these emission guidelines provide states with the flexibility to establish, implement, and enforce st andards of performance and do not intrude on the regulatory domain of FERC or the states. It cannot be said that because environmental requirements may have an effect on the wholesale energy market or state retail regulation that the EPA is therefore intru ding into energy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Congress expressly identified power plants as a priority source category for regulation under CAA section 111. Finally, as a matter of constitutional law,
this r ule does not alter the balance between state and federal authority any more than already provided in the Clean Air Act and in countless other cooperative federalism regimes that have routinely been upheld as constitutional. The Legal Memorandum accompanyin g the final rule discusses this constitutional aspect.

The federal enforceability considerations raised in the comment arose primarily under the proposed portfolio approach for state plans. As explained in section VIII.C of the preamble, the
EPA is not finalizing the portfolio approach, which would have allowed state plan submittals to include federally enforceable measures that apply to entities that are not affected EGUs. However, as further explained in section VIII.D, if the state is adopting the sta te measures type plan, the state plan submittal will need to specify, in the supporting materials, the state194 enforceable measures that the state is relying upon in conjunction with any federally enforceable
emission standards for affected EGUs to meet the emission guidelines. The final rule provides considerable discretion to the states in setting emission standards and related plan requirements
for its affected EGUs. Consistent with longstanding practice under the Clean Air Act, if a regulated entity doe s not meet a requirement, the EPA will address the matter on a case

- by

- case basis, to determine the appropriate response and resolution. Third parties have authority under section 304 of the CAA that is similar to the EPA’s authority under section 113(a)

- ( h) of the
CAA.

Our rule does not conflict with section 403(f) under Title IV. We disagree that we are expanding our authority to include wholesale energy market regulation. Our emission guidelines simply reflect an achievable emissions limit through the ap plication of the BSER and do not in themselves require states or sources to implement the BSER. Moreover, these emission guidelines provide states with the flexibility to establish, implement, and enforce standards of performance and do not intrude on the regulatory domain of FERC or the states. It cannot be said that because environmental requirements may have an effect on the wholesale energy market that the EPA is therefore intruding into energy regulation. Certainly, in the legislative history of the
19 70 CAA Amendments, Congress expressly identified power plants as a priority source category for regulation under CAA section 111. Lastly, we note that section 403(f) is only relevant to construing “subchapter” IV, i.e., Title IV.

Comment 1 6 : Commenters ref erred to and applied the rules of the "Chevron Deference" or "Chevron doctrine" (Chevron, 467 U.S. at 865

- 866) for assessing any conflict between the CAA and FPA. Commenters stated that Congressional intent under the FPA is clear and that there is
no confl ict, and concluded the EPA "impermissibly" interprets a conflict between the Acts. Commenters claimed that following the principles of the "implied repeal" process, EPA does not have authority under the CAA to regulate the power grid.

Commenters claimed that Congress clearly intended there to be no conflict between these two acts [CAA and FPA] because it unequivocally granted FERC exclusive authority to regulate the bulk power system as recently as 2005 without so much as alluding to the CAA; therefore, f or this reason, it effectively repealed any implied authority the EPA could possibly glean from the CAA that it too may regulate the power grid.

Commenters contended that if the EPA implements its CAA authority lawfully, by regulating only the source categ ory at issue in the rule and not the entire electricity grid, the CAA would
not be in conflict with the FPA and the two acts can be reconciled.

Commenters claimed that because the proposed rule "impermissibly interprets the CAA to conflict with the FPA," t hen validity of the rule must be analyzed. Commenters claimed that employing the Chevron standard, EPA's reconfiguring energy markets and risking grid reliability is inconsistent with the administrative structure that Congress has enacted.195 Commenters clai med that using the first step of an "implied repeal" analysis, it is clear that the
FPA and CAA can be reconciled, and that the CAA does not explicitly provide EPA with any authority to regulate the bulk power system. Also, commenters claimed that EPA has merely granted itself this authority through the CPP.

Commenters stated that even if the EPA is entitled to Chevron Deference, the proposal is an expansion of the EPA's regulatory authority without clear Congressional approval.

Commenters stated that the final rule should be well within the reasonable deference the federal courts would grant the EPA to interpret the CAA according to the Chevron standard of review.

Commenters stated that at "Chevron step one", it should be recognized that a "system" does no t really mean "virtually any set of things" and they defined the meaning of "system" in terms of its Latin and Greek systema. Commenters stated that "the integrated grid" and the "interconnected electricity sector" (as defined in the Legal Memorandum at 50 and 54, respectively) in and of themselves are systems different from the statutorily derived "system of emission reduction."

Commenters concluded that the EPA's interpretation [of 111(d)] fails at Chevron step two, and asserted that a claim of agency au thority lacking principled limits will not be deemed reasonable (American Library Association, 406 F.3d at 702

- 03).

Commenters contended that the EPA's CPP rendering a wholesale energy market regulation does not pass Chevron step two because it does not r easonably effectuate Congress' intent for the CAA (i.e., Chevron, 467 U.S. at 845; United States v. Shimer, 367 U.S. 374, 382

- 383 (1961)).

Commenters concluded that "the judiciary is the final authority on issues of statutory construction and must reject a dministrative constructions which are contrary to clear congressional intent"; therefore, commenters claimed that Chevron step two compels a judicial evaluation of congressional intent.

Commenters stated that if a court determined the two acts could not b e reconciled as they pertained to the power regulation, the courts will utilize the second step of the "implied repeal" analysis by analyzing the later statute (i.e., FPA) to determine if it repealed the prior statute.

Commenters claimed that even assumin g that the EPA is entitled to Chevron Deference, the EPA's interpretation is unreasonable because it would bring about enormous and transformative expansion of the EPA's regulatory authority without clear congressional authorization; the commenters quoted Brown & Williamson Tobacco, 529 U.S. at 159 ("when an agency claims to discover in a long

- extant statute an unheralded power to regulation "a significant portion of the American economy" then agency must provide an especially convincing explanation of its legal authority").

Commenters stated that EPA's reliance on Chevron (deference) does not consider the interplay with other implicated statutes, and has lead the EPA to overstep its authority and encroach upon196 authority reserved exclusively to the States ( building blocks 3 and 4) and FERC (building block 2).

Response 1 6 : The EPA disagrees with commenters. For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is
reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

Furthermore, we disagree that we are expanding our authority to include wholesale energy market regulation or state retail regulatio n. Our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. Moreover, these emission guidelines provide states with the flexibility to establish, implement, and enforce standards of performance and do not intrude on the regulatory domain of FERC or the states. It cannot be said that because environmental requirements may have an effect on wholesale energy or retail markets that the EPA i s therefore intruding into energy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Congress expressly identified power plants as a priority source category for regulation under CAA section 111.

Comment 1 7 : Commenters indicated that the states have authority over electric generation facilities, local distribution, retail sales of electricity, and intrastate transmission pursuant to Section 201(b) of the FPA.

Commenters stated that states alone, not the federal government or FERC, have the authority over electric generation resources and fuel mix determination. Commenters provided several references to support this statement (i.e., John E. Nowack & Ronald D. Rotunda, CONSTITUTIONAL LAW 138 (7 th ed., 20014); Munn v. Illinois, 94 U.S . 113, 124 (1877); Richard J. Pierce, Jr. and Ernest Gellhorn, REGULATED INDUSTRIES IN A NUTSHELL 78

- 83 (1999); and, 221 16 U.S.C. 791a, et seq.) Commenters stated that State regulation of electricity generation is "one of the most important functions trad itionally associated with the police powers of the States." [Arkansas Elec. Coop., 461 U.S. at 377] Commenters stated that one of a state's core powers is to promote the health and economic well

- being of its citizens, including through the management of it s energy and air quality resources.

Commenters also spoke to the specific authorities conferred to states. Commenters stated that retail energy markets and local service issues (including the siting and construction of electric generating units, closure of existing units, operational limitations, distribution, ratemaking,
demand

- side management, and renewable and efficiency requirements) are within the exclusive purview of the state and local authorities and entities cannot be regulated under the CAA.
Com menters stated that Integrated Resource Plans (IRPs) unquestionably fall on the state side of the "bright line". Commenters indicated that EPA is required to allow states to regulate and determine the need for additional generating capacity through the IRP procedure, which is a legally mandated and highly structured public process. Commenters indicated that the state197 Public Service Commission balances electric resources to meet the needs of electric consumers and uses the IRP process to set long

- term resour ce portfolios for regulated electric utilities.

Commenters argued that state PUCs retain considerable authority over utility operations, including regulation of rates and terms and conditions of retail sales of power and distribution service, siting of ut ility facilities, and programs designed to increase renewable generation and promote demand side and end use efficiency . Commenters stated that under state laws, most, if not all, of the emission

- reducing measures contemplated in building blocks 2, 3, and 4 fall under the exclusive authority of state utility regulators or the governing boards of local public power utilities or rural electric cooperatives established pursuant to state law, not state environmental agencies or EPA. Commenters claimed that the CAA does not give EPA sweeping authority over the electricity system, and, specifically for Texas, the authority rests with the PUC of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT). Commenters indicated that even though TCEQ regulates source emissions, the PUCT regulates transmission and limited portions of the wholesale and retail markets, and ERCOT manages the dispatch of electricity into the market. Commenters concluded that no state regulatory agency would be able to implement the

p roposed rule.

Commenters stated that EPA should ensure in the final rule that the 111(d) guidelines to states are not prescribing or mandating these types of energy policy requirements that are exclusively the authority of states.

Commenters stated that the States should retain their power to regulate electric utilities concerning questions of need, reliability, cost and other related concerns including determining resource portfolios that might not favor the selection of higher cost resources over lower cost resources. Commenters cited several cases in support of their argument: New England Power Generators Ass'n v. FERC, 757 F.3d 283, 290 (D.C. Cir. 2014; New York v. FERC, 535 U.S. 1, 24; and Pacific Gas & Elec. Co. v. State Energy Res. Conservation & D ev. Comm'n, 461 U.S. 190, 205 (1983).

Commenters provided Court decisions that they stated supports the states authority set up under the FPA. Commenters referenced or quoted the Supreme Court in New York v. FERC, 535 U.S.
at 22

- 23, stating that the FPA 's "legislative history is replete with statements describing Congress' intent to preserve state jurisdiction over local facilities." Commenters also stated that the Supreme Court has noted that FERC itself "has recognized that the States retain significa nt control over local matters even when retail transmissions are unbundled", and referred to FERC's own acknowledgments of the limits on its jurisdiction in Order No. 888 [New York v. FERC, 535 U.S. 1, 24 (quoting Order No. 888 at 31,782, n.543 ("'Among ot her things, Congress left to the States authority to regulate generation and transmission siting'"), and n.544 ("'This Final Rule will not affect or encroach upon state authority in such traditional areas as the authority over local service issues, includi ng reliability of local service; administration of integrated resource planning and utility buy

- side and demand

- side decisions, including DSM [demand

- side management]; authority over utility generation and resource portfolios; and authority to impose198 non

- b y

- passable distribution or retail stranded cost charges.'") (2002)).] Commenters also
referred to New York and cited New York v. FERC, 535 U.S. 1, 20 (2002) ("FERC's jurisdiction over the sale of power has been specifically confined to the wholesale market ." (emphasis omitted)

Commenters stated that numerous judicial decisions have read the FPA and the other federal energy statutes as retaining the States' "traditional responsibility in the field of regulating electrical utilities for determining questions of need, reliability, cost and other related state concerns" and "traditional authority over the need for additional generating capacity, the type of generating facilities to be licensed, land use, ratemaking, and the like" [Pac. Gas & Elec. Co. v.
State E nergy Res. Conservation & Dev. Comm'n, 461 U.S. 190, 205 and 212 (1983)]. Commenters stated that the Supreme Court has also emphasized that federal regulation by agencies other than FERC may not invade the domain that the FPA has preserved for the states. Commenters stated that in Pacific Gas & Electric Co. v. State Energy Resources Conservation & Development Commission, [461 U.S. 190 (1983)], the Court concluded that federal regulation of the safety of nuclear power plants did not override state authority over "the regulation of electricity production." Commenters stated that the Court noted that the only exception to state regulation of these activities was FERC's authority under the FPA over interstate wholesale sales and transmission by FERC

- jurisdiction al utilities. [Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm'n, 461 U.S. 205]

Commenters provided additional court decisions that maintained states authority, see also [Niagara Mohawk Power Corp. v. FERC, 452 F.3d 822, 824 (D.C. Cir. 2006) ("States retain jurisdiction over retail sales of electricity and over local distribution facilities.")]; [Duke Energy Trading & Mktg., L.L.C. v. Davis, 267 F.3d 1042, 1056 (9th Cir. 2001) ("Retail sales of electricity are within the exclusive jurisd iction of the States")]. Commenters also referenced court decisions that upheld the division of authority, see also Chemehuevi Tribe of Indians v. Fed. Power Comm'n, 420 U.S. 395, 408, 409

- 10 (1975); First Iowa Hydro

- Elec. Coop. v. Fed. Power Comm'n, 328 U .S. 152, 168 (1946).]. Commenters stated that the courts have consistently rejected federal attempts to intrude on the States' authority in these areas [See, e.g., S. Cal. Edison Co. v. FERC, 603 F.3d 996, 1000

- 02 (D.C. Cir. 2010) (FERC lacked jurisdiction to preempt State authority to "set the netting period for station power" i.e., the pricing mechanism "in the retail market")]; [Piedmont Envtl. Council v. FERC, 558 F.3d 304, 315 (4th Cir. 2009) (FERC lacked permitting authority where a State commission " engage[d] in a legitimate use of its traditional powers")]; [Detroit Edison Co. v. FERC, 334 F.3d 48, 54 (D.C. Cir. 2003) (ruling that FERC actions infringed on State retail jurisdiction)]. Commenters also referenced PPL EnergyPlus, LLC v. Nazarian, 753 F. 3d 467 (4th Cir. 2014) (emphasizing the need to preserve "the division of the regulatory field that Congress went to so much trouble to establish" by respecting "Congress specific grant of power to the States to regulate production.")].

Commenters stated that Congress chose to confine FERC's sphere of regulation to preserve traditional state regulatory authority over all other sales

- including retail sales

- and over generation and local distribution facilities. Thus, commenters stated, Congress intended to "tak[e] no authority from State Commissions" [New England Power, 455 U.S. at 341 (quoting199 H.R. Rep. No. 1318, 74th Cong.,1st Sess. 8 (1935)) (emphasis omitted).], and Congress specifically preserved the autonomy of state and local public power utilities from plenary FERC regulation. Commenters stated that for state and local public power utilities, Congress expressly stated that FERC's general FPA authority does not apply to states and subdivisions of states, unless the FPA provision expressly so provide s. Commenters stated that Congress has confirmed this division of authority between states and FERC, in the PURPA of 1978, PURPA amendments in 1992, and most recently in the Energy Policy Act of 2005, which granted FERC authority to
create an Electric Reli ability Organization (known as NERC) to help develop and enforce reliability standards for the U.S. Bulk Power System. Commenters stated that the statute "does not authorize the ERO [Electric Reliability Organization] or the Commission to order the

constru ction of additional generation or transmission capacity or to set and enforce compliance with standards for adequacy or safety of electric facilities or services." Commenters stated that it would be wholly inappropriate for EPA to rely on a purportedly amb iguous environmental provision to claim authority over electricity markets that Congress has even expressly denied
FERC. Commenters also stated that Congress did not intend for FERC to regulate intrastate electricity transactions or mandate that states und ertake specific programs designed to foster increased renewable generation or end

- use efficiency measures. Commenters believed if FERC has limited authority in these areas, EPA must also, and as a policy matter, EPA should not
intrude into areas that are a ppropriately left to the state to regulate.

Commenters stated that FERC itself has recognized the authority of states. Commenters noted that FERC has acknowledged that the FPA "explicitly removes from Commission jurisdiction facilities used for the gener ation of electric energy (except as specifically provided)" leaving those matters to the States [Middle South Servs., Inc., 32 FERC Section 61,425, at 61,946 (1986).]; and commenters noted that FERC itself has expressly acknowledged the rights of states

to encourage the development of particular generation resources as a legitimate policy interest that is within their jurisdiction under the FPA [see, e.g., Order Accepting Proposed Tariff Revisions, Subject to Conditions, and Addressing Related Complaint, PJ M Interconnection, L.L.C., 135 FERC paragraph 61,022, at 61,106 (Apr. 12, 2011) (a state may "act within its borders to ensure resource adequacy or to favor particular types of new generation").] Commenters stated that FERC has recognized that state law do es not intrude on federal jurisdiction to the extent that a state is directing the planning and resource decisions of electric utilities under its jurisdiction [see Order on Complaint and Petition for Declaratory Order and on Petition for Enforcement, Midw est Power Sys., Inc., 78 FERC paragraph 61,067, at 61,246 (Jan. 29, 1997) (Iowa statute not preempted "to the extent that [it] require[s] [state utilities] . . . to purchase from certain types of generating facilities"); see also Order on Requests for
Reco nsideration, S. Cal. Edison Co., 71 FERC paragraph 61,269 (June 2, 1995) (states have broad powers to direct the planning and resource decisions of utilities under their jurisdiction)]. Commenters quoted FERC Commissioner Tony Clark in recent Congressional testimony [FERC Perspectives: Questions Concerning EPA's Proposed Clean Power Plan and other Grid Reliability Challenges: Hearing Before the Subcomm. on Energy and Power of the H. Comm. on Energy & Commerce, 113th Cong. 4, 7 (July 29, 2014) (written testi mony of Tony Clark, Comm'r, FERC), available at http://energycommerce.house.gov/hearing/ferc

- perspectives

-200 questi ons

- concerning

- epa%27s

- proposed

- clean

- power

- plan

- and

- other

- grid ], stating that the Proposed Guidelines would "dramatically alter the traditional lines of authority by creating a new paradigm of oversight of net carbon emission from a state" and potentially result in states "ceding ultimate authority of the regulation of their state's public utilities and energy development to the EPA."

Commenters cited Electric Power Supply Association (EPSA) vs. Fed. Energy Regulatory Comm’n, 753 F.3d at 216, and stated it is not credible for the EPA to assert that, even though the federal agency that is actually tasked with overseeing interstate energy markets cannot engage in
demand

- side regulation, the federal pollution control agency is "sub silentio" empowered to do

so by Section 111(d). Commenters reiterated that the division of authority was upheld by EPSA, 753 F.3d at 216; commenters stated that courts rejected attempts by FERC to use indirect means to regulate in areas that the FPA reserves to the states, referencin g EPSA, 753 F.3d at 221. Commenters further explained EPSA, 753 F.3d at 216, stating that the court vacated FERC Order No. 745 which established revised rules for compensating demand

- side resources in
FERC

- jurisdictional markets, because demand reductions did not constitute wholesale sales of energy and "the Federal Power Act unambiguously restricts FERC from regulating the retail market . . . ." [753 F.3d at at 224]. Commenters also referenced Duke Power Co. v. Fed. Power Comm'n, 401 F.2d 930, 935 (D.C. Ci r. 1968) (explaining that the "major emphasis" of the FPA "is upon federal regulation of those aspects of the industry which

- for reasons either legal or practical

- are beyond the pale of effective state supervision"); Conn. Dep't of Pub. Util. Control

v . FERC, 569 F.3d 477, 481 (D.C. Cir. 2009) (reiterating established principle that FERC may not "directly regulat[e]" electric generation).

Commenters specifically noted that the D.C. Circuit's recent decision in EPSA v. FERC has significant ramifications for Building Block 4 of the Proposed Rule. Specifically, commenters stated that in EPSA, the court ruled that FERC's wholesale jurisdiction does not extend to the regulation of putative "wholesale sales" by demand

- response resources because that would

con stitute "direct regulation" of state

- jurisdictional retail markets [EPSA, 753 F.3d at 222, 224].
Commenters contended that EPSA v. FERC thus holds that demand

- response resources may not be permitted to participate as sellers of wholesale energy in FERC jur isdictional, RTO

administered markets. Commenters stated that some have argued that this holding would also apply to demand

- response resources participating as sellers in RTO capacity markets. Commenters stated, however, that the EPSA decision does not dis turb state

- administered
demand

- response programs and does not foreclose the recognition in wholesale markets of such
demand

- response programs in wholesale demand. Commenters believed that the EPSA decision respects state and local authority over demand

- res ponse resources and will, in the long run, better enable the development of demand response in wholesale markets. Thus, commenters stated that the EPSA decision is not an impediment to EPA's long

- term goals, but since the decision has vacated FERC's attemp t to supplant state and local authority over retail demand response, EPA may need to reevaluate this building block and appropriately adjust each state's emission goals.201 Commenters stated EPA must defer to existing federal and state

- specific policies in i ts calculation of renewable energy potential for Florida and other states. According to the commenters, the Florida Legislature has established policies to encourage the development of renewable energy resources and to ensure these resources contribute to reliable electric service at a reasonable cost. The commenters provided information on Florida laws and The Public Utility Regulatory Policies Act (PURPA), stating that they provide the legal framework for the interconnection and economic parameters to dev elop renewable energy and therefore Florida

specific policies should be inherent to the Proposed Rule.

Response 1 7 : We disagree with commenters. As an initial matter, we note that the final rule does not include building block 4

– demand

- side energy efficiency

– as a component of BSER. Therefore, we will not address comments on building block 4. As we explain in section s V.A. and V.B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. That is, EPA is responsible for determining the level of emission limitation from the source category, while states have the responsibility of assigning emission requirements to their sources that will ensure their achievement of that level of emission limitation. States may fulfil their responsibil ity by establishing emission standards or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emission reduction measures, including measures that are not part of the BSER.

We disagree that we are expanding our authority to include wholesale energy market regulation. Our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. Moreo ver, these emission guidelines provide states with the flexibility to establish, implement, and enforce standards of performance and do not intrude on the regulatory domain of FERC or the states. It cannot be said that because environmental requirements ma y have an effect on the wholesale energy market that the EPA is therefore intruding into energy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Congress expressly identified power plants as a priority source category for regul ation under CAA section 111.

Comment 1 8 : Commenters claimed the proposed rule interferes with or usurps state responsibilities under the FAA and would inappropriately assign oversight of electric generation to the EPA. Commenters believed the proposed rul e effectively limits the state regulator's ability to implement appropriate and balanced resource planning, interferes with the state utility regulators' ability to manage electricity rates, and gives the EPA oversight of electric generation dispatch, cons truction and integration of renewable power, and customer electricity consumption. Commenters argued the proposed rule would usurp the state utility regulator's authority by limiting the availability of certain electric generating resources, forcing the

pr emature retirement and replacement of existing generating resources, requiring the implementation of renewable energy and costly energy efficiency standards, requiring the state to construct new generation units, and increasing electricity rates for custom ers. Commenters argued that the EPA has no jurisdictional authority under section 111(d) to assume this role. Commenters believed the EPA would need clear Congressional authorization to usurp state's202 authority over utility rates, fuels and generation choic es and stated that "it is hard to imagine that Congress intended to give EPA authority to regulate the entire electric system by the use of the general term "system." Commenters stated that the environmental regulation has been limited to specific requirem ents on specific plants, and has never been interpreted to grant EPA broad authority to dictate the operation of the entire electricity system.

Commenters argued that the proposal overrides state prerogatives by forcing them to prioritize natural gas

- fired generation over coal

- fired generation and non

- fossil

- fuel generation or energy efficiency over fossil

- fueled generation. Commenters felt that the renewable portfolio standard would severely infringe on state's regulatory jurisdiction. Commenters reference d Detroit Edison Co., 334 F.3d at 49 ("Retail service [subject to State authority]

- denotes transmission or distribution to end users."); see also In re S. Cal. Edison Co., D. 05

- 01

- 054, 2005 WL 350964 (Cal. P.U.C. Jan. 27, 2005) (discussing State regulat ion of dispatch). Commenters stated that the unlawfulness of EPA's approach applies equally to EPA's proposal to prioritize the dispatch of existing NGCC facilities and EPA's suggestion in the NODA that its BSER analysis could be expanded to include new NG CC facilities. Commenters stated that, likewise, requiring the construction of new renewable power plants to serve retail demand is clearly not within the federal government's limited authority over "wholesale" transmission. Commenters stated that in
Build ing Block 4, by seeking to regulate local and intrastate electricity markets in the name of reducing demand, EPA is usurping the States' traditional authority over those markets. Commenters stated that the FPA clearly recognizes States' authority with resp ect to the generation and dispatch of electricity, and nothing in the CAA suggests that Congress has independently given EPA authority to compel fuel switching within the electricity sector.

Commenters argued that the proposed rule overrides each state's p rerogative to determine its own electricity policies. Commenters noted that state utility regulators are responsible for ensuring the lowest possible electricity prices for ratepayers and claimed that by forcing coal

- fired generating plants to shut down se veral years before the end of their remaining useful life and consequently causing electricity prices to increase, the EPA would be improperly usurping the state utility commission's authority to ensure low electricity prices. Similarly, commenters argued that the CPP's environmental dispatch requirement for utility electric generating units would interfere with a state's utility commission's ability to comply with its duty to ensure that utility services are provided to the ratepayers at the "lowest reason able cost."

Commenters noted that the states and FERC have expertise in public utility ratemaking and in understanding the complexity of the electric grid and electric reliability and argued that the EPA would not only exceed its authority but lacks the n ecessary experience and expertise to oversee the electric system. Commenters expressed similar concern regarding expansion of EPA's authority and noted that electric coops are governed by locally elected boards that are in a better position to understand t he dynamics of their local power systems and the desire of their member
owners than the EPA.203 Commenters contended that after an implementation is approved by EPA, a state will have lost its ability to chart its own course as to how it regulates public ut ilities and its energy sector as a whole, and further claimed that the several ISOs are warning that the grid cannot operate reliably under the EPA's proposal and electric costs will skyrocket.

Commenters claimed that the CPP effectively reverses Ohio's de cision to restructure its electricity market. Commenters indicated that in 1999 Ohio restructured the electricity market to tap into the decentralized forces of supplier competition and consumer choice. Commenters
described how consumers can choose between different prices, contract terms, generation resources, and incentives. Commenters claimed that the CPP would induce a "soft re

- integration" of Ohio's market which would undermine the state's restructuring decision.

Commenters stated that the EPA's CPP wo uld force the State Corporation and/or Public Utility Commission to oversee utility resource planning in order to further the EPA's climate change goals. Commenters quoted National Association of Regulatory utility Commissioners Chairman Joshua Epel who sa id the proposal's renewable generation goals and end

- use efficiency programs ". . . concerns me more than just about anything else in the rule."

Commenters expressed concern that state energy policy making would become subject to federal oversight and that the EPA would order states to boost their renewable generation goals or
increase their end

- use efficiency programs.

Commenters stated that policies such as renewable energy portfolio standards, energy efficiency standards, and cap

- and

- trade carbon emissi ons systems have always been implemented by deliberation in state legislatures or public utility commissions. Commenters noted that the American Clean Energy and Security Act of 2009 was an attempt by the U.S. Congress to authorize these policies [see H.R. 2454 of the 111th U.S. Congress; this legislation, also known
as the Waxman

- Markey Bill, was passed by the U.S. House, but failed in the Senate] and stated that "the EPA cannot now do what the elected representatives of the American people declined to

aut horize simply by reinterpreting long

- extant statutes to suddenly provide such authorization."

Commenters claimed that the EPA's "asserted authority could dramatically overhaul the choices made by Colorado officials" related to their RPS. Commenters explained that the Colorado law allows state officials discretion regarding enforcement of a 2% rate cap when it comes into conflict with the green energy production quota. Commenters asked whether the EPA would allow this choice to be made by the State.

C ommenters requested the proposed rule be withdrawn because it inappropriately usurps state authority.

Commenters noted that the United States Court of Appeals for the District of Columbia recently prohibited efforts made by FERC that sought to encourage demand side management programs.
Commenters stated that the court found that these efforts encroached upon powers that are within the exclusive purview of the states [see Electric Power Supply Ass'n v. FERC, 753 F.3d 216204 (D.C. Cir. 2014)]. Commenters state d that the Proposed Rule impermissibly encroaches on these same powers. Commenters also said that the FPA splits jurisdiction over the sale and delivery of electricity between the federal government and the states on the basis of the type of service being provided and the nature of the energy sale. Commenters quoted from Congressional testimony by FERC Commissioner Tony Clark who warned that states risk losing autonomy to EPA. Specifically, commenters quoted Mr. Clark stating that to the extent the state pl an "becomes blessed by EPA and submitted and approved by EPA . . . [the state] will have lost that opportunity [to modify its plan] because it will have become a part of a Federally

- approved plan and [the state] would then need to seek approval from the EP A." (See FERC Perspectives: Questions Concerning EPA's Proposed Clean Power Plan and Other Grid Reliability Challenges: Hearing Before the H. Subcomm. on Energy & Power of the H. Comm. on Energy, (2014) (statement of Tony Clark, Chairman, FERC), available at http://energycommerce.house.gov/hearing/fercperspectives

- questions

- concerning

- epa%27s

proposed

- clean

- power

- pla n

- and

- other

- grid ). Commenters, also citing ESPA, 753 F.3d at 216, stated that EPA should not be able to take a greater amount of power from the states than the D.C. Circuit allowed FERC to take. Commenters claimed that building block 4 conflicts with

state authority over regulation of energy, stating that EPSA, 753 F.3d at 218 upholds that not even FERC has authority to induce a reduction in the consumption of electricity by consumers. Commenters further claimed that neither the EPA nor the federal governme nt as a whole has authority to restrict the use or purchase of electricity, or impose heat rate improvements.

Commenters stated that EPA should certainly have no more ability to "do indirectly what it could not do directly" (Altamont Gas Transmission Co. v. FERC, 92 F.3d 1239, 1248, D.C. Cir. 1996) than FERC would with respect to matters that the FPA left to the states. Commenters believed that the limitations placed on EPA's authority by the Constitution and the CAA were confirmed almost 40 years ago (see Dist. of Columbia v. Train, 521 F.2d 971, 974 (D.C. Cir. 1975)) and believes the Supreme Court will exercise its authority to prevent any unconstitutional coercion of state power and authority by the federal government (see Nat'l Fed'n of Indep. Bus. v. S ebelius, 132 S. Ct. 2566, 2601

- 04, 2656

- 66 (2012)).

Commenters stated that the proposed rule's attempt to federalize control over state energy policy is inconsistent with the FPA. Commenters stated that it is unreasonable for EPA to propose regulation unde r Section 111(d) that would allow precisely the type of federal control over state
decision

- making that Congress denied to the federal government in the context of the FPA. Commenters claimed that the jurisdictional question turns on whether the Agency act ion "constitutes[s] direct regulation" of an area that is subject to state regulation (Connecticut Dept. of Public Utility Control v. FERC, 569 F.3d 477, 478 (D.C. Cir. 2009)).

Commenters stated that the rule's unprecedented reach extends past New Mexico's utilities and even beyond the Public Service Commission

- all the way to the state legislature. Commenters further stated that EPA's CPP would require New Mexico lawmakers to enact energy laws that mandate the usage of certain types of energy and services in the retail electricity market.205 Commenters stated that EPA infringes upon state legislatures and public service commissions by attempting to set state energy policy at the federal level.

Commenters argued that the proposal combines a renewable energy p ortfolio with demand

- side control measures to create a de facto national energy policy at the expense of state authority and
economic freedom.

Commenters believed that the EPA was attempting to federalize electric system that has been under the purview of the states or open markets. Commenters stated that the proposed rule dictates what both state environmental regulatory agencies and state energy commissions must adopt as policy choices, effectively choosing the winners and losers for electricity generatio n rather than leaving those decisions up to states and the market. Moreover, commenters stated that the process requires these policy choices to be made federally enforceable, taking any future decision to change that policy out the states' hands. Commente rs argued that the CAA does not empower EPA to take over state decision

- making authority regarding electric production, delivery, and use.

Commenters claimed that the proposal requires state plans must be federally enforceable and argued that this demonstr ates the EPA is usurping states' authority under the FPA.

Commenters noted that the operation of EGUs at a public power utility are assigned under state and local laws to the public power utility and stated that the proposed rule intrudes upon the local

co ntrol of public power utilities.

Response 1 8 : We disagree with commenters. As an initial matter, the final rule does not include building block 4

– demand

- side energy efficiency

– as a component of BSER. Therefore, we will not address comments on building block 4. Additionally, we note that we are not requiring affected EGUs to invest in renewable energy sources. Renewable energy is one potential measure that may be employed, consistent with the state flexibility principle that is central to this

program.

As we explain in sections V.A. and V.B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. That is, EPA is resp onsible for determining the level of emission limitation from the source category, while states have the responsibility of assigning emission requirements to their sources that will ensure their achievement of that level of emission limitation. States may fulfil their responsibility by establishing emission standards or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emission reduction measures, including measures that are not part of the BSER.

We disagree that we are expanding our authority to include wholesale energy market regulation

, state retail regulation , or federalizing state decisions over energy policy . Our emission guidelines simply reflect an achievable emissions limit through the ap plication of the BSER and do not in themselves require states or sources to implement the BSER. Moreover, these emission guidelines provide states with the flexibility to establish, implement, and enforce standards of206 performance and do not intrude on the regulatory domain of FERC or the states. It cannot be said that because environmental requirements may have an effect on the wholesale energy market that the EPA is therefore intruding into energy regulation. Certainly, in the legislative history of the
19 70 CAA Amendments, Congress expressly identified power plants as a priority source category for regulation under CAA section 111.

We note that t he federal enforceability considerations raised in the comment arose primarily under the proposed portfolio appr oach for state plans. As explained in section VIII.C of the preamble, the EPA is not finalizing the portfolio approach, which would have allowed state plan submittals to include federally enforceable measures that apply to entities that are not affected
EG Us. However, as further explained in section VIII.D, if the state is adopting the state measures type plan, the state plan submittal will need to specify, in the supporting materials, the state enforceable measures that the state is relying upon in conjunc tion with any federally enforceable
emission standards for affected EGUs to meet the emission guidelines. The final rule provides considerable discretion to the states in setting emission standards and related plan requirements
for its affected EGUs. Con sistent with longstanding practice under the Clean Air Act, if a regulated entity does not meet a requirement, the EPA will address the matter on a case

- by

- case basis, to determine the appropriate response and resolution.

Comment 19 : Several commenters sai d that electricity is not generated on a state

- by

- state basis

. Commenters also state that the EPA is unlawfully intruding on FERC’s authority under Federal Power Act 215 to ensure reliability of the bulk power system. Commenters also say that the EPA failed to consult with FERC about the 111(d) rule’s technical feasibility and impacts on reliability and markets.

Commenters stated that the title of the proposed rule, the Clean Power Plan, makes it clear that
EPA is crea ting national electricity policy. Commenters said EPA's proposal sets emission
standards on a state

- by

- state basis with initial compliance levels mandated in 2020, ongoing to 2030. Commenters said that FERC has a responsibility to promote the reliability o f our nation's bulk power system under section 215 of the Federal Power Act. Commenters said FERC must analyze the reliability impacts of the proposed rules. Commenters said because FERC is the economic regulator of the nation's wholesale electricity marke ts and is directed by statute to assure just and reasonable rates, the Commission also has a duty to analyze the economic consequences of the proposal.

Response 19 : We disagree with commenters. The EPA is not setting a national electricity policy. Further, we are not expanding our authority to include wholesale energy market regulation. Our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. Moreover, these emission guidelines provide states with the flexibility to establish, implement, and enforce standards of performance and do not intrude on the regulatory domain of FERC or the states. It cannot be said that because environmental requ irements may have an effect on the wholesale energy market that the EPA is therefore intruding into energy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Congress expressly identified power plants as207 a priority source categor y for regulation under CAA section 111. For a comprehensive discussion of how we considered reliability in developing the final rule, please see preamble section
VIII.G.2.

Further, we disagree with commenters that EPA is intruding on FERC’s authority under FPA section 215 to ensure bulk power system reliability. The EPA is setting achievable emission
limits. We are not asserting authority over issues that Congress has exclusively reserved for another. As noted in the final rule preamble, EPA officials worked closely with DOE and FERC officials to ensure, to the greatest extent possible, that actions taken by states and affected EGUs to comply with the final rule mitigate potential electric system reliability issues. Senior EPA
officials met with each of the FERC Commissioners and EPA staff had frequent contact with FERC staff throughout the development the rule. FERC held four technical conferences to discuss implications of compliance approaches to the rule for electric reliability , infrastructure,
and electricity markets . EPA staff attended the four conferences and EPA leadership spoke at all of them. The EPA, DOE, and FERC will continue to work together to ensure electric grid reliability in the development and implementation of state plans. The EPA ha s considered the input of FERC, DOE, and multiple stakeholders regarding reliability , infrastructure, and market issues as it develop ed the final rule. For a more comprehensive discussion of reliability issues, as
well as the EPA’s coordination with both F ERC and DOE, please see preamble section VIII.G.2. This section also includes a discussion of reliability analysis and reports regarding the 111(d)
rule. For a discussion of infrastructure and market issues, please see preamble section V and the GHG Mitiga tion Measures TSD. Finally, we note that the agency has addressed concerns about time needed to develop state plans and meet interim performance levels. Thus, with initial submittals, all states will have until September 6, 2018 to submit final plans, and the interim performance period will not begin until 2022. Additionally, the final rule adjusts the interim goals to provide a gradually phased

- in initial reduction requirement and a more gradual glide path to the final 2030 goals. This more gradual applica tion of the BSER over the 2022

- 2029 interim period provides the state with substantial latitude in selecting the emission reduction glide path for affected EGUs over that period.

Comment 2 0 : Comments stating that the EPA is attempting to usurp state autho rity over renewable energy, energy efficiency, and similar programs through the extension provision in proposed 40 Code of Federal Regulations (CFR) section 60.5760(a)(3), and furthermore, that no state agency can make such a federally enforceable commitme nt for measures in state law.

Commenters stated, the EPA is attempting to usurp state authority over renewable energy, energy efficiency, and similar programs through the extension provision in proposed 40 Code of Federal Regulations (CFR) section 60.5760( a)(3). Commenters said, the EPA does not have the legal authority under FCAA section 111(d) to make any demands regarding a state's current programs that are not already federally enforceable. Commenters said, furthermore, the
constitutions of Texas and mo st other states prohibit a state agency from making a federally enforceable commitment binding the state legislature from changing state law.208 Commenters stated, in section 60.5760(a)(3), the EPA is proposing that in exchange for an extension, the state mu st commit to not remove any existing CO2 measures. Commenters said, furthermore, the state must make the commitment in a way that allows the EPA to still enforce the measure even if the state fails to submit a final plan or EPA does not approve the final p lan. Commenters said, unless a state program, such as renewable energy standard, is already federally enforceable under a state plan or a SIP, the EPA does not have the authority to make any demands of the states regarding such a program. Commenters said, the EPA is attempting to force states to surrender that authority through section 60.5760(a)(3). Commenters said, for the EPA to threaten to withhold an extension unless the state surrenders authority of these programs
to the EPA is blatant extortion of th e states.

Commenters stated, furthermore, no state agency can make such a federally enforceable commitment for measures in state law. Commenters said, the rule, as proposed, applies to the administrator of the air quality program in a state. Commenters sai d, state agencies cannot bind their legislative process in the manner EPA is requiring. Commenters said, the TCEQ is no more capable of making such a commitment than the EPA can commit that a provision of the FCAA will not change. Commenters said, even a s tate legislature may not be able to restrict a future legislature from changing state law. Commenters said, the provision in section 60.5760(a)(3) makes it impossible for a state to qualify for an extension. Commenters said, this provision is illegal and u nnecessary and should be removed from the rule.

Response 2 0 : We disagree that we are expanding our authority to include wholesale energy market regulation or state retail regulation. Our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves req uire states or sources to implement the BSER. Moreover, these emission guidelines provide states with the flexibility to establish, implement, and enforce standards of performance and do not intrude on the regulatory domain of FERC or the states. It cannot be said that because environmental requirements may have an effect on the wholesale energy market that the EPA is therefore intruding into energy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Congress expressly identified p ower plants as a priority source category for regulation under CAA section 111.

The federal enforceability considerations raised in the comment arose primarily under the proposed portfolio approach for state plans. As explained in section VIII.C of the pr eamble, the EPA is not finalizing the portfolio approach, which would have allowed state plan submittals to include federally enforceable measures that apply to entities that are not affected EGUs. However, as further explained in section VIII.D, if the st ate is adopting the state measures type plan, the state plan submittal will need to specify, in the supporting materials, the state enforceable measures that the state is relying upon in conjunction with any federally enforceable
emission standards for aff ected EGUs to meet the emission guidelines. The final rule provides considerable discretion to the states in setting emission standards and related plan requirements
for its affected EGUs. Consistent with longstanding practice under the Clean Air Act, if a209 regulated entity does not meet a requirement, the EPA will address the matter on a case

- by

- case basis, to determine the appropriate response and resolution.

Comment 2 1 : Commenters stated that nothing in the CAA authorizes or hints at providing
authorit y to EPA to redesign the nation's electricity supply system.

Commenters stated that the EPA does not possess lawful authority to regulate electricity, power markets, the transmission and sale of energy into wholesale and retail markets, determine

resource mix, or regulate operation or construction of the electric grid; Commenters asserted that this authority resides with FERC (for wholesale transactions) and the states' Public Utilities Commissions (for retail transactions).

Commenters quoted FERC Commiss ioner's Tony Clark and Phillip Moeller (written testimonies before the Committee on Energy and Commerce, Subcommittee on Energy and Power, U.S. House of Representatives, July 29, 2014) to support their argument that the proposal would require extensive cha nges to the operation of the nation's power grid, and that this proposal usurps states' authority over the electricity grid.

Commenters stated that EPA does not have the authority to order states to implement, and lacks the authority itself to implement, B uilding Blocks 2, 3, and/or 4. Commenters reiterated that states, and not the federal government, have authority to implement Building Block 3 and/or 4. Commenters indicated that EPA's reliance on building block two in setting performance
standards exceed s its CAA authority because the states have authority to regulate electricity under the FPA programs. Commenters stated that building block 3 would displace the roles traditionally performed by state legislatures and state regulatory agencies. Commenters c laimed that EPA's portfolio approach (through Building Blocks 2, 3 & 4) would have the states regulate activities that remain the exclusive province of FERC. Commenters asked the question of whether, under the proposed rule, states would be required to reg ulate dispatch in contravention of FERC authority.

Commenters stated that if a state chooses to include increased dispatch of NGCC plants, renewable energy, or energy efficiency in its compliance plan under 111(d), the jurisdiction over
these activities re mains with FERC and the state utility commissions. Commenters agreed that although using renewable energy and energy efficiency for the purpose of complying with CO 2 emissions reduction goals is good public policy, enforceability by EPA is problematic, as it may usurp the authority of FERC and state public utility commissions over these activities. Commenters concluded by stating that EPA's oversight could lead to unintended consequences in terms of costs and reliability issues.

Commenters stated that the r egulation of CO 2 emissions is beyond the authority of the ISOs and
RTOs.210 Commenters said that the proposed guidelines do not address the D.C. Circuit's decision in EPSA that was decided less than a month before the Proposed Guidelines were published in the Federal Register ( Elec. Power Supply Ass'n v. FERC , 753 F.3d 216 (D.C. Cir. 2014)). Commenters stated that the decision both vacated FERC Order No. 745 and prohibits some
demand

- side resources from directly participating in FERC

- jurisdictional markets, a lthough it
does not affect state

- administered demand

- response programs. Commenters quoted from FERC and argued it would be inconsistent for EPA to continue to assume that demand

- side resources will play an expanded role in supporting emissions reductions g iven EPSA's potential implications. ("Whether the Opinion is read narrowly or broadly, its implementation will involve both setting new prospective rules and unwinding demand response participation in certain
wholesale markets

- a task with significant mar ket and financial implications that go far beyond the typical burdens of litigation . . . ." [See Mot. of FERC to Stay Issuance of Mandate at 11, Elec. Power Supply Ass'n v. FERC ]).

Commenters stated that the authority to require States to implement discr ete energy policies is denied to the federal government under the FPA. Commenters also referred to Elec. Power Supply Ass'n v. FERC, noting that the FERC order was struck down for violating the states' exclusive jurisdiction over retail electricity markets . Commenters stated that it is unclear how the EPA would exercise this claimed jurisdiction (i.e., the authority to state lawmakers to enact energy statutes).

Commenters stated that a federal agency may not assert authority over issues that Congress has

ex clusively reserved for another. Commenters cited Hunter v. FERC, 711 F.3d 155, 156 (D.C. Cir. 2013) as an example, stating that the court rejected FERC's attempts to regulate matters that the court believed were exclusively subject to the jurisdiction of t he Commodity Futures Trading Commission. Commenters also stated that it is clear that "jurisdiction cannot arise from the absence of objection, or even from affirmative agreement" by a regulatory body, [see Columbia Gas Transmission Corp. v. FERC, 404 F.3d 459, 463 (D.C. Cir. 2005)], any more than it can be created by the consent of a private party [see, e.g., Weinberger v. Bentex Pharms., Inc., 412 U.S. 645, 652 (1973) ("Parties . . . cannot confer jurisdiction; only Congress can."); Cal. Indep. Sys. Opera tor Corp. v. FERC, 372 F.3d 395, 398 (D.C. Cir. 2004); Michigan v. EPA, 268 F.3d 1075, 1081 (D.C. Cir. 2001) ("EPA is a federal agency

- a creature of statute. It has no constitutional or common law existence or authority, but only those authorities confer red upon it by Congress. 'It is axiomatic that an administrative agency's power to promulgate legislative regulations is limited to the authority delegated by Congress.' Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 . . . (1988). Thus, if there is no statute conferring authority, a federal agency has none.").]

Commenters stated that states do not have the authority to implement building block 2. Commenters stated that the EPA does not have authority under the FPA to modify dispatch rules
under buildi ng block 2. Commenters contended that operators also do not have control over dispatch. Commenters stated that it appears that only FERC has the authority under the FPA to211 approve changes to dispatch rules and that any "redispatch" mechanism developed by E PA would require FERC approval.

Commenters stated that the regulators in their respective states do not have the authority to require the minimum amounts of renewable energy and energy savings stipulated by their states' CPP target, and therefore the propo sed rule would require enabling legislation in order to comport with the EPA's CPP. Commenters stated that there is no statutory authority in Texas to empower an agency to require and regulate demand side management.

Commenters stated that the states face significant jurisdictional uncertainty about their ability to achieve compliance through environmental permit limitations and the re

- dispatch necessary to operate within such limitations.

Commenters quoted FERC Commissioner Clark: "States do not have authority to unilaterally compel dispatch of a unit in a FERC jurisdictional wholesale market." Commenters further quoted FERC Commissioner Moeller who said that it is not clear "how an RTO cou ld prioritize version State Implementation Plans over its own market dispatch."

Commenters stated that the Proposed Rule assumes that states can regulate dispatch and require environmental dispatch to implement the measures contemplated in building block 2. Commenters stated that in RTO regions, however, such matters are managed by RTOs pursuant
to FERC

- approved rules or directly through FERC

- approved tariffs. Commenters stated that the Proposal is arbitrary and capricious because, in failing to recognize FERC's role and its statutory obligations when regulating dispatch, it would create serious regulatory conflicts, as explained by FERC Commissioner Tony Clark:

"[E]ven if all states in a region band together under the regional grid operator, any changes in the wholesale markets must necessarily be vetted and approved by FERC. The Commission would be charged with the awkward task of evaluating fundamental wholesale market design changes driven by environmental priorities approved by EPA.
Yet FERC is an eco nomic and reliability regulator. Any decisions made by FERC must be rooted not in the CAA, but in our 'just and reasonable' and not 'unduly discriminatory or preferential' rate standard in the FPA. FERC's ability to alter or reject an RTO

- proposed complian ce mechanism would present a conflict with EPA's evaluation of the compliance plans. Absent Congress stepping in and clearly defining FERC authority and EPA authority, it is hard not to envision a future jurisdictional train wreck " [Clark Testimony].

Comm enters stated that the Proposal assigns implementation of the portfolio

- based emission

reducing measures in building blocks 2, 3, and 4 to the states, and EPA does not specify whether the state utility commission or the state environmental regulatory agenc y is charged with implementing building blocks 2, 3, and 4. However, commenters noted, state environmental agencies generally do not have authority under state law to implement these building blocks

- or212 have any experience in integrated resource planning

- and thus they may be ill

- suited to the task in comparison to the state utility commission. Commenters stated the Proposal fails to appreciate that state utility commissions can implement building blocks 2, 3, and 4 only for the utilities they regulate un der state law, and nearly all state utility commissions lack the authority to implement these building blocks with respect to their state's public power utilities; thus, EPA oversimplifies the difficulty of implementation of the Proposal's portfolio

- based building blocks under existing
state laws.

Commenters stated that the courts have also made clear that ambiguous statutory language is not sufficient to authorize an agency to regulate an area that has been traditionally subject to State regulatory authori ty. [See Am. Bar Ass'n, 430 F.3d at 472 (finding it unreasonable for federal agency to regulate area traditionally subject to State regulation when Congress has not spoken in clear terms)].

Commenters stated that the dispatch provisions of building block 2 of the proposed rule also violate federal law. Commenters stated that dispatch of Southwestern Electric Power Company's (SWEPCO's) EGUs within Texas is controlled by the Southwest Power Pool (SPP), according to
market

- based tariffs and operating agreemen ts that are intended to capture the benefits of security constrained market

- based economic dispatch across wide regions of the US in order to

secure more cost

- effective operation for the benefit of wholesale and retail customers.
Commenters stated that the operations of SPP are based on agreements of the system owners and operators, and are subject to oversight by FERC, but even FERC has no ability to compel any particular technique of coordination [Atlantic City Elec. Co. v. FERC, 295 F.3d 1 (D.C. Cir.
200 2).]. Commenters stated that SWEPCO is aware of no provision of state or federal law that would allow EPA or the state to alter those arrangements and dictate a specific technique to achieve this arbitrary level of dispatch for a specific type of unit. Com menters stated that energy markets recently developed in SPP have been carefully structured to achieve the least cost dispatch operation of committed generation, and to allow operators of the individual units the flexibility to respond to dynamic and const antly changing circumstances in both the supply of and demand for electricity [PUCT Project No. 42636

--- Commission Comments on Proposed EPA Rule on Greenhouse Gas Emissions for Existing Generating Units, Comments of SWEPCO
at 7

- 8 (Sept. 5, 2014)].

Commenters also cited California Independent System Operator Corp. (CAISO) v. FERC, 372 F.3d 395, 399 (D.C. Cir. 2004), stating that the D.C. Circuit rejected FERC's attempt to replace the CAISO's governing board under its authority to regulate "practice[ s]" affecting "rates and charges" in the wholesale electric markets. Commenters stated that the court concluded that FERC's construction of "practice in this context is . . . a sufficiently poor fit with the apparent meaning of the statute that the statute is not ambiguous on the very question before us." [CAISO at 401] (citing Brown, 513 U.S. at 120). Commenters stated that, in that case, too, the court found the lack of a limiting principle on FERC's assertion of authority critical because of the "stagger ing" and "drastic implications of [FERC's] overreaching," noting that the agency's reasoning would "apply to its regulation of all other jurisdictional utilities," allowing it213 "tomorrow without any further precedent or any further claim of expanded power" to, for instance, remove and replace Duke's or Dynegy's boards of directors. But, commenters stated, in the case of Section 111(d), the agency proposes to create a new regulatory program from whole cloth that applies without limitation to all fossil fuel

- f ired power plants and any other source "roped in" by a state or EPA in a manner that constitutes centralized energy and economic reorganization. Commenters stated that to say the least, "skepticism" is all the more appropriate in the face of such a sweepin g proposal, UARG, 134 S. Ct. at 2444. Commenters stated that whatever gaps or ambiguities EPA purports to discover and interpret in the CAA, the agency cannot bootstrap them into providing it "an unheralded power to regulate" the states' energy sectors, [I d.]

Commenters stated that the extent to which EPA's proposal would impact national energy policy is most directly illustrated by the effect of the proposal on coal

- fired EGUs; EPA's own (likely understated) projections indicate that coal generation will c ease entirely in eleven states. Commenters stated that given the importance of the energy sector to the economy, only the legislature should determine whether, as a matter of energy, economic, security, or environmental policy, one type of fuel should ess entially be banned. Commenters stated that in enacting CAA Section 111, Congress spoke directly to the importance of coal

- fired EGUs [see H. Rep. No. 95

- 294 at 192 ("The committee has designed this section and the entire bill, to encourage and facilitate t he increased use of coal . . . .")]. In addition, commenters stated that Section 111(d)(12) of the Public Utilities Regulatory Policies Act of 1978 ("PURPA"), as set forth in Section 1251 of the Energy Policy Act of 2005 ("EPAct 2005"), requires each elect ric utility to develop a plan for "minimizing dependence on one fuel source and ensuring that the electric energy it sells to consumers is generated using a diverse range of fuels and technologies including renewable technologies." Commenters stated that E PA's proposal contravenes PURPA's endorsement of fuel diversity and the requirement that each utility maintain a diverse mix of generation resources.

Commenters stated that the EPA does not address how the CAA interacts with other laws, and
thus whether t he EPA has the authority or expertise to formulate enforceable goals for matters that fall within the exclusive jurisdiction of other federal and state agencies (i.e., states' retail electricity regulation).

Commenters asked EPA to explain the legal and re gulatory mechanisms it has under the CAA to require the Arizona Corporation Commission to direct merchant NGCCs to increase generation to replace generation from existing coal

- fired plants.

Response 2 1 : We disagree with commenters. As an initial matter, w e note that the final rule does not include building block 4

– demand

- side energy efficiency

– as a component of BSER. As we explain in sections V.A. and V.B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. That is, EPA is responsible for determining the level of emission limitation from the source category, while states have the responsibility of214 assigning emis sion requirements to their sources that will ensure their achievement of that level of emission limitation. States may fulfil their responsibility by establishing emission standards or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emission reduction measures, including measures that are not part of the BSER.

We disagree that we are expanding our authority to include wholesale energy market regulation or state retail regulation. Our emission g uidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. Moreover, these emission guidelines provide states with the flexibility to establish, imple ment, and enforce standards of performance and do not intrude on the regulatory domain of FERC or the states. It cannot be said that because environmental requirements may have an effect on the wholesale energy market that the EPA is therefore intruding in to energy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Congress expressly identified power plants as a priority source category for regulation under CAA section
111.

We also disagree with commenters that the final rule inte rferes with economic dispatch. Instead, the potential to shift generation identified in building block 2 is entirely consistent with the existing economic dispatch protocols. Environmental policies can shift generation in two ways. The first is operational restrictions, such as permit limits on the number of hours that an EGU can operate in order to limit emissions. The second is changes in the relative costs of generation among different types of affected EGUs related to pollution reduction measures. For e xample, a regulation that necessitates the use of a control technology that requires the application of a reagent in a certain kind of EGU will increase the variable cost of operating that plant, which in turn may reduce the amount of generation it is call ed upon to deliver to the grid through security

constrained economic dispatch procedures. This is consistent with economic dispatch.

The federal enforceability considerations raised in the comment arose primarily under the proposed portfolio approach for s tate plans. As explained in section VIII.C of the preamble, the EPA is not finalizing the portfolio approach, which would have allowed state plan submittals to include federally enforceable measures that apply to entities that are not affected EGUs.
Howeve r, as further explained in section VIII.D, if the state is adopting the state measures type plan, the state plan submittal will need to specify, in the supporting materials, the state enforceable measures that the state is relying upon in conjunction with any federally enforceable
emission standards for affected EGUs to meet the emission guidelines. The final rule provides considerable discretion to the states in setting emission standards and related plan requirements
for its affected EGUs. Consistent wi th longstanding practice under the Clean Air Act, if a regulated entity does not meet a requirement, the EPA will address the matter on a case

- by

- case basis, to determine the appropriate response and resolution.

Comment 2 2 : Commenters stated that critics o f EPA's proposal argue that the plan would, for the first time, allow EPA to set policies that influence the types of fuels used as inputs in electricity production, a role that has traditionally been played by state utility regulators, either215 directly in regulated states or in conjunction with energy markets in deregulated

states. Commenters contended, however, that implementation of the CAA has repeatedly resulted in fundamental shifts in the fuel balance used in the power sector. Commenters described the history of Section 111 regulations and legislative changes that have impacted the fuel that power plants have used. Commenters referenced the sulfur dioxide regulation for power plants based on the 1970 CAA, which encouraged low sulfur coal. Commenters no ted that high sulfur coal was encouraged after Congress' 1977 Amendments to the CAA and low sulfur coal was again encouraged after the 1990 CAA Amendments with the Title IV cap

- and

- trade provisions for
sulfur dioxide. Commenters stated that EPA has also al tered the mix of fuel used for the production of energy through its regulatory authority, giving both the Cross

- State Air Pollution Rule under Section 110 and the Mercury and Air Toxics Standards rule under Section 112 as examples. Commenters stated that t hese rules are expected to encourage a shift from coal to natural gas in the electricity sector.

Response 2 2 : We appreciate these comments.

Comment 2 3 : Commenters stated that Congress gave FERC the authority to regulate interstate electricity transactions and wholesale energy markets through the FPA and the Energy Policy Act, and that the EPA's proposal encroaches on that authority. Commenters contended that the CPP violates section 310(a) of the CAA because it interferes with FERC's exclusive authority to (1) regulate interstate transmission and the wholesale sale of electric energy (sections 205 and 206 of the FPA); (2) promote the voluntary regional coordination of generation and transmission facilities (section 202(a) of the FPA); and (3) ensure reliabil ity of the BPS (section 215 of the FPA). Commenters stated that Congress has explicitly prohibited EPA from interfering with FERC's jurisdiction and cited section 310(a) of the CAA, stating that the Act "shall not be construed as superseding or limiting th e authorities and responsibilities, under any other provision of law, of the Administrator or any other Federal officer, department, or agency."

Commenters asserted that FERC's mission is to assist consumers in obtaining reliable, efficient
and sustainabl e energy services at a reasonable cost through appropriate regulatory means, while EPA's mission is to protect human health and the environment by issuing and enforcing anti

pollution standards.

Commenters stated that the FPA vests FERC with authority to e nsure that the rates, terms, and conditions for jurisdictional sales and transmission are "just and reasonable" and "not unduly discriminatory" or preferential. Commenters stated the FPA vests FERC with jurisdiction over "public utilities" (a term that the commenters indicated generally excludes publicly

- owned utilities and rural electric cooperatives). Commenters provided details on how FERC establishes "just and reasonable" rates, terms and conditions regarding the sale at wholesale of electric energy in interstate commerce and transmission of electric energy in interstate commerce. Commenters said that FERC specifically regulates the rates, terms and conditions under which
the RTOs and ISOs offer service as well as other interstate transmission services.216 Commenters stated that courts have affirmed that the section 205 filing requirement applies broadly to all classifications, practices, and procedures that "significantly affect" the price or

non

- price terms and conditions of FERC jurisdictional services. C ommenters cited City of Cleveland v. FERC, 773 F.2d 1368, 1376 (D.C. Cir. 1985): "There is an infinitude of practices affecting rates and service. The statutory directive must reasonably be read to require the recitation of only those practices that affect rates and service significantly . . . ." (emphasis omitted). According to the commenters, under section 205(a), FERC may only accept filed rates, rules, and practices if it determines that they are "just and reasonable" [16 U.S.C. 824d(a)].

Commenters st ated this EPA proposed rule has the potential to comprehensively reorder the jurisdictional relationship between the federal government and states as it relates to the regulation of public utilities and energy development.

Commenters stated that although t he FPA preserves state and local control over generation resource facilities; their development and procurement; generation resource adequacy; and generation resource portfolio diversity, a long line of cases makes clear that FERC has exclusive jurisdictio n over interstate transmission and wholesale sales of electricity. Commenters cited PPL EnergyPlus, LLC v. Nazarian, Nos. 13

- 2419, 13

- 2424 (4 th Cir. 2014). Commenters referenced New York v. FERC, 535 U.S. at 6

- 7; Nantahala Power & Light Co. v. Thornburg,
4 76 U.S. 953, 966 (1986) (quoting FPC v. SCE, 376 U.S. at 215

- 16 ("Congress meant to draw a bright line easily ascertained, between state and federal jurisdiction.... This was done in the [FPA] by making [FERC] jurisdiction plenary and extending it to all who lesale sales in interstate commerce except those which Congress has made explicitly subject to regulation by the States."). Commenters stated that because the Proposed Rule also would interfere with areas that fall squarely within FERC's FPA purview, it mu st be withdrawn and re

- proposed.

Commenters stated that the Supreme Court has repeatedly held that FERC's exclusive jurisdiction over interstate transmission is extraordinarily broad because of the integrated nature of the interstate transmission grid and the laws of physics. Commenters stated, for example, in New York v. FERC, 535 U.S. 1 (2002), the Court endorsed an earlier ruling, Federal Power Commission v. Florida Power & Light Co., 404 U.S. 453, 469 (1972), confirming FERC's exclusive jurisdiction ove r the Florida Power & Light Company's ("FPL") transmission facilities. Commenters cited the Court recounting:

"[S]ince electric energy can be delivered virtually instantaneously when needed on a system at a speed of 186,000 miles per second, such energy c an be and is transmitted to FPL when needed from out

- of

- state generators, and in turn can be and is transmitted from FPL to help meet out

- of

- state demands; . . . there is a cause and effect relationship in electric energy occurring throughout every generat or and point on the FPL, Corp, Georgia, and Southern systems which constitutes interstate transmission of electric energy by, to, and from FPL ." New York v. FERC, 535 U.S. at 7 n.5 (internal quotation marks omitted).217 Commenters cited Mississippi Power & L ight Co. v. Mississippi as evidence that Congress made it clear that where FERC has lawfully acted to ensure just and reasonable rates, states no longer have the power to act. Commenters stated that the Supreme Court has consistently held that
states may n ot infringe on FERC's exclusive authority over wholesale sales and markets, explaining that:

" Congress has drawn a bright line between state and federal authority in the setting of wholesale rates and in the regulation of agreements that affect wholesale r ates. States may not regulate in areas where FERC has properly exercised its jurisdiction to determine just and reasonable wholesale rates or to insure that agreements affecting
wholesale rates are reasonable " [Mississippi Power & Light Co. v. Mississippi, 487 U.S. 354, 374 (1988).].

Commenters stated that following Nantahala [Nantahala Power & Light Co. v. Thornburg, 476 U.S. 953, 963 (1986)], the Court concluded that: (1) FERC has exclusive jurisdiction over wholesale rates, and utilities cannot be order ed to charge rates not on file with FERC; (2) "FERC's exclusive jurisdiction applies not only to rates but also to capacity allocations that affect wholesale rates;" and (3) states may not bar regulated utilities from passing through to retail
customers FE RC

- mandated wholesale rates. Commenters stated that it would follow that, under the Proposed Rule, a state could not use its economic regulatory authority to block purchases of power from higher

- emitting resources where contracts for the purchase of that p ower had already been approved by FERC. Commenters stated that states might also have trouble directing utilities to invest in lower emitting resources where those investments could hurt the investment interests of independent owners of higher

- emitting res ources in FERC

- jurisdictional wholesale markets. Commenters stated that in New England Power Generators Association, Inc. v. FERC, the D.C. Circuit held that FERC could lawfully approve a tariff for the ISO

- NE market that would have had the effect of signi ficantly burdening state RPSs [ 757 F.3d 283 (D.C. Cir. 2014) ].
Commenters stated that under the ISO

- NE tariff approved by FERC, utilities that invested in renewable resources in compliance with state RPS requirements could not use the capacity from
those r esources to demonstrate that they had enough capacity to meet their consumers' demand
unless those resources were bid into and cleared in the ISO

- NE capacity market; because the new renewable resources cost significantly more than the already depreciated f ossil resources in that market, it was highly unlikely they would clear. Commenters stated that the utilities, therefore, could not only have to pay for the renewable resources to meet their RPS requirement but could also have to pay for duplicate capacity in the market.

Commenters stated that the Fourth Circuit's decision in PPL EnergyPlus, LLC v. Douglas R.M. Nazarian [ 753 F.3d 467 (4th Cir. 2014) ] upheld a district court order striking down a Maryland law that directed state jurisdictional retail utilit ies to contract with a select generator to purchase the generator's output at a specified price to encourage new gas

- fired generation in the state. Commenters noted that, in addition, a district court in New Jersey struck down a similar New Jersey law last year with a "Contract for Differences" scheme [see PPL EnergyPlus, LLC v. Hanna, 977 F. Supp. 2d 372 (D.N.J. 2013]. Commenters stated that the Third Circuit upheld the218 district court decision on appeal [see PPL EnergyPlus, LLC v. Solomon, No. 13

- 4330 (3d Cir. Sept. 11, 2014)]. Commenters stated that in this case, the state was addressing concerns that insufficient generation was available to meet local needs, but it could have equally been designed
to ensure that new lower

- emitting resources would be built to replace existing higher

- emitting resources pursuant to the Proposed Rule. Commenters stated that the court concluded that the laws interfered with wholesale ratemaking because the new capacity would "affect" prices for capacity in a FERC

- regulated mark et. Commenters quoted the Fourth Circuit: "Although states plainly retain substantial latitude in directly regulating generation facilities, they may not exercise this authority in a way that impinges on FERC's exclusive power to specify wholesale
rates." Commenters quoted the Supreme Court in a similar context: "[T]he problem of this case is not as to the existence or even the scope of a State's power to [regulate generation facilities]; the problem is only whether the Constitution sanctions the particular means chosen by [the state] to exercise the conceded power if those means threaten effectuation of the federal regulatory scheme". Commenters stated that in this regard, the Fourth Circuit found that Maryland law impermissibly eroded the FERC

- determined p rice and undermined FERC's exclusive authority.
Commenters stated that state actions that undermine a FERC tariff could be found to violate the Supremacy Clause, even if undertaken to advance a permissible state objective, including attempts to comply with the Proposed Rule. Commenters stated that the environmental dispatch of generation that would be required under the Proposed Rule could be found beyond the States' authority to implement, because FERC

- not the States

- establishes the rules governing how generation is dispatched in wholesale markets, and any attempt by the States to impose requirements contrary to FERC approved tariff and market rules could be found to violate the Supremacy Clause of the Constitution.

Commenters stated that Section 202(a ) of the FPA authorizes FERC to "divide the country into regional districts for the voluntary interconnection and coordination of facilities for the generation, transmission, and sale of electric energy" in order to ensure "an abundant supply of
electric e nergy" with "the greatest possible economy" and with regard to the "proper conservation and utilization of natural resources". Commenters stated that it is "definitively" clear that such coordination must be voluntary and that FERC has no power to compel a ny particular "technique of coordination" [Atl. City Elec. Co., 295 F.3d at 12 (quoting Duke Power Co. v. Fed. Power Comm'n, 401 F.2d 930, 943 (D.C. Cir. 1968)]. Commenters also referenced Cent. Iowa Power Coop. v. FERC, 606 F.2d 1156, 1161 (D.C. Cir. 1979 ) and stated that the court held that the voluntariness requirement of section 202(a) prevented FERC from revising a proposed power

- pooling agreement that "provide[d] a mechanism for coordinated daily operation of generation facilities" to create an even m ore "fully integrated electric system with central dispatch of generating units". Commenters stated, for example, that FERC may not force utilities to form or join an RTO under section 202(a).

Commenters stated that to ensure non

- discriminatory transmissi on service and to separate the operation of the transmission grid from the economic interests of generators, FERC has also encouraged the creation of ISOs and RTOs [See Midwest ISO Transmission Owners v. FERC, 373 F.3d 1361, 1364 (D.C. Cir. 2004)]. Comment ers stated that these entities, "provide open219 access to the regional transmission system to all electricity generators at rates established in a single, unbundled, grid

- wide tariff that applies to all eligible users in a non

- discriminatory manner" [see Mid west ISO Transmission Owners v. FERC, 373 F.3d 1364 (D.C. Cir. 2004) (internal quotations omitted)]. Commenters stated that these ISOs and RTOs are FERC

jurisdictional public utilities, subject to comprehensive FERC regulation under the FPA.

Commenters de scribed the role of ISOs and RTOs in selecting the generation with the least cost, as well as the procedures in non

- RTO/ISO areas. Commenters stated that for purposes of the Proposed Rule the important point is not what rates and terms are in the tariffs g overning the different power markets, but that all of these terms and conditions are filed with and approved by FERC and FERC alone; neither EPA nor the states have any power to alter them. Commenters also stated that under the Filed Rate Doctrine, operato rs are bound to what FERC has approved and have no choice but to implement the rates, terms, and conditions of their FERC tariffs.

Commenters stated that Section 206 requires FERC to revise any filed "rate, charge, or classification," or "any rule, regulat ion, practice, or contract" affecting them, if it determines that they are "unjust, unreasonable, unduly discriminatory or preferential”. Commenters stated that in recent decades, FERC has generally relied on the interplay of competitive market forces, sub ject to its oversight, to ensure that wholesale prices for electric energy are just and reasonable. Commenters stated that EPA's proposed Building Block 2 calls for reducing emissions from affected EGUs in the amount that results from substituting generati on at those EGUs with expanded low

- or zero

- carbon generation. Commenters stated that the Proposed Guidelines assert that it would be technically feasible for states to use redispatch to achieve substantial emissions
reductions. Commenters stated that EPA posit that it would be technically feasible to increase the average utilization rates of NGCCs to seventy percent via redispatch. Commenters stated that EPA estimates the cost and economic impacts of achieving that NGCC utilization rate and
concludes that they would be reasonable.

Commenters stated that FERC's jurisdiction over wholesale sales is comparably expansive, [see, e.g., Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 300 (1988)]. Commenters stated that
Schneidewind dealt with the Natural Gas Act rather than the FPA. Commenters said that because "the relevant provisions of the two statutes are in all material respects substantially identical," however, the Supreme Court has adopted an "established practice of citing interchangeably decisions interp reting the pertinent sections of the two statutes." [Ark. La. Gas Co. v. Hall, 453 U.S. 571, 577 n.7 (1981) (internal quotation marks omitted)] ("The [FPA] long has been recognized as a comprehensive scheme of federal regulation of all wholesales of [energ y] in interstate commerce.") (internal quotation marks omitted); Appalachian Power Co. v. Pub. Serv. Comm'n, 812 F.2d 898, 902 (4th Cir. 1987) ("FERC's jurisdiction over interstate wholesale rates is exclusive . . . .")].

Commenters stated that to the exte nt that there is a federal role to play in regulating dispatch or demand side energy efficiency, that role has been assigned to FERC and not to EPA. Commenters stated that EPA's role with respect to energy efficiency is limited to promoting220 voluntary progr ams. Commenters stated that regardless of EPA's general authority under Section 111(d), Congress, in the FPA, made FERC the sole federal agency with authority over the generation, dispatch, and consumption of electricity [see Morton, 417 U.S. at 550

- 51 ("W here there is no clear intention otherwise, a specific statute will not be controlled or nullified by a general one, regardless of the priority of enactment."); see also Hunter v. FERC, 711 F.3d 155 (D.C. Cir. 2013) (holding that a federal agency has no au thority to exercise jurisdiction over subject matter reserved exclusively to another agency)]. Commenters stated that, at a minimum, given the demarcation of authority adopted in the FPA and Congress' decision to limit the role of the federal government in regulating electricity markets, Section 111(d) cannot be read as giving EPA authority to mandate a fundamental restructuring of those markets, as the proposed rule
seeks to do.

Commenters stated that ERCOT is the only ISO in the country that is wholly co ntained within one state and is not synchronously interconnected to the remainder of the US. Commenters stated that ERCOT is unique among the nation's ISOs in that it is subject to very limited and specific jurisdiction by FERC under the FPA. Commenters st ated that transmission of electric energy occurring wholly within ERCOT is not subject to FERC's rate setting authority under FPA Sections 205 or 206 nor is it subject to FERC's sale, transfer and merger authority under Section 203 of the FPA (see: http:// www.ferc.gov/industries/electric/indus

- act/rto/ercot.asp). Commenters stated that pursuant to FPA Section 215, FERC does have jurisdiction to establish and enforce reliability standards for users of the bulk power system within ERCOT. Commenters
stated tha t under FPA Sections 210, 211 and 212, FERC has limited jurisdiction to order certain entities within ERCOT to interconnect and provide transmission service. Commenters stated that historically, FERC orders issued under FPA Section 212 that are applicable to entities in ERCOT have expressly stated that the utilities in ERCOT that are not currently public utilities under the FPA will not become public utilities and therefore subject to FERC jurisdiction for any purpose other than carrying out the provisions of FPA Sections 210, 211 and 212 [see e.g., Kiowa Power Partners, LLC, 99 FERC Para 61,251 (May 31, 2002).]

Commenters stated that provisions of the FPA also generally do not apply to the U.S. and federal agencies (including federal power marketing adminis trations), states and municipalities and their agencies (including state and local public power utilities), and most rural electric cooperatives.

Commenters stated that FERC has no authority to order the construction of generation facilities, and has only very limited authority regarding construction of transmission facilities. Commenters said, with the exception of licensing hydro facilities, FERC also has no authority to address the siting of generation facilities. Commenters also stated that DOE has virt ually no regulatory authority over utility generating, dispatch or customer business practices outside emergency situations [see Section 202 of the FPA]. Commenters stated the DOE also has limited authority to try to expedite the siting of utility faciliti es on federal land or otherwise requiring a federal approval [see FPA section 216(h)]. Finally, commenters stated that DOE establishes efficiency standards for utility transformers and for many electric powered customer appliances [see221 generally Title III, Part B of the Energy Policy and Conservation Act of 1975, Pub. L. 94

- 163], but DOE has no authority to require the purchase and use of such equipment.

Commenters stated that the Definition of BSER impermissibly intrudes into wholesale electricity
markets. Commenters said states do not have the authority to promulgate the laws and regulations that would be necessary to achieve the full redispatch, and associated emissions reductions, anticipated under Building Block 2. Commenters said the regulatory scheme governing the transmission and sale of power is a complex combination of both state and Federal law. Commenters said the FPA embodies Congress' attempt "to reconcile the claims of federal and local authorities and to apportion federal and state jurisdictio n over the industry." Commenters said under the FPA, FERC has exclusive jurisdiction over "the transmission of electricity in interstate commerce and the sale of such energy at wholesale in interstate commerce." Commenters said states retain jurisdiction o nly over retail sales of electricity, generating facilities, facilities used for local distribution, and facilities used for transmission of energy wholly consumed by the transmitter. Commenters said the Federal scheme "leaves no
room either for direct st ate regulation of the prices of interstate wholesales of [energy], or for state regulations which would indirectly achieve the same result."

Commenters stated that the outside

- the

- fence provisions of the proposed guidelines are based on novel legal theori es that could change the scope of air regulation more than any prior act of Congress because commenters believed that the proposal primarily relied on demand

- side energy efficiency measures that lower demand for electricity and measures that mandate electr icity system operators to dispatch EGUs powered by natural gas and renewable resources prior to dispatching EGUs that burn coal. Commenters asserted that the proposal contravenes section 310
of the Clean Air Act which states that the Act "shall not be cons trued as superseding or limiting the authorities and responsibilities, under any other provision of law, of ... any other Federal officer, department, or agency[,]" but commenters believed that is exactly what the proposed guidelines are attempting to do by superseding the authorities over electricity regulation granted by Congress to the United States Department of Energy, and particularly the Federal Energy Regulatory Commission (FERC). Commenters asserted that FERC, through its oversight of the
North A merican Electric Reliability Corporation (NERC), is responsible for ensuring the reliability, security, and adequacy of the U.S. bulk power system.

Response 2 3 : We disagree that we are expanding our authority to include wholesale energy market regulation or state retail regulation

. The EPA is not interfering with the FERC’s exclusive authority under Federal Power Act sections 20 5 and 206 to regulate interstate transmission and wholesale sales of electric energy. Our emission guidelines simply reflect an a chievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. Moreover, these emission guidelines provide states with the flexibility to establish, implement, and enforce standards o f performance and do not intrude on the regulatory domain of FERC or the states. It cannot be said that because environmental requirements may have an effect on the wholesale energy or retail energy market s that the EPA is therefore intruding into energy r egulation. Certainly, in the legislative history of the 1970222 CAA Amendments, Congress expressly identified power plants as a priority source category for regulation under CAA section 111. Additionally, we note that we are not including building
block 4

– d emand

- side energy efficiency

– as a component of the building blocks. Additionally, we note that the final rule does not require FERC or states to exercise jurisdiction over entities or areas over which it does not have jurisdiction.

We disagree with comm enters that the final rule requires environmental dispatch. Instead, the potential to shift generation identified in building block 2 is entirely consistent with the existing economic dispatch protocols. Environmental policies can shift generation in two w ays. The first is operational restrictions, such as permit limits on the number of hours that an EGU can operate in order to limit emissions. The second is changes in the relative costs of generation among different types of affected EGUs related to pollut ion reduction measures. For example, a regulation that necessitates the use of a control technology that requires the application of a reagent in a certain kind of EGU will increase the variable cost of operating that plant, which in turn may reduce the am ount of generation it is called upon to deliver to the grid through security

constrained economic dispatch procedures. This is consistent with the principle of economic dispatch. Further, we are not requiring states and affected EGUs to implement building block 2, or any of the building blocks for that matter, in order to meet the final rule requirements. Therefore, the EPA is not interfering with FERC’s exclusive jurisdiction under FPA sections 205 and 206 by regulating interstate transmission and wholesal e sales of electric energy.

Further, there are many actions that states can take to fulfil the 111(d) final rule requirements without running afoul of FERC’s exclusive jurisdiction over wholesale electricity rates under the
Federal Power Act to regulated i nterstate transmission and the wholesale sale of electric

energy

. 14

Commenters assert that the final rule conflicts with the voluntariness requirement of Section 202(a) of the FPA, intrudes into an area of FERC authority, and constitute an unlawful EPA attempt to exercise even greater power over the coordination of transmission and sale of electricity than the FPA gives to FERC. Commenters claim that the final rule intrude on FERC’s jurisdiction under FPA section 202(a) by promoting the development of state plans for the coordinated operation and dispatch of EGUs and by specifying rules to govern the developmen t and evaluation of such plans. We disagree. While we believe that multi

- state approaches can lead

14 See, e.g. , Brief for the United States and the Federal Energy Regulatory Commission as Amici Curiae, at 17

- 20, PPL Energy Plus, LLC v. Solomon , No. 13

- 4330 (3 rd Cir. filed Mar. 20, 2014) (citations omitted) (providing examples of valid state actions including the ability of states to “`use any resource they wish to secure the capacity they need’”, the ability “of states to promote particular generation resources as a legitimate policy interest within their jurisdiction”, state actions “directing the planning and resource decisions of electric utilities under its jurisdiction”, and the ability of states to “subsidize particular resources provided the implementation of the subsidy does not interfere with the Commission’s statutory responsibility to maintain the reliable operation of wholesale energy markets at just and reasonable rates”).223 to more efficient implementation with lower compliance costs for affected EGUs and lower impacts on electricity ratepayer, the final rule does not require mu lti

- state plans. We view the ability of a state to implement an individual plan or a multi

- state plan as a significant flexibility that allows a state to tailor implementation of its state policy objectives and circumstances. In fact, the final rule makes clear that participation on multi

- state plans is voluntary. States have flexibility to determine how they will design their state plans

– whether that be on an individual state basis or participating in a regional effort. We do not agree with commenters th at the rule, as a practical matter, effectively requires multi

- state coordination nor do we agree that the final rule expands the scope of existing RTO dispatch. The final rule sets emission limits by apply the BSER. It is up to state and affected EGUs to determine how to meet the rule’s requirements.
There are no requirements that they utilize the building blocks to do so. There is no requirement that they change their market structures or expand RTOs to do so. For a comprehensive
discussion of how affecte d EGUs can implement the building blocks see the preamble section V and the Legal Memorandum. We discuss the multi

- state plan issue in greater detail in preamble
section VIII.C.5.

Further, we disagree with commenters that EPA is intruding on FERC’s authori ty under FPA section 215 to ensure bulk power system reliability. The EPA is setting achievable emission limits. We are not asserting authority over issues that Congress has exclusively reserved for another. As noted in the final rule preamble, EPA officia ls worked closely with DOE and FERC officials to ensure, to the greatest extent possible, that actions taken by states and affected EGUs to comply with the final rule mitigate potential electric system reliability issues. Senior EPA
officials met with each of the FERC Commissioners and EPA staff had frequent contact with FERC staff throughout the development the rule. FERC held four technical conferences to discuss implications of compliance approaches to the rule for electric reliability, infrastructure,

a nd electricity markets. EPA staff attended the four conferences and EPA leadership spoke at all of them. The EPA, DOE, and FERC will continue to work together to ensure electric grid reliability in the development and implementation of state plans. The EPA has considered the input of FERC, DOE, and multiple stakeholders regarding reliability, infrastructure, and market issues as it developed the final rule. For a more comprehensive discussion of reliability issues, as
well as the EPA’s coordination with bot h FERC and DOE, please see preamble section VIII.G.2. For a discussion of infrastructure and market issues, please see preamble section V and the GHG Mitigation Measures TSD. Finally, we note that the agency has addressed concerns about time
needed to deve lop state plans and meet interim performance levels. Thus, with initial submittals, all states will have until September 6, 2018 to submit final plans, and the interim performance period will not begin until 2022. Additionally, the final rule adjusts the i nterim goals to provide a gradually phased

- in initial reduction requirement and a more gradual glide path to the final 2030 goals. This more gradual application of the BSER over the 2022

- 2029 interim period provides
the state with substantial latitude in s electing the emission reduction glide path for affected EGUs over that period.224 Comment 2 4 : Commenters stated that the EPA's proposal encroaches on FERC's authority to regulate interstate transmission and wholesale sale of electric energy.

Commenters belie ved that EPA did not give enough consideration and deference to the role of the FERC, FERC's FPA

- imposed authority, the functioning of wholesale capacity markets, and the potential for the proposal, if implemented, to undermine the effective operation of o rganized wholesale electricity markets. Commenters stated that the Proposal reflects fundamental misunderstandings of FERC

- regulated wholesale electricity markets in RTO regions and the bulk power system. In developing the Proposal, commenters stated, EPA failed to consider the legal implications of ISOs and RTOs dispatch, all the associated rules and requirements, and the complexity of changing all the rules to accommodate environmental dispatch instead of economic dispatch.

Commenters stated that neither the preamble nor the Legal Memorandum attempted to reconcile the obvious conflicting directive contained within the EPA proposal and the authority conferred on the FERC under the FPA. Commenters also stated that the proposed regulation fails to provide sta tes with meaningful guidance on how to reconcile the federal environmental requirements of the proposed regulation that conflict with federally approved markets, ratemaking standards, and reliability requirements implemented under the FPA.

Commenters state d that the proposal interferes with FERC's jurisdiction by promoting the development of multi

- state plans to implement EPA's environmental dispatch policies in regions effectively established by EPA based on other criteria and by specifying rules to govern the development and evaluation of such plans. Commenters claimed that the EPA cannot exercise greater power to force regional coordination than the FPA allows FERC, nor can it indirectly render mandatory regional coordination that the Congress has otherwi se determined must remain a purely voluntary state option. Commenters stated that FERC's Section 202(a) authority to "divide the country into regional districts" is for the "voluntary coordination" of generation facilities in utility operations. Commenters stated that to the extent the Proposed Rule requires the regional, coordinated operation of FERC

- regulated generation facilities, EPA would be supplanting Congress' judgment that these matters be left to administration by FERC.

Commenters claimed that th e proposal, particularly requirements to shut down significant amounts of installed capacity and pushing capacity far below target reserve margins, would place states and electric generators in direct conflict with responsibilities under the FPA and in dir ect conflict with FERC.

Commenters stated that any state action that EPA includes in its redefinition of BSER that directly or indirectly modifies the way that electricity is sold at wholesale or transmitted in interstate commerce could impermissibly intru de on FERC's exclusive jurisdiction and is inconsistent with the Supremacy Clause of the Constitution [see Mississippi Power & Light Co. v. Mississippi, 487 U.S. 377 (1988). ("Consequently, a state agency's 'efforts to regulate commerce must fall when they conflict with or interfere with federal authority over the same22 5 activity.'" Chicago & North Western Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 318

- 319 (1981))]. Commenters stated that the rates, terms, and conditions of power sales and service

pr ovided in FERC

- regulated wholesale markets (both ISO/RTO and non

- ISO/RTO) constitute
FERC

- approved tariffs. Commenters stated that the "Filed Rate Doctrine" provides that a utility must strictly adhere to the rates, terms, and conditions for service that w ere filed with and approved by FERC [see Nantahala Power & Light Co. v. Thornburg, 476 U.S. 953, 963 (1986)]. Commenters stated that under the Filed Rate Doctrine, only rates that have been fixed or accepted by FERC may be charged; not even the state or fe deral courts can authorize a utility to charge a different rate [see Nantahala Power & Light Co. v. Thornburg, 476 U.S. 963 (1986)]. Therefore, commenters stated, any attempt by the states to force specific utilities and/or generators to depart from the di spatch and curtailment provisions in their FERC

- approved tariffs
and service agreements to comply with a state

- mandated environmental dispatch will be an impermissible intrusion on FERC's authority.

Commenters stated that in South Carolina Public Service A uthority v. FERC, 762 F.3d 41, 59 (D.C. Cir. 2014) (per curiam), the court held that FERC's mandatory transmission planning reforms under Order No. 1000 were lawful because section 202(a) only governed the "coordinated operation of existing transmission fa cilities, not to the planning of future facilities" and was "textually limited to coordination for purposes of generation, transmission and sale, all activities that require operating facilities." Commenters stated that the decision thus affirmed that
Sect ion 202(a) does not permit FERC to impose greater involuntary coordination involving existing facilities, such as operational EGUs.

Commenters stated that the CPP would also impermissibly interfere with FERC

- approved generation dispatch and re

- dispatch rul es in these RTO regions; in these regions, which encompass nearly two thirds of the load in the U.S., the dispatch of generation resources is largely governed by RTO operating rules and RTO tariffs that are on file with FERC as required by Section 205 of t he FPA and subject to modification by FERC under Section 206 of the FPA [see, e.g., Security Constrained Economic Dispatch: Definition, Practices, Issues, and Recommendations: A Report to Congress Regarding the Recommendations of Regional Joint
Boards for the Study of Economic Dispatch Pursuant to Section 223 of the FPA, FERC (July 31, 2006) (describing existing dispatch regimes, their emphasis on security

- constrained economic dispatch, and the role of RTOs in administering them)]. According to the commente rs, building block 2 requires "environmental dispatch" of generation from higher emitting sources to favor "EGUs with expanded low

- or zero

- carbon generation". Commenters noted that the Proposed Rule states that EPA has determined that environmental dispat ch is feasible and that its costs are reasonable. But, according to the commenters, under Sections 205 and 206 of the FPA, FERC must determine if practices that significantly affect the price of its jurisdictional wholesale and transmission services are ju st and reasonable, and EPA has no role to play and cannot create one
for itself.

Commenters stated that proposed Building Block 2 interferes with FERC's authority under Sections 205 and 206 in several critical ways, including by effectively determining tha t the price226 increases necessary to achieve a seventy percent NGCC utilization rate would be “just and reasonable,” requiring changes to the dispatch and redispatch rules approved by FERC; only FERC has authority to modify (or approve modifications).

Comme nters stated that Building Block 2 would also require changes to the dispatch and redispatch rules applicable to EGUs. Commenters stated that EPA fails to consider the legal implications of the fact that ISOs and RTOs dispatch EGUs and other resources purs uant to voluminous and detailed rules filed with FERC under Section 205 [see, e.g., FERC, Security Constrained Economic Dispatch: Definition, Practices, Issues, and Recommendations: A Report to Congress Regarding the Recommendations of Regional Joint Board s for the Study of Economic Dispatch Pursuant to Section 223 of the FPA As Added by Section 1298 of the Energy Policy Act of 2005 (July 31, 2006) (describing existing dispatch regimes, their emphasis on security

- constrained economic dispatch, and the role of ISOs and RTOs in administering them),
available at http://www.ferc.gov/industries/electric/indus

- act/joint

- boards/final

- cong

- rpt.pdf ; Section III of the IS O New England Inc. Transmission, Markets, and Services Tariff ("Market Rule 1") ("govern[ing] the operation of New England's wholesale electricity markets and includes detailed information on pricing, scheduling, offering, bidding, settlement, and other

pr ocedures related to the purchase and sale of electricity"), available at http://www.iso

ne.com/participate/ rules

- procedures/tariff/market

- rule

- 1].

Commenters stated that FERC

- approved RTO dispatch rules m ay be amended only by: (1) the RTOs, which must voluntarily submit amendments and persuade FERC to accept them under the standards of section 205; or (3) by FERC, on its own initiative or in response to a third party complaint, under section 206. Commenter s stated that EPA and individual states have no authority to modify these dispatch rules. Commenters asserted that states also may not compel utilities, including ISOs and RTOs, to make involuntary section 205 filings [see, e.g., Atl. City
Elec. Co. v. FER C, 295 F.3d 1 (D.C. Cir. 2002)]. Commenters stated that the Guidelines directly invade FERC's core jurisdictional function by effectively determining that the price increases necessary to achieve a seventy percent NGCC utilization rate would be "just and r easonable." Commenters contended that this determination is for FERC, not EPA, to make.

Commenters also stated that EPA has ignored the fact that modifying redispatch rules to provide for the "environmental redispatch" contemplated by Building Block 2 woul d necessitate fundamental changes to existing ISO and RTO dispatch procedures that could conflict with FERC policies and with FERC's FPA authority.

Commenters also stated that the CPP imposes a system of environmental dispatch that negates states' long

- he ld prerogative to rely on economic dispatch. Commenters claimed that this would affect wholesale rates in contravention of FERC's exclusive authority.

Commenters recognized the lack of analysis that EPA employed. Commenters quoted FERC Commissioner Tony C lark that " EPA's self

- determined role as an environmental dispatcher of227 energy in a wholesale energy marketplace has placed FERC and EPA on track for a jurisdictional 'train wreck' absent Congressional intervention. "

Commenters stated that EPA has no authority to modify RTO tariffs or generation

- dispatch rules [see, e.g., Atlantic City Electric Co. v. FERC, 295 F.3d 1 (D.C. Cir. 2002)], but that is precisely what the Proposed Rule attempts to do through building block 2. Commenters stated that these are regulatory determinations that only FERC can make under the FPA with respect to FERC

jurisdictional RTOs.

Commenters stated that the same legal considerations apply to FERC

- jurisdictional public
utilities that have not transferred control of their transmission facilities to an RTO (i.e., principally utilities in the southeastern and western states). Commenters stated that these utilities provide transmission service under tariffs that are modeled closely on FERC's pro fo rma open

access transmission tariff (OATT) [see Preventing Undue Discrimination and Preference in Transmission Service, Order No. 890, FERC Stats. & Regs.

- 31,241, order on reh'g, Order No.
890

- A, FERC Stats. & Regs. 31,261 (2007), order on reh'g, Order N o. 890

- B, 123 FERC

- 61,299 (2008), order on reh'g, Order No. 890

- C, 126 FERC 61,228, order on clarification, Order
No. 890

- D, 129 FERC

- 61,126 (2009) (establishing the current version of the pro forma OATT used by most FERC

- jurisdictional utilities that are not participating in RTOs)]. The commenters
stated that non

- RTO tariffs also include provisions governing redispatch of EGUs, and the curtailment of transmission customers, in certain situations [see, e.g., Id. sections 13.3, 13.6, 15.4, 27, 30.5, and 33]. Commenters stated that, like RTO tariffs, non

- RTO tariffs are filed with, and approved by FERC, and can be amended only by the filing public utilities or by FERC

- not EPA or state regulators

- under Sections 205 or 206; and the generation portfolios of these public utilities, and the dispatch of the units in these portfolios to provide retail service, are subject to comprehensive oversight by state utility regulatory authorities

- not by state environmental officials and not by EPA.

Commenters state d the proposal would conflict with the voluntariness requirement of Section 202(a) of the FPA, intrude into an area of FERC authority, and constitute an unlawful EPA attempt to exercise even greater power over the coordination of transmission and sale of

e lectricity than the FPA gives to FERC.

Commenters stated that aspects of the proposed rule, including proposed Building Block 2, represent an unprecedented intrusion by EPA into areas that the FPA has made exclusively subject to FERC's jurisdiction. Commen ters claimed that because of FERC's exclusive jurisdiction, many states will be unable to achieve the EPA's estimates of possible reductions under building block 2 without adopting laws and regulations that impermissibly intrude upon the exclusive jurisdic tion of FERC.

Commenters stated that the proposed rule directly conflicts with FERC's regulatory authority and gave examples, including : 1) building block 2, which provides for EGU carbon emissions reductions through re

- dispatch conflicts with the FPA because it effectively determines that the228 price increases needed to achieve a 70% NGCC utilization rate would be "reasonable" but the EPA lacks the authority to make this decision; and 2) building block 2 would require changes to the dispatch/redispatch r ules applicable to EGUs, but these can only be amended as provided under the FPA. Commenters claimed that the proposal would require a significant change to dispatching based on environmental considerations rather than the least

- cost economic dispatch
rule s.

Commenters stated that by building a 70% capacity factor into state targets, the EPA has stepped into an arena that is dedicated to the states and FERC by the FPA. Also, commenters stated that the FPA creates a significant role for FERC, but not for EPA

.

According to the commenters, Building Block 2 represents an attempt by EPA to substitute its judgment for that of the competitive market on which generation plants should be utilized in ERCOT; commenters urged that EPA has no authority under the CAA to r equire this.
Commenters stated that in the non

- ERCOT areas of the state, the wholesale rates of electric utilities operating in Texas are market

- based, but are subject to the oversight of FERC. Commenters stated that EPA similarly lacks authority to usurp FERC's authority over the wholesale rates of utilities operating in the non

- ERCOT portions of Texas. Commenters stated
that the retail rates of non

- ERCOT utilities are set by the PUCT based on traditional cost of service principles. Commenters stated that Building Block 2 also conflicts with current Texas law that requires utilities to provide power to their customers at a just and reasonable rate [see Tex. Util. Code Ann. Section 36.003 (West 2007 & Supp. 2014)].

Commenters stated that even if EPA's propos ed overhaul of RTO dispatch mechanisms were technically feasible, it could be approved only by FERC, not mandated by EPA or by states acting at EPA's behest. Commenters stated that FERC, not EPA, would have to conclude that environmental dispatch is just, reasonable, and not unduly discriminatory; commenters stated that the Proposed Guidelines' usurpation of these decisions from FERC interferes with the authority given to FERC by Congress in the FPA.

Response 2 4 : We disagree with commenters. As an initial m atter, the final rule does not interfere with federal wholesale energy market regulation or state retail regulation. As we explain in sections V.A. and V.B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the a pplication of the BSER and do not in themselves require states or sources to implement the BSER. Further, the final rule does not require entities to utilize environmental dispatch in electricity markets. Instead, the potential to shift generation identifi ed in building block 2 is entirely consistent with the existing economic dispatch protocols. Environmental policies can shift generation in two ways. The first is operational restrictions, such as permit limits on the number of hours that an EGU can operat e in order to limit emissions. The second is changes in the relative costs of generation among different types of affected EGUs related to pollution reduction measures. For example, a regulation that necessitates the use of a control technology that requir es the application of a reagent in a certain kind of EGU will increase the variable cost of operating that plant, which in turn may reduce the amount of229 generation it is called upon to deliver to the grid through security

- constrained economic dispatch

proc edures. This is consistent with economic dispatch.

Th e EPA is responsible for determining the level of emission limitation from the source category, while states have the responsibility of assigning emission requirements to their sources
that will ensure their achievement of that level of emission limitation. States may fulfil their responsibility by establishing emission standards or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emission red uction measures, including measures that are not part of the BSER.

Commenters assert that the final rule conflicts with the voluntariness requirement of Section 202(a) of the FPA, intrudes into an area of FERC authority, and constitute an unlawful EPA

atte mpt to exercise even greater power over the coordination of transmission and sale of electricity than the FPA gives to FERC. Commenters claim that the final rule intrude on FERC’s jurisdiction under FPA section 202(a) by promoting the development of state plans for the coordinated operation and dispatch of EGUs and by specifying rules to govern the development and evaluation of such plans. We disagree. While we believe that multi

- state approaches can lead to more efficient implementation with lower complian ce costs for affected EGUs and lower impacts on electricity ratepayer, t he final rule does not require multi

- state plans. We view the ability of a state to implement an individual plan or a multi

- state plan as a significant flexibility
that allows a state to tailor implementation of its state policy objectives and circumstances. In fact, the final rule makes clear that participation on multi

- state plans is voluntary. States have flexibility to determine how they will design their state plans

– whether that be on an individual state basis or participating in a regional effort. We do not agree with commenters that the rule, as a practical matter, effectively requires multi

- state coordination nor do we agree that the final rule expands the scope of existing RTO dispatch. The final rule sets emission limits by apply the BSER. It is up to state and affected EGUs to determine how to meet the rule’s requirements. There is no requirements that they utilize the building blocks to do so. There is no requirement
that th ey change their market structures or expand RTOs to do so. For a comprehensive discussion of how affected EGUs can implement the building blocks see the preamble section V and the Legal Memorandum. We discuss the multi

- state plan issue in greater detail in preamble
section VIII.C.5.

Comment 2 5 : Commenters argued the CPP would require Montana lawmakers to enact energy laws, which is forbidden by the Federal Power Act.

Commenters stated this subsection explains how the rule's unprecedented reach extends past Montana's utilities and even beyond the Public Service Commission

- all the way the state legislature. Commenters added indeed, if finalized in its current form, EPA's Clean Power Plan would require Montana lawmakers to enact energy laws that mandate the usage of certain types of energy and services in the retail electricity market.230 Commenters stated Montana's Clean Power Plan target is based on the assumption that the state's utilities would achieve 1.5 percent annual reductions in demand. Commenters stated of course, state regulators do not possess an independent basis of authority to require minimum amounts of energy savings; rather, the Montana legislature must delegate such authority to state regulators. Commenters stated currently, they do not pos sess such a delegation. Commenters concluded because the energy efficiency goals established by the Clean Power Plan have no statutory basis in Montana, the rule almost certainly would require the state legislature to enact enabling legislation.

Commenters added notably, the D.C. Circuit recently struck down a FERC order that indirectly regulated utility energy efficiency programs, because the program violated the states' exclusive jurisdiction over retail electricity markets. Electric Power Supply Associat ion v. FERC, WL___(D.C. Cir. May 23, 2014). Commenters stated by contrast, EPA's Clean Power Plan asserts direct authority over Montana's energy efficiency program, as is made clear in a technical support document attendant to the rule: the EPA is proposin g that states be authorized to submit state plans that do not impose legal responsibility on the affected EGUs for the entirety of the emission performance level, but instead, by adopting what this preamble refers to as a "portfolio approach," impose requi rements on other affected entities

- e.g., renewable energy and demand

side energy efficiency measures

- that would reduce CO2 emissions from the affected EGUs. [Formatting added] Legal Memorandum for Proposed Carbon Pollution Emission Guidelines for
Exist ing Utility Generating Units, at 16.

Commenters stated of course, EPA's de facto requirement that Montana enact energy laws is expressly forbidden by the Federal Power Act. Commenters stated and until the proposed Clean Power Plan, the agency never has att empted to use the Clean Air Act to compel States to pass energy statutes. Commenters concluded furthermore, it is wholly unclear how the agency would exercise this claimed jurisdiction

- i.e., the authority to require Montana lawmakers to enact
energy stat utes

- were the agency to impose a Clean Air Act section 111(d) federal implementation plan.

Response 2 5 : We disagree that this rule is inconsistent with the Federal Power Act as we are not expanding our authority to include wholesale energy market regulat ion. Our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. Moreover, these emission guidelines provide states with the flexibility to establish, implement, and enforce standards of performance and do not intrude on the regulatory domain of FERC or the states. It cannot be said that because environmental requirements may have an effect on the wholesale energy market that
the EPA is the refore intruding into energy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Congress expressly identified power plants as a priority source category for regulation under CAA section 111. We also disagree that we requiring st ates to pass energy statutes that are inconsistent with the Federal Power Act or FERC’s exclusive jurisdiction over wholesale electricity rates.231 Moreover, EPA is not finalizing the proposed “portfolio” approach, and will not accept state plans that attempt to impose emission standards or other CAA compliance obligations on entities other than affected EGUs. The state measures approach provides a path for a state to achieve the emission performance level as expressed as a state goal in a way that avoids plac ing enforceable emission standards on affected EGUs (unless and until the backstop is triggered). States will have a wide range of flexibility in choosing how to demonstrate their affected EGUs are meeting a state goal.

Also, as discussed in section V.B., the BSER does not include demand

- side energy efficiency measures, which were proposed as building block 4.

Comment 2 6 : Proposed CPP does not regulate state energy markets.

Commenters asserted that the Clean Power Rule would not "federalize" state regulation of utility markets, as some commenters have suggested. Commenters said that fundamentally, the concern expressed over EPA considering energy efficiency and renewable ener gy in setting state goals fails to differentiate between the federal government "influencing" state energy policy and the federal government "regulating" in areas reserved for the states. While it is true that states exercise authority to regulate generati on and distribution for their state markets, the commenters asserted that states exercise that authority within a broader federally

- regulated interstate market. Commenters added that state authority already is constrained by the requirements of federal law

, and the Proposed Rule would not alter the relationship between the federal and state government with respect to regulation of electricity generation. Commenters noted that generators currently have to comply with federal and state environmental laws, inc luding the Clean Air and Clean Water Acts, and states must devise plans to implement federal environmental laws with respect to a variety of criteria pollutant sources, including power plants. Commenters further noted that
several recent federal court deci sions have determined that FERC has the sole authority to regulate the wholesale electricity market. Commenters said that economic dispatch decisions already reflect environmental regulatory mandates, and that electricity markets also already integrate sta te and regional environmental requirements into their economic dispatch. Commenters also noted that states consider federal environmental requirements when making decisions about electricity generation, and that many states use integrated resource planning (IRP), which often requires utilities, for purposes of long term planning to meet projected energy demand, to consider the costs for energy sources to comply with existing and potential future environmental regulations, demand side options, and/or environ mental impacts associated with

energy sources.

Response 2 6 : We appreciate commenters’ comment. We agree that the final rule would not “federalize” state regulation of utility markets.

Comment 2 7 : Comments stating that the proposed rule goes beyond any federal agency's authority or expertise because of regional imbalance.

Commenters said that, the Proposed Rule goes beyond any federal agency's authority or expertise because of regional imbalance. Commenters said, the cap

- and

- trade

- like system that232 the Proposed Rule would mandate requires balancing a multitude of interests well beyond EPA's charge of addressing environmental impacts of specific emissions. Commenters said that, Congress has the sole power to authorize and debate issues that implicate st ate's rights, energy planning and policy, and our national interests with respect to other countries.

Commenters said that, the Proposed Rule and the Waxman

- Markey bill were pushed by states that do not generate electricity from coal

- fired plants. Commen ters said, such policies are not in the best interests of a majority of states, which is why the Waxman

- Markey bill was not passed by Congress several years ago. Commenters said that if EPA presented this Proposed Rule to Congress, it too would not pass. C ommenters said the Proposed Rule ignores the policy

- making process. Commenters said EPA's proposal should be submitted to Congress for its consideration and debate, not unilaterally imposed by an unelected agency.

Response 2 7 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

Comment 2 8 : Commenters argued that Congress did not empower EPA to determine the appropriate products, producers, or level of consumption as part of its authorities under the CAA, and Congress did not empower EPA to regulate the energy marketplace for the purpose o f regulating emissions. Commenters argued that the decisions on the dispatch of specific EGUs and other measures affecting energy consumption, such as programs to require energy efficiency or propose generation from renewable sources (i.e., measures in bui lding blocks 2 to 4), are beyond the control of the individual EGU operator.

Response 2 8 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history. We disagree with commenters’ characterization of our proposal and note that we have excluded building block 4 from the final BSER.

1.4 COMBINED CATEGORIES AND CODIF ICATION IN THE CFR

Comment 1: Commenters said EPA correctly states that it has clear legal authority to consolidate or reorganize an already

- listed source category without making new regulatory findings that would be required for the l isting of an entirely new source category under section 111(b)(1). Commenters noted that Section 111(b)(1)(A) directs EPA to publish, "and from time to time thereafter revise," a list of stationary source categories that in the Administrator's judgment cau se or significantly contribute to pollution that endangers public health and
welfare. Apart from the finding of endangerment required for the listing of a new, not previously

- listed source category, commenters believed the statute places no particular limi ts on EPA's authority to "revise" the list of stationary sources over time, adding that EPA's proposed233 consolidation of the source categories for steam electric generating units and fossil fuel

- fired combustion turbines would neither expand nor otherwise a lter in any way the universe of sources comprising those source categories, and would therefore not constitute the listing of a new source category, nor would it somehow alter the predicate endangerment finding that EPA made when it originally listed both source categories in the 1970's. (Although the statute does not require that EPA make a new finding of endangerment when regulating additional pollutants from an already

- listed source category, EPA has provided more than ample evidence to support
such a fi nding in its pending proposals to regulate carbon pollution from new and existing EGUs.)

Response 1: The EPA agrees that it has the legal authority to consolidate or re

- organize already listed source categories without making the findings required to list new categories under section 111(b)(1)(A). EPA does not, however, consider such consolidation or reorganization of already listed categories to be a “revision” to the list under section 111(b)(1)(A). Instead, the EPA considers any such consolidation or reo rganization as part of its authority to establish standards under section 111(b)(1)(B). Section 111(b)(1)(B) does not specify that EPA must establish standards for the listed “source category.” Instead, the requirement is to establish standards for
“new sources” within the listed categories. EPA concludes that this phrasing focusing on the sources rather than the source categories provides EPA with the flexibility to establish standards for new sources within groups that consolidate or reorganize the list ed source categories where that is appropriate. EPA notes that the phrasing focusing on sources contrasts with the phrasing in CAA 129(a)(1), which expressly provides for EPA to establish standards and other requirements “for each category of solid waste incineration units.”

Comment 2 : Commenters stated, the courts have held that this discretion gives EPA the ability to reasonably subcategorize, or not subcategorize, depending on the characteristics of the source category and pollutant at hand. (See Lignit e Energy Council, 198 F.3d 930, 933 (D.C. Cir. 1999) (deferring to EPA's judgment that it was feasible and cost

- effective to require all new utility boilers to meet the same NOx emission standards regardless of fuel type, despite past practice establishing varying NOx standards for different subcategories of units).) Commenters stated that this discretion should logically extend to the establishment of emission guidelines under section 111(d). Commenters noted, indeed, nothing in the text of section 111(d) requires that standards for existing sources replicate the category framework into which EPA organizes new sources, so long as the sources covered by section 111(d) would be subject to "a standard of performance under this section [111]" if they were new s ources. (42 USC

- 7411(d)(1)(A)(ii)).

Response 2: The EPA agrees that the CAA and applicable case law support the Agency’s discretion to categorize and subcategorize (or not to ) and that this discretion applies when EPA exercises its authority under sectio n 111(d).

Comment 3: Further, commenters stated that EPA's 1975 Federal Register notice implementing section 111(d) also explicitly recognized that the categorization systems adopted under section 111(b) and (d) need not be identical. (See 40 Fed. Reg. at 53,341 ("while there may be only one standard of performance for new sources of designated pollutants, there may be several emission234 guidelines specified for designated facilities based on plant configuration, size, and other factors peculiar to existing f acilities.").) Commenters concluded that combining steam electric generating units and fossil fuel

- fired combustion turbines into one source category under section 111 would not limit EPA's authority to establish separate performance standards for distinct subcategories of new and modified coal and natural gas

- fired EGUs. Commenters supported this subcategorization approach in the rulemaking proposing standards for new EGUs, as well as the June 18, 2014 proposal for modified and reconstructed EGUs.

Response 3: EPA agrees with the commenters that the CAA provides EPA with significant flexibility as to how it may combine categories and subcategorize under sections 111(b) and 111(d).

Comment 4: Commenters agreed that because the two categories are pre

- existing, and EPA would not be subjecting any additional sources to regulation, that the combined category should not be considered a new category that EPA must list under Section 111(b)(1)(A). Therefore, commenters believed EPA should not be required to make a fin ding that the combined category causes or contributes significantly to air pollution which may be reasonably anticipated to endanger public health or welfare.

Response 4: The EPA agrees that it is not required to make a new listing decision, or otherwise
i nvoke the provisions in section 111(b)(1)(A), to combine previously listed categories into a combined category.

Comment 5: Commenters stated that under section 111(b)(1)(A), EPA is expressly authorized (and in fact required) to "revise" those categories of sources subject to standards of performance under section 111. [42 U.S.C. section 7411(b)(1)(A)], and pursuant to this authority, and as described in EPA's 2012 proposed new source performance standards, EPA has already repeatedly revised its source categ ories for electric utility generating units. [77 Fed. Reg. 22392, 22397 (Apr. 13, 2012)]

Response 5: As noted above, EPA does not consider the consolidation or reorganization of existing categories that may occur when sources from those categories are re gulated under section 111(b)(1)(B) as a “revision” to the list under section 111(b)(1)(A). The cited discussion in EPA’s 2012 proposed new source performance standards (at 77 FR 22392, 22397 (Apr. 13, 2012) should not be read to suggest that it does.

Com ment 6: Commenters stated EPA's BSER unlawfully combines two source categories' fossil
fuel

- fired steam generating boilers and NGCC units. Commenters remarked that the plain language of Section 111, however, requires EPA to develop emission guidelines for existing sources based on the individual source category for those sources; there is nothing in the CAA that provides EPA with the authority to lump source categories together for the purpose of developing these emission guidelines. Commenters added that S ection 111(b) of the CAA requires the administrator to establish "Federal standards of performance for new sources within such category" listed under Section 111(b)(1)(A), and based on the standards developed for new235 sources in that individual category, ex isting source standards can then be developed under Section 111(d) for the same category. Commenters specified that Section 111(d) requires states to develop plans which establish "standards of performance for any existing source for any air pollutant . . . to which a standard of performance under this section would apply if such existing source were a new source," and a plain reading of these provisions leads to the conclusion that new source and existing source standards are based on "such category" liste d under Section 111(b)(1)(A). Commenters concluded that a single emission standard and guideline cannot lawfully be developed for multiple source categories that are grouped together by EPA.

Response 6: As discussed above, the text in section 111(b)(1)(B) provides that EPA will establish standards for “new sources within such category” but does not mandate that the standards have to be set for the source category. EPA concludes that this phrasing focusing on the sources rather than the source categories pr ovides EPA with the flexibility to establish standards for new sources within groups that consolidate or reorganize the listed source categories where that is appropriate.

Comment 7: Commenters stated that Section 111 does not authorize combining source categories into a single category for setting standards.

Response 7: As discussed above, EPA concludes that the phrasing of section 111(b)(1)(B) focusing on the sources rather than the source categories prov ides EPA with the flexibility to establish standards for new sources within groups that consolidate or reorganize the listed source categories where that is appropriate.

Comment 8: Commenters stated EPA has proposed new unit standards of performance for t wo source categories

- fossil steam generating units and stationary combustion turbines (and particularly, NGCC facilities). Commenters believed EPA must issue a re

- proposed Section 111(d) regulation that mirrors the same two separate source categories.

Re sponse 8: For the reasons discussed above and elsewhere, EPA disagrees that it must issue a

re

- proposed section 111(d) regulation to mirror the categories regulated under section 111(b).

Comment 9: Commenters stated that EPA aggregates disparate categorie s of stationary sources into a regulated entity that incorporates virtually all power plants, regardless of technology type or fuel source, and this action directly contravenes Section 111(d) implementing regulations requiring the agency to "subcategorize" within industries. Commenters explained that because the implementing regulations that mandate subcategorization are extant and therefore carry the force of law, EPA would have to amend them with a legislative rule before the agency could permissibly purs ue its Clean Power Plan strategy of combining categories. Commenters continued, stating that until the agency does so, the proposed Clean Power Plan will remain impermissibly inconsistent with its underlying regulations. Commenters also stated that in

prom ulgating 40 C.F.R. [Section]60.22(b)(5), it was the agency's avowed intent in to provide flexibility to States implementing [section]111(d) emissions guidelines by subcategorizing236 within industrial classes. Commenters noted that this legislative rule has b een neither amended nor rescinded since its promulgation. Commenters noted, as such, the "Executive Branch is bound by it, and indeed the United States as the sovereign composed of three branches is bound to respect and enforce it." U.S. v. Nixon at 697. C ommenter added that crucially, the 111(d) implementing regulations define the applicability of existing source standards by referring to the applicability of new source standards. (Existing source standards apply to "designated facilities,"
which are defin ed by Section 60.21(b) as being "any existing facility (see [Section]60.2(aa)) which emits a designated pollutant and which would be subject to a standard of performance for that pollutant if the existing facility were an affected facility (see [Section]60 .2(e))." Commenters noted, the references attendant to the definitions of both "existing facility" and "affected facility" direct the reader to the implementing regulations for new source standards. Commenters stated that an "affected facility" is "any [st ationary source] to which a standard is applicable," while an "existing facility" is "any [stationary source] of the type for which a standard is promulgated in this part." Finally, as commenters noted, the definition of "standard" is "a standard of perfor mance proposed or promulgated under this part" (i.e., the New Source Performance Standards).) Accordingly, commenters remarked, because the Carbon Pollution Standards apply to subparts Da and KKKK, the Clean Power Plan can apply no more broadly
than to sub parts Da and KKKK, and from there, the [Section]111(d) implementing regulations require EPA to "subcategorize" when appropriate, but there is no such authorization for aggregating categories. Commenters summarized, stating that the [Section]111(d) implemen ting rules grant EPA's only one option: subcategorizing within subparts Da and KKKK. Instead, the agency amalgamated these subparts into a meta

- category, known as "affected EGUs." Commenters continued, stating that the EPA is required to address the Clean Power Plan's incompatibility with its underlying implementing, by either amending or rescinding 40 C.F. R. [Section]60.22(b)(5), and in so doing, the agency is required to conduct a legislative rulemaking and also to provide a "reasoned analysis." Commente rs argued that until such actions are performed, the Clean Power Plan's inconsistency with the [Section] 111(d) implementing regulations evidences arbitrary and capricious decision making by the EPA.

Response 9: EPA’s authority to subcategorize within a so urce category consistent with the CAA and EPA’s implementing regulations does not limit or impact EPA’s discretion to combine categories. As discussed above, EPA concludes that the phrasing in section 111(b)(1)(B) focusing on the sources rather than the so urce categories provides EPA with the flexibility to establish standards for new sources within groups that consolidate or reorganize the listed source categories where that is appropriate.

Comment 10: Commenters stated that Section 111(d) does not give t he EPA direct regulatory authority over existing sources but instead, section 111(d) directs the EPA to establish a "procedure" for states to submit plans establishing performance standards for existing

sources. Commenters continued (verbatim), stating th at Section 111(d) gives the states broad discretion to develop such plans and to implement and enforce them based on specific state
concerns and needs. Commenters asserted that the EPA recognized this in 1975 when it promulgated the Subpart B regulations t o interpret and implement section 111(d): "States will237 have primary responsibility for developing and enforcing control plans under section 111(d)."(40 Fed. Reg. 53,340, 53,343 (Nov. 17, 1975) The EPA's proposal to establish firm CO2 intensity caps infring es on that intent. (79 Fed. Reg. at 34,953; Proposed 40 C.F.R. 60.5765, Table 1)

Response 10: EPA is authorized by section 111(a)(1) and (d) to determine the degree of emission limitation achievable by application of the BSER, and to provide this informat ion as criteria for approvable state plans in an emissions guideline document. The Agency does not directly impose standards of performance on units, but gives states the flexibility to establish such standards in a manner that is appropriate for their sta te, and their sources. However, the agency is responsible for substantively reviewing state plans to ensure they are satisfactory, that is, that they meet the criteria or requirements of the guidelines. If a state plan does not do that, then the EPA may im plement a federal plan that directly imposes standards of performance on
the affected EGUs.

Comment 11: Commenters stated that the EPA may require states to submit plans that contain performance standards for emissions of certain pollutants from designated facilities, but it does not have the authority to dictate the form and content of those performance standards.

Response 11 : EPA recognizes this as true to some extent. EPA’s guidelines give states considerable flexibility in the design of standards of pe rformance actually applied to units.

Comment 12: As commenters noted, Section 111(d)(2)(A) authorizes the EPA to set substantive standards of performance only in situations where a state has failed to submit an acceptable plan.

Commenters stated, Congress limited the EPA's authority to establish substantive standards of performance for existing sources to those limited situations where a state fails to act. Thus, commenters asserted, unlike the very different language in section 111(b) governing the
stand ards of performance for new sources, section 111(d) gives the EPA no direct regulatory authority over existing sources, and instead gives states broad discretion to develop such plans subject to a general requirement that the state's exercise of discretion be "satisfactory." (CAA Section 111(d)(2)(A))

Response 1 2 : It is unclear what the commenter means by “substantive.” EPA is not directly setting standards of performance for affected EGUs under the emission guidelines. EPA may determine the degree of emiss ion limitation achievable in the emission guidelines and may review the standards of performance provided in state plans against that criterion.

Comment 1 3 : Commenters stated that the CAA gives the states substantial freedom to
determine the factors to be considered in formulating a state plan and how those factors are to be weighed, and it does not dictate any particular outcome for the state. Commenters noted that states thus have significant discretion to adopt state plans that vary from the EPA's emiss ion guidelines. Commenters noted, in the Proposed Guidelines, however, the EPA is imposing "binding" emission rates on each state. (79 Fed. Reg. at 34,844, 34,892)238 Response 1 3 : Section 111(d), similar to section 110 of the statute, provides states the

opp ortunity in the first instance to develop state plans to implement the agency’s emission guidelines. The EPA has recognized in the past, and provides in these emission guidelines, significant flexibility for the states in the design of their programs. Howe ver, the BSER and the degree of emission limitation achievable are determinations that rest with the administrator under section 111(a)(1). Ultimately, under section 111(d)(2), the EPA may disapprove a state plan that
does not meet the criteria of the emis sion guidelines.

Comment 1 4 : Commenters stated that the EPA is proposing not to give states the flexibility to which they are entitled under the statute. Moreover, as discussed in greater detail elsewhere in these comments, commenters stated that the EPA would force states to violate the terms of the CAA by regulating sources that may not be regulated under a section 111(d) rule for existing
fossil fuel

- fired EGUs. (79 Fed. Reg. at 34,853 ("EPA is proposing that states be authorized to submit state plans t hat do not impose legal responsibility on the affected EGUs for the entirety of the emission performance level, but instead, by adopting what this preamble refers to as a 'portfolio approach,' impose requirements on other affected entities (e.g., renewable energy and
demand

- side energy efficiency measures) that would reduce CO2 emissions from the affected EGUs.")).

Response 1 4 : EPA is not finalizing the proposed “portfolio” approach, and will not accept state plans that attempt to impose emission standards or other CAA compliance obligations on entities other than affected EGUs. The state measures approach provides a path for a state to achieve the emission performance level as expressed as a state goal in a way that avoids placing enforceable
emission stan dards on affected EGUs (unless and until the backstop is triggered). States will have a wide range of flexibility in choosing how to demonstrate their affected EGUs are meeting a state goal.

Comment 1 5 : Commenters noted, although the EPA asserts countless times in its Proposed Guidelines that it is giving states flexibility to adopt whatever "building blocks" it sees fit,(Id. at 34,859) in reality, because the standard of performance is an emission intensity cap applied to the state based on application of the four proposed building blocks rather than on what the affected facilities are capable of achieving, states in most cases will have little choice but to impose requirements on facilities that are not fossil fuel

- fired EGUs in order to meet their EPA

man dated state

- level emissions limits. In fact, commenters stated, in many states, it may be infeasible to adopt sufficient measures to achieve the EPA

- mandated emissions limits, and therefore the EPA is in effect forcing such states either to go beyond their borders and enter into an emissions compact or trading program with other states or to tell the EPA it cannot meet the mandate and turn the program over to the EPA under the section 111(d)(2) provisions.

Response 1 5 : The final rule lays out a number of options, variations and flexibilities that are
intended to provide states and affected EGUs the ability to design state plans that accorded with states’ specific situations and policies (now and in the future), and to ensure reliability and affordability o f electricity across the system and for all ratepayers

. As described in detail in239 Section VIII of the preamble, the EPA is finalizing state plan options such as individual state plans, multi state plans, individual state plans that contemplate multi

- state ties, and a number of compliance options for affected EGUs that provide states and affected EGUs with flexibilities to develop a state plan to achieve the necessary emissions reductions. The EPA believes these options will not force states to enter into em issions compacts or trading programs, but gives the states the opportunity to do so if they so choose, but otherwise provides affected EGUs sufficient flexibilities if a state chooses to submit an individual state plan.

Comment 1 6 : Commenters stated, in fa ct, despite the EPA's claim to the contrary, it is clear that these proposed standards are set to meet a nationwide target, allocated among the states, rather than a general guideline based on the EPA's evaluation of what sources can achieve at the state
l evel. Commenters noted, the EPA states that "This approach would mean that overall, the same nationwide level of emission reductions as proposed would be achieved."(Id. at 34,893) Commenters asserted that nothing in section 111(d) requires or authorizes th e EPA to achieve a nationwide level of emissions reductions. Commenters noted that Section 111(d) does not allow the EPA to set a nationwide limit on emissions, but rather to set guidelines for states to consider when they adopt their own rules. Commenters stated, it seems clear that the Proposed Guidelines are an attempt to set a national reduction target for CO2 emissions.

Response 1 6 : The EPA disagrees with this commenter in that this commenter has misunderstood the nature of the state goals. The EPA es tablished the BSER according to the statute, by focusing on technology and measures available to reduce emissions. This allowed the agency to determine the “degree of emissions limitation achievable,” pursuant to 111(a)(1), which in turn the agency
has tra nslated into state goals. The state goals are an accounting device

– an arithmetic expression of the BSER’s degree of emission limitation achievable for each state, based on the unique mix of affected EGUs in that state. The state goals are not directly en forceable against the state. Rather, they provide a criterion against which a submitted state plan may be reviewed for approvability by the agency. The agency disagrees with the commenter to the extent the commenter is suggesting the agency used a top

- down rather than bottom

- up approach to determining the BSER. The agency’s BSER analysis is rooted in what is achievable, and that comports with the statute. Once this has been done, it is possible to determine the “degree of
emission limitation achievable.” Th e fact is, emissions under any prior 111(d) rule can be aggregated and reported in such a way as to lay claim to the notion that the agency is establishing a “national” emission reduction target via its determination of the BSER and oversight of state plan s. See 40 CFR 60.25(a). That is a function of the statute (the purpose of which is, in any case, “to protect and enhance the quality of the Nation’s air resources ...” CAA section 101(b)(1) (emphasis added)). Further, the agency’s emission performance rate i s just that, a rate. The mass goal is simply an equivalent expression of the rate. States may choose to implement a rate system. Given these available tools in the EGs, it cannot be said that the EPA is mandating a particular nationwide reduction.

Comment 17: Commenters stated, as demonstrated by the numerous flaws inherent in EPA's attempt to use the CAA to establish a utility sector CO2 reduction program, it is clear that240 Congressional action would be a more appropriate vehicle for establishing national c limate policy. Commenters stated the emission guidelines and BSER determinations the EPA establishes are supposed to be largely procedural, and contain only nonbinding factors and descriptions of demonstrated systems of emission reductions for states to co nsider as the states
set their own standards. Commenters noted, they are not, as the EPA has proposed, supposed to be binding emission rate limitations on states. Commenters said, what the Agency determines to be BSER is merely one of the many factors stat es must consider in determining the level and form of any existing source performance standard as applied to a specific EGU. Commenters noted, similarly, under the Subpart B rules, states have considerable flexibility to deviate from the EPA's emission gui delines in adopting plans and emission standards. For example, commenters noted that states may apply "less stringent emission standards or longer compliance schedules" to particular facilities or classes of facilities if the costs of adopting the standard s suggested by the emission guidelines would be unreasonably costly, physically impossible, or for other reasons. (40 C.F.R. 60.24(f)(1)

- (3)) Commenters stated that states have significant discretion in designing their own plans and determining how individ ual sources or classes of sources may demonstrate compliance, including taking into account the "remaining useful life of the existing source." (CAA 111(d)(1)) Commenters noted, in applying this criterion, states may grant individual sources or types of so urces longer periods of time to comply, or may apply less stringent standards than set forth in the EPA's emission guidelines. Commenters stated that the Agency underscored as early as 1975 that "emission guidelines will reflect subcategorization
within so urce categories where appropriate," and the guidelines 'will in effect be tailored to what is reasonably achievable by particular classes of existing sources . . . ." (40 Fed. Reg. at 53,343) Commenters stated, because a standard of performance must be "ad equately demonstrated" for each source, the EPA has an obligation in accordance with its Subpart B rules to establish highly subcategorized emission guidelines within a broad source category like existing fossil fuel

- fired EGUs. (40 C.F.R. 60.22(b)(5)) Com menters stated that the fact that the EPA has not done so may in fact reflect the reality that there is no appropriate standard of performance that can be set for existing sources. Commenters noted, while Building Block 1 is based on achieving efficiency
i mprovements at the affected sources, because the efficiency of an individual generating unit is to a large extent driven by the unit's inherent design, there is little room for improvement and it is impossible to come up with a "standard" of performance fo r efficiency that could apply equally even within tight subcategories. Commenters stated lacking any other feasible measures to control CO2 emissions, the EPA has instead turned to actions which fall entirely outside of the
direct control of the affected s ources, by its reliance on Building Blocks 2, 3 and 4 which are not a "system of control," but a limitation on the productive output of the regulated sources. (The EPA determines that Building Blocks 2, 3 and 4 are feasible because a source "has the abilit y to limit its own operations." The EPA also states that Building Blocks 2, 3 and 4 are equally valid under either its "primary" approach to BSER or the "alternative" approach because "building blocks 2, 3, and 4 would not be components of the system of em ission reduction but instead would serve as bases for quantifying the reduced generation (and therefore emissions) at affected EGUs" 40 FR 34,889.) Commenters stated that bringing non

- affected sources into the proposed section 111(d) BSER determination and emissions guidelines is contrary to the EPA's obligation to adopt measures that have been adequately demonstrated for the tightly defined subcategories241 of existing sources. Commenters asserted, somehow, the EPA interprets the provisions in section 111(d) and Subpart B to actually go the opposite direction in categorizing the source

- rather than addressing the significant differences among the wide range of EGU sources (as it has done in numerous other regulations) by establishing appropriate subcategories , the EPA is making an entirely new argument here that it can wash over the differences among affected EGUs by instead declaring a super

- category which is "all of the affected EGUs in the State." ("the EPA may apply the BSER to all of the affected EGUs in the state as a group.) Commenters stated, similarly, the implementing regulations give the EPA broad discretion to identify the group of sources to which the BSER is applied. Commenters noted that the regulations provide that the EPA "will specify differen t emission guidelines or compliance times or both for different sizes, types, and classes of designated facilities when costs of control, physical limitations, geographical location, or similar factors make subcategorization appropriate." Commenters
stated that applying the BSER to the affected EGUs in each state as a group is appropriate, and therefore is consistent with these regulations." Commenters noted, EPA is saying here that after considering all of the differences among the sources in the EGU categ ory, the answer is to "subcategorize" by grouping all of the facilities together in one state. 79 Fed. Reg. at 34,891.) Commenters noted that this reasoning essentially renders the Subpart B language meaningless where it directs the EPA to develop appropri ate categories and subcategories. "The Administrator will specify different emission guidelines or compliance times or both for different sizes, types, and classes of designated facilities when costs of control, physical limitations, geographical location, or similar factors make subcategorization appropriate." (40 CFR 60.22(b)(5) Rather than address the differences between the affected EGU sources which would be subject to these requirements, commenters noted that the EPA has instead chosen to create a
sin gle broad category of "all sources within the state" and has ignored the fact that such broad categorization will in effect cause inequities among sources within the state which should have been addressed through the analysis of guidelines and compliance t imes applicable within appropriate subcategories. Commenters asserted, by its proposed actions, the EPA has completely eliminated the flexibility embedded in section 111(d). In the Proposed Guidelines, commenters stated that the EPA would set binding state emission reduction targets that cannot be adjusted by states once promulgated. Commenters closed, stating that the EPA's aggressive assumptions in the building blocks further erode state flexibility and disregards the primacy that Congress explicitly gave to the states over the EPA under section 111(d).

Commenters stated that rather than recognizing the significant differences between natural gas and coal generation, EPA is attempting to combine natural gas and coal generation into a single category. Comme nters remarked that violating the CAA and a basic understanding of these types of generation technologies, that action also directly conflicts with the New

- Source 111(b) Rule Proposal, which serves as the foundation for this Rule Proposal. Commenters expla ined that
while the New

- Source 111(b) Rule Proposal is flawed in numerous ways (as discussed in Part III of this letter), EPA was correct in realizing that it is unable to establish a single standard for both
coal and NGCC facilities when it revised and re

- proposed its New

- Source 111(b) Rule Proposal; however, despite making this correction in the New

- Source 111(b) Rule Proposal, EPA has242 apparently decided to proceed in this Rule Proposal under the false and illegal assumption of combining the generation te chnologies into one category.

Response 17: For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

As we explain in sections V.A. and V.B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves requi re states or sources to implement the BSER. That is, EPA is responsible for determining the level of emission limitation from the source category, while states have the responsibility of assigning emission requirements to their sources that will ensure the ir achievement of that level of emission limitation. States may fulfil their responsibility by establishing emission standards or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emission reduct ion measures, including measures that are not part of the BSER.

While we are not re

- opening the 1975 regulations, in response to comments, we explain in the preamble why they give the EPA broad authority to determine the BSER and, based on that,
statewide emission limitations for sources in the state.

As we explain in section VIII.D of the final rule preamble of the CPP, our emission guidelines provide the substantive criteria that are intended to govern the review of the Administrator’s review of state pl ans. The interim and final goals are intended to reflect such substantive criteria.

EPA is not finalizing the proposed “portfolio” approach, and will not accept state plans that attempt to impose emission standards or other CAA compliance obligations on entities other than affected EGUs. The state measures approach provides a path for a s tate to achieve the emission performance level as expressed as a state goal in a way that avoids placing enforceable emission standards on affected EGUs (unless and until the backstop is triggered). States will have a wide range of flexibility in choosing how to demonstrate their affected EGUs are meeting a state goal.

Comment 18 : Commenters stated that EPA does not subcategorize when commenters believe it must, and EPA proposes to lump different sources (and even non

- sources) into one category
which commenters believe is unlawful. Commenters continued that EPA's BSER combines two source categories' fossi l fuel

- fired steam generating boilers and NGCC units. Commenters said
Section 111(d) specifically requires that the state take into consideration the "remaining useful lives of the sources in the category of sources to which such standard applies. [Id. Sec tion 7411(d) (emphasis added).] Commenters stated that the continued use of "category" in the singular in Section 111 indicates that the standards are to be developed by EPA for a single source category, not for multiple categories that are lumped together . Commenters argued that the CAA simply does not authorize this lumping mechanism that EPA has proposed here. Commenters explained that EPA's preamble for the regulations that implement Section 111(d) confirm that the development of emission standards for new sources applies to a single source243 category, and the subsequent development of emission guidelines for existing sources applies to that same single category. [See 40 Fed. Reg. at 53,340 ("Section 111(d) requires control of existing sources of such poll utants whenever standards of performance (for those pollutants) are established under section 111(b) for new sources of the same type.") (emphasis added); id at 53,343 (Commenters explained that Section 111(d) standards are "techniques for the control of

t he same pollutants from the same types of sources under section 111(b).).] Commenters stated that the preamble to the regulations illustrates how the development of emission guidelines hinges on individual source categories. Commenters noted, action under section 111(d) is subject to a number of significant safeguards: (1) Before acting under section 111(d) the Administrator must have found under section 111(b) that a source category may significantly contribute to air pollution which causes or contributes to the endangerment of public health or welfare, and this finding must be technically supportable. [Id. at 53,341 (emphasis added); see also id. at 53,342 ("[T]he Administrator must find under section 111(b) that the source category covered by such
standar ds may contribute significantly to air pollution which causes or contributes to the endangerment of public health or welfare.") (emphasis added).] Accordingly, commenters concluded, EPA's regulations and the preamble promulgating such regulations provide n o indication that lumping of source categories is permissible.

Response 18 : EPA disagrees that the singular “category” is used consistently in section 111 or that the various passages cited by the commenter have any import on EPA’s authority to
combine c ategories. In section 111(b), the singular “category” is used to (1) state that the endangerment/cause

- contribute finding is to be made with respect to each specific category ([The Administrator] shall include a category of sources in such list if....”), an d (2) state the timing of when publication of proposed standards is to occur (“[w]ithin one year after the inclusion of a category of stationary sources in a list under [section 111(b)(1)(A).” But, the plural “categories” is also used in 111(b): to state EPA’s authority to subcategorize in section 111(b)(2) and to issue information on pollution control techniques in section 111(b)(3). In section 111(d), the word “category” appears as part of the House amendment to the Section 112 Exclusion, which is
disc ussed extensively in the preamble for this rule. Further, as the commenter notes, the use of the singular “category” appears in 111(d)(2) in the “remaining useful life” text, but that text has the same substantive meaning as the “remaining useful life” te xt in 111(d)(1), which simply refers to “the existing source to which the standard applies” and does not use either the singular “category” or plural “categories.” Thus, contrary to this comment, the singular “category” is not used consistently. Moreover, the use of the singular “category” or plural “categories” in section 111 varies by context and does not indicate anything concerning EPA’s authority to combine categories when it promulgates regulations under 111(b) or 111(d).

Comment 19 : Commenters cit ed case law interpreting other CAA provisions illustrates EPA's error in collapsing two source categories into one as described in the following sentences. [See Ne. Md. Waste Disposal Auth. v. EPA, 358 F.3d 936, 943 (D.C. Cir. 2004) (stating that Davis
Cnt y. Solid Waste Mgmt. v. EPA, 101 F.3d 1395 (D.C. Cir. 1996) involved "an attempt by the Agency to collapse two statutory categories into one").] Commenters added that in Davis County Solid Waste Management v. EPA, the D.C. Circuit was tasked with determini ng whether the standards for municipal solid waste combustion exceeded EPA's authority under S. 129 of the244 CAA. [Davis Cnty. Solid Waste Mgmt. v. EPA, 101 F.3d 1395, 1396

- 97 (D.C. Cir. 1996).] Commenters also added EPA's regulations had categorized "units by aggregate plant [municipal solid waste] capacity."[Id. at 1401]. Commenters noted that the petitioners, however, argued
that Section 129(a)(1) established separate source categories that EPA was required to separately develop standards for "large [munic ipal solid waste (MSW)] units (units with unit MSW capacities above 250 tons/day) and small [municipal waste combustor] units (units with unit MSW capacities of 250 tons/day or less)." [Id. at 1403.] Commenters said the court agreed with the petitioners, f irst noting that "Section 129(a)(1) begins by stating that the EPA shall promulgate standards and guidelines for 'each category of solid waste incineration units,' and then proceeds to identify specific types of units and the date by which standards shall be issued for each type."[Id.] Commenters noted, the court concluded that the "plain implication of section 129(a)(1) is that the types of units listed are the relevant categories for determining emissions standards."[Id.] Commenters remarked that while D avis involved the interpretation of Section 129 and a different standard, the court's holding is instructive to EPA's current attempt to lump
fossil

- fuel fired EGUs and NGCC units into one category. Commenters added that in Davis, the
court determined that EPA could not collapse source categories when Congress specifically defined those categories in Section 129(a)(1). Here, in similar fashion, Commenters noted that Congress has directed EPA to develop source categories under Section 111 and then issue

stan dards for each one of those categories, and here, as in Davis, EPA cannot collapse source categories for convenience sake when the CAA requires existing source standards for each
source category.

Response 19 : EPA disagrees with the commenter’s analysis o f this case law. Indeed, this
commenter’s own d iscussion of the Davis opinion makes clear that the court’s reasoning was based on the creation in section 129 of statutory categories and the text in section 129(a)(1) that specifies that EPA is to set standa rds and other requirements “for each category of solid waste incineration units.” This text in section 129(a)(1) contains very different phrasing from the relevant text in section 111(b)(1)(B), which focuses on sources rather than source categories.

1.5 AFFECTED SOURCES AND APPLICABILITY

Comment 1: Commenters stated the U.S. EPA asserts in the existing source rule that this once

in

- always

- in interpretation must apply to all sources in any source category regulated under Section 111(d), not just to this rulemaking. “It should be noted that this proposal applies to any existing source subject to any CAA Section 111(d) plan, and not only existing sources subject to the CAA Section 111(d) plans promulgated under this rulemaking.” [Id

. at 34903] Commenters stated not only is this not allowed under the plain language of Section 111, subjecting all sources that are covered by any Section 111(d) plan to forever be subject to that plan changes how all Section 111(d) programs are to be applied with real substanti ve consequences for the sources subject to the plans, and is illegal and a retroactive application of a complete regulatory program. Commenters stated other source categories have no notice that under the proposal for "Carbon
Pollution Standards for Modifi ed and Reconstructed Stationary Sources: Electric Utility245 Generating Units: Proposed Rules" that U.S. EPA is proposing this retroactive application of Section 111(d) applicability. Commenters said this rulemaking approach violates the basic tenets
of the A dministrative Procedures Act (APA) and good government practices.

Response 1: In this final rule, EPA has not adopted the “once

- in

- always

- in” interpretation.

Comment 2: Commenters stated that in determining BSER for modified and reconstructed sources, U. S. EPA evaluated several different control technology configurations including reductions in generation associated with dispatch changes, renewable generation, and demand

side EE; however, U.S. EPA ultimately decided not to establish BSER as these componen ts and opted for a less stringent BSER. Commenters found this counterintuitive to how BSER typically is defined for new, modified and reconstructed, and existing sources, explaining that U.S. EPA is attempting to finalize a BSER for existing sources that i s more stringent than the BSER for modified and reconstructed sources. Commenters added that for modified sources, U.S. EPA proposes BSER as efficiency improvements achieved through a combination of best operating practices and equipment upgrades. [79 FR 3 4982] Commenters noted, as part of one of the options, U.S. EPA is providing a low end cap to ensure the final rate for these units will not be more stringent than the emission limit for reconstructed sources. [79 FR 34987] In their
comments on the modifie d and reconstructed proposal, commenters raised concerns regarding a unit encroaching upon a rate that would be achievable by reconstructed units applying BSER, and commenters also had significant concerns regarding the potential for existing sources to
ul timately have a more stringent emissions limit than modified or reconstructed sources under this proposal.

Response 2: Comments related to new, modified and reconstructed sources are beyond the scope of this rule. We disagree that the section 111(d) sta ndards are more stringent than the section 111(b) standards. Further, we explain in the Legal Memorandum why the section 111(b) and (d) standards are based on different determinations of the BSER. The use of the term “ordinarily” in the 1975 preamble refle cts the agency’s long term understanding that standards under 111(d) may differ from those under 111(b). In any case, the statute does not dictate that 111(d) standards must be less stringent in all cases. Rather, Congress recognized that the agency
would be faced with different sets of challenges in regulating existing rather than new sources. Congress addressed this in part by establishing a cooperative

- federalism planning regime under section 111(d) similar to section 110. Reflecting this, the guidelines include significant flexibilities, including the ability to trade and relatively long periods for compliance.

Comment 3 : Commenters stated that widespread opposition to this proposal is evident and it is nationwide, as they can see by action in the House of Representatives, the U.S. Senate, and state legislative actions. Commenters explained that in mid

- July, the House Appropriations Committee passed a spending bill prohibiting EPA from using funds for carbon standards. Commenters also noted that, in March , the House passed legislation [H.R. 3826, or Whitfield

Manchin] to repeal the proposed new source rule and stop 111(d) without congressional approval. Commenters stated that forty

- one Republican senators have asked EPA to withdraw the rule, and seven Demo cratic senators have written the President complaining about the new246 source performance standards for EGUs. Commenters continued, stating that over 20 states passed legislation or resolutions stating greenhouse gas emissions can only be regulated on a plan t by plant basis inside the fence so to speak, not the systemwide state approach that EPA
takes.

Response 3 : The bills referenced by the commenters have not become law and therefore are not binding on any person. The comment otherwise expresses policy pr eferences. EPA has explained the policy advantages of this rule at length in the Preamble.

Comment 4 : Commenters stated EPA proposes to regulate emissions from existing EGUs by recognizing that the "integrated grid" operates as a unit but this is far too s implistic. Commenters
stated that EPA has assumed authority Congress did not grant. Commenters explained that the Supreme Court has clearly spoken to this point, stating that "it is axiomatic that an administrative agency's power to promulgate legislative regulations is limited to the authority delegated by Congress." Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988). Commenters asserted that Congress could not have foreseen the perceived need to define and regulate GHG emissions
to combat climate c hange. Commenters noted, in evaluating the validity of the Federal Reserve's interpretation of the Bank Holding Company Act in Dimension Financial, the Supreme Court observed that: Congress defined with specificity certain transactions that constitute bank ing subject to regulation. Commenters stated that the statute may be imperfect, but the [Federal Reserve] Board has no power to correct flaws that it perceives in the statute it is empowered to administer. Commenters asserted that its rulemaking power is l imited to adopting regulations to carry into effect the will of Congress as expressed in the statute. Commenters stated, if the Bank Holding Company Act falls short of providing safeguards desirable or necessary to protect the public interest, that is a pr oblem for Congress, not the Board or the courts, to address. Dimension Financial Corp., 474 U.S. at 362. Commenters added that similarly here, just because the CAA is an imperfect vehicle for the regulation of GHGs, EPA does not have the right to expand it s authority to include wholesale energy market regulation that is the sole domain of FERC, and by granting itself this authority, EPA is essentially attempting to "fix" the statute so that it may fit a regulatory policy into an act that Congress did not de sign for such a policy. Commenters closed, stating that similar to the Supreme Court's holding in Dimension Financial, if the CAA "falls short of providing safeguards desirable or necessary to protect the public interest, that is a problem for Congress," n ot for EPA to address.

Commenters stated EPA's proposal is wrongfully directing states to regulate renewable energy resources, demand side energy efficiency programs, and even existing and under

- construction nuclear units by means of "emission standards." Commenters stated that is not authorized under Section 111(d). Commenters explained that EPA's Legal Memorandum discusses using renewable sources as a "reduction requirement" for NGCC units, but provides no citation of authority or other instance where EPA has looked to alternative non

- regulated facilities for CAA compliance. OGC Legal Memorandum at 89. Commenters asserted that the Legal Memorandum acknowledges regulation of fossil

- fuel fired steam generation boilers starting in 1971 and NGCC units in 1979, but notably identifies no statutory or regulatory authority for regulating renewable

energy sources.247 Response 4 : We disagree with commenters’ assertion that this rulemaking assumes authority Congress did not intend to grant. As explained by the Court in AEP v. Connecticut , “[t]he Act itself ... provides a means to seek limits on emissions of carbon dioxide from domestic power plants” before holding that “[t]here is no room for a parallel track” to invoke federal common law to curtail greenhouse gas emissi ons from the power sector, including from existing sources. 131 S. Ct. at 2430. Accordingly, we disagree that Congress intended to foreclose the regulation of greenhouse gases under section 111(d).

We also disagree that we are expanding our authority to include wholesale energy market regulation. Our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and does not require states or sources to implement the BSER. Moreover, these emission guidelines provide s tates with the flexibility to establish, implement, and enforce standards of performance and do not intrude on the regulatory domain of FERC. It cannot be said that because environmental requirements may have an effect on the wholesale energy market that t he EPA is therefore intruding into energy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Congress expressly identified power plants as a priority source category for regulation under CAA section 111.

Contrary to commenters’ assertions, this rule does not regulate renewable energy sources. This rule simply identifies the BSER for affected sources which entails substitute generation to zero

emitting generators. It does not, however, impose emissions requirements on such sources

.

Comment 5 : Commenters stated that because the proposal as it stands would result in either the reduced utilization of EGUs beyond the ability of cooperatives to repay investments in those facilities and/or the premature closure of those or other cooperat ive EGUs, the proposal's requirements amount to a regulatory taking requiring compensation because of the premature closures and uneconomic curtailment it will require.

Response 5 : For EPA’s response to this issue, see the Legal Memorandum.

1.5.1 EGU sour ces

1.5.2 Non

- EGU sources

1.5.2.1. EPA has no legal authority to include other sources or source categories

1.5.2.1.1 Standards of performance, individual sources, and definitions

Multiple comments and multiple reasons address EPA’s legal authority to go beyond standards of performance for individual sources and raise specific definitional concerns, including:

Comment 1: Commenters stated the Clean Air Act forbids Section 111(d) regulations based on
emission reductions that cannot be achieved at individual facilities (sources) and stated further that EPA's goal calculation to be imposed on Alabama cannot meet this requirement, but instead248 relies on reductions by an entire system, state, and region to include facilities and state governments acting in tandem

.

Commenters stated and concurred that EPA is pursuing a regulatory standard on one industry source (fossil

- fuel power plants) based on potential actions taken well beyond the source's physical location and controlling authority, and in many cases by enti ties that are not directly subject to regulation under section 111 of the Clean Air Act, and this structure raises significant legal and practical questions regarding the viability of the rule. Commenters stated EPA has to date failed to answer such questi ons, and provided little to no information regarding what authority it is relying upon to institute such an expansive regime, and how it intends to proceed if it does not approve of individual state implementation plans. Commenters concluded this is
critic al information that EPA should disclose in the interest of maximizing transparency and continued cooperation with states and stakeholders.

Commenters questioned that EPA may not have the legal authority. Commenters stated that the EPA relies on interpreta tion of a rarely used section of the Clean Air Act, Section 111(d), as the basis to regulate carbon dioxide across a wide spectrum of the utility industry. Commenters stated, because the proposal is so outside historic EPA authority, undoubtedly there will be legal challenges to all or portions of the rule and will impact already tight guidelines. Finally, commenters stated they are concerned the proposal expands EPA's authority; rule is ambitious by any measure and regulates numerous activities that other federal and state agencies currently have authority for, and because the rule is not passed by Congress, a unilateral expansion by the EPA raises concerns how other federal and state agencies will respond.

Commenters stated that even if EPA legally could a dopt the CPP, it has no authority to require actions by any entity other than the generating facility itself. Commenters stated that 42 U.S.C. section 7411 grants EPA authority to establish "standards of performance" to "stationary sources." Commenters exp lained (verbatim) Section 7411 defines "standards of performance" as "a standard for emissions of air pollutants which reflects the degree of emission limitation achievable through the application of the best system of emission reduction." Commenters noted that "stationary source" means "any building, structure, facility, or installation which emits or may emit any air pollutant." Commenters stated that standards of performance can apply to an owner or operator of any stationary source that contains an affe cted facility, which is "any apparatus to which a standard is applicable." Commenters asserted, taken together, CPP standards may be applied to the source category as well as applicable equipment contained therein. Commenters stated, yet, the CPP goes beyo nd that as it attempts to control sources other
than coal

- fired generating units by requiring that non

- generating facilities also reduce their emissions. Commenters stated that such a broad reading of EPA's authority is improper and impermissible.

Commente rs stated Section 111 of the CAA speaks with absolute clarity as to the subject and nature of standards of performance for new and existing sources. Commenters asserted that a standard of performance under section 111 must be achievable for individual sour ces based on measures that the source's owner can integrate into the design or production process of the source itself. Commenters remarked that the Section 111 has existed, with only minor changes, for over249 40 years, and in that time EPA has applied it wi th total consistency on this fundamental point. Commenters added that a standard of performance cannot be based on actions taken beyond the
source itself that somehow reduce the source's utilization. Commenters noted that nor can it be based simply on requ iring a source to reduce its operations, and yet EPA is proposing a rule that departs so far from the Act's clear directions as to be unrecognizable as a section 111 rulemaking. Commenters stated the Agency's proposed approach has inverted the lawful order of
standard

- setting under section 111, and instead of defining a category of regulated sources, identifying the BSER that any individual source can incorporate into its design, and then allowing states to determine what standards are achievable for source s based on that BSER and other factors, EPA has started at the end by defining an inflexible emissions goal for each state and then requiring states to impose whatever obligations are necessary to achieve that goal. To effectuate this unprecedented approac h, commenters stated, EPA proposes to base its emission guidelines on actions that reach beyond individual regulated sources and impose obligations on entities with no emissions at all, or to simply mandate that regulated sources curtail operations or

ceas e operations altogether, and EPA's proposed approach has no basis in the statute. Commenters posited the rule defies reason and is inconsistent with the CAA, and EPA has exceeded its authority and must withdraw the Proposed Guidelines.

Commenters stated an d concurred that Section 111 provides for the regulation of individual emission sources through performance standards that are based on what design or process changes an individual source's owner can integrate into its facility. Commenters asserted, the

na ture of any standard of performance under section 111 is that, at a given level of operations, the regulated source emits less when subject to the standard than when not. Commenters continued that on its face, section 111 provides only for standards that r egulate the emissions performance of individual stationary sources in a category listed under section 111(b). Commenters noted the plain text of this section makes it clear that standards of performance apply to sources within listed categories as individu al facilities and do not regulate categories or subcategories as a whole: NSPS apply only to "new sources within [a listed] category," while state standards under section 111(d) apply to "any existing source . . . to which a [NSPS] . . . would apply if suc h existing source were a new source." Id. section 111(b)(1)(B), (d)(1). Commenters noted, in addition, section 111(d) explicitly directs states (and EPA, in the case of a federal plan) to consider the "remaining useful life" of existing sources when applyi ng any standard of performance, further demonstrating that this section focuses solely on what individual sources can do to improve their performance at reasonable cost rather than what the entire source category (or even other entities) can do collectivel y to reduce overall emissions. CAA section 111(d)(1), (d)(2). Commenters stated that even the titles used in these provisions
indicate their narrow focus on individual sources. Commenters stated Section 111 is titled "[s]tandards of performance for new sta tionary sources," and section 111(d) is designated "[s]tandards of performance for existing sources; remaining useful life of source." Id. section 111, 111(d). Commenters stressed section 111 also requires that any standard of performance be
"achievable" b y the sources to which it applies based on application of an "adequately demonstrated" system of emission reduction. Id. section 111(a)(1). Commenters stated the achievability requirement clearly indicates that Congress intended standards of performance to be based on systems of emission reduction that are within the control of (and thus, incorporated250 into the design or production process of) an individual source. Commenters asserted that a
standard cannot be "achievable" for a source if the source must rel y on measures taken by some other entity that it does not control, or if the source must not operate, in order to achieve the standard. Commenters noted, moreover, a "standard of performance" by its terms assumes that the source will continue to "perform." Commenters stated that a "standard of performance"
cannot mandate "non

- performance." Commenters added that this focus on measures incorporated into individual sources pervades other parts of section 111 as well and offers, for example, section 111(h) auth orizes EPA to promulgate a design, equipment, work practice, or operational standard in cases where "it is not feasible to prescribe or enforce a standard of performance," and defines exactly when Congress considered it "not feasible to establish a standar d of performance. Id. section 111(h)(1). Commenters said one such situation is where the regulated pollutant "cannot be emitted through a conveyance designed and constructed to emit or capture such pollutant"

- Id. section 111(h)(2)(A)

- and this provision equates a "standard of performance" with the use of a conveyance at the regulated source to capture and to control a portion of the
source's emissions.

Commenters stated that EPA is a "creature of statute" and has "only those authorities conferred upon it by Congress." Michigan v. EPA, 268 F.3d 1075, 1081 (D.C. Cir. 2001). Commenters said EPA's decision to impose state

- wide emission goals instead of emission guidelines that address specific sources is not legally justified under Section 111(d). Commenters asserted that the statutory language, EPA's own implementing regulations, and the structure for development and application of standards of performance under Section 111 all focus on determining appropriate emission guidelines applicable to individual emis sion sources. Commenters stated, by setting state goals that are not based on reference to particular sources of emissions regulated under Section 111(d) or the CAA, EPA has exceeded its statutory authority. Commenters said, first, the text of Section 111( d) and other provisions in Section 111 evince a clear focus on addressing individual sources, not an aggregation of disparate sources on a state level. Commenters noted that Section 111(d) expressly provides for states to apply standards of performance to "any existing source." 42 U.S.C. section 7411(d)(1)(A). Commenters noted that Congress has expressly limited the applicability of Section 111(d) to existing sources to which a standard of performance would apply if the existing source were a new source. 42 U.S.C.

- 7411(d)(1)(A)(ii). Commenters stated, consistent with this requirement, Section 111(b) rulemakings regulating CO2 from new and modified fossil fuel

- fired EGUs must be in effect before EPA has the authority to promulgate regulations for existing f ossil fuel

- fired EGUs under Section 111(d). Commenters stated, although EPA has proposed Section 111(b) rulemakings, see 79 Fed. Reg. 1430; 79 Fed. Reg. 34,960, the rules have not been finalized and will almost certainly be subject to legal challenge, crea ting uncertainty on the status and applicability of any Section 111(d) rulemaking. Commenters asserted, if those Section 111(b) rules have not been finalized or remain subject to legal challenge at the time EPA seeks to issue its final Section 111(d) rule for EGUs, the Section 111(d) rules must be held in abeyance pending completion of the jurisdictional prerequisite.) Commenters stated that EPA is required to permit states to take certain factors into account in applying a standard of performance "to any p articular source." Id. section 7411(d)(1). Commenters said these factors include the remaining useful life of "the existing source" to which such standard applies. Id. Commenters stated Section 111(a) defines251 "stationary source" as "any building, structure , facility, or installation which emits or may emit any pollutant." Id. section 7411(a)(3). Commenters said this plain statutory text (The source

based focus of Section 111(d)) is further supported in the legislative history. See, e.g., Report by
the Commi ttee on Interstate and Foreign Commerce to Accompany H.R. 6161 (CLEAN AIR ACT AMENDMENTS OF 1977), H.R. Rep No. 95

- 294, at 11 ("The section also makes clear that standards adopted for existing sources under section 111(d) of the act are to be based on
avai lable means of emission control (not necessarily technological) and must, unless the State decides to be more stringent, take into account the remaining useful life of the existing sources.") (emphasis added)) Commenters noted that it placed direct limits on EPA's ability to expand its regulatory reach beyond existing sources. See Elec. Power Supply Ass'n v. FERC, 753 F.3d 216, 222 (D.C. Cir. 2014) (rejecting FERC interpretation of authority that would render express statutory limitations on authority usele ss). Commenters said, second, EPA's implementing regulations for Section 111(d) acknowledge the source

- based focus in the statute: "[E]mission guidelines will reflect the degree of control attainable with the application of the best systems of
emission red uction which (considering the cost of such reduction) have been adequately demonstrated for designated [existing] facilities." 40 Fed. Reg. 53,340, 53,340 (Nov. 17, 1975) (emphasis added). Commenters asserted that the emission guidelines, as EPA describes, must make "allowances for the costs of controlling existing sources." 40 Fed. Reg. at 53,343. Commenters stated EPA further stated that it will consider subcategorization under Section 111(d) based on "sizes, types and classes of designated facilities." S ee 40 C.F.R. section 60.22(b). Commenters stated that EPA provided no suggestion in its 1975 regulations that it could or would attempt to expand its purported authority beyond the regulation of affected sources as it now proposes. Third, commenters stated that the overall structure of Section 111 demonstrates the focus on what controls may apply and what emission limits are achievable and adequately demonstrated at the individual sources. Commenters said Section 111 establishes a parallel structure in whic h standards of performance are derived for both new and, where appropriate, existing affected sources within the relevant source category. Commenters noted EPA confirmed in its 1975 regulations that the same general principle (application of best adequatel y demonstrated control technology, considering costs) applies to determine standards of performance for both new sources under Section 111(b) and emission guidelines for existing sources under Section 111(d). See 40 Fed. Reg. at 53,341. Commenters stated, however, complications arise in regulating existing sources because of the need to account for the different sizes, types and classes of individual sources within the larger source category. Commenters asserted EPA recognized that the way to ensure appropr iate treatment of the disparate sources was to drill down to smaller subcategories of individual sources. Commenters noted that EPA specifically amended its regulations "to make clear that the Administrator will specify different emission guidelines for di fferent sizes, types and classes of [existing sources] when costs of control, physical limitations, geographical location, and similar factors make subcategorization appropriate." Id. ("Thus, while there may be only one standard of performance for new sour ces of designated pollutants, there may be several emission guidelines specified for [existing sources] based on plant configuration, size, and other factors peculiar to existing facilities."). Commenters said grouping of different emission sources into an amorphous and expanded "system" that includes both jurisdictional and non

- jurisdictional units and unrelated activities,252 and then setting emission goals based solely on state boundaries as EPA has proposed, is not a valid means of subcategorizing because it fails to recognize the differences among units within particular states. Commenters stated, given the parallel process anticipated for the development
of source

- specific standards of performance for new and existing sources in the same source
category, EPA logically anticipated that "the degrees of control represented by EPA's emission guidelines [for existing sources] will ordinarily be less stringent than those required by standards of performance for new sources." 40 Fed. Reg. at 53,341. Commenters st ated that the upside

down nature of the Proposed Rule is demonstrated by comparing the state emissions goals to the new source performance standards for EGUs in EPA's pending proposal under Section 111(b). Commenters said the final state emissions goals fo r more than half the states under the Proposed Rule are lower than the corresponding Section 111(b) emission rates proposed for NGCC units.) Fourth, commenters stated that EPA's prior rulemakings under Section 111(d) are fully
consistent with the source

- ba sed focus of Section 111(d). Commenters noted, despite the disparate nature of the affected source categories, none of the regulations promulgated by EPA under Sections 111(b) or 111(d) for specific source categories over the past forty years have strayed from the common principle that emission guidelines are intended to lead to standards of performance achievable at the source. Commenters asserted that EPA's Proposed Rule for existing EGUs does not focus on individual source performance; rather it sets emi ssions requirements at levels unachievable for individual sources, and requires emissions reductions from actions taken by third

- party entities that are unrelated to the source. See 79 Fed. Reg. at 34,845 (proposing that emission guidelines be based on red uction of CO2 emissions from the entire "electric power sector"). Thus, commenters concluded that the Proposed Rule conflicts with the language, structure and historic implementation of Section 111(d) and exceeds EPA's statutory authority.

Commenters adde d that elsewhere, section 111(d) speaks to "the remaining useful life of existing source to which [a] standard applies CAA Section 111(d)(I)(B) and in addition, EPA's implementing regulations at 40 CPR 60.24(f) allow states to consider the "cost of control resulting from plant age, location, or basic process design," difficulties in "installing necessary control equipment," and "other factors specific to the facility" in determining the appropriateness of emissions standards and compliance schedules.

Respon se 1 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

As we explain in sections V.A. and V.B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. That is, EPA is responsible for determining the level of emission limitation from the source category, while states have the responsibility of assigning emission requirements to their sources that will ensure their achievement of that level
of emissi on limitation. States may fulfil their responsibility by establishing emission standards or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emission reduction measures, including measures that are not part of the BSER.253 Commenter’s arguments on section 111’s remaining useful life provision are addressed in section VIII.G.1 of the preamble and section IX of the Legal Memorandum.

Comment 2: Commenters stated and concurred that never before has EPA adopted emissions guidelines based on such outside

- the

- fence considerations. Commenters remarked that this is not surprising, since EPA's longstanding regulations focus on technological and operational measures that can be implemented at a specific unit. ( See, e.g., 40 C.F.R. 60.21(h) (referring to emission control equipment and process changes, both of which are unit

- specific measures). Commenters noted, since Section 111(d)'s enactment, EPA has promulgated regulations for specific source categories in 13 instances. (See Regulation of CO2 Emissions from Existing
Power Plants Under Section 111(d) of the Clean Air Act: Program Design and Statutory Authority, R. Nordhaus and I. Gutherz, 44 ELR 10366, 10372 n. 57 (2014). According to the authors, the 13 are: P hosphate Fertilizer Plants; Final Guideline Document Availability, 42 Fed. Reg. 12,022 (Mar. 1, 1977); Standards of Performance for New Stationary Sources; Emission Guideline for Sulfuric Acid Mist, 42 Fed. Reg. 55,796 (Oct. 18, 1977); Kraft Pulp Mills, No tice of Availability of Final Guideline Document, 44 Fed. Reg. 29,828 (May 22, 1979); Primary Aluminum Plants, Notice of Availability of Final Guideline Document, 45 Fed. Reg. 26,294 (Apr. 17, 1980); Emission Guidelines; Municipal Waste Combustors, Final E mission Guidelines, 56 Fed. Reg. 5,514 (Feb. 11, 1991), withdrawn & superseded by 60 Fed. Reg. 65387 (Dec. 19, 1995) (same source category); Standards of Performance for New Stationary Sources and Guidelines for Control of Existing Sources: Municipal Solid Waste Landfills, Final Rule, 61 Fed. Reg. 9,905 (Mar. 12, 1996); Standards of Performance for New Stationary Sources and Emission Guidelines for Existing Sources: Hospital/Medical/Infectious Waste Incinerators, Final Rule, 62 Fed. Reg. 48,348 (Sept. 15, 1 997); Standards of Performance for New Stationary Sources and Emission Guidelines for Existing Sources: Commercial and Industrial Solid Waste Incineration Units, Final Standards and Guidelines, 65 Fed. Reg. 75,338 (Dec. 1, 2000); Emission Guidelines
for Ex isting Small Municipal Waste Combustion Units, Final Rule, 65 Fed. Reg. 76,378 (Dec. 6, 2000); Clean Air Mercury Rule, 70 Fed. Reg. 28,606; Standards of Performance for New Stationary Sources and Emission Guidelines for Existing Sources: Other Solid Waste Incineration Units, Final Rule, 70 Fed. Reg. 74,870 (Dec. 16, 2005); Standards of Performance for New Stationary Sources and Emission Guidelines for Existing Sources: Sewage Sludge Incineration Units, Final Rule, 76 Fed. Reg. 15,372 (Mar. 21, 2011), and in each instance, those standards have been technological or operational standards that can be applied specifically to each designated facility. Commenters asserted such an approach harmonizes with Section 111's handling of stationary sources of air pollutan ts. Commenters offered, or instance, in its final rule promulgating new source performance standards and existing source emission guidelines for municipal solid waste landfills, EPA determined that BSER for MSW landfills comprised a well

designed and well

- operated gas collection system and [] a control device capable of reducing [the pollutant of concern] in the collected gas by 98 weight

- percent. (49 Fed. Reg. at 9907) Commenters noted that operational standards for each existing landfill were also promulg ated to ensure that each landfill was operated according to best practices to minimize emissions. (Id. at
9907

- 08) Commenters stated no suggestion was made that BSER included shuttering some landfills in favor of others employing more modern or lower

- emitt ing technologies, or that BSER could or should include efforts to minimize consumers' generation of municipal waste (even254 though that might have been one of the more effective measures in reducing emissions from MSW landfills).

Commenters stated the requir ed standard can only extend to the specific sources at issue (here,
fossil fuel

- fired EGUs), not an entire sector, and EPA's proposed BSER extends well beyond the source categories that EPA can require states to address under Section 111(d) and is thus out side EPA's authority under the CAA.

Response 2 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

Comment 3 : Commenters stated that the EPA's proposed building blocks are not a best system of emission reduction as required by Section 111(d). Commenters explained (verbatim) EPA's

propo sed CO2 guidelines rely on Section 111(d) of the CAA, although it has been rarely used by the EPA to establish procedures whereby states can implement and enforce performance standards for an existing source of an air pollutant. Commenters asserted Section 111(d)(1) mandates that "each state submit to the Administrator a plan which (A) establishes standards of performance for any existing source ..." Commenters noted that "standard of performance" is defined as a "standard for emissions of air pollutants wh ich reflects the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any non

- air quality health and environmental impact and energy re quirements) the Administrator determines has been adequately demonstrated." 42 U.S.C. section 7411(a)(1). Commenters noted EPA has proposed that the best system of emission reduction ("BSER") for CO2 should be a series of four "building blocks" or strategi es: building block 1

- reducing the carbon intensity of generation at EGUs through heat rate improvements (target 6% heat rate reduction); building block 2

- reducing CO2 emissions by substituting generation from the most carbon intensive EGUs with generat ion from natural gas combined cycle units; building block 3

- reducing CO2 emissions from affected EGUs by expanding low and zero carbon generating capacity; and building block 4

- increasing
demand

- side energy efficiency. 79 Fed. Reg. at 34836. Commenters asserted that building blocks 2, 3 and 4 do not constitute a "best system of emission reduction" that can be established for and applied to a source which emits or may emit an air pollutant, such as an EGU. Commenters noted that Section 111(a)(3) of the C AA defines a stationary source as any building, structure, facility or installation "which emits or may emit any air pollutant." Commenters suggested that entities which do not emit any pollutants, such as wind farms, or end users of electricity like the

g eneral public, cannot be treated as an "emitting source" under Section 111(a), as EPA proposes to do. Commenters stated that the limitation to requiring a state plan to establish standards of performance only for existing sources is supported by the remain ing language of Section 111(d), requiring that "regulations of the Administrator under this paragraph shall permit the State in applying a standard of performance to any particular source under a plan submitted under this paragraph to take into considerati on, among other factors, the remaining useful life of the existing source to which such standard applies." 42 U.S.C. section 7411(d)(1)(B)(emphasis added). Commenters noted that Congress expressly intended a standard of performance to be255 established and ap plied to a source. Commenters asserted that Building blocks 2, 3 and 4 cannot in any meaningful sense be established or applied to an existing EGU. Commenters said substituting low

- or zero

- carbon generation for generation produced by an EGU does not fit t he statutory meaning of applying emission reductions to that EGU, nor does requiring less energy use from consumers. Commenters said building blocks 2, 3, and 4, could be drafted into a state plan without even mentioning the word "source."

Response 3 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legi slative history.

Comment 4 : Commenters noted that EPA's proposed CO2 guidelines ignore the clear requirements of Section 111(d), the authority upon which it relies for the proposed CO2 guidelines. Commenters said EPA's disregard for Section 111(d) is furth er shown by its failure to give effect to the language "the remaining useful life of the existing source to which such standard applies" in setting standards for building blocks 2, 3 and 4. Commenters stated that the EPA proposed CO2 guideline fails to spe cify how the EPA took into account the remaining useful life of sources. Commenters noted, if anything, these building blocks have the opposite effect by reducing the usefulness of existing coal

- fired EGUs. Commenters said the reference to "existing useful life of a source" is further evidence that Congress did not intend that EPA could impose upon a state a standard of performance which is "outside the fence" of an EGU. Commenters noted, in consequence, EPA proposed BSER building blocks 2, 3, and 4 violate Section 111(d) of the CAA and are in excess of the statutory jurisdiction and authority granted by Congress to EPA. Commenters noted that Section 111(h)(1) also provides evidence that the EPA cannot compel states to adopt standards of performance which ar e outside of a source/facility and thus cannot be applied to a facility. Commenters said Section 111(h)(1) states that if it is not feasible to prescribe or enforce a standard of performance, the Administrator may instead promulgate a design, equipment, wo rk practice or operational standard, or combination thereof, which reflects the "best technological system of continuous emission reduction." 42
U.S.C. section 7411(h)(1). Commenters noted that the term "technological system of continuous
emission reductio n" means "a technological process for production or operation by any source which is inherently low

- polluting or nonpolluting," or "a technological system for continuous reduction of the pollution generated by a source before such pollution is emitted into the ambient air, including pre

- combustion cleaning or treatment of fuels." 42 U.S.C. section 7411(a)(7)(A) and (B)(emphasis added). Commenters asserted that building blocks 2, 3 and 4 cannot be considered to reflect or be within the meaning of a "technolo gical system of continuous emission
reduction."

Response 4 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of th e statutory text, statutory context, statutory purpose, and legislative history.

Comment 5 : Commenters stated EPA interprets CAA Section 111 to mean "the affected sources must be subject to emissions standards, but the basis for those standards

- the 'syst em of emission
reduction'

- may be any method that reduces the affected sources' emissions, as long as that256 method is a 'system' that meets the criteria for being the 'best' that is 'adequately demonstrated.'" 79 Fed. Reg. at 34885/3. Commenters stated thi s interpretation is said to pass muster under either Chevron step one or step two, id. at 34885

- 86, but it does neither. Commenters said EPA tries to justify its faulty interpretation of BSER by claiming "it is clear ... that anything that reduces the
emis sions of affected sources may be considered a 'system of emission reduction.'" 79 Fed. Reg.at 34886/1. Commenters noted, under this expansive interpretation, literally anything and anybody

- from preventing the issuance of housing permits to requiring hous eholds to turn down
their thermostats in the winter

- could be regulated by the EPA. Commenters asserted that EPA's statutory analysis focuses on the term "'system,' which is not defined in the CAA," Id. at 34885/3, but system only refers to one part of th e statutory plan, not to the plan as a whole. Commenters said such statutory dissection is impermissible as a means to interpret statutory intent. American Petroleum Institute v. EPA, 52 F.3d 1113, 1119

- 20 (D.C. Cir. 1995)("EPA cannot uncouple the first se ntence of [the relevant section] from the rest of the section in order to expand its authority beyond the aims and limits of the section as a whole."). Commenters stated EPA asserts that the "context in which standard of performance is found" does not "add [any] constraints," but allows "anything that reduces the emissions of affected sources [to] be considered a 'system of emission reduction' for those sources." 79 Fed. Reg.at 34886/1. Commenters stated, in this regard, EPA reads the highlighted portion of Section 111(d)(1)(A)

- "standards of performance for any existing source"

- as having "a more capacious meaning" when applied to setting standards for those sources. 79 Fed. Reg.at 34903/1. Commenters noted, specifically, EPA's capacious meaning of "for" would include any standards that "would have an effect on affected sources." Id. Commenters stated it is difficult to imagine what standards would not fit within this "capacious" definition. Commenters said this interpretation contradicts EPA's prior view that "for" should be defined to link the system of emission reduction directly to what can be achieved by particular existing sources, not to what might "have an effect" upon those
sources. See State Plans for the Control of Certain Pollutants From Existi ng Facilities, 40 Fed. Reg.53340, 53341/2 (Nov. 17, 1975)("there may be several emission guidelines specified for designated facilities based on plant configuration, size, and other factors peculiar to existing facilities"); id. at 53343/3 ("EPA's emission guidelines will reflect its judgment of the degree of control that can be attained by various classes of existing sources without unreasonable costs" and "EPA's emission guidelines will in effect be tailored to what is reasonably achievable by particular classes of existing sources ... the result is likely to be substantial variation in the degree of control required for particular sources, rather than identical standards for all sources"). Commenters noted, as the operative language of Section 111(d)(1)(A ), "standards of performance for any existing source," has not changed since EPA's contemporaneous interpretation of the originally

- enacted provision, its initial narrow interpretation linking standards of performance to existing sources negates EPA's curr ent reading that Congress intended that standards of performance would encompass any system of emission reduction that "affects," but is not linked to (i.e., outside the fence or beyond the fence line of), existing sources. Commenters stated, likewise, EPA 's reading that "for" in Section 111(d)(1) means that "affected sources must be subject to emissions standards," 79 Fed. Reg.at 34885/3, does not provide any clarity.257 Commenters offered as the alternative, that EPA might treat "system" as including all un its and facilities comprising a particular electrical generating utility. Commenters stated, though such a reading would be unreasonable in light of the plain language of Section 111 and judicial and agency interpretations of that language, EPA could, perh aps, argue that a utility is itself a sort of commercial system, as that term is sometimes used. Commenters stated, even so, the last three of EPA's proposed BSER Building Blocks cannot be part of the system, simply because the utility does not necessarily have control over them. Commenters said, for example, order of dispatch and portfolio standards "both important components of EPA's proposed BSER determination" exceed what an individual utility can control. Commenters stated that a single utility cannot control the order in which another utility dispatches its electric generating units. Commenters said EPA's Building Block formula would therefore require utilities to coordinate their operations. Commenters noted, likewise, improvements in end

- use energy e fficiency, another key Building Block, are entirely outside the universe of actions over which utilities can exercise any enforceable degree of control. Commenters said the scope of EPA's proposed BSER, then, is too broad even for the most expansive defini tion of system.

Response 5 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory conte xt, statutory purpose, and legislative history.

Comment 6 : Commenters stated the proposed rule appears designed to achieve 30% national reduction in tons of carbon dioxide vs. 2005 for the power sector as a whole but this is not what Section 111(d) require s. Commenters stated that Section 111(d) only authorizes standards of performance on individual affected sources.

Commenters stated that the CPP treats each state's power sector as an existing source, and argued that is contrary to the text of section 111( d), EPA's 1974

- 1975 implementing regulations, and historical practice, all of which leave no doubt that an "existing source" is a "particular source," i.e., a "designated facility," not an entire economic sector or interconnected marketplace.
Commenters st ated that the CPP cites directly relevant case law; however, n ASARCO Inc. v EPA 578 F.2d 319 (1978), the D.C. Circuit Court of Appeals struck down an NSPS rule in which EPA claimed flexibility to define a stationary source as "either an individual facilit y or combination of facilities" comprising an "entire plant." Commenters explained that in agreeing with Sierra Club, the court ruled that a source is a "single building, structure, facility, or installation," and EPA "has no authority to rewrite the statu te in this fashion." Commenters stated: "And so EPA may not even define the 'stationary source' for section 111 purposes as an entire plant, much less as an entire state."

Commenters stated the proposed rule would extend regulation well beyond any a single category of emitters to encompass every electricity generator and consumer in the country, displacing the regulation of the Federal Energy Regulatory Commission ("FERC") along the way, and the CAA does not authorize this extension of EPA authority, and EP A has never previously said that it does. Commenters continued (verbatim) stating that Section 111(d) authorizes EPA to "prescribe regulations which shall establish a procedure similar to that provided by section 7410 of this
title." 42 U.S.C. section 7411 (d). Commenters stated, specifically, the Section 110 model258 includes cooperation with the States, which submit plans specifying performance standards and methods for implementation and enforcement. Id. Commenters said, by its terms, this provision applies only to "existing sources," which it defines to include "any stationary source other than a new source." 42 U.S.C. section 7411(a). Commenters noted that "Stationary source" is also a defined term, meaning "any building, structure, facility, or installatio n which emits or may emit any air pollutant." Id. Commenters noted that this definition is crucial, and its meaning begins with ordinary dictionary definitions. Smith v. United States, 508 U.S. 223, 228

- 29(1993). Commenters said each noun defining the "sta tionary sources" subject to regulation under Section 111(d) refers to a single location. Webster's II New College Dictionary, 149 (defining building as "[a] structure that is built"); 1120 (structure: "[s]omething constructed, such as a building"); 409 (fa cility: "[s]omething created to serve a particular function 'a new mental health facility'"); 588 (installation: "[a]n apparatus, as a system of machinery, set up for use."). Commenters said none of the definitions sweeps widely enough to allow regulation of the national network of electricity

- producing, transmitting, and consuming entities and locations. Commenters noted, instead, they refer to individual buildings, or other constructed equipment that emits pollution. Accordingly, in order to properly rely on Section 111(d), commenters stated that regulations must take a form that applies to an individual "building, structure, facility, or installation." Commenters said, if anything, the dictionary definitions underlying Section 111(a) represent the
outer l imit of how broad those terms might be. Commenters stated canons of interpretation served to narrow further the meaning of "building, structure, facility, or installation," and achieving a reasonable reading of the statute under Chevron requires the Agency to employ those canons. Bell Atlantic Telephone Co. v. FCC, 131 F.3d 1044, 1047 (D.C. Cir. 1997). Commenters said the noscitur a sociis canon of statutory interpretation is particularly relevant. Commenters noted, in its simplest form, the canon mandates that "words grouped in a list should be given related meaning." Third Nat'l Bank in Nashville v. Impac Ltd., 432 U.S. 312, 322 (1977). Or, in a more faithful translation, "a word is known by the company it keeps." Gustafson v. Alloyd Co., 513 U.S. 561, 575 (1995). Commenters stated, however expressed, the canon's purpose is to narrow the universe of meanings that may permissibly attach to statutory text. Id. (explaining that the canon serves to avoid "giving unintended breadth to the Acts of Congress"). Her e, commenters said the canon's application is straightforward. Commenters said each of the nouns in the definition of "stationary source" reinforces the fact that the law applies only to individual locations. Commenters stated, if they appeared alone, the Agency might have some claim to ambiguity based on an expansive reading of a dictionary definition. But by enacting this particular four

- word provision, commenters noted that Congress conveyed additional information about the type of "sources" it intended to bring within Section 111(d). Commenters said comparison with neighboring provisions also provides a contextual clue to the range of "stationary sources" covered by Section 111(d). Commenters noted, despite cross

- referencing Section 112 for exclusionary purposes, Section 111(d) does not incorporate the definition of "major source" from this neighboring Clean Air Act provision. Commenters said that term, as used in Section 112, expressly allows the aggregation of sources "within a contiguous area" and
is t hus broader than the disaggregated stationary sources referred to in Section 111(d). See 42 U.S.C. section 7412(a)(1). Commenters said this contextual comparison bolsters the conclusion that Congress did not intend to authorize regulations aimed at the ent ire network of energy

-259 producing, transmitting, and consuming entities and locations as such. Commenters stated, instead, regulations must target a category of similar, individual sources and speak in terms of what they must do to reduce emissions. Furtherm ore, commenters asserted that Section 111(d)'s instruction that regulations "take into consideration, among other factors, the remaining useful life of the existing source to which such standard applies," 42 U.S.C. section 7411(d) (emphasis added), shows t hat regulations must speak in terms of individual sources. Commenters said there is, after all, no single "useful life" of the power grid or nationwide set of power plants as a whole. Commenters stated, in this case, the proposed rulemaking sets aside the long

- recognized meaning of Section 111(d) and seeks to regulate the entire network of energy production, transmission, and consumption. See, e.g., 79 Fed. Reg. at 34,925 ("Instead, the EPA is proposing to establish state emission performance goals for the collective group of affected EGUs in a state ... ." (emphasis added)); Id. at 34,833 ("this proposal lays out state

- specific CO2 goals" (emphasis added)). Commenters noted that these proposed regulations say nothing about the "performance standards" and me thods for implementation and enforcement at individual stationary sources. Commenters said also illustrative of the mismatch between the statutory authorization and the proposed rule is the Notice's lack of any discussion of each source's "useful
life." Co mmenters stated that the proposed rulemaking notes the "general" rule that "remaining useful life and other facility

- specific factors are relevant for emission guidelines in which the EPA specifies a presumptive standard of performance that must be fully a nd directly implemented by each individual existing source within a specified source category." Id. at 34,925. Commenters said despite acknowledging that standard approach for complying with the terms of Section 111(d), "[i]n these proposed guidelines ... the agency does not take that approach." Id. Commenters noted, instead, because EPA reinterprets the statute to allow regulation aimed at "the collective group" of power plants, the Agency would defer all consideration of remaining useful life to the State s as they implement EPA's mandate. Id. at 34,925

- 26. Commenters stated, in this fashion, when considered against the text and context of Section 111(d), the Agency's proposed rulemaking emerges as an unprecedented expansion of the statute, and one largely divorced from text and past practices. Commenters said recognizing that context can limit the scope of a statutory term to prevent an expansion of federal law has become routine at the Supreme Court. E.g., Bond v. United States, 134 S. Ct. 2077, 2091 (2014 ) ("We are reluctant to ignore the ordinary meaning of 'chemical weapon' when doing so would transform a statute passed to implement the international Convention on Chemical Weapons into one that also makes it a federal offense to poison goldfish."). Moreo ver, commenters said the Court recently emphasized that long

- standing agency practice weighs against reading a statute in a novel way to expand regulatory power: "When an agency claims to discover a long

- extant and unheralded power to regulate 'a significa nt portion of the American economy' ... we typically greet its announcement with a measure of skepticism." UARG, 134 S. Ct. at 2444 (quoting FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 159 (2000)). Commenters stated, if anything, the newly disco vered powers on which the current proposed rulemaking relies are more sweeping than those at issue in UARG. Commenters noted, by seeking to regulate the entire network of electrical production, transmission, and consumption as a single unit, the proposed r egulations would use a limited provision of the CAA to reach every producer, transmitter, and consumer in 49 States over the coming 16 years. Commenters stated that the260 instant proposed rulemaking threatens precisely the type of expansion beyond congressio nal
authorization that the Court has declined to allow.

Commenters stated that by attempting to expand BSER, and the associated Building Blocks, beyond the affected source category units, EPA illegally seeks to regulate the electric power transmission syst em as a whole.

Response 6 : We disagree that we are illegally seeking to regulate the electric power transmission system as a whole. Our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not require states or sources to implement the BSER. Moreover, these emission guidelines provide states with the flexibility to establish, implement, and enforce standards of performance and do not intrude on the regulatory domain of FERC. It
cannot be said that becau se environmental requirements may have an effect on the wholesale energy market that the EPA is therefore intruding into energy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Congress expressly identified power plants as

a pr iority source category for regulation under CAA section 111.

Comment 7 : Commenters stated that their review of EPA's proposed Clean Power Plan and the accompanying Regulatory Impact Analysis and Technical Support Documents leads them to conclude that the proposed rule is ill

- founded and untimely. Commenters stated that the ru le should be limited to "inside the fence" emission reductions similar to the 2011 energy efficiency guidance EPA has issued for Best Available Control Technology (BACT) reviews of major new

sources.

Commenters stated that Section 111(d) provides EPA with narrow authority to set emission standards based solely on emissions reductions that can be achieved inside the fence line. Commenters stated, as such, only the reductions resulting from actions taken under EPA's proposed building block one may lawfully b e recognized. Commenters stated that building blocks two through four, as proposed by the agency, are outside the fence line and the agency does not have the expansive statutory authority to recognize them as the best system of emission
reduction.

Commente rs stated and concurred that the proposed rule mandates state "goals" that go far beyond setting standards on the affected sources, employing a "Best System of Emission Reduction" extending its reach beyond the "fenceline" of affected sources.

Commenters s tated that Section 111(d) only authorizes standards of performance on individual, affected sources, and the proposed rule mandates state goals that go far beyond setting standards on the affected sources, employing a best system of emission reduction which extends its reach beyond the fence

- line of its affected sources, and including renewable and energy efficiency in goal

- setting infringes on state and local authority.

Commenters stated that the Clean Air Act does not allow EPA to regulate greenhouse gas

e missions from existing coal

- fired power plants under Section 111(d) because coal

- fired power plant are already regulated by EPA under Section 112 of the Clean Air Act. Commenters explained that even if EPA believes it has specific authority to regulate Sec tion 111(d) allows261 EPA to set emission standards based solely on emission reductions that can be achieved inside the fence line. Commenters noted, however, this proposal requires substantial reductions outside
the fence.

Commenters stated the guidelines an d the subsequent state

- developed standards for stationary sources under Section 111 of the Clean Air Act should begin and end with the regulated source itself. Commenters asserted that an NSPS or existing source guideline must apply to individual

sources, must be based on reductions that an individual source can achieve, and must be based on the use of a system that is incorporated into the design of the source. Commenters added that of the four building blocks that EPA proposes as part of its system of an emission reduction, under its option 1 approach, only the first building block can be applied by individual sources. Commenters remarked that the other three measures are out of the control of any particular regulated source and are predicated on actions b y others. Commenters closed, stating that this is inconsistent with EPA's obligations under the Clean Air Act.

Response 7 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

Comment 8 : Commenters stated the EPA has interpreted BSER too broadly; Section 111 applies
to sources within a discrete identified source category; the EPA may not create different standards for these sources based on their location, i.e., the EPA cannot set different state goals for the same types of sources; and the EPA's proposed rule to establish CO2 emission guidelines for existing EGUs attempts to regulate the entire energy sector under Section 111(d). Commenters explained that Section 111 defines a standard of performance as "standards for emissions of air pollutants which reflects the degree of emission lim itation achievable through the application of the best system of emission reduction [or BSER] which (taking into account the cost of achieving such reduction and any non

- air quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated." Commenters continued, stating that BSER is a source

- based standard and is limited to systems of emission reduction that can be implemented on

- site by the affected facility, and thus, a standard of performance under FCAA Section 111(d) must be based on a set of emission controls that can be implemented at the source that is subject to regulation. (See e.g. Portland Cement Association v. Ruckelshaus, 486 F2d 375 (D.C. Cir. 1973).) Commenters argued that BSER cann ot be read as broadly as the EPA proposes for existing sources, explaining
that FCAA Section 111(d) directs the EPA to prescribe regulations to "establish standards of performance for any existing source of any air pollutant." Commenters contended that the EPA is not setting standards of performance for existing sources when it looks outside the fence line of the EGUs to establish 'building blocks' based on renewable energy and energy efficiency programs and uses them to establish a state goal or standard. Commenters stated that a standard of performance that requires emission reductions from other sources and even other source categories is fundamentally inconsistent with the plain language of the FCAA, and historically,
the EPA has limited BSER to technolo gy

- based emission controls that could be installed and implemented at the facilities subject to regulation. Commenters asserted that EPA offers no262 reasonable explanation for abandoning that approach in this rulemaking. Commenters cited the TCEQ and PUCT st atements to EPA that it did not have broad discretion under the FCAA in setting the standards in response to EPA questions for States on Section 111(d) plan requirements. (TCEQ Attachment 2, Comments on CO2 Emissions for EGUs, Section 111(d) of
the Clean A ir Act, Letter from Richard A. Hyde, P.E., Executive Director TCEQ, and Brian H. Lloyd, Executive Director, PUCT to Gina McCarthy, EPA Administrator, January 14, 2014), and the TCEQ and PUCT informed the EPA that the flexibility given to states in developi ng plans to meet the standards of performance should not, and legally cannot, be used in setting BSER. Commenters cited "[Section] 111(d) limits EPA to establishing, 'standards of performance for any existing source for any pollutant ... if such existing s ource were a new source. Commenters said establishment of the performance standard must be based upon BSER on a source specific basis. Commenters said a 'system' standard may face additional practical and legal challenges; however, a 'system' approach shou ld be allowed as a part of any state's plan on how it will apply the standard of performance to any particular source under the plan." Commenters remarked that the EPA is considering coal and gas

- fired EGUs collectively in setting the state goals under
Sec tion 111(d), and in the proposed NSPS (79 FR 1430) under Section 111(b), the EPA established that coal and NGCC units are fundamentally different and cannot be combined for purposes of establishing a standard of performance. Having done so, commenters expl ained, the EPA cannot take an inconsistent position by combining them in setting a standard under a 'system' approach for existing sources, and further, ceasing operation of coal

- fired units cannot be a 'system of emission reduction' for coal

- fired EGUs. C ommenters believed requiring a 70% dispatch rate under Block 2 for all NGCC facilities will have the EPA's desired effect of shutting
down coal

- fired units, and it is not economical to operate a coal

- fired EGU at partial capacity
and this would force shut

- down of these units. Commenters noted that the EPA acknowledges this fact in the proposal, estimating that 46

- 49 GW of coal

- fired EGUs will retire by 2020 as a
result of the rule under a state

- by

- state approach. Commenters said, however, the EPA has not shown how forcibly shutting down a source appropriately considers the 'remaining useful lives' of these sources, as Section 111(d)(1) allows. Commenters believed that by effectively regulating one source category out of existence through re

- dispatch, incre asing renewable energy production and demand side energy efficiency improvements, the EPA exceeds its delegated authority by making energy policy rather than environmental policy. Commenters stated that the state goals established in this section 111(d) pr oposed rule recognizes the diverse nature of the energy production and use section of the economy in attempting to look beyond the fence

- line for reductions in CO2. However, beyond the identified source categories of fossil fuel

- fired EGUs, commenters asse rted that the EPA has no jurisdiction over the other identified programs. Commenters said these are generally exclusively under state control through state utility regulators. Commenters continued, stating that the proposed rule is arbitrary, capricious an d unlawful because it will require states to regulate additional sources, including commercial buildings and residences, for mandatory reductions in order to achieve the emission reductions identified in Building Blocks 2, 3, and 4. Commenters explained th at the EPA unlawfully directs the states to impose standards of performance on affected entities that are not fossil fuel

- fired EGUs, and in proposed new 40 CFR Section 60.5820 (79 FR 34956), the EPA proposes to define "affected entities" broadly to includ e affected EGUs "or another entity with obligations under263 this subpart for the purpose of meeting the emission performance goal requirements in these emission guidelines." Specifically, commenters remarked, the EPA directs the states to identify
"the state emission performance level for affected entities that will be achieved through implementation of the plan" and to demonstrate "that each emission standard is quantifiable,

non

- duplicative, permanent, verifiable, and enforceable with respect to any affecte d entity," and as a practical matter, by incorporating these blocks into the BSER analysis, the EPA has proposed state emission reduction targets that cannot be achieved by imposing emission reduction requirements on fossil fuel

- fired EGUs alone. Commenter s contended that this is not flexibility, but instead the EPA imposing on the states performance requirements that are outside the EPA's authority to do. Commenters believed the EPA's entire approach to identifying BSER based upon individual states is arbi trary, and the EPA's proposed rule is more akin to 50 different state plans than the establishment of national standards for existing units within source categories regulated under Section 111(b). Commenters argued that the EPA does not have the authority
under Section 111(d) to establish a different standard of performance on a state

- by

- state basis; the section 111(d) statutory directive applies to 'existing sources'; commenters noted that state plans must establish a standard of performance, based on BSER , "for any existing source;" commenters said the FCAA definition of "existing source" is any stationary source other than a new source;" and the term "stationary source" is also clearly defined in statute as "any building, structure, facility, or installat ion which emits or may emit any air pollutant..." Commenters believed Section 111(b)(2) gives EPA the authority to distinguish among classes, types, and sizes within categories of new sources for the purpose of establishing standards; however, the
authorit y to distinguish among states for the purpose of establishing standards was clearly not granted to EPA for new sources, and that authority was also not granted to EPA for existing sources. In fact, commenters remarked, the limitation on EPA to establish st andards of performance for existing sources are linked to limitations used to establish performance standards for new sources, specifying that section 111(d) limits the Administrator to "establishing standards of performance for any existing source for any air pollutant "... to which a standard of performance under this section would apply if such existing source were a new source..." Commenters posited that the EPA has ignored the clear source

- specific intent of this section and proposes state

- specific goa ls instead, based on what the EPA proposes as achievable by application of BSER to the energy generation mix of that state and commenters stated that Texas's goal of 791 lbs CO2/MWh is not based on what existing fossil fuel

- fired EGUs can achieve, but rath er a complicated EPA assumption of the state's future energy generation capabilities and energy efficiency efforts. Commenters believed the EPA has not asserted clear statutory authority to establish state by state standards of performance under section 11 1, and there is no ambiguity in the statute that would defer to the EPA the authority to make such a strained interpretation of the FCAA. Commenters quoted the United States Supreme Court: "We are not willing to stand on the dock and wave goodbye as EPA em barks on this multiyear voyage of discovery." (Utility Air Regulatory Group v. EPA, 134 S.Ct. 2427 (2014), p. 23.)

Commenters were concerned that EPA's Clean Power Plan as proposed may not rest on the most secure legal foundation and may fall outside of t he authority of Section 111(d) in the following areas as listed below, and therefore invite legal challenge that may delay implementation of the rule causing further uncertainty for regulated entities such as: the definition of "source";264 definition of "sta ndard of performance" on the resulting "best system of emissions reduction" (BSER); the definition of "adequately demonstrated"; and whether EPA has fully taken "into account the cost of achieving such reduction and any non

- air quality health and environme ntal impacts and energy requirements." Commenters stated that if not based on a solid legal foundation, the proposed rule may result in the consumption of significant resources and expenses while promoting regulatory uncertainty in an industry which must r ely on long range planning to remain viable.

Commenters stated that EPA has exceeded its authority and intruded on the authority of other agencies and of the States by attempting to regulate "beyond the fence line" of the real source category at issue coal

- fired EGUs in a manner tantamount to regulating electric power generally. Commenters cited Electric Power Supply Association v. FERC, in which the District of Columbia Circuit held that "states retain exclusive authority to regulate the retail market" for the sale and delivery of electricity.(753 F.3d at 220, 221, 224 (holding that FERC's attempt to "regulat[e] consumption by electricity customers is a regulation of retail, not wholesale, activity," impinging on matters "exclusively within state control" t hereby rendering FERC's attempt to regulate energy demand unlawful). Commenters noted, if FERC which does have important duties in regulating the power grid lacks authority to regulate consumer efficiency as held in Electric Power Supply Association, then EPA must surely lack authority to regulate the same thing in building block four. Commenters held that EPA similarly must lack authority to impose building blocks two and three, and concluded, stating it is simply not plausible that Congress placed these immense and unexpected powers in the definition of BSER in section 111(d) of the CAA. (See Whitman v. Am. Trucking Associations, 531 U.S. 457, 468 (2001) ("Congress, we have held, does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions "it does not, one might say, hide elephants in mouse holes."))

Response 8 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history. We disagree that we are expanding our authority to include regulating electric power generally. Our emission guidelines simply reflect a n achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. Moreover, these emission guidelines provide states with the flexibility to establish, implement, and enforce
standard s of performance and do not intrude on the regulatory domain of FERC or the states. It cannot be said that because environmental requirements may have an effect on the wholesale energy market that the EPA is therefore intruding into energy regulation. Cert ainly, in the legislative history of the 1970 CAA Amendments, Congress expressly identified power plants as a priority source category for regulation under CAA section 111. Finally, with respect to the building blocks, as we explain in sections V.A. and V. B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the application of the BSER, and do not in themselves require states or sources to implement the BSER. That is, EPA is responsible for determining the level of emission limitation from the source category, while states have the responsibility of assigning emission requirements to their sources that will ensure their achievement of that level of emission limitation. States may fulfil their responsibility by265 estab lishing emission standards or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emission reduction measures, including measures that are not part of the BSER. Finally, we note that the final rule does not include
demand

- side energy efficiency

– building block 4

– as a component of BSER. Therefore, we are not responding to comments regarding its inclusion as a building block.

Comment 9 : Commenters stated that the possibility of imposing the Propose d Rule through FIPs is a hollow one given commandeering doctrine and given the limited regulatory reach that EPA has to act beyond the fence line in connection with building blocks two through four.

Commenters stated that EPA's approach to regulating "outs ide the fence" is contrary to the Supreme Court's recent decision in UARG, supra, 134 S. Ct. at 2444, stating the Court explained that, "[w]hen an agency claims to discover in a long

- extant statute an unheralded power to regulate a significant portion of t he American economy, we typically greet it with a measure of skepticism." Ibid. Commenters noted, further, the Court "expect[s] Congress to speak clearly if it wishes to assign to an agency decisions of vast economic and political significance." Ibid.
Comm enters argued that performance standards do not and cannot apply to entities not within the source category of affected EGUs, yet EPA's proposal would require application to other sources, or else it would be impossible for New Jersey to meet the 2030 goal established by
EPA.

Commenters stated that even in cases where EPA has allowed existing sources to comply with emission guidelines by using beyond

- the

- fenceline mechanisms such as averaging and trading, the agency has based the stringency of these guideli nes exclusively on systems of emission reduction that are well within the fenceline. Commenters added that even assuming that section 111(d) could be read to allow EPA to exercise the expansive, newfound authority it now claims, the dictates of statutory c onstruction require that such significant authority be clearly established in the statutory language. Commenters said, in this case, neither the statute nor EPA's other interpretations of section 111 (including at least one that was made contemporaneously with the Proposed Rule) support such an expansive view of EPA's authority. Commenters noted, consequently, EPA's interpretation that it can base its mandatory emission guidelines on beyond

the

- unit measures is unreasonable and should be withdrawn.

Response 9 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, a nd legislative history.

Comment 10 : Commenters stated the Supreme Court recently considered whether EPA permissibly interpreted the CAA to provide that a source may be required to obtain a PSD or Title V permit on the sole basis of its potential greenhouse

- gas emissions. Commenters stated in finding EPA's interpretation unreasonable under Chevron, the Court stated: EPA's interpretation is also unreasonable because it would bring about an enormous and transformative expansion in EPA's regulatory authority wi thout clear congressional authorization. When an agency claims to discover in a long

- extant statute an unheralded power to regulate "a significant portion of the American economy," Brown & Williamson, 529 U.S., at 159, 120 S. Ct. 1291, we typically greet266 i ts announcement with a measure of skepticism. We expect Congress to speak clearly if it wishes to assign to an agency decisions of vast "economic and political significance." Utility Air Regulatory Group, 573 U.S. at 2427. Commenters contended that the tex t of the CAA simply does not provide the authority to regulate entities outside of the affected source categories but that EPA nonetheless argues that the proposal is reasonable, and EPA claims that applying BSER on a statewide basis is fully consistent wi th the principles of federalism because it provides each state with "significant flexibility" to take local circumstances and state policy goals into account in determining how to reduce emissions. [EPA Legal Memorandum, pg. 18] Commenters
remarked that th e rule does not allow the flexibility it claims but rather, this agency

- issued regulation would impose state

- specific CO2 reduction targets that preclude freezing, relaxing, or repealing cap and trade programs, renewable energy quota, and demand reduction policies, and moreover, each "SIP

- like" state plan requires federal approval and allows EPA to enforce a state standard if the state does not. 42 U.S.C. section 7411(d)(1)(B). However, commenters explained, because state plans must be submitted to EPA for approval and become federally enforceable, EPA is attempting to assert a newfound authority to regulate the activities of numerous entities that do not emit CO2 or any other regulated pollutant under the Clean Air Act. Commenters believed that Congress did not intend such a result in promulgating the CAA. Commenters quoted, similar to the reasoning in UARG, allowing the regulation of beyond the fence line sources would render the CAA "unrecognizable to the Congress that designed" it. Utility Air Regulatory Group, 573 U.S. at 2444. Commenters stated, accordingly, EPA's reasoning in support of its authority to impose such a far

- reaching regulation is fundamentally flawed.

Commenters stated and concurred that EPA's interpretation of BSER includes Building Block actions that take place outside the fence line of the affected power plant and are outside of the control of the plant operator. Commenters argued that this regulatory approach far exceeds EPA's authority under the CAA for several reasons, explaining firs t, the statute and previous EPA rules make it clear that the emission control systems that EPA may consider to be BSER include only those that can be implemented at and by the source, and consequently, EPA may not
consider re

- dispatch, RE, nuclear energy, or EE to be BSER because these measures are not part
of an inside

- the

- fence system of emission reduction that is within the source's control. Second, commenters contended, EPA may not set the BSER based on re

- dispatch from coal units to natural gas combine d cycle (NGCC) because the CAA clearly requires continuous emission
reductions

- which would not necessarily occur under a re

- dispatch approach to reducing
emissions from coal

- fired EGUs, and third, EPA's alternative interpretation of BSER

- that
reduced uti lization constitutes BSER

- is unreasonable and would represent an unprecedented departure from the intent and spirit of the Act.

Commenters stated EPA's "outside the fence" proposals are inconsistent with the statutory plan and argues (verbatim) against th ree justifications EPA offers for why "outside/beyond the fence" measures can be included: (1) CAA Section 111 provisions "do not by their terms preclude the BSER from including" them; (2) "affected sources may themselves implement the measures in building blocks 2, 3, and 4;" and (3) "re

- dispatch measures in building block 2 are limited to267 affected sources." Id. at 34889/1. Commenters stated that the first justification resurrects a position that has been soundly rejected. Commenters noted, because a statu te does not expressly preclude an agency from taking certain actions does not mean, as the CO2 guidelines appear to suggest, that the agency has been granted authority to take those actions: "We refuse, once again, to presume a delegation of power merely b ecause Congress has not expressly withheld such power." Ethyl Corp. v. EPA, 51 F.3d 1053, 1060 (D.C. Cir. 1995). Commenters said nor does the absence of a specific preclusion create a gap that the agency may fill under Chevron step two analysis. "Were cour ts to presume a delegation of power absent an express withholding of such power, agencies would enjoy virtually limitless hegemony, a result plainly out of keeping with Chevron and quite likely with the Constitution as well." Id. (emphasis in original; cit ations omitted); see, e.g. Michigan v. EPA, 268 F.3d 1075, 1081 (D.C. Cir. 2001) ("EPA is a federal

agency

- a creature of statute. It has no constitutional or common law existence or authority, but only those authorities conferred upon it by Congress."); Atlantic City Elec. Co. v. FERC, 295 F.3d 1, 8 (D.C. Cir. 2001)("In the absence of statutory authorization for its act, an agency's "action is plainly contrary to law and cannot stand.'"). Commenters noted the other reasons for adopting building blocks 2, 3, and 4, viz., "affected sources may themselves implement" those
measures and "re

- dispatch measures in Building block 2 are limited to affected sources," 79 Fed. Reg. at 34889/1, are equally unpersuasive as justifications for adopting outside the fence

st andards. Commenters said the legal question for the instant matter is not, as EPA seems to think, whether compliance is sufficiently far in the future to "relieve any pressure on grid reliability," 79 Fed. Reg. at 34899/3 (though obviously grid reliability is crucial), but, rather, whether the CAA gives EPA authority to promulgate outside the boundary rules requiring implementation by third parties, not existing sources. See Barnhart v. Sigmon Coal Co., 534 U.S. 438, 462 (2002)("Congress, however, did not d elegate authority to the Commissioner to develop new guidelines or to assign liability in a manner inconsistent with the statute."). Commenters noted, as previously discussed, building block 2 resides on implementation by third parties not subject to EPA's authority, but whose tariffs, including any changes to currently

- approved dispatch protocols to accommodate the CO2 guidelines, fall within FERC's exclusive jurisdiction. Commenters said it follows that adoption of building block 2, which depends on
actio n by ISO/RTOs, would exceed EPA's authority.

Commenters stated that Section 111 (d) limits the types of existing sources for which a standard of performance can be established to those already regulated under section 111 (b) (if the existing source was new ); however, EPA does not currently regulate, nor has proposed to regulate, "beyond

- the

- unit" participants in the power market under section 111(b). Commenters said nor has EPA proposed to regulate CO2 emissions from non

- fossil fuel

- fired EGUs under
section 111 (b), and in fact, at the present time, EPA does not regulate CO2 emissions from coal or natural gas

- fired EGUs under section 111(b).

Commenters stated and concurred that EPA lacks the authority to set emission guidelines under CAA Section 111(d) base d on beyond

- the

- unit measures outside the EGU source category, and EPA may not set standards based on CO2 control measures that are undertaken outside the268 boundaries of a particular EGU, including re

- dispatching from coal to natural gas combined cycle (NGC C) generation, increased use of renewable, nuclear, and end

- use energy efficiency.

Commenters stated that Building Blocks 3 and 4 clearly fall far outside the fence line and thus are invalid as a means for establishing North Carolina's emission standard.

C ommenters stated that Section 111(a) includes the definitions EPA must use when reading later portions of Section 111 of the CAA, including "standard of performance"42 U.S.C. section 7411(a)(1) (emphasis added). Commenters stated that logically, this defin ition requires BSER to control emissions from a particular source, and not to control all tangentially related industrial actors, or consumers of the affected source's end product. Commenters added that the definition
discusses the emission limitations ach ievable through "application of the best system of emission reduction." Commenters said this must mean application of the BSER to an affected source. Commenters observed that if the BSER could be applied beyond a particular source, then there is no logical reason to have specific systems of emission reduction for different source categories.

Commenters stated that Section 111(d) Proposal Constitutes an Unlawful Reorganization of State Energy Economies, and Section 111(d)'s text is clear: it authorizes EPA t o establish a procedure under which states will submit to it a plan that "establishes standards of performance for any existing source.

. . ." C.A.A. Section 111(d)(1)(A), 42 U.S.C. 7411(d)(1)(A) (emphasis added). Commenters stated that only the first "bu ilding block" from which EPA derives its proposed "state goals," heat

- rate efficiency improvements, resembles the "inside

- the

- fenceline" measures authorized by Section 111(d). And even in the case of efficiency improvements, commenters said there is a good case that EPA is overstepping its authority. Commenters continued (verbatim), the Section 111(d) proposal violates the core tenet of administrative law that "[t]he definition of words in isolation .

. . is not necessarily controlling in statutory

construc tion. A word in a statute may or may not extend to the outer limits of its definitional possibilities." e.g., Dolan v. U.S. Postal Serv., 546 U.S. 481, 486 (2006). Rather, commenters said statutory terms must be construed in light of the text of the provis ion as a whole, its context, its purpose, and relevant precedent and authority. Id. Furthermore, commenters said agencies cannot ground a claim to regulatory power on the absence of express prohibition. e.g., Ethyl Corp. v. EPA, 51 F.3d 1053, 1060 (D.C. C ir. 1995). Commenters asserted that the ostensibly

open

- ended "definitional possibilities" of the word "system" cannot support EPA's attempt to override states' policy choices and impose energy and natural

- resource policy on them.

Commenters found that the proposed regulations fail to conform to the 111(d) requirement of reductions from the "SOURCE", that the proposed Best System of Emission Reduction (BSER) goes far beyond the means available to the "source" for reductions, and in fact proposes to turn
the current economic dispatch model into an environmental dispatch model.

Commenters stated that the [Clean Air] Act's use of term "system" in the context of emissions controls is not isolated to Section 111. Commenters said, in fact, this terminology is used in an analogous manner elsewhere in Title I, that being the definition of "best available control technology," or BACT, explaining that like a "standard of performance," BACT is an "emission limitation" which the Administrator (or permitting authority), " taking into account energy,269 environmental, and economic impacts and other costs, determines is achievable ... through application of production processes and available methods, systems, and techniques." [CAA Section 169(3) (emphasis added)] Commenters stat ed, indeed, BACT and "standard of performance" are intrinsically linked by the Act, as the application of BACT cannot "result in emissions of any pollutants which will exceed the emissions allowed by any applicable standard established pursuant to section 7411" (i.e., Section 111). [Id.] Commenters noted that until this point, EPA has consistently and correctly interpreted "systems" in the definition of BACT to refer only to control techniques that can be applied directly to "each individual new or modified affected emissions unit and pollutant emitting activity." ["New Source Review Workshop Manual" (draft), October 1990 (p. B.4). See also 40 CFR 52.210)].

Commenters stated that EPA's proposed emission reduction targets are unlawful because they are
not bas ed on an adequately demonstrated best system of emission reduction ("BSER") for fossil
fuel

- fired EGUs. Further, commenters remarked, to the extent that there is/any ambiguity in Section 111(d), they did not believe that EPA can use that ambiguity to regul ate the entire energy

sector.

Commenters stated and concurred EPA's justifications for not stopping at the fenceline are specious and contrary to the statutory text. See Proposal, 70 Fed. Reg. at 34,856. Commenters said EPA argues that the word "system" in the statutory phrase "best system of emission reduction" is broad enough to encompass these "outside

- the

- fenceline" measures. See Id. at 34,885

- 86 (relying on dictionary definition of "system" as "[a] set of things working together as parts of a mechanism or interconnecting network"). But commenters said Section 111 does not actually grant EPA authority to regulate a "system." Rather, commenters noted the statute provides that EPA and the states may set standards for emissions based on "the application of the best system of emission reduction." 42 U.S.C. section 7411(a)(1) (emphasis added). Commenters stated that this statutory phrase directs the agency (in the new

- source, 111(b) context) or the state (in the existing

- source, 111(d) context) to establish st andards of performance by applying the "system of emission reduction" to the individual sources with the source category being regulated. (In keeping with this, the 111(a) definition section defines "new source" and "stationary source" immediately after de fining "standard of performance." Id. section 7411(a)(2), (3).) Commenters continued, stating that the term "standard of performance" itself can only be
understood in context of a source

- specific limit, as it is defined as "a requirement of continuous
emis sion reduction, including any requirement relating to the operation or maintenance of a source to assure continuous emission reduction." See CAA section 302(l), 42 U.S.C. section 7602(l) (emphasis added). Commenters stated, indeed, the meaning of the term "application" in the context of a standard for emissions recurs throughout the Act and can only be understood in the context of an individual source. Commenters said, considering again Section 169(3) of the Act, defining the "best available control technol ogy" ("BACT") that must be applied to new or modified sources under the prevention of significant deterioration program, the Act provides that "[i]n no event shall application of [BACT] result in emissions of any pollutants which will
exceed the emissions allowed by any applicable standard established pursuant to" Sections 111 or 112. 42 U.S.C. section 7479(3) (emphasis added). Commenters noted, similarly, the definition of lowest achievable emission rate ("LAER") for the nonattainment new source review pro gram270 provides that "in no event shall the application of [LAER] permit a proposed new or modified source to emit any pollutant in excess of the amount allowable under applicable new source standards of performance." CAA section 171(3), 42 U.S.C. section 75 01(3) (emphasis added). Commenters said, put another way, whatever the "best system" is, it must be a system that reduces emissions from a particular source "to which a standard of performance under this section would apply if such existing source were a n ew source." 42 U.S.C. section 7411(d)(1)(A)(ii). Commenters stated that even if EPA did have authority to regulate a "system," its proposed regulation here would fail. "The definition of words in isolation . . . is not necessarily controlling in statutory construction. A word in a statute may or may not extend to the outer limits of its definitional possibilities. Interpretation of a word or phrase depends upon reading the whole statutory text, considering the purpose and context of the statute, and
consult ing any precedents or authorities that inform the analysis." Dolan v. U.S. Postal Serv., 546 U.S. 481, 486 (2006). Commenters noted, in the context of emission control, the Clean Air Act displays a consistent and clear pattern of referring to "systems" as source

- specific measures.32 Commenters said "Best system of emission reduction" as used in Section 111 falls within the statute's norm, rather than the exception: "systems" limiting emissions are source

specific unless indicated otherwise. Commenters said the Section governs the issuance of performance standards, and "standard of performance" is defined at section 7602(l) to mean "a requirement of continuous emission reduction, including any requirement relating to the operation or maintenance of a source t o assure continuous emission reduction." Commenters said the only example given in this definition is expressly source

- specific. Commenters mentioned, in the few instances where the Clean Air Act intends the term "system" to refer to a geographically dispe rsed "set of things," it does so expressly, as in Section 319(a) of the Act, directing the Administrator to "promulgate regulations establishing an air quality monitoring system throughout the United States." 42 U.S.C. section 7619(a). Commenters continued that in this regard, EPA's attempt to take the term "system" out of context is akin to the situation that the Supreme Court faced in MCI Telecommunications Corp. v. American Telephone & Telegraph Co., 512 U.S. 218 (1994). Commenters noted, there, the Supr eme Court rejected the agency's position that its decision to make tariff filing optional for all nondominant long

- distance carriers was within its statutory authority to "modify any requirement" under 47 U.S.C. section 203. Id. at 225. Despite the seeming breadth of the term "modify," commenters stated the court determined that the word's plain meaning is to make a moderate change, whereas the challenged order made a "radical or fundamental change." Id. at 228

- 29. Commenters asserted, instead, by
"eliminat [ing a] crucial provision of the statute for 40% of a major sector of the industry," the agency had engaged in "a fundamental revision of the statute, changing it from a scheme of rate regulation in long

- distance common

- carrier communications to a scheme o f rate regulation only where effective competition does not exist. That may be a good idea, but it was not the idea Congress enacted into law in 1934." Id. at 231

- 32. The order "is effectively the introduction of a whole new regime of regulation," Id. at 2 34. Commenters posited that by going beyond source

level, inside

- the

- fenceline measures, EPA's proposal would expand 111(d), and specifically the underlying statutory term "best system of emission reduction," into "a whole new regime of regulation": one th at regulates not only pollutant emission by sources, but a state's entire resource and energy sectors. And notably, commenters remarked, courts have in the past rejected a similar271 attempt by EPA to re

- define the fundamental level at which Section 111's "be st system of emission reduction" applies by disaggregating that concept from the concept of an individual source as defined by statute. In ASARCO Inc. v. EPA, 578 F.2d 319, 326

- 27 (D.C. Cir. 1978), the D.C. Circuit invalidated EPA regulations interpreting Section 111(a)(3)'s definition of "stationary source" to "allow a plant operator who alters an existing facility in a way that increases its emissions to avoid application of the NSPSs by decreasing emissions from other facilities within the plant." Id. at 325. EPA argued that the broad statutory definition gave it discretion to define a stationary source as either a single facility or a combination of facilities." Id. at 326. (This type of aggregation is known as the "bubble concept," e.g., Id. at 321.) C ommenters stated that the court disagreed, holding that the "regulations plainly indicate that EPA has attempted to change the basic unit to which the NSPSs apply . . . ." Id. at 326

- 27 (emphasis added). (See also Id. at 322: "The basic controversy in the cases before us concerns the determination of the units to which the NSPSs apply."). Commenters said, in the current Section 111(d) proposal, EPA takes the even more egregious action of changing the field of regulation from sources to a state's entire powe r sector. Commenters asserted, given that EPA lacks the authority to expand "performance standards" to apply collectively to all regulated facilities at a single industrial site, it is not credible to suggest that the "best system of emission
reduction" un derlying such standards can encompass measures adopted throughout the state's entire power sector.

Commenters remarked that States establish "standards of performance for any existing source . . . ."(42 U.S.C. 7411(d)(1)(A) (emphasis added).); "Standard of performance" is defined as "a standard for emissions of air pollutants which reflects the degree of emission limitation achievable through the application of [BSER]."(42 U.S.C. 7411(a)(1) (emphasis added)); and thus, the terms of section 111 clearly requ ire that any eligible "system of emission reduction" be capable of "application" to the "existing source." Commenters argued that this language is a clear indication that EPA may only consider at

- the

- unit systems of emission reduction under section 111, an d similarly, because a standard of performance must be established "for any existing source," each component in the definition of "standard of performance" must also, logically, be "for any existing source." Commenters stated that as relevant here, the "be st system of emission reduction which . . . has been adequately demonstrated" must be a system that has been adequately demonstrated "for any existing source," and a system cannot be considered "adequately demonstrated" for a source if the implementation o f that system depends on the actions of third parties that are not part of the source or under the source's control. Commenters remarked that Section 111(h), which authorizes EPA to establish design, equipment, work practice, and operational standards, cle arly evinces congressional intent to limit EPA's BSER
determination to at

- the

- unit systems of emission reduction and offers, for example, where EPA has determined that prescribing or enforcing a numerical NSPS would not be feasible, EPA is
authorized to is sue a design, equipment, work practice, or operational standard "which reflects the best technological system of continuous emission reduction."(Id. 7411(h)(1) (emphasis added)) Commenters added that such a standard must "assure the proper operation and

m aintenance of any such element of design or equipment,"(Id.) and the phrase "technological system" and "element of design or equipment" clearly evinces Congress' understanding that section 111 systems of emission reduction would be limited to at

- the

- unit s ystems. Commenters272 added that the statutory phrase "not feasible to prescribe or enforce a standard of performance" is defined in section 111(h)(2) as "any situation in which [EPA] determines that," inter alia, "a pollutant or pollutants cannot be emitted through a conveyance designed and constructed to emit or capture such pollutant, or that any requirement for, or use of, such a conveyance would be inconsistent with any Federal, State, or local law"(42 U.S.C. 7411(h)(2) (emphasis added)),
and Congress' u se of the phrase "conveyance designed and constructed to emit or capture [a] pollutant" strongly implies that Congress intended EPA to limit its BSER consideration to conveyances, devices, and other such at

- the

- unit features of design or equipment that cou ld be
used to reduce emissions.

Commenters stated that EPA's proposal is also unlawful because it would permit States to include in their implementation plans binding legal obligations on entities other than affected
fossil fuel

- fired EGUs. Commenters stat ed that a central component of the flexibility touted by
EPA is the so

- called "portfolio approach" that would permit States to comply with the emission reduction targets by "impos[ing] requirements on other affected entities (e.g., renewable energy
and dem and

- side energy efficiency measures) that would reduce CO2 emissions from the affected EGUs." 79 Fed. Reg. at 34,853. In other words, commenters noted, EPA would authorize States to implement Section 111(d) standards of performance by imposing binding lega l obligations on an entity simply because it could either replace fossil fuel

- fired electricity generation or reduce its own electricity consumption. Commenters contended that the proposed portfolio approach is unlawful because the Clean Air Act does not a uthorize EPA and the States to expand standards of performance under Section 111(d) beyond the source categories already subject to regulation under Section 111(b), and EPA cannot offer States the ability to regulate any generator or consumer of electricit y (i.e. the entire economy) simply because doing so provides for greater emission reductions than limiting regulations to the affected fossil fuel

- fired EGUs. Commenters contended that the plain language of Section 111(d) bars EPA's portfolio approach, exp laining that in enacting Section 111(d), Congress imposed a series of limitations on the authority of EPA and the States to regulate existing sources. Commenters pointed out that chief among them is that standards of performance may only be established for existing sources "to which a standard of performance would apply if such existing source were a new source." 42 U.S.C. Section 7411(d)(1). Further, commenters stated, EPA's assertion that its proposal to authorize a portfolio approach must be afforded def erence is incorrect. Commenters stated EPA asserts that "the terms of CAA section 111(d)(1) do not explicitly address whether, in addition to emissions limits on affected EGUs, State plans may include other measures for achieving the emission performance l evel, nor do they address whether entities other than affected EGUs may be subject to requirements that contribute to reducing EGU emissions." 79 Fed. Reg. at
34902. Commenters continued, explaining that given the broader context of Section 111, the lack

o f an explicit reference to a portfolio approach in Section 111(d) suggests that regulations should be limited to affected sources, not that EPA should expand regulations as it sees fit. UARG, 134 S. Ct. at 2442 ("[R]easonable statutory interpretation must account for both 'the specific context
in which

- language is used' and the broader context of the statute as a whole." Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997).). Commenters noted that the central regulatory focus of
Section 111 is on source ca tegories, and Congress prescribed a detailed process that EPA and the States must go through to impose regulations on a given source category: EPA must make a273 significant contribution endangerment determination for the pollutant and source category, EPA

mu st establish standards of performance for new sources, and only then may EPA and the States establish standards of performance for existing sources. 42 U.S.C. Section 111(b), (d). Commenters stated, when viewed in this broader context, the absence of a spe cific reference to the regulation of other source categories under Section 111(d) does not suggest a statutory gap. Commenters said, instead, it is fully consistent with the implicit understanding that Section 111(d) would only be applied to existing sourc es in a source category for which EPA had made an endangerment determination and established standards of performance for new sources. Thus, commenters concluded, EPA and the States are foreclosed from basing implementation plans on a portfolio approach th at imposes legal obligations on any entities other than the fossil fuel

- fired EGUs in the source categories covered in EPA's January 2014 proposal under Section 111(b) because these are the only source categories for which EPA has taken any action at all t o regulate GHG emissions under Section 111. Commenters asserted, unless and until EPA conducts a significant contribution endangerment determination and establishes standards of performance for new sources under Section 111(b), it cannot authorize States t o use Section 111(d) to impose binding legal obligations to reduce GHG emissions on nuclear electricity generators, renewable electricity generators, or electricity consumers. Further, commenters said it is unlikely that EPA could ever regulate GHG emissio ns from these sources categories under Section 111 because, as the Agency has recognized, they produce either zero

- or near

- zero emissions of CO2 and, therefore cannot contribute significantly to the endangerment of public health or the
environment. Commen ters concluded, thus, under Section 111, neither EPA nor the States have the authority to unilaterally impose emission reduction obligations on any existing sources other
than affected fossil fuel

- fired EGUs, the only source categories currently subject to regulation under Section 111(b).

Response 10 : To the extent this comment objects to the portfolio approach, which the EPA is not finalizing, the comment is moot. Otherwise, for the reasons discussed in section V.A. and V.B. of the preamble and in the Leg al Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

Comment 11: Commenters asked if EPA employs a portfolio appr oach, does Section 111(d) permit state plans that place enforceable requirements on entities other than EGUs. [79 Fed. Reg. 34830, at 34901

- 34903] Commenters stated that although EPA has not issued many rules under Section 111(d), [Id. at 34844] it has nev er interpreted "standards of performance for any existing source..." to apply to third party entities beyond the fence and this appears to be a tortuous reading of the statute and one that Congress likely did not intend.

Commenters stated that the langua ge is clear on its face

- the Section 111(d) standard must be "for existing facilities" in a regulated source category (i.e., fossil fuel

- fired EGUs), not the entire "integrated electricity system" and not facilities outside the subject source categories.274 Commenters stated that the language and legislative history of the CAA show that Congress granted EPA the authority only to regulate individual sources of pollution; not to rely on the phrase "system of emission reduction" to treat the grid as a "system" i t can regulate. Commenters provided two explanations. First, commenters noted that Section 111 requires EPA to create a list of "categories of stationary sources" which "cause[], or significantly contribute to, air pollution which may reasonably be anticip ated to endanger public health or welfare."[42 U.S.C. section 7411(b)(1)(A)] "Stationary source" is defined as a "building, structure, facility, or installation."[40 C.F.R. section 60.2] Commenters said, second, and only after listing a source category, EP A is to establish standards of performance for new sources within such category."[42 U.S.C. section 7411(b)(1)(B) (emphasis added)] Commenters asserted, unlike EPA posits, this does not mean that the entire utility system is a "source category" to be regul ated. Commenters said that a "source category" would be a coal facility

- and natural gas, nuclear facilities, renewable facilities, and energy efficiency measures are not components of a coal facility. Commenters observed that under this theory, EPA could s et performance standards for any source category that requires production cuts based on the fact that we should use less of that particular product or should substitute another product, and commenters asked "What would prevent EPA from taking this one step further and demanding that certain facilities are only able to run a set number of hours per day, or days per year?" Commenters believed not even EPA's strictest standards can require this, yet it is a logical next step here given EPA's interpretation of its power under section 111(d). [42 U.S.C. Section 7412(d)(3) (stating restrictive MACT standards require facilities to install control technology to match "emission control that is achieved in practice" by best

- controlled sources)].

Commenters stated EPA' s novel "systems" approach to BSER in the proposed guidelines raises legal questions about EPA's authority to base standards for existing units on reductions that can be achieved only by units not regulated under the CAA or through changes in the end

- use o f a product. Commenters explained that because EGUs cannot, on their own, achieve the level of reductions necessary to comply, the proposed guidelines effectively require states, utilities owning EGUs and, in many cases, consumers and organizations that ar e totally unrelated to an existing EGU to undertake new programs and measures to meet the emission rate goals. Commenters said that never before have the BSER provisions of the CAA been applied to authorize EPA to regulate states and markets in this way, a nd these legal issues, which are discussed in more detail in section IV, below, eventually will be addressed by the inevitable litigation of the proposed 111(d) guidelines.

Commenters stated that standards promulgated under Section 111 must be source

- based and reflect measures that the source's owner can integrate into the design or operation of the source itself. Commenters said a standard cannot be based on actions taken beyond the source itself that
somehow reduce the source's utilization. Commenters sai d nor can it be based simply on requiring a source to reduce its operations. Commenters noted that a "standard of performance"
cannot mandate "non

- performance." Moreover, commenters noted that requiring a source to operate at reduced capacity would effecti vely order a fundamental redesign of the facility, which EPA has no authority to do. Commenters continued, stating that standards of performance apply to sources within listed categories and cannot regulate categories or subcategories in the275 aggregate or i n combination with other entities outside the source category. Commenters asserted that the Act narrowly confines the stationary sources that may be regulated under Section 111 to any individual "building, structure, facility, or installation which emits o r may emit any air pollutant." Commenters said this definition of "stationary source" does not extend to
combinations of these facilities or to non

- emitting entities such as states or consumers of electricity. Commenters asserted that EPA's Proposed Guidel ines would unlawfully impose federally enforceable obligations on a broad, undefined class of "affected entities" beyond the regulated category of existing EGUs in order to effectuate the Agency's policy goal of reducing aggregate CO2 emissions. Commenters added that Section 111 of the CAA also requires that any standard of performance be "achievable" by the sources to which it applies based on applying an "adequately demonstrated" system of emission reduction. Commenters said a standard cannot be
"achievab le" for a source if, in order to achieve the standard, the source must rely on measures taken by some other entity that it does not control, or must simply cease to operate. Commenters stated that the Agency's past rulemakings pursuant to Section 111 refle ct the provision's singular focus on individual sources. Commenters noted, in over 40 years of EPA's implementation of the CAA, every single standard of performance has been based on a "system of emission reduction" that is incorporated into the design or operation of individual sources. Commenters added the Agency's radical redefinition of what measures may constitute a "system of emission reduction" is impermissible in light of the past four decades of contrary implementation and section 111's
exclusive f ocus on what individual sources can achieve. Commenters remarked the broad program of energy resource management and economy

- wide demand reduction that EPA has proposed to create and administer in the Proposed Guidelines bears no resemblance to the

source

- focused regulatory program that Congress established in section 111. Commenters stated that the Proposed Guidelines would violate the D.C. Circuit's holding in ASARCO Inc. v. EPA, 578 F.2d 319 (D.C. Cir. 1978). Commenters said there the court invalidated E PA's attempt to change the basic unit to which the section 111's new source performance standards ("NSPS") apply from a single building, structure, facility, or installation to a combination of such units.
Commenters stated the D.C. Circuit held that EPA " has no authority to rewrite the statute in this
fashion."

Commenters stated that the CAA's other provisions confirm the narrow scope of what and how EPA may regulate under Section 111. Commenters asserted that nothing in the remainder of the
Act authorize s EPA to regulate emissions from stationary sources by basing standards of performance on measures that are not implemented by the regulated source itself. Commenters said, likewise, there is no provision of the CAA under which the Agency may base a standa rd of performance on reduced operations. Commenters noted that standards of performance cannot be based on enforceable limitations on hours of operation or on electricity production. Commenters said the CAA's other programs establishing emission standards for new and existing sources focus solely on achieving emission reductions at individual sources. Commenters said these programs regulate emissions from sources based on what other individual sources can or already have achieved. Commenters mentioned, for example, emission standards for hazardous air pollutants must be based on the maximum achievable control technology and reflect the application of "measures, processes, methods, systems or techniques" directly to individual sources. (5 These measures inclu de those that: "(A) reduce the volume of, or eliminate emissions276 of, such pollutants through process changes, substitution of materials or other modifications, (B) enclose systems or processes to eliminate emissions, (C) collect, capture or treat such poll utants when released from a process, stack, storage or fugitive emissions point, (D) are design, equipment, work practice, or operational standards (including requirements for operator training or certification) . . ., or (E) are a combination of the above ." CAA section 112(d)(2). Notably, all of these measures can be implemented at an individual source.) Id. section 112(d)(2). Commenters noted that standards for visibility

- impairing pollutants must reflect the "best available retrofit technology . . . for controlling emissions from [each eligible] source," considering the costs, existing control technology, and remaining useful life for that source. Id. section 169A(b)(2)(A). Commenters stated, under the CAA's PSD program, new and modified sources must impl ement the "best available control technology" ("BACT"), which the permitting authority must identify on a case

- by

- case basis for each source and which must reflect "application of production processes and available methods, systems, and techniques" at the source. Id. sections 165(a)(4), 169(3). Commenters said, although a source may accept operational limits in its preconstruction permit under the PSD provisions in order to avoid qualifying as a "major emitting facility" and having to implement BACT, under no circumstances may the BACT standard itself be based on reduced utilization of the unit. See id. section 169(3), 40 C.F.R. section 52.21(b)(12). Commenters noted that the BACT program is particularly relevant as evidence of Section 111's scope because Co ngress explicitly tied the BACT emission standards to Section 111. Commenters said standards of performance under Section 111 provide a regulatory floor for BACT standards. CAA section 169(3). But, as commenters asserted, if a standard of performance relie s on a "system of emission reduction" that goes beyond the source itself, it cannot meaningfully inform a BACT standard for sources in that category. Commenters stated, in contrast, in the few regulatory programs where Congress
did authorize emission contr ol measures that go beyond a specific source for the purpose of meeting aggregate emission reduction goals, it spoke clearly and precisely. Commenters said, for example, when Congress took action in the 1990 CAA Amendments to cap sulfur dioxide
emissions a nd establish a program for emissions allowances and trading, it added an entirely new title to the Act (Title IV) spelling out the requirements and implementation procedures for that program in great detail. See id. sections 401

- 416. Commenters stated, unl ike Title I of the CAA, in which Section 111 is found, Congress's statement of purpose in Title IV specifically includes "encourag[ing] energy conservation, use of renewable and clean alternative technologies, and pollution prevention as a long

- range strat egy, consistent with the provisions of this subchapter, for reducing air pollution." Id. section 401(b). Commenters said that Congress also gave EPA explicit instructions on how to credit sources for compliance with emission requirements based
on avoided e missions from renewable energy and energy conservation. Id. section 404(f). Commenters said Section 111 contains no such instructions. Commenters said, likewise, the CAA's provisions regarding implementation of the national ambient air quality standards (" NAAQS") authorize states to take broad measures to attain and maintain compliance with those standards, and even contemplate that some existing stationary sources may need to reduce operations or retire in order for an area to achieve those standards. See id. Section 110. But in establishing the NAAQS program, commenters stated that Congress explicitly authorized EPA to promulgate health

- based standards for ambient concentrations of certain pollutants at a level277 "requisite to protect the public health" with "an adequate margin of safety." Id. section 109(b). And commenters noted that Congress directed states to enact any "emission limitations and other control measures, means, or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights) . . . as may be necessary or appropriate to meet" these standards, without singling out for regulation any specific sources of the regulated pollutants. Id. section 110(a)(2)(A). Commenters stated, in contrast, Section 111 re gulates emissions from specific sources, not overall concentrations or amounts of pollutants. Commenters closed, statin its technology

- based standards of performance are driven by what emission limitation those sources can achieve during their performance at reasonable cost, using adequately demonstrated measures, rather than by requirements dictated by public health or welfare.

Commenters stated EPA's long and consistent history of implementing Section 111 confirms the plain language of the statute and has also given shape to this regulatory program. Commenters said the Agency's past rulemakings reflect the program's singular focus on individual sources. Commenters noted, in fact, in the 44

- year history of the Act, EPA has limited the scope of
Section 111 t o the regulated source in every rulemaking it has undertaken. Commenters made multiple points. First, commenters said the Agency's 1975 Subpart B regulations in which EPA established a procedural framework for states to adopt standards of performance for e xisting sources share the statute's exclusive focus on standards that are achievable by individual sources. Commenters stated that Subpart B directs EPA to publish a "guideline document containing information pertinent to control of the designated pollutan t form [sic] designated facilities [i.e., existing sources subject to regulation under Section 111(d)]." 40 C.F.R. section 60.22(a) (emphasis added). Commenters stated, echoing the statutory text, emission guidelines under Subpart B must "reflect[] the app lication of the best system of emission reduction (considering the cost of such reduction) that has been adequately demonstrated for designated facilities." Id. section 60.22(b)(5) (emphasis added). Commenters stated, acknowledging Section 111's
statutory command to consider the "remaining useful life" of regulated existing sources, Subpart B also notes that states may tailor standards of performance for individual designated facilities to account for "[u]nreasonable cost of control resulting from plant age , location, or basic process design," "[p]hysical impossibility of installing necessary control equipment," or "[o]ther factors specific to the facility (or class of facilities) that make application of a less stringent standard or final compliance time si gnificantly more reasonable." Id. section 60.24(f). Commenters stated, in adopting this provision, EPA noted that such flexibility to depart from emission guidelines was necessary because "controls cannot be included in the design of an existing facility a nd because physical limitations may make installation of particular control systems impossible or unreasonably expensive in some cases." 40 Fed. Reg. at 53,344. Commenters said this discretion reflects Subpart B's focus on identifying what emission reducti ons individual existing sources can achieve themselves. Commenters continued that Subpart B also specifies that compliance with any state standard of performance for existing sources will be shown through a series of "[i]ncrements of progress," which are " steps to achieve compliance which must be taken by an owner or operator of a designated facility." 40 C.F.R. section 60.21(h). Commenters said these increments of progress include awarding contracts, initiating on

- site construction or installation,
and com pleting on

- site construction or installation of emission control equipment or process changes. Thus, commenters said Subpart B makes clear that compliance with standards of278 performance is achieved through on

- site measures taken by regulated sources. Second

, commenters noted, out of the nearly 100 NSPS and emission guidelines EPA has promulgated and subsequently revised since 1970, every single standard of performance has been based on a "system of emission reduction" that is incorporated into the design or operation of individual sources. Commenters said, for example, when the Agency promulgated and later revised NSPS for kraft pulp mills, it never considered basing the standard of performance on requiring increased use of recycled paper to reduce kraft pulp mill operations, even though such a measure arguably would have reduced emissions from kraft pulp mills. See 43 Fed. Reg. 7568 (Feb. 23, 1978); 79 Fed. Reg. 18,952 (Apr. 4, 2014). Commenters said, likewise, on each past occasion in which EPA has promulgat ed or revised NSPS for the categories of EGUs at issue in this proposed rulemaking a timeframe spanning from 1971 to 2012 the Agency's analysis has focused entirely on the use of emission control technology or low

- sulfur fuels at individual sources.(See,

e .g., 36 Fed. Reg. 24,876 (Dec. 23, 1971) (promulgating Subpart D); 44 Fed. Reg. 33,580 (June 11, 1979) (promulgating Subpart Da); 44 Fed. Reg. 52,792 (Sept. 10, 1979) (promulgating Subpart GG); 63 Fed. Reg. 49,442 (Sept. 16, 1998) (amending Subpart Da); 71 Fed. Reg. 38,482 (July 6, 2006) (promulgating Subpart KKKK); 77 Fed. Reg. 9304 (Feb. 16, 2012) (amending Subpart Da).) Commenters stated, despite pervasively regulating EGUs under Section 111 over the past forty years, EPA has never before even considere d basing a standard of performance for emissions from these sources on reduced utilization or shifting generation to lower

- emitting sources. Commenters said nor has EPA's focus on individual sources changed in recent years. Commenters noted, in an NSPS rul emaking that took place just weeks after the Proposed Guidelines were published, EPA once again reaffirmed that standards of performance "apply to sources" and must be "based on the BSER achievable at that source." 79 Fed. Reg. 36,880, 36,885 (June 30, 201 4). Commenters stated, because of the nature of Section 111(d), EPA has conducted very few rulemakings under that provision. But on the few occasions that EPA has issued emission guidelines for existing sources, commenters said it has maintained the same
f

ocus on measures that the regulated source can incorporate into its design or otherwise implement by itself. Commenters stated that adopting the same approach is not only appropriate but required, given that the CAA defines "standard of performance" identi cally for new and existing sources. Commenters said, since 1970, EPA has only published valid emission guidelines under section 111(d) for five source categories, and in all five of these rulemakings the emission guidelines were based on the application of pollution control technology or other process controls at individual sources. (41 Fed. Reg. 19,585 (May 12, 1976) (guidelines for phosphate fertilizer plants based on "spray cross

- flow packed scrubbers"); 41 Fed. Reg. 48,706 (Nov. 4, 1976) (guidelines for sulfuric acid production units based on "fiber mist eliminators"); 43 Fed. Reg. 7597 (Feb. 23, 1978) (guidelines for kraft pulp mills based on process controls and

two

- stage black liquor oxidation system); 45 Fed. Reg. 26,294 (Apr. 17, 1980) (guidelines f or primary aluminum plants based on "effective collection of emissions, followed by efficient fluoride removal by dry scrubbers or by wet scrubbers"); 61 Fed. Reg. 9905, 9907 (Mar. 12, 1996) (guidelines for municipal solid waste landfills based on "(1) [a] well

- designed and well

operated gas collection system and (2) a control device capable of reducing [non

- methane organic compounds] in the collected gas by 98 weight

- percent").) Commenters noted that even EPA's short

- lived CAMR under section 111(d) did not adopt a broader approach to establishing279 standards of performance. Commenters said, although CAMR did authorize an emissions trading program as a tool for compliance with standards of performance, the "system of emission
reduction" that was used to set th e emission guidelines themselves was limited to pollution control technology that could be installed at individual sources. 70 Fed. Reg. at 28,617

- 20, 28,621 (final guideline was "based on the level of Hg emissions reductions that will be achievable by the combined use of co

- benefit (CAIR) and Hg

- specific controls"). In sum,

commenters stated that the plain text of Section 111 of the CAA establishes a program that is focused on reducing the rate of emissions from new and existing stationary sources through the application of systems that can be integrated into the design or operation of the source itself. Commenters noted that the overall context of the CAA and EPA's unwavering commitment to this approach outside of the present rulemaking confirm this focus. Commenters closed, stating the notion that a source must be able to comply with a standard of performance through measures under its own control is so fundamental to Section 111 that it pervades every aspect of that provision's language and history of imp lementation.

Commenters stated the broad program of energy resource management and economy

- wide demand reduction that EPA proposes to create and administer in this rule bears no resemblance
to the source

- focused regulatory program that Congress established in Section 111 and that EPA has consistently implemented over the past four decades. Commenters noted, in the Proposed Guidelines, the Agency has defied precedent and logic by rewriting some parts of the Act and completely ignoring others in order to emba rk on a multiyear voyage of discovery that far exceeds EPA's lawful authority. See UARG v. EPA, 134 S. Ct. at 2446. Indeed, commenters remarked, as noted in the introduction to this section of UARG's comments, EPA's proposal would invert the Act's regulato ry process under Section 111 for controlling emissions from existing sources. Commenters stated, in the lawful course of regulation, reducing emissions from existing sources under Section 111(d) would proceed such that: (1) EPA specifies a source
category and identifies achievable source

- based performance measures that can reduce sources emissions through design or process changes; (2) the state determines which measures are appropriate for particular sources based on cost, remaining useful life, and other factors; (3) individual regulated sources implement those measures based on standards of performance promulgated by states; and (4) emission reductions result from individual sources operating at a reduced emission rate. Commenters said yet EPA's Proposed Guidelines would begin at the end, by mandating a specific level of CO2 emissions from each state at the outset, and only deviate farther from the Act from there. Commenters stated EPA's approach is that: (1) the Agency specifies a permissible CO2 emission s rate for each state expressed in lb/MWh; (2) the state determines what entities whether EGUs or other commercial, institutional, corporate, or governmental entities it will subject to enforceable obligations; and (3) the state requires a broad
and undefi ned range of emission

- reducing or operational measures at those entities as necessary to achieve the desired emissions level. Commenters asserted that this backwards approach plainly exceeds the Agency's authority under the CAA. Commenters stated that near ly every aspect of the Proposed Guidelines is inconsistent with the Act and with EPA's binding legislative rules. Commenters stated, in particular, the Agency's radical redefinition of what measures may constitute a system of emission reduction is plainly impermissible in light of Section 111's exclusive focus on what individual sources can achieve and the past four decades of contrary280 implementation. Likewise, commenters added, EPA's claim that it may apply BSER to a state as
a whole rather than to individ ual sources in a source category lacks any legal merit. And, commenters stated, finally, the fact that the Proposed Guidelines required emission reductions cannot be enforced without dramatically expanding the universe of entities subject to obligations

un der Section 111 underscores the extent to which EPA has strayed from the scope of regulation permitted under the CAA. Commenters stated, together, these defects reflect the Agency's disregard for the statutory and administrative bounds of its own authority . Commenters closed, stating the Proposed Guidelines would bring about an enormous and transformative expansion in EPA's regulatory authority without clear congressional authorization, and therefore it must be
withdrawn. Id. at 2444.

Commenters stated and concurred that perhaps the most fundamental departure from the law in EPA's Proposed Guidelines is the Agency's assertion that the "best system of emission reduction" for the sources in a designated source category under Section 111 may include measures th at would (either directly or indirectly) reduce a source's utilization and that are not within the control of individual sources. Commenters stated, of the four "building blocks" that make up EPA's proposed statewide BSER for existing EGUs, only Building B lock 1 (heat rate improvements at coal

- fired EGUs) falls within the scope of measures contemplated in the Act and could therefore provide the foundation for a legally defensible emission guideline. Commenters asserted that the others mandating redispatch o f generation from coal

- fired units to NGCC units, displacing generation from affected EGUs with generation from renewable energy sources, and reducing electricity demand through energy efficiency measures all impermissibly rely on measures that go beyond t he boundaries of individual affected EGUs and that are not within the control of individual EGU owners and operators. Commenters said the measures in Building Blocks 2, 3, and 4 are all based on implementation of statewide energy policies that
would confis cate the available generating capacity of existing EGUs. Commenters stated, indeed, the Proposed Guidelines impose undefined regulatory obligations on a broad swath of unspecified "affected entities" in addition to the fossil fuel

- fired EGUs that are the s ource category for this rule. Commenters said many of these "affected entities" do not emit CO2 in any appreciable amount. Commenters asserted that this "beyond

- the

- source" approach would allow EPA to restructure every aspect of the states electric power m arkets and regulate any electricity

user

- effectively, to administer the entire national economy

- for the purposes of reducing demand for and generation by sources in the listed source category (i.e., existing fossil fuel

- fired EGUs). Commenters stated t hat this is impermissible and would transform Section 111 into something untethered to its statutory language and unrecognizable to the Congress that created it. Commenters said the genesis of this novel claim to regulatory power lies in the Agency's attem pt to rewrite what constitutes a "system of emission reduction" for the purposes of Section 111. Commenters stated, as noted above, under that section, a standard of performance must "reflect[] the degree of emission limitation achievable through the appli cation of the best system of emission reduction" that has been adequately demonstrated for sources in the regulated category. CAA Section 111(a)(1) (emphasis added). Commenters asserted, in this rulemaking, however, EPA "claims to [have] discover[ed] in [t his] long

- extant statute an unheralded power to regulate a significant portion of the American economy," a practice that courts have looked upon skeptically in the past. UARG v. EPA, 134 S. Ct. at 2444. Commenters stated EPA asserts here281 that because the w ord "system" is not explicitly defined in the CAA, the Agency may freely apply that word's abstract dictionary definition: "a set of things working together as parts of a mechanism or interconnecting network; a complex whole. ("Legal Memorandum for Propose d Carbon Pollution Emission Guidelines for Existing Electric Utility Generating Units at 51 (undated) (emphasis added), Docket ID No. EPA

- HQ

- OAR

- 2013

- 0602

- 0419 ("EPA Legal Memorandum"). Commenters noted EPA applies this definition in the abstract to conclu de that a "system of emission reduction" can be "virtually any set of things that reduce emissions," including anything from "add

- on controls . . . to measures that replace production or generation
at the affected sources." Id. at 51

- 52 (emphasis added). C ommenters noted the Agency even claims that it may require "reduced utilization" of a source as part of a "system of emission reduction," presumably including a prohibition on utilizing a specific regulated source. Id. at 79; 79 Fed. Reg. at 34,889. Commen ters stated that the breadth of EPA's unprecedented assertion of authority is staggering, particularly in light of Section 111's singular focus on regulating individual sources of emissions. Commenters stated, under EPA's asserted definition of a "system o f emission reduction," standards of performance for sources in a regulated source category would become a mere pretext for imposing a wide range of demand

- reducing obligations on countless entities across the entire nation. Commenters noted, under EPA's
in terpretation, EPA would be able to require any "affected entity" to implement any "set of things" that the Agency believes would reduce the operation of sources in the listed source category and hence emissions from that category no matter how far removed the required actions are from the source itself. Commenters noted that in the context of EGUs, these measures could include anything from capping annual generation from certain EGUs, to ordering the shutdown of some EGUs or other affected entities altogeth er, to regulating how individuals use electricity or consume other goods and services that require electricity. Commenters asserted that applying this "beyond

- the

- source" approach to other source categories as this rulemaking suggests EPA is likely to atte mpt leads to similarly expansive outcomes. Commenters said, for example, this approach could lead EPA to adopt standards of performance for kraft pulp mills that are based on efforts to reduce demand for new paper, such as requiring office buildings to imp lement paper recycling programs or encouraging credit card companies to provide paperless billing to customers. Commenters said or it could allow EPA to adopt standards of performance for oil and gas production facilities that are based on reducing demand for gasoline, such as mandating carpooling programs or requiring additional state investments in public transportation infrastructure. Commenters stated that these beyond

- the

- source measures are inconsistent with the regulatory program Congress provided fo r in Section 111 of the CAA. Commenters stated, although the dictionary definition of "system," if considered in the abstract and devoid of any statutory or historical context, might theoretically embrace statewide, regional, or even national reduction pro grams, the word as used in Section 111 can refer only to reductions resulting from measures that are incorporated into the source itself. EPA's claim that nothing in the language or context of Section 111 limits the Agency's expansive redefinition of "syst em of emission reduction" is patently false, and it suggests that EPA has ignored the statute and its own past rulemakings. See EPA Legal Memorandum at 51

- 52. Commenters stated, indeed, Section 111's clear focus on measures that are achievable by the regul ated source itself pervades every aspect of that provision's language, its statutory context, and EPA's legislative rulemakings282 implementing that provision. Commenters said, as described above in Section III.A, Section 111 is a narrow program designed to i mprove the emissions performance of new and existing sources in specific categories based on the application of achievable measures implemented in the design or production process of the source at reasonable cost. Commenters asserted that EPA completely ig nored these factors when addressing the meaning of the word "system" as it is used in Section 111, and in developing its proposed BSER. Commenters noted that Building Blocks 2, 3, and 4 of the proposed BSER are based on beyond

- the

- source measures that cann ot be achieved by individual sources, and accordingly, they cannot be used to support a rulemaking under Section 111 of the CAA. Commenters stated, as noted above, Section 111 requires that emission guidelines and standards of performance be "achievable" b y "any existing source" in the regulated category not by only some sources, by a state, or by the category in the aggregate or in combination with other "entities." Commenters said an emission guideline that requires regulated
sources to obtain emission re ductions offsite in order to comply with an otherwise unachievable standard would unambiguously contravene the plain text of the CAA. Commenters said yet EPA failed to acknowledge how the achievability requirement limits the systems of emission
reduction t hat may provide the basis for Section 111 regulation. Commenters noted Building Blocks 2, 3, and 4 of the proposed BSER require measures that go beyond individual existing
EGUs. Commenters said the owner of an individual coal

- fired utility boiler cannot co ntrol the dispatch of NGCC units relative to other fossil fuel

- fired EGUs. Commenters said nor can it make changes in the design or production process of its boiler to generate renewable energy or to lead consumers to use less electricity. Therefore, comme nters noted that Building Blocks 2, 3, and 4 cannot support an achievable emission guideline. Commenters said, indeed, when EPA has attempted in the past to group individual sources together for the purposes of applying standards of performance, these atte mpts have been soundly rejected by the courts. See ASARCO, 578 F.2d at 327. Commenters noted, in ASARCO, the D.C. Circuit invalidated EPA's attempt to "change the basic unit to which the NSPSs apply from a single building, structure, facility, or
installat ion

- the unit prescribed in the statute

- to a combination of such units," holding that EPA "has no authority to rewrite the statute in this fashion." Id. (emphasis in original). Commenters noted that the Agency must be "guided by a reasoned application o f the terms of the statute it is charged to enforce, not by an abstract dictionary definition." Id. at 324 n.17. Commenters said if the Agency is concerned about the need for flexibility in order for sources to comply with a standard, the solution is to al ter the stringency of the standard rather than the scope of the source to which that standard applies. Id. at 328

- 29. Moreover, commenters asserted that EPA failed to acknowledge the other ways in which the language and overall statutory context of Section 111 render its beyond

- the

- source approach unreasonable. Commenters said it is a "fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme." UARG v. EPA, 134 S. Ct. at 2441 (internal quotation marks omitted). Commenters said yet EPA myopically limits its discussion of the "context in which . . . system of emission reduction is found" to Section 111(d)(1) of the CAA in isolation, and states that nothin g in that subsection constrains the Agency from applying a beyond

- the

- source regulatory approach. EPA Legal Memorandum at 52. Commenters stated, as an initial matter, this conclusion is simply inaccurate. Commenters said Section 111(d)(1) specifies that it s standards of performance must apply to "any existing source" and directs states283 to account for the remaining useful life of each regulated source when applying these standards to the source, demonstrating that Section 111(d) is concerned with achievable measures that individual sources can take to reduce their rate of emissions. But more importantly, commenters asserted that it is unreasonable for EPA to limit the context of this statutory provision to a single paragraph in Section 111, or even to a singl e section of the CAA, particularly when that term is used repeatedly throughout the Act. As discussed above, commenters stated that Section 111 unambiguously limits standards of performance, and thus the systems of emission reduction on which they are base d, to individual sources. Commenters said, likewise, the CAA's other similar programs for regulating emissions from stationary sources

- including programs for hazardous air pollutants, visibility

- impairing pollutants, and prevention of significant deterio ration of air quality

- are limited to measures incorporated into the design or production processes of individual sources. Commenters said nowhere in the Proposed Guidelines does EPA acknowledge that its claimed authority to base standards on beyond

- the

- s ource measures fundamentally conflicts with its entire 44

- year history of rulemaking under Section 111. Commenters noted that EPA's Subpart B regulations speak exclusively in terms of requirements that apply to, and are implemented by, individual designate d facilities. Commenters asserted that emission guidelines must be based on "the application of the best system of emission reduction . . . that has been adequately demonstrated for designated facilities," and EPA committed itself to
address "different siz es, types, and classes" of existing sources by "specify[ing] different emission guidelines or compliance times" when "costs of control, physical limitations, geographical location, or similar factors" warrant the application of different guidelines. 40
C.F .R. section 60.22(b)(5) (emphasis added). In addition, commenters stated that every single NSPS or emission guideline that EPA has ever issued

- spanning over four decades, multiple comprehensive amendments to the CAA, and nearly 100 subparts within EPA's regulations has been based on measures that individual sources can implement through design or process measures at the source itself. Commenters stated that the Agency's only reference to precedent is to note that some of its emission guidelines for munici pal waste combustors, which were promulgated jointly under Sections 111 and 129 of the CAA, have included provisions concerning emission rate averaging, tradable emission credits, and waste management plans. EPA Legal Memorandum at 63. Commenters noted tha t these rules do not support the position EPA has adopted in the Proposed Guidelines. Commenters said, contrary to the Agency's implication, none of the emission guidelines for municipal waste combustors were based on measures similar to Building Blocks 2, 3, and 4. Commenters said, rather, the emission guidelines for existing hospital/medical/infectious waste incinerators were based on "good combustion" and wet scrubbers of varying efficiency levels, 62 Fed. Reg. 48,348, 48,371 (Sept. 15, 1997), while the emission guideline for existing commercial and industrial solid waste incinerators was based on "the use of a wet scrubbing system, or other equivalent emission control technology," 65 Fed. Reg. 75,338, 75,344 (Dec. 1, 2000). Critically, commenters asserte d that the emission rate averaging and tradable emission credits that EPA included in its emission guidelines for municipal waste combustors were merely flexible compliance tools and were not used to determine the stringency of the standard itself, as EPA seeks to do here. Thus, commenters stated that these rulemakings only serve to reinforce

- not to contradict

- Section 111's narrow focus on measures that individual sources can implement (and have implemented in284 the past). Commenters said this focus is un surprising in joint rulemaking under Sections 111 and 129, given that standards of performance under both provisions are required to reflect the "degree of reduction in emissions of air pollutants" that the Administrator determines is
"achievable" for indi vidual sources. Compare CAA section 111(a)(1) with CAA section 129(a)(2). Commenters noted that EPA also points to the now

- defunct emission guidelines under CAMR as an example of regulations under Section 111 that EPA claims are based on a beyond

the

- sourc e emission trading program. EPA Legal Memorandum at 63 n.51. But, commenters stated, like the emission guidelines for municipal waste combustors described above, CAMR's trading program was merely a tool for compliance: the actual standards were set based o n the application of pollution control technology at individual EGUs. Commenters noted that the systems of emission reduction that were used to set CAMR's emission guidelines were (1) the

co

- benefit mercury reductions of installing scrubbers and selective catalytic reduction ("SCR") at individual units under the Clean Air Interstate Rule ("CAIR") (for the first phase of CAMR) and (2) the installation of mercury

- specific pollution control technologies such as activated carbon injection (for the second phase) . 70 Fed. Reg. at 28,617

- 20, 28,621. Thus, commenters asserted that EPA's reasoning in CAMR does not support a beyond

- the

- source approach to standard

setting under Section 111. Commenters said it confirms the source

- focused nature of Section 111, and furth er demonstrates that, after setting achievable emission standards for individual sources, EPA may allow states to adopt flexible programs (such as emissions trading) to comply with standards that those individual sources are otherwise capable of achieving without resorting to those flexible programs. Commenters stated Section 111 could not be clearer that its standards of performance for new and existing sources must be achievable by individual sources using measures that are implemented into the sources th emselves. Commenters stated, when compared to the narrow regulatory program that Congress created in Section 111 and to which EPA has given shape through its consistent administrative implementation, the authority that the Agency
now claims under its novel redefinition of "system of emission reduction" is plainly unlawful. Commenters closed, stating that EPA's beyond

- the

- source approach "would bring about an enormous and transformative expansion in EPA's regulatory authority without clear congressional auth orization "indeed, despite clear congressional language and regulatory history contradicting that claim of authority. See UARG v. EPA, 134 S. Ct. at 2444. Therefore, EPA must withdraw the Proposed Guidelines.

Commenters stated that EPA's proposal for modi fied and reconstructed sources under S. 111(b) is not sufficient to justify the S. 111(d) proposal. Commenters stated, although the CAA defines the term "new source" to include a modified source, CAA Section 111(a)(2), the proposed guidelines seek to regul ate systems, states, and sources other than individual EGUs. Commenters noted that the proposed guidelines define an "affected entity" as any entity with an enforceable obligation under a state plan. Commenters said this could include nearly any type of en tity, "e.g., an entity that is regulated by the state, such as an electric distribution utility, or a private or public third

- party entity." By contrast, commenters noted that the Section 111(b) proposal for
modified and reconstructed facilities define the designated facility as a fossil fuel

- fired EGU. Commenters believed this is an unlawful mismatch, explaining that EPA cannot regulate or285 require the regulation of a different type of source under Section 111(d) than the type of source that is regulated as a new (or modified or reconstructed) source under Section 111(b). Commenters posited that because EPA has not met these legal prerequisites for proposing and finalizing Section 111(d) emission guidelines for CO2 emissions, the proposal is unlawful and

mus t be withdrawn.

Commenters stated that the Clean Air Act and its regulations define "stationary source," as "any building, structure, facility, or installation which emits or may emit any air pollutant." (69 40 C.F.R. 60.2), and emissions controls under Se ction 111(d) must apply directly to "a single building, structure, facility, or installation" the unit prescribed in the statute, rather than to a combination or agglomeration of such units.(70 Asarco Inc. v. EPA, 578 F.2d 319, 322 (D.C. Cir. 1978)) Commen ters believed that EPA's implementing regulations make it clear that these standards and reductions apply to individual units and offers the example, when EPA's regulations speak of "increments of progress" toward compliance with a standard of performance , they refer expressly to the steps "which must be taken by an owner or operator of a designated facility" in order to achieve that compliance. (71 40 C.F.R. 60.21) Commenters stated that the regulations call for each state plan to "adopt emission standard s and compliance schedules applicable to designated facilities," to obtain information about compliance at designated facilities, and to require testing and recordkeeping at designated facilities (72 40 C.F.R. 60.26).

Commenters stated that arguing that th e definition of source and system is unique between 111(b) and 169(3) applications versus what EPA chooses to apply under 111(d) in this instance only leads to the City's uncertainty in this rule's outcome, especially in light of the Supreme
Court's recent decision reversing in large part the Tailoring Rule.

Commenters stated that through its four building blocks contained in the proposed rule, EPA defines the Best System of Emission Reduction ("BSER") for coal

- fired EGUs as a combination
of emission reduct ions from efficiency upgrades at coal

- fired units, increased utilization of natural gas units, extending the life of nuclear plants, installing more renewable power and significant gains in demand

- side energy efficiency, and this so

- called "integrated elec tricity system" approach for defining BSER stretches so far beyond the fence

- line of a regulated facility that literally every consumer of electricity in the U.S. could be implicated as a potential compliance option for EPA's rule. Commenters remarked that certainly heavy manufacturers such as steel and forging would be forced into a State's compliance plan. Commenters closed stating that this approach is not only unprecedented, it is unlawful, and commenters requested that EPA reevaluate its proposed metho d for establishing BSER and limit any guidance in setting performance standards to actions that can reasonably take place within the fence

- line of a regulated facility.

Commenters stated that EPA's "system

- based" approach in the proposed ESPS that looks to CO2 reductions from entities in building blocks 2

- 4 beyond the "affected facility" is inconsistent with past precedent, incompatible with the statutory provisions, and ultimately results in the regulation of a wide range of entities that are not "existing sources" to meet the proposed ESPS.286 Commenters stated that even the broadest interpretation of the term "system" does not support this precedential expansion of EPA's Section 111 authority and requires EPA to side

- step its statutory obligation to consider costs at the source, and as a result, EPA has proposed an unreasonable and excessively stringent standard of performance that will result in the closure of
coal

- fired EGUs. Commenters added that EPA gleans much of its authority to reduce generation

at coa l

- fired EGUS from a broad reading of the best system of emission reduction. Commenters said, however, even if one accepts EPA's premise that EGUs are part of an electrical "system" (a point that Newmont does not concede), it does not follow that EPA has th e authority to use that "system" to require the listed source category to reduce production or close its doors. Commenters noted, similarly, using the entire "system" as a means of spreading costs across a state's electrical grid does not properly account for the costs that the "affected EGU" must shoulder to comply with the standard of performance. Commenters continued, stating that prior to this rulemaking, EPA has consistently used its authority under Section 111 to require control technologies (historic ally referred to as "best demonstrated technology") at the source and has never applied a standard of performance to intentionally reduce production. Commenters stated, as EPA developed this rulemaking, however, it began moving away from technology

- based

s tandards under Section 111 to focus on BSER: The level of control prescribed by Section 111 of the [Clean Air Act] historically has been referred to as "Best Demonstrated Technology" or BDT. Commenters noted, to better reflect that Section 111 was amended in 1990 to clarify that 'best systems' may or may not be 'technology,' the EPA is now using the term 'best systems of emission reduction' or BSER. Commenters contended that EPA's new reliance on the phrase "system" does not provide the requisite authority to treat the entire grid

- or even each state grid

- as a "system" (including the entire population of electrical consumers) over which EPA can spread the costs of BSER. Commenters stated that none of the example source categories EPA cites provide a prece dent for vastly expanding the scope of Section 111(d). (For example, EPA cites to Clean Air Act Section 129 regulations for hospital/medical/infectious waste incinerators, 62 Fed. Reg. 48,348, 48,359 (Sept. 15, 1997), and for commercial and industrial soli d waste incinerators, 65 Fed. Reg. 75,338, 75,341 (Dec. 1, 2000), which require the incinerators would adopt waste management "plans." See e.g. 65 Fed. Reg. at 48,359 (noting that "recycling and pollution prevention measures could yield greater reductions in emissions than add

- on controls alone.").) Commenters asserted that these plans are limited to the sources in question, and not the entire industrial system within which they operate, and they do not require regulated sources to cut back operations in or der to further reduce emissions. Commenters concluded that EPA's previous rulemakings do not provide precedent for EPA's expansive reading of its Section 111(d) authority.

Commenters stated that EPA notes that it wants to give states broad discretion to i mplement the Section 111(d) program, including through the portfolio approach EPA has developed to reflect the Building Blocks it used to identify BSER. Id. at 34,917. Commenters stated EPA goes on to admit, however, that the program it has envisioned may prove challenging to implement. Id. Commenters added that EPA suggests that it is a key state consideration, therefore, to figure if the program as imagined by the Agency could be workable. Commenters said EPA has it backwards. In developing the Proposed G uidelines, commenters stated that EPA should have done the work necessary to determine if the program it has devised is practical. Commenters287 noted, under Section 111(d), EPA cannot seek to impose stringent emission control requirements
on states without k nowing if the plans needed to implement those requirements can be developed. Commenters closed, stating that this is the antithesis of Section 111's requirement that performance standards reflect levels of emission control that are achievable and
demonstra ted.

Commenters stated that EPA lacks statutory authority (and is limited by its own regulations) to issue emission guidelines seeking reductions of CO2 emissions from coal

- based EGUs in a manner based on something other than an adequately demonstrated re duction system for such
EGUs.

Commenters stated the proposed guidelines would require the regulation of sources that extend far beyond the coal

- and gas

- fired EGUs addressed in the Agency's January 2014 Section 111(b) proposal, and that it is clear that EPA intends for the Section 111(d) performance standards to apply to "affected entities," not only to "affected EGUs."(5050 See, e.g., Proposed 40 C.F.R. 60.5780(a) ("Your state plan shall include emission standard(s) that are quantifiable, verifiable,

non

- duplicative, permanent, and enforceable with respect to each affected entity.");
Id. 60.5780(f) ("An emission standard is enforceable against an affected entity if: (1) A technically accurate limitation or requirement and the time period for the limitati on or requirement is specified; (2) Compliance requirements are clearly defined; (3) The affected entities responsible for compliance and liable for violations can be identified; (4) Each compliance activity or measure is enforceable as a practical matter; and (5) The Administrator and the state maintain the ability to enforce violations and secure appropriate corrective actions . . . .") (emphasis added).) Commenters posited that EPA has no authority, under either Section 111(d) or the Subpart B regulation s, to adopt a nonnegotiable, binding "emission limitation" for states as it proposes to do. Commenters noted that Subpart B does not even mention the term "emission limitation." Commenters said both Subpart B and Section 111(d) speak in terms of
"standards of performance." Commenters stated, under Section 111(a)(1), the standard of performance must reflect the degree of "emission limitation" that is achievable. Commenters stated, under Section 111(d), states are to establish standards of performance applica ble to sources. Commenters closed, stating that EPA's approach disregards both the statute and its own implementing regulations and would apply to states a binding emission limitation, and states must then apply standards of performance to any "affected en tity" it wishes, without fealty to the restriction that the regulated entity must be identical in the Section 111(b) and Section 111(d) regulations.

Commenters stated that EPA has established a BSER methodology that sets state

- specific emission rates, and EPA is, in effect, claiming that while the rate was set based on the particular state's circumstances, it need not evaluate whether those circumstances actually are consistent
with the mix of BSER blocks the EPA has determined are achievable. Commenters c ontended that the proposed guidelines do not establish that the four BSER Building Blocks can be implemented together as an achievable, adequately demonstrated, cost

- effective "system" for
each state.288 Commenters believed the CPP is illegal because it depen ds on "outside the fence line"
mechanisms

- not controls at the sources of the emissions

- to achieve the vast majority of emission reductions. See generally 79 Fed. Reg. 34,856

- 34,858. Commenters stated, in its proposal, EPA mandates CO2 reductions for in dividual states. Id. at 34,833 (the proposed rule "lays out state

- specific CO2 goals that each state is required to meet?") Commenters asserted
that EPA repeatedly refers to these as "goals" even though they are actually "binding," not optional as the word "goal" implies, based on four building blocks, only one of which involves
reduction of emissions at the source. Id. at 34,892. "EPA's Proposed Clean Power
Plan: Implications for States and the Electric Industry," The Brattle Group, June 2014, page 3,
Tab le 1 (building block 1 accounts for only 12% of the total BSER CO2 reductions in the Clean Power Plan). Commenters argued that the majority of the reductions are achieved from building blocks that are beyond the source of the CO2 emissions, and further, EP A also employs these same building blocks as the compliance mechanisms upon which states are to rely for developing compliance plans.

Commenters stated that EPA has not described the mechanisms states can use to develop and implement a plan that will relia bly demonstrate compliance. Commenters believed that Building blocks 3 and 4 are not enforceable against designated facilities, explaining that EPA's proposal takes the form of a "portfolio approach" under which states would apply traditional "emission

sta ndards" to affected EGUs, and other requirements to other "affected entities" that, taken as a whole, will achieve the required level of emission performance. (79 Fed. Reg. at 34,891) Commenters stated, alternatively, EPA suggests that a "standard of perfo rmance" could be adopted by the states that places the entire burden of achieving the level of performance reflected in the state goals on affected sources

. Commenters said EPA proposes that states can create other "compliance entities" to assume those res ponsibilities, (79 Fed. Reg. at 34,901) but does not explain how these entities (which emit nothing that is subject to regulation under the CAA) became subject to the jurisdiction of the environmental regulators, or how states could rely on activities by u nrelated third parties to reduce emissions at independently operated facilities. Commenters remarked that this framework raises a number of unanswered questions, including who is the entity being regulated, and who has enforcement responsibility.

Commente rs stated EPA proposes to redefine the term "emission standard" beyond its historic meaning to include "any requirement applicable to an affected entity other than an affected source that has the effect of reducing utilization of one or more affected sourc es, thereby avoiding emissions from such sources, including, for example, renewable energy and demand

side energy efficiency measures requirements." 40 CFR 60.5820 (proposed), 79 Fed. Reg. at 34,956. Commenters stated, coupled with this is EPA's proposed d efinition of a whole new category of "affected entities," other than "affected sources," that would become subject to CAA Section 111(d) regulation even though these "affected entities" (1) do not comprise any part of the CO2 emitting affected sources subj ect to CAA Section 111(d) regulation and (2) may not
even emit CO2 at all. Commenters did not believe there is evidence of support in Section 111 of
the CAA for the "overreach" of these new definitions.289 Commenters also stated that CAA Section 111 addresse s "new" (Section 111(b)) and "existing" (Section 111(d)) "stationary sources." Commenters quoted the term "stationary source" means "any building, structure, facility, or installation which emits or may emit any air pollutant." CAA Section 111(a). Commente rs added that Section 111 authorizes EPA to establish "standards of performance" for "categories of stationary sources." In other words, commenters said the standards of performance apply to defined "stationary sources," i.e., facilities that emit air poll utants ("affected sources"), not facilities that merely consume electricity ("affected entities" under EPA's proposed new definition). Commenters argued that EPA's proposed definitions of "emission standard" and "affected entities": go far beyond any histo ric interpretation of the reach of CAA Section 111 and are simply not supported by any reasonable interpretation of that

statute.

Commenters stated EPA proposes to regulate sources that are not affected sources, and some of these sources are gas

- fired units that operate below a 33% capacity factor, RE sources that will be required to operate in lieu of fossil

- fueled sources, and demand side improvements (i.e., Building Blocks 2, 3 and 4) to accomplish the targets set by EPA. Commenters believed it is
cl ear that Congress intended a standard of performance to be something that would be established and applied to a source, and substituting other generation from less carbon intensive sources does not establish a standard for an EGU. Commenters explained that substituting low or zero carbon generation for generation produced by an EGU does not apply anything to the EGU. Commenters stated that reducing generation from an affected EGU by requiring less energy use from consumers does not apply anything to the EGU . Commenters argued that EPA's proposed CO2 guidelines ignore the clear requirements of Section 111(d) upon which it relies for its authority to propose the CO2 guidelines, and EPA does not have legal authority to regulate non

affected sources and should n ot do so in the final rule either as proposed or in an expanded
fashion.

Commenters stated that each component of the definition of "standard of performance" must also
be "for any existing source", and consequently, under the statute, the "best system of emission
reduction which

... has been adequately demonstrated" must have been adequately
demonstrated "for any existing source." Commenters stated that they fail to see how the beyond

the

- unit systems that EPA identifies in building blocks two, three, and four can be considered "adequately demonstrated" for EGUs if the implementation of those systems depends on the actions of third parties (e.g., RE generators or end

- users) that are neither part of the source nor
under the source's control.

Commenters stat ed that while regulated utilities can and often do encourage demand

- side efficiency measures, they generally have no license or capability to restrict any given end

- user's demand. Commenters stated, consequently, building blocks 2, 3, and 4 are plainly not "within [the] control" of affected sources.

Commenters stated EPA does not have authority to subject entities that are not "affected EGUs" to regulation and enforcement under Section 111(d). Commenters contended that EPA is attempting to regulate the reta il electricity sector, over which the states have exclusive jurisdiction.290 Response 11 : To the extent this comment objects to the portfolio approach, which the EPA is not finalizing, the comment is moot. Otherwise, for the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

Comment 12 : Commente rs stated that while the industry supports flexible mechanisms for power plants to meet their compliance obligations under the Existing Source proposal, such as counting of renewable energy produced from landfill or biogas towards the renewable energy

comp onent of individual compliance plans, they do not support any regulatory compliance obligations on other entities that are not affected EGUs (i.e., fossil fuel

- fired EGUs). Commenters’ concerns with this approach were enumerated. First, commenters found EP A's description of the role of "other entities" to be vague and open

- ended. For the most part, EPA emphasizes situations that would leverage actions already being taken in states by an array of "other entities." Commenters said these include potentially re quiring utility distribution companies to comply with a state's Renewable Portfolio Standards (RPS) or Energy Efficiency Resource Standards (EERS); requiring an established private non

- profit entity to administer end

use energy efficiency (EE) and/or renew able energy (RE) deployment programs, or requiring a state agency or authority to implement an EE or RE program to reduce emissions. [State Plan Considerations TSD, p. 15

- 16] Commenters stated, however, there is nothing in the draft rule
that limits EPA or the states from being more expansive in their approach toward "other entities." Commenters stated, in fact, EPA itself appears to be soliciting additional information on what types of entities might be relevant. Commenters said, for example, EPA seeks com ment "whether the Agency should provide guidance on enforceability considerations related to requirements in state plans for entities other than affected EGUs (and, if so, which types of entities). Commenters noted this statement is troubling for many reas ons, not least of which are (1) EPA's failure to reveal their own view of "other entities," and (2) the EPA's open

- ended request for stakeholders to broaden the types of other entities. Second, commenters did not agree that EPA has the authority to designa te ill

- defined "other entities" to reduce emissions that are properly the responsibility of the affected EGUs.

Commenters stated and concurred that their legal concerns are magnified by EPA's vague and

open

- ended description of "entities other than affect ed EGUs." Commenters stated, in the preamble and supporting materials, EPA focuses discussion of other entities on those that are already implementing EE and RE policies at the state level. (For example, pp. 15

- 16 of the State
Plan Considerations TSD inclu des discussion of potentially requiring utility distribution companies to comply with a state RPS or EERS; requiring an established private non

- profit entity to administer end

- use EE and/or RE deployment programs on behalf of a state, or requiring a state agency or authority to implement an EE or RE program to reduce emissions.) Commenters stated that there is nothing in EPA's language, however, that limits EPA or the states from being more expansive in their approach towards "other entities." In fact, comm enters remarked, EPA itself appears to be soliciting additional information on what types of entities might be targeted for regulation. Commenters said, for example, EPA seeks comment "whether the Agency should provide guidance on enforceability considerat ions related to requirements in291 state plans for entities other than affected EGUs (and, if so, which types of entities).(79 FR 34911) (Emphasis added.) Commenters asserted that this statement is troubling for many reasons, not least of which are (1) EPA's failure to reveal their own view of "other entities," and (2) the Agency's open

- ended request for stakeholders to expand the scope of other entities that could be affected by the rule.

Response 12 : As explained in Section VIII.C. of the preamble, the EPA is not finalizing the portfolio approach that was included in the proposed rulemaking, 79 FR 34830, 34902 (June 18, 2014). In the proposal, the EPA noted that the portfolio approach raised legal que stions. 79 FR 34830, 34902

- 03. After reviewing comments, the EPA agrees with commenters that legal questions remain.

Comment 13: Commenters stated that EPA should not expand greenhouse gas regulations to other source categories. Commenters said not only do es the CPP extend the EPA's reach unnecessarily and without authority in one sector, they believed there is no legal obligation for EPA to address other source categories. Commenters stated that other source

- specific regulations would and should require a much broader, more complex consideration by the EPA and potential stakeholders. Commenters noted that rolling other source categories into the existing power plant rule does not to consider the complexity these multiple source categories present. Commenter s closed suggesting that should the EPA insist on moving forward with this provision, and suggested a state compliance plan should allow for exemption under any potential future Section 111 regulations.

Commenters stated that EPA is seeking not only to reg ulate existing electric generating units, but is greatly expanding the scope to extend to other non

- regulated and non

- emitting entities. Commenters observed that EPA's building block l seeks to regulate existing electric generating units (EGUs) in the trad itional manner; however, in blocks 2, 3, and 4 EPA is seeking to determine how EGUs are to be dispatched, what resources are to be installed and how consumers use electricity, and this approach is so counter to the Congressional intent of the Section 111

s tandards and structure that EPA must withdraw this proposal.

Commenters stated (verbatim) EPA argues that its unprecedented interpretation of Section 111(d) is supported by the addition and subsequent removal of the word "technological" from
Section 111's definition of "standard of performance." (See Legal Memorandum at 56) Commenters stated, as a principal matter, it is illogical for EPA to draw a conclusion about the standard that applies to existing sources by referring to a change in the standard for ne w sources. Commenters said, however, even assuming that this legislative history could be read to support
the idea that BSER can include non

- technological systems of emission reduction, it clearly does not support EPA's conclusion that the CAA authorizes b eyond

- the

- unit measures. Commenters stated, rather, the removal of the term "technological" during the 1990 Amendments from the definition that applied to new sources (66 As EPA correctly points out, the definition of standard of performance applicable to existing sources has never included the term "technological." See Legal Memorandum at 55

- 56. Consequently, Congress' decision to remove the term from the definition that previously applied to new sources has no bearing on the interpretation of the term

as it applies to existing sources) was simply meant to clarify that other available at

- the

- unit292 methods of reducing emissions' other than "technological" end

- of

- stack improvements (such as fuel switching to lower

- sulfur coals) could be components of BSER. Com menters stated the legislative history of Section 111 demonstrates conclusively that this narrower interpretation represents the true intent of Congress. Commenters noted that Congress first used the phrase "best system of emission reduction" in the 1970 A mendments to the CAA. (Clean Air Amendments of 1970, Pub. L. No. 91

- 604, S. 111, 84 Stat. 1676, 1683 (codified as amended at
42 U.S.C. 1857, et seq. (currently codified at 42 U.S.C. 7401, et seq.))) Commenters noted, according to the official "Summary of the Provisions of Conference Agreement on the 1970 CAA Amendments," Section 111 authorized EPA to require sources to achieve performance standards "based on the latest available control technology, processes, operating methods, and other alternatives."(CAA Amendments of 1970, Conference Report, 116 Cong. Rec. 42,381, 42,384 (1970) (emphasis added)) Commenters said the 1970 Senate Committee on Public Works' description of the Senate provisions that would later be combined into Section 111 (These provisions w ere included in Sections 113 and 114 of the Senate bill) also indicates that the absence of the word "technological" from the original definition of "standard of performance"
was meant to allow consideration of additional at

- the

- unit process and operationa l changes that would not have been considered "technological." Commenters said, according to the Committee, "'[s]tandards of performance' . . . refers to the degree of emission control which can be achieved through process changes, operation changes, direc t emission control, or other methods." (S. Rep.
No. 91

- 1196 at 17 (emphasis added). See also id. ("The Secretary would be directed to review and promulgate new or modified standards whenever new technology processes or operating methods become available.") (emphasis added); H.R. 17255, 91st Cong. Section 113(b)(2) (as amended and passed by Senate Sept. 22, 1970) (requiring the establishment of performance standards reflecting "the greatest degree of emission control which the Secretary determines to
be achi evable through application of the latest available control technology, processes, operating methods, or other alternatives") (emphasis added)) Commenters said the same Committee Report emphasizes that both technological and non

- technological at

- the

- unit sy stems of emission reduction were to be applied at existing sources: "Emission standards developed under this section would be applied to existing stationary sources. Commenters noted, however, the Committee recognizes that certain old facilities may use eq uipment and processes which are not suited to the application of control technology." (S. Rep. No. 91

- 1196, at 19 (emphasis added)) Commenters stated, because the definition of "standard of performance" in the 1970 Amendments and current law are nearly ide ntical, and because this aspect of the definition for existing sources (unlike the definition for new sources) has not changed since 1970, it is clear that the absence of the word "technological" from the definition of "standard of performance" in
the curr ent statute does not imply that beyond

- the

- unit measures can be designated as BSER. Rather, commenters said the decision not to use the word "technological" in the definition of standard of performance only serves to clarify that non

- "technological" system s of emission reduction could also be considered BSER so long as they could be "applied" at and by the regulated source. Commenters stated that the addition and subsequent removal of the word "technological" to the requirements for new sources does not alt er this analysis. Commenters said Congress added this word to Section 111 out of concern that power plants would lack incentives to install "technological" methods of pollution control (such as scrubbers) because293 they could meet the then

- applicable emissio n limits by substituting from high

- sulfur coal to low

sulfur coal (See, e.g., H.R. Rep. No. 95

- 294, at 188 (May 12, 1977) ("In order to effectuate the purposes stated above in the promulgation (and revision) of new source standards of performance, the comm ittee has specified that standards under section 111(b) must require use of the best technological system which has been adequately demonstrated. This means that a major new stationary source may no longer meet NSPS requirements merely by use of untreated oil or coal. Instead, employment of a technological system would become a mandatory aspect of the NSPS requirements for such a source.").) not out of concern that sources EPA would base future NSPS on beyond

- the

- unit measures (a concept that clearly never occurred to the authors of section 111). Commenters stated, as the Congressional Record clearly demonstrates, Congress added the word "technological" as a signal that future NSPS could not be based solely on use of

non

- technological, at

- the

- unit compliance options such as fuel switching from high

- sulfur fuel to
low

- sulfur fuel. Importantly, commenters noted that the addition and subsequent removal of this term to the requirement for new sources did not change the fundamental intent of the statute,
which was and is to limit required control techniques under Section 111 to those that can be implemented at the unit and under the control of the owner or operator of the regulated source. Commenters noted that the legislative history of the 1990 Amendments further confirms this interpretation. Commenters stated, for example, Section 501 of the 1990 Amendments clearly uses the term "technological" as a contrast to other methods of at

- the

- unit emission reduction approaches, such as "work practices" (See 1990 Amendmen ts, Pub. L. No. 101

- 549, S. 507, 104 Stat. 2399, 2645

- 46 (codified as amended at 42 U.S.C. 7401, et seq.) (requiring EPA to approve state "small business stationary source technical and environmental compliance assistance" programs if the state includes, among other things, "[p]rocedures for consideration of requests from a small business stationary source for modification of . . . (A) any work practice or technological method of compliance . . . .") (emphasis added)) not as a contrast to "beyond

- the

unit" measures. In addition, commenters noted that language in several pre

- 1990 Committee Reports demonstrates that Congress used the term "technological" as a way of differentiating scrubbers, precipitators, and other end

- of

- stack treatments (i.e., "technologi cal" systems) from other types of at

- the

- unit processes and systems that a regulated source could employ to reduce emissions. (See, e.g., S. Rep. No. 100

- 231, at 232 (Nov. 20, 1987) ("The technologies, practices or strategies which are to be considered in setting emission standards under [section 112] go beyond the traditional end

- of

- the

- stack treatment or abatement system. The Administrator is to give priority to technologies or strategies which reduce the amount of pollution generated through process chan ges or the substitution of less hazardous substances. A second class of control requirements focusing on the enclosure of emissions points or other secondary containment systems is also to be considered before systems to collect, capture or treat the
emiss ions are reviewed. Considering municipal waste combustion as a potential category of major sources to illustrate these concepts (even though standards for [Municipal Waste Combustors] are set independently by another provision of this legislation): source separation and good combustion are examples of process modifications; covered facilities for ash handling and negative air flow are examples of enclosure and secondary containment; and scrubbers, precipitators and selective catalytic reduction are examples of end

- of

- the

- stack treatment systems."); S. Rep. No. 101

- 228, at 168 (Dec. 20, 1989) (substantially the same language))294 Commenters noted, finally, EPA itself also clearly contemplated that emission guidelines would
be based on at

- the

- unit systems of emis sion reduction. EPA's implementing regulations, which were issued five years after the 1970 Amendments became law, require EPA's emission guideline to reflect "the application of the best system of emission reduction . . . that has been adequately demonstr ated for designated facilities." In addition, commenters noted that the regulations require EPA to provide information on the costs and effects of "applying each system [of emission reduction] to designated facilities" as well as the time needed "for the d esign, installation, and startup of identified control systems." Commenters said this language from EPA's own regulations conforms with EPA's and Congress' past, consistent position that BSER can include only those technologies and practices that can be im plemented at the regulated source and under the control of the source's owner or operator. Commenters said examples of
such at

- the

- unit methods in the EGU context include operating or work practices that could improve heat rate or lower the parasitic consu mption of electricity used for pollution control equipment and other ancillary facilities. Commenters stated that these kinds of methods involve the application of some control measure or practice at the EGU, and would be within the full
control of the EGU operator. Commenters noted that redispatch, renewable energy additions, nuclear generation, and end

- use energy efficiency, by contrast, are neither at

- the

- unit improvements nor are they within the typical source's power to control. Commenters said,

conseq uently, these "systems of emission reduction" are outside the scope of the term BSER, and may not be considered in establishing emission guidelines under section 111(d).

Commenters stated that they have concerns about EPA expanding the traditional boundari es for BSER beyond not only the electric generating unit but also going to generating sources and segments of the economy, not specifically regulated by the Clean Air Act.

Commenters posited that EPA's proposal exceeds legal authority under the Clean Air A ct. Commenters stated, by this proposal, EPA attempts to require actions by entities which are not directly subject to the regulation on the Clean Air Act.

Commenters posited that the final rule should indicate, explicitly, that EPA and states do not
have the legal authority to require emissions reductions outside the EGU sector.

Commenters stated that even under a permissive reading of Section 111's BSER requirement, EPA is limited to regulating within a distinct source category but EPA's Proposed Rule goe s beyond the limits of the specified source category to define BSER based on its highly inexpert assumptions as to how States could or should regulate renewable energy sources, nuclear power plants, and end

- user energy efficiency improvements. Commenters a rgued it is difficult to discern how a regulation intended to limit CO2 emissions from fossil

- fuel

- fired power plants
arrives at such far

- reaching regulation of EGUs, non

- emitting power generators, energy markets, electric transmission and gas infrastructu re, and even energy consumers, that are not within the identified source category, contending that the effect of EPA's definition is to lump nearly every conceivable producer and user of electric energy together as a single "source category" for BSER

purpo ses, and that the definition is ultimately unworkable, since it renders the term source category a nullity and results in EPA regulating the generation, dispatch, and consumption of295 energy, rather than just "systems of emission reduction" designed to reduc e specific sources
emissions.

Response 13 : EPA’s source category for this rule is limited to the affected EGUs. For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

Comment 14: Commenters stated that in the Proposed Rule, EPA asserts that both at

- the

- unit and beyond

- the

- unit measures th at reduce CO2 emissions from EGUs can be considered "systems of emission reduction." (Proposed Rule, 79 Fed. Reg. at 34,886) Commenters stated EPA is proposing that the combination of four "building blocks"

- three of which involve actions that are beyond the control of the affected EGU

- constitute BSER. (Proposed Rule, 79 Fed. Reg. at 34,836) Commenters stated that this interpretation appears to be precluded by the terms of
Section 111 and is also contrary to EPA's past interpretations of the term

- includ ing the agency's interpretation of BSER in the New and Modified Unit Proposals that EPA issued in tandem with this Proposed Rule. (Standards of Performance for Greenhouse Gas Emissions From New Stationary Sources: Electric Utility Generating Units, Propose d Rule, 79 Fed. Reg. 1430 Gan. 8, 2014) [hereinafter "New Unit Proposal"]; Carbon Pollution Standards for Modified and Reconstructed Stationary Sources: Electric Utility Generating Units, Proposed Rule, 79 Fed. Reg. 34,960 Gune 18, 2014) [hereinafter "Modi fied Unit Proposal"]) Commenters concluded that EPA should revise its approach to BSER by setting emission guidelines based only on actions that can be applied at and by the regulated source.

Commenters stated that Building Blocks 2 and 3 lie far afield o f any lawful authority EPA may exercise under Section 111(d). Commenters stated that as the Supreme Court recently held in striking down EPA's PSD/Title V Tailoring Rule, which, like the present proposed regulation, would radically expand EPA's authority c ompared to what Congress intended, "EPA's interpretation is "unreasonable because it would bring about an enormous and transformative expansion in EPA's regulatory authority without clear congressional authorization. Commenters said when an agency claims t o discover in a long

- extant statute an unheralded power to regulate 'a significant portion of the American economy,' they typically greet its announcement with a measure of skepticism. Commenters expected Congress to speak clearly if it wishes to assign to an agency decisions of vast 'economic and political significance.' Commenters remarked that the holdings of UARG and American Trucking Associations apply with force here. Commenters stated that in the proposed rule, EPA transforms a provision allowing the States considerable flexibility in establishing standards of performance for specific existing sources into a vast program giving EPA unprecedented and almost limitless power, and it would effectively allow EPA to take control of the nation's electric gri d for the sole purpose of achieving reductions in the emissions of a single pollutant, without regard to reliability or other generation or dispatch considerations. To that end, commenters closed stating, EPA specifies not only the level of
emission reduct ions that it expects at each designated facility through heat

- rate improvements, but also how electricity generation dispatch decisions are to be made which is unlawful.296 Commenters stated that Building Block 4, which requires increases in end

- user energy efficiency and other efforts to reduce demand for electricity, sits egregiously outside of EPA's lawful authority and looks to derive emission reduction from something over which utilities have no enforceable control: efficiencies that might be gained by c onsumer efforts, and when the Agency calls for demand reduction as a means of controlling emissions from the production of a good, it is calling for the regulation of millions of small actions, by entities that are not even sources under the Clean Air Act, before they hit the grid. Commenters contended this is the type of gross expansion of regulatory authority rejected by the UARG Court.

Response 14 : The EPA is not finalizing building block 4 as part of the BSER . Further, as we explain in sections V.A. and V.B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. That is, EPA is responsible for determining the level of emission limitation from the source category, while states have the responsibility of assigning emission requirements to their sources that will ensure their achievement of that level of emission limitation. States may fulfil their responsibility by est ablishing emission standards or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emission reduction measures, including measures that are not part of the BSER.
For the reasons discussed in secti on V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

Comment 15 : Co mmenters stated that Section 111's language, which specifically focuses on individual sources, does not allow EPA to regulate any of these entities directly. Commenters added that if a state does not act in a timely manner to provide an approvable plan tha t includes enforceable measures, then EPA is mandated by the Act to create a federal plan. However, commenters said EPA would not have the authority to implement any measure in Building Block 2, 3, or 4 as it cannot regulate, for instance, a state's energy consumers.
Commenters stated that EPA coverage of Building Blocks 3 and 4 is inappropriate, citing Section 111(d)(2) of the statute, which requires EPA to establish a federal Section 111(d) plan for any state that fails to submit a "satisfactory" plan of its own. [42 U.S.C. section 7411(b)(1)(A)]. Commenters explained that EPA has no authority or ability to require increased renewable or nuclear generation or to implement demand

- side energy efficiency programs, and
that these are traditional areas of state legislation and regulation and areas over which EPA and the regulated Section 111 source categories have no control. As a result, commenters concluded, if a federal plan were to apply, affected EGUs subject to a BSER standard based on such federally unenf orceable programs or activities would bear the full stringency of the resulting limits, and therefore would be forced to limit generation in order to achieve compliance, and this in turn threatens the reliability of the electricity grid, a result incompati ble with BSER's express consideration of "energy requirements" and the foundational prerequisite that standards be "adequately demonstrated." [42 U.S.C. section 7411(a)(1)] Commenters contended that EPA may not stretch its authority to extend to regulation of resources and activities over which it has no jurisdiction, [See Elec. Power Supply Ass'n v. FERC, 753 F.3d 216, 221 (D.C. Cir. 2014)297 (concluding that agency could not read its authority to "lure' non

- jurisdictional resources" into its regulatory sweep )] and because any "system" of emission reduction that reaches beyond EPA's regulated source categories cannot be implemented by EPA, neither can it satisfy BSER when establishing emission guidelines for state compliance.

Response 15 : The EPA is not finali zing building block 4 as part of the BSER . Further, as we explain in sections V.A. and V.B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require

states or sources to implement the BSER. That is, EPA is responsible for determining the level of emission limitation from the source category, while states have the responsibility of assigning emission requirements to their sources that will ensure their achieveme nt of that level of emission limitation. States may fulfil their responsibility by establishing emission standards or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emission reduction measures , including measures that are not part of the BSER. For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statuto ry text, statutory context, statutory purpose, and legislative history.

Comment 16: Commenters stated that 88 Section 103(g) of the CAA confers on EPA limited authority to address energy conservation with respect to research and other non

- regulatory
activi ties. 42 U.S.C. section 7403(g)(1). Commenters said EPA has relied upon this authority in carrying out its Energy Star Program, EPA's flagship effort to reduce consumer electricity demand, and has generally acted through voluntary public/private partnershi ps to promote energy efficiency. Commenters noted, in 2005, Congress expressly authorized the Energy Star Program, specifically conferring on EPA specific energy conservation authority. See Energy Policy Act of 2005, Pub. L. No. 109

- 58, section 131, 119 St at. 594, 620

- 21 (2005). Commenters stated, where Congress has delegated such specific and limited authority, EPA cannot presume that it has any broader authority to direct energy conservation. Cf. Am. Petroleum Inst. v. EPA, 52 F.3d 1113, 1119 (D.C. Cir. 1 995) ("EPA cannot rely on its general authority to make rules necessary to carry out its functions when a specific statutory directive defines the relevant functions of EPA in a particular area."); Am. Petroleum Inst. v. EPA, 706 F.3d 474, 479 (D.C. Cir. 2 013) ("[A] broad programmatic objective cannot trump specific instructions."). Commenters asserted, as such, EPA has no authority to require energy efficiency measures through 111(d) or other regulatory provisions.

Response 16 : EPA is not mandating particu lar forms of energy conservation. As we explain in sections V.A. and V.B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implem ent the BSER. That is, EPA is responsible for determining the level of emission limitation from the source category, while states have the responsibility of assigning emission requirements to their sources that will ensure their achievement of that level o f emission limitation. States may fulfil their responsibility by establishing emission standards or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emission reduction measures.298 Comment 17: Comm enters stated that some of their specific issues include that the proposed rule appears designed to achieve a 30 percent national reduction in tons of CO2, first in 2005 for the power sector as a whole, and this is not what Section 111(d) requires. Comment ers believed Section 111(d) only authorizes standards of performance on individual, affected sources and adds that the proposed rule mandates state goals that go far beyond setting standards on the affected sources, employing a best system of emission redu ction which extends its reach beyond
the fence

- line of its affected sources.

Response 17 : The commenters misinterpret EPA’s statements about expected overall reductions from the program. These are projections about how much emissions reduction will occur u nder the rule, not a binding or mandatory target in and of itself.

Comment 18: Commenters stated that EPA bases the proposed state

- wide emission reductions on beyond

- the

- fence measures that EPA itself has no authority to mandate, including reductions
in c onsumer use of electricity, changes in the states' generation resource mix and the dispatch of generation resources. Commenters added that through its four building blocks EPA defines the
BSER for fossil

- fuel

- fired power plants as a combination of emission reductions from efficiency upgrades at coal

- fired power plants, increased utilization of natural gas plants, extending the life of nuclear plants and completing construction of new nuclear units, installing more renewable power and significantly increasin g demand side energy efficiency, and this so

- called "integrated electricity system" approach for defining BSER stretches so far beyond the fence

- line of a regulated facility that literally every consumer of electricity in the United States could become

par t of state compliance plans mandated by EPA's rule. Commenters remarked that it is one thing to give States the flexibility to use alternative methods, such as increased nuclear or renewable energy, to help demonstrate compliance with an emission reduction obligation; it is quite another for EPA to base reduction requirements on alternative methods that the Agency itself

- if it were authorized to establish the final performance standards

- could not mandate (or enforce) under
the Act. Commenters believed E PA must reevaluate its proposed method for establishing BSER and limit any guidance in setting performance standards to actions that can reasonably take place within the power plant's fence

- line, explaining that the unprecedented nature and expansive

scope of the Proposal demonstrate how far from EPA's delegated authority the Agency has attempted to travel. Commenters asserted that Section 111(d) does not authorize EPA to regulate entire sectors of the economy. Commenters cited the U.S. Supreme Court which recently noted: "[w]hen an agency claims to discover in a long

- extant statute an unheralded power to regulate 'a significant portion of the American economy,' ... we typically greet its announcement with a measure of skepticism. We expect Congress to speak clearly if it wishes to assign to an agency decisions of vast 'economic and political significance.'"

Response 18 : The EPA is not finalizing a building block 4 as part of the BSER . Further, as we explain in sections V.A. and V.B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. That is, EPA is responsible for determining the level of
emission limitation from the source category, while states have the responsibility of assigning emission requirements to their sources that will ensure their achievement of that level of299 emission limitation. States may fulfil their responsibility by establishing emission standard s or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emission reduction measures, including measures that are not part of the BSER. For the reasons discussed in section V.A. and V.B. of the pre amble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

Comment 19: Commenters stated Section 111 (d) does not require a 30% or "meaningful" national reduction in power sector carbon dioxide emissions; nor does Section 111(d) call for a regulatory program based on "opportunities" for large emissions reductions. Commenters stated that Section 111(d) is very specific on what it authorizes and requires. Commenters said Section 111(d) calls for state plans that establish standards of performance for certain existing sources. Commenters noted, in this rulemaking, the only potentially eligible existing source categories are electric utility steam generating units and stationary combustion turbines

- because these are the only two source categories for which EPA has proposed (but has not yet finalized) Section 111(b) federal standards of performance for new sou rces. Thus, commenters asserted that EPA is only authorized to apply 111(d) to electric utility steam generating units and stationary combustion turbines. Commenters said, yet, the proposal's preamble and other docket materials make it clear that the regul ation is designed to achieve a "meaningful" emission reduction, or about a 30% emission reduction in tons, by 2030, compared with 2005 (or a "greater" emission reduction than alternatives as discussed below), and that the best ways to reduce emissions are to "look at the power system as a whole"

- rather than reducing emissions by means of standards of performance for the two potentially eligible existing source categories as required by Section 111(d).

Commenters stated not only does U.S. EPA expect state s to impose emission limits on a wide range of affected entities to meet the state's performance goal under the proposed emission guideline, but U.S. EPA arrived at the BSER, comprised of the four building blocks, that also incorporates obligations imposed on those affected entities. Commenters stated that Building Blocks 2 (dispatch changes) and 3 (increased RE), for example, require regulating entities across the entire power system, and not just the EGUs alone. Commenters remarked that in no other
Sectio n 111(d) rule have sources other than those that, if new, would be regulated under a Section 111(b) standard of performance been subject to an emission limit. Commenters posited that by essentially requiring states to impose emission limits on affected ent ities, as well as using obligations on affected entities to arrive at the BSER, the proposed emission guideline exceeds U.S. EPA's statutory authority by regulating sources to which the NSPS would not apply if those

sources were new.

Commenters stated tha t while it has long been common industry practice for system operators to choose from among multiple EGUs when deciding which EGU to "dispatch" to generate the next increment of electricity needed

- the well

- established practices of the industry that suppo rt EPA's
evaluation of "re

- dispatch" of generation from coal

- fired steam EGUs to NGCC units as a potential component of the basis for the BSER to reduce CO2 emissions from existing EGUs

- is what got us all here, in this predicament in the first place. Com menters stated that wind and solar300 generation cannot be categorized under this ruling, yet the Clean Power Plan leaves open the consideration of the expansion of Zero

- emission EGUs beyond the phase

- in period and a reduction in the need for expensive and en vironmentally burdensome nuclear EGUs, and even Natural Gas Combined Cycle (NGCC).

Commenters stated that Section 111 of the CAA defines "existing source" as "any stationary source other than a new source." 42 U.S.C. Section 7411(a)(6), and a "new source" is defined as "any stationary source, the construction or modification of which commenced after the publication of regulations (or, if earlier, proposed regulations) prescribing a standard of performance under this section which will be applicable to such source." 42 U.S.C. Section 7411 (a)(2). Moreover, commenters added, the CAA defines "stationary source" as "any building, structure, facility or installation which emits or may emit any air pollutant." 42 U.S.C. Section 7411(a)(3), and therefore, by defini tion under Section 111(d), nuclear energy, renewable energy and energy efficiency (the measures grouped in Building Blocks 3 and 4) cannot be existing stationary sources pursuant to a CO2 rule because none of them "emit or may emit" CO2.

Response 19: For t he reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legisl ative history.

The final rule limits federal enforceability to emission standards for affected EGUs, whether in the context of an emission standard type plan, a state measure type plan, the federal backstop, or a federal plan

1.5.2.1.2 Section 111(d) proce ss

Comment 1: Multiple comments question EPA’s use of 111(d) process:

Commenters stated the regulations provide that states may apply "less stringent emission standards or longer compliance schedules" to individual facilities or classes of facilities if adopting the standards reflecting the emission guidelines would be unreasonably costly, physically impossible, or for other reasons.(40 C.F.R. 60.24(f)(1)

- (3).) Commenters noted
that EPA must permit states to take into consideration the "remaining useful life of the existing source," (42 U.S.C. 7411(d)(1)(B)) and in doing so, permit states to grant individual sources or classes of sources longer periods of time to comply, or to apply less stringent standards than set forth in EPA's emission guidelines. Com menters stated EPA's regulations also require that its emission guidelines address subcategories of "different sizes, types, and classes" of existing sources where factors like "costs of control, physical limitations, [or] geographical location"
warrant th e application of different guidelines. (40 C.F.R. 60.22(b)(5).) The Proposed Rule does not do any of these things.

Commenters stated that EPA claims that the four BBs are mere guidelines for the states and that states are afforded maximum flexibility in ch oosing how to meet the standards; however, the301 guidelines proposed by EPA are mandatory and extraordinarily stringent. Commenters explained that the four BBs are the basis of the proposed mandatory emission limiting goals, and rather than affording flexibi lity as EPA claims, they constitute a regulatory straightjacket, and further, EPA intends to deny the states statutory flexibilities contained in CAA Section 111(d) that allow the states to take into account specific state factors that would allow the stat es to require less stringent emission limiting standards for certain plants based on the life of the unit and other factors. Commenters remarked that EPA regulations outline other flexibilities to be afforded the states, including costs, physical limitatio ns or "other" factors. Commenters said, however, the flexibilities that EPA insists the states have under the proposed rule are illusory given the stringency of the mandatory emission limiting goals.

Commenters stated EPA has no authority to propose stand ards for the states or state goals, which EPA maintains are mandatory requirements, based on actions that are outside of the CO2 emitting EGU sources. Commenters believed EPA is expected to provide guidelines to the states so that the states can develop a state plan to meet state

- established source specific standards, with the states provided great flexibility in terms of developing the means of meeting those source specific standards. Commenters believed that EPA is imposing mandatory goals on the states t o meet instead of providing procedural guidance to states for standards that the EGUs will be required to meet, contrary to the statutory design of Section 111, and EPA, rather than offering guidance towards development of state plans, has instead dictated the stringency and content of state plans through its bizarre determination of BSER. Commenters contended that the four BBs
that are the basis of EPA

- designed standards become instead the actual state plan with very little room to alter the mandatory goal s. Commenters noted that Section 111 requires source

- specific regulation of CO2 emitting EGUs, and the statute requires states to "establish standards of performance for any existing sources for any air pollutant." Commenters concluded that EPA is
not auth orized under the statute to regulate "outside the fence" or to include non

- emitting sources, reduced utilization or end use energy efficiency improvements or demand reductions as components of the BSER.

Commenters stated because the Clean Air Act does not authorize EPA or states to impose emission reduction requirements onto sources outside the fence line, EPA cannot require states to incorporate such obligations into state plans. Commenters continued, stating that BSER and emissions rate reduction targets cannot be set using emissions reductions EPA would be unable to achieve in a federal implementation plan. Commenters added that because EPA has no authority to establish or enforce these measures, which are solely within the province of the states, EPA la cks authority to include these measures in its BSER analysis or in setting emission rate reduction targets.

Commenters stated that the statute dictates that Section 111(d) emissions standards be designed
to be cost

- effective, be adequately demonstrated, an d be achievable at each specific source or electric generating unit (EGU), and such a standard requires source

- specific analysis. Commenters believed that EPA did not undertake this level of analysis, instead relying on national modeling, averaging of data and assumptions of achievability that were not grounded in
unit

- specific assessments, that EPA has established mandatory goals for states based on302 assumption of authorities that are not granted to EPA under the law, and that these assumptions
result in re ductions that are far more stringent than could be imposed if EPA followed the CAA statute, which has been interpreted by both the Agency and the courts to require source

- specific
standards confined to fossil fuel sources.

Commenters stated and concurred that if a state fails to submit a "satisfactory plan" under 111(d), EPA is authorized to directly prescribe a plan itself. C.A.A. Section 111(d)(2), 42 U.S.C. S. 7411(d)(2), but EPA lacks authority to directly regulate the substance of all but its first
bu ilding block, e.g., to require the development of new renewable generation or to require end

use efficiency measures. Commenters explained that these measures are the traditional subject of state police powers, with federal regulation authorized only where Congress has expressly done so, and for this reason, EPA would likely be limited to measures under the first block, i.e.,
inside

- the

- fenceline efficiency improvements at individual sources, which would not be sufficient to achieve EPA's binding state

- by

- s tate emission goals. Commenters added that any attempt to do so would disproportionately burden the regulated sources, create highly inequitable treatment of one state's sources compared to another, and violate Congress' intent in affording
EPA the authori ty to directly prescribe federal plans, and because EPA has that authority, the only reasonable reading of Section 111(d) is that the measures embraced in EPA's proposed best system of emission reduction should be the type of measures which the agency coul d directly regulate itself under its 111(d)(2) authority, should the need arise. Commenters concluded that the disconnect between the current proposal and EPA's ability to directly regulate under (d)(2) confirms that the proposal exceeds the agency's autho rity under Section 111(d).

Commenters stated that the CPP deviates from EPA's 1975 implementing regulation: Whereas the implementing rule authorizes the division of new

- source categories into existing

- source subcategories in order to match designated facil ities to appropriate pollution control standards, the CPP aggregates sources from different categories and mixes in non

- sources outside of any category to maintain the fiction that a state power sector is an existing source. Commenters stated, while there may be only one standard of performance for new sources of designated pollutants, there may be several emission guidelines for designated facilities based on plant configuration, size, and other factors peculiar to existing facilities. Commenters remarked that as discussed elsewhere in the preamble, EPA's emission guidelines will reflect sub

- categorization within source categories where appropriate, taking into account differences in sizes and types of facilities and similar considerations, including differ ences in control costs that may be involved for sources located in different parts of the country. Thus, commenters stated that EPA's emission guidelines will in effect be tailored to what is reasonably achievable by particular classes of existing sources ... However, commenters said the CPP pursues an opposite approach. Commenters asserted that it aggregates coal power plants, NGCC power plants, nuclear power plants, wind and solar power plants, grid managers, and even retail consumers into a vast,
unnamed grab

- bag category for the purpose of setting a 'performance standard' (actually an emissions cap) for an entire state. Commenters stated "This won't fly", explaining that the courts will compare the CPP to EPA's implementing regulation and wonder how the same agency could read section 111(d) so differently.303 Commenters stated that since EPA's proposed Section 111(b) new unit rule applies only to fossil

fired units, there is no basis for EPA to establish existing unit standards for non

- emitting sources
such as wind, solar or nuclear generation, let alone energy efficiency, under Section 111(d). Commenters added that EPA does not explain how it is possible for their existing unit standard to be more stringent for many states than the proposed national new uni t standard, something Congress clearly did not intend. Commenters added that by going "outside the fence line" in setting standards, EPA developed standards for existing units that are more stringent than new unit new source performance standards (NSPS), w hich establishes a policy with no basis in the statute or no precedent under regulatory guidance. Commenters closed, stating EPA offers no justification for developing source specific standards under Section 111(b) and source specific
standards for the mod ification and reconstruction rule but not for Section 111(d).

Response 1: For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority i n light of the statutory text, statutory context, statutory purpose, and legislative history.

As we explain in sections V.A. and V.B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the BSER. That is, EPA is responsible for determining the level of emission limitation from the source category, while states have the responsibility of assigning emission requirements to thei r sources that will ensure their achievement of that level of emission limitation. States may fulfil their responsibility by establishing emission standards or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emission reduction measures, including measures that are not part of the BSER.

EPA is not finalizing the proposed “portfolio” approach, and will not accept state plans that attempt to impose emission standards or other CAA compliance obligat ions on entities other than affected EGUs. The state measures approach provides a path for a state to achieve the emission performance level as expressed as a state goal in a way that avoids placing enforceable emission standards on affected EGUs (unless a nd until the backstop is triggered). States will have a wide range of flexibility in choosing how to demonstrate their affected EGUs are meeting a state goal.

EPA recognizes that each state has unique factual circumstances that will shape the development

o f a state’s plan. We look forward to working with the states to account for these factual circumstances in developing satisfactory state plans.

1.5.2.1. 3 Enforcement

Comment 1: Comments raise enforcement issues:

Commenters stated that EPA does not recognize that State agencies charged with enforcing the Proposed Rule have no authority to enforce outside the fence reductions, and by proposing to regulate outside the fence, the Proposed Rule exceeds the scope of EPA's authority under the
CAA.304 Commente rs stated that past Clean Air Act (CAA) actions impacting EGUs, as with other NSPS regulated industries, have been imposed inside

- the

- fence at the affected unit, and that these compliance strategies and tools are familiar to the state and regulated entitie s because once the Section 111(d) plans step outside that fence line, the landscape becomes more difficult, particularly when moving beyond traditional state environmental and utility authorities. When factoring into the equation municipal electric systems and rural electric cooperatives that do not fall under state RE and EE standards because of local governance, commenters believed U.S. EPA is essentially proposing a wholesale reworking of each state's individual enforcement
authorities. Commenters stated that at the forefront are the problems associated with enforcing a standard that is directed at controlling emissions at an existing EGU against a non

- affected facility, such as a manufacturing facility, commercial building, and the like, and if a demand

- side regulation was not met, and that was a contributing factor in a state's failure to meet its assigned CO2 goal, who would the state, or U.S. EPA, seek to sanction? Commenters contended that it is difficult to imagine an enforcement action against a non

- EGU based on an EGU NSPS from either a legal or practical standpoint, and difficult to imagine an enforcement action against an EGU for the actions of an entity accountable for improvements in EE. Commenters closed, stating that as with other sections of the proposal, the approach of enforcing an EGU NSPS against a non

- EGU puts the U.S. EPA in the position of establishing energy and economic policy, an action outside the realm of environmental policy and well beyond existing legal
authorities.

Commenters s tated that the CAA does not authorize EPA or citizen enforcement actions against

non

- stationary sources, that EPA lacks authority to make non

- EGU entities subject to federal enforcement actions, and although Section 111(d) authorizes EPA to enforce the pro visions of state "plans" where the state fails to enforce them, (42 U.S.C. 7411(d)(2)(B)) this provision is clearly intended to authorize EPA to enforce only "standards of performance" that apply to the stationary sources identified in state plans. Comment ers continued (verbatim), nothing in Section 111 authorizes EPA to enforce other types of state or local regulations (for example, RPS requirements or energy efficient building codes) that may be incorporated in state plans, if those regulations are not "s tandards of performance" for "stationary sources." Thus, commenters stated, although a state could enforce the non

- "performance standard" rules or regulations that may be necessary to achieve EPA's emission goal, EPA itself may not directly enforce these

r ules or regulations against the non

- stationary source entities that may be responsible for those specific actions under the state plan. Moreover, commenters noted that non

- EGUs included in state plans clearly cannot be subject to federal citizen suits for failure to meet state plan requirements. Commenters said neither Section 111(d) nor Section 304 (which relates to citizen suits) authorizes citizen suits against non

- "stationary source" entities for failure to comply with the requirements of state plans. Commenters stated, indeed, by its terms, Section 111(d) only authorizes EPA to enforce state plans. Commenters said, in addition, as applicable here, the CAA's citizen suit provisions only authorize citizen suits to be brought for a violation of an
"emissi on standard or limitation,"(Id. 7604(a)(1)(A). Commenters stated that citizens may also bring suit for alleged violations of EPA or state orders, for failure of EPA to perform a non

discretionary act or duty, and for construction of a source without a requ ired federal air permit or for violation of such a permit. Id. 7604(a). However, commenters said none of these causes of305 action are directly relevant to the Section 111(d) context which the CAA defines as a "requirement established by the State or the Admi nistrator which limits the quantity, rate, or concentration of emissions of air pollutants on a continuous basis, including any requirement relating to the operation or maintenance of a source to assure continuous emission reduction." (135 Id. 7602(k)) Com menters said, since an RPS, EERS, or other "portfolio" requirement on

non

- EGUs would not be a "requirement . . . which limits the quantity, rate, or concentration of emissions of air pollutants," such a requirement cannot be considered an "emission standar d or limitation" and thus cannot form the basis of a citizen suit against the entity. Commenters stated, consequently, any requirements in state plans other than an explicit emission limitation that is directly applicable to an affected EGU cannot be the s ubject of a citizen suit. Commenters asserted, to the extent that EPA's proposal would allow such suits against non

- EGUs, the proposal exceeds EPA's statutory authority.

Response 1 : The federal enforceability considerations raised in the comment arose primarily under the proposed portfolio approach for state plans. As explained in section VIII.C of the preamble, the EPA is not finalizing the portfolio approach, which would have allowed state plan submittals to include federally enforceable measures that apply to entities that are not affected EGUs. However, as further explained in section VIII.D, if the state is adopting the state measures type plan, the state plan submittal will need to specify, in the supporting materials, the state
enforceable measure s that the state is relying upon in conjunction with any federally enforceable
emission standards for affected EGUs to meet the emission guidelines. T he existing guidance
documents pertaining to enforceability include: (1) September 23, 1987 memorandum an d accompanying implementing guidance, “Review of State Implementation Plans and Revisions for Enforceability and Legal Sufficiency;” (2) August 5, 2004 “Guidance on SIP Credits for
Emission Reductions from Electric

- Sector Energy Efficiency and Renewable En ergy Measures;” and (3) July 2012 “Roadmap for Incorporating Energy Efficiency/Renewable Energy Policies and Programs into State and Tribal Implementation Plans, Appendix F. The final rule provides considerable discretion to the states in setting emission standards and related plan requirements
for its affected EGUs.

1.5.2.1. 4 FIP Issues

Comment 1: Comments raise FIP issues:

Commenters stated that EPA has not provided a model rule or plan for implementation of the Clean Power Plan by each state, and pa rt of the difficulty the commenters expected to face in developing any future state plan is related to this decision not to issue a model rule

- on which any Federal Implementation Plan ("FIP") might be based

- that would allow states to assess how their o wn plans compare. [See Supplemental Proposal for the Rule to Reduce Interstate Transport of Fine Particulate Matter and Ozone (Clean Air Interstate Rule), 69 Fed. Reg. 32,684, 32,709 (June 10, 2004) (discussing advantages of model rule for SO2 and NOx Clea n Air Interstate Rule)] Commenters surmised that this lack of a model rule stems in part from the fact that EPA lacks statutory authority to impose the building blocks (beyond building block one) on sources (and especially on non

- sources), and that it woul d therefore not be possible for EPA to implement a FIP based on all four building blocks. [See 42 U.S.C. Section 7411(a)(3) (defining306 "stationary source"); 40 C.F.R. Section 60.27(e) (requiring regulations proposed and promulgated by the Administrator to p rescribe emission standards of the same stringency as the corresponding emission guideline(s) specified in the final guidance document).] This leads the commenters to the conclusion that EPA should not consider beyond the fence line, third

- party measures i n determining the stringency of state goals. [The Commission does not believe that the state goals set using all four building blocks as EPA had done are attainable through the implementation of only Building Block 1, even taking all EPA assumptions relate d to Building Block 1 as feasible.]

Response 1 : The EPA is proposing a federal plan and model rule that will demonstrate how the degree of emission limitation determined by the BSER can be carried into effect through an emissions trading program in which e nforceable emission standards are applied only to the affected EGUs.

Comment 2: Commenters stated that EPA lacks authority to impose a State

- specific demand

side energy efficiency program as part of a federal implementation plan. Commenters said, first,

a s EPA recognizes in the proposed rule, EERS programs, like RPS programs, are adopted and implemented at the State level and reflect the exercise of authority that was reserved by the States. Commenters said this is consistent with the general federal appro ach to energy efficiency, which has focused on voluntary programs, such as tax incentives and grants, rather than mandatory adoption of energy efficiency measures. (See DSIRE Database for State Incentives for Renewables and Efficiency, Financial Incentives for Energy Efficiency, available at http://www.dsireusa.org/summarytables/finee.cfm .) In contrast, commenters stated that Congress has only authorized one federal energy efficiency program, w hich is administered by the Department of Energy, not EPA. See 42 U.S.C. 6291 et seq.; 10 C.F.R. pt. 431. Second, commenters noted that there is nothing in the Clean Air Act to suggest that EPA has authority to require States to implement mandatory energy efficiency obligations. Commenters said nor has EPA ever asserted that it possessed such authority in the past. In fact, EPA's website highlights State programs, such as energy efficiency portfolio standards, as means to improve energy efficiency. (EPA, En ergy Efficiency, available at http://www.epa.gov/statelocalclimate/state /topics/energy

- efficiency.html .)

In sum, commenters stated that the authority to impose energy efficiency requirements on retail consumers of electricity rests exclusively with the States and, to the extent that there is any federal role at all with respect to mandatory energy efficiency standards, it is exercised by agencies other than EPA.

Respon se 2 : The CAA section 111(d) phrase “system of emission reduction” is deliberately broad in meaning. The provisions of CAA section 111(d)(1) and (a)(1) do not explicitly include renewable energy use, but they do not include any specific emission reduction measures. The absence of specific provisions does not mean that Congress did not intend the BSER to include any of those types of measures. Rather, this contrast supports viewing a “system of emission reduction” under CAA section 111 as sufficiently broad to encompass a wide range of measures for the purpose of emission reduction of a wide range of pollutants from a wide range of307 stationary sources. Renewable energy is one potential measure that may be employed, consistent with the state flexibility princip le that is central to this program.

Comment 3 : Commenters stated CAA neither Section 110 nor CAA Section 111 addresses the contents of a FIP or describes the types of requirements EPA may establish through a FIP, and those sections identify the situations in which EPA may impose a FIP, but do not grant the power to adopt or enforce specific measures in a FIP. Commenters stated, for that, EPA must rely on other sections of the Act. Commenters continued, stating EPA's FIP authority is limited by CAA
Section 3 07, which provides that FIPs must not be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 42 U.S.C. Section 7607(d)(9); North Dakota v. EPA, 730 F.3d 750, 758 (8th Cir. 2013); it would be arbitrary, capricious, an abuse of discretion and not in accordance with law for EPA to impose a FIP that regulates beyond the fence line because the Act does not grant EPA the power to do so. Commenters believed EPA may exercise only the authority delegated by Congress. La. Pub. Serv. Comm'n., 476 U.S. at 374; Ctr. for Biological Diversity, 722 F.3d at 413 (Kavanaugh, J. concurring). Commenters added EPA may not exercise authority "in a manner that is inconsistent with the administrative structure that Congress enacted into law." ETSI Pipeline Project v. Missouri, 484 U.S. 495, 517 (1988). Commenters concluded, stating that the administrative structure of the Clean Air Act allows for the regulation of individual stationary sources and their direct emissions. Indirect regulation of air emissions is authorized only rarely, and only when expressly called for by the Clean Air Act.

Commenters stated and concurred EPA proposes to make all requirements in state plans "federally enforceable," including those requirements that would apply t o entities other than affected EGUs under a "portfolio" approach. (See Proposed Rule, 79 Fed. Reg. at 34,901) Commenters stated EPA does not define what it means by "federally enforceable"; however, this language could be interpreted to mean that non

- EGU e ntities identified in state plans (which could include local distribution utilities, renewable energy providers, energy efficiency providers, or state agencies) could be subject to federal enforcement actions by EPA (See 42 U.S.C. 7413) or by citizen group s under the CAA's citizen suit provision. (See Id. 7604) Commenters noted that under section 111(d), EPA may only require states to issue performance standards for "sources" of air pollutants, and read in the context of the rest of the Act, Section 111(d) 's reference to "sources" is clearly intended to designate stationary sources," (See 42
U.S.C. 7411(a)(2)) (limiting the definition of "new source" to stationary sources); Id. 7411(a)(6) (limiting the definition of "existing source" to stationary sources)) which Section 111 defines as "any building, structure, facility, or installation which emits or may emit any air pollutant."(Id. 7411(a)(3)) Thus, commenters concluded, EPA does not have authority to regulate entities like
local distribution utilities or nuclear generators that fall outside of the definition of a "stationary source." Commenters noted that Section 111 also does not authorize states to regulate such entities, and although states may generally regulate such entities under their own sovereign state powers, EPA may not require states to do so under Section 111 of the CAA.

Commenters stated that the Proposed Rule encourages states to submit a plan that contains what EPA calls "portfolio" measures, and these measures would be used, for instance, t o dramatically increase the use and deployment of renewable energy and EE throughout the state, targeting their308 state's citizens and businesses as necessary agents in the reduction of electric consumption. Commenters said, however, upon EPA approval of a s tate's CAA Section 111(d) Plan, these measures would become "federally

- enforceable" against those agents (citizens and businesses) required to implement them. Commenters stated that CAA Section 111(d) does not provide EPA the authority to create federally enforceable obligations on entities that do not own or operate facilities within the regulated source category but rather, CAA Section 111 authorizes standards
to be set for facilities within EPA

- listed source categories. Commenters closed, stating that
CA A Section 111 does not apply to, nor can it permissibly reach, any other facilities or entities that are not part of the listed source category.

Response 3 : The federal enforceability considerations raised in the comment arose primarily under the proposed portfolio approach for state plans. As explained in section VIII.C of the preamble, the EPA is not finalizing the portfolio approach, which would have allowed state plan submittals to include federally enforceable measures that apply to entities that are n ot affected EGUs. However, as further explained in section VIII.D, if the state is adopting the state measures type plan, the state plan submittal will need to specify, in the supporting materials, the state enforceable measures that the state is relying u pon in conjunction with any federally enforceable
emission standards for affected EGUs to meet the emission guidelines. The final rule provides considerable discretion to the states in setting emission standards and related plan requirements
for its affec ted EGUs. Consistent with longstanding practice under the Clean Air Act, if a regulated entity does not meet a requirement, the EPA will address the matter on a case

- by

- case basis, to determine the appropriate response and resolution.

1.5.2.1. 5 Other Lega l Authority Issues

Comment 1: Commenters believed EPA's proposed rules under Section 111(d) to reduce greenhouse gases from both power plants and beyond power plants is legally and technically flawed, and that the EPA appears to recognize the legal vulnera bilities by proposing to make each of the building blocks independently severable, as if realizing they will be vacated by the Court during judicial review.

Commenters stated that EPA determined each individual state's emission reduction target using
2012 data for several building blocks, including: 6 percent heat rate improvements at existing coal plants; redispatching existing natural gas combined cycle plants to 70 percent capacity; increasing the use of renewable energy; ensuring the continued operation of nuclear plants; and enhancing energy efficiency programs. Commenters said EPA's plan emphasizes that states will have flexibility in the means chosen to meet the carbon dioxide target goals, through these and other measures. Commenters stated, however, with the exception of the heat rate improvements, the other measures only serve to shift generation away from existing coal

- fired EGUs.

Commenters recognized EPA's limited authority to regulate carbon dioxide emissions under the CAA and expresses concern s related to establishing CO2 reduction targets under Section 111(d) that force the development of a State Energy Plan rather than the regulation of affected fossil
fuel

- fired EGUs. Commenters continued that this is an unprecedented method of establishing control requirements for existing sources from a source category that is subject to New Source309 Performance Standards under Section 111(b) of the CAA. Commenters believed the Section 111(d) state plan should not be the State Energy Plan; rather, the Section 111(d) plan should be part of a state's energy plan. Commenters stated they have developed a White Paper entitled Recommended Framework for the Section 111(d) Emissions Guidelines Addressing Carbon Dioxide Standards for Existing Fossil Fuel

- Fired Power Pl ants. Commenters said it was sent to EPA Administrator Gina McCarthy on April 10, 2014, and has received a significant attention in the national press. In that paper, commenters recommended and urged EPA establish emission guideline targets based upon acti ons that can be taken directly by operators at existing sources that would actually be subject to the Section 111(d) emission guidelines, explaining that this approach is consistent with previous emissions guidelines promulgated under the CAA by EPA
for ot her source categories.

Commenters stated EPA argues that it bases its proposed "building blocks" on measures that states are already undertaking

- Proposal, 79 Fed. Reg. at 34,856

- but a state's exercise of its own policy discretion cannot confer regul atory authority on a federal agency, and EPA expresses concern that, if it limited its proposal to heat

- rate improvements achieved inside the fence at
individual coal

- fired plants, a "rebound effect" would increase operations at these plants and lead

to sm aller overall reductions. Id. at 34,856 & n.93. Commenters said the "rebound effect" is nothing new in environmental law. See, e.g., 75 Fed. Reg. 74,152, 74,316

- 20 (Nov. 30, 2010) (providing detailed discussion of "rebound effect" in fuel

- efficiency contex t). Commenters stated that it has never been used as a justification to set state energy policy or otherwise enlarge EPA's authority, and it cannot bear that weight here. Commenters noted EPA also asserts that its additional, beyond

- the

- fenceline "building blocks" promise additional emission reductions "by significant amounts and at lower costs" than some strategies within the first, inside

- the

- fenceline "building block." Proposal, 79 Fed. Reg. at 34,856. But commenters said even assuming this is true, it i s only a reason to propose these measures if they are within the agency's power to

propose.

Commenters noted that in striking down EPA's Clean Air Interstate Rule, the D.C. Circuit noted that it is "entirely arbitrary" to base standards on "irrelevant fact ors." North Carolina v. EPA, 531 F.3d 896, 930 (D.C. Cir. 2008). Commenters explained that in the CPP proposed rule, two of the four building blocks (Building Blocks 3 and 4) impact units or entities that do not emit CO2 and some do not emit anything at al l. Commenters believed EPA has no authority to require actions
from non

- emitting units or entities under the CAA and continues (verbatim) EPA's contention that, under Section 111, these other units are somehow relevant to the regulation of emissions
from f ossil

- fuel

- fired EGUs further supports the fiction that it is establishing an existing source performance standard. EPA argues that these building blocks "displace or avoid the need for generation from those sources and thereby reduce the emissions from th ose sources." Legal Memorandum, supra note 21, at 14. Commenters stated, by this logic, EPA could include any number of things under this rule, including electric vehicles, global climate patterns and geo

politics, all of which may "avoid the need for gene ration from those sources and thereby reduce emissions from those sources." Commenters said, as the court in North Carolina noted, "lest EPA forgot, it is 'a creature of statute' and has only those authorities conferred upon it by Congress."
North Carolina , 531 F.3d at 922. Commenters stated that EPA may not take, even in the public310 interest, the power to regulate "a significant portion of the American economy," much of which it currently does not and cannot regulate directly. Brown & Williamson, 529 U.S. a t 159. Commenters stated, by including national projections for non

- emitting units and entities into
state standards for fossil

- fired EGUs, EPA is constructing a goal that is entirely theoretical and arbitrary.

Commenters stated that the assumption that al l EGUs are fungible as part of an interconnected grid

- such that increasing generation from natural gas and renewable power or reducing retail
demand will reduce coal

- fired generation

- does not apply to the Commenter's Power
Plant. Commenters continued, stating that Building Blocks 2, 3, and 4 are entirely outside of commenters’ control because it is not associated with a utility distribution system, and that it is neither technically feasible nor reasonable to impose on an affected facility an emission standard generated through assumptions that are simply inapplicable to that facility. Commenters’ unique position further supports a finding that it is not an "affected" EGU and should not be included within the scope of this rulemaking.

Response 1 : The commenters are incorrect. This rule is for the reduction of carbon dioxide from the affected power plants, not any other facility. Further, for the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretat ion of the BSER is reasonable and within the scope of EPA’s authority in light of legal precedent, the statutory text, statutory context, statutory purpose, and legislative history.

1.5.2.2. EPA has legal authority to include flexible beyond

- the

- fence com pliance approaches

Comment 1: Commenters stated in earlier comments to EPA, the Alabama Governor's office and Alabama Department of Environmental Management (collectively, "the Administration") questioned the legal basis for the proposal.(7 See, e.g., Alabama's Opposition to U.S. EPA's Clean Power Plan, Testimony by Blaine Galliher, Senior Advisor to Governor Robert Bentley,
available at http://governor.alabama.gov/newsroom/2014/07/governor

- bentley

- sends

- senior

advisor

- testify

- epas

- public

- hearing

- clean

- power

- plan

- regulations/ ) Commenters noted, indeed, Alabama is one of 12 states that have brought suit against the proposal, notwithst anding the legal hurdles to challenging a non

- final rule. (Neela Banerjee, 12 States sue the EPA over proposed power plant regulations, L.A. Times (Aug. 4, 2014), available at http://www.latimes.com/business/la

- fi

- epa

- lawsuit

- 20140805

- story.html .) Commenters stated the Administration's purported legal critique involves two basic arguments: (1) EPA cannot regulate power plant carbon dioxide emissions under Clean Air Act sec tion 111(d) because EPA has promulgated emission standards for power plant hazardous air emissions under section 112; and (2) section 111(d) requires controls on emission sources only, and does not authorize "beyond the fence line" compliance flexibility. (Id.) Commenters said each of the Administration's arguments is flawed. First, commenters stated EPA interprets section 111(d) to limit development of standards of performance for specific pollutants regulated under section 112,
rather than for entire cate gories of sources regulated under that section. Commenters said EPA's311 interpretation is a permissible construction that, in fact, is the most natural reading of the statute and best effectuates each of the statutory provisions. Second, commenters noted tha t EPA's broad interpretation of "best system of emission reduction" to include beyond

- the

- fence

- line compliance approaches is a logical and permissible reading of these generically defined statutory terms. Commenters said, to demonstrate the flaws in Admin istration's attempted legal critique, these comments will first briefly outline the applicable statutory and regulatory framework for section 111 before addressing the state's specific criticisms. Commenters stated that Clean Air
Act section 111 directs EP A to establish "standards of performance" limiting emissions of harmful air pollutants in three phases. Commenters said, first, EPA must identify categories of stationary sources that cause or contribute significantly to "air pollution which may reasonably be anticipated to endanger health or welfare."(42 U.S.C section 7411(b)) Second, commenters said EPA must establish national standards of performance for new sources in each such category. (Id.) Finally, commenters stated that once EPA has developed stand ards of performance for new sources in a category, it must then prescribe regulations under which states develop standards of performance for existing sources in the same source category. (Id. section 7411(d)) Commenters said Section 111(d) provides that E PA "shall prescribe regulations which shall establish a procedure . . . under which each State shall submit [to EPA] a plan which . . . establishes standards of performance for any air pollutant . . . to which a standard of performance
under this section w ould apply if such existing source were a new source." (Id. (emphasis added) Commenters said Congress exempted two categories of air pollutants from this mandate: any air pollutant (1) for which air quality criteria have been issued or which is listed unde r section 108(a); or (2) emitted from a source category covered under the hazardous air pollutant provisions of section 112.(Id.) Commenters said neither exemption applies here. Commenters noted that EPA regulations implementing section 111(d) establish a broad framework under which EPA establishes emission guidelines for each covered pollutant.(40 C.F.R. section 60.22(a)) Commenters said the guidelines set minimum required emissions limitations based on the best adequately demonstrated systems of emission reductions.(Id. section 60.22(b)) Commenters said states then have flexibility to tailor their own plans to implement the standards of performance, so long as they meet or are equivalent to EPA's emission guideline.(Id.) Commenters stated that EPA's implem enting regulations also provide for case

- by

- case variances from an emission guideline to allow for "significantly more reasonable" compliance options, (40 C.F.R. section 60.24(f)(3)) such as where necessary to take into account the remaining useful life
of an existing source that would be subject to the performance standard. (42 U.S.C. section 7411(d)(1)(B)) Commenters noted, although EPA promulgated its guidelines for implementing section 111(d) in 1975, the agency has issued few performance standards for existing sources. Thus, commenters stated, while this is EPA's default approach, it has not been extensively elaborated or refined through a long history of prior rulemakings; and nothing in the Clean Air Act requires EPA to adhere rigidly to this approach for each air pollutant or each existing source category. Commenters stated, in fact, EPA may adopt any reasonable approach to develop, issue, and implement existing source standards, so long as they meet the minimum requirements of the
Clean Air Act and t he agency adequately explains its approach and rationale through appropriate notice and comment rulemaking. (See, e.g., FCC v. Fox Television Stations, Inc. 566 U.S. 502, 515 (2009) (an agency may change its position so long as it provides "good reasons" f or doing312 so)) Commenters noted, in this instance, EPA's rationale for using 111(d) as a legal basis to establish guidelines of performance for existing power plant sources of carbon dioxide is fully consistent with the Clean Air Act, EPA's implementing reg ulations, and past practice. In particular, commenters stated that "Congress amended Section 111 [in 1990] to remove the word 'technology' from its definition of performance standards, indicating that standards need not be technology

- based."(Id.) Thus, com menters said not only there is no support in the statute for the Administration's overly restrictive reading of the statute, accepted principles of statutory interpretation refute the Administration's contention. Commenters noted, additionally, section
111 (d) explicitly provides that the procedure for implementing standards of performance for existing sources "shall . . . be similar to that provided by section 7410 [section 110] of this title." (42 U.S.C. section 7411(d)(1)) Commenters stated that the proce ss prescribed under section 110 grants states great latitude to fashion state implementation plans so long as they will achieve air quality protections that are at least equivalent to minimum federal standards, and specifically authorizes flexible complian ce approaches "including economic incentives such as fees, marketable permits, and auctions of emission rights."(U.S.C. section 7410(a)(2)(A)) Commenters stated, based on well

- established practice, states have, in fact, exercised this flexibility to implem ent pollutant reductions required under section 110 through a variety of non

source

- specific mechanisms, including renewable portfolio standards, demand

- side management, utility planning, and other indirect emission reduction systems. (See EPA Roadmap for Incorporating Energy Efficiency/Renewable Energy Policies and Programs into State Implementation Plans/Tribal Implementation Plans (2011); EPA Guidance on SIP Credits for
Emissions Reductions from Electric

- Sector Energy Efficiency and Renewable Energy Meas ures (2004)). Commenters noted that these guidance documents have been successfully implemented in Texas, Shreveport, Louisiana, and the Washington, D.C. region, all of which modified their SIPs to receive credit for reductions achieved through energy effi ciency and renewable energy measures, and there is no question that EPA has similar flexibility in suggesting and in some cases implementing through Federal Implementation Plans' flexible compliance approaches, as section 111(d)(2) accords EPA the same aut hority granted to the states in order to fashion a federal "backstop" program for existing sources. Thus, commenters stated that contrary to the Administration's unsupported criticisms, there is little question that "EPA has the authority to
outline flexib le structures in its [section 111(d)] guidance to states on existing source regulation, either in the form of a specific preferred option or by listing several alternative options."

Commenters stated EPA also correctly takes a system

- wide approach. Comme nters supported the EPA's decision to look beyond the fence line of individual plants in identifying the best system of emission reduction, and because of the integrated nature of the electric grid, reductions in generation at a particular fossil fuel faci lity must be balance with either increased generation or with demand reduction elsewhere on the grid. Commenters added that because of this, the carbon intensity of generation cannot be considered in isolation, and setting goals and ultimately determining compliance should rightly consider the entire system.Commenters stated regarding regulating beyond the fence line, NCDENR erroneously claims that "[t]he plain language of the Act as well as legal precedent precludes EPA and States from designing a standard that relies on reductions made outside of the emissions unit." Commenters continued (verbatim), tellingly, NCDENR does not identify the "plain language" or the legal precedent that purportedly limits313 EPA to developing unit

- specific guidelines and constrai ns EPA from creating flexible compliance options. Commenters said the reason for this omission is simple

- it does not exist. Commenters stated, in contrast to NCDENR's unsupported argument, "[t]here is widespread agreement in the academic community that S ection 111 authorizes the use of many types of flexible approaches."(G. Wannier, J. Schwartz, N. Ricardson, M. Livermore, & D. Burtaw, Prevailing Academic View on Compliance Flexibility under Section 111 of the Clean Air Act, Institute for Policy Integrity , New York University School of Law Discussion Paper No. 2011/2 at 1) Commenters stated, to the extent the Clean Air Act defines the terms used in section 111(d), it does so broadly, leaving EPA wide latitude to interpret them in any reasonable manner that effectuates the pollution reduction goals of the Act. Commenters noted, in section 111(a), Congress defined "standard of performance" to mean "a standard for emissions of air pollutants which reflects the degree of emission limitation achievable through t he application of the best system of emission reduction (taking into account the cost of achieving such reduction and any

non

- air quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated ." 42 U.S.C. section 7411(a)(1). Commenters noted that the general definitions in Clean Air Act section 302 define "standard of performance" to mean "a requirement of continuous emission reduction, including any requirement relating to the operation or mai ntenance of a source to assure continuous emission reduction. 42 U.S.C. section 7602(l) (emphasis added). Commenters stated, on the face of the statute, EPA has broad discretion to identify the best system of emission reduction and is limited only to the e xtent the
standard is achievable and considers certain factors such as cost and other non

- air quality impacts. Commenters asserted that the applicable definitions do not, as NCDENR argues, limit EPA to developing unit

- specific guidelines. And commenters sa id courts should not infer such an unexpressed limitation on the agency's discretion to reasonably interpret its statutory mandate. Chevron U.S.A. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 863 (1984); see Texas Rural Legal Aid Inc. v. Legal Serv. C orp., 940 F.2d 685, 694 (D.C. Cir. 1991) ("Under Chevron [courts] normally withhold deference from an agency's interpretation of a statute only when Congress has 'directly spoken to the precise question at issue.'"). Commenters stated, to the extent Congre ss has spoken on the issue of EPA's discretion to fashion flexible compliance approaches under section 111(d), "it has removed, rather than added, barriers to flexible mechanisms in EPA regulations." G. Wannier, et al., Prevailing Academic View on Complian ce Flexibility under Section 111 of the Clean Air Act, supra. at 4. Commenters noted, in particular, "Congress amended section 111 [in 1990] to remove the word 'technology' from its definition of performance standards, indicating that standards need not be technology

- based." Id. Thus, commenters stated that not only is there no support in the statute for NCDENR's overly restrictive reading of the statute, accepted principles of statutory interpretation refute NCDENR's contention. Additionally, commenters no ted that Section 111(d) explicitly provides that the procedure for implementing standards of performance for existing sources "shall . . . be similar to that provided by section 7410 [section 110] of this title." 42 U.S.C. section 7411(d)(1).
Commenters sa id the process prescribed under section 110 grants states great latitude to fashion state implementation plans so long as they will achieve air quality protections that are at least equivalent to minimum federal standards, and specifically authorizes flexi ble compliance approaches "including economic incentives such as fees, marketable permits, and auctions of314 emission rights." 42 U.S.C. section 7410(a)(2)(A). Commenters asserted, based on well

established practice, states have, in fact, exercised this flex ibility to implement pollutant reductions required under section 110 through a variety of non

- source

- specific mechanisms, including renewable portfolio standards, demand

- side management, utility planning, and other indirect emission reduction systems. See EPA Roadmap for Incorporating Energy Efficiency/Renewable Energy Policies and Programs into State Implementation Plans/Tribal Implementation Plans (2011); EPA Guidance on SIP Credits for Emissions Reductions from
Electric

- Sector Energy Efficiency and Renew able Energy Measures (2004) (These guidance documents have been successfully implemented in Texas, Shreveport, Louisiana, and the Washington, D.C. region, all of which modified their SIPs to receive credit for reductions achieved through energy efficiency and renewable energy measures). Commenters stated that there is no question that EPA has similar flexibility in suggesting

- and in some cases implementing through Federal Implementation Plans

- flexible compliance approaches, as section 111(d)(2) accords EPA the same authority granted to the states in order to fashion a federal "backstop" program for existing sources. 42 U.S.C. section 7411(d)(2); see G. Wannier, et al., Prevailing Academic View on Compliance Flexibility under Section 111 of the Clean Air Act, supra. at 4. Thus, commenters said, contrary to NCDENR's unsupported criticisms, there is little question that "EPA has the authority to outline flexible structures in its [section 111(d)] guidance to states on existing source regulation, either in th e form of a specific preferred option or by listing several alternative options." G. Wannier, et al., Prevailing Academic View on Compliance Flexibility under Section 111 of the Clean Air Act, supra at 4.

Commenters stated that Oklahoma DEQ does recognize that absent such an approach, most existing subject facilities located in Oklahoma will not be able to achieve the proposed CO2
emission limitations. Commenters believed that if outside the fence

- line reductions are determined to be impermissible, then the proposed goals would need to be adjusted drastically in order for the state or the subject facilities to have any reasonable chance to comply with EPA's requirements, and consequently, to the extent that such an approach is determined to be within the leg al confines of the Clean Air Act, ODEQ supports the ability to consider such reductions in developing and implementing a state Section 111(d) plan. However, commenters stated, if
outside the fence

- line reductions are determined to be impermissible, then EP A's Proposed Rule should be withdrawn. Commenters contended that standards for existing sources set under Section 111(d) are supposed to be similar to those for new, modified, or reconstructed sources set under Section 111(b). Commenters added that it appe ars that the corresponding emission rates for existing sources that would result from implementation of the Proposed Rule would actually be significantly more stringent than those contained in the related rule proposed for new
sources. Commenters stated th at the question is whether Section 111(d) allows for indirect or direct regulation of sources that are not regulated under the corresponding Section 111(b) standard, and if existing sources are not allowed to include reductions obtained outside of the
fenc e

- line (i.e., EE, DSM, etc.), then it will be difficult (if not impossible) for many existing sources to comply.

Response 1 : Some of these statements are supportive of the rule and we appreciate them. We explain in section V. of the preamble our authority under section 111(d) and (a)(1) to include315 building blocks 2 and 3 as part of the BSER. We also explain in the preamble that sources would be encouraged to take advantage of certain compliance alternatives, including demand

- side energy efficiency measures, in lieu of implementing the BSER. We disagree that the section 111(d) standards are more stringent than the section 111(b) standards.

1.5.2.3. Including non

- EGU sources will have negative economic impacts

Comment 1: Commenters stated that they are conce rned that EPA has requested appropriations to develop emissions limits for other industries, including petroleum refining, pulp and paper, solid waste landfills, iron and steel production, CAFOs, and Portland cement manufacturing.
Commenters stated that re gulation of additional source categories is not necessary, as emissions from these sectors are at least an order of magnitude lower than those for fossil fuel

- fired EGUs and EPA cannot make a source category

- specific significant contribution endangerment
d etermination for these sectors based on the quantity of GHGs emitted. Commenters stated that many of the targeted sectors are energy intensive, trade exposed industrial and manufacturing sectors; in the face of stiff global competition, even small increase s in operating costs due to compliance with additional environmental standards should shift the competitive structure of these industries and drive production overseas. Commenters stated that such an outcome could have the perverse effect of increasing rat her than decreasing overall GHG emissions due to "carbon leakage" as production shifts to foreign countries with fewer regulations designed to reduce GHG emissions. Commenters stated that manufacturing and industrial sectors are less homogenous than fossil fuel

- fired EGUs, and rely on a much broader range of designs, processes, feedstocks, and products; as a result, it is difficult to identify and apply broadly applicable "best systems of emissions reduction" for these sectors. Commenters stated that at a

m inimum, EPA must carefully coordinate among the various NSPS programs and ensure that manufacturing and industrial sectors are not punished in subsequent NSPS and ESPS rulemakings for any demand

- side energy efficiency improvements that they undertake as a result of mandatory or voluntary actions taken to assist States in complying with the ESPS for fossil
fuel

- fired EGUs.

Commenters stated that imposing uniform GHG standards of performance on other source categories could disadvantage these sectors by makin g them less competitive on the global stage, and new regulations with high compliance costs that do not account for trade exposure will translate into significant job losses and reductions in economic activity without actually reducing
GHG emissions.

Comme nters stated that because the proposed rule regulates greenhouse gas emissions outside the fence, it sets an impossible precedent for future regulation of greenhouse gases for the manufacturing sector. Commenters explained that the rule's precedent would r equire industrial sources to reduce greenhouse gases in amounts that are above what we could reduce through manufacturing technology, equipment, and practices, and be required to accept responsibility to achieve higher greenhouse gas reductions by reducing emissions outside their fence line,316 and their customers are all over the world, and this regulation imposes costs that our global competitors would not have.

Response 1 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

Comment 2: Commenters stated they believe that taking the action s proposed through the 111(d) rulemaking process will lead to extensive regulatory uncertainty, particularly for entities/industries that may be targeted for reductions through the outside the fence line portfolio approach, and this uncertainly will lead t o a chilling effect on capital investment and manufacturing growth opportunities throughout the US economic base.

Commenters stated EPA should not expand GHG performance standards to other source categories, explaining that by usurping the role of States u nder 111(d) and requiring reductions at the source category (here, fossil fuel

- fired generating units) achievable only with outside

- the

fence measures at unregulated entities, EPA's Proposal sets dangerous precedent for other source categories. Commenters asserted that EPA should not proceed with additional GHG standards of performance for other source categories unless and until its legal authority and methodology for imposing such reductions on the utility sector are upheld. Commenters added that source

c ategories in the manufacturing sector require consideration of impact by a broad range of factors that EPA has not considered and in some cases has not had to consider in its Proposal for power plants, such as industry economics, geography, federal and sta te incentives, transportation systems, ownership structures, foreign competition, profit margins, and customer bases, and regulating GHG emissions from the manufacturing sector is neither necessary nor sensible at this time, particularly given that so many industries have already been reducing GHG emissions through voluntary and extensive energy efficiency initiatives. Commenters believed that imposing uniform GHG standards of performance on other source categories could disadvantage these sectors by making them less competitive on the global stage, and new regulations with high compliance costs that do not account for trade exposure will translate into significant job losses and reductions in economic activity without actually reducing GHG emissions. Commen ters remarked that if EPA were to proceed with regulations for other sectors, however, then the Agency, at a minimum, should first proceed with an Advanced Notice of Proposed Rulemaking (ANPR) for any particular source category. Commenters said an ANPR wou ld allow for notice and public comment from impacted stakeholders, as well as a source

- category specific endangerment determination for GHG emissions.

Response 2 : To the extent the comment objects to the portfolio approach, which the EPA is not finalizing , the comment is moot. With respect to arguments about regulatory uncertainty and hypothetical future consequences, as we explain in section V. B. of the preamble and in the Legal Memorandum, we have refined our analysis of the BSER, and we do not believe our interpretation will lead to unreasonable future actions for any source category. In accordance with our interpretation, we undertake a pollutant

- specific and source

- category

- specific evaluation. As a result, the BSER is unique to each industry and even may be different for new and existing sources.317 1.5.2.4. Including non

- EGU sources is necessary

Comment 1: Commenters supported EPA's consideration of the potential for shifts in dispatch, low or zero carbon generation, and energy efficiency in the wider e lectricity system to assess emissions reduction potential, stating. Commenters said EPA's approach provides needed flexibility and will lead to more cost

- effective reductions than an approach that is limited to actions that can be taken at the electric gen erating units alone.

Commenters stated they believe the proposed rule is well within EPA's statutory authority and is in fact legally and scientifically required and disagrees strongly with claims asserted by other industry groups that EPA has exceeded its authority by looking to the full electric system for reductions, or by proposing the rule at all.

Commenters supported the approach of allowing entities, other than affected EGUs, to help achieve emission performance goals. Additionally, commenters supp orted recognition by U.S. EPA of renewable energy (Building Block 3) and energy efficiency (Building Block 4) measures, such as GHP systems, as implementation measures that should be available for states to incorporate, at their option, into state implemen tation plans. Commenters believed giving states flexibility to use a full

- range of greenhouse gas emission reduction tools will aid in reaching goals while potentially reducing costs and allowing state

- specific tailored approaches, and the proposed framewo rk allows states to develop an implementation plan that fits their situation while nationally achieving the Clean Air Act objectives of protecting and enhancing the quality of the Nation's air resources so as to promote the public health and welfare and th e productive capacity of its population.

Response 1 : Some of these statements are supportive of the rule; we appreciate them. As explained in the preamble, we are not finalizing building block 4. We explain in section V. of the preamble our authority under section 111(d) and (a)(1) to include building blocks 2 and 3 as part of the BSER. We also explain in the preamble that sources would be encouraged to take advantage of certain compliance alternatives, including demand

- side energy efficiency measures,
in l ieu of implementing the BSER.

1.5.2.5. State goals are improper and inequitable

Comment 1: Commenters stated that identifying BSER as a system that includes the regulation
of non

- emitting and non

- affected entities is arbitrary, capricious, and contrary to law.

Commenters believed that EPA must set BSER based on emission reductions achievable inside the fence line of the source category and then allow states to achieve the reductions through whatever means it chooses in its SIP. Commenters argued that the p roposed rule illegally and unfairly reverses this process. Consequently, commenters concluded, Ohio's target for reductions is unattainable and in implementation, inflexible. Commenters said further analysis of each building block illustrates this problem.318 Commenters stated that although the proposed rule does not explicitly require that states implement any or all of the building blocks proposed by U.S. EPA, the manner in which U.S. EPA applied BSER to each building block to establish the goal for each sta te does require states to implement strategies beyond what can be achieved through a single building block, and as a result, the statewide average emission rates proposed by U.S. EPA would be impossible to meet by implementing the only building block that can be legally implemented and enforced, that being Building Block 1. Clearly, commenters remarked, the proposed rule is intended to regulate activities beyond the fence line and beyond the control of the affected sources, and Federal law
does not authoriz e this intent.

Commenters stated EPA proposed a unique approach for existing sources under Section 111(d) that calculates an emission rate target for each state, and this nontraditional, formulaic approach produces different targets for each state. Comment ers stated that the fact that an EGU is co

located in a state with an impressive record of capturing energy efficiency or a robust renewable portfolio standard does not necessarily impact the environmental impact of that EGU's CO2 emissions; nor, given the interstate nature of the electric system, does it necessarily indicate that the given EGU's generation may more easily be displaced by cleaner and carbon

- free resources. Commenters believed EPA would be better served by applying CO2 standards on existing sources in Section 111(d) uniformly throughout the nation as it has proposed under Section 111(b).

Response 1: For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history. To the extent this comment objects to the portfolio approach, which the EPA is not finalizing, the
comment is moot. While it is the case that the emissions reductions contemplated by this rule cannot be met by building block 1, a s explained in Section VIII of the preamble, states have various options they can use in developing their state plans.

1.5.2.6. Guidance and clarif ication needed from EPA

Comment 1: Commenters stated that many of the operating practices and equipment upgrades that are the basis of the Agency's assertion that 4 to 6 percent heat rate improvements are achievable are not included in a Subpart Da affecte d facility, and for this reason, EPA lacks authority to regulate such equipment under Section 111(d). Commenters stated that Subpart Da is the codification of the NSPS for electric utility steam generating units, and these pieces of complicated equipment, logically enough, generate steam. Commenters noted that the "affected facility" is "each electric utility steam generating unit." [40 C.F.R. 60.40Da.] Commenters noted that equipment within the boiler island is the Subpart Da affected facility, while equip ment beyond the boiler island is not. Commenters agreed with UARG's comments that the following equipment is specifically beyond the purview of this rule: steam turbines, water purification equipment, water

- supply systems, air cleaning and cooling apparatu ses, condensers, main exhaust and main steam piping, water screens, motors, and moisture separators for turbine steam.319 Commenters asserted that EPA's attempt to require improvements in these components' efficiency for building block 1 is contrary to law.

Commenters stated that Section 111(d) requires each state's plan to establish standards of performance for the existing stationary sources that are subject to Section 111(d) within its jurisdiction. Commenters explained that the only potentially eligible e xisting stationary source categories for regulation under Section 111(d) are electric utility steam generating units and stationary combustion turbines

- because these are the only two source categories for which EPA has proposed (but has not yet finalized ) Section 111(b) standards of performance for new

sources.

Response 1: In this rulemaking, the EPA is combining the sources from the two existing source categories for the affected EGUs, as listed in 40 CFR subpart Da and 40 CFR subpart KKKK,
into a single location, 40 CFR subpart UUUU, category for purposes of addressing the CO2 emissions from existing affected EGUs. The EPA is also codifying all of the requirements for the affected EGUs in a new subpart UUUU of 40 CFR part 60 and including all GHG e mission guidelines for the affected sources

— fossil fuel

– fired electric utility steam generating units, as well as natural gas

- fired stationary combustion turbines

— in that newly created subpart.

For the EPA’s response to claims about “equipment beyond the b oiler island,” see section 1.9.4.

1.5.2.7. Other issues

Comment 1: Commenters stated that the precedent EPA's new interpretation would set is not limited to just the power sector, that it would apply to setting existing

- source performance
standards throughout the economy, and every source category that EPA regulates could, in theory, be forced to reduce production if EPA, based on an economy

- wide "BSER" analysis, determines that substitutes are available. Commenters offered that EPA, for instance, co uld determine, under the guise of adopting performance standards, that petroleum refineries must reduce production because EPA thinks that the use of more electric vehicles is "adequately
demonstrated" and cost

- effective.

Commenters stated that because EGU s cannot, on their own, achieve the level of reductions necessary to comply, the proposed guidelines effectively require states, utilities owning EGUs, and, in many cases, consumers and organizations that are totally unrelated to an existing EGU, to
undert ake new programs and measures to meet EPA's proposed standards.

Commenters stated that EPA cannot hold affected EGUs solely responsible for meeting the entirety of a state's emission reduction goal. Commenters explained that in setting the state goals,

EP A relied upon emission reduction measures that could be achieved through mechanisms outside of affected EGUs, such as redispatch to NGCCs and RE as well as avoided generation through EE programs, and as a result of EPA's use of these mechanisms in its BSER analysis, EPA set state goals that the commenters cannot meet solely through emission reduction measures achievable at affected EGUs, short of wholesale retirement of existing fossil fuel

- fired generation, given that several state goals are well below the CO2 emission rate achievable by
fossil fuel

- fired generation, even for new NGCCs. Commenters believed that EPA does not have320 the authority to enforce the entire emission reduction commitments against affected units even though affected units are the only entities within EPA's jurisdiction. Commenters continued, stating that EPA proposes that each state plan must include a "demonstration that each emission standard is quantifiable, nonduplicative, permanent, verifiable, and enforceable with respect to
an af fected entity" and commenters explained that 1) proposed section 60.5740(a)(iii)(6) (emphasis added). EPA further proposes that "[o]nce a state receives the EPA's approval for its plan, the provisions in the plan become federally enforceable against the en tity responsible for noncompliance, in the same manner as the provisions of an approved SIP under CAA Section 110." 79 Fed. Reg. at 34,844, and 2) due to the proposed broad definition of "affected entity," EPA's proposal would transform emission reduction measures in state plans that are the responsibility of non

- affected EGU entities into federally enforceable requirements. Commenters opposed this approach. Commenters stated that an "affected entity" is "an affected EGU, or another entity with obligations under this subpart for the purpose of meeting the emissions performance goal requirements in these emission guidelines" (Proposed section 60.5820), and the category would include entities that EPA has no authority to regulate under Section 111(d),
such as electric distribution utilities and independent non

- profit entities that administer RE and EE programs. (See State Plan Considerations TSD at 10.) While commenters agreed that states should be able to rely on emission reductions achieved by affected entiti es to achieve compliance with their state goals, commenters believed that EPA does not have the authority to make these emission reduction commitments federally enforceable.

Response 1 : The federal enforceability considerations raised in the comment arose primarily under the proposed portfolio approach for state plans. As explained in section VIII.C of the preamble, the EPA is not finalizing the portfolio approach, which would have allowed state plan submittals to include federally enforceable measures that apply to entities that are not affected EGUs. However, as further explained in section VIII.D, if the state is adopting the state measures type plan, the state plan submittal will need to specify, in the supporting materials, the state
enforceable measure s that the state is relying upon in conjunction with any federally enforceable
emission standards for affected EGUs to meet the emission guidelines. The final rule provides considerable discretion to the states in setting emission standards and related pl an requirements
for its affected EGUs. Consistent with longstanding practice under the Clean Air Act, if a regulated entity does not meet a requirement, the EPA will address the matter on a case

- by

- case basis, to determine the appropriate response and res olution.

Further, for the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statut ory purpose, and legislative history. We do not believe our interpretation will lead to unreasonable future actions for this or any other source category. In accordance with our interpretation, we undertake a pollutant specific and source category specific evaluation. As a result, the BSER is unique to each industry and even may be different for new and existing sources.

Comment 2 : Commenters stated that the first thing to be noted under this standard is that EPA has not considered the possibility that ther e will be widespread state refusal to issue SIPs321 implementing building blocks two through four. Commenters noted that in 2010, Arizona passed a law precluding state regulation of GHGs without approval of the legislature (See A.R.S. S. 49

- 191). Commenters s tated the director of the Arizona Department of Environmental Quality has recently testified before Congress: "In the end, should EPA choose not to make adjustments to the final rule based upon our real implementation concerns, litigation remains an option for Arizona." State Perspectives: Questions Concerning EPA's Proposed Clean Power Plan; Hearing Before the Subcomm. on Energy & Power of the H. Comm. on Energy & Commerce, 113th Cong. 33 (2014) [hereinafter State Perspectives: Questions Concerning EPA's P roposed Clean Power Plan] (testimony of Henry B. Darwin, Dir., Ariz. Dept. of Envtl. Quality), available at http://democrats.energycommerce.house.gov/sites/default/files/documents/ Preliminary

Transcript

- EP

- EPA

- Clean

- Power

- Plan

- 2014

- 9

- 9.pdf ). Commenters explained that under existing law, Kansas, Kentucky, Louisiana, Missouri, and West Virginia may not shift poll ution control costs to other parts of the economy but must limit reductions to the specific source. Commenters noted, on June 6, 2014, the Attorney General of West Virginia addressed a letter to the Administrator opining that the Proposed Rule is beyond th e authority of EPA (Letter from Patrick Morrissey, West Virginia Attorney General, to Gina McCarthy, Administrator, U.S. Envtl. Prot. Agency (June 6, 2014), available at http://www.ago.wv.gov/publicresources/Documents/ Letter%20to%20
EPA%20on%20section%201 11%28d%29%20authority.pdf). Commenters noted, on June 16, 2014, nine state governors wrote the President protesting the rule (Letter from Governors of Alaska, Indiana, Louisiana, Mississippi, North Carolina, North Dakota, Pennsylvania, Texas, and Wyoming t o President Barack H. Obama II from Governors of the States of Alaska, Indiana, Louisiana, Mississippi, North Carolina, North Dakota, Pennsylvania, Texas, and Wyoming (June 16, 2014), available at http://www.ncair.org/rules/EGUs/ Gov_Energy_Letter

6.16.14%20FINAL.pdf ). Commenters said thirteen Attorneys General wrote the Administrator on August 25, 2014, protesting the failure of EPA to comply with 42 U.S.C. 7607(d) by
inc luding in the docket as of the date of publication of the Proposed Rule all data in the record on which the agency relies (Letter from Attorneys General of Alabama, Indiana, Kansas, Louisiana, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina , South Dakota, West Virginia, and Wyoming to Gina McCarthy, Administrator, U.S. Envtl. Prot. Agency (Aug. 25, 2014), available at http://www.ago.wv.gov/pressroom/Documents/ Section%20 307%20Letter%20(August%2025,%202014).pdf). Commenters said on September 9, 2014 the Governors of fifteen states wrote the President protesting the Proposed Rule and challenging EPA's authority to issue it (53 Letter from Governors of Alabama, Alaska, Arizona, Idaho, Indiana, Mississippi, New Mexico, North Carolina, North Dako ta, Oklahoma, Pennsylvania, South Carolina, Utah, Wisconsin, and Wyoming to President Barack H. Obama (Sept. 9, 2014), available at http://governor.alabama.gov/assets/2014/09/RGA

- Letter

- to

- POTUS.pdf).
Commenters noted that nine States have challenged the s ettlement that provided the basis for the Proposed Rule in the United States Court of Appeals for the District of Columbia Circuit and have supported a complementary challenge in the same forum seeking an extraordinary writ against the Proposed Rule (See, e.g., West Virginia v. EPA, No. 14

- 1146 (D.C. Cir. 2014); In re Murray Energy Corp., No. 14

- 1112 (D.C. Cir. 2014)). Commenters noted that on October 29, 2014, the three commissioners of the Kansas Corporation Commission sent a letter to the322 Administrator s tating "that Kansas ratepayers will face a future of exorbitantly high electricity costs and unreliable electric service" (Cover Letter, Comments of the Staff of the Kansas Corporation Commission on the Proposed Clean Power Plan, EPA

- HQ

- OAR

- 2013

- 0602 (Oct. 29, 2014), available at http://www.eenews.net/assets/2014/10/31/document_ew _01.pdf ). Commenters stated that the Commissioners attributed this threatened EPA regulatory harm to the fact that "the EPA has inserted itself into a regulatory field occupied by the states for decades in which the states have proven expertise." Commenters said the Commissioners also noted their "legal duty and obligation to look out for the energy futur e of Kansas and the Kansas economy." Commenters concluded listing by stating that Legislative proposals hostile to the approach now taken by EPA are pending in many States and EPA may not simply ignore this important part of the problem.

Response 2 : Consi stent with the cooperative federalism structure of section 111(d) the EPA can and will implement a federal plan imposing standards of performance on affected EGUs in states that do not submit approvable state plans. See Texas v. EPA , 726 F.3d 180, 193 (D.C . Cir. 2013) (where a state has “no intention of revising its SIP because of its disagreement with EPA’s regulation of greenhouse gases under the [Clean Air] Act],” “invoking ‘cooperative federalism’ ... rings hollow”).

Furthermore, we disagree that we are expanding our authority to include wholesale energy market regulation. Our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require states or sources to implement the
BSER. Moreov er, these emission guidelines provide states with the flexibility to establish, implement, and enforce standards of performance and do not intrude on the regulatory domain of the states. It cannot be said that because environmental requirements may have an effect on the wholesale energy market that the EPA is therefore intruding into energy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Congress expressly identified power plants as a priority source category for regulation und er CAA section 111.

Finally, for the EPA’s response to comments regarding docketing requirements under CAA section 307(d), see section 1.13.

1.5.3 Affected entities under Building Block 2

1.5.3.1: Legal authority

Comment 1 : Commenters asked what state or federal legal authority (emphasis on legal authority) can EPA cite that can force the owner of a combined cycle natural gas plant to operate their unit at 70 percent of capacity if they decide not to. Commenters concluded that if EPA can't cite that law, then how can we have a best available system of emission reductions that is both
enforceable and measurable as EPA requires.

Response 1 : We disagree with commenters. As an initial matter, we note that we are not requiring any NGCC unit to operate at 70 pe rcent of capacity if they determine not to. As we explain in sections V.A. and V.B. of the preamble, our emission guidelines simply reflect an323 achievable emissions limit through the application of the BSER and do not in themselves require

states or sources to implement the BSER. That is, EPA is responsible for determining the level of emission limitation from the source category, while states have the responsibility of assigning emission requirements to their sources that will ensure their achievement of th at level of emission limitation. States may fulfil their responsibility by establishing emission standards or creating plans consistent with the guidelines. In doing so, states will be able to choose from a wide range of emission reduction measures, includ ing measures that are not part of the BSER. Further, we note that the building blocks are not based on an individual unit basis. Instead, the calculation is an average with substantial additional headroom available

. Therefore, if a number of NGCC units decide not to, or are unable to, operate at 70 percent, this does not mean that the 70 percent is not achievable or unreasonable. For a c omprehensive discussion of building block 2, please see the preamble section V. D.

Comment 2 : Commenters stated that EPA cannot include Building Block 2 in a federal implementation plan because it does not have the authority to make electricity dispatching decisions, explaining that the authority is reserved for the States in the FPA. 16 U.S.C.

- 824(b)(1). Commenters cited Congress' recognition of the States' "traditional responsibility in the field of regulating electrical utilities for determining questions of need, reliability, cost and other related state concerns" in Pac. Gas & Elec., 461 U .S. at 205. Commenters continued, stating
that States have the fundamental authority to determine whether to operate a vertically integrated or competitive market system and to establish parameters under which those systems operate, and, in many cases, the States have partnered with ISOs or RTOs to manage aspects of electricity dispatching and transmission and to ensure the consistent and reliable delivery of electricity to consumers. Commenters said, within this context, States retain the authority to dete rmine the rules and priorities for dispatching various electricity generating units, taking into account cost, reliability, and other priorities such as the generation of renewable energy. Thus, commenters concluded, EPA cannot rely on increasing utilizati on at existing NGCC facilities as part of a federal implementation plan when dispatching decisions are made by the State and implemented by the States or ISOs and RTOs. Commenters added that to the extent that there is any residual federal authority over d ispatching decisions at the federal level, it does not belong to EPA. See, e.g., New York, 535 U.S. at 19

- 20 ([T]he text of the FPA gives FERC jurisdiction over the transmission of electric energy in interstate commerce and the sale of electric energy at

w holesale in interstate commerce. (Quoting 16 U.S.C.

- 824(b))). Commenters provided example, to the extent that States participate in RTOs with interstate transmission of electricity, changes to dispatching priorities would be subject to federal oversight through FERC, not EPA.
See 16 U.S.C.

-- 824d, 824e. Commenters posited that the division of authority between federal and State authorities under the FPA is clear, and leaves no role for EPA to play. Commenters said, in light of this clear statement from C ongress in the FPA, there is no basis to suggest that Congress intended to give EPA broad authority to regulate electricity dispatching as a means of controlling pollution under Section 111(d). See Whitman v. Am. Trucking Association, Inc., 531324 U.S. 457, 4 68 (2001) (Congress does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions

- it does not, one might say, hide elephants in mouse holes .).

Response 2 : The EPA disagrees that its approach to the BSER in the Clea n Power Plan conflicts with the FPA or otherwise places the CAA in tension with that law. As explained in Section VII of the Legal Memo, the BSER is a technical determination of what means are best to achieve emission reductions from a particular class of facilities. At the point of implementation of the emission standard, either in a state or federal plan under section 111(d), the source still retains the flexibility to determine how it will meet the standard. Neither the state air regulator, nor the

agenc y, will need to or be required to regulate specific dispatch decisions in order to meet the requirements of the final rule. For example, in a state implementing a mass

- based emission trading program, the agency’s determined emission performance levels may set the mass budget, but the primary compliance obligation on the source is simply to hold allowances sufficient to cover emissions. Failure to do so could subject a source to state or federal CAA enforcement. But that need not involve the air regulator in any of the other choices the owners and operators of the affected EGUs make regarding their operations or level of generation. So, to complete the commenter’s analogy, there is no “elephant.” (And in any case, section 111(d), is not a
“mousehole.” See AEP v. Connecticut , 131 S. Ct. 2527, 2539 (2011) (“It is altogether fitting that Congress designated an expert agency, here, EPA, as best suited to serve as primary regulator of greenhouse gas emissions.”) (citing section 111(d)).

1.5.3.3: 111(b)/111(d) issue s

Comment 1 : Commenters stated Indiana is assuming that when a new NGCC unit goes online
after 2016

- 2017, that unit will be subject to 111(b) and not subject to 111(d). Commenters explained that through conversations with U.S. EPA staff, it has been conveyed that states will have the option to include new NGCC units into the 111(d) planning process, thus making them subject to 111(d) standards. Commenters added that in order to prepare a compliant state plan, Indiana needs to see this matter explicitl y addressed in the rule, including how states can avoid legal pitfalls associated with regulating affected entities under both elements of Section 111 (new and existing).

Response 1 : Section VIII of the preamble discusses how new EGUs covered under the C AA section 111(b) rule are not allowable measures in section 111(d) state plans because the EPA believes it would result in increased emission leakage. However, to address emission leakage under mass based state plans, Section VIII.J. also discusses how st ates may regulate sources subject to 111(b) as a matter of state law in order to ensure obligations regarding affected EGUs regulated under a section 111(d) state plan are met.

Comment 2 : Commenters stated that a unit cannot be both a new unit and an exis ting unit. Commenters noted, under Section 111(a)(6), "[t]he term 'existing source' means any stationary source other than a new source." (Emphasis added.) Commenters said, in contrast, Section 111(a)(2) defines a "new source" as "any stationary source, th e construction or modification of325 which is commenced after the publication or regulations (or, if earlier, proposed regulations) prescribing a standard of performance under this section which will be applicable to such source." Thus, commenters concluded, EPA has no authority to subject new units to regulation under both Sections 111(b) and 111(d).

Commenters stated that Section 111(a)(6) states that an "existing source" means any stationary source "other than a new source." Commenters remarked that the pla in statutory meaning is that "new sources" and "existing sources" are entirely separate categories of sources that cannot be combined. Commenters explained that in the Preamble, EPA asks for comment on whether EPA should, at some point, fold new units gove rned by Section 111(b) into the proposed Section 111(d) existing unit program. Commenters said EPA indicates that while they are not proposing that new NGCC capacity is "part of the basis supporting the BSER," they state that many new NGCC units are being built and will likely be used as a CO2 mitigation strategy. Commenters said EPA then states, "Therefore, we invite comment on whether we should consider construction and use of new NGCC capacity as part of the basis supporting the BSER. Further
we take com ment on ways to define appropriate state

- level goals based on consideration of new NGCC capacity." Commenters believed this would, in effect, create a statewide cap on the state CO2 emission rate. Commenters argued EPA does not have the authority to combin e these statutorily separated programs, given that the statute states that an "existing source means any stationary source other than a new source" and commenters explained that bringing new gas units into the existing unit program would radically change S ection 111 and the entire existing unit program as to its nature, reach and stringency with huge policy, feasibility and cost implications, creating a nationwide cap on CO2 emissions from fossil EGUs. Section 111(d) applies to existing units only.

Response 2 : We have not finalized new natural gas as part of the BSER nor are we finalizing an approach whereby modified sources would remain existing sources.

Comment 3 : Commenters stated EPA's proposal is unlawful because it would permit states to impose bindi ng legal obligations on entities other than affected fossil fuel

- fired EGUs. Commenters explained that a central component of the flexibility touted by EPA is the so

- called "portfolio approach" that would authorize states to impose binding legal obligation s "on other affected entities (e.g., renewable energy and demand

- side energy efficiency measures) that would reduce CO2 emissions from the affected EGUs." 79 Fed. Reg. at 34,853. Commenters believed this approach is unlawful because EPA and the states are prohibited from expanding standards of performance under Section 111(d) beyond the source categories already subject to regulation under Section 111(b). Commenters stated that EPA proposes to define "affected entity" as "an affected EGU, or another entity with obligations under this subpart for the purpose of meeting the emissions performance goal requirements in these emission guidelines." Proposed 40 C.F.R. Section 60.5820, 79 Fed. Reg. at 34956 (emphasis added). Commenters stated that the
State Plan Cons iderations Technical Support Document (TSD) indicates that EPA intended to limit the scope of an affected entity to a "utility entity that is not regulated by a state public utility commission, such as a municipal utility or a utility cooperative. Commente rs said it could326 also be a private non

- profit entity established to administer end

- use energy efficiency and renewable energy deployment programs' non

- profit entities [that] are created by state legislation and overseen by state public utility commissions or state

- regulated private utilities." [State Plan Considerations Technical Support Document, at 16

- 17] However, commenters said the proposed regulatory language defines an "affected entity" broadly to any other entity identified by the state to help meet its emission goals. 79 Fed. Reg. at 34956. Commenters noted that the regulatory text does not specifically limit it to the types of entities listed in the TSD, thus leaving the door open for a state to impose enforcement requirements on third parties such as industrial end users. [state must ensure that any compliance activity or measure must be enforceable for affected entities that are not affected EGUs. 79 Fed. Reg. at 34953.] Commenters remarked that while the states and EPA are prohibited from imposing binding GHG emission reduction obligations on any entities other than affected EGUs, if EPA decides to include other affected entities in the final Section 111(d) rule, commenters recommended that EPA revise its proposed regulatory
definition of "affected entity" to align with EPA's intent as explained in the TSD and limit its scope to the utility entities that are not regulated by a state public utility commission, such as a municipal utility or a utility cooperative, private non

- profit entities establish ed to administer end

use energy efficiency and renewable energy deployment programs, or entities that are created by state legislation and overseen by state public utility commissions or state

- regulated private
utilities. Commenters added that EPA and the states must make clear

- both in these regulations and in state implementation plans

- that third

- party participation in emission reduction programs is on a voluntary basis. Commenters said, by making participation voluntary EPA and the states
can ensure tha t no third

- party entity inadvertently becomes subject to regulatory obligations without its consent. Commenters agreed with EPA that electricity transmission and distribution efficiency improvements, the use of biomass

- derived fuels, and new NGCC units sho uld be available voluntary compliance options that are eligible to participate voluntarily in a state implementation plan. See 79 Fed. Reg. at 34,923. Commenters observed that if EPA proceeds to finalize guidelines that permit states to allow for other ent ities such as electricity consumers to participate voluntary in emission reduction program, EPA and states needs to recognize the GHG emission reduction efforts in subsequent regulations.

Commenters stated that EPA should allow states to average emissions from non

- Section 111(d) generating units with emissions from "affected entities" for purposes of demonstrating compliance, and EPA should clarify in the final rule that states have the option to average emissions from generating units that are not subject to regulation under Section 111(d) with emissions from affected EGUs for the purposes of calculating compliance. Commenters suggested this could include, for example, modified EGUs, reconstructed EGUs, and small units
that do not meet the definition of "af fected EGU" under Section 111(d). Commenters said this would allow states to use these units in their compliance calculations under Section 111(d), giving states employing a rate

- based standard the flexibility to determine how best to shift generation away from fossil

- fuel fired EGUs to more efficient EGUs like new NGCCs. Commenters stated that allowing a state to include non

- Section 111(d) generating units in their compliance calculations would not make these units subject to regulation under Section 111(d ), nor would it require them to be factored into a state's goal calculation. Rather, commenters327 stated, allowing states to include non

- Section 111(d) generating units in their compliance calculations furthers EPA's "portfolio approach," under which "[t]he state has flexibility...in imposing requirements on other [non

- affected EGU] entities

- as long as...the required emission performance level is met." 79 Fed. Reg. at 34,853, and indeed, EPA does not have the authority to subject non

- Section 111(d) units, l ike new, modified, and reconstructed units, to regulation under both Sections 111(b) and 111(d). Commenters stated, accordingly, the Class of '85 objects to EPA's proposal that "a modified or reconstructed source would be subject to both (1) the CAA
Sectio n 111(d) requirements that it had previously been subject to and (2) the modified source or reconstructed source standard being promulgated under CAA Section 111(b)." 79 Fed. Reg. at 34,903. Further, commenters observed, the Group opposes the proposed inco rporation of re

dispatch to new NGCCs, which are regulated under Section 111(b), into Building Block Two. See NODA, 79 Fed. Reg. at 64,550. Commenters believed EPA's plan to subject modified and reconstructed units to requirements under both Sections 111(b ) and 111(d) contravenes the clear statutory language in Section 111 and is beyond the scope of EPA's authority under the CAA, explaining that the CAA establishes two avenues for applying standards of performance to sources: (1) regulation of "new sources" under Section 111(b), see 42 U.S.C. section 7411(b)(1)(B), or (2) regulation of "existing source[s]" under Section 111(d), see S. 7411(d)(1)(A), and these two avenues are mutually exclusive. Commenters stated that a unit
cannot be both a new unit and an e xisting unit. Commenters said, under Section 111(a)(6),"[t]he term 'existing source' means any stationary source other than a new source." (emphasis added). Commenters noted, in contrast, Section 111(a)(2) defines a "new source" as "any stationary

source, the construction or modification of which is commenced after the publication of regulations (or, if earlier, proposed regulations) prescribing a standard of performance under this section which will be applicable to such source." [EPA's proposal to conside r modified and reconstructed units to be both "new" units and "existing" units at the same time is yet another example of how far EPA has strayed in this Proposed Rule from the authority granted to it by Congress under Section 111.] In light of the clear s tatutory language, commenters concluded, EPA cannot interpret Section 111(d) to apply to both new and existing units. [Chevron, 467 U.S.
at 842

- 43 ("If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, mu st give effect to the unambiguously expressed intent of Congress.")] Commenters contended that EPA has provided no justification for its proposed approach of subjecting modified and reconstructed units to compliance obligations under both Sections 111(b) a nd 111(d), and EPA's not providing any legal basis or policy justification for its determination that sources can simultaneously be subject to requirements under both Sections 111(b) and 111(d) of the CAA clearly violates CAA Section 307. Commenters noted Section 307(d)(3) requires that proposed rules "shall be accompanied by a statement of its basis and purpose." Further, commenters said the statement of basis and purpose must include a summary of "the major legal interpretations and policy considerations underlying the proposed rule." Commenters believed EPA does not do so here and commenters argued that prior to finalizing the Proposed Rule, EPA must make available its legal interpretation of how sources can be subject to both Sections 111(b) and 111(d) a nd provide the public with an opportunity for review and comment.328 Response 3 : To the extent the comment objects to the portfolio approach, which the EPA is not finalizing, the comment is moot.

Comment 4 : Commenters stated that any emissions standard prom ulgated pursuant to the authority of Section 111(d) of the Clean Air Act must utilize an "inside the fence" methodology to establish emission standards at each effected generating unit ("EGU"), and while compliance plans can and should allow states to achi eve compliance through activities beyond the fence line, using facilities outside the plant site to establish emission standard at such existing stationary sources exceeds EPA's authority under 111(d). Commenters added that while Building Block 2
attempts to regulate behavior inside the fence by directing the dispatch of a state's generation resources, it exceeds EPA's authority under 111(d) by not establishing emission standards at the
EGU.

Response 4 : For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history. We disagree that including buildi ng block 2 as part of the BSER does not lead to an emission standard applicable to affected EGUs. Pursuant to section 111, emission guidelines reflect the application of the BSER. These emission guidelines are provided to assist states in preparing
satisfa ctory plans which establish standards of performance for affected sources within their jurisdiction under section 111(d) . In accordance with these plans, sources will need to comply
with applicable emission standards, which could include application of the BSER or other acceptable compliance measures

.

1.5.4 Affected entities under Building Block 3

Comment 1: Commenters 23394 stated that regarding Block 3, except possibly for renewable generation technologies such as biomass, EPA has no Section 111 authorit y over these generation technologies (nuclear, renewable) at all. Commenters said that first, they do not release any air pollution, preventing the EPA from making an endangerment finding involving
these units under Section 111. Commenters said that furthe r, the definition of stationary source requires that the source "emits or may emit any air pollutant." Commenters said since nuclear
and non

- biomass renewable generation emit no air pollutants of any type, it forecloses the ability of EPA to propose any ru les regarding these generation technologies.

Commenters stated, renewable energy and nuclear power should not be included in the determination of BSER. Commenters said, EPA assumes in Building Block 3 that states can lower carbon emissions by deploying ren ewable energy sources and zero

- emitting sources such as nuclear power plants. Commenters did not believe that Building Block 3

- non

- emitting

sources

- should be included in the determination of BSER because these "affected entities"
would not be "affected electric generating unit(s)" as defined in the proposed rule. Commenters said, existing non

- emitting sources, such as nuclear, hydroelectric (hydro) and other RE generation sources have little effect on the emissions of existing affected EGUs. Commenters329 said, new nuclear, hydro, and RE generation may reduce the dispatch of existing affected

sources.

Response 1 : As explained in the final rule, we are not including nuclear energy within building block 3. In section V of the preamble we explain the basis for our inclusion of renewable

energy.

Comment 2 : Commenters stated Building Block 3 is outside the intent and precedence of Section 111 of the Act and should not be part of setting the performance standard for this rule. Commenters said it would involve developing NEW generation facilities rather than measures to control emissions from existing units.

Commenters stated the CPP assumes as BSER the displacement of coal by other generation, the addition of renewable energy and demand side management programs (building blocks 2

- 3) which are not control technologies and should not be considered to establish the BSER.

C ommenters believed renewable energy programs are a matter of state policy and outside the scope of the EPA's regulatory authority under CAA 111(d). Commenters said, thus EPA should remove renewable energy from the Best System of Emission Reduction (BSER) p rocess used to set state goals, but allow renewable energy to be used for goal compliance.

Response 2: For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s authority in light of the statutory text, statutory context, statutory purpose, and legislative history.

Comment 3 : Commenters stated the expansion of renewable energy projects is beyond the authority of the EPA as required by the rule. Commenters said EPA cannot set an RPS for Wyoming, as this goes beyond the jurisdiction of EPA.

Response 3 : For the Reasons explained in Section V of the Preamble and the legal memo, EPA
has concluded that its determination of BSER is well within the au thority delegated to it under section 111 of the Clean Air Act. Contrary to the assertion in the comments EPA is not mandating that any state establish an RPS. Rather EPA has provided states with significant flexibility in designing their state plans. Re newable energy is one potential measure that may be employed, consistent with the state flexibility principle that is central to this program. This rule does not regulate renewable energy sources. It identifies the BSER for affected sources, which
entails substitute generation to zero

- emitting generators, but it does not impose emissions requirements on such zero

- emitting generators

.

Comment 4 : Commenters stated including renewables and energy efficiency in goal

- setting infringes on state and local author ity.330 Commenters stated given Florida's existing statutory framework, and EPA's failure to take this into account, its application of BSER in Florida is unlawful. Commenters said with regards to Building Block 3, no Florida agency has authority to establis h RPS. Commenters said unlike some state utility commissions, the FPSC does not directly oversee integrated utility resource planning, although it annually reviews Ten

- Year Site Plans submitted by all electric utilities and it reviews resource planning dec isions on an ad hoc basis when electric utilities petition for need determinations for new steam electric generating capacity. Commenters said although the FPSC briefly had authority to propose an RPS, the Legislature repealed that authority in 2012. See C h.
2012

- 117, Laws of Fla. (repealing portions of Section 366.92, F.S., relating to RPS). Commenters said legislative action would be required before this building block could be implemented under Florida law.

Response 4 : We disagree with commenters. As an initial matter, we note that the final rule does
not include demand

- side energy efficiency

– building block 4

– as a component of BSER. For
the r easons explained in Section V of the Preamble and the legal memo, EPA has concluded that its determination of BSER is well within the authority delegated to it under section 111 of the Clean Air Act. Contrary to the assertion in the comments EPA is not ma ndating that any state establish an RPS. Rather EPA has provided states with significant flexibility in designing their state plans. Renewable energy is one potential measure that may be employed, consistent with the state flexibility principle that is ce ntral to this program. This rule does not regulate renewable energy sources. It identifies the BSER for affected sources, which entails substitute generation to

zero

- emitting generators, but it does not impose emissions requirements on such zero

- emitting

g enerators

.

Comment 5 : Commenters stated the CPP violates the RE Act and over sixteen additional statutes establishing the federal mandate that rural electric cooperatives reliably serve rural
America. Commenters said the CPP will force G&Ts like Hoosier E nergy to violate the RE Act mandate, FERC requirements and state laws requiring reliable service. Commenters said the FERC, NERC, Regional Transmission Organizations (RTOs), Independent System Operators (ISOs) and state reliability analyses have all identi fied significant reliability concerns with the CPP. Commenters said because of their location far from other sources of generation, and because of the unique cost constraints faced by many rural electric cooperatives, gas

- fired and
RE sources are often una vailable. Commenters said this makes the emission reductions that EPA assumes can be obtained from Building Blocks 2 and 3 unrealistic. Commenters said if rural electric cooperatives retire coal units to achieve the CPP's goals, inaccessibility of NGCC and RE sources will make it difficult, if not impossible, to continue to provide reliable service to their
members.

Response 5 : The EPA does not agree with commenters that the final rule will cause reliability
issues. The rule does not impede current dispatch protocols about how these units are operated, and provides many flexible options for compliance, such as emission rate credits, so that these entities can work with their respective states during state plan development. So the commenter is331 incorrect to m aintain that reliable operation of their units is in conflict with their
mandates. Moreover, the rule addresses reliability in both planning and potential unanticipated emergencies (See Section VII.G.2)

.

Comment 6: Nu clear: EPA lacks authority to include nuclear facilities in Building Block 3

Commenters said the EPA unlawfully encroaches upon the regulatory domain of the NRC by implicitly assuming that about 30% of existing nuclear capacity, which is due to expire before 2030, will be available. Commenters said the EPA can only rely on the continuation of this existing nuclear reactor capacity by assuming that the NRC will approve as safe the extension of those reactor licenses. Such an assumption undermines the NRC's statutory responsibility to deny
licens e renewal applications if the NRC concludes they would pose an unreasonable risks to public health and safety. Commenters said NRC has conceded that renewal of a reactor license
should not be allowed unless the licensee can demonstrate that it has taken me asures to address "the detrimental effects of aging" during the reactor's license renewal term. See Final Rule, Nuclear Power Plant License Renewal; Revisions, 60 Fed. Reg. 22,461, 22,464 (May 8, 1995).
See also 10 C.F.R. Section 54.29(a)(1) (requiring a r easonable assurance finding regarding a licensee's program for "managing the effects of aging" on certain reactor components. Commenters said EPA should avoid trespassing on NRC's unique regulatory domain by presuming a positive outcome for NRC license ren ewal reviews. Commenters said even assuming for purposes of argument that such encroachment is lawful, it would be extremely poor public policy for the EPA to build extended operation of aging and increasingly dangerous reactors into its regulatory scheme as a fait accompli.

Response 6 : We disagree with commenters. Further, the final rules does not include nuclear in building block 3. For a more comprehensive discussion of this issue, please refer to preamble
section V.A.

Comment 7 : Commenters stated that EPA cannot include Building Block 3's reliance on avoided retirement of nuclear facilities in a federal implementation plan because it does not have the authority over the operation of such facilities. Commenters noted, under the Atomic Energy Act, the NRC is given the authority to issue, renew, and, if necessary, revoke commercial licenses for nuclear energy facilities. 42 U.S.C.

- 2133. Further, commenters stated that the savings clause in the Atomic Energy Act states that "this section shall not be deeme d to confer upon any Federal, State, or local agency any authority to regulate, control, or restrict any activities of the Commission." Id. S. 2018. Thus, commenters concluded that EPA lacks the authority to compel a nuclear energy facility to remain in op eration and could not overrule a decision by the NRC not to renew an existing facility's license. Given EPA's lack of authority over nuclear energy generation, commenters asserted that it cannot rely on avoided nuclear generating capacity as part of a lega lly enforceable federal implementation plan.

Commenters contended that EPA's interpretation of its authority under Section 111(d) conflicts with the Federal Power Act, the Public Utility Regulatory Policies Act, and the Atomic Energy
Act. Commenters added that pursuant to the Atomic Energy Act, Congress granted the NRC332 exclusive authority to regulate radiation hazards associated with the construction, operation, and decommissioning of nuclear facilities, (42 U.S.C. Section 2011

- 2296b) and despite this expli cit grant of authority over radiation safety, Congress made sure to preserve the existing division of responsibility between the federal government and states over resource planning and over the energy sector more generally, providing in Section 271 that n othing in the Atomic Energy Act "shall be construed to affect the authority or regulations of any Federal, State, or local agency with respect to the generation, sale, or transmission of electric power produced through the use
of nuclear facilities license d by the [Nuclear Regulatory] Commission." (Id. at 2018)
Commenters said this exclusion was explained by Senator Hickenlooper, the floor manager of the Senate bill, as follows: "Once [electricity] is produced it should be subject to the proper regulatory b ody, whether it be the Federal Power Commission [FERC] in the case of interstate transmission, or State regulatory bodies if such exist, or municipal regulatory bodies. We feel
that there is no difference and that it should be treated as all other electric ity which is regulated by the public . . . [Section 271] is designed to keep the regulatory authority exactly as it is now, traditionally and under the law." (100 Cong. Rec. 11567 (1954) (statement of Sen. Bourke Hickenlooper)) Thus, commenters stated, whe n Congress has intended to authorize federal regulation of electric power, it has done so explicitly, and it has vested that authority in other agencies. More importantly, commenters added, Congress has just as clearly reserved to the states the authority to regulate the production of electric power, including the type of generating facilities, within their borders. Commenters stated, if Congress has to date been unwilling to give FERC or the NRC authority over generation resource planning, including demand

- side programs, it cannot possibly have intended to vest that authority in EPA in 1970 under Section 111(d) of the CAA without having said.

Commenters also believed that EPA should not proceed with additional GHG standards of performance for other source c ategories, saying that in addition to the fact that it has no legal obligation to do so, the EPA should opt not to propose GHG standards of performance for other source categories for the reasons identified below.

Response 7 : We disagree with commenters. Additionally, the final rules does not include nuclear in building block 3. For a more comprehensive discussion of this issue, please refer to preamble section V.A. W e note that the additional steps the EPA may or should take with respect
to GHG standards of performance for other source categories is outside the scope of this rulemaking. As the Agency has previously explained, however, it is taking a step by step common sense approach to regulating GHG emissions. These common sense steps are laid out
in th e Climate Action Plan and the President’s Methane Strategy.

1.5.5 Affected entities under Building Block 4

Comment 1 : Commenters said, the current laws of their states do not facilitate the ability to meet building block 4 and mandate residential energy efficiency measures. Commenters said, the proposed rule is based on actions the state cannot currently initiate and has created an333 unattainable goal that cannot be a valid standard of performance. Commenters said, due to this fact they recommend either re moving or modifying building block 4.

Commenters stated, building block #4, energy efficiency (EE), plays an important role in EPA's development of state

- by

- state CO2 reduction requirements. Commenters said, however, EPA has identified no authority for reg ulating customer end

- uses of electricity. Commenters said, energy policies that include EE programs and goals are traditional areas of regulation reserved for states under the Tenth Amendment, and included in integrated planning processes in states with

ve rtically integrated utilities. Commenters said, thus, the use of building block #4 in setting the Section 111(d) proposed standards is not appropriate.

Commenters stated that NERC notes that EPA has projected that energy efficiency will grow
faster than el ectricity demand, which NERC characterizes as an assumption with "complex" implications. Commenters said NERC states that if EPA's aggressive rate of efficiency growth cannot be met, it will be necessary to adopt additional CO2 emission reduction measures, presumably through further reductions in fossil fuel generation that may not themselves be
achievable.

Commenters believed energy efficiency programs are a matter of state policy and outside the scope of the EPA's regulatory authority under CAA 111(d). Co mmenters said, thus EPA should remove energy efficiency from the BSER process used to set state goals, but allow energy efficiency to be used for goal compliance.

Commenters stated, the Proposed Regulation is based on an unprecedented and unsupportable leg al interpretation that the "best system of emissions reduction" for existing sources can include homeowners and retail customers that neither generate any power nor produce emissions. Commenters said, the Proposed Regulation asserts that statutory provisio ns for the regulation of existing generation facilities that are sources of emissions can apply more broadly to, and make subject to federal enforcement, other entities, citizens, and activities. [79 Fed. Reg. 34,901.] Commenters said, for example, homeown ers' installation of more efficient windows or light bulbs, which are common energy efficiency measures, would be subject to federal enforcement under EPA's proposal. Commenters said, this stretches the Clean Air Act beyond recognition and
forces the carbo n emission rates proposed for Virginia so low that, as discussed above, the rate for existing sources is far more stringent than the rate for new sources using the best available control technology.

Commenters stated, including energy efficiency as part o f a "best system of emission reduction" also changes the "standard for emissions of air pollutants" for existing sources of emissions from a measurable standard for which accountability can be ensured to a compliance requirement based on layer upon layer o f assumptions and estimates. Commenters said, the Proposed Regulation and supporting documents recognize that "many states with energy efficiency programs use different input values and assumptions" to estimate energy savings from such programs. [Technical Support Document, State Plan Considerations at 42.] Commenters said, this is because estimates of energy savings from these programs are just that

- estimates.334 Commenters stated to use such estimates

- which require many assumptions about, among other
thi ngs, how retail customers would have acted but for such energy efficiency programs

- to calculate an emission standard for existing sources of pollutants moves an emission standard from science to, at best, a realm of art where there are many different sch ools of thought.

Commenters stated, in light of intervening guidance of the Supreme Court in its Utility Air Regulatory Group decision, the EPA need not, and should not, wait until a subsequent court
decision

- as proposed in the Proposed Regulation [79 Fe d. Reg. 34,892.]

- to sever the energy efficiency building block. Commenters said, although legitimate state and federal initiatives can be undertaken to encourage energy efficiency, the EPA's proposal to subject such consumer activity to regulation enforc eable under the Clean Air Act is ultra vires and unworkable.

Response 1 : As explained in Section V

. B

. of the preamble we are not including demand

- side energy efficiency

– building block 4

- as a component of BSER. We disagree with the comment
that the s ection 111(d) standards are more stringent than the section 111(b) standards applicable to new sources. Further, we explain in the Legal Memorandum why the section 111(b) and (d)
standards are based on different determinations of the BSER.

Comment 2 : Co mmenters stated regardless of the EE savings levels proposed by EPA, no EE savings will be achieved unless current state

- and administrator

- run EE programs are both continued and expanded. Commenters explained that the regulatory environment in each state determines the size of the budget for customer

- funded EE programs; the budget determines the scope and breadth of the EE programs, and regulatory frameworks that support utility investments in EE programs (through cost recovery mechanisms or performance in centives), therefore, are the key to achieving actual EE savings. Commenters remarked that EPA's analysis does not make any mention of this relationship between supportive regulatory policies and EE savings, and refers to KDHE and KCC comments, which expla in that KDHE does not have authority for the energy efficiency programs in Kansas that authority resides with the KCC. In addition, commenters remarked, both the KDHE and KCC state that authority does not reside at
EPA.

Commenters stated that under Buildi ng Block 4, EPA established demand

- side energy efficiency requirements for the states; and these are modeled on the current Energy Efficiency Portfolio
Standards in the 26 states that have them. Commenters believed that EPA does not have the authority to r equire any actions outside those imposed on existing sources; setting aside this legal argument, the methodology the EPA uses to set these state efficiency standards is arbitrary and highly flawed.

Commenters stated that while they strongly support volunta ry demand

- side energy efficiency improvements, the y believe significant portions of the proposed rule are unlawful because the EPA lacks the authority to fundamentally restructure the energy sector under CAA Section 111(d). Commenters agreed the EPA is aut horized to regulate existing sources within a specific source category (here fossil fuel

- fired EGUs), and for this reason, commenters believed that the ESPS will not withstand judicial scrutiny. Commenters cited Utility Air Regulatory Group v.335 EPA, 134 S. Ct. 2427, 2444 (2014) (Justice Scalia delivering the opinion of the Court with respect to Parts I and II, warned "[w]hen an agency claims to discover in a long

- extant statute an unheralded power to regulate 'a significant portion of the American economy,' Brown & Williamson, 529 U.S., at 159, 120 S. Ct. 1291, we typically greet its announcement with a measure of skepticism. We expect Congress to speak clearly if it wishes to assign to an agency decisions of vast 'economic and political significance.' Id., a t 160, 120 S. Ct. 1291.... ").

Commenters believed that EPA lacks authority under the CAA to impose requirements beyond the boundaries of the "affected sources" subject to Section 111 regulation, in this case, the category of existing EGUs. Moreover, comme nters believed states lack any authority that could mandate energy efficiency requirements on consumers of electricity.

Response 2 : As explained in Section V

. B

. of the preamble

, we are not including demand

- side energy efficiency

– building block 4 as a com ponent of the BSER.

Comment 3 : Commenters stated that EPA's proposal to expand BSER beyond the fence line is impermissible. Commenters asked, "by what metrics will EPA, a State, or a source evaluate demand reduction? How will they distinguish between demand growth and efficiency improvements?" Commenters asserted that nowhere has EPA attempted to answer these questions. Commenters believed such an all

- encompassing plan to reduce demand is not within the experience, competence, or jurisdiction of EPA. C ommenters said there is neither the administrative record nor the programmatic structure to support such an initiative. Commenters said, to call such ill

- defined, untested efforts a "best system of emission reduction" is to deny any meaning or sense to the term. Commenters noted (verbatim) that vital to the Supreme Court's decision in UARG that EPA may regulate greenhouse gases at least to some extent was the Court's observation that EPA was "not talking [in the rules before the Court] about extending EPA j urisdiction over millions of previously unregulated entities, but about moderately increasing the demand EPA . . . can make of entities already subject to its regulation." [134 S. Ct.
at 2448

- 49] Commenters said the Court emphasized that EPA should not int erpret its narrow decision largely upholding EPA's rules to allow a vast jurisdictional expansion. In particular, commenters said the Court rejected EPA"s assertion of "newfound authority to regulate millions of small sources' including retail stores, offi ces, apartment buildings, shopping centers, schools, and churches." [Id. at 2446] Yet, commenters observed, that is the jurisdictional expansion EPA contemplates in Building Block 4. Commenters stated that when the Agency calls or demand
reduction as a mea ns of controlling emissions from the production of a good, it is calling for the regulation of millions of small actions, by entities that are not even "sources" under the Clean Air Act, before they hit the grid, and this is the type of expansion of regula tory authority rejected by the UARG Court.

Commenters stated that including energy efficiency as part of a "best system of emission reduction" changes the "standard for emissions of air pollutants" for existing sources of
emissions from a measurable standard for which accountability can be ensured to a compliance requirement based on layer upon layer of assumptions and estimates. Commenters explained that the Proposed Regulation and supporting documents recognize that "many states with energy336 efficien cy programs use different input values and assumptions" to estimate energy savings from such programs. [Technical Support Document, State Plan Considerations at 42], and this is because estimates of energy savings from these programs are just that

- estima tes. Commenters said that to use such estimates to calculate an emission standard for existing sources moves an emission standard from science to, at best, a "realm of art" where there are many different schools of thought. Commenters continued, stating th at at the accountability stage, the inclusion
of demand

- side energy efficiency programs becomes even more problematic and unsupported by the Clean Air Act. Commenters asked, "What if the retail customers and homeowners integral to these programs do not act the way they are assumed or expected to" [See, e.g., The Breakthrough Institute, Energy Emergence: Rebound & Backfire as Emergent Phenomena (Feb. 2011)] Under the Clean Air Act, how can either these homeowners (who are not within the scope of 111(d)) or

t he existing carbon emitters (who are within the scope of 111(d), but are not responsible for the actions of homeowners) be held accountable? Indeed, most aspects of a homeowner's everyday life that affect his or her electricity consumption are not matters of interstate commerce, much less the regulatory construct of the Clean Air Act." Commenters asserted that the Proposed Regulation would place plainly excessive demands on state governmental resources for the foreseeable future, and it would transform EPA' s regulatory authority by expanding it beyond the fence line of existing power plants (and other actual emitters) and into, among other things, the homes of citizens. Commenters closed, stating that in light of intervening guidance of the Supreme Court in its Utility Air Regulatory Group decision, the EPA need not, and should not, wait until a subsequent court decision

- as proposed in the Proposed Regulation's

- to sever the energy efficiency building block. Commenters stated that although legitimate stat e and federal initiatives can be undertaken to encourage energy efficiency, the EPA's proposal to subject such consumer activity to regulation enforceable under the Clean Air Act is ultra vires and
unworkable

.

Response 3 : As explained in Section V.B. of the preamble, we are not including demand

- side energy efficiency

– building block 4 as a component of the BSER. In the preamble and the L egal
Memorandum we describe why the remaining building blocks 1, 2, and 3 constitute the BSER.

Comment 4 : Commenters stated EPA's reliance on demand response as part of the source of BB
No. 4 reductions is especially untimely since the D.C. Court of Appeals has recently found that the Federal Power Act does not grant the FERC authority over demand response, and for EPA t o establish an enforceable goal, based on the expected exercise of authority that Congress has reserved exclusively for states, raises significant legal questions.

Response 4 : As explained in Section V.B. of the preamble, we are not including demand

- side energy efficiency

– building block 4 as a component of the BSER. Building block 4 does however remain an important compliance options that states will be able to evaluate in
de veloping their state plans. We note that the Supreme Court has granted cert. in the reference d matter and oral argument is expected this fall.

Comment 5 : Commenters stated that if EPA authorizes States to regulate additional sources beyond affected EGUs and make them responsible for mandatory reductions, electricity337 consumers

- including those in the manufacturing and industrial sectors

- that implement energy efficiency measures with this rulemaking should be exempted from, or given credit towards, compl iance with any subsequent GHG regulation for other sectors under CAA Section 111.

Response 5 : While states may decide to regulate additional sources as part of a state measures approach, we have concluded that making such limits federally enforceable woul d be inappropriate. Questions regarding what EPA would do in a subsequent Section 111 standard are beyond the scope of this rulemaking.

1.5.6 Other

Comment 1 : Commenters stated that in formulating its state goals, EPA assumed building block 2 reductions ( i.e., shifting to NGCC generation) would be accomplished by 2020. Commenters believed there are significant impediments to this, and, as reflected in the NODA, EPA now recognizes two of them and concedes this is a significant problem for states like Texas where "building block 2 results in large amounts of the overall required CO2 reductions relative to other building blocks."[79 Fed. Reg. at 64,544] Commenters remarked that the NODA identifies two significant issues that prevent states from meeting the 202 0 interim deadline that EPA proposed

- the need for additional infrastructure and stranded assets

- and as a work

- around to these obvious issues, EPA suggests a "glide path" in lieu of the currently calculated reduction mandated in 2020. Commenters agreed that these are critical flaws in EPA's proposal, but the quick fix EPA is suggesting is not adequate nor can meaningful comment be developed until EPA issues an actual proposal to address these issues. Commenters encouraged EPA to address
them in a revised proposal that is published for public comment. Commenters stated that EPA acknowledges that infrastructure improvements are needed before natural gas units could be ramped up to operate at a higher capacity factor but EPA's proposed glide path is not the answer to this issue. Commenters argued that EPA does not have the authority, nor is it appropriate, for EPA to direct a state's infrastructure development through Section 111(d). Commenters stated, whether EPA exceeds its authority by requiring the infra structure in 2020 or in 2030, it is still coloring outside the lines of the authority that Congress provided in the CAA.

Response 1 : We disagree with commenters. However, in the final rule, we address timing concerns, in part, by adjusting the compliance t imeframe from a 10

- year interim period that begins in 2020 to an 8

- year interim period that begins in 2022, and by refining the approach for meeting interim CO 2 emission performance rates to be a gradual glide path separated into three steps, 2022

- 2024, 2025

- 2027, and 2028

- 2029, that is also achievable “on average” over the 8

- year interim period. In response to the concerns of commenters that the proposal’s 10

- ye ar interim target failed to afford sufficient flexibility, the final guidelines’ approach will provide states with realistic options for customizing their emission reduction trajectories.

Comment 2: Commenters asserted that the EPA is required to identify a “best system of emission reduction ... adequately demonstrated” (BSER) for each affected EGU. Commenters stated that in light of the diversity of the electric power industry, the EPA might be obliged to338 make numerous subcategorizations, with a separate BS ER for each one. Commenters stated that this process is necessary to avoid imposing unreasonable costs on any individual affected EGU.

Response 2 : We disagree with this comment. We may identify a set of measures as the BSER as long as their costs meet th e D.C. Circuit’s cost criteria across the industry, even if the costs are higher for individual sources. In this rule, however, this issue is moot because the costs for a typical EGU are reasonable, and all sources have a wide range of methods available to achieve the emission performance standards, whether through implementation of the BSER or
otherwise. In part because we reasonably expect states to authorize emission trading, few, if any, individual EGUs may be expected to find the costs of compliance w ith emission standards that reflect the emission performance rates in the guidelines to be greatly in excess of the costs to a typical plant. The various mechanisms that individual affected EGUs can use to access all of the building blocks are discussed in section V.A.5., V.C., V.D., and V.E. of the preamble and in the Legal Memorandum.