1 

### Table of Contents 1.11 State Plan Enforceability Considerations

................................ ................................ ........... 2

1.11.1 Legal issues

................................ ................................ ................................ ......................... 2

1.11.2 Fed eral enforceability of renewable energy and demand

- side energy efficiency

measures
................................ ................................ ................................ ........................... 52

1.11.3 Plans with state commitments

................................ ................................ ......................... 72

1.11.4 Ongoing applicability of CAA Section 111(d) state plan

................................ .............. 91

1.11.5 Obligations on affected EGUs

................................ ................................ ....................... 105

1.11.6 Parties regulated by the state other than affected EGUs

................................ ........... 117

1.11.7 Private or public third

- party entity not regula ted by the state

................................ . 124

1.11.8 State agency, authority, or entity

................................ ................................ .................. 132

1.11.9 Multi

- state approaches

................................ ................................ ................................ .. 138

1.11.10 Other

................................ ................................ ................................ ............................. 149

1.12 Promulgation of rules not proposed

................................ ................................ ................ 161

1.13 CAA 307(d)

................................ ................................ ................................ ........................ 168

1.14 Request for extension of comment period

................................ ................................ ...... 191

1.15 Other

................................ ................................ ................................ ................................ .. 204

1.15.1 CAA/Section 111(d) issues

................................ ................................ ............................. 204

1.15.2 APA issues

................................ ................................ ................................ ...................... 241

1.15.3 Constitutional issues

................................ ................................ ................................ ...... 261

1.15.4 General illegality/exceedance of EPA authority

................................ .......................... 272

1.15.5 Data and information

................................ ................................ ................................ .... 279

1.15.6 Economic/industry issues

................................ ................................ .............................. 283

1.15.7 State

- specific issues

................................ ................................ ................................ ........ 285

1.15.8 Recommend EPA delay, modify, withdraw proposal

................................ ................. 297

1.15.9 Recommend EPA strengthen proposal

................................ ................................ ........ 307

1.15.10 Information Quality Act Comments

................................ ................................ .......... 3102 1.11 STATE PLAN ENFO RCEABILITY CONSIDERA TIONS

1.11.1 Legal issues

Comment 1: Commenters argued that EPA's Subpart B rules require state emission standards to be generally no less stringent than the emission guidelines, but they cannot be binding and enforceable against any source. Commenters argued that because the EPA has stated that “[T]he interim and final goals will be binding emission guidelines for state plans,” they are not, by definition, guidelines.

Commenters argued that EPA's Subpart B rules generally require state emission standards to "be no less stringent than" the em ission guidelines set forth by EPA. Commenters stated, when it first adopted its section 111(d) regulations, EPA took pains to emphasize that, in contrast to the "emission standards" that states adopt under their section 111(d) plans, emission guidelines a re not "legally enforceable," (emphasized by the fact that the term emission guideline was used in place of emission limitation). Commenters noted that what the Administrator determines to be BSER is merely one of the many factors states must consider in d etermining the level and form of any existing source performance standard as applied to a specific EGU. Commenters argued that EPA's Section 111(d) guideline document is supposed to contain an "emission guideline" for designated facilities.

Commenters argu ed that EPA itself recognized state primacy in 1975 when it promulgated the Subpart B regulations to interpret and implement section 111(d): "States will have primary responsibility for developing and enforcing control plans under section 111(d)[.]" Commen ters stated, on the other hand, EPA's role under its own regulations is to set "guidelines," not binding emission standards for existing sources. Commenters noted that EPA itself defined an “emission guideline” as “a guideline . . . which reflects the degr ee of emission reduction achievable through application of the best system of emission reduction . . . .” Commenters said, by contrast, EPA’s regulations separately define an “emission standard” as “a legally enforceable regulation setting
forth an allowab le rate of emissions into the atmosphere.” Commenters said, yet, by EPA’s own admission, its proposal would establish legally enforceable (“binding”) allowable emission rates for each state. Commenters argued that, thus, applying EPA's own definitions, the proposal establishes "emission standards," not guidelines, which contravenes section 111(d) and EPA's
stated role for itself under 40 C.F.R. section 60.22.

Response 1 : We disagree that the proposal established “emission standards” in contravention of
CAA section 111(d). In any case, we do not take the position in the final rule that we have established binding requirements on any source. As we explain in section VIII.D of the final rule preamble of the CPP , our emission guidelines provide the substantive c riteria that are intended to govern the review of the Administrator’s review of state plans ; they do not impose any requirements directly onto any source

. T he interim and final goals are intended to reflect such
substantive criteria.3 Comment 2 : Commenters argued that despite the clear requirements of section 111(d), the CPP would include emission reduction standards based almost entirely on measures that cannot be incorporated or achieved by individual units. Commenters stated, specifically, thre e of the four Building Blocks that comprise EPA's proposed BSER are not directed at existing coal

- fired EGUs. Commenters argued that such a system

- wide approach inappropriately commingles all elements of electricity production and distribution into a singl e "source category" and removes from the states and EPA the authority to implement the final three Building Blocks. Commenters argued that this is especially problematic because the proposed regulations would require each state to demonstrate, in its state plan, that it has the legal authority to carry out the plan. See 40 C.F.R. 60.26. Commenters argued that because individual facilities cannot implement Building Blocks 2 through 4 under any circumstances, there is nothing that states can require of facili ty owners and operators that will enable compliance with the CPP.

Response 2 : We disagree with these comments. We explain in section V.B of the final rule preamble of the CPP how affected EGUs can implement building blocks 2 and 3.

Comment 3 : Commenters a rgued that EPA's BSER interpretation under section 111(d) is inconsistent with the structure of section 111(d) because the BSER includes measures that the EPA has determined the Agency itself cannot require of states and sources as part of a Federal
Plan i f a state fails to submit a plan or submits a plan that is not approved by EPA. Commenters said, for example, EPA's proposed Building Block 3 requires the construction of new renewable generation, and under the CAA, EPA does not have authority to impose RE S requirements on utilities within a state, nor require new renewable energy construction through the integrated resource planning process. Commenters said, similarly, with respect to Building Block 2, EPA
has no control over wholesale electric market rule s to impose changes in the dispatch of units. Commenters stated, finally, the EPA does not have control over customer decisions about how much power they use or even the ability to approve rate recovery for utilities to invest in EE programs such as effici ent appliance rebates.

Commenters argued that EPA's lack of authority for a system

- wide approach is evident from its approach to BSER in the section 111(b) rulemakings, where the EPA is the exclusive regulating authority for the same pollutant and source c ategories, but for which the Agency explicitly rejected system

- wide approaches to determining BSER as inappropriate. See 79 Fed. Reg. at 34,983. Commenters argued that this is telling, because it shows that EPA's BSER approach in the proposed guidelines is inconsistent with both its own prior determinations and the structure of CAA section 111. Commenters argued that EPA's actions regarding sources regulated under CAA section 111(b) show that the Agency tacitly recognizes the limits on its own authority, an d that its BSER interpretation in the proposed guidelines is inconsistent with the structure of CAA section 111 by requiring actions of states that the Agency cannot take itself.

Commenters noted that in order to receive EPA approval, "a state plan must co ntain enforceable
measures that reduce EGU CO 2 emissions," and once approved by the Agency, its provisions

- including its requirements for affected entities

- would then generally become federally enforceable by EPA and by private individuals in citizen s uits. Commenters argued that it is4 unclear what kind of "enforceable" obligations a state could impose on affected entities in order to implement Building Blocks 2, 3, and 4, or how those requirements could be enforced in the event they are not implemented ; therefore, it may well prove impossible for states to submit plans that are "approvable" under EPA's criteria.

Commenters argued that the EPA acknowledges that state and federal enforceability of measures applied against affected entities other than EGUs may present practical challenges, but the EPA does not attempt to resolve these issues. For instance, state agencies are immune from suit under the CAA's citizen suit provision. Further, commenters questioned, if a state imposes renewable energy investmen t obligations on a third party other than a state agency, would an investment obligation alone be sufficient to ensure federal enforceability, or would more, such as a specific amount of renewable generation capacity, be required? How would such obligation s be enforced by a court?

Commenters argued that these uncertainties are present because section 111 was never intended to be used in the manner the EPA contemplates. Commenters argued that section 111 is a narrowly focused provision intended to be based on design or process changes that only individual sources within listed categories can implement to reduce their own emissions.

Response 3 : We disagree with these comments. The state plans that adopt emission standards impose either emission rates or mass limits on affected EGUs, and those measures are enforceable by the states and by the EPA. The affected EGUs may achieve their emission limits by taking various types of actions to implement the building blocks, and it is not necessary that
those actions t hemselves be enforceable by the state or by the EPA. We are not finalizing the portfolio approach. We explain in the Legal Memorandum why the section 111(b) rule does not rely on the building blocks as the BSER.

Comment 4 : Commenters believe EPA has overst epped its authority with the portfolio approach, and cannot legally require emission reductions from any source outside of fossil

- fuel fired EGUs. Commenters stated that they would support the ability of sources not subject to regulation under the CPP to v oluntarily opt

- into a State plan, if that option were to be included in the final CPP, and it was clear that such action would be taken solely at the discretion of the non

regulated source, and under no circumstances would be required by any State. In retu rn, commenters suggested that States should have the discretion to provide non

- regulated sources that voluntarily opt

- in with incentives, such as offsets or exclusion from future State plans directly targeting the sector.

Response 4 : The EPA is not requiring or authorizing state plans to impose federally enforceable requirements on non

- affected EGUs

. Also, as explained in section V .B of the final rule preamble
to the CPP , the EPA is not finaliz ing the proposed portfolio approach and a ny comments on that proposed approach to 111(d) state plan design are therefore moot.

Comment 5 : Commenters stated, EPA's broad approach is authorized, at least in part, by section 111(d)'s specific reference to state implementation plans under section 110 as a model.5 Specifically, the commenters stated that the statute directs the Administrator to " prescribe regulations which shall establish a procedure similar to that provided by [Clean Air Act section 110] under which each State shall submit to the Administrator a plan..." 42 U.S.C. section 7411(d)(1).Commenters said, under section 110, EPA uses it s expertise in safeguarding public health and welfare to set NAAQS for designated criteria pollutants that states must attain through implementation of emission limits set forth in their SIPs. Commenters said, EPA does not set

source

- specific emission limi tations; that is left to the states. Commenters said, following that lead, the Proposed Rule sets statewide emission goals that represent the BSER for each state, and
leaves it to the states to determine how to allocate individual emission limitations to m eet those goals. Commenters said, by specifically referencing section 110 and providing no further guidance, it can be inferred that Congress intended to encourage this statewide goal

- setting and compliance paradigm.

Response 5 : These comments are generall y supportive of EPA’s proposal.

Comment 6 : Building blocks 2

- 4 do not qualify as standards of performance because they are
not “for” the affected source.

Commenters stated that EPA's argument that RE and EE measures are "for" EGUs because they
would have an effect on affected sources is contrary to section 111 in at least two ways:

1. Section 111(d) plans are supposed to "establish[ ] standards of performance" for existing sources; however, renewable energy generating technologies and
demand

- side energy effic iency measures such as energy efficiency programs, building energy codes, state appliance standards, tax credits, and benchmarking requirements for building energy use are not "standards of performance." The commenters stated that a "standard of performanc e" is "a standard for emissions of air pollutants" or "a requirement of continuous emission reduction."
2. The Act makes clear that "standards of performance for any existing source" must be standards that are applied to those existing sources, and not merel y standards that "have an effect on" those sources. The commenters noted that there are only four sentences in section 111(d), and stated that two of those sentences make this conclusion crystal clear: "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 consideration, among other factors, the remaining useful life of the existing source to which such standard appl ies. ... In promulgating a standard of performance under a plan prescribed under this paragraph, the Administrator shall take into consideration, among other factors, remaining useful lives of the sources in the category of
sources to which such standard a pplies."

The commenters concluded that when viewed in context, section 111(d) standards of performance are standards that apply to sources in the relevant source category, not just requirements that affect such sources.6 Commenters said that EPA is not cle ar whether the portfolio measures would be considered standards of performance under the approach that measures on sources outside the regulated category are "for" sources within the regulated source category. The commenters said that although in the first full paragraph of page 34,903 EPA signals that under this justification portfolio measures would not be considered standards of performance, the commenters presume that they would be since EPA tries to justify these measures as "standards of performance f or any existing source." The commenters stated that either the measures contained within the portfolio approach are (a) standards of performance or measures to implement or enforce those standards, in which case they can be included in a state plan, or (b) they are not, in which case they can't. The commenters indicated that in any event, there is no possible reading of the term "for" in the context in which it is used in section 111(d) that could convert a standard for a facility in a non

listed source cat egory into a standard that applies to and is therefore "for" facilities in a listed source category). Commenters stated that the proposal violates the core tenet of administrative law that "[t]he definition of words in isolation ... is not necessarily cont rolling in statutory construction. 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).

Commenters argued that building blocks 2, 3, and 4 do not quali ty as a standard of performance, charging that EPA is using a circular logic to defend their position because blocks 2, 3, and 4 as implementation measures are not part of BSER but still are used to calculate the goals. The
commenters stated that these mea sures are needed to meet the standards but will be difficult to implement and enforce, e.g., to avoid double counting and to account for entities in different

states.

Regarding the suggestion that state emission performance levels (i.e., the "state goals") could be considered "standards of performance," commenters stated that the agency presumably intends to argue that if the state goals are "standards of performance," then EE and RE measures would be "implement[ing] measures that could be included in the s tate plans. The commenters said this argument is flawed, and that "standard of performance" does not mean "a requirement that concerns emissions"; it means, "a standard for emissions of air pollutants" or "a requirement of
continuous emission reduction." T he commenters said that state goals cannot be "standards of performance" because state goals are not requirements on individual electric generating units.

Commenters indicated that what EPA calls "standards of performance" are more akin to state implement ation plan measures. The commenters indicated that the portfolio measures cannot be called performance standards, and that state plan requirements that create obligations on third parties are not "standards for emissions of air pollutants."

Commenters sta ted that EPA goes far beyond any reading of the term "standard of performance" in the proposed rule

.
Commenters stated, the fundamental tenet of guidelines under Section 111(d) is that they set standards of performance for existing sources that are achieva ble by that source. Commenters said, EPA ignores the very essence of the section 111 regulatory program

- regulation of sources7 in a source category. Commenters said, EPA has severed the link between the standard of performance and the source category and in stead effectively sets a standard of performance for the state, not the source category. Commenters said, in EPA's view, "[a]lthough "for" could be read as meaning that standards must apply to affected sources, "for" is also reasonably interpreted to have a more capacious meaning: Standards (such as energy efficiency and renewable energy) are reasonably considered to be "for" affected sources if they would have an effect on existing sources ... by decreasing the amount of generation needed from affected
EGU s." Commenters argued this is an unprecedented and tenuous interpretation of EPA's authority over setting standards for stationary sources under Section 111.

Commenters stated, in attempting to support the suite of measures not directly tied to the source, EPA also compares its approach to the kind of measures adopted in state implementation plans ("SIPs") under Section 110. Commenters said, this argument only highlights the problems with EPA's argument. Commenters said, first, to suggest such an expansive reading of the word "for" renders it meaningless. Commenters said, more fundamentally, the argument regarding the SIP comparison fails because under Section 110, it is the state that must develop a state plan to achieve a national ambient air quality stand ard for the state, not a standard of performance for a source in a source category subject to an emission guideline. Commenters said, thus, it is logical in the SIP context for a state to develop a suite of measures that apply to particular sources in the state or other measures that taken together combine to achieve an ambient standard in that state. Commenters said, under Section 111, however, Congress has only authorized establishment of standards of performance (or guidelines under 111(d)) for stationar y sources that reflect the application of BSER for the source, not some general target of emissions reduction from all sources that may in some way help reduce GHG emissions. Commenters said, EPA is not establishing an ambient standard under Section 111 (d ), nor can it.

Response 6 : We disagree with these comments. See section V.B of the final rule preamble to the CPP for EPA’s response to this comment. Also, as explained in section V.B of the final rule preamble to the CPP, the EPA is not finalizing the pr oposed portfolio approach and any comments on that proposed approach to 111(d) state plan design are therefore moot.

Comment 7 : Commenters stated, the Clean Air Act as a whole is based on cooperative federalism, emphasizing the "primary responsibility" of the states to control air pollution, consistent with governing federal standards. See 42 U.S.C. section 7401 (a). Commenters sa id, section 111(d) markedly relies on this model. Commenters said, unlike new sources of emissions in covered sectors, which are regulated by uniform federal standards of performance, see id. section 7411(b), designing appropriate plans for existing source s, which may be less amenable to uniform retrofit requirements, often requires more creativity. Commenters said, state planners are better able to respond to this complexity with plans designed for the particular existing source populations in their states . Commenters said, recognizing this reality, Congress gave the states primary responsibility to implement and enforce standards of performance for these sources, subject to U.S. EPA oversight. Commenters said, the contrast between section 111(b)'s federal8 mandates and section 111(d)'s broad delegation to state planning authorities underlines Congress's cooperative federalism approach in this context.

Commenters stated, although U.S. EPA is to evaluate state plans to determine whether they are "satisfactory ," in the sense that they reduce emissions to the required "best system of emissions reduction" (BSER) level and comply with other requirements, the standards of performance contained within these plans are to be "establishe[d]" by the states. See id. sect ion 7411(d)(1). Commenters said, a state plan will not be "satisfactory" if it does not "establish" standards that "reflect the degree of emission limitation achievable through the best system of emission reduction," id. section 7411(a)(1) & (d)(1). Commen ters said, but there are many potential plan designs that could deliver this required level of performance.

Commenters stated, the Act leaves that design question to the states, subject to U.S. EPA approval. Commenters said, the Act provides that state pl ans must "provide for the implementation and enforcement" of standards "for any existing source" consistent with BSER reduction levels. Id. section 7411(d)(1). Commenters said, the statute does not say what constitutes a plan "for" any existing source, nor does it specify particular mechanisms for state implementation and enforcement. Commenters said, thus, ARB staff agrees with U.S. EPA that the requirement that state standards be "for" sources affords U.S. EPA discretion to approve a range of plans that s atisfactorily address existing source emissions. See 79 Fed. Reg. at 34,903. Commenters said, although a plan would not be "satisfactory" if its implementation and enforcement design failed to guarantee that BSER emissions levels were achieved and
maintain ed, the form of the plan and its standards is otherwise primarily up to the state.

Commenters stated, the statute does not provide much further substantial direct guidance on the content of the state plans. Commenters said, although the "procedure" under which they are submitted is to be "similar to that provided by section 7410" (section 110) for criteria pollutant plans, id. section 7411(d)(1), it is not required to be identical, and no particular requirements are provided by statute. Commenters said, st ate planners under section 110 are already vested with substantial discretion, so section 111 (d)'s cross

- reference to that section further demonstrates Congress's intent. See, e.g., Union Electric Co. v. U.S. EPA, 427 U.S. 246,267 (1976) ("[the]
state has virtually absolute power in allocating emission limitations so long as the national standards are met"); Texas v. U.S. EPA, 690 F.3d 670, 684 (5th Cir. 2012) (the Clean Air Act "supplies the goals and basic requirements of state implementation plans, but the states have broad authority to determine the methods and particular control strategies they will use to achieve the statutory requirements"); Luminant Generation Co., LLC v. U.S. EPA, 714 F.3d 841,
845

- 46 (5th Cir. 2013) (affirming this principle). Com menters said, indeed, the design flexibility for section 111 plans is likely greater than that afforded to section 110 plans. Commenters said, this is because the statute sets out a long list of requirements for section 110 planning, see 42
U.S.C. section 7 411 (a)(2)(A)

- (M), but does not provide a similarly directive list under section 111, noting only that procedures for those plans should be "similar" to section 110. I d. section 711(d)(1).9 Commenters stated, it is especially reasonable for U.S. EPA to c onsider creative state plan designs for greenhouse gas emissions from EGUs because of the nature of the best system of emission reduction for these sources. Commenters said, as U.S. EPA discusses at length in the proposal, the most effective systems for co ntrolling power plant emissions include actions that modify the functioning of the electrical grid that links together these sources, and regulates which sources are used at which times. Commenters said, grid

- level actions that displace the need for higher emitting sources can enable very substantial reductions at the sources
themselves.

Commenters stated, to capture these reductions

- that is, to be "satisfactory"

- states' plans thus must operate in the larger world of the electric system, and so relate in a complementary way to the many regulators and regulations, state and federal, that also govern the grid. Commenters said, state and federal energy regulators have long adapted their planning processes to
accommodate Clean Air Act mandates. Commenters sai d, the section 111(d) state plans will benefit from this experience. Commenters said, states should be allowed to design these plans in ways that achieve Congress's mandate to employ the "best system of emission reduction" to
address these Clean Air Act re quirements while working within the structure of electric system regulation set out by state and federal laws, including the Federal Power Act. See, e.g., Morton v. Mancari, 417 U.S. 535, 551 (1974) (statutes are to be interpreted harmoniously).

Commenter s stated, clearly U.S. EPA has the discretion to consider for approval a broad range of state plan types given: the principles of cooperative federalism at the foundation of the Clean Air Act; the marked contrast between the national, one

- size

- fits

- all sta ndards for new sources under section 111(b) versus the state plan approach in section 111(d) which provides even greater latitude in some respects to states than in the section 110 context; the statute's reliance on the best system of emission reduction, a term that on its face extends beyond the bounds of any particular source; and, in the particular context of this rule, the interconnected nature and diversity of EGUs and the need to harmonize emission reductions with other statutory directives.
Commenter s said, there is, in other words, every indication that state plans may use a wide array of approaches provided that they guarantee enforceable emission reductions.

Response 7 : These comments generally support EPA’s proposal. The EPA thanks the
commenter for these comments.

Comment 8 : Building blocks 2

- 4 qualify as standards of performance because they are “for” the
affected source.

Commenters stated that although the "for" in setting performance standards "for" affected sources could reasonably be read as meaning that the standards must apply to affected sources, "for" is also reasonably interpreted to have a more capacious meaning to include standards with
an effect on affecte d sources. C ommenters indicated that standards such as those for renewable energy, are reasonably considered to be "for" affected sources if they would have an effect on10 affected sources by, for example, causing reductions in affected EGUs' carbon emission s by decreasing the amount of generation needed from affected EGUs. C ommenters said that under EPA's specific interpretation, and depending on the specific provisions of a state's plan, renewable energy would be "for" fossil fuel

- fired EGUs, even if the st andards do not apply directly to fossil fuel

- fired EGUs.

Commenters agreed with EPA's proposal that section 111(d)(1) allows state plans to include measures that would reduce emissions from affected sources, even if those measures are neither
"standards of performance for existing sources" nor measures "for the implementation and enforcement of such standards of performance."

Commenters said that standards of performance for affected sources are reasonably read to include the emission performance level (i.e ., the state goal) on the grounds that the level is a
standard for emissions. C ommenters said it is in the nature of a requirement that concerns emissions and it is "for" the affected sources because it helps determine their obligations under the plan. C om menters said that measures, such as renewable energy deployment, may be considered "implement[ing]" measures in state plans if they are not directly tied to emission reductions that affected sources are required to make through emission limits, and if they are requirements on entities other than the affected sources.

Response 8 : These comments generally support EPA’s proposal. The EPA thanks the
commenter for these comments.

Comment 9 : Commenters said that, EPA makes clear in the proposal, and they support , that states have substantial flexibility to determine the most cost

- effective means to meet the applicable target based on the specific resources and opportunities in a state. Commenters said that, consistent with the applicable case law, in the proposed rule EPA provides states with many choices on how to comply. Commenters said that, the proposal establishes a state emission target and allows states to implement any combination of the measures that constitute BSER or include measures that were not part of EPA's BSER determination as long as the state can demonstrate that the affected EGUs meet the applicable emission target. Commenters said that, one state may elect not to use energy efficiency measures as a means to comply but rather impose a mass

- based target on affected EGUs. Commenters said that, another state may elect to continue to develop renewable energy generation as a compliance mechanism in combination with a rate

- based trading program that encourages the displacement of higher emitting source s with lower emitting generation. Commenters said that, as long as a state can demonstrate that its compliance choices can achieve its applicable emission reduction level, EPA appropriately proposes to recognize those measures as compliance options.

Commen ters said that, given the flexibility Congress intended for states in designing compliance plans under 111(d), it is essential that EPA design the final rule to encourage states to implement their compliance plans most cost

- effectively based on the specifi c state dynamics and utilizing11 proven market

- based regulatory approaches and existing tools where appropriate, such as the regional transmission operator (RTO) structure.

Commenters said that, allowing states significant compliance flexibilities for reduc ing or displacing emissions, is analogous to the approach Congress specified for the consideration of a wide variety of transportation control measures available to States in formulating their SIPs under section 110, which Congress referenced in section 11 1(d). Commenters said that, for example, as part of a SIP, states can consider any of the transportation control measures listed in section 108(f) of the Act or any other measure that reduces emission from the transportation sector by reducing vehicle use or changing traffic flow or congestion conditions. Commenters said that, Congress intended that such measures receive the same credit as those which depend upon actual tailpipe reductions. Commenters said that, this recognition by Congress that a broad

ran ge of measures can lead to a reduction in emissions is consistent with EPA's approach of providing significant flexibility for states to demonstrate compliance in the section 111(d) plans.

Response 9 : These comments generally support EPA’s proposal. The EPA thanks the
commenter for these comments.

Comment 10 : EPA's Inclusion of Energy Efficiency and Renewable Energy Programs is Inconsistent with "Cooperative Federalism."

Commenters stated that the Clean Air Act was built on the principle of "cooperative federalism" in which the federal government and individual states would work together to control air pollution. Commenters said that when enacting the CAA in 1970, 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, s tate, regional, and local programs to prevent and control air pollution." Commenters said that as a federal appeals court recently explained, "Congress chose
a balanced scheme of state

- federal interaction to implement the goals of the Clean Air Act."

Comm enters stated that the CAA establishes a cooperative framework whereby EPA and the states work in partnership to achieve air quality objectives. Commenters said that the CAA's "cooperative federalism structure is a defining feature of the statute." Comment ers said 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 t he development of cooperative federal, state, regional, and local programs to prevent and control air pollution."

Commenters said that in the statute, Congress stated that the purposes of the CAA are:

(1) to protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the productive capacity of its population;

(2) to initiate and accelerate a national research and development program to achieve the prevention and control of air pollution;12 (3) to provide t echnical and financial assistance to State and local governments in connection with the development and execution of their air pollution prevention and control programs; and

(4) to encourage and assist the development and operation of regional air pollutio n prevention and control programs.

Commenters said that further, Congress stated that a "primary goal" of the Act is "to encourage or otherwise promote reasonable Federal, State, and local governmental actions, consistent with the provisions of this chapt er, for pollution prevention."

Commenters stated that EPA, in its CPP, does more than encourage or promote state actions

- it federalizes them. Commenters said that EPA is building bold assumptions regarding EE and RE, beyond

- the

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

- the

- unit measures to achieve the standard. Commenters said besides being simply unnecessary, another major problem exists wi th
it

- by requiring states to include their state

- regulated EE and RE programs into its federally

enforceable SIP, EPA effectively subjects state programs to federal enforcement. Commenters said that the EE programs and many of the RE programs have to dat e been wholly state

programs.

Commenters stated that the Federal Power Act, which grants regulatory authority of the interstate electricity grid to FERC, not EPA, places specific limits on that authority (see Section IV).
Commenters said in the recent case Electric Power Supply Association v. FERC, the D.C. Circuit Court of Appeals ruled that the Federal Power Act "unambiguously restricts" FERC from regulating retail electricity demand, stating that retail markets are a matter that Congress left
"exclusivel y within state control."

Commenters stated that EPA deviates from this prohibition in the proposed rule. Commenters said by regulating state

- run EE and RE programs, which EPA argues affect CO2 emissions from the source category by reducing demand of elect ricity generated from fossil

- fuel fired EGUs, EPA is failing to respect the state's explicit authority to regulate its own retail electricity demand. Commenters said that FERC Commissioner Tony Clark stated in his testimony before the House Energy and Comm erce Subcommittee on Energy and Power that:

"More than any regulation I have seen during the time I have been involved in the energy sector, this EPA proposed rule has the potential to comprehensively reorder the jurisdictional relationship between the fed eral government and states as it relates to the regulation of public utilities and energy development...What was once a relationship of interacting and cooperating entities will be one in which there is a clear senior partner...[States] will have entered a comprehensive "mother

- may

- I relationship with the EPA that has never before existed."

Commenters stated that this "Mother

- may

- I" relationship will have profound implications beyond just the CPP. Commenters said that Clark went on to explain:13 "To use just one example, if a future legislature decides that its renewable portfolio standard is not working for the citizens of its state, that legislature may effectively be prevented from changing course, because its 'EPA

- approved' RPS will still be in full effect ; and likely enforceable by either the EPA or subject to a private party lawsuit. The same would apply to any future state utility commission action to the degree it implicates an EPA approved plan. And because basically everything in the electricity secto r affects carbon output in some manner, if a state 'plays ball' with the EPA, the proposed rule could effectively lock a state into a comprehensive carbon integrated resource plan that can only be changed with the acquiescence
of the EPA."

Commenters stat ed that these are powerful and insightful words to hear from a federal energy regulator, and they articulate a crystal clear vision of what will result from EPA's oversight of state electricity regulation. Commenters said that if FERC, the federal energy a gency, lacks authority to regulate electricity demand under the FPA, EPA most certainly does not have the authority under its emission statute

- the Clean Air Act.

Response 10 : The EPA disagrees with these comments. See section V.A and V.B of the final
rul e preamble of the CPP for the EPA’s response to this comment. In addition, 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 th e affected EGUs, and thus this rule does not require that states make their EE or RE programs federally enforceable. Further, to the extent that this comment relates to energy efficiency, we note that we are not including building block 4 as a component of BSER in the final rule, but EE may be available as a compliance measure. The EPA has the clear authority from Congress, recognized by the Supreme Court, to regulate GHGs from the affected EGUs.

The rule is consistent with the cooperative federalism struc ture throughout the CAA. EPA’s oversight authority is plainly provided in the text of the statute, see section 111(d)(2).

We disagree that we are expanding our authority to include wholesale energy market regulation.
We also note that we are not finalizin g the portfolio approach. 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 marke t 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. For a more compre hensive discussion of cooperative federalism and the final 111(d) rule, please see EPA’s response to comments in
section 1.2.14 Comment 11 : Commenters stated that the CAA empowers states, not EPA, to apply appropriately tailored standards to individual sour ces, explaining that under some provisions of the CAA, EPA itself sets federal standards that apply directly to individual sources

- for instance, under Section 112, or under Section 111(b), which empowers the agency to set performance
standards for new so urces but under the Section 111(d) system, EPA is limited to establishing a procedure for states to submit plans under which the states will set performance standards for existing sources within their jurisdiction, taking into account plant

- specific charac teristics such as the remaining useful life of each facility. Commenters contended that the states are expressly afforded this discretion by the statute, and the agency has reflected this in its general regulations implementing the statute. Commenters said only if a state fails to submit a "satisfactory" plan may EPA impose its own, federal plan, and that federal plan may only remain in force until the state corrects its plan. Commenters stated that the current proposal upends this by setting binding
and in flexible state "goals" in the form of statewide limits on CO2 emissions for a state's entire power sector, and this contradicts Congress's intent to respect and harness states' local knowledge. Commenters remarked that even assuming that Section 111 contem plates beyond

the

- fence, grid

- wide "systems of emission reduction"

- which, as explained above, it does not

- Congress's design of the statute makes clear that it would never have wanted the agency to make the intensely detailed, state

- specific projections of what each individual state can achieve through alteration of its energy policy. Commenters continued, stating that it is telling that EPA does not invite states to submit proposals of what reductions they think are achievable from their existing source s. Commenters said, instead, states are relegated to a purely ministerial role in achieving the limits handed down from the federal government. Commenters stated that this gets Section 111 entirely backwards: 111(d) was designed to establish cooperative st ate

- federal regulation, with less of a role for the federal government than under 111(b), and the CPP imposes
cookie

- cutter regulation.

Commenters stated that significant uncertainties exist regarding the design, implementation, and demonstration of compliance strategies to achieve the Building Block 3 goals, and this includes uncertainty regarding who has the regulatory authority to requi re the development and operation of specified amounts of renewable resources and nuclear power, how such requirements are designed in context with RTO/ISO and state

- dispatch regulations, how compliance is to be demonstrated, and where the compliance obliga tion resides.

Commenters stated that even though EPA invokes Section 111(d)(2) for the Administrator's authority to implement "a satisfactory plan as he would have under section 7410 of this title in the case of [a State's] failure to submit an implementa tion plan," the Clean Air Act still requires the Administrator to have the authority to impose individual elements of that plan. Commenters believed that regardless of how serious the problem an administrative agency seeks to address, it may not exercise i ts authority "in a manner that is inconsistent with the administrative structure that Congress enacted into law." Food & Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 125, 120 S. Ct. 1291, 1297, 146 L. Ed. 2d 121 (U.S. 2000) (citing ETSI P ipeline Project v. Missouri, 484 U.S. 495, 517, 108 S.Ct. 805, 98 L.Ed.2d 898 (1988)). Commenters argued that the CAA granting EPA authority "to impose a plan" does not confer on the Agency15 the authority to impose elements of a plan that the States may hav e authority to impose but for which the Administrator lacks authority. Commenters offered the following example: the fact that a State may have authority through its Public Service or Public Utility Commission to control retail markets or the generation of electricity or the basis for transmission of electricity in the state (prices, reserves, a preference for environmental dispatch over lower

- cost electricity) does not confer that authority on EPA should the State fail to exercise that authority.
Commenter s argued that EPA's authority under CAA Sections 110 and 111 are confined to establishing "emissions standards" applicable to "affected sources"; the State PUC or PSC is not an "affected source" that EPA has authority over; nor are the elements of Blocks 2 ,3, or 4 such as the production and sale of electricity, authority for licensing nuclear facilities and wind farms an "emission standard," which is defined by the Act as "a requirement established by the State or the Administrator 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 emissions reduction and any design, equipment, work practice or operational s tandard promulgated under this chapter." Id. at 7602 (k).

Response 11 : See section V.A and V.B of the final rule preamble of the CPP for the EPA’s response to this comment. The CAA, in both text and structure, as interpreted by the Supreme Court, support s the agency’s action. Brown & Williamson is distinguishable for a variety of

reasons.

Comment 12 : Commenters stated that Michigan has the capability to import hydroelectric generation from Canada and believes that the final rule should reflect and acknowledge international trading of electricity, as well as allow for the purchase of RE credits from other nations such as Canada. Commenters explained that while Michigan's current Renewable
Portfolio Standard does not consider out

- of

- state hydropower a s eligible, allowing international trading of low or non

- emitting electricity generation to count toward meeting their state's emission reduction goal would encourage Michigan to continue to build upon progress already made in offsetting fossil fuel

- fired generation with cleaner RE alternatives.

Response 12 : See section VIII.K of the final rule preamble of the CPP for the EPA’s response
to this comment.

Comment 1 3: Comments stating that section 111 does not allow EPA to reestablish BSER as part of "out

- year" requirements beyond an alternative 2025 performance goal.

Commenters noted that in connection with the alternative state goals, for the years after 2027, EPA requests comment o n the same "out

- year" issues and concepts for maintaining or improving emission performance over time that are described for the final goal (i.e., whether a state plan should provide for emission performance after 2025 solely through post

- implementation16 em ission checks that do not require a second plan submittal, or whether a State should also be required to make a second submittal prior to 2025).

The commenters stated that EPA lacks legal authority under Section 111 to establish a subsequent BSER based on levels of improved performance (i.e., section 111 does not permit EPA to reestablish a second BSER or performance goal ). The commenters noted that EPA refers
to the 8

- year review provision in Section 111(b) as authority to re

- issue NSPS for existing units

. The commenters contended that this view is misplaced because EPA cannot re

- issue a NSPS for new sources that have already gone through the process. Likewise here, the commenters stated that existing sources that have undergone a section 111(d) process ca nnot be forced to undergo it again.

The commenters stated that the only legally permissible alternative is post

- implementation
emission checks . When goal exceedances arise due to unforeseen circumstances the commenters stated that goals should be adjusted accordingly. For other exceedances, the commenters suggested that post

- implementation checks coupled with state readjusted plans are appropriate.

Response 13: See section VIII.B of the final rule preamble of the CPP for the EPA’s response to
this comment. See section V.A. of the final rule preamble for the final BSER determination and sections VI and VII of the final rule preamble and the CO 2 Emission Performance Rate and Goal Computation TSD for CPP Final Rule for more information regarding the final perfo rmance rates and goals.

Comment 1 4 : Portfolio approach is not allowed under section 111(d)

Commenter s indicated that EPA cannot approve and make federally enforceable non

performance measures, and the section 110 authority which gives states discretion to include various types of measures in their SIPs to attain NAAQS is a fundamentally different program.
The commenter s stated that Congress specifically gave states the authority to formulate any measures they wish to meet the NAAQS, but under section 111(d), state plans must include "standards of performance" which is a defined term with a specific regulat ory context. The

commenter s stated that no CAA authority exists for section 111(d) plans to contain other types of federally enforceable substantive measures.

Response 1 4 : The EPA has decided not to finalize the portfolio approach to designing a state plan under this guideline, so any comments objecting to the portfolio approach are moot.

Comment 1 5 : Comments on the enforceability of a federal plan containing the proposed Portfolio approach17 The commenters stated that Section 111(d) presumes that the BSER established by the EPA will be within the authority granted EPA and so capable of being enforced through a FIP if a State declines to act. Commenters questioned EPA's authority to develop and implement a Federal Implementation Plan (FIP) based on the portf olio approach. Commenters stated that it is unclear from the proposal whether EPA believes it could impose portfolio measures in a federal plan. Commenters argued that the EPA does not have the authority to implement a FIP based on the portfolio approach and believed that "an interpretation of the CAA that permits the issuance of a BSER that cannot be enforced through a FIP runs contrary to one of the oldest plain statement rules in American jurisprudence: 'we must generally assume, in the absence of a pla in indication to the contrary, that Congress when it enacts a statute is not making the application of the federal act dependent on state law'." Commenters stated that the recognition that "federal statutes are generally intended to have uniform nationwid e application" and the concern "that the federal program would be impaired if state law were to control" "apply with substantial force to an interpretation of section 111 that would permit a BSER that depends upon the States willingness to exercise police powers that EPA does not possess and cannot assume."

Commenters stated t he issue of plan enforceability is further complicated in the event a state does not submit a plan or a state is not on track to meet its interim state goal. Commenters said
the EPA n eeds to identify how it will handle such situations. Commenters stated the EPA does not have jurisdiction over retail sales of electricity and does not have jurisdiction to compel non

EGU entities to participate in an emissions reduction program applicable to EGUs. Commenters said in light of these constraints, they did not believe the EPA would be able to include RE and EE measures in a federal plan that replaces a state plan because it would require commandeering jurisdiction from other regulators. Commen ters stated when the EPA attempted to require state regulators to implement federal transportation control plans in the 1970s, courts held that the EPA could not require state officials to affirmatively implement vehicle inspection and maintenance programs because it commandeered state agencies in violation of the 10th Amendment. Commenters said, EPA cannot impose requirements on states that the agency itself does not have the authority to enforce.

Commenters noted that without their inclusion in a state c ompliance plan, EPA could not on its own regulate any of the areas implicated by blocks two, three, or four through a federal plan. The commenter argued that even under a mass

- based system, EPA would effectively be regulating by proxy: because mass

- based p lans must be equivalent to rate

- based plans, [Without their inclusion in a state compliance plan, EPA could not on its own regulate any of the areas implicated by blocks two, three, or four through a federal plan.] a state would still be required to make c hanges across the entire electricity sector in order to meet EPA's proposed emission targets. Commenters said that the necessary regulatory authority to implement building blocks two through four is, in many states, conferred through statutory provisions t o commissions or other entities established by state constitutions and not to the federal government. Commenters cautioned that states might not participate, and as was the case with the Patient Protection and Affordable Care Act, might not prefer state fl exibilities (state exchanges) to federal implementation. Commenters questioned
how EPA would make re

- dispatch federally enforceable in a federal plan.18 Commenters stated that if a state chooses not to file a SP, it risks the loss of authority over its
elec tricity market when EPA imposes a FP to implement the rule. Commenters stated that it is unclear how the EPA would exercise its "claimed jurisdiction, i.e., the authority to require Colorado lawmakers to enact energy statutes" were the Agency to impose a C AA 111(d) federal implementation plan.

Commenters stated concern with potential federal requirements for demonstrating compliance with 111(d) rules based on renewable electricity consumption will preempt state renewable portfolio standard rules, which typically vary considerably from one state to the next.
Comme nters said it will not be possible for the EPA to honor the RPS rules for each state while maintaining a coherent national policy regarding what renewable electricity is eligible for use in compliance with 111(d). Commenters stated as a result, states and utilities will have a strong incentive to revise their renewable electricity procurement strategies towards those strategies that comply with both state RPS and federal 111(d) rules, effectively preempting state

- specific RPS rules that were put in place to reflect the specific interests and goals of that state.

Commenters stated in addition, there is the potential for the development of clean energy resources, such as incremental hydro upgrades at existing dams, to be used for compliance with 111(d) while not being eligible for compliance with state RPS programs. Commenters said as a result, the eventual consumer of this electricity may not be known nor would any RECs be generated by the facility or purchased and retired by an electricity consumer. Commente rs stated a perfect example of this already exists in Montana, where PPL Montana completed a capacity expansion at its Rainbow Dam in 2013, increasing its nameplate capacity from 35 MW to 60 MW. Commenters said however, the incremental electricity generati on from Rainbow Dam's 25 MW of additional capacity is not considered an eligible renewable energy resource under Montana's RPS and Rainbow's increased electricity sales are sold as null power on the wholesale market alongside PPL Montana's other electricit y generation. Commenters stated Montana can clearly take credit for the incremental generation from the Rainbow Dam upgrade if 111(d) compliance is based on where renewable electricity generation occurs. Commenters said unfortunately, it's unclear what sta te would be able to take credit for Rainbow Dam's incremental electricity generation if 111(d) compliance is based on the procurement and consumption of renewable electricity or RECs. Commenters stated in others words, state RPS programs and 111(d) may be inconsistent in terms of verification and accounting.

Commenters stated that the option to decline to participate by not formulating a state plan is not truly available under the Clean Air Act, because if the State does not create a state implementation p lan that meets with EPA's approval, EPA would mandate a federal plan and could sanction the State if its citizens fail to meet the federal standards. Commenters stated, if the state refuses to participate, the Proposed Rule will abrogate its sovereignty a nd impose
federal control.19 Response 1 5 : The EPA is not finalizing the portfolio approach for state plans, and does not intend to propose use of the concept of a portfolio approach to implement or enforce a federal plan. Therefore, any comments about the portfolio approach in either a state plan or a federal plan are moot. EPA anticipates that any proposed federal plan will rely on emission standard s that apply to affected EGUs. To the extent that the commenters are asserting the EPA implementing a federal plan of any sort somehow impairs a state’s sovereignty, EPA disagrees. EPA only has authority to promulgate a federal plan in a state when that state has declined to submit an approvable state plan. In effect the state has made a choice not to participate in implementing this guideline, and consistent with the cooperative federalism structure of the CAA as it has operated for decades , EPA is then left with the task of implementing the guideline. EPA would not infringe upon a state’s choice not to participa te in implementing the guideline, but would rather take over that duty. As described in section VIII of the final rule preamble of the
CPP , EPA is not requiring states to adopt any measures that EPA itself could not enforce. States may choose to use state measures to reduce emissions, but those measures must be backstopped by standard s on affected EGUs. EPA would not exert enforcement authority over any entity
other than affected EGUs

.

Comment 1 6 : C ommenters stated that standards must be enforceable

, not just by the EPA, but by citizens, including groups like the American Lung Association.

Commenter s stated that in the final rule, the EPA must make it clear who ultimately has the responsibility for meeting the targets, from getting the targets and ta king the actions required by state plans to meet the goals of those plans. Commenter s said ambiguous responsibility will lead to emission reduction goals not being met. Commenter s said that progress reducing pollution and the Clean Air Act has not only bee n the result of independent actions by EPA states, but also the citizens holding responsible the parties accountable to Section 304 of the Act. Commenter s said together we need to be able to hold accountable power from these states and third parties for

ma king the target plans work. Commenter s said the programs intended to achieve state targets must be directly enforceable by citizens against sources and other parties responsible for achieving reductions under the provisions of the state or federal implemen tation plans.
Commenter s said EPA must also provide explicit requirements in the final rule to assess quarterly agencies that are promoting obligation and timing for establishing a plan for states that have inadequate plans or that fail to submit any plan.

Commenter s stated that EPA must amend its proposed regulations to ensure that emissions standards are enforceable by citizens. Commenter s said EPA has proposed a regulation which would mandate that each state plan include emissions standards that satisfy certain criteria, including the requirement that emission standards must be "enforceable with respect to each affected entity." Commenter s said the proposed regulation provides that an emission standard is "enforceable against an affected entity if," among other things, "[t]he Administrator and the state maintain the ability to enforce violations and secure appropriate corrective actions pursuant to sections 113(a) through (h) of the Act." Commenter s said the proposed regulation omits any20 requirement that t he emission standards are enforceable by citizens. Commenter s said the Clean Air Act provides that citizens may sue for violation of "an emission standard or limitation under this chapter," and defines "[e]mission standard or limitation under this chapter" to include "any requirement under section [111] or [112] of this title ." Commenter s said that if the state plans establish emission standards without ensuring that citizens have the ability to enforce violations and secure appropriate corrective actions p ursuant to section 304 of the Act, citizens may not be able to enforce those standards as a practical matter. Commenter s said EPA must cure this
omission.

Commenter s stated that correcting the proposed regulations by including a requirement that
emission s tandards be enforceable by citizens would also be consistent with longstanding EPA practice, as reflected in the existing enforcement guidance which the proposed rule describes as "serv[ing] as the foundation for the types of emission limits that the EPA h as found can be enforced as a practical matter." Commenter s said the guidance provides that emission reductions that create obligations for sources are considered enforceable if, among other things, "[c]itizens
have access to all the emissions

- related info rmation obtained from the source [and] can file suits against the source for violations." Commenter s said that reductions achieved through energy efficiency or renewable energy actions for which a party other than a source bears responsibility
are consider ed enforceable if, among other things, "[c]itizens have access to all the required activity information from the responsible party [and] can file suits against the responsible party
for violations."

Commenter s stated t here is also uncertainty as to whethe r the state

- driven portfolio approach under the proposed rule allows citizen suits against states (or non

- EGUs). Commenter s said t his potential for citizen suits could result in significant additional costs.

Commenter s stated in a portfolio approach, where entities covered by an energy sector measure

an RPs, for example

- are included in a state plan, do these entities have citizen suit liability if they do not comply? Commenter s asked, relatedly, if the state wishes to alter an energy policy
contained w ith the plan, what EPA approval process would be applicable?

Response 1 6 : In the proposed regulatory text describing the enforc e ment measures that states must include in state plans, the EPA inadvertently excluded a required demonstration that states
and other third parties can enforce against violations of an emission standard included in a state plan via civil action pursuant to CAA section 304. Commenters noted the EPA’s intent to require this demonstration based on statements in both the proposal pream ble text and “State Plan
Considerations” TSD 1 and based on the requirements of CAA section 304. We are finalizing a requirement for a demonstration that states and other third parties can enforce against violations
of an emission standard included in a sta te plan via civil action as part of the required plan component demonstrating enforceability. We are finalizing this requirement as a logical

1 State Plan Considerations technical support document for the Clean Power Plan Proposed Rule: http://www2.epa.gov/carbon

- pollution

- standards/clean

- power

- plan

- proposed

- rule

- state

- plan

- considerations.21 outgrowth of proposal preamble text, the proposal preamble citation to existing enforceability guidance documents that discuss this requirement, comments received, and the clear statutory
foundation.

As explained in section V.B and VIII of the preamble, the EPA is not finalizing the proposed portfolio approach and any comments on th at proposed approach to 111(d) state plan design are
therefore moot . Instead, the EPA is finalizing an option to submit either an “emission standard” plan type, which imposes requirements solely on affected EGUs in the form of federally enforceable emission standards, and a “ state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieved through state measures that impose requirements on entities other than affected EGUs that are not included in the federally enforceable 111(d) state plan, provided the state submits standards of performance for CO 2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be triggered if the state measures fail to achieve the required CO 2 emission performance level.
Under a s tate measures plan, the backstop emission standards constitute the standards of performance required by section 111(d), and the state plan provides for the implementation and enforcement of such standards of performance by specifying the trigger mechanism and conditions under which the backstop emission standards apply to affected EGUs. Upon EPA approval of a state measures plan under section 111(d), the backstop emission standards become federally enforceable requirements, which EPA and citizens may enforc e against affected EGUs
under section 113 and section 304

. The final emission guidelines require that all 111(d) state plans, including state measures plans, specify CO 2 emission monitoring, reporting and recordkeeping requirements for affected EGUs, demon strate that plan measures are enforceable, and contain the process, content and schedule for state reporting to the EPA on plan implementation and progress toward meeting the required CO 2 emission performance level. For state measures plans in particular, the final emission guidelines also require states to submit annual reports to the EPA that address periodic programmatic milestones to show progress in program implementation ; s ee section VIII. The EPA intends to review each submitted state plan

on a case

- by

- case basis to determine whether it satisfactorily addresses the Act’s enforceability requirements. Final EPA action on any submitted 111(d) state plan, including a state measures plan, is subject to judicial review under section 307(b) of the Act.

Comm enters argue that the language of section 304 of the Act necessarily requires that every
collateral measure a state takes in order to reduce CO2 emissions from affected EGUs must be made federally enforceable through section 304 . We disagree. In relevant part, section 304(a) provides that “any person may commence a civil action on [their] own behalf against any person ... who is alleged to have violated (if there is evidence that the alleged violation has been repeated) or to be i n violation of an emission standard or limitation under this chapter .” “Emission standard or limitation under this chapter” is defined in relevant part in section 304(f) as “any requirement under section [111] ... (without regard to whether such requirement is expressed as an emission standard or otherwise) ... which is in effect under this chapter.” In turn, the relevant “requirement[s] under section 111 ... which are in effect under this chapter”22 are those in a state plan that are necessary to satisfactorily “provide for ... enforcement” of the standards of performance.

Because the phrase “provide for ... enforcement” is ambiguous, EPA has been delegated authority to interpret what elements in a state plan are necessary to satisfactorily provide for
enforcement of the standards of performance. Under the emission standards plan type, those requirements are the emission standards on affected EGUs along with the associated monitoring, recordkeeping, and reporting requirements that ensure enforceability. Under the state measures plan type, those requirements are the trigger and the backstop. The backstop must satisfy the same enforceability criteria as the emission standards in an emission standards plan type. The trigger must be capable of being activated by EP A and citizens. Details of the interpretation of section 111(d)(1) with respect to the state measures approach are provided in the Legal
Memorandum.

Finally, we note that a requirement in a state plan is not federally enforceable until EPA has approved it as part of the federally enforceable plan. In other words, measures in a state plan are not “in effect under this chapter” for the purposes of section 304 until EPA has made them part of the federally enforceable plan. As a result, under the emission standards plan type, the emission standards and associated monitoring, recordkeeping, and reporting that EPA has approved into the federally enforceable plan are “requirements under section 111 which are in effect under this chapter,” and are thus enforce able under section 304. Under the state measures plan type, the trigger and backstop are approved into the federally enforceable plan and are therefore “requirements under section 111 which are in effect under this chapter” and are thus
enforceable under section 304.

Comment 1 7 : Commenter s stated that a mix of entities might have enforceable obligations under a state plan. Commenter said various provisions of EPA's proposed Clean Power Plan rely on the assumptions that states themselves may take responsi bility for obligations under a section 111(d) plan, and that such states would be subject to citizen suit if they failed to fulfill those obligations. Commenter s provided the example EPA solicits comment on a "state commitment approach" to section 111(d) p lans, under which states would commit to implement, say, RE and
demand

- side EE programs "that would achieve a specified portion of the required emission performance level on behalf of affected EGUs." Commenter s said EPA explains that those
commitments woul d not be part of the state plan, per se, and would not be federally enforceable; however, EPA asserts, states "fail[ing] to achieve the expected emission reductions ... could be subject to challenges

- including by citizen groups

- for violating CAA requiremen ts and, as a result, could be held liable for CAA penalties." Commenter s said EPA suggests, states could "impose the full responsibility for achieving the emission performance level on the affected EGUs, but ... credit the EGUs with the amount of emission reductions expected to be achieved from, for example, RE or demand

- side EE measures" and "then assume responsibility for that
credited amount of emission reductions ...." Commenter s said EPA's proposal ignores important restrictions on the ability to sue s tate agencies under the Clean Air Act's citizen suit provisions.23 Commenter s said Section 304 of the Clean Air Act authorizes "any person" to commence "citizen suits" against "any person (including ... any ... governmental instrumentality or agency to
the e xtent permitted by the Eleventh Amendment to the Constitution) ... who is alleged to have
violated ... or to be in violation of

- certain requirements of the Clean Air Act. Commenter s said the relevant provisions of section 304 would permit suit only for vio lations of "an emission standard or limitation" or "an order issued by the Administrator or a State with respect to such a standard or limitation [...]Emission standard or limitation under this chapter" is defined, in section 304(f)(3), to include "any req uirement under section 7411 or 7412 of this title (without regard to whether such requirement is expressed as an emission standard or otherwise)[.]" See 42
USC Section 7604. Commenter s said Section 304 does not, however, provide citizens the ability

to sue state agencies for failure to administer section 111 requirements. Commenter s said in Sierra Club v. Korleski (681 F.3d 342, 351 (6th Cir. 2012)), the U.S. Court of Appeals for the Sixth Circuit held that "[Section]7604(a)(1) does not permit citizen suits against state regulators qua regulators. Instead," the court held, "[Section]7604(a)(1) is only a means by which "parties may enforce the substantive provisions of the [CAA] against regulated parties[.]"

Commenters asked w hat are the consequences for an e ntity assigned responsibility in a state plan that has failed to perform? Commenters asked i f the mix of responsible entities in a state plan includes local, state, regional, and federal organizations, what authority will a state have to evaluate, judge, a nd penalize non

- performance?

Response 1 7 : As explained in section VIII .C of the final rule preamble of the CPP , the EPA is not finalizing the proposed state commitment approach or crediting approach for state plan design . Therefore, any comments about the state commitment or crediting approach in a state plan, and any related comments about citizen suits against states, are moot. Under the final emission guidelines, only affected EGUs have federally enforceable obligation s under a 111(d) state plan. See section VIII.

Comment 1 8 : EPA is usurping state authority to set standards of performance.

C ommenters argued that the proposed rule usurps the rights of states to set performance
standards. C ommenters argued that under Section 111(d), the states, not EPA, have the authority to establish standards of performance for existing sources. C ommenters stated that EPA does not and cannot identify anything in section 111(d) or elsewhere in the CAA that authorizes it to displace states' legal authority to establish emission standards. Commenter s quoted Am. Library
Ass'n v. FCC, 406 F.3d 689, 698 (D.C. Cir. 2005) noting that an agency's "power to promulgate legislative regulations is limited to the scope o f the authority Congress has delegated to it."
Commenter s said, EPA cannot grant itself authority unless Congress delegated to
EPA. Commenter s stated the CAA itself directly addresses the interrelationship between EPA and other federal agencies, and EPA an d the states. Commenter s said, section 310 of the CAA states that the CAA "shall not be construed as superseding or limiting the authorities and24 responsibilities, under any other provision of law, of . . . any other Federal officer, department, or agency." Commenters quoted the Supreme Court regarding the balance of state and EPA authority: "Section 111(d) allows each State to take the first cut at determining how to best achieve EPA emissions standards within its domain" and, "For existing sources, EPA iss ues emissions guidelines; in compliance with those guidelines and subject to federal oversight, the states then issue performance standards for stationary sources within their jurisdiction, Section 7411(d)(1)." Am. Elec. Power Co. v. Connecticut, 131 S. Ct 2527, 2537

- 39 (2011).

Commenters stated that the rule diminishes the role of states in managing natural resources
and energy generation and distribution, and is beyond the scope of reach allowed by the law. Commenters stated that a state's authority to d etermine how it uses its natural resources is a central component of state sovereignty. Commenters stated that EPA should not make any unlawful assertions of authority regarding the allocation of resource attributes located within a
state. Commenters state d that while a state may choose under certain circumstances to agree to allocate an attribute of its resources to other states, this prerogative belongs to the states and not the EPA. Commenters stated that many factors lead to the development of a state's natural resources, including state tax credits, state infrastructure investment, and other state incentives. Commenters stated that whenever state resources are involved, the EPA should defer to state authority to develop state agreements and plans that c ooperatively address any reallocation of
these resources or resource attributes.

Commenters argued that the EPA would exceed its lawful authority by establishing the standards of performance itself and specifying binding, statewide emission reduction goals , providing states with little leeway for determining how those standards apply to each individual existing source and no flexibility to adjust the emission reduction goals in the event that affected facilities cannot fully implement any element of BSER.

C ommenters noted that EPA's authority under 111(d) is clearly limited to "establishing procedures" by which states submit plans establishing standards of performance.

Commenters argued that the EPA has long recognized that its role in developing state

- spe cific existing source emission guidelines is limited. Commenters stated that in the preamble to EPA's 1975 rules (Subpart B) establishing the framework for developing existing source emission guidelines, EPA explained that it used the term "emissions guide lines" rather than "limitations" to make it clear that the guidelines were not intended to be binding requirements but rather "criteria for judging the adequacy of State plans."

C ommenter s argued that 40 CFR Section 60.22 (Subpart B) specifically authoriz es EPA to issue only a nonbinding "guideline document" that "contain[s] information pertinent to control of the designated pollutant from designated facilities." C ommenter s argued that the use of the words "guidance" and "information," rather than "standar ds" or similar words meant to convey an intent to bind, indicates that information is all EPA may provide to States in its final emission guideline, and these words cannot reasonably be read to authorize EPA to issue binding statewide emission reduction go als that are "guidelines" in name only. C ommenters stated that under CAA section 111(a)(1) and EPA's Subpart B rules, the Agency is authorized only to set25 "emission guidelines" addressing factors relevant to the states' determination of the "best system
of emission reduction" that has been "adequately demonstrated" and is "achievable" for each source type. C ommenters said that EPA's guidelines are not legally binding or directly enforceable on sources, and that they simply set out considerations for states to address in adopting their own standards for existing sources.

C ommenter s stated that in the proposed rule, however, EPA grossly oversteps their authority and
sets EPA

- developed, state

- specific emission reduction targets that the states have no ability to alter, and has set binding "limits" that both the statute and EPA's regulations prohibit. According
to the commenter s , the only authority that EPA cites for establishing mandatory "goals" is the EPA regulations to implement section 111(d) of the CAA. C ommenter s notes that these regulations provide for EPA to promulgate "guidelines" that states must follow, and that under these EPA regulations, a "guideline" "reflects the application of the best system of emission reduction (considering the cost of such reduction" that has been adequately demonstrated." In other words, according to the commenter s , the "guideline" is a performance standard.

C ommenter s noted EPA's statement that goals are "based on an assessment of the amount of
emissions that can be redu ced at existing fossil fuel

- fired EGUs through the application of the BSER" and stated, that is exactly what a standard of performance is under the statute: "a standard for emissions of air pollutants which reflects the degree of emission limitation
achie vable through the application of the best system of emission reduction."

Commenter s said that EPA's claim that the measures that create obligations on third parties are "standards of performance" because they reduce emissions from the regulated source ca tegory only serves to emphasize that EPA's "goals" are no different from performance standards. The

commenter s said that EPA's point is that states can meet the "goals" by (a) setting rate

- based or

mass

- based limits on the regulated source category, (b) ad opting "portfolio" measures which have the effect of reducing generation (and therefore emissions) from the source category, or (c) some combination of both approaches. C ommenter s stated that whatever plan the state submits,
it must ensure that emissions f rom the regulated source category must decline to the level of the goals, and that therefore, 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 factor s. C ommenter s stated that as a result, EPA is promulgating performance standards within the meaning of section 111(a), which is authority that Congress gave to states, not EPA.

C ommenter s argued that, by EPA's own admission, the proposed rule would establ ish legally enforceable ("binding") allowable emissions rates for each State. C ommenter s argued that applying EPA's own definitions, the proposal establishes "emission standards," not guidelines,
which contravenes EPA's stated role for itself under 40 C.F. R. Section 60.22.

Commenter s said, EPA has made clear that when it issues the final rule it will set a final number in the guideline for each state and that the state plan must meet that number sa ying clearly "Once26 the final goals have been promulgated, a state would no longer have an opportunity to request that EPA adjust its CO2 goal because they will represent the application of BSER for the states'
affected sources."

Response 1 8 : See section V.A and V.B of the final rule preamble to the CPP for EPA’s r esponse to this comment.

Comment 19 : EPA has the legal authority to set binding emission guidelines for states

Commenter s stated that EPA may reasonably establish binding emission guidelines, and that, as a preliminary matter, EPA reasonably interpreted section 111(d) in its 1975 regulations to provide for the promulgation, after notice and comment, of binding emission guide lines that specify the emissions performance level that is required of standards of performance included in state plans. C ommenter s indicated that section 111(d) provides for EPA to review state plans, approve them if "satisfactory," and requires EPA to is sue a federal plan if a state fails to submit a satisfactory plan. C ommenter s stated that these provisions authorize EPA to apply substantive criteria, not only procedural criteria, in making the determination whether a state plan is "satisfactory." C ommen ter s also stated that it is "the Administrator" who determines the "best system of emission reduction." C ommenter s stated that given that EPA may apply substantive criteria in its approval/disapproval decision after a state submits a plan, it is within EPA 's discretion to articulate the criteria that will govern its approval/disapproval decisions beforehand, in emission guidelines adopted through notice and comment.

Commenter s continued to explain that Congress recognized and approved the guidelines' setting process that EPA established in its 1975 regulations, when amending the CAA in 1977 and 1990.
C ommenter s stated that in 1977, the House committee explained that under secti on 111(d) the Administrator would establish guidelines as to what is the best system for each category of existing sources. C ommenter s stated that in 1990, in CAA section 129, Congress directed EPA to adopt standards for solid waste combustion through a pr ocess that expressly refers to guidelines under section 111(d). C ommenter s noted that CAA section 129(b)(1) requires EPA to promulgate guidelines "pursuant to section 7411 (d) of this title and this section [that] shall
include . . . emissions limitations" and requires each state to submit to EPA a plan to implement and enforce those guidelines within a year following their promulgation. C ommenter s also noted that an attack on the 1975 regulations would now be time barred.

Commenter s stated, EPA's longstan ding interpretation of its authority, as set forth in its implementing regulations (Subpart B), further affirms that EPA is, at a minimum, allowed to establish substantive guidelines. C ommenter s said, in its initial rulemaking proposal to establish general procedures under section 111(d), EPA explained that it would publish guideline documents setting minimum emission guidelines that reflect the best available demonstrated systems of emission control. C ommenter s said, EPA reiterated in the preamble to its f inal27 implementing regulations that the agency has the statutory authority to set minimum emission guidelines for state emission standards included in state plans. C ommenter s said in responding to industry comments questioning EPA's authority to prescribe m ore than procedural requirements for state plan adoption and submittal, EPA correctly reasoned that its interpretation was necessary to implement section 111(d) effectively. C ommenter s said, if EPA had no authority to set minimum substantive guidelines, th e states would be able to set "extremely lenient standards" for air pollutants subject to regulation only under section 111(d)

- which would leave "a gaping loophole in a statutory scheme otherwise designed to force meaningful action." Id. at 53,343.
C omme nter s said, EPA has followed this approach in emission guidelines it has promulgated pursuant to section 111(d), repeatedly establishing substantive requirements in its final emission guidelines for each state to include in its respective plan.

Response 19 : We agree with these comments.

C omment 2 0 : Proposed rule conflicts with the Tenth Amendment

C ommenters expressed concern that the EPA had seized authority from states granted by the CAA and the Tenth Amendment. Commenters believed that by proposing binding state emission rate limits, EPA is violating state sovereignty principles under the Tenth Amendment.
Commenter s stated that the rule raises substantial Constitutional issues under the Tenth Amendment's reservation of local regulatory powers to the states. Commenter s noted that the Tenth Amendment "clearly places limits on the authority of the federal government by reserving to states all powers not specifically delegated to Congress by the Constitution" and added that the CPP "rests on questionable legal authority."

Commenters stated that the proposed rule attempts to coerce the States into implementing a federal regulatory program in violation of the Tenth Amendment. C ommenters stated that, if finalized, the proposed rule would violate the Tenth Am endment because it would compel State regulatory (and likely legislative) activities that lie at the heart of the States' sovereign authority to regulate the retail electricity market.

Commenter s said that since the proposed CO 2 emission reductions were d etermined by EPA and not individual states, the decreases violate the Tenth Amendment. C ommenter s stated that each state knows best its own capabilities and should be able to ensure the reliability, safety, and affordability of its electric system.

Comment er s stated that the fundamental purpose of the Constitution's federal structure is to secure to citizens the liberties that derive from the diffusion of sovereign power. C ommenter s said the Tenth Amendment codifies that concept by reserving to the States a nd the people all powers not delegated to the United States by the Constitution. C ommenter s indicated that if a power is an attribute of state sovereignty reserved by the Tenth Amendment, it is necessarily a28 power the Constitution has not conferred on Cong ress, and, having the power to make decisions and to set policy is what gives the state its sovereign nature. The commenter s cited New York v. U.S., 505 U.S.144 (1992), FERC v. Mississippi , 456 U.S.742 (1982) and the Constitution in support of their argume nt.

Commenter s believed that re

- dispatch from coal EGUs to NGCCs or low

- emission sources and implement and enforce demand

- side efficiency programs were precluded by the federal structure of the Constitution itself, and the Tenth Amendment.

Commenters indic ated that the courts have repeatedly rejected federal attempts to compel the States to enact or administer a federal regulatory program, and cited New York . Commenter s also
noted that in Printz v. U.S ., 521 U.S. 898 (1997), the Court invalidated a statute attempted to direct state law enforcement officers to participate in the administration of a federally enacted regulatory scheme, and stated that the federal government may neither issue directives requiring the states to address particular problems, nor c ommand the states' officers to administer or enforce a federal regulatory program.

Commenters indicated that the courts have not hesitated to strike down attempts by EPA to dictate to the states actions that they must take to reduce pollution, and cited Br own v. EPA , 521 F.2d 827 (9th Cir. 1975). Commenter s also referenced Arizona v. EPA, 521 F.2d 825 (9th Cir. 1975); District of Columbia v. Train, 521 F.2d 971 (D.C. Cir. 1975); and Maryland v. EPA, 530 F.2d 215 (4th Cir. 1975). Commenter s said, to avoid "serious constitutional issues," the court refused to construe the statute to grant EPA power to compel California to undertake certain tasks assigned to it by the Agency. C ommenter s also cited Maryland v. EPA , 530 F.2d 215 (4th Cir. 1975) and indicated the Fourth Circuit rejected EPA's attempt to require Maryland to enact similar regulatory programs pursuant to a transportation control plan, and stated that the court did not believe that an Act of Congress may be construed to permit a U.S. agency to direct a state legislature to legislate. C ommenter s also referenced District of Columbia v. Train , 521 F.2d 971 (D.C. Cir. 1975), where the D.C. Circuit held EPA's regulations invalid to the extent they required unconsenting states to administer and enforce the EPA

- promulgated transportation control programs, because the Constitution contemplates direct federal regulation of the offending activity and not coerced state policing of the details of an intricate federal plan.

Commenters stated that th e fact that the proposed rule would require states to enact a host of new laws makes clear that the proposed rule would impermissibly intrude on core, sovereign state prerogatives protected by the Tenth Amendment. Commenter s noted that only 25 states have some form of law requiring a minimum percentage of retail electricity load to come from renewable sources, and that to comply with the proposed rule, the remaining states could be forced to enact RPSs, which would require action by state utility regulatory commissions, legislatures or citizen ballots. C ommenter s stated the same is true of state energy efficiency
standards. C ommenter s stated that under the Tenth Amendment, the decision to enact a law lies with the state legislature, not unelected federal off icials.29 Commenter s stated that the proposed rule would violate the Tenth Amendment even in states that would not need to enact new legislation to meet EPA's prescribed targets. Commenter s stated that these cases reflect not only the structure of dual sov ereignty that is built into the Constitution, but also the fact that political accountability would suffer if the federal government could strong

- arm the states into acting on its behalf, and quoted again from New York and Printz

. C ommenter s said, the Supr eme Court made clear in Printz that commandeering state executive and regulatory authority is no less a Tenth Amendment violation than commandeering a state legislature. C ommenter s state d that EPA can no more direct state PUCs or other regulatory
bodies to enact its programs than it can require state legislatures to do so, and also cited MCI Telecom. Corp. v. Illinois Bell Tel. Co ., 222 F.3d 323, 343 (7th Cir. 2000) (the federal government "cannot 'commandeer' state regulatory agencies ... [by] forcing them to regulate").
C ommenter s stated that EPA has no authority to change the dispatch order of power plants, to mandate that power plants be utilized a certain percentage of time, to delay the retirement of nuclear plants, to require that a certain percentage of each state's power be generated through solar and wind power, or to require that citizens reduce their demand for electricity, and that EPA cannot accomplish the same result by commandeering the States to take steps that EPA
could not take itself. Comm enter s also cited Printz to point out that commandeering violates the
Constitution. Commenter s stated that in this instance the Agency has set standards that even EPA
itself could not mandate. C ommenter s stated that as a result, states do not have the opti on of simply leaving regulation to the federal government. C ommenter s contended that absent express congressional authorization, it is unprecedented for EPA to rely on public utility commissions and other state and local agencies to impose measures necessa ry to achieve emissions reductions.
C ommenter s stated that because state public utility commissions and other state and local agencies are not delegated the authority to implement the CAA, for EPA to promulgate a program that can be implemented only throug h their action is a form of direct commandeering at
odds with the Tenth Amendment.

Commenter s said that defining a specific rate for each state and then mandating that each state meet that predetermined rate runs counter to the Constitution and cases that stand for limitations the Constitution places on federal agencies when they seek to press state governments into
federal service. D.C. v. Train , 521 F. 2d 971 (CADC 1975); New York (1992); Printz (1977 [sic]). Similarly, commenter s stated that the proposa l exceeds federal constitutional authority and cited and quoted Printz at 935 (". . . The Federal Government may neither issue directives requiring the States to address particular problems, nor command the States' . . . to administer or
enforce a federal regulatory program.")

Commenter s stated that the proposed rule would violate or at least create substantial questions under the Tenth Amendment because it would require states to enact legislation or exercise authority in particular ways, forcing state le gislators to make policy choices that they would not
otherwise make. Commenter s referenced Printz and noted that the Constitution does not empower Congress to command state governments to implement legislation enacted by Congress. Commenter s indicated that forcing states to regulate interstate commerce in particular ways is in conflict with Tenth Amendment anti

- commandeering precedents, and that the30 proposed rule would be struck down as constitutional commandeering. C ommenter s provided an

exa mple problem of where a facility that is forced to close blames the State, even though the State was acting under federal compulsion. C ommenter s said that canon of constitutional avoidance would compel a reviewing court to reject the EPA's interpretation o f section 111(d).
C ommenter s also provided a several page summary of agencies' authority to implement statutes, particularly as it relates to the traditional balance of power between states and the federal government.

Commenter s also stated that in Reno v. Condon, the Court reaffirmed that Congress may not "control or influence the manner in which States regulat[e] private parties." C ommenter s stated that applying that principle, the Court upheld a law regulating resale and disposal of personal
information contained in DMV records. C ommenter s said that the court explained that the law "regulate[d] the States as the owners of data bases," and did not "require the States in their sovereign capacity to regulate their own citizens." C ommenter s said that the cour t thus distinguished between permissible federal regulation of interstate commerce and impermissible regulation of States in their "sovereign capacity" as "regulat[ors of] their own citizens."

Commenter s said that the U.S. Constitution specifically limits EPA's authority to exercise authority reserved to the States ("powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people"). U.S.
CONST. Amend. X. See New Yor k v. United States , 505 U.S. 144, 156, 112 S. Ct. 2408, 2417, 120 L. Ed. 2d 120 (1992) (If a power is delegated to Congress in the Constitution, the Tenth Amendment expressly disclaims any reservation of that power to the States; if a power is an
attribute of state sovereignty reserved by the Tenth Amendment, it is necessarily a power the Constitution has not conferred on Congress.) C ommenter s stated that EPA would violate the Tenth Amendment because the authority over the production and sale of electricity is reserved to
the states. C ommenter s 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." Grego ry v. Ashcroft , 501 U.S. 452, 460

- 61, 111 S. Ct. 2395, 2401, 115 L. Ed. 2d 410 (1991). C ommenter s also quoted Atascadero State Hospital v. Scanlon , 473 U.S. 234, 242 (1985)), and others, "In the absence of such clarity, courts 'refer to basic principles of federalism embodied in the Constitution to resolve ambiguity in a federal statute.' Bond, 134 S. Ct. at 2090.

Commenter s stated that EPA's consideration of the potential for energy efficiency and renewable energy to contribute to state BSER goals that may incentivize states to adopt such policies does not offend the Tenth Amendment, nor the balance struck between areas of state and federal jurisdiction in the power sector. C ommenter s said the Illinois Commerce Commission, is instructive on this point. Comm enter s continued there, the court dismissed plaintiffs' Tenth Amendment argument as "frivolous," and found that a FERC action that "provides a carrot states won't be able to resist" is a "far cry" from "the federal government's conscripting a state

governm ent into federal service" by, for example, "ordering states to build transmission lines the federal government wants to use for its own purposes." C ommenter s paralleled the argument to31 this proposal and said here, the same may be said of EPA's action

- it ma y provide an irresistible carrot, but it cannot be said to constitute a stick, where states have discretion in using the energy efficiency and renewables building blocks in formulating their state plans. Commenter s said see also Texas v. EPA, 726 F.3d 180, 196

- 97 (D.C. Cir. 2013) (rejecting argument that EPA permitting regulations for greenhouse gases emitted by major stationary sources violated the Tenth Amendment); Friends of the Earth v. Carey, 552 F.2d 25 (2d Cir. 1977) (citing the Clean Air Act's coope rative federalism model in rejecting Tenth Amendment claim by city challenging state's adoption of implementation plan to control pollution from transportation sector).

Response 2 0 : For the reasons stated in the Legal Memorandum, the EPA disagrees that this rule
coerces or commandeers states in violation of the Tenth Amendment.

Comment 2 1 : Rule violates the principle of cooperative federalism

Commenters stated EPA cannot set a stan dard for state implementation plans that EPA itself lacks the authority to implement in a federal implementation plan. Commenter s stated that 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 (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 agency has none.' Michigan v. EPA, 268 F.3d 1075, 1081 (D.C. Cir. 2001)."). C ommenter s pointed out that under CAA section 111, EPA only has authority to regulate emissions of air pollutants from existing fossil fuel

- fired
EGUs and cannot mandate emissions reduction from other sources, including those addressed in Blocks 2, 3, and 4. For example, the commenter s pointed out the following:

• EPA does not have the authority to regulate the retail electricity market, because the Federal Power Act grants this right to states.

• EPA is not authorized to make decisions about decommissioning nuclear power plants

• EPA lacks authority to amend state renewable portfolio standards

• EPA cannot mandate demand

- side energy efficiency programs

Thus, if a state fails to submit a satisfa ctory implementation plan, commenter s contended that EPA will lack the legal authority to impose the emissions reduction requirements necessary to meet the state's emissions reduction target. C ommenter s concluded that because EPA lacks the authority under the CAA to implement the standards of performance necessary to achieve the state emissions reduction targets, it is unlawful for EPA to use the CAA to require States to do

so. C ommenter s cited American Trucking Ass'n v. Whitman, in stating that Congress wo uld not have hidden an elephant (i.e., an exception to cooperative federalism) in the regulatory mouse
hole that is CAA section 111(d).

The proposed rule prevents States from exercising their primary policymaking responsibility for developing plans that e stablish standards of performance. The EPA does not have authority32 under Section 111(d) to override a state plan establishing a standard of performance because it disagrees with the "factors" that a State deems important or relevant. For instance, the EPA cannot directly or indirectly override a State's determination of the mix of electricity generation required to provide the most reliable and efficient power supply needed to serve its citizens. And it certainly cannot require, in the guise of setting perf ormance standards for existing coal generators, significant increases in the use of NGCCs, renewable resources, nuclear resources, and energy efficiency programs. Such resource

- planning decisions are reserved to the States. The proposed rule, however, woul d establish emissions "goals" that States cannot adjust, and that are so stringent that they can be met only by an EPA

- mandated approach

- an approach that necessarily strips States of their policymaking role and runs afoul of the CAA.

Commenters stated tha t proposed rule would vanquish state policymaking authority in other ways as well. Commenters said, for example, many States will be unable to implement the EPA's proposal without changing their laws or extensively coordinating among state agencies.
Commen ters stated, to the extent the EPA is even authorized to co

- opt State legislators in this manner, these splits of authority will require significant additional time and coordination, beyond that envisioned by the EPA, to address through new or revised stat e legislation or regulation, before the State can even begin to develop its Section 111(d) plan. Commenters also stated that the rule violate the principles of cooperative federalism because it allow direct federal intrusion into generation resource planni ng, which is a core state function that cannot be intruded upon without a clear statement from Congress.

Response 2 1 : See section III.B and VIII.G of the final rule preamble of the CPP for EPA’s

response.

Comment 2 2 : Commenter s stated that the proposed rule's requirement of a State Plan, and the imposition of a Federal Plan, would constitute commandeering within the meaning of New York v. United States, 505 U.S. 144 (1992), and Printz v. United States, 521 U.S. 898 (1997).
C omme nter s pointed out that the U.S. Supreme Court has held that Congress cannot "commandeer the legislative processes of the States by directly compelling them to enact and enforce a federal regulatory program." Hodel v. Virginia Surface Mining & Reclamation A ssn., Inc., 452 U.S. 264, 288 (1981). C ommenter s stated that the Court warned that accountability is diminished when, due to federal coercion, elected state officials cannot regulate in accordance with the views of the local electorate in matters not preem pted by federal regulation. (New York v. United States, 505 U.S. 144, 169 (1992). C ommenter s stated that a state must be able to choose to implement a federal program under its own will and not under the strain of undue federal influence per Steward Machi ne Co. v. Davis, 301 U.S. 548, 590 (1937). In this case, the federal influence would be the threat of a federal standard that would remove the state's ability to regulate its own electricity markets and risk the loss of affordable and reliable power.

Comme nter s stated that the U.S. Supreme Court just recently provided the federal government with a reminder that the Constitution provides some protections against federal intrusion into areas that have historically been the regulatory province of the states. B ond v. U.S. , 134 S.Ct.33 2077 (2014). C ommenter s pointed out that although Bond is a criminal case, the decision confirms that Congress must be "reasonable explicit" if it wants to readjust the balance of federal and state authority; and commenter s see no in tent of Congress in the CAA to intrude upon the historic authority of the states to establish energy policy at the state level.

Commenters maintained that EPA cannot use section 111(d) to compel states to do what the federal government is not authorized t o do, i.e., regulate electricity generation policies that are expressly reserved to the states. Commenter s stated that the proposal violates both the Tenth amendment and the principle of cooperative federalism and cited a number of court decisions (many of them cited below by other commenters) to justify their position. Commenter s stated
that the rule would violate the anti

- commandeering doctrine of District of Columbia v. Train and usurp powers of the states by requiring states to adopt legislation and re gulations to implement a federal regulatory program for power generation and distribution over which EPA has no legal authority. Commenter s stated that air quality regulation under the CAA is an exercise in cooperative federalism, and indicated that the pr oposed rule departs from that principle.
Commenter s’ arguments in this regard are included in their comments on the Tenth Amendment (also under Section 1.11.1 of their comments). Commenter s cited Dominion Transmission, Inc. v.
Summers , 723 F.3d 238, 240 (D .C. Cir. 2013); accord Sierra Club, 681 F.3d at 343; Luminant Generation Co., LLC v. EPA , 675 F.3d 917, 921 (5th Cir. 2012) in support of their statement that the CAA is intended to be a model of cooperative federalism.

Response 2 2 : For the reasons stated in the Legal Memorandum, the EPA disagrees that this rule coerces or commandeers states in violation of the Tenth Amendment. For reasons provided in section 1.2 of this response to comments, EPA similarly disagrees that this rule vi olates aspects of cooperative federalism under the CAA.

Comment 2 3 : Commenter s stated that under section 111(d), neither state nor EPA officials possess sufficient authority on their own to determine both the appropriate methods for obtaining and the degre e of emission reductions that can be obtained from existing units. C ommenter s stated that instead, section 111(d) embodies the principle of cooperative federalism, making distinct and exclusive delegations of authority to federal and state officials that c omplement one another in establishing standards for existing sources. C ommenter s stated that with its proposed rule, EPA blatantly violates this principle, effectively usurping from the states all power to
determine what emission reductions can be obtained from existing units. C ommenter s stated that the proposed rule relegates states to the ministerial role of implementing and enforcing the substantive standards of performance and specific, state

- wide emission reduction goals that EPA has predetermined in t he rule, which cannot be squared with the cooperative federalism principles the Clean Air Act embodies. Commenter s added that the rule requires states to enact laws to change resource planning decisions that already are adopted pursuant to state planning

a uthorities.

Response 2 3 : See section V.A of the final rule preamble of the CPP for the EPA’s response to
this comment.34 Comment 2 4 : Commenter s stated that EPA cannot legally coerce the states to regulate any entity other than affected existing EGUs because it violates the principle of state sovereignty guaranteed by the Commerce Clause of the Constitution. C ommenter s contended that the
Constitut ion does not give Congress the ability to commandeer the legislative process of the States by directly compelling them to enact and enforce a federal regulatory program and that Congress cannot require States to govern according to Congress' instructions. C ommenter s went to say that the federal government may encourage States to act through the spending power, but even in that context States may not be coerced. But because of the anti

- commandeering doctrine,

commenter s stated that the EPA cannot, through th e promulgation of CAA implementation plans, oblige a non

- consenting State to adopt law or regulations, or invest enforcement resources, to implement a federal policy under pain of penalty. Even if a State initially agreed to issue a SIP, and even though a SIP becomes federal law unamendable without EPA consent under the CAA, commenter s stated that there is a third set of constitutional doctrines that prevent state police powers from being permanently transferred to a federal agency: the rule against legisla tive entrenchment that prevents one legislature or administration from binding a later one and the doctrine of reserved powers that prevents the legislature from prospectively limiting, or relinquishing to another, a State's police power.

Commenter s stat ed, the agency must also reexamine the Proposed Rule to address any other potential constitutional defects, such as Commerce Clause issues, created by its crafting of optional compliance paths for states.

Response 2 4 : For the reasons stated in the Legal M emorandum, the EPA disagrees that this rule
coerces or commandeers states in violation of the Tenth Amendment. See section VI.A and V.B of the final rule preamble for the EPA’s response to this comment.

Comment 2 5 : Commenters said EPA has directed States t o incorporate into SIPs assurances that the States will alter their laws to provide for enforcement under state police power. Commenters
said EPA pursues this route because it cannot itself promulgate the Clean Power Plan as a FIP, as Congress gave EPA no authority over power generation or distribution. Commenters said,
because the Clean Power Plan relies almost completely on state authority to reach its 30 percent reduction target, and a present state legislature cannot bind future state legislatures, the rule likely is unable to work nationally as intended and thus is inherently arbitrary and capricious.

Commenters stated that it is clear that no State can be required to adopt a SIP in the first instance. Commenters said, furthermore, even where a State a dopts a SIP, the argument that SIPs become federal law which may not be amended without approval of EPA should not be sufficient to prevent a State from ceasing to employ its police powers that are beyond the direct powers of EPA. Commenters noted that the Sixth Circuit recently had occasion to observe that
the anti

- commandeering rule is applicable to the CAA. Commenters said the same should be true for the rule against legislative entrenchment. As a consequence, commenters stated that EPA will
encounter St ates that will not issue SIPs or, if they do so initially, will not continue their35 subordination of the grid to the authority of EPA. Accordingly, commenters maintained that EPA does not have the authority to establish the rule requirements through a FIP.

Response 2 5 : We disagree with this comment. If a state fails to submit a state plan or does but the EPA disapproves it, the EPA has authority to promulgate a federal plan that would consist of emission standards that the sources could achieve by implementing the build ing blocks or taking other approaches. The EPA would not need to

– and could not

– assert authority over power generation or distribution. If action by a state legislature is needed to develop an approvable state plan

, it could take such action, including putting in place emission requirements on sources that
are not time

- limited, and therefore may extend into future years. This frequently occurs under the section 110 and 111 provisions of the CAA and is not dependent on a state legislature binding subseque nt state legislatures. Additionally, f or the reasons stated in the Legal Memorandum, the EPA disagrees that this rule coerces or commandeers states in violation of the Tenth
Amendment.

Comment 26 : Commenter s stated that EPA does not have the legal authorit y to require states to
submit a SIP for this rule. C ommenter s stated that because of the flexibility granted to states to account for differences among states, CAA assumes two legal facts: that the political officers of the States can say no., i.e., cannot be commandeered into legislating or executing federal policy, and that the BSER determined by the Administrator is within the delegated authority of EPA to promulgate and, if necessary, enforce. Commenters said a standard of performance premised upon a BS ER that EPA lacks the power to promulgate in the first instance or enforce through a FIP results in a rule that is only operative in willing States for as long as they remain willing. Commenters said, as a matter of federal agency rulemaking, particularly rulemaking aimed at addressing national issues that know no political boundaries, this dependency upon the political decisions of the States is arbitrary and capricious, contrary to the terms of the CAA, and an improper exercise of EPA regulatory authority

.

Commenter 23542 said, cooperative federalism lies at the heart of the CAA Section 111(d) process and therefore it is critical that any emission guideline proposed by EPA should respect that principle. Commenter 23542 said, states and local air agencies have the primary responsibility for regulating sources in their jurisdictions and the CAA affords them wide
discretion.

Commenter 33118 stated, the principle of cooperative federalism embedded in the Act and longstanding EPA regulations implementing Sect ion 111(d) is rooted in "reality and humility: the reality that no Washington agency can ever efficiently attain the local knowledge necessary to make prudent judgments concerning the effective implementation of BSER across the entire national electricity generation sector, and the humility to recognize this reality."36 Response 26 : EPA agrees that this guideline must be implemented consistent with the principles of cooperative federalism. No state is obligated to submit a state plan under this guideline. If, however, a state fails to submit an approvable plan, EPA has the responsibi lity to promulgate and implement a federal plan. EPA would, of course, prefer that states develop their own plans for many of the reasons the commenters cite, such as in

- depth knowledge of local circumstances. But failing that, EPA has been careful to stru cture this guideline so that a plan can ultimately be
based on emission standards enforced at affected EGUs, a structure EPA can rely on if the responsibility falls to EPA to administer a plan in a state.

Comment 27 : Chevron allows EPA's interpretation of building blocks 2

- 4 as BSER

Commenter s said that section 111(d)(1) does not explicitly address whether, in addition to emission limits on affected EGUs, state plans may include other measures for achieving the required emission performance goals, and tha t the CAA does not address whether entities other than affected EGUs may be subject to requirements that contribute to reducing EGU emissions.
C ommenter s stated that consistent with the U.S. Supreme Court determination in Chevron U.S.A.
Inc. v. NRDC (1984) , where the statute leaves a gap the agency has discretion to fashion an interpretation that is a reasonable construction of the law. C ommenter s stated that EPA's reasonable construction of 111(d) is a valid interpretation.

Response 27 : We are not finalizing the portfolio approach , as described in section s V.B and
VIII of the final rule preamble of the CPP

.

Comment 28 : Chevron does not justify the portfolio approach because the lack of a prohibition in the CAA does not allow EPA broad powers

Comm enter s said EPA's assertion that its proposal to authorize a portfolio approach must be
afforded deference is incorrect. C ommenter s said, the fact that Congress did not specifically address the merits of a "portfolio approach" does not mean that there is a statutory gap for EPA
to fill. Commenter s stated that EPA cannot claim authority to exercise rulemaking power merely because that authority is not expressly denied to it. Ethyl Corp. v. EPA, 51 F.3d 1053, 1060 (D.C. Cir. 1995).

Commenters disagreed with E PA's arguments that section 111(d) does not explicitly prohibit states from including measures other than performance standards and implementation and enforcement measures, and that the principle of cooperative federalism provides EPA the authority to regu late outside the affected source category. C ommenters pointed to Michigan v.
EPA , 268 F.3d at 1081 as establishing that EPA has "only those authorities conferred upon it by Congress." Commenter s said that in section 111(d), Congress conferred authority on EPA to prescribe regulations under which states would submit plans that include (1) "standards of performance" and (2) "[provisions] for the implementation and enforcement of such standards of performance." C ommenter s said Congress did not authorize EPA to prescribe regulations under which states may submit plans that include measures other than performance standards and37 implementation and enforcement measures. C ommenter s said, because Congress did not give EPA that authority, EPA does not have that authori ty. C ommenter s said that while it is true that states may choose to pass their own laws to reduce the CO2 emissions of electric generating units in those states, such laws would not be part of any section 111(d) plan if they did not constitute performance standards, or implementation and enforcement measures for performance
standards.

Commenters also cited Michigan v. EPA , at 1082, and quoted from Ethyl Corp. v. EPA, 51 F.3d 1030, 1060 (D.C. Cir. 1995), "Were courts to presume delegation of power absent an express withholding of such power, agencies would enjoy virtually limitless hegemony...", and stated that Congress' silence on this matter does not presume a delega tion of such vast authority to regulation the energy market.

C ommenters stated that EPA's primary argument in applying the "portfolio approach" that there is no specific language in CAA section 111(d) or elsewhere in the Act that prohibits states from
incl uding measures other than performance standards and implementation and enforcement measures in state plans for existing sources, erroneously assumes that under the CAA any action that Congress did not explicitly prohibit is permitted. Both commenters state d that just the opposite is true. Commenter s cited Ethyl Corp. v. EPA, 51 F.3d 1053, 1060 (D.C. Cir. 1995); see also Aid Ass'n for Lutherans v. U.S. Postal Serv., 321 F.3d 1166, 1174

- 75 (D.C. Cir. 2003).
C ommenters said Congress must "speak clearly if it w ishes to assign to an agency decisions of vast 'economic and political significance.'" UARG v. EPA , 134 S. Ct. at 2444. C ommenters said, a reading of the CAA that gives EPA and states the authority to potentially impose obligations on any entity that uses electricity would unquestionably bear vast economic and political significance. C ommenters noted that EPA admits, "the terms of CAA section 111(d)(1) do not explicitly address whether, in addition to emission limits on affected EGUs, state plans may
includ e other measures for achieving the emission performance level." C ommenters indicated that without such explicit authorization, EPA may not seize regulatory authority beyond the affected sources on which section 111's narrow regulatory program is focused.

R esponse 28 : As discussed in section s V.B and VIII, after considering comments on the proposed portfolio approach, EPA is not finalizing that approach. Therefore, these comments are moot. Instead of the proposed portfolio approach, EPA is finalizing an opti on to submit a “state measures” plan type, under which a mass CO2 emission goal may be partially or entirely achieved through state measures that impose requirements on entities other than affected EGUs and that are not included in the federally enforceabl e 111(d) state plan, provided the state submits standards of performance for CO2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be triggered if the state measures fail to achieve the required CO2 emission performa nce level. See section VIII.

Comment 29 : Commenter s said that EPA's suggestion that Chevron step two is implicated any time a statute does not expressly negate the existence of a claimed administrative power (i.e.,
when the statute is not written in "thou shalt not" terms), is both flatly unfaithful to the principles38 of administrative law and refuted by precedent. C ommenter s stated that if courts were to presume a delegation of power absent an express withholding of such power, agencies would enjoy virtual ly limitless hegemony, a result plainly out of keeping with Chevron and quite likely
with the Constitution as well. The commenter s provided the following citations to support their argument: Ry. Labor Exec. Ass'n v. Nat'l Mediation Bd ., 29 F.3d 655, 671 (D .C. Cir. 1994) (emphasis added); see also Sea

- Land Serv. Inc., 137 F.3d at 645; Michigan v. EPA , 268 F.3d 1075, 1082 (D.C. Cir. 2001); Stephen Breyer, Judicial Review of Questions of Law and Policy, 38 Admin. L. Rev. 363, 373 (1986) ("To read Chevron as la ying down a blanket rule, applicable to all agency interpretations of law, such as "always defer to the agency when the statute is silent," would be seriously overbroad, counterproductive, and sometimes senseless.").

Commenter s indicated that nothing in s ection 111(d) can be read to authorize the shift in power that the proposed rule would cause towards infringement of state sovereignty, and courts would not defer to EPA's construction of section 111(d). C ommenter s said, to accord Chevron
deference to EPA' s interpretation would contravene structural principles of federalism by allowing EPA to intrude on a core state function.

Commenter s said EPA's interpretation is nonsensical and circular and fails Chevron step 2.
C ommenter s indicated that the statute says that a "standard of performance" is determined through "the application of the [BSER]", and under EPA's proposal, the "system" that it would apply is "the electricity system" itself. C ommenter s sa id that EPA is using circular reasoning because the sources EPA would subject to this rule are already part of the electricity system, so EPA is applying the "system" to the "system." C ommenter s said that clearly the "system" that is to be applied to the sou rce must be something other than the source itself or a system of which is already a part. C ommenter s said that EPA proposes to dictate how an existing system is operated. Commenters noted t hat is outside the scope of Section 111 and underscores the illega l nature of EPA's proposal.

Response 29 : We disagree 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 in light of legal precedent, the statutory text, statutory context, statutory purpose, and legislative history.

Comment 3 0 : State plans may include non

- BSER measures, and need not be limited to the
measures EPA determines are BSER

Commenter s stated that section 111(d) references section 110, and t hat EPA should create a similar procedure for section 111(d) compliance plans. C ommenter s said the extensive case law interpreting the federal

- state relationship under sections 109 and 110 is instructive in understanding the breadth and limits on EPA and s tate authorities to propose and evaluate compliance plans. C ommenter s said that the courts have been clear that each state, not EPA, has discretion under section 110 to determine the best compliance mechanisms for its circumstances.
C ommenter s said, so lon g as the state's selection of measures in its plan satisfies the EPA

established goal, EPA may not "question the wisdom of a state's choices." ("The Agency is39 plainly charged by the Act with the responsibility for setting the national ambient air standards

. Just as plainly, however, it is relegated by the 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."). C ommenter s asked EPA to clarify that states have the discretion to include a range of measures (e.g., carbon capture and storage,
biomass co

- firing, others) and not just those measures that EPA proposes as BSER, in compliance plans as long as they are designed to ac hieve emission rate goals.

Commenters said Section 110 provides guidance for section 111(d) plans; Section 111(d) plans may include other control measures, means, or techniques (including economic incentives, such as marketable permits or auctions of emissions allowances.

Response 3 0 : We agree with these comments, and discuss in sections III.A, V.A, V.B, and
VIII.D of the final rule preamble of the CPP the types of other measures sources may implement and states may implement through the state measures approach.

Comment 3 1 : Commenter s noted that section 111(d) was modeled on section 110, and referenced state implementation plan (SIP) submission, review, and disapproval provisions in
section 110. C ommenter s noted that to attain the NAAQS, each state mu st submit a SIP that establishes "enforceable emission limitations and other control measures, means, or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights)". Commenters stated, based on the structural similarity of 111(d) and 110, underlined by the specific reference in section 111(d) to section 110, it is reasonable for EPA to conclude that the state and federal plans provided for under section 111(d) may also include “enforceable
emission l imitations or other control measures, means, or techniques (including economic incentives, such as marketable permits or auctions of emissions allowances).” Accordingly,

commenter s concluded that it is a reasonable interpretation of the statute for EPA to set standards of performance for existing sources predicated on Building Block 1 and credits from activities described in Building Blocks 2

– 4. Commenters said the four building blocks represent a “system of emission reduction” that taps the emission reduct ion potential achievable at reasonable cost across the interconnected electricity system, using emission limitation methods, including crediting systems, authorized under section 110(a)(2).

Response 3 1 : We agree with this comment, although we not that we a re not finalizing building block 4 as part of the BSER.

Comment 3 2 : Section 110 provides guidance for section 111(d) plans; State plans may include "implementation" measures

Commenter s said that EPA is correct that states may include portfolio measures in their 111(d) plans as "implementation" measures. C ommenter s noted section 110 provides that SIPs may include a variety of measures that do not directly reduce emissions from affected sources, as well as measures that regulate entities other than pollution sources. C ommenter s indicated that section40 111(d) provides that its state plans should be modeled on SIPs, and that it is reasonable for EPA to conclude that state section 111(d) plans "for the implementation [of] ... standards of performance" may include similar measures.

Response 3 2 : As discussed in section s V.B and VIII of the final rule preamble of the CPP , the EPA is not finalizing the portfolio approach.

Comment 3 3 : Commenter s stated they are pleased to see EPA's acknowledgement that the state plans required under section 111(d) and the state implementation plans (SIPs) required under section 110 serve different purposes. Commenter s pointed out that EPA states in the Existing
S ource proposal, "[i]t is a well

- established principle that states have discretion regarding the measures adopted in their state implementation plans under CAA section 110 to attain the NAAQS." Commenter s said further, the Agency claims "the same principle applies in the context of state plans under section 111(d) as well, such that each state has discretion to adopt emission reduction measures other than the measures found by the EPA to comprise the BSER, or to place greater or lesser emphasis than the EPA on certain measures, provided that the state's plan achieves the required level of emission performance for affected sources." C ommenter s said they believe that EPA's conclusion is in error, because the mechanics of the regulatory
frameworks under sections 110 and 111(d) have little in common. Commenter s said under the NAAQS program, EPA sets ambient air quality standards that must be met collectively by all sources within a region, and establishing implementation plans under those circumstances necessarily involves tradeoffs between controlling emissions from different sources and even different sectors in a region. Commenter s said the fact that electricity generation must be evaluated comprehensively in order to meet health

- based standards promulgated unde r section 110 offers no support for looking beyond the fence line and requiring "entities other than affected EGUs" to contribute toward compliance with technology

- based standards under section 111(d). Commenter s said section 111(d) is a source

- category ba sed rule and leaves little room for innovative approaches implemented outside of the specific category. Commenters said EPA reports several states already adopted RE and EE measures in their CAA section 110 SIPs for attaining and maintaining NAAQS. C omment er s said they support state efforts to implement RE and EE policies in the context of the NAAQS, because section 110 was designed as an economy

wide regulatory approach, and they are not seeking to restrict the use of RE and EE to reduce CO2 emissions; how ever, their concern is that the section 110 and 111(d) regulatory frameworks are intended to achieve different aims and must necessarily regulate different types of entities using different approaches. Commenter s said EPA cannot incorporate the approaches used in NAAQS SIPs into section 111(d) state plans because these approaches are not compatible with the design or intent of section 111.

Response 3 3 : We disagree with this comment. We explain in section V .B of the final rule preamble of the CPP our basis for including the building blocks as part of the BSER

, and in section VIII our basis for allowing states flexibility. We are not finalizing the portfolio approach, and building blocks 2 and 3 may be included as part of the BSER without subjecting

non

- affe cted EGUs to section 111(d) regulatory requirements.41 Comment 3 4 : Commenter s said that the proposal is unenforceable.

Commenter s stated in reference to building blocks 2, 3 and 4 that enforcement of a system

- based limit becomes unenforceable as a practica l matter in the real world of unit

- specific sources.
C ommenter s said that EPA's theory that they may apply a standard of performance over a collection of sources has not been tested in court, and the CAA does not support the EPA interpretation. C ommenter s said that standards of performance should be unit

- specific.

Commenter s maintained that EPA does not have the authority to enforce the proposed rule because the CAA grants EPA the authority to regulate sources, but only the state has the authority to regul ate generation

‐ related compliance options.

Response 3 4 : To the extent these comments address either building block 4 or the portfolio approach, they are moot, because the EPA is not finalizing those elements of the proposal. Furthermore, as explained in section V.B.6 of the final rule preamble of the CPP , EPA does have the statutory authority to promulgate this rule as finalized. In this rule, the EPA is following the same approach that it uses in any rulemaking under CAA section 111(d), which is designed to regulate the air pollutants from the source category at issue. In this rule, as with all CAA section 111(d) rules, the EPA is not directly regulating any entities. Accordingly, the EPA is neither requiring nor authorizing the states to regulate entities other than affected EGUs in their CAA 111(d) plans.

T he federal enforceability considerations raised in the comment arose primarily under the proposed portfolio approach for state plans. As mentioned above and explained in section VIII.C
of the final rule preamble, the EPA is not finalizing the portfolio app roach, 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 of the final rule preamble , if the state is adopting the stat e 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 e mission 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 does not meet a requirement,
the EPA will address the matter on a case

- by

- case basis, to determine the appropriate response
and resolution.

As proposed, we are requiring that state plans include a demonstration that plan measures are enforceable, which for sta te measures plans is provided for in § 60.5780 and discussed in section
VIII.D.2.c.6 of the final rule preamble. T he existing guidance documents pertaining to enforceability include: (1) September 23, 1987 memorandum and 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 Energy Measures;” and (3) July 201242 “Roadmap for Incorporating Energy Efficiency/Renewable Energy Policies and Programs into State and Tribal Implementation Plans, Appendix F.”

Comme nt 35 : C ommenter s noted that the EPA says it is not "re

- opening" these implementing regulations for section 111(d) in this current rulemaking

. C ommenter s argued that it is uncertain whether the EPA, by this statement, means to assert that these regulations may not be challenged as a part of an appeal of EPA's Section 111(d) rules given the passage of time since they were adopted. C ommenter s argued that this is not a reasonable assertion given that no one could have anticipated, when these implementing regul ations were adopted, that the EPA would use them to try to significantly reduce coal usage in the United States or that existing fossil fuel

- fired EGUs would be regulated by EPA and the States pursuant to Section 111(d). Thus, commenter s conclude d that a c hallenge to these implementing regulations should not be foreclosed at this time. See Coalition for Responsible Regulation v. EPA, 684 F.3d 102, 131

- 32 (2012).
C ommenters stated that in subpart B, EPA has given itself the authority to conduct a BSER analys is and establish standards of performance that are legally binding on the states, thus abrogating the intent of Congress that states establish the standards of performance for existing

sources. C ommenter s claimed that they have standing to challenge subpar t B now, even thought it was adopted in 1975, because prior to this rulemaking the Associations that the commenter represents have had no basis for challenging EPA's regulations because their members were not regulated by EPA and the States pursuant to Sec tion 111(d). Commenter s said, here, for the first time, EPA has proposed to apply those regulations to the Associations' members' existing fossil
fuel

- fired EGUs in a manner that, if finalized, would cause their members harm.

Response 35 : In the proposal, our statement that we are not re

- opening the implementing regulations meant that we are not taking comment on or revising those regulations. Commenters

comment ed about authority to challenge the implementing regulations in Court may be relevant
i n any litigation raising “after

- arising” issues over this rule, but are not relevant for this rulemaking.

Comment 36 : CPP's Federal

- state collaboration similar to Section 110

Commenters believed the federal

- state collaboration is very similar to the proc ess implemented
under section 110. Commenter s cited the section 110 plan development process and cases that describe EPA's role, and concluded that sections 110 and 111(d) have an appropriately parallel structure under EPA's interpretation of the statute

- under both provisions, EPA uses its expertise to identify the emission reductions that must be achieved, states use their discretion to develop plans to achieve the emission reductions, and EPA reviews plans to ensure they are meeting the
relevant statuto ry criteria.

Commenter s stated, the very language upon which opponents rely, requiring EPA to establish a "procedure similar to that provided by section 7410," undermines their argument. C ommenter s43 said, EPA uses its scientific expertise to establish sub stantive standards under section 110 (national ambient air quality standards or NAAQS), which the states then develop plans to implement. Commenter s said, thus, like the section 110 state implementation plan (SIP) framework and procedure, section 111(d) di rects EPA to work hand

- in

- hand with the states to
ensure that each state

- through its plan

- achieves the reductions that EPA has determined are achievable through the application of the BSER that has been adequately demonstrated.
Commenter s said, this co operative federalism allows EPA to establish the amount of reductions required, while giving the states flexibility to determine how to achieve those reductions (or more).

Response 36 : We agree with these comments.

Comment 37 : C ommenters addressed the legal basis of the four individual plan approvability criteria the EPA proposed to use to determine whether a state’s plan is “satisfactory” under CAA section 111(d)(2)(A) and, thus, approvable. 79 FR 34909

. (1) Enforceable Measure s : C ommenters argued that enforceability issues with the Proposed Rule present serious cooperative federalism concerns.

Commenter s noted that the CAA foundation rests on three straightforward themes: cooperative federalism, narrowly tailored emission cont rol programs for enumerated purposes, and avoidance of duplicative regulation. C ommenter s noted that while EPA has a role in establishing minimum requirements for state programs, States assume the primary implementation role under the CAA,
and the statute prohibits duplicative regulation between federal and state authorities.
C ommenter s stated that Congress thus crafted a statute that would leave to States the task of enacting and administering programs to meet federal standards and noted that the process f or setting, implementing, and enforcing the NAAQS typifies this approach. C ommenter s noted that under the NAAQS, the EPA may step in to take over the States' plan

- preparation responsibility only if a State fails to make a required plan submission or submit s a plan that has not satisfied the minimum criteria of the Act, and then does not timely correct the deficiency. C ommenter s noted that Congress explicitly carried this regime of cooperative federalism throughout CAA Section 111 and stated that EPA is relegated by the Act to a secondary role in the process of determining and enforcing standards.

Commenter s stated that one essen tial criterion for EPA approval of a state plan is for a state to ensure that its plan is enforceable. C ommenter s noted that the proposal requires that a state plan must include enforceable emission limits that apply to affected EGUs and can also include

e nforceable measures such as RE standards or demand

- side EE measures under a portfolio approach. According to the commenter s , EPA admits that requiring enforceable measures beyond the affected EGUs present a special challenge at 79 FR 34917. C ommenter s posi ted that it is not just challenging but impossible, and forcing a state to extend its authority in such a manner violates the basic precepts of federalism embedded in the CAA.44 Response 37 : As described in section V.B and VIII of the final rule preamble, w e are not adopting the portfolio approach in the final rule.

Comment 38 : Commenter s stated that based on historical experience, they believed that to implement the final rule, EPA will use its authority to constrain State preferences with respect to

progra m design, potentially going so far as dictating policies that restrict when American families can do the laundry or run the air conditioning, and thus diminish the role of the States in our system of cooperative federalism.

Response 38 : We disagree with th ese comments. We discuss in sections V. and VIII of the final rule preamble of the CPP the flexibilities that sources and states have in meeting their obligations under section 111(d), and we explain in section V.B. of the final rule preamble that this rul e is consistent with section 111(d) and does not represent over

- reaching.

Comment 39 : (2) Emission Performance : Commenter s expressed concern that the second approvability criterion for state plans ( that the projected CO2 emission performance by affected EGUs must be equivalent to, or better than, the required CO2 emission performance level in the state plan ) intrudes on state authority under section 111(d). C ommenter s argued that this leaves states none of the authority section 111(d) provides to establis h different performance standards
for individual sources based on their individual characteristics and needs. Moreover, commenter s stated that EPA appears to be contemplating highly involved demonstration requirements that are
not consistent with what the Agency may impose under section 111(d) and that cannot realistically be performed in the time that would be permitted under the proposed guidelines.

(3) Quantifiable and Verifiable Emission Performance : Commenter s stated that EPA must take comment on any requirement that state plans include, such as EM&V plans to address quantification, monitoring, and verification of EE and RE measures

. C ommenter s stated that EPA should recognize that states have discretion over ho w to address these issues.

(4) Reporting and Corrective Actions : Commenter s questioned the EPA's proposal
that approvable state plans must specify a process for annual reporting of overall plan performance and implementation (including compliance of affect ed entities with applicable emission standards) during the plan performance periods. C ommenter s argued that the EPA has no legal basis to impose a regulatory requirement for annual reporting of overall plan performance and implementation

. C ommenter s stated that no such requirement exists under Section 110 for SIPs, and no other Section 111(d) emission guideline requires states to submit an annual report identifying compliance of affected entities with applicable emission standards.
C ommenter s stated that even U.S. EPA's Emerging and Voluntary Measures guidance (at page 21) contemplates an initial evaluation of the effectiveness of each measure within 18 months of the measures being in place and then provides for states to re

- evaluate these mea sures every 3

years. C ommenter s stated that reporting under Regional Haze only requires a performance check every 5 to 10 years. C ommenter s stated that Section 110 maintenance plans do not require any reporting back to U.S. EPA after initial submittal.45 C om menters disagreed with the proposed requirement that state plans include a process and schedule for implementing corrective measures if reporting shows that the plan is not achieving the projected level of emission performance. C ommenters noted that EPA re quested comment on whether the process should include the adoption of new plan measures and subsequent resubmission of the plan to EPA for review and approval, or whether the process should specify the implementation of corrective measures that are already included in the approved plan in case the projected performance level is not achieved, and on the point at which such a process and schedule would be triggered (e.g., at the end of a multi

- year plan performance period or at specified interim stages within that period). As noted by the commenters, self

- correcting mechanisms will not require corrective measures be included in the plan.

Commenter s argued that corrective, or contingency, measures are not appropriate or lawful for a section 111(d) plan. Accord ing to the commenter s , any BSER developed by EPA that would necessitate contingency measures cannot be the type of BSER ever intended under the CAA

.

Commenter s argued that states have discretion to determine the manner in which they will address any shortf alls in their plans and annual reporting on plan performance and corrective measures should not be criteria for approving a plan.

Response 39 : Regarding emission performance, we disagree. EPA’s authority to determine
BSER is addressed in section V of the preamble and in the legal memorandum. EPA’s interpretation of the remaining useful life provision is discussed in section VIII.G.1 of the preamble and in the legal memorandum.

Regarding quantification, verification, and monitoring of RE and EE, EPA has th e authority to prescribe the minimum requirements for state plans to “provide for implementation” of the standards of performance. States do not have unfettered discretion with respect to quantification, verification, and monitoring.

Regarding reporting of plan performance, we disagree. Although provisions in section 110 are not dispositive of the issue, section 110 specifically provides for “periodic reports on the nature
and amounts of emissions and emissions

- related data” from stationary sources. 42 USC 7410(a)(2)(F); see also 40 CFR part 51 subpart A (requiring state reporting of air emissions to EPA).. Since section 110 requirements are related to maintenance and implementation of the NAAQS, section 110 also specifically requires states to provide an ambient air quality monitoring network and make data from it available to the Administrator. 42 USC 7410(B); see also 40 CFR part 58, which “contains requirements for measuring ambient air quality and reporting ambient air quality,” id. § 58.2(a). In the case of plans under these emission guidelines, plan performance is related to emissions and electrical generation, both of which
have well

- established monitoring methods. Thus, determining plan performance is more straightforward than the very complex requirements under part 58 for monitoring ambient air quality to ensure that the NAAQS are maintained. See generally part 58. Of particular note, part 58 in fact requires states to submit an annual monitoring network plan to EPA to ensure that the network remains adequate. 40 CFR 58.10. In any case, as mentioned in the preamble the46 statutory language “provide for impl ementation and enforcement” of the standards of performance is ambiguous and EPA may reasonably interpret it. It is of course reasonable, and in fact possibly compelled, for EPA to require reporting on plan performance to ensure that the plan “provides fo r implementation” of the standards of performance.

With respect to the comment that corrective measures are not appropriate or lawful for a sectio n 111(d) state plan, we disagree. We note that a basic emission standards plan adopting the performance rate s or setting mass limits that total the mass goal is mathematically assured (assuming full compliance) to achieve BSER. EPA is requiring corrective measures for plans that are not mathematically assure d to achieve BSER; because those plans are flexibility alternatives provided to states, EPA may require additional mechanisms to assure BSER is achieved. See section VIII of the preamble for additional discussion.

With respect to the comment that states have essentially unfettered discretion to address
shor tfalls in their plan, we disagree. See the Legal Memorandum for a discussion of EPA’s general authority. See section VIII of the preamble for discussion of EPA’s authority to require
corrective measures and address shortfall.

Comment 4 0 : Commenter s state d some commentators have suggested that EPA's proposal that multiple states may submit a joint compliance plan to implement the CO2 emissions targets for existing sources, may violate the Compact Clause of the U.S. Constitution, or at the very least
would require Congressional approval. Commenter s said the Compact Clause provides that "[n]o State shall, without the Consent of Congress

- enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War unless actually invaded, or in such imminent Danger as well not admit of delay." Commenter s said critics argue that multi

- state plans amount to interstate compacts and cannot be put into place without specific congressional authorization.
Commenter s said they do not agree.

Commen ter s stated Congress has already sanctioned agreements of this nature under the Clean
Air Act. Commenter s said under the Compact Clause, Congress may give explicit or implicit authorization to compacts, and it may do so for all interstate agreements of a p articular subject
matter. Commenter s exemplified that in Cuyler v. Adams, Congress authorized joint state action on criminal enforcement and allowed states to coordinate on policies and laws in the Crime
Control Consent Act of 1934. Commenter s said the lan guage of the statute did not authorize a specific compact, but rather, approved future interstate agreements for the general purpose of "mutual assistance in the prevention of crime." Commenter s said similarly, Congress foresaw
interstate coordination on a ir pollution issues. Commenter s said Clean Air Act section 102 expressly instructs the Administrator to "encourage cooperative activities" and "encourage the making of agreements and compacts between States for the prevention and control of air pollution." Commenter s said this provision cannot be interpreted in any way other than that Congress anticipated interstate compacts as a useful tool and pre

- authorized them for efforts to improve air pollution control. Commenter s said as in the Crime Control Consent Act, Congress has granted consent, in a capacious manner so that states would have the flexibility to47 accomplish a general legislative goal. Commenter s said multi

- state plans comfortably qualify under the broad purpose of "prevention and control of air po llution."

Commenter s stated the Supreme Court has never interpreted the Compact Clause to require Congressional approval of every agreement between multiple states. Commenter s said in one of its earliest cases concerning the Compact Clause, the Court rema rked, "[t]here are many matters upon which different states may agree that can in no respect concern the United States."
Commenter s said the Court repeatedly recognized in subsequent cases that the Constitution "did not purport to exhaust imagination and r esourcefulness in devising fruitful interstate relationships" and it was "not to be construed to limit the variety of arrangements which are possible through the voluntary actions of individual States with a view to increasing harmony
within the federalism created by the Constitution." Commenter s said having established in Virginia v. Tennessee, 148 U.S. 503, 518 (1983), that the Compact Clause did not apply to all interstate agreements, the Court affirmed that position in New Hampshire v. Maine, 426 U.S.
3 63 (1976), another state boundary dispute case, and again declined to broaden its reading of the Compact Clause in United States Steel Corporation v. Multistate Tax Commission, 434 U.S. 452 (1978). Commenter s said in Multistate Tax, the Supreme Court expla ined in detail which interstate agreements require Congressional approval, and laid out the applicable test.
Commenter s said the case involved multi

- state corporate taxpayers seeking to invalidate a compact between twenty

- one states that created an adminis trative body to facilitate determination of liability for multi

- state taxpayers and avoid duplicative taxation. Commenter s said the Court stated that "[t]he relevant inquiry must be one of impact on our federal structure," as the Compact Clause only covere d agreements "tending to the increase of political power in the States, which may encroach upon or interfere with the just supremacy of the United States."
Commenter s said this bar is extremely high, and in all of the interstate compacts that the Court
has reviewed, it has never found an interstate compact to encroach on federal power.
Commenter s said for that reason alone, it is unlikely that multi

- state plans at issue here would trigger the Court's disapproval. Commenter s said the Court in Multistate Tax listed the following indicia to evaluate whether an interstate agreement encroaches on federal power: if a compact (1) authorizes member states to exercise any powers they could not in its absence, (2) delegates sovereign authority, or (3) encroaches on th e power of the United States with respect to foreign
relations. Commenter s provided more discussion in a footnote. Commenter s said multi

- state plans under EPA's proposed rule do not exhibit these indicia. Commenter s said multi

- state plans serve the same function as single

- state plans and may even be submitted as one plan.
Commenter s said they do not "create" more authority for the states involved any more than if each of the member states submitted individual plans. Commenter s said it is true that the power sector is relatively unique because the sources operate in an interconnected grid system that is typically regional in scale. Commenter s said a multi

- state plan that comprises a subset of states in a regional grid system could potentially exert economic influences on non

- member states, but such pressure alone is unlikely to constitute federal encroachment. Commenter s referenced Multistate Tax, 434 U.S. at 473, noting that while "[g]roup action in itself may be more influential than independent actions by the States," it did not enhance state power at the expense of the national government.48 Commenter s stated a multi

- state plan does not create any type of regulatory body with delegated authority that has greater powers than the sum of the member states acting individually or could bind member states in a way that would impact the federal structure. Commenter s said even in Multistate Tax, the Court took no issue with member states empowering an administrative body
to han dle typically individualized tax legislative initiatives, noting that the individual states could have adopted the procedures on their own. Commenter s said under the proposed rule, states may meet EPA's emissions goals under individual plans as well as mul ti

- state ones, albeit that the latter may capitalize on efficiencies. Commenters said this is no different than what the Court permitted in Multistate Tax.

Commenter s stated while the federal government is undoubtedly interested in climate policy on
an int ernational scale, interstate compacts that merely speak to federal interests do not necessarily encroach on federal supremacy. Commenter s said the Court emphasized that the regulatory organization in Multistate Tax did not interfere or foreclose federal ac tion, and therefore did not encroach on federal supremacy. Commenter s said even the fact that the member states were acting in concert to enhance their capacity to lobby for legislation did not constitute
encroachment. Commenter s said in comparison, multi

- state plans are mere instruments for states to implement regulatory goals; they do not lend the member states any additional political power and certainly do not foreclose additional federal action, both from a domestic standpoint and if
the United States were to enter into any international agreements on climate change.

Commenter s stated for the multi

- state plans to violate the Compact Clause, they would have to increase state power at the expense of federal supremacy. Commenter s said ultimately, the prima ry difference between multi

- state plans and single state plans is one of form, rather than
function. Commenter s said the multistate plans do not enhance state power any more than single state plans do; therefore, it is unnecessary to receive congressional approval for these plans, which are merely one option that EPA has developed

- an innovative and efficient method for additional emissions reduction that is well within the confines of the Agency's statutory authority. Commenter s said it is the type of inter state cooperation that Congress envisioned and provided for when drafting the Clean Air Act. Commenter s said it is not their view that the Compact Clause argument is valid, the argument would be annulled if EPA were to make clear through a model rule the a pprovable elements of a multistate plan, including such plans intended to adopt multi

- state mass

- based allowance trading systems. Commenter s said in that case, multistate plans could not arguably be increasing political power in the States, or "encroach[in g] upon or interfere[ing] with the just supremacy of the United States," indeed they would be in furtherance of the Clean Air Act's directives, and the federal government's policy on pollution
control.

Response 4 0 : We agree with these comments.

Comment 4 1 : Commenter s said e arlier this year, the Missouri General Assembly and the
Governor enacted House Bill 1631 authorizes the state to develop such regulations. Commenter s said this bill, which was passed in the last legislative session and signed by Governor Nixon on49 July 7, 2014, requires the Missouri Air Conservation Commission (MACC) of the Department of Natural Resources (DNR) to set Missouri's carbon standard. Commenter s said to assure that the resulting emission standards make sense for Missouri and bes t balances their needs, the legislation instructed MACC to set standards based on an inside

- the

- fence analysis of what is feasible at each EGU, and allow for a more lenient standard on a case

- by

- case basis after considering factors such as cost and impacts on ratepayers and the economy.

Commenter s said that, MACC has the legal authority to "develop emission standards under [Section 111(d)] through a unit

- by

- unit analysis of each existing affected source of carbon
dioxide within the state." Commenter s said, MACC "shall consider," among other factors, the remaining useful life of the existing affected source, and the overall economic impact from any and all emission standards and compliance schedules developed and implemented under Section 111(d). Commenter s said, MACC has the explicit authority in HB 1631 to develop less stringent emission standards and longer compliance schedules than those required by federal regulations based on these key factors: (1) Unreasonable cost due to plant age, location, or basic process design; (2) Physical impossibility of installing necessary control equipment; or (3) Factors specific to the existing affected source or class of such sources that make a less stringent standard or compliance schedule more reasonable, including: (a ) absolute cost of the emission standard or compliance schedule; (b) economic impact of closing the affected source, including job losses if the source is unable to comply with the performance standard; and (c) customer impacts of the emission standard and compliance schedule, including disproportionate rate impacts on low income populations.

Response 4 1 : See section V.A and V.B of the final rule preamble of the CPP for explanation of the EPA’s authority to develop standards of performance.

The general thru st of the comment is that existing state law should dictate what EPA determines to be BSER and how these emission guidelines should ensure that state plans establish standards of performance and provide for their implementation and enforcement. This misu nderstands the cooperative federalism structure of the Clean Air Act in g eneral and section 111(d)(1) in particular. Under the Act, EPA establishes standards based on health, welfare, and/ or technology considerations. States may then choose to implement those standards, but if a state does so the state must have adequate legal authority. If not, then EPA must implement the standards. In the
case of these emission guidelines, if a state lacks authority to submit a satisfactory plan, then EPA must impose a federal plan.

With respect to the three factors quoted by the commenter, those factors are derived from the framework regulation in 40 CFR 60.24(f) that permits States, subject to EPA review and approval, to relax an emission standard in certain circumstances. In these guidelines, EPA is making the provisions in 60.24(f) inapplicable. With respect to remaining useful life, EPA is permitting states to consider remaining useful life through a number of reasonable mechanisms other than the provisions in 60.24(f). For details please see section VIII.G.1 of the preamble and the Legal Memorandum.50 Comment 4 2 : Comments stating that the EPA has not answered essential implementation questions, and that the guidelines are far removed from section 111’s narrow source

- focused regulatory program.

Commenter s said that EPA has not answered essential implementation que stions, nor can the CAA or EPA's past rulemakings under section 111 provide answers to any of these questions.
Commenter s said that the types of aggregate emission reduction measures and the broad universe of affected entities that EPA asserts authority ov er in the Proposed Guidelines are so far removed
from section 111's narrow source

- focused regulatory program as to be completely unrecognizable as a program under section 111(d) of the CAA. Commenter s said, the CAA "do[es] not explicitly address" any of th ese issues, 79 Fed. Reg. at 34,902, for the same reason that section 111 does not explicitly address mobile source regulation or endangered species protection: because such language would be nonsensical in a statutory provision that has nothing to say abou t those issues. Commenter s said, section 111, on its face, is singularly concerned with design or process changes that individual new and existing stationary sources within specific categories can implement to reduce their own emissions. Commenter s said, t hat EPA is now grappling with the complex question of how to impose enforceable obligations on other affected entities in order to reduce aggregate emissions by reducing utilization of affected sources simply demonstrates that EPA has strayed far off the C AA's regulatory path.

Response 4 2 : We disagree with these comments. We explain in section V .B of the final rule preamble of the CPP our basis for including building blocks 2 and 3 as part of the BSER and we explain in section VIII of the final rule preambl e that we are not finalizing the portfolio approach.

Comment 4 3 : Commenter s said that, EPA maintains that it may specify in proposing an emission guideline that less stringent standards or a delayed compliance schedule would not be appropriate". Commenter s said, in several of the past Section 111(d) guidelines, EPA expressly
for eclosed the availability of any "variances" to be within state plans. Commenter s said all of the regulations in which EPA foreclosed variances except one were regulations affecting solid waste incinerators under Section 129, and therefore it could be argue d that these regulations were responsive to the particular language of Section 129(b)(2) provides that state plans "shall be at least as protective as the guidelines promulgated by the Administrator." Commenter s said that language is not in Section 111(d). Commenter s said EPA has prescribed the same by regulation in the implementing regulations. Commenter s said that, EPA has acknowledged that there is a difference between the discretion afforded states under Section 111 compared to Section 129 guidelines.

Response 4 3 : We disagree with the thrust of this comment, which is that EPA should allow for variances in these emission guidelines due to differences between section 129(b) and section 111(d)

. Section 129(b) does provide, as commenter states, that state p lans “shall be at least as protective as the guidelines promulgated by the Administrator.” This does not create a necessary inference that section 111(d)(1) requires EPA to allow state plans to be less stringent than section 111(d)(1) emission guidelines ( i.e. to provide for variances)

, for several reasons.51 First, section 129(b) requires guidelines to reflect the maximum achievable control technology (MACT) standard in section 129(a)(2) for existing solid waste incineration units The MACT standard for existing units must at a minimum meet the “MACT floor,” the “average emissions limitation achieved by the best performing 12 percent of units in the category.” 42 USC 7429(a)(2). Thus, to a certain extent the requirement in 129(b) (2) that state plans must be as protective as the guidelines reflects the nature of the MACT standard itself.

That this is the case does not create a necessary inference that the remaining useful life provision in section 111(d)(1) must be interpreted to allow for less stringent plans (i.e. variances). Indeed, had Congress intended section 111(d)(1) to operate in that way, Congress could have clarified
this in the 1990 Amendments at the same time that Congress added section 129 and made clear
that section 129 did not allow for less stringent state plans. Instead, section 111(d)(1) is silent as to whether the state plan must be as stringent as the guidelines. Thus, Congress intended to delegate to EPA to reasonably decide the issue.

Finally , the remainin g useful life provision was added in the 1977 Amendments. (See the detailed legislative history in section IX of the Legal Memorandum.) As noted in the legislative history discussion in the Legal Memorandum, Congress appears to have been aware of and
inf ormed by EPA’s 1975 framework regulations, yet Congress did not explicitly state in the remaining useful life provision that EPA must allow for variances or less stringent state plans in the way contemplated by the framework regulations. Compare 42 USC 74 11(d)(1) (“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 consideration, among other factors, the remainin g useful life of the existing source to which such standard applies.”) with 40 Fed. Reg. 53,340, 53,347/3 (Nov. 17, 1975) (“States may provide for the application of less stringent emission standards ...”). Thus, the legislative history confirms that Congr ess intended to delegate to EPA to reasonably decide. T he document quoted by commenter, “Section 129 Rules for Solid Waste Combustion,” is a one

- p age descriptive document on EPA’s website that lacks legal relevance. 2 However, even if EPA had officially ta ken the interpretation stated in the document, that “Section 129 requires that Section 111(d)/129 State plans be ‘at least as protective as’ the Guidelines, whereas Section 111(d) allows States flexibility to consider other factors,” and that meant that 11 1(d) plans necessarily had to allow variances, EPA would be entitled to change that interpretation through notice and comment, so long as EPA is reasonably interpreting the statute and explains the reasons for the change . See Nat'l Cable & Telecomms. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 981

- 82 (2005). Here, we have explained that section 111(d) does not preclude other approaches than the variance approach in 40 CFR 60.24(f). For details see section VIII.G.1 of the preamble and
section IX of the Legal Memorandum.

2 Available at http://www.epa.gov/ttnatw01/129/gil2.pdf

.52 1.11.2 Federal enforceability of renewable energy and demand

- side energy efficiency

measures

Comment 1: Emission reductions from EE and RE projects are difficult to project and do not always achieve the levels predicted ; the threat of possible federal enforcement and citizen suits could limit the number and type of RE and EE projects undertaken.

Commenter s stated the EPA is not proposing to provide any additional funding to states to manage their plans as a part of this highly complex proposal. Commenter s said and as a legal matter, EE and RE projects, even with the best available data, do not always achieve the levels predicted. Commenter s stated with the added pressure that sources or third parties could be liable, not only to the EPA but also citizens, if reductions are not achieved as expected, is a risk many entities may not want to take and could greatly limit the amount and type of projects
undertaken.

Response 1: We disagree with these comments. For the reasons described in the p reamble, RE is adequately demonstrated and its emission reductions can be projected with confidence. The federal enforceability considerations raised in the comments arose primarily under the proposed portfolio approach for state plans. As explained in sec tion VIII.C of the final rule preamble of the
CPP , 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 fur ther explained in section VIII.D of the final rule preamble , 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. And states that submit emission standard type plans would include in the state plans only standards of performance on their affected EGUs, and would not independently require any RE projects. In addition, building block 4 is not part of the BSER.

Comment 2 : EE and RE measures should not be made fede rally enforceable; other EPA regulations have not made EE and RE measures federally enforceable.

C ommenter s stated that mandating an EE/RE program that must meet the requirements proposed under this rule or face the ramifications is completely inappropri ate under Section 111(d).
Commenters noted that EE/RE measures under Section 110 are not mandated and the EPA does not require a percentage of SIP measures incorporate EE/RE. C ommenter s said under Section 110 this option is at the states discretion when th ey see it as viable. C ommenter s stated the EPA has gone beyond what could ever be contemplated as BSER given the significant road blocks states would have to overcome in order to incorporate EE/RE into a state plan. C ommenter s said under this proposed Sect ion 111(d) program, states are being set up to fail.53 Response 2 : We disagree with these comments. A s described in section V of the final rule preamble of the CPP , states are not required to implement RE measures; rather, they may submit
an emissions standards state plan that imposes standards of performance on their sources.

Comment 3 : EPA should not make EE and RE measures federally enforceable; EPA should use an approach similar to the SIP calls under NAAQS and require states to revise their state p lans if EPA finds a state plan is deficient.

C ommenter s stated instead [of making EE and RE federally enforceable], the EPA should rely on a generic equivalent of the SIP calls under the NAAQS, under which the EPA

- and only the
EPA

- may find a state pl an deficient in terms of its effectiveness in reducing emissions, as laid out in the plan, and call for a revised plan to better achieve the specified levels of emission
reductions.

C ommenter s said instead, the EPA envisioned requiring contingency measure s or a SIP call to make up any shortfall. C ommenter s requested that the EPA clarify if and how this guidance is applicable in the context of a rate

- based plan. C ommenter s said or if, under the mass

- based alternative, the EPA intends to allow states to pres ent EE/RE measures as a binding commitment to capture such reductions as a part of the baseline emissions projections.

C ommenter s provided an EE analogy to transportation emissions controls in SIPs and transportation conformity

. C ommenter s stated that the EPA should recognize that smaller, dispersed EE measures are analogous to transportation emission reduction measures (many of which are, indeed, transportation EE). C ommenter s stated that the EPA should consider viewing
them in a manner si milar to how transportation measures are treated in NAAQS SIPs and for transportation conformity. C ommenter s stated that the EPA allows and provides guidance for the use of various transportation

- related emissions control and prevention approaches and thes e measures are not subject to strict interpretations of enforceability

. Nonetheless, commenter s stated that the impacts of these types of measures can be credibly modeled and do deliver significant emissions reductions and air quality benefits

. C ommenter s stated that modeling results can be compared with selective sampling and monitoring to verify progress. C ommenter s noted that States are afforded the opportunity to make up for shortfalls that occur despite good faith efforts and can modify their plans, mo dels, programs and measures accordingly.

Response 3 : These comments generally focus on the concern that making RE and EE measures federally enforceable as EPA has interpreted that concept would not be appropriate. Instead they argue for a more planning ba sed approach, were the effect of RE and EE measures are accounted for in a state’s plan, and EPA works with states to ensure that the overall effect of the plan meets the requirements of this guideline.

In the final rule, EPA has adopted an approach to the structure of state plans which is broadly responsive to these commenters’ concerns, depending on the choices each state makes in its plan design. EPA is not finalizing its proposal for the “portfolio” approach to state plans . Therefore,
to the extent the comment relates to the portfolio approach, the comment is moot. EPA has54 instead provided for states to have the reductions anticipated under a state’s plan enforceable either entirely on the affected sources subject to the plan or through a combination of limits on
EGU’s and state measures . In either case, the EPA would not exert enforcement authority over any entity other than affected EGUs and thus this rule does not require that states make their EE or RE programs federally enforceable.

. It is possible that such entities would be subject to state law requirements or incentives to perform measures that reduce carbon emissions, which is currently the case for many of these RE and EE programs.

As discussed extensively in section V and VIII of the final rule preamble of the CPP describing the state measures plan approach EPA is promulgating, EPA has essentially embraced the idea that states should have the flexibility to rely on innovative RE and EE programs to accomplish
reductions under the se plans, while giving the state the flexibility to avoid incorporating those programs into the plan as a federally enforceable measure. If the state’s assumptions about the efficacy of the programs on which the state’s plan relies do not prove accurate ov er time, the final guideline allows the state to use a combination of backstop emission standard s on EGUs
and a planning response, rather than subjecting other entities undertaking RE or EE measures to be subject to direct federal enforcement. The state mu st implement backstop measures or submit

a new plan design to address any emissions reduction shortfall.

Comment 4 : Making section 111(d) plans federally enforceable undermines state authority

Commenter s said making Section 111(d) plans federally enforceable would undermine California's authority under Section 111(d). Commenter s stated instead, the EPA should

encourage California to continue to use its broad discretion under California state law to choose emission reduction programs best suited to its needs over time, and, consistent with the terms of Section 111(d), provide California with the fullest ability to recalibrate and redirect California's programs over time to comply with federal emission GHG r eduction targets.

Commenter s stated i n light of the EPA's proposal to go "beyond the fence" of power plants for its BSER and thus the implication of activities and regulation beyond the scope of the Clean Air Act, it is particularly important for the EPA to avoid requiring states to cede jurisdiction over aspects of their plans that involve state or other non

- EPA authorities and jurisdictions.
Commenter s said such excessive federal enforceability could give the EPA and third parties the ability to seek to change activities over which they have no current jurisdiction (or expertise) through litigation. Commenter s stated this outcome should be avoided. Commenter s said the EPA should leave all state jurisdictional and non

- Clean Air Act jurisdictional policy an d regulatory determinations fully under state or other authority and not attempt to make them federally enforceable through its 111(d) rulemaking process.

Commenter s stated the s tates must be able to use state

- run programs, such as those for energy
effic iency and renewable energy, for compliance with the rule without the risk of the EPA assuming any authority or control over state programs if they fail to deliver the anticipated
emissions reductions. Commenter s said instead, if these programs fall short o f their goals, the55 state should be responsible for attaining those emissions reductions in another manner.
Commenter s stated such an approach is currently used by states that include contingent reduction plans in criteria pollutant SIPs to be used in the e vent a shortfall in reductions occurs within the core approach. Commenter s said this approach allows states to retain authority of all state programs used for compliance with the Clean Power Plan while assuring the program objectives
will be met even if th e planned approach falls short.

Response 4 : We appreciate this comment and agree with many aspects of it. The state measures approach accommodates the commenters’ concerns.

Comment 5 : State EE programs should not be federally enforceable for states that adopted

mass

- based limits.

C ommenter s stated that to the extent a state intends to comply by establishing a mass based target, the state's EE program, including its EM&V protocols shoul d not be subject to approval in a state plan or federally enforceable.

Response 5 : We agree with this comment.

Comment 6 : Federal enforceability of RE and EE on third parties.

C ommenter s expressed concern about direct federal enforcement on third parties if a portfolio or

mass

- based approach is taken. C ommenter s explained that part of either of these approaches should require a CO2 limit on the regulated EGUs, and the regulation of the EGUs would be presumed to also be federally enforceable. C ommenter s ex pressed concern if some of the other obligations of the state plan, RE and EE, were viewed as federally enforceable against third parties

. C ommenter s argued that the state plan should be acceptable if the state has enforcement authority over the in

- state t hird party entities

. C ommenter s noted that in a case where the
state, and not the EPA, has enforcement authority, it would be the state that would be held accountable for meeting goals that rely on the non

- EGU entities

.

C ommenter s noted that the EPA proposes to approve state plans based on four general criteria,
the first of which is "enforceable measures that reduce EGU CO2 emissions." C ommenter s stated
that a plan that includes re

- dispatch using Building Block 2 from a state wher e the grid is run by
an RTO would not be enforceable

. C ommenter s noted that generation dispatch in Michigan is managed by MISO or PJM (not the state) based on security

- constrained economic dispatch (i.e., Michigan does not decide which units are dispatched and does not have the authority to enforce

re

- dispatch to reduce CO2 emissions). C ommenter s stated that by proposing as the BSER a building block that many states (including Michigan) cannot enforce, the EPA is proposing a method for reducing CO2 emission s that the EPA itself will not approve. C ommenter s asserted that approach is irrational, and the proposed rule is therefore arbitrary and capricious.
C ommenter s noted that where the state plan includes emission limits for the affected EGUs, and56 when the so le responsibility for meeting the state goals are established with requirements for individual affected EGUs, it leaves little doubt that the state plan would be enforceable and the affected EGUs could be held responsible for meeting the goals in the state plan.

C ommenter s stated CPP is unclear about the regulatory approach that would hold them accountable for the actions and inactions of third parties outside of the control of the commenter's city. C ommenter s understands that there are ways to incentivize demand side management, but there are no enforcement mechanisms or ways to guarantee this compliance.
C ommenter s stated p ast Clean Air Act actions impacting electric generating units (EGUs)

- as with other New Source Performance Standards (NSPS) regulated industries have been imposed
at the affected unit. C ommenter s stated o nce the 111(d) plans propose to manage third parties, the regulatory landscape moves beyond state air or utility agency traditional authorities.

Response 6 : We appreciate these comments. The EPA is not finalizing the portfolio approach, so that states may either submit state plans for EPA approval that include only standards of performance on affected EGUs, and not requirements on any other entities, or adopt the state measures approach.

Comment 7 : Commenters recommended that all complementary measures implemented by entities other than affected EGUs should not be federally enforceable.

C ommenter s opposed the EPA's proposal "that all measures relied on to ach ieve the emission performance level be included in the state plan renders those measures federally enforceable ”
C ommenter s recommended that the EPA finalize guidelines for state plans to explicitly exclude all complementary measures implemented by entities other than affected EGUs that support reductions in generation by affected EGUs. C ommenter s stated e missions reductions achieved through DSM programs should not be federally enforceable measures included in a state plan.
C ommenter s said t he discretion 111 (d) provides the EPA in establishing the guidelines for the development of state plans does not give the Agency carte blanche to overextend its reach and subject non

- EGU parties to enforceable requirements under this regulation. C ommenter s urged
the EPA to reevaluate the scope of options and approaches available to states and ensure that any guidelines finalized by the Agency ensure the treatment of energy efficiency and DSM programs as complementary measures. C ommenter s said w hile state performance goals were established by the EPA through an application of the BSER, the proposal as drafted does not prescribe the states' use of any BSER component measures in designing their state plans. C ommenter s added the EPA is proposing gui delines for states that provide multiple pathways for developing a state plan that influence the scope of program measures covered as well as who the responsible
entities will be. C ommenter s said a more limited scope of plan approaches that treat DSM

progr ams as complementary measures should help ensure that ultimate legal responsibility for
the achievement of required emissions reductions remains with affected EGUs or the state.

Response 7: See section IV.A of the final rule preamble of the CPP for the EPA’s response to
this comment.57 Comment 8 : EPA does not have authority to enforce EE and RE programs

.

Commenter s stated t he inclusion of DSM programs in the state plan will make these programs federally enforceable as well as mandatory. Commenter s said t hus, if a state fails to enforce the requirements of the state plan, the EPA would have authority to initiate enforcement actions against non

- EGU parties. Commenter s said g iven that the EPA has no authority over DSM programs it would be unlawful for the EPA to seek implementation or enforcement of these

programs. Commenter s stated t he obligation for ensuring emission reductions at affected EGUs must rest with the affected utilities or the state and must not extend out to the participants in such

prog rams. Commenter s stated o therwise, the specter of federal enforcement will limit participation in DSM programs, especially given that 304 of the Clean Air Act allows citizens to bring civil suits to compel federal enforcement

. Commenter s stated t o create s uch a disincentive for participation will undermine the success of existing programs and run counter to the Clean Power Plan's goal of achieving emission reductions though end use energy efficiency programs.
Commenter s said a s proposed, the rule would not impose any such limitation on responsible
entities. Commenter s stated i ndeed, the EPA acknowledges that "a portfolio approach may result in enforceable state plan obligations accruing to a diverse range of affected entities beyond
affected EGUs."

Commenter s stated at a recent Senate hearing on the proposal, EPA Administrator McCarthy failed to answer questions pertaining to the EPA's intentions to enforce provisions in State Plans that currently fall outside the EPA's authority. Commenter s said f or example, while the Administrator acknowledged that the EPA lacks the authority to require a state to adopt a renewable portfolio standard (RPS), she repeatedly dodged the question of whether the EPA believes it has the authority to enforce an RPS once a state subm its it as part of a State Plan.
Commenter s stated without clarification, we are left to assume that the EPA is entertaining the possibility of overreaching its authority in this area.

Commenter s asked under your proposal, if a state adopts a renewable por tfolio standard (RPS) and/or an Energy Efficiency Resource Standard (EERS) as part of its compliance strategy and later softens or repeals the RPS and/or EERS, does the EPA claim to have the authority to enforce the original RPS and/or EERS irrespective of subsequent legislation? If so, commenter s questioned what is the source of the EPA's legal authority to take such action?

Commenter s stated EPA cannot hold affected EGUs solely responsible for meeting the entirety of a state's emission reduction goal. Com menter s said in setting the state goals, EPA 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 cannot be met solely through emission reduction measures achievable at affected EGUs, short of wholesale retirement of existing fossil fuel

- fired generation, given that several58 state goals are well below the CO2 emission rate achievable by fossil fuel

- fired generation, even
for new NGCCs. Commenter s said EPA does not have the authority to enforce the entire emission reduction commitments against affected units even though affected units are the only entities within EPA's jurisdiction. Commenter s said 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, and commenter opposed this approach. Commenter s said according to the proposal, an affected entity is an affected EGU, or a nother entity with obligations under this subpart for the purpose of meeting the emissions performance goal requirements in these emission guidelines. Commenter s said this definition would include entities that EPA has no authority to regulate under Sectio n 111(d), such as electric distribution utilities and independent non

- profit entities that administer RE and EE programs. Commenter s agreed that states should be able to rely on emission reductions achieved by affected entities to achieve compliance with t heir state goals, EPA does not have the authority to make these emission reduction commitments federally enforceable.

Commenter s stated the EPA explains in the Proposed Rule that if a state wants to avoid imposing legal responsibility on affected EGUs for the entirety of the state's emissions reduction goal, the state may elect to pursue a "portfolio approach" to compliance plan development, which would allow enforcement of requirements against entities other than affected EGUs.

Commenter s did not agree wit h the EPA's interpretation. Commenter s said

, first, including any requirements related to RE and EE programs would put the EPA in the position of regulating retail electricity sales, over which the states (or in the case of the commenter, the commenter's
B oard) have exclusive jurisdiction

. Commenter s said the EPA cannot enforce where it does not have jurisdiction. Commenter s stated

, second, contrary to the EPA's assertion that the portfolio approach "accommodate[s] a diverse range of state approaches," impl ementation of the portfolio approach requires a state to have either (i) a legally binding RPS or EERS or (ii) a vertically integrated electricity sector that engages in integrated resource planning. Commenter s said both these options would be reliant on p articipation of the electric utility sector for emissions
reductions

- states do not have an alternative to regulation of the utility sector. Commenter s saw no path in which the states can compel non

- EGUs to participate in an emissions reduction

program ap plicable to EGUs. Commenter s said this suggests the portfolio approach is unworkable and the states could not rely on this approach in developing state compliance plans.

Commenter s stated, the new "interpretation" of CAA section 111(d) set forth in the Pro posed Rule encourages Wyoming to submit a plan that contains what EPA calls "portfolio" measures.
Commenter s said, these measures would be used, for instance, to dramatically increase the use and deployment of renewable energy and EE throughout the state, targeting Wyoming citizens and businesses as necessary agents in the reduction of electric consumption. Commenter s said, however, upon EPA approval of a Wyoming CAA section 111(d) Plan, these measures would become "federally

- enforceable" against those agen ts (citizens and businesses) required to implement them. Commenter s said, yet, 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 c ategory. Commenter s said, rather, CAA section 111 authorizes standards to59 be set for facilities within EPA

- listed source categories. Commenter s said, 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.

Commenter s stated EPA has no legal authority to regulate activities or sources that are not existing fossil fuel

- fired EGUs, and its reliance on the "integrated nature" of the power sector
cannot create such autho rity where none exists. Commenters said EPA cannot enforce where it does not have jurisdiction, see 42 U.S.C. section 7413(a)(3), and, consequently, cannot take enforcement action against entities other than affected EGUs. Commenter s said holding affected EGUs legally responsible for obtaining all of the emission reductions required by the state goals would be unreasonable and illegal as proposed, and EPA would need to revise its BSER analysis to consider only the costs and other factors involved in applyin g the emission rate goals solely to
affected EGUs. Commenter s said EPA cannot develop and analyze a BSER that relies on reductions throughout the electric sector and then require affected EGUs to be wholly responsible for meeting the emissions reductions r equired by such an expansive BSER
determination. Commenter s said such a result would clearly circumvent Section 111's requirement that standards of performance be "achievable." 42 U.S.C. section 7411(a)(1).
Commenter s said this would be the epitome of arbi trary and capricious rulemaking. Commenter s said EPA itself recognizes that state goals cannot be met solely through emission

- reducing measures that may be taken by affected EGUs. Commenter s said that, even with affected coal

fired EGUs reducing emissions by 6 percent and additional reductions from sources other than affected EGUs, 65 gigawatts of affected sources will retire as a result of this proposal.
Commenter s said affected EGUs have no authority to ensure that other affected entities attain the proje cted emissions reductions required for the state to achieve its goal. Commenters said

, for example, an affected EGU cannot mandate redispatch or force consumers to participate in EE programs, and enforcement against affected EGUs in each state, in the event that the state does not meet its goal, would be irrational and would render the rulemaking arbitrary and capricious.

Commenter s stated that EPA does not have the authority to regulate activity outside the sources subject to the CAA's performance standards. Commenter s said renewable energy projects and energy efficiency measures have no CO2 emissions and cannot be regulated under these buildin g blocks by the EPA. Commenter s said the state agencies do not believe that the distinction
between "inside the fence" and "outside the fence" is artificial. Commenter s stated renewable energy projects and the measures to reduce end

- user demand are not emi ssions reductions inside the fence, but rather, alternatives to fossil fuel generation outside the fence. Commenter s said yet, the Clean Power Plan expands the EPA enforcement authority by requiring states to include renewable portfolio standards and energ y efficiency measures within their state plans if the states intend on using these Building Blocks, which would then make them federally enforceable.
Commenter s stated concern that the state goal set forth in the Clean Power Plan cannot be met
without util izing each Building Block. C ommenter s expressed concern over BB2, BB3, and BB4 that would be incorporated in state plans that expand the EPA's jurisdiction. Commenter s said the EPA may initiate an enforcement action against any person that has violated a s tate plan; therefore making the state plan federally enforceable. Commenter s said the state public utilities60 commission would be included in the state plan, and would subject the public utilities commission to the EPA's oversight and enforcement and to cit izen suits of litigation against the state's public utilities commission.

Response 8 : These commenters focus on the scope of EPA’s authority to regulate sources other
than affected EGUs. The federal enforceability considerations raised in the comment a rose primarily under the proposed portfolio approach for state plans. As explained in the preamble to the final rule and in response to comment B2, above, EPA has not finalized the portfolio approach for state plan design. Therefore, EPA would not exert enforcement authority over any entity other than affected EGUs. Furthermore, this rule does not require that states make their EE or RE programs federally enforceable.

. The final guideline leaves the states with a choice whether to rely on emissions limit s placed entirely on the EGU’s that are affected sources under the guideline, or a combination of limits on those EGU’s and state measures. In either case, EPA is not requiring a broad range of entities to be subject to the state plan and federal enforceme nt.

EPA is requiring, however, that the state plan result in emissions reductions that meet the state’s emission goal under this guideline. And EPA is setting those emission goals based on an assessment of what the best system of emission reduction is achievable in each state. EPA sees nothing arbitrary about limiting EGU’s to emission levels that reflect the goals for emissions
from affected sources based on that best system. If the state anticipates a certain level of emissions reduction might come from adjusting how EGU’s are dispatched, thereby reducing the utilization of a high

- emitting EGU, the state can put that emission limit on the EGU . That emission limit simply becomes one of the several factors that limit how an EGU gets dispatched. It would be no different than an EGU that is subject to a temperature limit in its NPDES permit under the Clean Water Act. If that limit constrains the g enerating capacity of the EGU on a hot day, it will not be able to dispatch as much electricity to the grid as it might unconstrained by environmental limits. If the state anticipates a certain level of emissions reduction might come from RE development, a nd imposes emission limits on its EGU’s in anticipation of those alternative energy supplies, those limits simply become another factor in how the EGU’s get dispatched. There is nothing beyond the affected sources’ control or “outside the fence line” that inhibits a source from complying with environmental limits on its operations. EPA’s analysis makes it clear that states have ample options available to adjust for these BSER

- based limits on
EGU’s.

Comment 9 : EE and RE measures may not be enforceable as a p ractical matter.

C ommenter s stated that challenges persist as to whether or not all DSM measures can meet the EPA's own general principle regarding enforceability that "a requirement that is enforceable as a practical matter is one that is quantifiable, v erifiable, straightforward, and calculated over as
short a term as reasonable." C ommenter s stated the EPA notes that "a plan that assigns responsibility to affected entities other than affected EGUs may be more challenging to61 implement and enforce" before further acknowledging that "it may be more challenging for a state to demonstrate that it has sufficient legal authority to subject such affected entities other than affected EGUs to the federally enforceable requirements specified in its state plan."
C omm enter s said implementing the increased regulatory requirements of the Clean Power Plan, as proposed, will likely result in commenters ’ organization's members incurring unnecessary costs and liabilities as this uncertainty is resolved over time. C ommenter s suggested that

t reatment of DSM programs as complementary measures would help avoid this result, while preserving the value these programs currently hold.

Response 9 : 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 final
rule preamble of the CPP , the EPA is not finalizing the portfolio approach, w hich 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 of the final rule preamble , if the state is adopting the state measur es 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 with longstanding practice under the Clean Air Act, if a regulated entity does not mee t a requirement,
the EPA will address the matter on a case

- by

- case basis, to determine the appropriate response
and resolution.

As proposed, we are requiring that state plans include a demonstration that plan measures are enforceable, which for state measu res plans is provided for in § 60.5780 and discussed in section
VIII.D.2.c.6 of the final rule preamble. T he existing guidance documents pertaining to enforceability include: (1) September 23, 1987 memorandum and accompanying implementing guidance, “Revie w 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 Energy Measures;” and (3) July 2012 “Roadmap f or Incorporating Energy Efficiency/Renewable Energy Policies and Programs into State and Tribal Implementation Plans, Appendix F.”

It should be possible for the state to track the success of these state measures with sufficient accuracy to anticipate wheth er the design assumptions behind its plan remain valid. In any case, the ultimate measure of the success of these complementary measures will be the emissions
measured from the affected EGU’s

, which should reduce consistent with the state’s design assumpti ons. It is relatively easy for EGU’s and the state to track carbon emissions, and they have been under the greenhouse gas reporting rule for years now.

Comment 10 : It is unclear what constitutes compliance or non

- compliance with RE and EE

programs; a clearer definition is required.62 C ommenter s stated, in some cases it is unclear what would constitute a "violation" warranting an enforcement action or how a court would enjoin that violation. C ommenter s said, for example, a state might assign responsibilit y for implementing Building Block 3 (increased renewable energy generation) to a third party, such as an electric distribution utility, and require that utility to invest a certain amount of money each year into new renewable energy development.
C ommenter s expressed concern whether there any guarantee that those investments will result in the required reduction in EGU CO2 emissions to render the state plan approvable. C ommenter s asked whether the utility demonstrate compliance with that obligation by simply making the required investments, or must it also show that the contemplated amount of renewable energy was produced as a result. C ommenter s questioned whether the utility would "violate" its obligation if new renewable energy capacity failed to materializ e, or if that renewable capacity was not utilized enough (e.g., due to variations in weather) to generate the contemplated amount of renewable energy. C ommenter s requested clarification on whether a court would enjoin that violation by requiring greater in vestments, or by requiring increased renewable generation.
C ommenter s questioned whether that the owners of renewable energy projects receiving investments under the state plan would also be "affected entities" subject to enforceable obligations requiring a minimum amount of generation each year. C ommenter s also asked if it they were affected entities, would it be a violation of that requirement if a solar or wind

- powered energy source did not meet its generation target because of insufficient sun or wind.

Response 10 : As explained in section VIII.D of the final rule preamble of the CPP , 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 requirem ents. How the state structures its plan will determine what constitutes a violation of the plan.

As proposed, we are requiring that state plans include a demonstration that plan measures are enforceable, which for state measures plans is provided for in § 60.5780 and discussed in section
VIII.D.2.c.6 of the final rule preamble. T he existing guidance documents pertaining to enforceability include: (1) September 23, 1987 memorandum and accompanying implementing guidance, “Review of State Implementation Plan s 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 Energy Measures;” and (3) July 2012 “Roadmap for Incorporating Energy Effici ency/Renewable Energy Policies and Programs into State and Tribal Implementation Plans, Appendix F.”

Comment 11 : There are enforceability limitations associated with the RE and EE measures under the "portfolio" approach.

C ommenter s stated whether a state has deregulated its electricity sector or has a binding RPS or EERS further limits state options under the portfolio approach. C ommenter s said the 21 states that currently do not have enforceable RPS and the 27 states that do not have mandatory EERS63 would be forced to implement RE and EE measures through integrated resource planning because the measures are not enforceable through a binding RPS or EERS; conversely, a state with a deregulated energy sector and binding RPS and EERS, like Arizona, would have t o rely on its RPS and EERS to incorporate EE and RE measures into its state plan. C ommenter s said a state that has a deregulated energy sector and no mandatory RPS or EERS, like Virginia, may not be able incorporate EE and RE measures into its state plan a t all unless it enacts mandatory RPS and EERS or partially regulates its energy sector. C ommenter s said despite EPA's assertion that the CPP accommodates a range of state energy regulatory structures through the portfolio approach, the portfolio approach o ffers states no flexibility in whether to regulate the energy sector and little flexibility in the means of regulating the energy sector. C ommenter s said EPA has not fully explained how EE, RE and redispatch measures included in state plans could be
enforc ed against entities that are not affected units under "portfolio approach." Commenter s said however, it is not clear that EPA or citizens can enforce state plan RE and EE measures against
such entities. Commenter s questioned if a RE company proposes to bui ld a new wind system but chooses not to do so because of economic reasons, how EPA or an environmental organization
would purport to bring an enforcement action

. C ommenter s requested clarification on if a third party service company (perhaps even a non

- governmental organization) contracts to provide EE services but achieves less conservation than expected, how would EPA really expect that it can bring an enforcement actions against the company and how EPA would enforce against the plan

. C ommenter s stated that EPA cannot bring an enforcement action against EGUs simply because they have relied on a state plan that proposes to achieve specific levels of RE and EE that were subsequently not achieved. C omme nter s added that regulating the RE and EE requirements of electric distribution utilities and EE providers would put EPA in the position of regulating retail electricity sales, over which the states have exclusive jurisdiction. EPA cannot enforce where it does not have jurisdiction.

Response 11 : First, as noted, EPA is not finalizing the portfolio approach, and the final guideline provides for state plan structures that ultimately rely on emission standard s on affected EGUs, while giving states the flexibil ity to pursue state measures to reduce those emissions. It is not necessary for states to adopt RPS or EERS programs in order for RE to become available to affected EGUs. Rather, the fact that RE will allow affected EGUs to achieve their emission
standards , coupled with the expected continued decline in prices of RE, will assure the availability of RE. Many commenters raised concerns about the ability of various states to adopt RPS or EERS programs, and therefore about the ability of the sources in those st ates, and those states, to comply with their section 111(d) obligations. However, as just noted, those RPS and EERS programs are not necessary for compliance with this rule , and if a state does choose to develop an RPS or EERS program, it is not necessary for the state to submit the program as an enforceable element of its state plan

. The state can choose to implement an emission standard type plan. As further described in section VIII of the preamble, the final rule provides
considerable discretion to th e states in setting emission standards and related plan requirements

.

Comment 12 : Demand

- side energy programs should be enforceable through citizen’s suit under
CAA section 304.64 C ommenter s stated one of the two options the EPA has proposed for implementing the program is called a "portfolio" approach, whereby the state itself is held responsible for measures such as
demand

- side energy efficiency programs and renewable portfolio standards. C ommenter s thinks
that to the extent a commitment to implement such programs is included in a State Implementation Plan for criteria pollutants, it could be enforced via a citizen's suit under CAA Section 304, as an "emission standard or limitation." 42 U.S.C. Section 7604(a)(1 ) as recognize d in cases such as CBE v. Deukmejian, 731 F. Supp. 1448; 1454 (N.D.Cal. 1990) reconsideration granted in part, 746 F. Supp. 976 (N.D. Cal. 1990}; Friends of the Earth v. Carey, 535 F. 2d. 165; 170 (2d. Cir. 1976); Am. Lung Ass'n. of N.J. V. Kean, 670 F. Su pp. 1285, 1289 (D. N.J. 1987); Bayview Hunter's Point Comty. Advocates v. Metro. Transp. Comm'n., 366 F. 3d 692, 670 (9th Cir. 2004).

Response 12 : The EPA is not finalizing the portfolio approach or the state commitment approach

.

Comment 13 : EPA should pr ovide additional guidance regarding what would be a n acceptable federally enforceable plan for RE and EE

.

Commenter s asked what is a federally enforceable plan for RE or EE measures? Commenter s said for example, is an RPS "federally enforceable", or will EPA require that it be named as a third party beneficiary under power purchase agreements in order to enforce them? Commenter s asked what if a state RPS allows for EE to satisfy part of the stan dard?

Commenter s asked what mechanisms EPA envisioned would be acceptable for states to propose in their plans to make energy efficiency projections and measures federally enforceable in states where deregulation has decoupled generation from distribution and delivery and the state has no existing statutory authority to enforce energy efficiency programs.

Commenters stated that EPA must address enforceability issues (e.g., for EE and RE programs) rather than leaving these issues for states to resolve.

Comm enter s stated that the Proposed Rule acknowledges that the plans EPA envisions would differ significantly from other types of Clean Air Act implementation plans and plans submitted under Section 111(d). C ommenter s stated that the Proposal, however, glosses over the unprecedented and arguably unlawful elements of each plan type, including measures that would be enforceable against entities other than affected EGUs and treating demand

- side energy efficiency (EE) and renewable energy (RE) requirements as "stan dards of performance" for the
affected EGUs. C ommenter s asserted that EPA must provide a more thorough analysis of these issues rather than simply leaving states to grapple with them.

Similarly, commenter s noted that EPA acknowledges "there may be challen ges to practically enforcing against some entities in the event of noncompliance" resulting from the untested nature65 of its Proposed Guidelines. 79 FR 34909. C ommenter s stated that there are serious legal problems with the enforceability of EPA's Proposed Guidelines. C ommenter s stated that indeed, the Plan TSD also acknowledges the enforceability challenges presented by the Proposed Guidelines, and according to the commenter, improperly suggests that it falls to states to resolve these questions. Plan TSD a t 13

- 19. C ommenter s argued that EPA cannot make enforceability a prerequisite to plan approval without first resolving these issues.

Response 13 : EPA is not finalizing the portfolio approach and, therefore, comments on the federal enforceability of RE or E E measures are moot. States may choose to develop state measures to promote RE or EE, but those programs would not be an approved part of the state plan or directly enforceable under it.

As discussed in section VIII of the preamble, after considering comme nts on the proposed portfolio approach, EPA is not finalizing that approach. Therefore, these comments to the extent they relate to the portfolio approach are moot. Instead of the proposed portfolio approach, EPA is finalizing an option to submit a “state measures” plan type, under which a mass CO2 emission goal may be partially or entirely achieved through state measures, that may include RE and EE

, and impose requirements on entities other than affected EGUs and that are not included in the federally enforceable 111(d) state plan, provided the state submits standards of performance for CO2 emissions from affected EGUs in the form of a federally enfo rceable “backstop” that would be triggered if the state measures fail to achieve the required CO2 emission performance level.
See section VIII.

The final rule provides considerable discretion to the states in setting emission standards and related plan req uirements for its affected EGUs. Consistent with longstanding practice under the Clean Air Act, if an affected EGU does not meet one of its requirements, regardless of whether or not its state has met its state requirements, the EPA will address the affec ted EGU’s violation

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.

As proposed, we are re quiring that state plans include a demonstration that plan measures are enforceable, which for state measures plans is provided for in § 60.5780 and discussed in section
VIII.D.2.c.6 of the final rule preamble of the CPP . T he existing guidance documents p ertaining to enforceability include: (1) September 23, 1987 memorandum and accompanying implementing guidance, “Review of State Implementation Plans and Revisions for Enforceability and Legal Sufficiency;” (2) August 5, 2004 “Guidance on SIP Credits for
Em ission Reductions from Electric

- Sector Energy Efficiency and Renewable Energy Measures;” and (3) July 2012 “Roadmap for Incorporating Energy Efficiency/Renewable Energy Policies and Programs into State and Tribal Implementation Plans, Appendix F.”66 Comment 14 : EPA should implement enforceable emissions targets, but should also allow programmat ic flexibility , including enforcement at the state or municipal level

.

Commenter s stated the EPA should implement enforceable emissions targets but allow programmatic flexibility. Commenter s said EPA is proposing that all measures relied on to achieve the emission performance level be included in the state plan, and that inclusion in t he state plan renders those measures federally enforceable. Commenter s said in light of current state programs, and of stakeholder expressions of concerns, including legal enforcement considerations, with respect to those programs, the EPA is proposing to authorize states either to submit plans that hold the affected EGUs fully and solely responsible for achieving the emission performance level, or to submit plans that rely in part on measures imposed on entities other than
affected EGUs to achieve at least part of that level, as well as on measures imposed on affected
EGUs to achieve the balance of that level. Commenter s said they do not take a position on any of the approaches put forth by EPA regarding the structure of state plans, but what is important i s that the EPA require states to commit to binding and verifiable emission reductions, while allowing states significant programmatic flexibility in achieving those reductions. Commenter s said EPA and states have much flexibility in the state plans, and c o mmenter s urged the EPA to take advantage of this flexibility and allow states to maintain autonomy over their emission reduction programs to the extent possible. Commenter s said states have shown that they can achieve significant reductions through a combi nation of programs and measures developed and managed at the state level. Commenter s said they are concerned that taking an overly prescriptive approach to enforcing state programs will render the programs less effective by exposing states to litigation ri sk and disrupting the administration of the programs by state agencies; therefore, commenter s suggested the EPA require states to commit to binding emission reductions, but allow states significant programmatic flexibility in achieving their reduction goal s.

Commenter s stated s imilarly, a federal enforcement scheme is not appropriate for Building
Blocks 3 and 4. Commenter s said for many years, the commenters ’ organization ha ve had RE and EE requirements in place for electric utilities. Commenter s stated the commenter's organizations ’ rules require the utilities to obtain commenters ’ organizations ’ approval for many aspects of these programs on at least a yearly basis. Commenter s said the evolving nature of both programs, including approval of various EE meas ures and RE projects, makes inclusion of these programs under a federal enforcement scheme highly problematic. Commenter s stated if state plans are forced to contain specific requirements on renewables and energy efficiency,
the commenters ’ organizations ’ ability to make appropriate changes to these programs and properly discharge its constitutional authority would be adversely impacted.

Commenter s stated agreement with the EPA that renewable energy and energy efficiency programs should be enforceable as a practical matter to be used for compliance. Commenter s said the question is which entity should be responsible for enforcement. Commenter s stated in the proposed CPP, the EPA asserts that elements in state plans must be enforceable by the state
and the fed eral government. 79 Fed. Reg. at 34,953

- 54 (proposed section 60.5780(f)(5)).
Commenter s stated this can raise serious issues for municipal regulators. Commenter s said for67 example, the city council is the entity responsible for managing the provision of pow er to its ratepayers, rather than the state public service commission. Commenter s said the city council is the entity that implements municipal programs in the energy efficiency and renewable energy fields, and the state public service commission has no au thority to enforce such programs in the city.

Commenter s stated this means that it is the city council, and not the state or the state public service commission, which implements, oversees and "enforces" municipal regulations relating to electricity (to th e extent they are enforceable and not voluntary programs or aspirational goals). Commenter s stated while the city council fully supports inclusion of a broad range of municipal programs in the CPP, it does not support having those programs implemented and
enforced at the state or federal level. Commenter s said such higher

- level oversight and
enf orcement is hardly appropriate for what are inherently local programs based on local factors, needs and expertise.

Commenter s stated rather than make such programs enforceable by the state or federal government (except to the extent they are state

- led prog rams), the proper implementation could be ensured by appropriate reporting and auditing requirements that could be written into the programs and implemented locally. Commenter s said moreover, a state which adopts in its plans such municipal programs need n ot "enforce" those programs in the traditional sense of policing compliance. Commenter s stated rather, the state could be held accountable by the EPA for reductions estimated to occur from those programs that are elements of state plans, and would be requi red to find reductions from elsewhere to cover any shortfalls in reductions ascribed to these municipal programs. Commenter s said this is similar to the way the EPA authorizes states to adopt voluntary programs for mobile source emission reductions and sta tionary source emission reductions as measures in state implementation plans ("SIPs") under Clean Air Act section 110.

Commenter s stated

, ultimately, the EPA should minimize the conditions and requirements it imposes on state programs, especially those ba sed on local implementation, as red tape and prolonged bureaucratic review can be a powerful disincentive to these programs. Commenter s said the EPA should give states and municipalities flexibility to determine appropriate mechanisms as long as a program can be effectively evaluated, monitored and verified.
Commenter s stated the EPA can certainly provide guidance to the states on how best to achieve these goals, but it should not take over enforcement.

Response 14 : See section IV.A of the final rule preamb le of the CPP for the EPA’s response to
this comment.

Comment 15 : EPA should carefully consider which elements of an allowance system must be federally enforceable in or der to satisfy it regulations, while maintaining operating space for state regulators.

Commenter s stated that EPA should carefully consider which elements of an allowance system must be federally enforceable in order to satisfy its regulations, while maintaining operating68 space for state regulators to flexibly address more granular market f unction issues. C ommenter s stated that de signing allowance systems is a complex task, requiring a significant state regulatory
effort to define how the allowance market will function

. C ommenter s stated that in California's experience, these market rules ha ve required careful elaboration and ongoing market monitoring, along with several sets of regulatory amendments over the past few years. C ommenter s did not believe that the full suite of regulatory efforts supporting state allowance systems necessarily

nee d be subject to federal enforcement if the systems are used as all or a portion of 111(d) compliance plan

- i.e., not every market rule need be subject to federal approval, or open entities to the possibility of federal citizen suit

. C ommenter s stated that such rigidity would make it difficult to adjust these rules as needed, and could impose undue compliance liabilities for market participants. C ommenter s stated that it is very important to the commenter to ensure that 111(d) requirements do not cause disru ptions to the existing economy

- wide carbon market, or to continued regulatory efforts to improve it, so U.S. EPA's confirmation that not all market structures need be federally enforceable is especially important

.

Instead, commenter s stated that EPA shoul d confirm that it will evaluate state plans with allowance system designs in accordance with the broad plan design and enforcement latitude that section 111 indicates is appropriate. Although they expect to continue to explore options with
EPA and stakehol ders, the commenter initially suggested that appropriately bounded enforceability designs might include a commitment to continue operating the system itself and (an obligation for covered EGUs to participate in the system as a federally enforceable obligat ion

- but not federal enforcement of more detailed state

- level allowance system rules. C ommenter s expected that EPA would carefully scrutinize any submitted allowance plan to ensure that it would produce the required reductions (in combination with other p rograms or on its own).
C ommenter s stated that allowance program designs need to be carefully reviewed to ensure, for instance, that they are not over

- allocated and that they will function effectively as markets and pollution reduction tools. C ommenter s st ated that such an approach could be appropriate if a state demonstrated to a reasonable certainty that market competition between entities and market design generally, in concert with complimentary measures reducing EGU emissions, demonstrate
that covered EGUs would not acquire sufficient allowances as to collectively exceed the 111(d) levels under a wide range of plausible market conditions. C ommenter s stated that upon such a demonstration, the underlying market rules would not be included in the plan, but a requirement that entities participate in the plan would be, along with a requirement that the state continue to operate the system as a whole

.

As a result, commenter s stated that EPA and citizens would have the authority to enforce the obligation to operate the market as against state agency officials (including via imposing a federal plan, if necessary), see 42 U.S.C. section 7411(d)(2)(A), and the requirement to participate in allowance programs against covered entities, see 42 U.S.C. sections 7411(d)(2)(B) and 7413 (EPA may enforce state plan requirements against covered entities).
C ommenter s stated

, however, EPA would not enforce compliance with p articular program rules; these rules would also not require direct EPA approval before amendment (unless rule changes significantly changed the compliance demonstration).69 C ommenter s stated that other designs may also be appropriate

. C ommenter s stated

, for instance, EPA may determine that additional EGU

- specific market design features are necessary in

economy

- wide carbon markets. If so, commenter s recommended that EPA work very closely with state officials to ensure that any such features do not disrupt the market as a whole, nor unwittingly cause reliability issues within the electrical grid. C ommenter s stated that the large emission reductions which efficient economy

- wide carbon markets provide should not inadvertently be compromised by sector

- specific sect ion 111 programs. C ommenter s stated that the goal, in considering the interactions between state allowance systems and the federal rules, should be to ensure that plans are "satisfactory" for federal compliance purposes without potentially significantly di srupting the continuing management and operation of state allowance systems. C ommenter s stated that in a sense, higher level federal enforceability of allowance systems is a variant of the "enforceable commitment" approach discussed below. C ommenter s
state d that states would be making a federally enforceable commitment to run an allowance system, with a particular emissions cap, but underlying program details would not themselves be federally enforceable (though a more general requirement for EGUs to partic ipate in the system might be ).

Response 15 : EPA agrees with some of the broad principles in this comment but does not necessarily agree with every recommendation. First, we agree that EPA has the authority to reasonably determine what requirements must be made federally enforceable in order for state plans to “provide for implementation and enforcement” of the standards of performance. For details p lease see the Legal Memorandum discussion of the state measures approach.

We have designed certain features of these guidelines, such as various state plan approaches
available under the state measures plan type and emission standards plan type , with the aim of accommodating existing state programs, such as allowance

- based tradi ng programs that cover a broader range of sources to meet the requirements of section 111(d)(1) with minimal disruption to those programs. See section VIII.J.2.d. However, we are not approving any state’s specific program in this action; we will act on a state submittal of its program through notice

- and

comment rulemaking.

For all state plan types, we are requiring a demonstration that the state plan will achieve the CO2 emission performance rates or the CO2 emission goals. In the case of a state measur es plan type, the plan must include a description of the state measures along with a demonstration that the state measures and any federally enforceable emission standards for affected EGUs will achieve the mass goals.

We are not finalizing a state commi tment approach. Instead, we are finalizing the state measures approach, which includes a federally enforceable trigger and backstop.

Comment 16 : Federal enforcement is critical for fair and consistent rule implementation and for rapidly reducing emissio ns.70 Commenter s said the history of air pollution control shows that it is only effective under the potential for federal enforcement; therefore, given the urgency of addressing climate change, the

commenter s believe d that federal enforcement is critical bo th for fair and consistent rule implementation and for rapidly reducing emissions that will impact our state.

Response 16 : EPA agrees it is important that requirements in a state plan must be federally
enforceable. EPA has not finalized the portfolio approach to state plan design. As the comments above indicate, it raised many questions about legal authority. 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 an affected EGU does not meet one of its requirements, regardless of whether or not its state has met its state requirements, the EPA will address the af fected EGU’s violation 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.

Comment 17 : If EPA makes RE and EE projects federally enforceable, then states would not have the flexibility they need; provisions such as force maje ure and cost caps would not be available in cases where they are needed

.

Commenter s stated that provisions such as force ma jeure and cost cap have not been accounted for in U.S. EPA's rule, and federally enforceable RE would not allow states the flexibility to apply such measures in cases when it is needed. C ommenter s said states would be locked into goals that do not account for real world changes and do not allow state agencies to fully utilize their knowledge regarding these measures and what is the most beneficial for the state.
C ommenter s said this further strengthens Ohio EPA's desire to keep measures like RE and EE as

state

- only programs. Commenters said states should have control over what programs are used to achieve state RE and EE goals and if a program becomes no longer economically beneficial or technically feasible, the state can freely chose to take appropriate action without a lengthy SIP revision or enforcement by U.S. EPA or a citizen's suit.

Commenter s stated in regards to implementing EE programs in the state, Ohio has the following language in ORC 4928.66 (2)(b): "The commission may amend the benchmarks set forth in division (A)(1)(a) or (b) of this section if, after application by the electric distri bution utility, the commission determines that the amendment is necessary because the utility cannot reasonably achieve the benchmarks due to regulatory, economic, or technological reasons beyond its
reasonable control." C ommenter s stated the U.S. EPA has afforded no similar opportunity for states to make adjustments that are warranted, yet used these very state programs to develop the goals. C ommenter s said the U.S. EPA must re

- evaluate the RE and EE goals, base them on all provisions provided in the indiv idual state RPS programs and provide needed flexibility for goals and state plans to be adjusted when warranted, without the need for anti

- backsliding provisions.

Response 17 : EPA is not finalizing the portfolio approach.71 Comment 18 : Commenters stated that under section 111(d)(2)(A), as with other SIP

- based obligations, Congress obligated EPA to act if a state does not: "The Administrator shall have the same authority ... to prescribe a plan for a State in cases where the State fails to submit a
satisfactor y plan as he would have under section [110(C)] in the case of failure to submit an implementation plan .... " Commenters said that whatever EPA requires must be something that it can lawfully do if the state does not. Commenters said that while EPA certain ly could adopt and impose emission limitations on "existing sources," it has no authority to prescribe state

- wide energy policy, as the proposal would direct the states to do for themselves. Commenters said that EPEC is not aware of any CAA provision that authorizes EPA to establish and enforce renewable portfolio standards, to direct dispatch decisions, to provide rebates for programmable thermostats, or to undertake any of the other notions that it has for Blocks 2

- 4 of its BSER.
Commenters said that thos e blocks are outside of the options delegated to EPA by Congress
under section 111.

Response 18 : See section IV.A of the final rule preamble of the CPP for the EPA’s response to
this comment.

Comment 19 : Accountability and enforceability of demand

- side EE is problematic and unsupported by the CAA.

Commenters stated, at the accountability stage, the inclusion of demand

- side energy efficiency programs becomes even more problematic and unsupported by the Clean Air Act. Commenters said, what if the retail cus tomers and homeowners integral to these programs do not act the way they are assumed or expected to? Commenters said, under the Clean Air Act, how can either these homeowners (who are not within the scope of 111(d)) or the existing carbon emitters (who

are within the scope of 111(d), but are not responsible for the actions of homeowners) be held accountable? Commenters said, indeed, most aspects of a homeowner's everyday life that affect his or her electricity consumption are not matters of interstate comme rce, much less the regulatory construct of the Clean Air Act.

Commenters stated, the Proposed Regulation's proposal for the States to resolve this dilemma and to assume accountability for enforcing activity beyond the bounds of the Clean Air Act is
unlawf ul. Commenters said, far from cooperative federalism, the Proposed Regulation unlawfully expands coverage of the Clean Air Act and commandeers significant state resources. Commenters said, shortly after the Proposed Regulation was issued, the Supreme Court of the United States overturned an aspect of the EPA's Tailoring Rule for reasons that apply no less to the Proposed Regulation. Commenters said, in Utility Air Regulatory Group, the Court stated, among other things, that:

• The fact that EPA's greenhouse

- gas

- inclusive interpretation of the PSD and Title V triggers would place plainly excessive demands on limited governmental resources is alone a good reason for rejecting it; but that is not the only reason. EPA's interpretation is72 also unreasonable because it would bring about an enormous and transformative expansion in EPA's regulatory authority without 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," 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 19 : See section IV.A of the fin al rule preamble of the CPP for the EPA’s response to
this comment.

1.11.3 Plans with state commitments

Comment 1 : The proposed s tate commitment approach conflicts with Congress’s intent that state plans be federally enforceable; EPA should require enfor ceability and accountability in state plans.

Commenters o pposed the state commitment approach. Commenters believed that state plans that

count non

- federally enforceable measures to reach the BSER would be illegal and contrary to the
Clean Air Act and argued that the EPA should reject them. Commenters argued the state commitment approach would conflict with Congress's intent that state plans must be federally enforceable by the EPA and citizens. C ommenters stated that enforceability and accountability

m ust remain strong to ensure that states do not falter implementing their plans in the face of political or economic pressure. Commenters urged the EPA to not allow states to use the state commitment approach because it would make states un acc ountable

. C omm enter s believed the state commitment approach would be unenforceable and would exclude the specific standards of performance from the federally enforceable state plan.

Commenter s stated that section 111(d)(1) specifically requires state plans to establish standards of performance and provide for their implementation and enforcement. C ommenter s argued Congress has not given the EPA authority to allow states to exclude standards of performance
and the EPA does not have plenary authority subject only to congr essional restriction. Railway
Labor Executives’ Association v. National Mediation Board, 29 F.3d 655, 670 (D.C. Cir. 1994) (en banc) ("agencies owe their capacity to act to the delegation of authority" from Congress). "Were courts to presume a delegation o f 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 the Constitution as well." Id. at 671. Commenter s stated that EPA's rationale that
it has authority to allow the state commitment approach because Congress has not prohibited the state commitment approach has no legitimate basis.

Commenter s stated that citizen enforcement under section 304 and 307 must be available, as it is for NAAQS. Citizen suits are an essential element of Clean Air Act enforcement and citizens are specifically authorized to sue to enforce "any requirement under [section 111] (without regard to7 3 whether such requirement is expressed as an emission standard or otherwise)". Com menter s said the EPA cannot issue any regulations in violation of this specific statutory requirement, and should expressly provide for citizen suit enforcement.

Commenter s argued the EPA must establish clear requirements for the contents of state plans to ensure that states commit not only to overall targets and standards, but also spell out precise and enforceable emissions reduction obligations, methods and timelines, and identify by name the sources responsible for obtaining those reductions. Commenter s stated in addition, state plans must contain monitoring, reporting and verification procedures. C ommenter s said this level of
detail in s tate plans is necessary to guarantee their enforceability

.

Commenter s stated the Clean Air Act contains all the proce dures necessary for the federal enforcement of state plans under section 111(d). Sections 111(d)(1) and 111(d)(2)(B) specifically refer to section 110 state implementation plans, or SIPs for national ambient air quality standards, and to section 113, which describes section 110 SIP enforcement procedures.
Commenter s said these statutory references give the EPA clear authority to enforce section 111(d) state plans in the same manner as SIP violations under sections 108 to 110. Commenter s stated that section 110 provides that state plans must include enforceable emission limitations and other control measures, means, or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), as well as schedules and timeta bles for compliance, as may be necessary or appropriate to meet the applicable requirements of this Act. 42 U.S.C. 7410(a)(2)(A). C ommenter s said the EPA reached these conclusions when it first considered section 111(d) plans in 1975

.

If states opt to rel y on actions by third parties to reduce emissions at power plants, commenter s argued that these obligations should become part of the approved state plans and therefore federally enforceable. Commenter s stated that state plans must name the responsible pa rties, set specific reduction targets, and be sufficiently detailed so that effective enforcement can take place. If a state implements a state plan that exceed federal requirements , commenter s argued
that the state would still have to identify the specifi c measures designed to meet the guidelines to ensure th ose measures are federally enforceable.

Commenter s thought the EPA included the state commitment approach in the proposal “to appease states, who desire to avoid accountability and want flexibility.”

Response 1 : As explained in section VIII of the final rule preamble of the CPP , the EPA is not finalizing the proposed portfolio approach or state commitment approach, and any comments on these proposed approaches to 111(d) state plan design are therefore moot . Instead, the EPA is finalizing an option to submit a “state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieved through state measures that impose requirements on
entities other than affected EGUs and that are not included in the federally enforceable 111(d) state plan, provided the state submits standards of performance for CO 2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be triggered if the state
measures fail to achieve the required CO 2 emission performance level. Under a state measures74 plan, the backstop emission standards constitute the standards of performance required by section 111(d), and the state plan provides for the implementation and enforcement of s uch standards of performance by specifying the trigger mechanism and conditions under which the backstop emission standards apply to affected EGUs. Upon EPA approval of a state measures plan under section 111(d), the backstop emission standards become fede rally enforceable requirements, which EPA and citizens may enforce against affected EGUs under section 113 and section 304 of the Act, respectively, once triggered and implemented to address a shortfall in

necessary emission reductions

. See section VIII

. The final emission guidelines require that all 111(d) state plans, including state measures plans, specify CO 2 emission monitoring, reporting and recordkeeping requirements for affected EGUs

, demonstrate that plan measures are enforceable, and contain the process, content and schedule for state reporting to the EPA on plan implementation and progress toward meeting the required
CO 2 emission performance level. For state measures plans in particular, the final emission guidelines also require states to submi t annual reports to the EPA that address periodic programmatic milestones to show progress in program implementation. See section VIII. The EPA intends to review each submitted state plan on a case

- by

- case basis to determine whether it satisfactorily addre sses the Act’s enforceability requirements. Final EPA action on any submitted 111(d) state plan, including a state measures plan, is subject to judicial review under section 307(b) of the Act.

Comment 2 : Commenters opposed the state commitment approach due to concerns the proposed

a pproach would make enforcement impractical.

Commenter s opposed the s tate commitment approach because they felt it raises practical enforceability issues. C ommenter s noted that if the stand ards of performance are not part of the state plan, then citizens and the EPA would have difficulty d etermin ing compliance with the
state commitment because citizens and the EPA would need to evaluate many different state programs and measures and independ ently challenge a state's claim that it has met the performance level. Commenter s argued that enforcement is more practical when citizens and the EPA can enforce specific, verifiable, and enforceable standards of performance identified in state plans.

Resp onse 2 : T he EPA is not finalizing the proposed state commitment approach and comments
on this approach to 111(d) state plan design are therefore moot . Instead, as explained in sect ion VIII of the preamble and above, the EPA is finalizing an option to submit a “state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieved through state measures that impose requirements on entities other than affected EGUs and that are not included in the federally enforceable 111(d) state plan, provided the state submits standards of performance for CO 2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be triggered if the state measures fail to achie ve the required CO 2 emission performance level. The state measures approach ensures that , if the state measures fail to achieve necessary emission reductions, the EPA and citizens can enforce backstop emission75 standards against affected EGUs , once the se ba ckstop requirements are triggered and implemented

.

Comment 3: C ommenters expressed support for the state commitment approach and asserted that state plans with state commitments would maintain appropriate level of federal enforceability while providing st ate s with greater flexibility to implement state programs

.

C ommenter s supported the state commitment approach because it would provide greater flexibility to states, while maintaining an appropriate level of federal enforceability. Commenters
believed the state commitment approach would enable states to conti nue to develop and implement effective and innovative energy policies that will support compliance with federal emissions targets. Commenters argued the state commitment approach ensures continuous

pro gress towards achieving the federal goals is legally binding, while still providing states with the flexibility to innovate and improve programs if necessary. Commenters also said the state commitment approach would avoid any undue federal enforceability o f the fine details of state allowance systems, by rendering the emissions reductions achieved by those systems federally enforceable, but not the system of measures used to meet the emission reductions. Commenter s stated that the state commitment approach would avoid any integration challenges between EPA's and the state's emissions enforcement responsibilities under the Clean Air Act, and the enforcement of state energy programs. Commenter s supported the state commitment approach
because it would focus fed eral enforcement on ensuring the state's compliance with its plan and would avoid transforming state policies and processes into federal programs.

Commenter s argued that states that select the state commitment approach would be subject to
federal and cit izen law suit s if the y fail to meet the ir commitments. C ommenters also n ote d that section 111(d) preserves EPA enforcement authority under 42 U.S.C. sections 7413 & 7414 where a state fails to "enforce the provisions" of its section 111(d) plan . In support of their arguments, commenter s also cited two court cases: (1) e.g., Citizens for a Better Environment v. Deukmejian, 731 F. Supp. 1448, 1457 (N.D. CCll. 1990) (explaining that citizen suits under 42 U.S.C. section 7604 are available to secure injunctive relief against state agency officials that fail to uphold enforceable commitments in a section 110 plan; and (2) B CCA Appeal Group v. U.S. EPA, 355 F.3d 817, 837, n.25 (5th Cir.2003) (collecting cases on state commitment enforcement).

Commenter s thought the state commitment approach would allow states to retain flexibility to administer their own programs in the most efficient and cost

- effective manner, without the complexities of unnecessary federal mandates, and avoid subjecting non

- EGU entities to multiple levels of regulation and enforcement authority. Commenter s noted under existing programs, California's EGUs and other affected entities already provide reports to state agencies and submit detailed information regarding their compliance with s tate mandates to reduced
emissions reductions. C ommenter s argued the imposition of additional and duplicative reporting requirements on the EGUs and affected entities would add no value to the EPA's proposal, but76 rather would only result in additional comp liance costs, and should be avoided. Commenter s said the reporting and verification obligations already required in California support a robust and comprehensive means by which the state would be able ensure its emission reduction
commitment under the Clea n Power Plan, without further burdening compliance entities.

Commenter s said the state commitment approach avoids potentially duplicative federal and enforcement processes for particular energy program designs and fine plan details which might otherwise m ake it difficult to continue to adjust State energy and climate programs as circumstances shift over the coming years. Commenter s thought the state commitment approach was important for maintaining state control over the energy programs and would allow the states to adapt programs to respond to new challenges. Commenter s thought the state commitment approach would allow states to expand a wide range of energy efficiency and renewable energy programs without freezing a particular suite of programs in place a nd rendering them federally
enforceable.

Commenter s argued that states understand the EPA will enforce commitments made under 111(d) should they fail to meet their commitments in a timely manner.

Commenter s said this alternative approach would avoid the legal issue associated with placing partial or full responsibility on entities other than EGUs

C ommenters thought the state commitment approach was consistent with cooperative federalism upon which the Clean Air Act is founded and urged the EPA to preserve the states' role as primary implementers of the 111(d) performance standards, as envisioned by the Act.

Response 3: The EPA is not finalizing the proposed state commitment approach and comments on this approach to 111(d) state plan design are therefore m oot. Instead, as explained in sect ion VIII of the preamble and above, the EPA is finalizing an option to submit a “state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieved through state measures that impose requirements on entities other than affected EGUs and that are not included in the federally enforceable 111(d) state plan, provided the state submits standards of perf ormance for CO 2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be triggered if the state measures fail to achieve the required CO 2 emission performance level. The state measures approach allows states to rely on
i mplementation of a wide variety of state

- administered programs in their 111(d) state plans without subjecting these programs to federal enforcement under the CAA. At the same time, the state measures approach ensures that if the state measures fail to achi eve necessary emission reductions, the EPA and citizens can enforce backstop emission standards against affected EGUs, once these backstop requirements are triggered and implemented.

Comment 4 : Commenters supported the proposed state commitment approach be cause it would reduce enforcement risks for EGUs and allow states to encourage, implement, and account for a number of programs and policies that could not otherwise be counted towards state goals.77 C ommenters supported the proposed state commitment approac h because it would reduce enforcement risks for EGUs and allow states to encourage, implement, and account for a number of programs and policies that could not otherwise be counted towards state goals.

Commenter s noted that if a state incorporates an RPS i n its entirety into its section 111(d) plan

, then all aspects of the RPS would become federally enforceable and open to citizen suits.
Commenter s stated that federal enforcement of programs that are outside the EPA's jurisdiction is not authorized by the C AA and creates greater enforcement risk for EGUs and other entities

. C ommenter s further observed that litigation by environmental group s h as increased in the last few years, with groups seeking energy policy objectives rather than righting a permitting or statutory infraction. Commenter s said this is evidenced by the multi

- million dollar efforts behind Sierra Club's "Beyond Coal" campaign, which the commenter believed was designed to "re place [dirty] coal with clean energy by mobilizing grassroots activists in local communities to advocate for the retirement of old and outdated coal plants and to prevent new coal plants from being
built." To illustrate their concerns, c ommenter s reference d several examples, including:

• December 2013 Sierra Club suit filed in U.S. District Court in Springfield that argu ed the

court should force more controls on the carbon sequestration FutureGen project

.

• Sierra Club suit against Mississippi Power's Kemper County Energy Facility where Kemper will use a technology known as "transport integrated gasification" ("TRIG") to convert lignite coal into natural gas and will use clean coal technologies to capture
carbon. Commenter s stated during the four years of leg al challenges Sierra Club sought $15 million in energy efficiency and clean energy investments to the state.

• Sierra Club "Beyond Gas" campaign which opposes fracking and the use of natural gas in
the United States.

Commenter s stated that EGUs affected by the proposed rule can anticipate continued litigation
over the use of fossil fuels in the U.S. and noted the CPP will become a new tool for environmental groups. Commenter s said incorporating state policies such as an RPS into a state plan would lead to a vast expansion of litigation and would lead to potential federal enforcement of every state approval process under every energy regulation. Commenter s thought federal
enforcement of an RPS would allow environmental groups to challenge business decisions th at these groups would otherwise have no standing to pursue. For this reason, c ommenter s thought the state commitment approach may be appropriate for states that wish to rely on state RE and
demand

- side EE programs but that do not w ant to include those prog rams in their state plans.
Commenter s said the state commitment approach may also encourage participation since third parties would no longer be concerned with subjecting themselves to federal enforcement.

Commenter s stated the EPA also proposed a modifie d variation of the state commitment approach, under which the state would credit the EGUs with the amount of emission reductions expected to be achieved from RE or demand

- side EE measures. Commenter s said the state would then assume responsibility for the credited amount of emission reductions. Commenter s stated78 while he agrees with this modified variation, the full state commitment approach provides greater flexibility.

Response 4 : As explained in section VIII of the final rule preamble of the CPP , the EPA is not finalizing the proposed portfolio approach, state commitment approach, or crediting approach, and any comments on these proposed approaches to 111(d) state plan design are therefore moot. Instead, as explained in section VIII of the final rule preamble and above, the EPA is finalizing an option to submit a “state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieved through state measures that impose requirements on entities other
than affected EGUs and that are not included in the federally enforceable 111(d) state plan, provided the state submits standards of performance for CO 2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be triggered if the state measu res fail to achieve the required CO 2 emission performance level. The state measures approach allows states to rely on implementation of a wide variety of state

- administered programs, including state renewable portfolio standards, in their 111(d) state pla ns without subjecting these programs to federal enforcement under the CAA. At the same time, the state measures approach ensures that if the state measures fail to achieve necessary emission reductions, the EPA and citizens can enforce backstop emission st andards against affected EGUs, once the se backstop requirements are triggered and implemented.

Comment 5 : State commitment approaches are well established and have been used for criteria pollutant regulations in section 110 (attainment area plans) and se ction 172 (non

- attainment area plans).

Commenter s supported the state commitment approach and argued that this approach is well
established. C ommenter s noted that the Clean Air Act explicitly recognizes the use of state
commitments in contingency planning for areas with extreme local criteria pollutant pollution problems and suggest s th is type of plan is appropriate for section 111(d) plans that address public health challenges across a broader geographic scope. Commenter s noted that both section 110 (for attainment plans) and section 172 (for nonattainment plans) endorse the use of a wide array of enforceable measures that clearly can include such commitments. C ommenter s said that
the U.S. EPA and the states have long used such commit ments for other criteria pollutant plans. See, e.g., 79 Fed. Reg. 52,526, 52,534 (Sept. 3, 2014) (endorsing enforceable commitments for nonattainment planning generally, per 42 U.S.C. section 7502(c)(6), as part of South Coast air district plan); 77 Fed. R eg. 12,562, 12,653

- 655 (Mar. 1, 2012) (enforceable commitment approval for San Joaquin air district); 76 Fed. Reg. 69,928, 69,941

- 45 (Nov. 9, 2011) (same for South Coast air district).

Response 5 : The EPA is not finalizing the proposed state commitment a pproach and comments on this approach to 111(d) state plan design are therefore moot. Instead, as explained in sec tion
VIII of the final rule preamble of the CPP and above, the EPA is finalizing an option to submit a “state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely79 achieved through state measures that impose requirements on entities other than affected EGUs and that are not included in the federally enforceable 111(d) state plan, provided the state
submits standa rds of performance for CO 2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be triggered if the state measures fail to achieve the required CO 2 emission performance level. The state measures approach allows states t o rely on implementation of a wide variety of state

- administered programs in their 111(d) state plans without subjecting these programs to federal enforcement under the CAA. At the same time, the state measures approach ensures that if the state measures f ail to achieve necessary emission reductions, the EPA and citizens can enforce backstop emission standards against affected EGUs, once these backstop requirements are triggered and implemented.

Comment 6 : Courts have upheld plans with enforceable commitments.

Commenter s supported the state commitment approach and noted that the federal courts have previously upheld plans with enforceable commitments. C ommenter s specifically mentioned the following court de cisions:

• Environmental Defense v. U.S. U.S. EPA, 369 F.3d 193, 208

- 10 (2nd Cir. 2004) (approving New York plan and holding that "[g]iven the breadth of the statutory language, U.S. EPA's decision to treat an enforceable commitment as a means or technique [of ensuring compliance] is reasonable and therefore should be upheld");

• BCCA Appeal Group v. U.S. U.S. EPA, 355 F.3d 817, 841 (5th Cir.2003) (approving Texas plan, holding that "U.S. EPA reasonably concluded that an enforceable commitment to adopt additi onal control measures on a fixed schedule was an 'appropriate' means, technique, or schedule or timetable for compliance under the statute" and noting that U.S. EPA had maintained this interpretation "[f]or over 20 years");

• Bayview Hunters Point Community Advocates v. Metro. Transp. Comm'n, 366 F.3d 692,
701

- 03 (9th Cir. 2004) (discussing whether a plan element was an enforceable commitment);

• Coalition Against Columbus Center v. City of New York, 967 F.2d 764 (2nd Cir. 1992) (considering implementation of such a commitment); and

• Citizens for a Better Environment v. Deukmejian, 731 F. Supp. at 1457 (analyzing enforceable commitments and holding that "the basic commitment to adopt and implement additional measures, should the identified conditions occur, cons titutes a specific strategy, fully enforceable in a citizens action, although the exact contours of those measures are not spelled out.").

Commenter s stated that courts and the EPA have found commitments appropriate for situations
where the state demonstra tes it is capable of fulfilling the commitment, the commitment covers a reasonable period of time, and the commitment "addresses a limited portion" of the plan, at least in the case where the state is committing to enact new programs. C ommenter s noted that the state80 must submits a "comprehensive and detailed plan" for its commitments, allowing U.S. EPA to "deem the proposals sufficient to make the necessary emission reductions." C ommenter s believed that the state commitment approach is appropriate for s ecti on 111(d) plans and noted
that these plans are significantly less constrained in some regards than the criteria pollutant plans
that U.S. EPA has previously considered. C ommenter s believed that Congress expected a high degree of state flexibility and that a broad approach to state commitments, including allowing commitments to cover a potentially larger portion of state plans, would be appropriate.

Response 6 : The EPA is not finalizing the proposed state commitment approach and comments on this approach to 111(d) state plan design are therefore moot. Instead, as explained in sect ion VIII of the preamble and above, the EPA is finalizing an option to submit a “st ate measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieved through state measures that impose requirements on entities other than affected EGUs and that are not included in the federally enforceable 111(d) state pla n, provided the state submits standards of performance for CO 2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be triggered if the state measures fail to achieve the required CO 2 emission performance level. The sta te measures approach allows states to rely on implementation of a wide variety of state

- administered programs in their 111(d) state plans without subjecting these programs to federal enforcement under the CAA. At the same time, the state measures approach ensures that if the state measures fail to achieve necessary emission reductions, the EPA and citizens can enforce backstop emission standards against affected EGUs, once these backstop requirements are triggered and implemented.

Comment 7 : State commitme nt approach would address legal issues related to extending federal
enforcement to RE and demand

- side EE programs that are currently controlled by state utility
commissions.

Commenter s supported the state commitment approach because it would allow state

re quirements for renewable energy and energy efficiency programs to be excluded federal oversight and enforcement. Commenter s said

, instead, the state plan would include an enforceable commitment by the state itself to implement state

- enforceable measures th at would achieve a specified portion of the required emission performance level on behalf of affected
EGUs. C ommenter s thought the state commitment approach would addresses the legal issues that could arise with extending federal enforcement renewable energy and demand

- side energy efficiency requirements that to date have been within the exclusive purview of state utility regulatory commissions.

Response 7 : The EPA is not finalizing the proposed state commitment approach and comments on this approach to 111(d) state plan design are therefore moot. Instead, as explained in sect ion VIII of the preamble and above, the EPA is finalizing an option to submit a “st ate measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieved through81 state measures that impose requirements on entities other than affected EGUs and that are not included in the federally enforceable 111(d) state pla n, provided the state submits standards of performance for CO 2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be triggered if the state measures fail to achieve the required CO 2 emission performance level. The sta te measures approach allows states to rely on implementation of a wide variety of state

- administered programs in their 111(d) state plans without subjecting these programs to federal enforcement under the CAA. At the same time, the state measures approach ensures that if the state measures fail to achieve necessary emission reductions, the EPA and citizens can enforce backstop emission standards against affected EGUs, once these backstop requirements are triggered and implemented

.

Comment 8 : Commenters expr essed concern that the state commitment approach may subject state utility regulatory commissions to federal enforcement and challenges brought by citizen groups for violations CAA violations.

Commenter s were concerned the sate commitment approach would subject state utility regulatory commission to federal enforcement and citizen lawsuits. Commenter s acknowledged
that the EPA has been willing to work with state regulators to address compliance concerns an d
reduce the risk of citizen lawsuits and noted that their state considered retaining state oversight of renewable energy and energy efficiency decisions to be important and to greatly outweigh the risk of potential citizen lawsuits. C ommenter s also noted that their state ha d a lot of experience implementing energy ef ficiency and renewable energy programs and was implementing a technical reference manual to better assure the integrity of demand

- side energy efficiency
investments and results. C ommenter s beli eved these efforts greatly limit the potential risk of
enforcement claims.

Response 8 : The EPA is not finalizing the proposed state commitment approach and comments on this approach to 111(d) state plan design are therefore moot. Instead, as explained in sec tion VIII of the preamble and above, the EPA is finalizing an option to submit a “state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieved through state measures that impose requirements on entities other th an affected EGUs and that are not included in the federally enforceable 111(d) state plan, provided the state submits standards of performance for CO 2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be triggered if the state measures fail to achieve the required CO 2 emission performance level. The state measures approach allows states to rely on implementation of a wide variety of state

- administered programs in their 111(d) state plans without subjecting these progr ams to federal enforcement under the CAA. At the same time, the state measures approach ensures that if the state measures fail to achieve necessary emission reductions, the EPA and citizens can enforce backstop emission standards against affected EGUs, on ce these backstop requirements are triggered and implemented.

Comment 9 : Commenters supported the state commitment approach but expressed concern
about EPA imposing penalties on states that fail to meet goals.82 Commenter s supported the state commitment approach

, but recommended the EPA not impose penalties on states that fail to meet milestones, interim goals, or final goals

. C ommenter s stated
the state's Environment Department does not have and does not intend to seek authority for
enforcement of items such as renewable portfolio standards and energy efficiency resource standards (EERS). However, commenter s stated that they will continue to work closely with
those state agencies that have authority in these areas

. C ommenter s stated that it is not

appropr iate for the EPA to have federal authority over the actions of other agencies within the state such as the Public Regulation Commission. Instead, commenter s stated that it is appropriate for the EPA to enforce upon the State and for the State to work with those agencies in determining how to correct any deficiencies in meeting State goals. Rather than imposing penalties on states, commenter s recommended the EPA f ollow a process similar to a "SIP Call" wherein, if a state fails to meet a milestone or goal as outlined in its state plan and corrective measures are not included in the plan, the EPA will notify the state that it must revise the plan to make up for the deficiency and to meet the milestone or goal. I f the state fails to do so,

commenter s noted the EPA co uld then issue a federal implementation plan. C ommenter s argued that the “SIP Call” approach would be beneficial since it would ensure corrective actions are
take n

.

Response 9 : The EPA is not finalizing the proposed state commitment approach and comments on this approach to 111(d) state plan design are therefore moot. Instead, as explained in sect ion VIII of the preamble and above, the EPA is finalizing an option to submit a “st ate measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieved through state measures that impose requirements on entities other than affected EGUs and that are not included in the federally enforceable 111(d) state pla n, provided the state submits standards of performance for CO 2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be triggered if the state measures fail to achieve the required CO 2 emission performance level. The sta te measures approach allows states to rely on implementation of a wide variety of state

- administered programs in their 111(d) state plans without subjecting these programs to federal enforcement under the CAA. At the same time, the state measures approach ensures that if the state measures fail to achieve necessary emission reductions, the EPA and citizens can enforce backstop emission standards against affected EGUs, once these backstop requirements are triggered and implemented.

Comment 10 : EPA should inc lude provisions clarifying the extent of federal jurisdiction to ensure enforcement is limited and other measures not included in state plans are not subject to
federal enforcement.

Commenter s expressed concern about the federal jurisdiction for requirements that are not included in state commitment plans. Commenters noted that measures that achieve the state goals, and measures applicable to non

- EGUs should be enforceable solely by the state, a nd not the EPA, even to the extent that they impact "affected entities." C ommenter s recommended the EPA include provisions in the final rule that clarify in the final rule the extent of the federal jurisdiction, and ensure that federal enforcement is limit ed and only invoked in instances where83 the state has violated its own plan or refuses to enforce state plan provisions. Commenter s w ere

concern ed that state

- level RPS and EE requirements (such as California's RPS) would become federally enforceable against municipalities and public power entities if the state decided to use the state commitment approach. C ommenter s believed that a major advantage of the state
commitment approach is that it could a void imposing federal energy regulatory obligations on
munici palities and public power entities.

Although commenter s were generally supportive of the state commitment approach, they suggested the EPA provide additional details o n how this approach would work, confirm that the state commitment approach would be appro vable

, and clarify what aspects of the state commitment, if any, would be federally enforceable and on which entity. Commenter s also
recommended the EPA clarify that any state that commits to meet its goal through a combination of measures to be implemente d by municipalities and public power entities would not be required to make any aspect of those state measures subject to federal enforcement, even if those measures are referred to in state plans as evidence that the state will meet its state emission goa l.
C ommenter s emphasized that the EPA and citizens should be limited to bringing enforcement actions against the state itself in cases where the state fails to meet the RE target prescribed by the state plan and that RPS, EE, and other state programs should be enforceable only under state
law

.

Commenter s noted that Oregon may choose to develop a state plan using the "portfolio approach" identified by EPA, and use the planned Boardman retirement, the state RPS program, and state efficiency efforts to meet its Clean Power Plan goals. C ommenter s stated that the EPA should clarify that such a construct would make Oregon's commitment to achieve the emissions goals subject to federal law, but would not make the underlying RPS and energy efficiency

programs themselves subject to federal law.

Response 10 : As explained in section VIII of the final rule preamble of the CPP , the EPA is not finalizing the proposed portfolio approach or state commitment approach, and any comments on these proposed approaches to 11 1(d) state plan design are therefore moot. Instead, the EPA is finalizing an option to submit a “state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieved through state measures that impose requirements on
entiti es other than affected EGUs and that are not included in the federally enforceable 111(d) state plan, provided the state submits standards of performance for CO 2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be t riggered if the state measures fail to achieve the required CO 2 emission performance level. The state measures approach allows states to rely on implementation of a wide variety of state

- administered programs in their 111(d) state plans without subjecting these programs to federal enforcement under the CAA. At the same time, the state measures approach ensures that if the state measures fail to achieve necessary emission reductions, the EPA and citizens can enforce backstop emission standards against affect ed EGUs, once these backstop requirements are triggered and implemented . Under the final emission guidelines, only affected EGUs have federally enforceable obligations under a 111(d) state plan. See section VIII.84 Comment 11 : State commitments approach would not prevent improper interference in areas that are traditionally regulated by states. EPA seeks to avoid the appearance of such federal interference through the state commitment approach , but does not address how programs designed to meet the state goals can be left out of state plans

. Commenters were concerned about federal interference in areas of state jurisdiction and argued that the state commitment approach does not allay their concerns. Commenters stated that the
E PA had not addressed how elements necessary to ensure that state plans are implemented could be left out of state plans. Commenter s stated that the state commitment approach would not avoid EPA interference in areas that are traditionally regulated only by states argued that EPA was trying “to avoid the appearance of such interference. ”

Response 11 : As explained in section VIII of the final rule preamble of the CPP , the EPA is not finalizing the proposed state commitment approach, so any comments on this approach to 111(d) state plan design are moot. Instead, the EPA is finalizing an option to submit a “state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieved through state measures that impose requirements on en tities other than affected EGUs and that are not included in the federally enforceable 111(d) state plan, provided the state submits standards of performance for CO 2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be triggered if the state measures fail to achieve the required CO 2 emission performance level.

The state measures approach allows states to rely on implementation of a wide variety of state

administered programs in their 111(d) state plans without subjec ting these programs to federal enforcement under the CAA. Under the state measures approach, the backstop emission standards constitute the standards of performance required by section 111(d), and the state plan provides for the implementation and enforcem ent of such standards of performance by specifying the trigger mechanism and conditions under which the backstop emission standards apply to affected EGUs. Upon EPA approval of a state measures plan under section 111(d), the backstop emission standards bec ome federally enforceable components of the state plan. See
section VIII.

Comment 12 : What enforcement measures w ould EPA be able to take against states that fail to
meet their state commitments?

Commenter s questioned what would happen if a state fails to meet its commitment . Specifically,

commenter s asked what remedies the EPA would have to help the state get back on track

. C ommenter s also asked what types of contingencies and backstops state planners should
consider for state plans using th e state commitment approach.85 Response 12 : As explained in section VIII of the final rule preamble of the CPP , the EPA is not finalizing the proposed state commitment approach, so any comments on this approach to 111(d) state plan design are moot.

Comment 1 3 : EGUs should not be held responsible if states choose the "state commitment approach" for control measures that are beyond their control, such as RE and demand

- side EE

programs.

Commenter s thought the EPA should ensure that only those entities w ho have full control over the reduction measure(s) be held responsible for meeting those requirements for entities in states with state commitment plans

. Specifically, c ommenter s noted that if a state chooses to require a specific level of RE generation in its compliance plan, the n owners/operators of an affected fossil
fuel

- fired EGU with no control over the RE resources should not be responsible for meeting the RE generation goal. Commenter s recommended that affected EGUs should not be held responsible if states choose the "portfolio approach" or the "state commitment approach" for control measures that are beyond their control, including RE and demand

- side EE programs.

Response 1 3 : As explained in section V .B and VIII of the final rule preamble of the CPP , the EPA is not finalizing the proposed portfolio approach or state commitment approach, and any comments on these proposed approaches to 111(d) state plan design are therefore moot. Instead,
the EPA is fin alizing an option to submit a “state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieved through state measures that impose requirements on entities other than affected EGUs and that are not included in the feder ally enforceable 111(d) state plan, provided the state submits standards of performance for CO 2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be triggered if the state measures fail to achieve the required CO 2 em ission performance level. The backstop provision would impose enforceable obligations on the affected EGUs only if triggered by a state plan’s failure to achieve necessary CO 2 emission reductions.

The state measures approach allows states to meet the stat utory requirements of section 111(d) while accommodating the wide range of regulatory requirements and other programs that states have deployed or will deploy in the electricity sector that reduce CO 2 emissions from affected EGUs, such as RE and demand

- sid e EE programs.

Comment 1 4 : Commenters expressed concern that the state commitment approach would lead to attempts by citizen groups to dictate state actions through enforcement actions.

Commenter s were concerned that the proposed state commitment approa ch would result in EPA or citizens potentially bring ing suit against the state for violating the CAA if RE and demand

side EE measures were not implemented

. C ommenter s were concern ed that citizen groups would attempt to dictate state actions either through enforcement actions or the threat of such actions.

Response 1 4 : The EPA is not finalizing the proposed state commitment approach and comments on this approach to 111(d) state plan design are therefore moot.86 Comment 1 5 : Commenters questioned how the EPA would take federal enforcem ent action against a state that takes obligations u pon itself and e xpressed concern that EPA may be abdicating enforcement to third parties, thereby creating less flexibility and greater uncertainty for the power sector.

Commenter s questioned how the EPA would prosecute a federal enforcement action against a state that took obligations upon itself in a state

- based portfolio approach. Commenter s were concerned t he proposed rule would rely on citizen suits for enforcement an d felt that the EPA

was a bdicating enforcement to third parties , which they believed would result in a loss of flexibility and increased regulatory certainty for long

- term power planning.

Response 1 5 : As explained in section V.B and VIII of the final rul e preamble of the CPP , the EPA is not finalizing the proposed portfolio approach or state commitment approach, and any comments on these proposed approaches to 111(d) state plan design are therefore moot. Instead,
the EPA is finalizing an option to submit a “state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieved through state measures that impose requirements on entities other than affected EGUs and that are not included in the federally enforceable 111(d) stat e plan, provided the state submits standards of performance for CO 2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be triggered if the state measures fail to achieve the required CO 2 emission performance level. The state measures approach allows states to rely on implementation of a wide variety of state

administered programs in their 111(d) state plans without subjecting these programs to federal
enforcement under the CAA. At the sam e time, the state measures approach ensures that if the state measures fail to achieve necessary emission reductions, the EPA and citizens can enforce backstop emission standards against affected EGUs, once these backstop requirements are triggered and imp lemented. See section VIII.

Comment 1 6 : EPA should provide guidance to regional offices for the review and approval of state plans that use the state commitment approach; guidance is essential for ensuring consistency.

Commenter s supported the state commit ment approach but recommended the EPA provide guidance to regional offices for the review of these plans to ensure consistency across the regions.

Response 1 6 : The EPA is not finalizing the proposed state commitment approach, so comments
on this approach to 111(d) state plan design are moot . The EPA is prepared to work with states to assist them in developing state plans that satisfy the requirements of section 111(d) through the emission standards approach and/or state measure s approach

.

Comment 1 7 : EPA must ensure the state commitments are federally enforceable.

Commenter s cautioned that state plans that contain state commitments should be crafted in a way
that ensure s enforceability against the states. Commenter s said for example, a state commitment87 tha t is dependent on passage of state legislation or administrative rules would be unacceptable given the inability of the implementing agency to ensure passage of such laws.

Response 1 7 : The EPA is not finalizing the proposed state commitment approach, so co mments on this approach to 111(d) state plan design are moot

.

Comment 1 8 : Commenter s said that, EPA suggests that States subject themselves to EPA enforcement authority. Commenter s said, this course of action would raise non

- entrenchment
issues. Commenter s said, it is not clear that the necessary political support exists for such prospective waivers of the Eleventh Amendment.

Response 1 8 : The EPA is not finalizing the proposed st ate commitment approach, so comments on this approach to 111(d) state plan design are moot.

Comment 19: EE and RE measures should be federally enforceable. EPA's proposal to substantially undermine, or eliminate completely, federal enforceability violates the Clean Air
Act.

Commenters stated the EPA proposes to allow states to exclude measures from state plans under the portfolio approach and make a commitment to achieve a specified portion of the required emission performance level on behalf of EGUs. Comme nters said as described below, states may not exclude any measures by which states will achieve the state performance goal. Commenters stated nor may states simply commit to achieving the performance goal. Commenters said the EPA acknowledges that its prop osals stem from states' desire to avoid federal enforceability.

Commenters stated the EPA's proposals miss the point here. Commenter said Congress requires that the plans and standards of performance be federally enforceable. Commenters stated

moreover, Congress wants citizens to be able to enforce the standards of performance and any requirement under section 111. Commenters stated just because states want a section 111(d) rule that excludes some or all of the strategies designed to achieve the performan ce goals, that desire does not justify eviscerating enforceability. Commenters said for the reasons described below, the EPA's proposal to substantially undermine, or eliminate completely, federal enforceability
violates the Clean Air Act.

Commenters state d under section 111(d)(1), the EPA "shall establish a procedure similar to that provided by section 110." 42 U.S.C. section 7411(d). Commenters said plans submitted under section 110 must include enforceable emission limitations and other control measures, means, or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), as well as schedules and timetables for compliance, as may be necessary or appropriate to meet the applicable requirements of this Act ." Commenters stated Congress specifically authorized citizens to enforce EPA

- approved plans required by section 110. Commenters said Congress also authorized citizens to enforce "any requirement under section 111 or 112 (without regard to whether such req uirement is expressed as an emission standard or88 otherwise)." Commenters stated the EPA correctly states that "that all measures relied on to achieve the emission performance level be included in the state plan, and that inclusion in the state plan renders those measures federally enforceable." Commenters said this statement is consistent with section 110(a)(2)(A), Bayview, and El Comit, para el Bienestar de Earlimart v. Warmerdam, 539 F.3d 1062 (9th Cir. 2008). Commenters stated the EPA then illegally prop oses to evade federal enforceability.

Commenters stated under the "portfolio approach," the EPA proposes to allow states to utilize renewable energy ("RE") and demand

- side energy efficiency ("EE") measures from the state plans. Commenters said such measure s must be federally enforceable, including verifiable by citizens and enforceable as a practical matter. Commenters said the EPA discusses, and appears to propose, that states may exclude these portfolio approach measures from the state plans and
thus fede ral enforceability. Commenter s stated Section 111(d)(1) does not authorize the EPA to permit states to exclude measures from state plans. Commenters stated Section 111(d)(1) specifically requires states to submit plans that establish "standards of performa nce for any existing source" and "provides for the implementation and enforcement of such standards of performance." Commenters said Sections 111 and 302 define "standard of performance." Commenters stated Congress required 111(d) state plans to include th ese emissions standards and spoke directly to the issue. Commenters said Section 111(d)(2)(B) also specifically mandates that the EPA have the same authority to enforce such plans under sections 113 and 114 with respect to State Implementation Plans requir ed by section 110. Commenters said the EPA concedes that allowing states to exclude standards of performance from the plans would render them unenforceable. 79 Fed. Reg. at 34902. Commenters stated adopting the portfolio approach and allowing states to exc lude any standards, including RE and EE measures, violates section 111(d)(1) and 111(d)(2)(B).

Commenters stated for these reasons and because the EPA must adopt a procedure similar to that required under section 10, 42 U.S.C. section 7411(d)(1), the EPA h as no authority to allow states to exclude measures from their state plans. Commenters said to ensure enforceability, states must submit measures to the EPA and demonstrate that the measures produce quantifiable, verifiable,

non

- duplicative, permanent, and enforceable reductions.

Response 19 : As explained in section V.B and VIII of the final rule preamble of the CPP , the EPA is not finalizing the proposed portfolio approach and any comments on th at proposed approach to 111(d) state plan design are therefor e moot. Instead, the EPA is finalizing an option to submit a “state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieved through state measures that impose requirements on entities other than
affected EGUs and tha t are not included in the federally enforceable 111(d) state plan, provided the state submits standards of performance for CO 2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be triggered if the state measures fail to achieve the required CO 2 emission performance level. Under a state measures plan, the backstop emission standards constitute the standards of performance required by section 111(d), and the state plan provides for the implementation and enforcement of such standards of performanc e by specifying the trigger mechanism and conditions under which the backstop emission standards89 apply to affected EGUs. Upon EPA approval of a state measures plan under section 111(d), the backstop emission standards become federally enforceable requireme nts, which EPA and citizens may enforce against affected EGUs under section 113 and section 304 of the Act, respectively, once triggered and implemented to address a shortfall in necessary emission
reductions. See section VIII.

The final emission guideli nes require that all 111(d) state plans, including state measures plans, specify CO 2 emission monitoring, reporting and recordkeeping requirements for affected EGUs, demonstrate that plan measures are enforceable, and contain the process, content and sched ule for state reporting to the EPA on plan implementation and progress toward meeting the required
CO 2 emission performance level. For state measures plans in particular, the final emission guidelines also require states to submit annual reports to the EPA that address periodic programmatic milestones to show progress in program implementation. See section VIII. The EPA intends to review each submitted state plan on a case

- by

- case basis to determine whether it satisfactorily addresses the Act’s enforceabili ty requirements. Final EPA action on any submitted 111(d) state plan, including a state measures plan, is subject to judicial review under section 307(b) of the Act.

Commenters argue that the language of section 304 of the Act necessarily requires that ev ery collateral measure a state takes in order to reduce CO2 emissions from affected EGUs must be made federally enforceable through section 304. We disagree. In relevant part, section 304(a) provides that “any person may commence a civil action on [their] own behalf against any person ... who is alleged to have violated (if there is evidence that the alleged violation has been repeated) or to be in violation of an emission standard or limitation under this chapter .”
“Emission standard or limitation under th is chapter” is defined in relevant part in section 304(f) as “any requirement under section [111] ... (without regard to whether such requirement is expressed as an emission standard or otherwise) ... which is in effect under this chapter.” In turn, the rele vant “requirement[s] under section 111 ... which are in effect under this chapter” are those in a state plan that are necessary to satisfactorily “provide for ... enforcement” of the standards of performance.

Because the phrase “provide for ... enforcement” is ambiguous, EPA has been delegated authority to interpret what elements in a state plan are necessary to satisfactorily provide for enforcement of the standards of performance. Under the emission standards plan type, those requirements are the emission st andards on affected EGUs along with the associated monitoring, recordkeeping, and reporting requirements that ensure enforceability. Under the state measures plan type, those requirements are the trigger and the backstop. The backstop must satisfy the

sa me enforceability criteria as the emission standards in an emission standards plan type. The trigger must be capable of being activated by EPA and citizens. Details of the interpretation of section 111(d)(1) with respect to the state measures approach a re provided in the Legal
Memorandum.

Finally with respect to section 304, we note that a requirement in a state plan is not federally enforceable until EPA has approved it as part of the federally enforceable plan. In other words, measures in a state p lan are not “in effect under this chapter” for the purposes of section 30490 until EPA has made them part of the federally enforceable plan. As a result, under the emission standards plan type, the emission standards and associated monitoring, recordkeeping , and reporting that EPA has approved into the federally enforceable plan are “requirements under section 111 which are in effect under this chapter,” and are thus enforceable under section 304. Under the state measures plan type, the trigger and backstop are approved into the federally enforceable and are therefore “requirements under section 111 which are in effect under this chapter” and are thus enforceable under section 304.

With respect to section 110(a)(2)(A) , as explained in section VIII of the p reamble section 110(a)(2)(A) explicitly requires that SIPs “include enforceable emission limitations.” Thus, section 110(a)(2)(A) is inapposite. While section 111(d)(1) does require “similar” procedures to section 110, it does not require the “same” proc edures, again as explained in section VIII of the preamble. As also explained in the preamble, substantive requirements in section 110, such as that in section 110(a)(2)(A), do not directly apply; however EPA may adopt analogous substantive requirements i f doing so would be reasonable in light of the purposes of section 111(d)(1). In this case, EPA is reasonably interpreting the language “provide for implementation and enforcement” as allowing the state measures approach and not requiring every collateral measure aimed at reducing CO2 emissions from affected EGUs to be made federally enforceable under section 304. If anything, the cases cited by the commenter, Bayview Hunters Point Community Advocates v. Metropolitan Transp.Comm’n , 366 F.3d 692, 695 (9th C ir. 2004) and El Comité para el Bienestar de Earlimart v. Warmerdam , 539 F.3d 1062 (9th Cir. 2008), support the state measures approach, as they support the enforceability of the trigger through section 304.

Comment 20 : EPA should limit federal enforceab ility to a state's commitment to form (i.e., rate or mass), timeframe, and a narrower categorization of affected entities.

C ommenter s opposed requiring specific state plan provisions, such as targeted performance under individual building blocks or specific state programs, to be federally enforceable.
C ommenter s stated u nless otherwise requested by a state, the EPA should consider to be federally enforceable only a state's commitment to achieve progress in the form (e.g., rate, mass) and over the timeframe the state submits and the EPA approves. C ommenter s stated such a requirement could expose specific programs or projects, such as gas dispatch, energy efficiency or renewable energy projects, to the threat of federal enforcement or citizen suit. C ommenter s stated such an enforcement risk would be wholly inappropriate for state energy planning and states should be permitted to avoid this risk for projects implemented to achieve CPP

- mandated
reductions. C ommenter s said a commitment approach is particularly important where states cannot guarantee specific dispatch outcomes nor ensure the success of specific renewable energy
or demand

- side ef ficiency strategies. C ommenter s stated the EPA acknowledged similar concerns and has asked for comment on a "state commitment approach" to including energy efficiency and renewable energy in state plans. C ommenter s said the EPA and the states have
consider able experience with such an approach, and under CAA section 110, the EPA has
allowed states to include limited commitments in SIPs in certain circumstances instead of91 specific adopted measures. C ommenter s stated that courts have upheld the EPA's authority under the CAA and the EPA's regulations to approve a SIP containing an enforceable commitment to adopt unspecified control measures.

Response 20 : As explained in section V.B and VIII of the final rule preamble of the CPP , the EPA is not finalizing the pr oposed portfolio approach or state commitment approach, and any comments on these proposed approaches to 111(d) state plan design are therefore moot . Instead,
the EPA is finalizing an option to submit a “state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieved through state measures that impose requirements on entities other than affected EGUs and that are not included in the federally enforceable 111(d) state plan, provided the state submits standards of perf ormance for CO 2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be triggered if the state measures fail to achieve the required CO 2 emission performance level. The state measures approach allows states to rely on i mplementation of a wide variety of state

administered programs in their 111(d) state plans without subjecting these programs to federal enforcement under the CAA, while ensuring that the EPA and citizens can enforce backstop emission standards against affe cted EGUs once these are triggered and implemented to address a shortfall in necessary emission reduction s.

1.11.4 Ongoing applicability of CAA Section 111(d) state plan

Comment 1: Commenters argued that under the CAA a source is either “existing” or “n ew” and that Section 111(d) cannot apply to sources subject to section 111(b) and to apply both section 111(d) and 111(b) to a source is inconsistent with the CAA. Section 111(b) and 111(d) should be mutually exclusive.

Commenter s stated t he critical fact then is that once an existing source is modified or reconstructed, it ceases to be an existing source subject to section 111(d) and becomes a new source subject to 111(b). Commenter s said

, under the CAA, a source is either "existing" or it is "new"; it can not be both at the same time. Commenter s stated

, moreover, under its explicit terms, section 111(d) may not apply to sources subject to section 111(b). Commenter s said

, because the EPA's proposal ignores this clear statutory language, the Proposed Rule mus t be withdrawn and

re

- proposed to conform to the clear statutory language of CAA section 111.

Commenter s stated that it is inconsistent with the CAA to subject units that are modified or reconstructed after the effective date of a state or federal section 111(d) plan to both programs, and noted that a unit is either new or existing, but cannot be both simult aneously. Commenters noted, if a unit is modified or reconstructed after state plan approval, the unit would no longer be subject to existing source requirements.

Commenter s stated EPA's proposal would unlawfully subject modified and reconstructed sources to standards of performance under both Sections 111(b) and 111(d). Commenter s said under the92 plain meaning of Section 111, these standards of performance are mutually exclusive and cannot both be applied to the same source: A source cannot simultaneously b e "new" and "existing."
Commenter s said EPA's proposed justifications for continuing to regulate modified and reconstructed sources under Section 111(d) are unreasonable, and even if EPA's underlying factual assumptions are correct, this merely underscores the legal and practical defects in the proposed rule. Commenter s said to the extent that EPA's proposed regulations are incompatible with the plain meaning of the Clean Air Act, it is EPA's proposal that must yield.

Commenter s stated that EPA proposes tha t units that become "modified" and therefore "new" sources after a state plan is adopted and goes into effect will remain subject to the requirements of the state plan, and at the same time be required to comply with the recently proposed
standards under s ection 111(b). Commenter s said this result is precluded by the plain language of the statute, which contains definitions for "new" and "existing" sources that are mutually
exclusive.

Commenter s stated Congress' intent here is further underscored by the language of Section 111(d), which authorizes States to impose standards of performance only on sources "to which a standard of performance would apply if such existing source were a new source." 4 2 U.S.C. Section 7411(d)(1) (emphasis added). Commenter s said the contingent nature of this provision makes clear that States cannot impose standards of performance under Section 111(d) on new sources which are in fact subject to standards of performance u nder Section 111(b). Commenter s said the fact that Section 111(d) does not expressly state that standards of performance no longer apply after modification or reconstruction, 79 Fed. Reg. at 34,904, is of no moment: "A statutory 'provision that may seem am biguous in isolation is often clarified by the remainder of the statutory scheme.'" UARG, 134 S. Ct. at 2442 (quoting United Sav. Ass'n of Tex., 484 U.S. at 374). Commenter s said here the definitions themselves make clear that regulation under Sections
111 (b) and 111(d) must be mutually exclusive. Commenters noted that the regulatory structure of Section 111 further underscores the mutually exclusive nature of Sections 111(b) and (d).
Commenter s said Section 111(b) authorizes EPA to regulate new sources whi le Section 111(d) directs States to establish standards of performance for existing sources. Commenter s said there is no basis to suggest that Congress would have intended a source to be subject to two different standards of performance adopted by two diff erent regulators.

Commenter s said EPA cannot lawfully require modified sources to be subject to both 111(d) and 111(b) requirements. Commenter s said

, despite EPA's assertion that Section 111 is "silent on whether requirements imposed under a CAA section 11 1(d) plan continue for a source that ceases to be an existing source because it modifies or reconstructs" the plain language of the CAA disallows EPA's interpretation. Commenter s said the CAA 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." Commenter s said

, alternatively, the CAA
de fines an existing source as "any stationary source other than a new source." Commenter s said these definitions contain no ambiguities

- an existing source is not a new source, and a new93 source includes modified sources; therefore, EPA may not subject modifi ed sources to both existing source and new source standards, and the Agency's stated rationale for attempting to do
so evidences the flaw in EPA's BSER determination.

Commenter s stated the standards of performance established by EPA under Section 111(b)

ex tend beyond newly constructed sources and also include "modified" sources. 42 U.S.C. Section 7411(a)(2). Commenter s said EPA expanded the definition of new sources to include
reconstructed sources as well. See 40 C.F.R. Section 60.15. Commenter s said exist ing sources are then defined in Section 111 as "any stationary source other than a new source." 42 U.S.C. Section 7411(a)(6). Commenter s concluded existing sources are defined as the residual sources that are not considered "new" under Section 111, and the two categories are mutually exclusive.
Commenter s continued by explicitly defining new and existing sources in mutually exclusive terms, the plain language of Section 111 dictates that a source cannot simultaneously be both a new source and an existing source. Commenter s said this follows logically then that the applicability of standards of performance under Section 111(b) for new sources and Section 111(d) for existing sources must also be mutually exclusive. Commenter s concluded a single source cannot be simultaneously subject to standards of performan ce under both Sections 111(b) and (d).

Commenter s said under the EPA's proposed reinterpretation, existing sources subject to 111(d) plan that later modify or reconstruct would remain subject to the 111(d) plan, and would also become subject to separate 1 11 (b) requirements for modified or reconstructed sources.
Commenter s stated the EPA's rationale is that Section 111(d) does not explicitly exclude existing sources that modify or reconstruct from inclusion under 111(d). Commenter s stated the EPA

expresses that uncertainty about whether affected power plants would remain subject to a 111(d) plan would be detrimental to the plan's long

- term stability and integrity, and that it must avoid creating an incentive for sources to undertake modifications simply to avoid obligations under a 111(d) plan. Commenter s stated the EPA's reinterpretation of Section 111(d) is at odds with prior Clean Air Act language, rulemakings, and interpretations, which clearly delineate the application of Section 111 (b) and (d) between new and existing sources.

Commenter s stated w e are also concerned that this aspect of the EPA's proposal exceeds the agency's authority under the Act. Under section 111, a "new source" is "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 .... "
Commenter s said an "existing source," meanwhile, is defined as "any stationary source other
than a new source." Commenter s stated it appears that under the statute, the definitions of "new source" and "existing source" are mutually exclusive: under section 111(a)(2), an existing source that commences modification after the publication of an applicable NSPS becomes a "new
source." Commenter s said meanwhile, under section 111(a)(6), this "new source" cannot also be an existing source to which section 111(d) would apply, because that section defines an existing source as any source "other than a new source."94 C ommenters note d that EPA has not proposed that either new sources or modified and reconstructed sources that commence construction prior to becoming subject to a section 111(d) plan would later become subject to such plans, even though the statute and EPA regulations treat all new, modified, and reconstructed sources as "new sources." Commenters noted that EPA has not explained why it has chosen to include only a subset of modified/reconstructed sources in
state section 111 (d) plans while excluding all new sources, as well as modified and reconstructed sources that commence construction before becoming subject to a state section 111(d) plan.
Commenters asserted that this dubious legal interpretation raises further substantial risk that this aspect of the Pro posed Rule will be overturned on judicial review.

Commenter s stated, the agency's justification for reinterpreting the Clean Air Act to fit the policy goals of the section 111(d) proposal is to avoid disruption "to the operation of the program" caused by " uncertainty about whether units would remain in the program" and to avoid creating "incentives for sources to seek to avoid their obligations under a CAA section 111(d) plan by undertaking modifications." Commenter s said, EPA has no statutory authority to do this, particularly in light of the plain language of the text. Commenter s said, in its UARG decision, the Supreme Court is again instructive, where it declared that "An agency has no power to 'tailor' legislation to bureaucratic policy goals by rewritin g unambiguous statutory terms." Commenter s said, consequently, the EPA must also withdraw its proposed rule for modified and reconstructed
units.

Response 1 : As explained in section VIII of the final rule preamble of the CPP , the EPA is not finalizing its proposal concerning ongoing applicability of section 111(d) state plan requirements after an existing source modifies or reconstructs. Instead, the EPA is seeking public comment on this issue through the proposed federal pla n issued concurrently with these final emission guidelines. Therefore, any comments on the effect of modification or reconstruction on preexisting section 111(d) state plan requirements are moot as to this rulemaking.

The EPA encourages commenters to raise these issues during the public comment period on the EPA’s proposed federal plan, which has a separate rulemaking docket.

Comment 2 : EPA’s proposal that existing units should continue to be subject to Section 111(d) after they are modified or reconstructe d would result in duplicative and overly burdensome regulation that would be confusing to the sources and state permitting authorities.

Commenter s said EPA's proposal would result in duplicative and overly burdensome regulation
for the sources and confus ion regarding the obligations of state permitting authorities.
Commenter s said this purported "ambiguity" arises solely as a result of EPA's decision to invert the nature of the proposed standards, seeking far more aggressive emission reductions from
exist ing sources than those that would apply if a source became "new" as a result of a
modification. Commenter s said there is no basis for EPA's duplicative regulatory proposal, and it conflicts with the clear language of the statue and is invalid.95 Response 2 : As explained in section VIII of the final rule preamble of the CPP , the EPA is not finalizing its proposal concerning ongoing applicability of section 111(d) state plan requirements after an existing source modifies or reconstructs. Instead, the EPA is se eking public comment on this issue through the proposed federal plan issued concurrently with these final emission guidelines. Therefore, any comments on the effect of modification or reconstruction on preexisting section 111(d) state plan requirements are moot as to this rulemaking.

The EPA encourages commenters to raise these issues during the public comment period on the EPA’s proposed federal plan, which has a separate rulemaking docket.

Comment 3 : EPA’s justifications for continuing to regulate modifi ed and reconstructed sources under section 111(d) are unpersuasive, questionable from a public policy standpoint, and not necessary to ensure effective implementation of the CPP

.

Commenter s stated EPA's purported justifications for continuing to regulate modified and
reconstructed sources under Section 111(d) are unpersuasive and simply underscore the unlawful, arbitrary, and capricious nature of the proposed rule. Commenter s said EPA asserts that its approach is necessary "to assure the integrity of the C AA section 111(d) plan" because "[u]ncertainty about whether units would remain in the program could be very disruptive to the operation of the [Section 111(d)] program." 79 Fed. Reg. 34,904. Commenter s continued even if EPA is correct that the potential f or modified and reconstructed sources to be removed from Section 111(d) implementation plans may create uncertainty and pose challenges to implementing the proposed rule, that does not give EPA authority to override the statutory text and regulate modified and reconstructed sources under Section 111(d). Commenter s said as the Supreme Court recently held, "[a]n agency has no power to 'tailor' legislation to bureaucratic policy goals by rewriting unambiguous statutory terms." UARG, 134 S. Ct. at 2445.

Comment er s stated in sum, the EPA's proposal that modified sources would remain subject to section 111(d) even after modification is questionable from a public policy standpoint, is not necessary to ensure effective implementation of the Proposed Rule, and appears t o be contradicted by the plain language of section 111. Commenter s said for these reasons, they encourage the EPA to abandon this novel and unnecessary interpretation when it issues a final
rule.

Commenter s stated the EPA's 111(b) proposal has major implic ations for its section 111(d) proposal. Commenter s said primarily, an EGU that was initially governed by section 111(d), which later becomes subject to section 111(b) criteria, would be governed by both standards instead of just section 111(b). Commenter s d id not support EPA's contention that a "reconstructed facility" is still an existing facility. Commenter s said a "new source" is defined 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 of96 performance under this section which will be applicable to such source." Commenter s said an "existing source" is "any stationary source other than a new source."

Response 3 : As explained in section VIII of the final rule preamble of the CPP , the EPA is not finalizing its proposal concerning ongoing applicability of section 111(d) state plan requirements after an existing source modifies or reconstructs. Instead, the EPA is seeking public com ment on this issue through the proposed federal plan issued concurrently with these final emission guidelines. Therefore, any comments on the effect of modification or reconstruction on preexisting section 111(d) state plan requirements are moot as to this rulemaking.

The EPA encourages commenters to raise these issues during the public comment period on the EPA’s proposed federal plan, which has a separate rulemaking docket.

Comment 4 : Commenters disagreed with EPA’s concern that existing units would avoid section 111(d) by undertaking modifications and reconstructions because p erformance standards for
modified and reconstructed sources should be more stringent than section 111(d) standards.

Commenter s stated EPA expresses "concern[] that owners or ope rators of units might have incentives to modify purely because of discrepancies in the stringency of the two programs." 79 Fed. Reg. at 34,904. Commenter s said again, the fact that EPA concedes that the standards of performance for existing sources will be more stringent than those for modified and reconstructed sources simply underscores the unlawful nature of the proposed rule. Commenter s said the inclusion of modified and reconstructed sources under Section 111(b) reflects the intent of Congress and EPA that such sources may be subject to more stringent standards of performance than existing sources. See, e.g., 40 Fed. Reg. at 58,416, 58,417 ("The reconstruction provision is intended to apply where an existing facility's components are replaced to such a degree that it is technologically and economically feasible for the reconstructed facility to comply with the applicable standards of performance [under Section 111(b)]."); see also 40 Fed. Reg. at 53,540, 53,340 ("[T]he degree of control reflected in EPA' s emission guidelines will take into account the costs of retrofitting existing facilities and thus will probably be less stringent than corresponding standards of performance for new sources."). Commenter s said this approach is inherently sensible, as fac ilities undergoing modification or reconstruction may have opportunities to incorporate emission control technology not available to other existing sources.
Commenter s said here, EPA turns that logic on its head and suggests that existing fossil fuel

fired EGUs may be subject to standards of performance so stringent that they go beyond the "best system of emission reduction" that has been "adequately demonstrated" for a modified or reconstructed source in the same source category. Commenter s said the fact t hat a source could gain relief by undergoing a modification or reconstruction is clear evidence that the proposed regulations for existing sources are unlawfully stringent.

Commenter s stated EPA's stated reasons for proposing to merge the separate "new" a nd "existing" provisions of Section 111 is a "concern[] that . . . units might have incentives to97 modify purely because of discrepancies in the stringency of the two programs . . . ." Commenter s said in order to maintain an interpretation of Section 111 wh ich allows for Section 111(d) to be more stringent than Section 111(b), EPA has to strain to prevent existing units from "escaping"
Secti o n 111(d) and becoming "new units" by undertaking a modification (of course, when Section 111(b) is more stringent, as it should be, this is not a concern

- new sources have no mechanism for becoming "not new.").

Response 4 : As explained in section VIII of the final rule preamble of the CPP , the EPA is not finalizing its proposal concerning ongoing applicability of section 111(d) state plan requirements after an existing source modifies or reconstructs. Instead, the EPA is seeking public comment on this issue through the proposed federal plan issued concurrently with these final emission guidelines. Therefore, any comments o n the effect of modification or reconstruction on preexisting section 111(d) state plan requirements are moot as to this rulemaking.

The EPA disagrees with commenters’ assertion that the requirements for existing sources are more stringent than those for modified and reconstructed sources. As explained in the preamble, comparison of the control requirements in the section 111(d) emission guidelines to those in the section 111(b) standards of performance is an “apples

- to

- oranges” comparison, in particular
b ecause the two sets of rules become applicable at different points in time and have significantly different compliance periods. Additionally, the flexibility that this rule offers the states has important implications for its stringency and for any compari son to the section 111(b) rule.

Comment 5 : EPA cannot simultaneously treat modified and reconstructed units as existing sources under CAA 111(d) and as new sources under CAA 111(b) because the source categories the EPA is regulating under its proposed modi fied/reconstructed source rule and its proposed existing source rule are different.

Commenter s state d the EPA cites no precedent for separating its "new" source standards into two separate rulemakings

-- one for new sources and another for modified/recons tructed source

- with either one of them sufficient for supporting existing source standards. Commenters said, regardless , EPA's approach does not work. Commenter s sa id the EPA's proposal to set performance standards for modified and reconstructed coal units states that modified and reconstructed sources will be treated as existing sources that remain subject to any CAA 111(d)
standard that is then in effect. Commenter s stated the EPA cannot simultaneously treat modified and reconstructed units as existing so urces under CAA 111(d) and as new sources under CAA 111(b). Commenter s said the source categories the EPA is regulating under its proposed modified/reconstructed source rule and its proposed existing source rule are different.
Commenter s stated under the p roposed modified/reconstructed source rule, the EPA is regulating
coal

- fueled EGU's. Commenter s said under the proposed existing source rule, the EPA is nominally regulating a combined coal/natural gas category but in reality is setting standards applicabl e to entire state electric utility systems. Commenter s stated as explained in the Department's prior written comments, CAA 111(b) and CAA 111(d) regulations must apply to the same source category, the EPA therefore cannot rely on its modified/reconstructed source regulations to regulate existing coal

- fueled EGU's.98 Response 5 : With respect to commenters’ concern about treating modified and reconstructed units both as existing sources under section 111(d) and as new sources under section 111(b), as
noted above, the EPA is not finalizing its proposal concerning ongoing applicability of section 111(d) state plan requirements after an existing source modifies or reconstructs. Instead, the EPA is seeking public comment on this issue through the proposed federa l plan issued concurrently with these final emission guidelines. Therefore, any comments on the effect of modification or reconstruction on preexisting section 111(d) state plan requirements are moot as to this rulemaking.

Comment 6 : EPA should not make mo dified and reconstructed sources subject to both section 111(b) and section 111(d) because both rules have very different emission limits and compliance requirements.

Commenter s we re very concerned that the EPA is proposing that modified and reconstructed electric generating units be subject to both CAA section 111(b) and section 111(d), which have widely disparate proposed compliance requirements. Commenter s said under the proposed section 111(b) language, new, modified or reconstructed fossil

- fuel fired E GUs must emit no more than 1,100 lb CO2/MWh. However, under this section 111(d) proposal, over half of the States have proposed final CO2 emission performance goals below 1,100 lbs CO2/MWh. These disparate CO2 emission rates could result in some States req uiring modified and reconstructed EGUs to emit less than 1,100 lb CO2/MWh as per section 111(d), even though the EGU would be regulated by and compliant with section 111(b).

Response 6 : As explained in section VIII of the final rule preamble of the CPP , the EPA is not finalizing its proposal concerning ongoing applicability of section 111(d) state plan requirements after an existing source modifies or reconstructs. Instead, the EPA is seeking public comment on this issue through the proposed federal pla n issued concurrently with these final emission guidelines. Therefore, any comments on the effect of modification or reconstruction on preexisting section 111(d) state plan requirements are moot as to this rulemaking.

Comment 7 : Sources that elect to modi fy or reconstruct an EGU should be able to benefit by being allowed to decide whether they comply with section 111(d) or section 111(b).

Commenter s stated ultimately, there should be an election made between the New Source
Performance Standards and Exist ing Source Performance Standards. Commenter s said if a facility owner elects to incur the expense of modifying or reconstructing an EGU, then it should
be entitled to the benefit of such an election.

Response 7 : Under these final emission guidelines, state plans must address a ny affected steam generating unit, IGCC, or stationary combustion turbine that commences construction on or before January 8, 2014 and that meets the relevant applicability conditions specified in section
60.5840 of the final rule.99 As explained in section VIII of the final rule preamble of the CPP , the EPA is not finalizing its proposal concerning ongoing applicability of section 111(d) state plan requirements after an existing source modifies or reconstructs. Instead, the EPA is seekin g public comment on this issue through the proposed federal plan issued concurrently with these final emission guidelines. Therefore, any comments on the effect of modification or reconstruction on preexisting section 111(d) state plan requirements are moot as to this rulemaking.

Comment 8 : Forcing EGUs to comply with both sections 111(b) and 111(d) will result in higher costs for ratepayers.

Commenter s said in section 111(b), the EPA has proposed a limit that is more stringent than BSER by forci ng an EG U to comply with both sections 111(b) and 111(d). Commenter s stated with no relief provided on 111(d) for the modification/reconstruction of an existing source, the economics of doing so become even more difficult. Commenter s stated ultimately, such a

stan dard will only cause the ratepayers to incur even higher costs.

Response 8 : As explained in section VIII of the final rule preamble of the CPP , the EPA is not finalizing its proposal concerning ongoing applicability of section 111(d) state plan requiremen ts after an existing source modifies or reconstructs. Instead, the EPA is seeking public comment on this issue through the proposed federal plan issued concurrently with these final emission guidelines. Therefore, any comments on the effect of modification or reconstruction on preexisting section 111(d) state plan requirements are moot as to this rulemaking.

Comment 9 : EPA has failed to provide guidance for situations where conflicts arise between sections 111(b) and 111(d) ; the EPA has provided no indication of which standard would take precedence

.

Commenter s stated further, should conflicts arise between sections 111(b) and 111(d), the EPA has provided no indication of which standard would take precedence, just as the EPA has provided no support for applying both standards.

Response 9 : As explained in section VIII of the final rule preamble of the CPP , the EPA is not finalizing its proposal concerning ongoing applicability of section 111(d) state plan requirements after an existing source modifi es or reconstructs. Instead, the EPA is seeking public comment on this issue through the proposed federal plan issued concurrently with these final emission guidelines. Therefore, any comments on the effect of modification or reconstruction on preexisting section 111(d) state plan requirements are moot as to this rulemaking.

Comment 10 : Commenters agreed that EPA has the authority to require modified and reconstructed units to remain subject to section 111(d) and agreed that sources may have
incentives to m odify units due to discrepancies in the rules.

Commenter s stated, section 111(d) continues to apply even after a modification or reconstruction
of a source. Commenter s said, because Section 111(d) does not address whether an existing100 source that is subject to a Section 111(d) program remains subject to that program even after it modifies or reconstructs, EPA has authority to provide a reasonable interpretation, under the Supreme Court's decision in Chevron U.S.A. Inc. v NRDC. Commenter s agreed with E PA's proposal that an existing source subject to requirements under Section 111(d) will continue to be subject to those requirements even after it undertakes a modification or reconstruction.
Commenter s said, under this interpretation, a modified or recons tructed source would be subject to both: (1) the section 111(d) requirements that it had previously been subject to; and (2) the modified source or reconstructed source standard being promulgated under Section 111(b) simultaneously with this rulemaking. Co mmenter s said, this interpretation, which is supported by the statutory text, is a sensible policy and will further the goals of the statute.

Commenter s agreed with EPA that owners and operators of units might have incentives to modify purely because of po tential discrepancies in the stringency of the two programs, which would undermine the emission reduction goals of Section 111(d). Commenter s said, and, the uncertainty about whether units would remain in the program could be very disruptive to the operati on of the program. Commenter s said, EPA's interpretation of Section 111(d) will avoid creating incentives for sources to seek to avoid their obligations thereunder by undertaking modifications and, therefore, will assure the integrity of the Section 111(d) program.

Commenter s stated Section 111 is ambiguous as to whether existing sources continue to be subject to 111(d) requirements after modification or reconstruction makes that source subject to section 111(b) standards. Commenter s said EPA has reasonably resolved this ambiguity by concluding that state plans must continue to apply section 111(d) carbon pollution standards to those sources regardless of a later modification or reconstruction. Commenter s said this interpretation is consistent with the statu tory text, EPA's past practice, and judicial interpretations of the framework of section 111, and is necessary to avoid perverse incentives that could undermine the regulatory scheme and weaken limits on carbon pollution.

EPA's Duty to Establish Emission G uidelines for Existing Sources is Not Altered By the Continuing Applicability of 111(d) Requirements to Sources that Subsequently Elect to Modify
or Reconstruct

Commenter s stated, EPA has properly recognized that its duty to issue emission guidelines for

e xisting sources now that the Agency has proposed standards of performance for reconstructed or modified sources is not affected by the clarification that 111(d) requirements continue to apply to sources that modify or reconstruct after becoming subject to 111(d) state plan requirements.
Commenter s said, contrary to industry arguments, the modified and reconstructed standard of performance is a sufficient predicate for the regulation of existing sources under 111(d) regardless of the continued applicability of 111(d) plan requirements to sources that modify or reconstruct because the statutory definitions of "new' and "existing' sources are relevant only to the initial applicability of the respective standards. Commenter s said, consequently, a source can
be s ubject to ongoing 111(d) requirements because it was formerly an existing source, even101 though the source has also become subject to a 111(b) standard by meeting the section 111(a)(2)
definition of a "new" source.

Commenter s stated, industry comments rely o n the flawed assumption that the ongoing applicability of 111(d) requirements to modified or reconstructed sources rests on the modified or reconstructed sources continuing to be "existing" sources as defined in section 111(a)(6).
Commenter s said that "[i] f EPA intends to continue to subject sources that modify or reconstruct to the CAA section 111(d) plan, it must be because EPA considers modified and reconstructed sources to be existing sources for some reason." Commenter s , based on this conclusion, asser ted that if the modified and reconstructed sources are actually existing sources, the proposed rule cannot be a predicate for regulation under the command of section 111(d)(1)(A). Commenter s said section 111 is ambiguous as to whether 111(d) requirements c ontinue to apply to a source
that modifies or reconstructs. Commenter s said, a reasonable interpretation of this ambiguity is that the definitions of "new" and "existing" source are relevant to the question of what type of standard of performance initially applies to a source, but do not constrain whether that standard continues to apply once the same source meets the requirements for applicability of another
standard under section 111. Commenter s said, consequently, the question of whether a source
continu es to be subject to a standard is separate from whether that source initially meets the statutory definition of "new source" or "existing source."

Commenter s stated, under EPA's interpretation of the statutory ambiguity, sources that modify or

reconstruct continue to be subject to the 111(d) standard not because they are still "existing" sources, but rather because the statute does not relieve sources of requirements that were imposed on them at an earlier time, when they were "existing" sources. Commenter s said, indeed, in the specific context of the Clean Power Plan, excluding modified or reconstructed sources from a section 111(d) state plan would not ensure that the standards for such sources reflect the "best system of emission reduction," as section 11 1(a)(1) requires. Commenter s said

–

the BSER for modified and reconstructed EGUs necessarily encompasses not just systems such as heat rate improvements, considered in the proposed standards here, but also the potential to reduce carbon pollution through s hifts in utilization towards lower

- or zero

- emitting generation
and demand

- side energy efficiency. Commenter s said, this is the system that EPA has identified as the "best system of emission reduction" in the proposed emission guidelines for all existing

p lants because it achieves the greatest pollution reductions considering cost, energy requirements, and other health and environmental outcomes. Commenter s said, the modification or reconstruction of an existing fossil fuel

- fired EGU does not alter the fact that the flexible,

cost

- effective system of emission reduction identified by EPA remains the best system for that plant, achieving the greatest emission reductions considering cost and the other statutory factors.
Commenter s said, rather, the modification or reconstruction means that there is an additional component of the best system for that source to ensure that the section 111(b) standard serves its technology

- forcing, emission

- reducing role when significant investments are being made in these plants.102 Commenter s 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 performan ce for modified and reconstructed EGUs are in no way standards for "existing" sources.

Commenter s said requiring, in the finalization of these standards, that state plans apply to all sources that were "existing" as of the date the emission guidelines wer e proposed is also consistent with the statutory text. Commenter s said section 111(d) vests EPA with broad authority to establish procedures governing the submission and content of state plans that "establish" performance standards for "any existing source ." Commenter s said the statute does not clearly delineate the point in time at which a source should be considered to be "existing" and therefore within the scope of a state plan; however, EPA's proposed emission guidelines set

state

- wide goals that are ba sed on the BSER for all EGUs that were under construction or in operation as of January 8, 2014. Commenter s said it is reasonable and consistent with the statute
for EPA

- acting under its authority to establish minimum requirements for state plans, includ ing determining the scope of those plans to require that state plans establish performance standards for the same set of existing sources addressed in the emission guidelines.

Response 10 : As explained in section VIII of the final rule preamble of the CPP , the EPA is not finalizing its proposal concerning ongoing applicability of section 111(d) state plan requirements after an existing source modifies or reconstructs. Instead, the EPA is seeking public comment on this issue through the proposed federal pla n issued concurrently with these final emission guidelines. Therefore, any comments on the effect of modification or reconstruction on preexisting section 111(d) state plan requirements are moot as to this rulemaking.

The EPA encourages commenters to raise these issues during the public comment period on the EPA’s proposed federal plan, which has a separate rulemaking docket.

Comment 11 : Commenters supported EPA’s proposal that section 111(d) remain applicable to modified and reconstructed sources, but reco mmend the EPA undertake frequent review of the NSPS to ensure the emissions guidelines for existing EGUs are effectively coordinated with the
NSPS standards.

Commenter s stated they support EPA's proposal that Section 111(d) standards remain applicable

to s ources that modify or reconstruct, and they suggested EPA take on more frequent review of the NSPS to ensure that the proposed emission guidelines for existing EGUs are coordinated effectively with the proposed standards for modified and reconstructed sour ces. Commenter s said although section 111(b) of the Clean Air Act clearly requires that carbon pollution standards for new sources be reviewed at least once every eight years, EPA could establish a more frequent schedule for revision (such as once every fi ve years) in recognition of the rapid evolution of methods to reduce carbon pollution from the power sector. Commenter s said this would ensure that sources that modify or reconstruct quickly come into compliance with section 111(d), consistent with EPA's p ast practice of subjecting modified and reconstructed sources to state plans upon revision of an applicable NSPS, and in so doing, EPA would also reduce potential103 incentives for EGUs to modify or reconstruct for the purpose of avoiding state plan requireme nts under section 111(d).

Response 11 : As explained in section VIII of the final rule preamble of the CPP , the EPA is not finalizing its proposal concerning ongoing applicability of section 111(d) state plan requirements after an existing source modifies or reconstructs. Instead, the EPA is seeking public comment on this issue through the proposed federal plan issued concurrently with these final emission guidelines. Therefore, any comments on the effect of modification or reconstruction on preexisting se ction 111(d) state plan requirements are moot as to this rulemaking.

The EPA agrees, however, with commenters’ statement that EPA may review carbon pollution standards for new sources more frequently than once every eight years under CAA section 111(b).

Co mment 1 2 : If EPA decides modified and reconstructed EGUs are not required to continue to comply with section 111(d), then the EPA should require the emissions from modified and reconstructed units to continue to be counted when determining state compliance with sec tion 111(d).

Commenter s stated that if modified or reconstructed EGUs are excluded from state plans under section 111(d), E PA could require that emissions from modified and reconstructed units "count" when determining state compliance with Section 111(d). Commenter s said EPA could require that emissions from those units continue to be "counted" when determining whether states have complied with the goals promulgated in the emission guidelines. Commenter s said this requirement would not impose any section 1 11(d) obligations on the modified or reconstructed EGUs, but would ensure that limits on carbon pollution under section 111(d) are not undermined by "leakage" resulting from increased emissions at those modified or reconstructed EGUs.

Commenter s said in p ractice, state regulators would have a strong incentive to ensure that modified and reconstructed units are subject to either state plans or to additional emission limitations in order to ensure compliance with the section 111(d) goals.

Commenter s said th is approach is not precluded by the broad language of section 111(d), which affords EPA significant discretion to determine how states demonstrate compliance with an emission guideline, and EPA could justify this approach as necessary to ensure an accurate accounting of emissions from affected EGUs. Commenter s said this is because generation from any EGU that modifies or reconstructs would effectively be substituting for generation from the same EGU prior to its modification or reconstruction. Commenter s sa id if generation and
emissions from modified and reconstructed EGUs were not counted in the state's emission rate under section 111(d), emissions from existing EGUs could appear to decrease solely because
some of those units had become modified or reconstr ucted sources subject to section 111(b).
Commenter s said EPA could reasonably conclude that to protect against such "over

- crediting," emissions from modified and reconstructed EGUs must be included in a state's average emission
rate. Commenter s said this a pproach would also have the effect of treating modified or104 reconstructed EGUs in a way that is comparable to incremental nuclear, renewable energy and energy efficiency

- all of which are considered as resources that displace affected EGUs and
therefore ente r into the compliance determination for each state as zero

- emitting resources.
Commenter s said the emissions from the units in question were taken into account when EPA established the state goals, and it would be appropriate to find that those emissions m ust continue to count in determining compliance with that target. Commenter s said because the proposed state goals reflect the emissions from those units, the state's compliance demonstration must also
include the emissions from those units.

Response 1 2 : W ith respect to commenters’ concern about treating modified and reconstructed units both as existing sources under section 111(d) and as new sources under section 111(b), as noted above, the EPA is not finalizing its proposal concerning ongoing applicabilit y of section 111(d) state plan requirements after an existing source modifies or reconstructs. Instead, the EPA is seeking public comment on this issue through the proposed federal plan issued concurrently with these final emission guidelines. Therefore, a ny comments on the effect of modification or reconstruction on preexisting section 111(d) state plan requirements are moot as to this rulemaking.

However, to address emission leakage under mass based state plans, Section VIII.J. of the preamble also discus ses how states, as an option and under their own discretion, 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 1 3 : States should be given the discretion to address section 111(b) and 111(d) requirements for modified and reconstructed sources on a case

- by

- case basis.

Commenter s stated the EPA noted in the Proposed Rule that regulations proposed under 111(b)
for modifi ed and reconstructed sources affect the implementation of state plans under 111(d) and requested comment on the interdependency of 111(b) and 111(d). See 79 Fed. Reg. 34,852 (June 18, 2014). Commenter s said accounting for any 111(b) actions only adds to th e complexity of a state plan and increases the administrative burden. Commenter s stated the States must be given the discretion to address 111(b) interdependencies on a case

- by

- case basis if the EPA requires an analysis of 111(b) as part of the approval pr ocess for 111(d) state plans.

Response 1 3 : Section VIII of the preamble discusses how new EGUs covered under the CAA section 111(b) rule are not allowable measures in section 111(d) state plans because the EPA
believes it would result in increased emissio n leakage. However, to address emission leakage under mass based state plans, Section VIII.J. also discusses how states, as an option and under their own discretion, may regulate sources subject to 111(b) as a matter of state law in order to ensure obligat ions regarding affected EGUs regulated under a section 111(d) state plan are met.

If commenters’ are concerned about treating modified and reconstructed units both as existing sources under section 111(d) and as new sources under section 111(b), as noted above, the EPA105 is not finalizing its proposal concerning ongoing applicability of section 111(d) state plan requirements after an existing source modifies or reconstructs. Instead, the EPA is seeking public comment on this issue through the proposed federa l plan issued concurrently with these final emission guidelines. Therefore, any comments on the effect of modification or reconstruction on preexisting section 111(d) state plan requirements are moot as to this rulemaking.

1.11.5 Obligations on affected EGUs

Comment 1 : The compliance obligation should be kept to only covered source units.

Commenters stated, as a legal matter, the final obligation to comply with standards of performance lies with each such plant. To minimize legal uncertainty, the complia nce obligation should be kept to only covered source units, with the assumption that system

- wide compliance tools, such as renewable energy generation, would reduce overall electricity generation at covered sources, thereby reducing overall emissions.

Resp onse 1 All affected EGUs that are subject to an emission standards state plan will be subject to standards of performance, as described in section VIII.C of the final rule preamble of the CPP, that will be enforceable by their terms.

Comment 2 : Commenter s stated that the electric utility industry is made up of dozens of entities operating across state lines and bounded by dispatch region s; commenters asserted that setting state goals that require entities separate from those responsible for carbon

- emitting EGUs to take certain actions is inequitable. C ommenters argued that a state's ratepayers would be penalized for living in the same state as affected EGUs where their actions are not connected with, and t hus have no effect on, affected EGU emissions in the state.

Response 2 : We disagree with these comments. As we discuss in the preamble, the affected EGUs are able to implement the building blocks.

Comment 3 : State plans should place the burden of complia nce on EGUs.

C ommenters stated that state plans must ensure that affected EGU’s are responsible for meeting emission reductions required by federally enforceable emission limits in the rule. C ommenter s stated that the Act explicitly provides for state plan s requiring affected sources to be the entities legally responsible for achieving the required emission standards. C ommenter s said emission limits that are federally enforceable against affected EGUs clearly fall within the definition of a "standard of per formance." C ommenter s added that the federally enforceable limits would106 require affected EGUs to demonstrate compliance in the event that the portfolio measures fail to deliver the required emissions reductions. C ommenter s noted that section 111(d) does not prevent states from imposing obligations on non

- affected entities so long as it ensures that affected EGUs are ultimately responsible for all emission reductions; what a state may not do, however, is shift responsibility away from affected EGUs and onto other entities. C ommenter s said states must craft their plans to ensure that affected entities can claim proper credit for emission reductions that are not automatically reflected in their source

- specific emission rates.

C ommenter s noted that a state plan that includes portfolio measures can only be approved if the plan also "provides for the ... enforcement of [the] standards of performance" established for the
affected sources. C ommenter s added that EPA could add provisio ns that could take the form of a requirement that regulated EGUs make sufficient reductions or secure sufficient credits from re

dispatch, renewable energy generation, and energy efficiency activities to make up the shortfall within the same compliance yea r. C ommenter s suggested that the obligation to make up the shortfall could be allocated among sources in any manner acceptable to the state. C ommenter s said the backstop would be included in the operating permits of the regulated entities, and would
be fed erally enforceable by EPA under section 113 of the Clean Air Act, and by citizens under
section 304 of the Act.

C ommenter s stated under a portfolio approach, the EGU would be responsible for implementing Building Blocks 2, 3 and 4 in addition to "inside th e fence" improvements in Building Block 1.
C ommenter s said EGUs are fully capable of developing and implementing demand side and energy efficiency programs, and many do so in Indiana voluntarily. C ommenter s stated in addition, EGUs are capable of developin g renewable energy sources and refueling to natural gas or developing new natural gas plants. C ommenter s stated EGUs can do all of the above more quickly and efficiently than the state or other smaller, lower capitalized entities, and they can

enter contra cts with other entities to meet their goals. C ommenter s stated with the EPA’s alternative to having third party entities partially responsible under the state plan for Building Blocks 2, 3 and 4, the state would assume the responsibility of ensuring reduct ions to be credited toward the state goals by third parties other than EGUs. C ommenter s said this alternative may avoid the legal issue associated with placing partial or full responsibility on entities other than
EGUs. C ommenter s stated a further variatio n is to place full responsibility on EGUs for meeting the state goals, but would allow the states to credit EGUs with progress towards those goals for emissions reductions expected from renewable energy, demand side management or energy efficiency measures

. C ommenter s stated of the two alternatives, a state plan that places the responsibility to meet the state goals on the EGUs, but allows the state to credit the EGUs with reductions resulting from Building Blocks 2, 3 or 4, would be preferable, because res ponsibility would be clear at the outset, and EGUs would be motivated to bring their considerable planning and technical expertise to the task of working with the state and other entities to develop programs and projects to reduce electricity demand and em issions.

Response 3 : EPA agrees that section 111(d) specifically requires a state to submit standards of performance. The final rule satisfies this requirement by making two types of state plans available: the emission standards type, which applies all requirements for meeting the emission107 guidelines to affected EGUs, and the state measures type, under which a mass CO2 emission goal may be partially or entirely achieved through state measures imposing requirements on
entities other than affected EGUs and that are not included i n the federally enforceable 111(d) state plan. To ensure that the state measures plan type is consistent with section 111(d), as part of a state measures plan a state must submit standards of performance for CO2 emissions from
affected EGUs in the form of a federally enforceable “backstop” that would be triggered if the state measures fail to achieve the required CO2 emission performance level. Thus, under either possible plan type, the state must submit federally enforceable standards of performance that

a ffected EGUs are responsible for meeting. See 40 CFR § 60.5775.

To the extent the comments concern the proposed portfolio approach, the comments are moot. As explained in sections V.B and VIII.C of the final rule preamble of the CPP , the EPA is not
finali zing that proposed approach, and is instead finalizing the option to submit the state measures plan type, including a requirement for a federally enforceable emission standards backstop. Under a state measures plan, the backstop emission standards constitu te the standards of performance required by section 111(d), and the state plan provides for the implementation and enforcement of such standards of performance by specifying the trigger mechanism and conditions under which the backstop emission standards a pply to affected EGUs. The state measures approach will give states the flexibility to take advantage of efficiencies such as those described by some of the commenters, without raising the legal issues that some commenters raised in connection with the por tfolio approach.

Comment 4 : State plans should not place the entire burden of compliance on EGUs.

C ommenters stated that the entire burden of compliance should not be placed on EGU’s.
C ommenter s stated that federal and state enforcement must take into acc ount that other parties, such as renewable and energy efficiency providers, likely will have a role in meeting the emission reduction requirements through the approach of the EPA Plan's building blocks; otherwise, the entire burden of compliance is placed inappropriately on the regulated EGUs that only have direct control over emissions from their affected units. C ommenter s added that state plans should be able to include measures and policies (e.g., renewable portfolio standards) for which the state itself is responsible. C ommenter s supported allowing states to submit plans that rely in part on measures imposed on entities other than affected EGUs to achieve at least part of that level, as well as on measures imposed on affected EGUs to achieve the balance of that level.
C ommenter s added that state plans should include measures enforceable against other entities that support reduced generation by, and therefore carbon emission reductions from, the affected
EGUs.

C ommenter s stated that plans with rate

- based emission limits could incorporate enforceable renewable energy measures by adjusting an EGU's carbon emission rate when demonstrating compliance through either an administrative adjustment by the state or use of a tradable credit approach. C ommenter s emphasized states should be able to rely on certain renewable energy programs as complementary measures to reduce costs for, and otherwise facilitate, EGU emission limits without including those measures in the Section 111(d) state plan. C ommenter s108 said the EGU emission limits would be federally enforceable, but certain renewable energy measures could serve as complementary meas ures and would not be enforceable under federal law; instead, they would remain enforceable under state law. C ommenter s said this approach would work for certain types of state programs, such as RPSs, particularly because they are well

established and can be expected to achieve their intended results. C ommenter s said the state plan would include an enforceable commitment (state commitment approach) by the state itself to implement state

- enforceable (but not federally enforceable) measures that would achieve a specified portion of the required emission performance level on behalf of the affected EGUs.
C ommenter s added that a state plan that imposes a mass limit on affected EGUs that is sufficiently stringent to achieve the emission performance level should no t need to include renewable energy measures as an enforceable component of the plan to assure the achievement of that performance level. C ommenter s added that the mass limit itself would suffice; however, the state may wish to implement renewable energy me asures as a complement to the plan to support forward

- looking achievement of the mass limit at lesser cost.

C ommenter s expressed concern that there are no current mechanisms for imposing legal responsibility on the state for providing for the funding and r egulatory rulemaking required to implement the energy efficiency programs and renewable energy projects that will be required for EGU's to comply with the proposed standard and adequately maintain reliability.
C ommenter s added that RGGI is an existing sour ce performance standard compliance approach that can be used for meeting the 2030 emission goal but only if appropriate funding is authorized and effectively applied to energy efficiency and renewable generation development. C ommenter s continued that presuming the RGGI overall emission cap will decrease over time, it is absolutely essential that the State take responsibility for meeting its portion of the emission reduction paradigm. C ommenter s stated that even in situations where a uti lity or non

- state entity implements energy efficiency or renewable energy development programs, the state ultimately holds the obligation for authorizing funding and enabling regulation for these programs.
C ommenter s rejected the concept that "... state pl ans must impose all of the legal responsibility for achieving the required emission performance level on the affected EGUs" and encourages the
EPA to ensure that no RGGI

- based state plan reliant on outside

- the

- fence measures leaves the affected EGUs expose d as the only compliance entity. C ommenter s explained that t his level of legal responsibility may not be captured in statute in some states, and legislative changes, where necessary, should be part of a state plan filed with the EPA and the EPA should not approve that state plan unless the legislation requiring this increased level of legal responsibility has been
enacted.

Response 4 : Because section 111(d) specifically requires a state to submit standards of performance for existing sources, state plans mu st include federally enforceable standards applicable to EGUs. As noted above, however, the state measures plan type allows states to design plans that include state

- enforceable measures applicable to EGUs and to other entities as
well. These measures coul d include mechanisms advocated by the commenters, such as such as renewable portfolio standards and energy efficiency measures. This plan type gives states the flexibility that the commenters requested, while ensuring through the backstop mechanism that
th e requirements of section 111(d) are satisfied.109 Commenter 5 : EGUs or group of EGUs cannot enforce RE and EE programs.

C ommenter s stated, there is sufficient evidence that these building blocks can be legally enforceable emissions performance standard at affected EGUs, no matter who the responsible party is. However, commenter s said, an affected EGU or group of EGUs cannot enforce RE and EE programs, especially in non

- vertically integrated states.

Response 5 : See section IV.A of the final rule preamble of the CPP for the EPA’s response to
this comment.

Comment 6 : States and the EPA has limited resources and enforcing against multiple entities will be difficult and complicate enforcement.

C ommenter s stated the States and the EPA have limited resources to d evote to enforcement.
C ommenter s stated allowing plans that apply to multiple entities will complicate enforcement.
C ommenter s stated instead, requiring EGUs to meet the emission limitations will simplify enforcement and ensure greater success toward meeti ng the carbon emission goals. C ommenter s said as stated in the Draft Rule, demonstrating compliance would be achieved by quantifying reduced generation at the EGUs resulting from building Blocks 2, 3 and 4, rather than requiring costly compliance and enfor cement strategies aimed at multiple entities.

Response 6 : As discussed in section V of the final rule preamble of the CPP explaining how EPA designed the BSER, the EPA designed the emissions reduction goals so that they should be readily achievable using proven methods for efficient and clean energy production. EPA is not finalizing the portfolio approach. It is therefore, t he EPA’s expectation that state law will not have to be radically restructured. The guideline does not require a state to change its law in a way that subjects entities other than affected EGU’s to federally enforceable requirements under the state plan. C ompliance determinations under the federally approved state plan will focus on measuring the effect of whatever measures the state decides to pursue on the emissions from affected EGU’s, which should be readily verifiable and enforceable.

Comment 7 : State s will need to take an active role in crafting state plans that apportion emission
reductions across affected units.

C ommenter s stated that states will need to take an active role in crafting state plans that apportion emission reduction obligations across their fleets of affected units and in administering such programs, a particularly important for states that choose to adopt a rate

- based protocol, since emission reductions achieved through measures other than on

- site heat rate improvements

- EE, RE, and other techniques that allow for reduced dispatch of affected fossil units

- will not be
reflected in the emission rates of the affected EGUs. C ommenter s said rate

- based states will need to include a mechanism in their implementation plans that adjusts the emission rate at affected
units to account for non

- HRI emission reductions.110 Response 7 : As we explain in section VIII.D of the final rule preamble of the CPP and the Legal Memorandum, a state may fulfill its requirements under section 111(d) by adopting a state plan with the emission standards approach, and that imposes rate

- based emission standards at the level of the source subcategory

- specific performance rates or that imposes the equivalent mass

based emission standards. The affected EGUs would be able to take actions to implement the building blocks or other emission reduction methods, and thereby achieve their emission standards. As a result, it is not necessary for state utility or environmental agencies to order the affected EGUs to implement the bu ilding blocks and, therefore, it is not necessary for the state agencies to have the authority to do so or for the states to make the other types of changes to
state law that the commenters describe.

Comment 8 : EGUs that are subject to System Support Resource Agreements (SSRs) should not be assigned sole responsibility for compliance because they may be required to operate by
FERC , and should be excluded from the rule

C ommenter s stated the EPA requested comment on whether the responsibility to achieve the emission performance level should be assigned solely to EGUs. C ommenter s said while this may be possible, it does lead to some questionable scenarios. C ommenter s indicated that one such scenario is when a regulated unit is subject to a System Support R esource Agreement (SSR) that requires a unit to operate to maintain system reliability. C ommenter s said Michigan currently has three power plants in the Upper Peninsula that are subject to an SSR Agreement: the Presque Isle Power Plant, the City of Escanab a Plant, and White Pine No. 1. C ommenter s questioned if a unit cannot run because of a CO2 limit, how this would interact with a SSR ordered by FERC.

Commenters stated p ower plants with System Support Resource agreements in place with an electric system o perator that prohibit plants from retiring and require them to remain in service due to reliability issues should be excluded from this rule since these plants will be retired once the system reliability issue is resolved. Commenters list ed the Presque Isl e Power Plant in Michigan's Upper Peninsula as an example. Commenters stated it appears reasonable to exclude these units since, once the system reliability issues are resolved, these units will not be a source
of future GHG emissions. Commenters said the need for this type of flexibility could be demonstrated by unit SSR status, or through some other similar type of electric system operator procedure. Commenters stated alternatively, a mechanism is needed to provide state flexibility
for treatment of units that are designated for retirement but are required to run due electric system reliability constraints. Commenters said if the units are not excluded from rule applicability overall, states should be able to exclude emissions from these units for purposes of preparing state compliance plans.

Response 8 : We recognize the commenters’ concerns regarding SSR agreements and reliability issues. The EPA has fully considered reliability issues in developing this final rule. Specifically, we note that affected EGUs that are required to run for reliability reasons have means t o do so,111 including trading for ERCs or allowances. For a more comprehensive discussion of reliability issues and final rule, plea se see preamble section VIII.G.2

.

Comment 9 : EPA should clarify the legal obligations placed on EGUs subject to section 111(d) plans.

C ommenter s requested clarification on appropriate enforcement mechanisms for affected EGUs not regulated by the state public utility commission, especially merchant power plants

. C ommenter s stated, the final emission guidelines should offer greater clarity regarding how obligations placed on EGU owners, electric utilities and others contained in state plans will be
enforced.

Response 9 : All affected EGUs that are subject to an emission sta ndards state plan will be subject to standards of performance, as described in section VIII.C of the final rule preamble of the CPP, that will be enforceable by their terms.

Comment 10 : C ommenter s stated i f this format for state goals is adopted in the Final Rule, the EPA should provide additional clarity that state goals are for, and a state plan must address,
affected EGUs within its borders.

Response 10 : We discuss state goals in section VII of the final rule preamble of the CPP . Their purpose is to a ssure that the state’s standards of performance on its sources result in an emission performance level from those sources that is equivalent to the source subcategory

- specific emission performance rates.

Comment 11 : Commenters supported the option of enf orcing emissions limits for EGUs but allowing states with existing re

- dispatch, RE, and EE programs to adjust EGU limits, provided the other programs are enforceable and reductions verified.

C ommenter s stated as for states that already have aspects of Bu ilding Blocks 2,3 and 4 in place and are under the control of the state or other entities, those states be allowed to include these projects and the reductions they will achieve in 2020

- 2029 in their plans so long as an
enforceable mechanism exists to main tain the programs. C ommenter s stated the goals for those states could be adjusted down to include reasonable projections of the reductions expected from those programs, so long as the programs themselves are enforceable and the projected reductions

are ver ified in the state plans. C ommenter s stated there is a rational basis to treat states that have made progress reducing carbon emissions differently from states that have not and therefore have a limited time period to meet their goals.112 Response 11 : We appreciate these comments. The state measures approach is designed to achieve the policy objectives that the commenters support.

Comment 12 : Some commenters disagreed with both approaches arguing that placing the entire responsibility of compliance on EGUs would be arbitrary and capricious and that EPA does not have authority to enforce regulations for other non

- EGU entities.

C ommenter s stated the EPA's proposed BSER presents challenges with the enforcement of the
standards. C ommenter s said u nder the Act, the EPA is authorized to issue an order, administrative penalty or bring a civil action if a person has violated or is in violation of any requirement or prohibition of a state implementation plan. C ommenter s said the EPA proposes two different options to address the federal enforcement statute, both of which are unlawful.
C ommenter s stated t he first option would be arbitrary and capricious, as it places the entire responsibility of achieving a state's emissions performance level fully and solely on the aff ected
EGUs. C ommenter s said t he second option would make affected EGUs responsible for achieving their balance of the emission reduction level with the remaining responsibility falling on the remaining measures. C ommenter s said the EPA is without the authority to propose, let alone enforce, outside the fence measures, such as renewable portfolio standards and energy efficiency because those measures bring into the scope of section 111 sources that Congress did not intend to be regulated.

Response 12 : E PA disagrees that a rule that allows a state to place the responsibility for compliance on EGUs is either arbitrary or capricious, because as explained above Section 111(d) specifically requires a state to submit standards of performance for existing sourc es. The final rule satisfies this requirement while adding flexibility for states by making two types of state plans available: the emission standards type, which applies all requirements for meeting the emission guidelines to affected EGUs, and the state measures type, under which a mass CO2 emission goal may be partially or entirely achieved through state measures imposing requirements on entities other than affected EGUs and that are not included in the federally enforceable 111(d) state plan. To ensure that the state measures plan type is consistent with section 111(d), as part of a state measures plan a state must submit standards of performance for CO2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be triggere d if the state measures fail to achieve the required CO2 emission performance level. Thus, under either possible plan type, the state must submit federally enforceable standards of performance that affected EGUs are responsible for meeting. See 40 CFR § 60 .5775. (To the extent the comments concerned the proposed portfolio approach, the comments are moot. As explained in section V.B and VIII.C of the final rule preamble of the CPP , the EPA is not finalizing that proposed approach.)

In response to this commen t’s concerns regarding enforcement, the final rule gives considerable discretion to the states in setting emission standards and related plan requirements for affected
EGUs. Under the final rule, the states may choose whether to rely on emissions limits pl aced entirely on the EGUs that are affected sources under the guideline, or a combination of limits on113 those EGUs and state measures. And, consistent with longstanding CAA practice, if a regulated entity does not meet a requirement, the EPA will address th e matter on a case

- by

- case basis, to determine the appropriate response and resolution. But EPA would only enforce the standards that apply to affected EGUs , not state

- enforceable measures that apply to entities other than
affected EGUs included in a state measures plan. S tates need not face the issue of making
entities “outside the fence” subject to direct federal enforcement.

Comment 1 3 : EGUs should not be subject to enforcement if they are complying with any unit

specific emission limits ; EGUs should not be subject to enforcement if the state fails to
demonstrate emission reduction s are occurring consistent with the trajectory or that the state fails to procure sufficient RE and EE

.

C ommenter s stated, the failure of a state to meet its p rojected emission rate may occur for many reasons that are beyond the control or responsibility of individual EGUs and utilities.
C ommenters said the approach to enforcement under section 111(d) plans should follow two principles: first, that affected EGUs will not be subject to enforcement if they are complying with any unit

- specific emission limits that are imposed as part of the state compliance plan; and second, that states (and EGUs in such states) will not be subject to enforcement if annual reports
d emonstrate that emission reductions are occurring consistent with the trajectory included in the approved compliance plan, even if specific elements of the plan are not performing as expected.

C ommenters stated that an affected EGU should have no enforceme nt exposure so long as it is complying with its obligations written into an EPA

- approved state plan. C ommenters said EPA should make clear that the legal obligation on individual EGU owners, utilities, or other affected entities is to comply with the appli cable requirements contained in the relevant state plan where that entity is located. C ommenters said, so long as an affected entity complies with the specific obligations required of that entity under the state plan

--- for example, to hold emission
allowan ces in a cap

- and

- trade program, submit RECs under an RES, or invest a set amount of funds in energy efficiency programs

--- that entity will be considered in compliance and so cannot be subject to any enforcement actions by EPA or under the Clean Air Act cit izen suit provisions.
See CAA section 304. C ommenter s stated EPA should make clear that an affected entity is not at risk of enforcement action merely because a state's emission rate in a given year deviates from the trajectory it established in its state plan submission or, after 2030, from its goal. C ommenter s said, the fact that the state is off of its compliance pathway may be a basis for triggering corrective measures or otherwise modifying a state plan, but it is not a basis for pursuing
enforcement a ction against an individual entity in an attempt to achieve additional emission reductions or other actions beyond those required by the EPA

- approved state compliance plan.

C ommenter s in cases where states place obligation on non

- EGU, non

- utility entities

, the state necessarily will have placed direct obligations on individual EGUs and/or utilities that, when added together, only will result in achievement of a portion of the state goal, consistent with the state's trajectory or 2030 goals. C ommenter s state d that if a state may require affected EGUs (or a group of EGUs, such as all EGUs operated by an integrated utility) to meet emission standards114 less stringent than the state goal, an affected EGU or utility that complies with the state

- set emission standar d should be considered to have fulfilled all of its obligations under the state plan and so there would be no enforcement, even if other affected entities in a state (including the state itself), did not meet their obligations or if, for whatever reason, t he state's overall emission rate performance was not consistent with the level required by trajectory established in the approved compliance plan. C ommenter s stated, alternatively, if a state makes a commitment to administratively adjust the EGU or utility 's emission rate, EPA should make clear that the failure to procure sufficient alternative generation or energy savings should not expose the EGU or utility to enforcement action.

C ommenter s stated there are circumstances where an affected entity's obligat ions under the state plan will change from those originally set out by the state plan submitted and approved by EPA.
C ommenter s said, for example, if a state plan results in emission reductions that are not sufficient for the state to be within 10 percent of its approved emission reduction trajectory, that state will be required to impose corrective measures. C ommenter s added that if a state's corrective measures are still not enough for the state's emission rate to be consistent with the state's trajectory, or if the state has a change in circumstances, the state may have to modify its plan. C ommenter s said, in such cas es, principles of fairness and due process require that no new enforceable obligations for EGUs or utilities be created under the modified state plan without procedural protections including notice, and the opportunity to provide public comment on those

mo difications.

C ommenter s stated the appropriate remedy for a state whose plan is not resulting in expected emission rate reductions notwithstanding faithful execution is modification of the state plan, not an enforcement action against regulated entities. C ommenter s said, under such circumstances, neither EPA nor private litigants may bring an enforcement action against EGUs or utilities for underperformance of the state plan. C ommenter s added neither EPA nor private parties may use
an enforcement action to impose obligations on EGUs or utilities that were not already included in a properly approved plan. C ommenter s said that there are significant concerns that EPA or private parties may attempt enforcement actions even if an EGU or utility is fully implemen ting the required measures included in a state plan, merely because RE, EE or other state or third

party actions do not result in the emission reductions built into the state's plan projections or because of unexpected circumstances such as increased elect ricity demand due to economic

recovery. C ommenter s said that EPA should more clearly establish that an EGU or utility that is complying with its obligations under an EPA

- approved state compliance plan is legally meeting all federally enforceable obligation s and therefore cannot be subject to an EPA enforcement
action or citizen suit.

Response 1 3 : Once the plan is implemented, if the CO 2 emission performance rates or applicable state rate

- based CO 2 goal are not achieved, for emission standard type plans corrective measures would need to be implemented, as described in section VIII.F.3 of the final rule preamble of the CPP , or for state measures type plans the federally enforceable backstop would be triggered, as described in section VIII.C.3 of the final rule preamble

. In response to this115 comment ’ s concerns regarding enforcement, the final rule provides considerable discretion to the states in setting emission standards and related plan requirements for its affected EGUs. And,
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.

The comment also is expressing concern that affected EGUs should have clear compliance obligations under their control and a chance to comment on the structure of a state plan. The guideline as finalized meets both those goals. As a matter of direct federa l enforcement, a state plan will include emission standards on affected EGUs. Those standards may be designed to accomplish the entirety of the emission reductions needed under the plan, or a portion, with the state relying on state measures to achieve the balance. In either case, the affected EGU can limit its emissions to meet the requirements of the state plan. In addition, the EGUs will have an opportunity as the state develops its plan to comment on how those limits are structured, and, if a

state uses a state measures plan design with backstop EGU emission standard s, the EGUs can comment on the conditions under which those backstop standard s become effective.

Comment 14 : EPA is not permitted to enforce a state plan if a state fails to meet its state goals.

C ommenter s stated that a state's failure to meet its state goal does not permit EPA to enforce the state's plan. C ommenter s said EPA can take over administration of a state plan when "violations of an applicable implementation plan or an approved pe rmit program . . . are so widespread that such violations appear to result from a failure of the State in which the plan or permit program applies to enforce the plan or permit program effectively." 41 U.S.C. section 7413(a)(2).
C ommenter s said if a state has implemented the measures in its state plan then there would be no widespread violations meriting EPA enforcement. C ommenter s said if EPA cannot enforce against a state for failing to meet a state goal, then EPA must explain whether and how it will
addr ess a state that is not on track to meet its interim state goal (per the progress checks every two years). C ommenter s said EPA needs to clarify whether the Agency would issue a federal plan or whether it would require the state to amend its plan. C ommenter s said based on EPA's regulations, it appears EPA would issue a revision to the state plan, see 40 C.F.R. section 60.29.

Response 14 : Once the plan is implemented, if the CO 2 emission performance rates or applicable state rate

- based CO 2 goal are not achiev ed, for emission standard type plans corrective measures would need to be implemented, as described in section VIII.F.3 of the final rule preamble of the CPP , or for state measures type plans the federally enforceable backstop would be triggered, as descri bed in section VIII.C.3 of the final rule preamble

. In response to this comment’s concerns regarding enforcement, the final rule provides considerable discretion to the states in setting emission standards and related plan requirements for its affected EG Us. And, 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.116 Comment 15 : If an a ffected unit or program fails to meet expectations, then the utility should not be considered out of compliance if the utility as a whole is meeting the requirements imposed upon it by the state.

C ommenter s stated as states develop their compliance strateg y to meet the respective emission reduction requirements for the CPP in their state, they will necessarily make certain assumptions, including but not limited to, the following items: (1) Affected fossil unit(s) generation; (ii) Affected fossil unit(s) CO2 emission rate; (iii.) Installed capacity and generation from in

- state qualified renewable resources ; (iv.) Renewable energy credits transferred into or out of state; (v.) Existing and incremental capacity and generation from in

- state nuclear resources; (v i.) Incremental capacity and generation from hydroelectric resources; and (vii.) Energy efficiency
and demand

- side management energy savings. C ommenter s said most vertically integrated
utilities will be able to draw on some or all of the aforementioned resources in states in which they operate, and as such, it will be most efficient if the compliance requirement for such utility was placed upon the compan y as a whole and not on the individual resources and programs
which it controls. C ommenter s said this is important to avoid a potential unintended consequence where the utility is in compliance overall, but certain individual components may have not met
th e original expectations and as such could receive a Notice of Violation for being out of compliance with the state expectation for such unit. C ommenter s gave as an example, in a hotter

than

- normal year, a certain state may lean more heavily on its fossil

- f ueled resources than originally expected, but this may have been offset by higher than expected generation from its renewable resources and/or larger energy efficiency savings from its retail load. C ommenter s said if an affected unit or program has a speci fic requirement as part of a state plan, that unit or program should not be deemed to be out of compliance if the utility as a whole is meeting the requirement imposed upon it by the state for a given year.

Response 15 : 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 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 16 : States should have the ability to enforce state plans.

C ommenter s urged EPA to ensure that affected EGUs are not necessarily the only entities responsible for achiev ing the final emission performance levels. C ommenter s said it is important for EPA to urge states to consider which entities would be responsible for the measures states include in compliance plans as some entities may be responsible for implementing energ y efficiency measures but also dependent on decisions beyond their control to achieve the projected reductions. C ommenter s provided examples in their comment.

C ommenter s recommended that the requirements to meet renewable or energy efficiency obligations should be enforced consistent with current practice. C ommenter s said states should have the authority to determine whether they want to design a plan consistent with EPA' s

described "portfolio approach" or the "state commitment approach". C ommenter s said provided117 states are ensuring implementation and enforcement of the appropriate emission reductions, state plans can be designed consistent with the requirements of 111(d). C ommenter s said the choice of the federally enforceable entity should be a state's decision. C ommenter s said if a state chooses to include a measure as an express component of its 111(d) compliance plan, that program can become federally enforceable; howe ver, as an alternative, a state can commit to achieve a portion of the required emission performance level on behalf of affected EGU, and the state can be responsible for demonstrating those reductions without the associated state programs becoming
federal ly enforceable. Commenters said this alternative is consistent with the procedures under
section 110 to which section 111 references.

Response 16 : We appreciate these comments. The final rule requires that states adopt either an emissions standards approa ch or a state measures approach and approaches offer the states the types of opportunities the commenters recommend.

Comment 17 : Commenters referred to specific comments made for each building block, and
stated that a number of issues have been identified regarding the underlying assumptions used by EPA. Commenters stated that these issues create significant uncertainties that greatly diminish the potential for states to translate those assumptions into feasible requirements that can be implemented and enf orced. Commenters also summarized issues of uncertainties and implementation concerns, including: Building blocks 3 and 4 are not enforceable against designated facilities

Response 17: We are not finalizing the portfolio approach. Accordingly, states must either (i) submit state plans that adopt the emission standards approach and that therefore include standards of performance for the affected EGUs, but that do not impose requirements on non

affected EGUs, which standards of performance are federally enfor ceable; or (ii) adopt the state measures approach that may include some or no federally enforceable emission standards for
affected EGUS and state

- law requirements on non

- affected EGUs and other non

- EGU entities, which are not federally enforceable.

1.11. 6 Parties regulated by the state other than affected EGUs

Comment 1: Concern regarding the liability of the power sector if Building Block 4 reductions

are not met.

Commenters indicated that problems with Block 4 including the lack of uniform technical standards for measuring EE gains may result in an unfair shift of liability to EGU owners in states that rely upon significant EE achievements if EE components are unme t. Commenters said, it is unclear within the current rule how one industry sector within a state compliance plan would be affected by the failings of others. Commenters suggested a clear chain of liability in the event that any entity or single EGU misses goals. Commenters said, states should keep the mechanism for enforcement internal, and bear costs, rather than shifting costs/risk to other entities in the portfolio.118 Response 1: We disagree with the commenters, although as discussed in section V.B. of th e final rule preamble of the CPP, we are not including building block 4 as part of the BSER.

Comment 2 : Comments that EPA should ensure that provisions of state plans are verifiable and
enforceable.

Commenters said that state plans with requirements th at apply to entities beyond the affected EGUs must make those requirements federally enforceable by both EPA and citizens, and incorporate a backstop mechanism that will ensure that any shortfall is remedied. Comment ers said the backstop mechanism must be designed by the state and incorporated in its plan

, must be triggered automatically by any shortfall

, and must ensure that ultimate responsibility for remedying any shortfall in emission reductions rests with the regulated EGUs. Commenters said
that the st ate plans must clearly present how liability and enforcement would work when entities other than power plants have responsibility for emission reduction measures as part of a state's implementation plan. C ommenter s stated that the rule should be enforceabl e only against
affected EGUs and no other entities. Commenters from electric utilities stated that they should
not be held accountable for measures that are not under their direct control.

Response 2 : The preamble addresses these concerns by explaining th at the final rule authorizes either the emission standards approach or the state measures approach, which requires the state submit standards of performance for CO2 emissions from affected EGUs in the form of a federally enforceable “backstop” that would be triggered if the state measures fail to achieve the required CO2 emission performance level. See section VIII of the final rule preamble of the
CPP . T he final rule does not authorize the portfolio approach, a s explained in section VIII.C of
the final r ule preamble, and affected EGUs are able themselves to take actions that implement the building blocks and achieve their emission standards at the levels of the source subcategory specific emission performance rates. The federal enforceability considerati ons raised in the comment arose primarily under the proposed portfolio approach for state plans., the EPA is not finalizing the portfolio approach, which would have allowed state plan submittals to include federally enforceable measures that apply to entit ies that are not affected EGUs. However, as further explained in section VIII.D of the final rule preamble , if the state is adopting the state measures type plan, the state plan submittal will need to specify, in the supporting materials, the
state enforce able 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 an d related plan 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 resp onse and resolution.119 Comment 3 : Comments that s ection 111(d) does not authorize EPA to make the control measures in building blocks 2

- 4 federally enforceable against any entities other than the EGUs that are “designated facilities .”

Commenter s said, CAA section 111(d) does not provide EPA the authority to create federally enforceable obligations on entities that are not within the regulated source category.
Commenter s said first, the entity must be a "stationary source," meaning a "building, s tructure, facility, or installation which emits, or may emit any air pollutant.' Section 111(a)(3). Second, commenters said that stationary source must be an existing source that falls within the "category of sources" that EPA has listed as eligible for r egulation because that category "causes, or contributes significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare." Section 111(b)(1)(A). Third, commenters said that EPA must have promulgated a standard of per formance for new sources in the source category. Commenter s said finally that EPA's regulations define "designated facility" as "any existing facility that emits a designated pollutant and that would be subject to a standard of performance for that facilit y if the existing fac ility were an affected facility ." Commenter s stated

, thus, a "designated facility" for which state plans must establish existing

- source performance standards is the same as an "affected facility" for which EPA establishes new source pe rformance standards, except that a "designated facility" is an existing facility. Commenter s concluded, therefore, that neither EPA
nor the states have no authority under section 111(d) to enforce emissions reductions beyond the physical boundary of a “des ignated facility.” Commenters said that if an entity is not a stationary source of pollutants in a category for which the Agency has promulgated an endangerment finding and an applicable NSPS, then neither EPA nor the states have authority to impose any
ob ligation on that entity under section 111(d). But instead, commenters said that the Agency proposed to take another wrong turn away from the regulatory program established in section 111 and to direct states to impose legal obligations on "affected entitie s" other than EGUs to obtain the aggregate emission reductions that cannot be achieved by adopting proper standards of performance for existing EGUs. 79 Fed. Reg. at 34,901

- 03. Commenters also pointed out that "affected entity" is not a term that EPA has previously used in its Section 111(d) regulations to define the regulated sources and is not defined in the Agency's section 111(d) implementing

r egulation 40 CFR 60, subpart B.

Response 3 : The EPA is not adopting the portfolio approach in the final rule ; accordingly, any requirements that the state adopts for entities other than affected EGUs must be limited to the state measures approach and those measures that apply to entities other than affected EGUs will not be federally enforceable

.

Comment 4 : Comme nts that the enforcement authority of the CAA does not allow enforcement against any entity other than a regulated source.

Commenters stated in some states, public utility commissions are the only entities with authority to effectively implement the re

- di spatch of generation from existing coal

- fired units to NGCC units, or to coordinate investments in renewable energy generation or demand

- side energy efficiency campaigns. Commenters stated these state agencies are shielded from suit under the120 CAA's citizen suit provision. Commenters stated therefore, it would not be possible to enforce
emission

- reducing measures on these state agencies. Commenters stated in that case, under the state plan requirements of the EPA's proposal, the state plan submission would n ot be approvable unless the state adopts legislation expressly opening its agencies to citizen suits seeking to enforce these obligations, which would plainly exceed the scope of measures the EPA may require in a state plan. Commenters concluded accordingl y, it may well prove impossible for states to submit plans that are "approvable" under the EPA's criteria.

Commenter s stated, EPA acknowledges that placing enforceable goals on non

- EGUs (i.e., the portfolio approach) may be "challenging" and tasks states w ith working out these problems. 79 Fed. Reg. at 34,915. Commenter s said, EPA cannot impose goals if it does not know if they are lawful, and it cannot circumvent that by asking the states to figure it out.

Response 4 : The EPA is not adopting the portfolio approach ; accordingly, any requirements that the state adopts for entities other than affected EGUs must be limited to the state measures approach and those measures that apply to entities other than affected EGUs will not be federally
enforceable

.

Commen t 5 : Comments suggesting that EPA should define enforcement and compliance measures for the rule and clarify utilities responsibilities.

Response 5 : The final rule provides considerable discretion to the states in setting emission standards and related pla n requirements for its affected EGUs. Consistent with longstanding practice under the Clean Air Act, if an affected EGU does not meet one of its requirements, regardless of whether or not its state has met its state requirements, the EPA will address the
affected EGU’s violation 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.

EPA is finalizing an option to submit either an emission standards plan type or a state measures plan type . If a state fails to achieve the required CO2 emission performance level , then under an emission standards plan a corrective measure would apply and under a state measure plan a federally enforceable backstop would be triggered. Under the state measures plan a mass CO2 emission goal may be partially or entirely achieved through state measures that impose requirements on entities other than affected E GUs and that are not included in the federall y enforceable 111(d) state plan. See section VIII of the final rule preamble of the CPP

. As proposed, we are requiring that state plans include a demonstration that plan measures are enforceable, which for stat e measures plans is provided for in § 60.5780 and discussed in section
VIII.D.2.c.6 of the final rule preamble. T he existing guidance documents pertaining to enforceability include: (1) September 23, 1987 memorandum and 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 from121 Electric

- Sector Energy Efficiency and Renewable Energy Measures;” and (3) July 2012
“Ro admap for Incorporating Energy Efficiency/Renewable Energy Policies and Programs into State and Tribal Implementation Plans, Appendix F.”

Commenters requested that EPA define enforcement and compliance measures in the rule for EE projects undertaken to hel p reach the CPP's goals. The commenter s argued that the proposed language is ambiguous and compliance and enforcement measures should be on the state or entity managing the overall EE program and not the individual sites implementing EE/RE. The

commenter s wanted EPA to clarify that water and wastewater utilities are only responsible for submitting proper monitoring and verification materials to the sponsoring state or electric utility and are not considered regulated entities in this rule or subject to CAA enforcement under this
rule.

Comment 6 : Commenters stated that holding affected EGUs legally responsible for obtaining all of the emission reductions required by the state goals would be unreasonable and illegal as proposed. EPA would need to revise its BSER analysis to consider only the costs and other factors involved in applying the emission rate goals solely to affected EGUs. Commenters stated EPA cannot develop and analyze a BSER that relies on reductions throughout the electric sector and then requi re affected EGUs to be wholly responsible for meeting the emissions reductions required by such an expansive BSER determination; such a result would circumvent Section 111's requirement that standards of performance be "achievable." 42 U.S.C. section 7411( a)(1);
and this would be arbitrary and capricious rulemaking. Commenters continued, stating that EPA recognizes that state goals cannot be met solely through emission

- reducing measures that may be undertaken by affected EGUs. See 79 Fed. Reg. at 34,838. A ccording to EPA, affected coal

- fired EGUs could reduce their emissions by only six percent through the adoption of best practices to reduce heat rate variability and implementation of equipment upgrades. Id. at 34,861, and even
with the assistance of CO2 emission reductions from sources other than affected EGUs, EPA still predicts that 50 GW of affected fossil

- fuel fired generation will retire as a result of the Proposal.(77 See American Legislative Exchange, Clean Power Plan Fact

-- Expected Plant
Retirem ents, at http://www.alec.org/cpp

- facts/expected

- plant

- retirements.) Additionally, Commenters remarked, affected EGUs have no authority to ensure that other affected entities attain the projected emissions reductions required for the state to achieve its go al. For example,
an affected EGU cannot mandate re

- dispatch or force consumers to participate in EE programs. Commenters concluded, stating that enforcement against affected EGUs in each state, in the event that the state does not meet its goal, would be i rrational and would render the rulemaking arbitrary and capricious.

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 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,122 states will be able to choose from a wide range of emission reduction measures, including measures that are not part of the BSER.

To the extent this comment objects to the portfolio approach, which the EPA is not finalizing, the comment is moot. Nevertheless, as explained in the preamble, the EPA 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 stat e 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.

1.11 .6a Electric distribution utility with obligations to meet an EERS or RPS pursuant to state regulations

Comment 1 : Commenter s disagreed that distribution utilities should have enforceable requirements for EE and RE measures. C ommenter s said if the state p lans provide that an electric distribution utility will be fined if it transmits electricity that does not satisfy proclaimed EERS or RPS, then it is difficult to see how this comports with due process; or if EPA is suggesting that a distribution utility n ot transmit electricity from sources not in compliance, then the rule will have electricity reliability impacts

. C ommenter s said that if alternative compliance payment (ACP) provisions are not be permitted for an RPS , or not fully permitted, then EPA's
det ermination o f demonstrated BSER for RE is not valid because current s tate plans allow ACPs.

Response 1 : The final rule provides considerable discretion to the states in setting emission standards and related plan requirements for its affected EGUs. EPA is finalizing an option to submit a “state measures” plan type, under which a mass CO2 emission goal may b e partially or entirely achieved through state measures that impose requirements on entities other than affected EGUs and that are not included in the federally enforceable 111(d) state plan. See section VIII.

As proposed, we are requiring that state plans include a demonstration that plan measures are enforceable, which for state measures plans is provided for in § 60.5780 and discussed in section VIII.D.2.c.6 of the preamble. T he existing guidance documents pertaining to enforceability include: (1) Septe mber 23, 1987 memorandum and 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 Energy Measures;” and (3) July 2012 “Roadmap for Incorporating Energy Efficiency/Renewable Energy Policies and Programs into State and Tribal Implementation Plans, Appendix F.”

1.11.6b Vertically integrated electric utility with ob ligations under a state

- approved integrated resource plan

Comment 1 : The proposed rule is unenforceable against traditional utilities, perhaps even more so against Cooperatives and other Public Power Systems

. Commenters stated that the states have123 jurisdic tion over electric utility planning for traditional utilities and EPA has no authority to intervene. Municipal utilities and co

- operatives are not subject to the jurisdiction of the state and therefore the state has even less authority to mandate action by these utilities.

Response 1 : The final rule does not adopt the portfolio approach ; accordingly, any requirements that the state adopts on entities other than affected EGUs must be limited to the state measures approach and requirements that apply to entities other than affected EGUs will not be federally
enforceable.

Comment 2 : Commenters disagreed that s tates could reduce or deny rate recovery to vertically integrated, state

- regulated utilities for failure to meet emission s obligations or to empower agencies to issue direct compliance orders. C ommenter s said because a public utility is entitled to a constitutionally guaranteed rate of return on capital it is not clear that rate recovery can be reduced or denied solely to in fluence CO2 emissions, particularly for building blocks, such as energy efficiency, over which the utility lacks direct control.

Response 2 : As we explain in the section VIII.D of the final rule preamble of the CPP and the Legal Memorandum, a state may fulfill its requirements under section 111(d) by adopting a state plan with the emission standards approach, and that imposes rate

- based emission standards at the level of the source subcategory

- specific performance r ates or that imposes the equivalent mass

based emission standards. The affected EGUs would be able to take actions to implement the building blocks or other emission reduction methods, and thereby achieve their emission
standards. In regulated states, we n ote that a vertically integrated utility operating under cost

- of

service would obtain cost recovery through state Public Utility Commissions (PUCs) or other authorities with jurisdiction over their rates. We note that “In states where electric utilities ow n affected power plants, such costs will tend to be passed along to those utility’s consumers through regulated rates as a pass

- through of a variable expense, or as recovery of and a return on compliance capital investments.” 3 “Typically, state regulators in states that own power plants determine whether large capital investments at those plants are prudent, used and useful, and appropriate to be included in `just and reasonable’ rates charged to customers.” 4 In some instances, utilities obtain preapproval of expenditures for costs of environmental compliance. For example, “under Ohio law, under an automatic rider, utilities are able to recover costs of environmental compliance, including `the cost of emission allowances; and the cost of federally
mandated c arbon or energy taxes...’ and a `reasonable allowance for construction work in progress ... for an environmental expenditure for any electric generating facility of the electric

3 Analysis Group, EPA’s Clean Power Plan: State Plans and Consumer Impacts

, at 1 1 (July 2014), available at http://www.analysisgroup.com/uploadedfiles/content/insights/publishing/analysis_group_epa_cle an_power_plan_report.pdf.

4 Id. at 5 n.4.124 distribution utility....’” 5 Finally, we note that we are not including building bloc k 4 as a component of BSER in the final rule.

1.11.7 Private or public third

- party entity not regulated by the state

Comment 1 : Commenter s said that, making State 111(d) Plans "enforceable" could require major changes in Indiana law, given Building Blocks 2, 3, and 4 , because Indiana has not authorized the Indiana Utility Regulatory Commission (IURC) to mandate specific dispatch decisions, implement renewable portfolio standards, or require end

- use energy efficiency measures and lacks the authority to dire ctly regulate some electricity markets in
Indiana. Commenter s said, Indiana explicitly gives municipalities and rural electrical membership cooperatives or corporations the option to opt out of IURC oversight , and these entities and their generating assets are covered by the proposed rule.

Commenter s said that, Local Boards of Trustees and City Councils are educated in the operation of their respective municipal electric utilities and are in the best position to make decisions regarding municipal utilities generating resources, and they are in the bes t position to understand the impact those decisions will have on the ratepayer

- citizens in the communities in which they

serve.

Commenter s said that, EPA suggests that States might use public funds to induce voluntary submission to state control for privat e or public third

- party entities not now regulated by a State.
Commenter s said that "Alternatively, a municipal utility or utility cooperative might voluntarily submit to state authority as a condition of the state agreeing to let the entity implement a

po rtfolio approach, in lieu of the application of certain direct CO2 emission limits for affected EGUs owned and operated by such entities through a state regulation." Commenter s said that, it is not clear that these tactics could be employed everywhere beca use in some States such locally controlled entities enjoy constitutional protection

. Commenter s said that it is not clear that the funding could be secured much less dedicated funding or that conditioning environmental
concessions on surrender of control o f the governance of an entity is lawful regulation.

Response 1 : As explained in the section V.B and VIII.C of the preamble of the CPP , the final rule does not adopt the portfolio approach; accordingly, any requirements that the state adopts on

non

- affecte d EGUs must be limited to the state measures approach and requirements that apply

to non

- affected EGUs will not be federally enforceable. A state may adopt the emission standards approach, under which regulatory requirements are limited to the affected EGU s and,

5 R egulatory Assistance P roject

, Incorporating E nvironmental Costs in Electric Rates Working to Ensure Affordable Compliance with Public Health and Environmental Regulations , at 17 (2011) (citing Ohio Revised Code, Section 4928.143(B)(2)(a)and (b) ), available at raponlin e .org.125 as described in the preamble, those entities are able to take actions, including implementing the building blocks, that will allow them to achieve emission standards at the level of the source subcategory

- specific emission performance rates. The sta te may also adopt the state measures approach although, of course, if that approach proves challenging in a particular state for any reason, the state may use the emission standards approach.

Comment 2 : Comments that p roposed rule is unenforceable against traditional utilities (larger, vertically integrated) and perhaps even more so against cooperatives and other public power systems , and that local boards and City Councils are in a better position to make resource decisions related to their respective mun icipal utilities

.

Commenter s said that, the Proposed Rule is unenforceable against traditional utilities, perhaps even more so against cooperatives and other public power systems.

Commenter s said that, the differences between smaller, public utilities (like cooperatives and municipals) and larger, more traditional and vertically integrated utilities are even more pronounced in the laws of some states, which tend to exert greater control over traditional
investor

- owned utilities. Commenter s said, states possess exclusive authority over investor

owned utilities (IOUs), including decisions regarding the need for additional generating capacity; the type, location, and construction of generating fa cilities to be licensed; and the retirement of existing generators. Commenter s said, for such systems, states maintain jurisdiction over the integrated resource plan (IRP), which represents the utility's plan for meeting its anticipated energy demand throu gh a combination of supply and demand

- side resources. Commenter s said, most states, including Georgia, require such utilities to file their IRP with the public utility
commission. Commenter s said, some states may use the information in IRPs to develop

rene wable portfolio standards (RPS) that require the affected utilities to serve retail load with certain levels of renewable generation.

Commenter s said that , some state laws may treat smaller systems, like electric cooperatives or municipals differently from traditional utilities. Commenter s said, this is the case in Georgia. Under Georgia law, an electric membership corporation (EMC) is not subject to the jurisdiction of the Georgia PSC:

Except as otherwise provided in Part 1 of Article I of this chapter, th e "Georgia Territorial Electric Service Act," electric membership corporations shall not be subject to the jurisdiction of the commission.

O.C.G.A. section 46

- 3

- 177 (2004 & 2014 Supp.). Commenter s stated consequently, unlike traditional IOUs, a wholesale s ervice EMC like Oglethorpe Power is not subject to regulation by the Georgia Public Service Commission (PSC). Commenter s said Georgia electric membership corporations ( EMCs ) are not required to produce and seek approval of IRPs, and the State

- through the jurisdiction of the Georgia Environmental Protection Division ( EPD ) , the PSC or any other Georgia regulatory agency

- cannot impose renewable energy production or demand

- side management requirements on Georgia EMCs, including Oglethorpe Power. Commenter s stated126 instead, Georgia law grants its EMCs the power to generate, manufacture, purchase, acquire, and accumulate electricity, and to transmit, distribute, sell, furnish and dispose of such electricity.

Commenter s said that, based on the way Georgia regul ates traditional utilities and cooperatives, EPA's proposed rule is unenforceable against both types of entities. Commenter s said that for traditional utilities, the State of Georgia PSC has been given exclusive authority over issues like generation, IRPs and electric retail sales and not the EPD or EPA. Commenter s said, this structure has been upheld through federal law and judicial precedent. Commenter s said not only does the Federal Power Act (FPA) prohibit Federal Energy Regulatory Commission (FERC)
fro m regulating generation either directly or indirectly, but also a recent D.C. Circuit decision rejected FERC's attempt to intrude on state authority to regulate its own retail electricity market.
Commenter s said, if FERC lacks such authority, common sense dictates that EPA would not possess it either. Commenter s said EPA cannot point to any statute enacted by Congress that would extend it such authority. Commenter s said, EPA's proposed rule is invalid to the extent that it infringes on a state's traditional rights to regulate those portions of its electric market addressed by the Proposed Rule.

Commenter s stated that furthermore, given that the EPA cannot, through its proposed rule, require Georgia to impleme nt certain steps in regard to traditional utilities, then it similarly cannot require Georgia to implement measures in regard to cooperatives. Commenter s said as discussed above, subject to a limited exception for retail EMCs (Oglethorpe Power is not a ret ail EMC and thus is not subject to that limited exception), Georgia cooperatives are not subject to the jurisdiction of the PSC like IOUs, lessening the State's ability to exert control over them, especially in the areas contemplated by the Proposal. Comme nter s stated thus, even assuming the EPA could require Georgia to implement the proposed rule in regard to its vertically

- integrated IOUs, which it cannot, the State would still lack the necessary jurisdiction to implement the Proposal in regard to Georgia EMCs

- especially ones like Oglethorpe Power over whom the PSC has no regulatory authority.

Response 2: We disagree with commenters. CAA section 111(d)(1) requires the EPA to promulgate regulations under which states submit state plans regulating “any ex isting 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 quality 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 determining how they 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 states 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). Additionally, we are not requiring any state or affected EGU to cons truct electric generation. Further, we note that we are not including building block 4, demand

- side energy127 efficiency in the final rule. Finally, for reasons that we fully explain in preamble section V.B. and the legal memo, we are within our legal authori ty and the final rule is consistent with past EPA practice and interpretation in setting standards of performance.

Comment 3 : Commenter s said that, electric cooperatives face an entirely different and unique regulatory framework from investor

- owned utilities and municipal utilities operating in the state, as well as from generation and transmission cooperatives. Commenter s said, Texas legi slatures have largely chosen to leave it up to the electric cooperatives' members (through voting for their boards of directors) to regulate themselves. Commenter s said, in order for a Texas State Implementation Plan (relative to this EPA proposed rule) to be enforceable, the Texas legislature would need to first alter state policy and pass a new law regulating Texas electric cooperatives

. Commenter s questioned whether the federal government can legally dictate a change in state policy and mandate that Texa s regulate electric cooperatives

. Commenter s said
that the EPA's attempt to coerce the state legislature to change the way it regulates electric cooperatives who do business entirely in the State of Texas is highly questionable from a legal perspective.

Co mmenter s said that, from state's rights perspective, FERC Commissioner Tony Clark has pointed out that every state will be forced to move from a cooperating relationship with the federal government to a "mother

- may

- I'' relationship with EPA, as to how a st ate may regulate how it generates, transmits and consumes energy. Commenter s said that the Proposed Rule will comprehensively reorder, perhaps forever, the way that states interact with the Federal government in regard to electric energy. Commenter s said t hat federalism and state

- sovereignty issues are not being adequately considered by EPA in this rulemaking.

Response 3 : 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, includi ng municipalities and electric cooperatives, are subject to air quality 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). W e give states and affected EGUs flexibility determining how they meet these requirements. No state or affected EGU must implement the precise measures included in the building blocks in order to do so. We recognize that states must have legal authority to implement approvable state plans. In the event that states 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). Finally, for reasons that we fully explain in preamble sect ion 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.128 Comment 4 : Commenter s said that, Rural Cooperatives and Municipal facilities sho uld be subject to the same requirements as electric generating units under this rule, especially in deregulated markets where they would operate at a competitive advantage, as compared to units subject to the proposed rule. Commenter s said, any longer

- term capacity planning strategies advantage could be misconstrued as market distortion.

Response 4 : We appreciate th is comment and note th at to th e extent that electric cooperatives and municipal ities own affected EGUs as defined in the final rule, they will be subject to the
final rule requirements . Please s ee section V.A of the final rule preamble of the CPP for EPA’s response to this comment.

Comment 5 : Comments that the proposed regulation lends no insight into which body should take the lead, Colorado De partment of Public Health and Environment or Public Utilities Commission, and that the legislature would have to decide by passing an enabling statute.

Commenter s said that, historically, the Colorado Department of Public Health and Environment (CDPHE) ha s administered the federal Clean Air Act in Colorado. Commenters said, however

, currently, environmental regulators at the CDPHE and the Air Quality Control Commission (AQCC) are not authorized to regulate "beyond the fence" of an individual pollution sour ce, so they would not possess the authority to implement much of the Clean Power Plan. Commenter s said that if the legislature were to grant this authority to environmental regulators, such a delegation no doubt would conflict with the Public Utilities Com mission's (PUC's) century

- old jurisdict ion over the electric industry.

Commenter s said that, EPA's Clean Power Plan (CPP) would thrust into regulatory limbo the Colorado's 22 electric cooperatives and 29 publicly

- owned utilities, which provide approximatel y 24 percent and 17 percent respectively of Colorado's power. Commenter s said, these "coops" and "munis" would have to be part of any Colorado strategy to achieve the Clean Power Plan, but they are exempt from rate regulation by the State, and are otherwis e subject to far less onerous oversight from the Public Utilities Commission (PUC).

Commenter s said that, the lack of PUC resource planning over coops and munis is particularly problematic in the context of the CPP. Commenter s said, unlike investor

- owned utilities, generation and transmission providers are only required to file its resource plan with the PUC as a report rather than filing it for approval through a litigated proceeding. Commenter s said that
member

- systems and th e other coops in the state have voted to exempt themselves from PUC regulation as allowed for under state law. Commenter s said that these coops are therefore not subject to the resource planning jurisdiction of the PUC and do not need to file resource plan s for approval. Commenter s said, the PUC does not have resource planning or any other re gulatory authority over munis. Commenter s said, the PUC lacks approval authority over the resource planning activities of all utilities except the two investor

- owned ut ilities in Colorado.
Commenter s said that the resource planning is the only regulatory process where all "building blocks," as a general matter, are holistically evaluated and considered in conjunction with each129 other. Commenter s said the proposed CPP does not include how Colorado should incorporate its "coops" and "munis" into a compliance plan. Commenter s said that, any attempt to further regulate these entities will result in political and legal battles.

Response 5 : We disagree with commenters. CAA sect ion 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 f or the implementation and enforcement of such standards of performance.” Affected EGUs, including municipalities and electric cooperatives, are subject to air quality 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 determining how they meet these requirements. No state or affected EGU must implement the precise measures included i n 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 states 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. Finally, 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 6 : Broad definition of system raises enforcement and Home Rule issues for municipal electric systems.

C ommenter s noted that the concept of an "outside

- the

- fence" regulatory approach would hold individual generating units accountable for the actions and inactions of third parties outside their
control. C ommenter s questioned how states might incorporate outside

- the

- f ence strategies into a section 111(d) plan, including whether such measures are legally permissible/defensible, and whether they are necessarily central to a compliance strategy. C ommenter s argued that past CAA actions impacting EGUs

-- as with other NSPS regulated industries

-- have been imposed "inside the fence line" at the affected unit and these compliance strategies and tools are familiar to states and regulated entities. Commenters said once the 111(d) plans step outside that fence line, the regulato ry landscape becomes more difficult, particularly when moving beyond state air or utility agency traditional authorities. C ommenter s argued that the proposal would require a reworking of state enforcement authorities to account for municipal electric syste ms and rural electric cooperatives that in most states do not fall under state renewable and energy efficiency standards because of local governance. C ommenter s argued that Home Rule authorities are extremely important to municipal electric systems and mus t be maintained. C ommenter s argued that EPA's proposed rule should not be used to impose state utility commission oversight of public power utilities for purposes of compliance in contravention of longstanding state laws and policies.

Response 6 : We disag ree 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 were130 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 quality requirements, including meeting such standards of performanc e 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 determining how they meet these requirements. No state or affected EGU must implement th e 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 states 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. Finally, 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 7 : State environmental agencies lack the authority to require private companies to invest in new infrastructure needed to comply with the rule.

Commenter s said that, the state environmental agencies lack the authority to require individual companies to invest in natural gas generating assets or infrastructure to comply with a rule
settin g the BSER using parameters outside the existing units.

Response 7 : We disagree with commenters that the final rule requires state environmental agencies to require private companies to invest in new infrastructure. There are many ways in
which affected E GUs can comply with the final rule. 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 existi ng source were a new source” and “provides for the implementation and enforcement of such standards of performance.” Affected EGUs, including individual companies, are subject to air quality requirements, including meeting such standards of performance tha t 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 determining how they meet these requirements. No state or affected EGU must implement the pre cise 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 states lack the necessary state

- law authority to implement a plan, the EPA w ill implement a federal plan for that state under section 111(d)(2). Finally, 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
inter pretation in setting standards of performance.

Comment 8: Commenters said

, EPA delegates the development of performance standards to the States through a requirement that each state develop a State Implementation Plan ("SIP") that
details the actions that will be required to meet the emission rate targets set by the rule.
C ommenters said to achieve compliance with the Proposed Rule, the State(s) in which the Co

-131 ops operate would be required to develop enforceable requirements on a Federal agency which
raise s significant questions about federalism and a State's authority to issue such requirements.

Response 8: We disagree with commenters. CAA section 111(d)(1) requires the EPA to promulgate regulations under which states submit state plans regulating “any ex isting 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 electric cooper atives, are subject to air quality 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 flexi bility determining how they 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 p lans. In the event that states 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 efficie ncy in the final rule. Finally, 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 9 : Clarification needed on how programs funded or implemented by federal entities such as the Bonneville Power Administration may be incorporated in state compliance plans as
enforceable measures

.

Commenter s noted that in the Northwest, many of the energy efficiency programs relied upon by
the consumer

- owned electric utilities (e.g., public utility districts) are funded by Bonneville Power Administration (BPA), a federal agency

. C ommenter s stated that the ene rgy efficiency programs implemented by BPA are invaluable to the region and to customers of these utilities, and are also programs which EPA has implicitly included in setting its energy efficiency target since over half of the state's population is served by these utilities. C ommenter s stated that tying enforceable measures (such as accomplishing energy efficiency improvements) to budget decisions made by a federal agency is a scenario which EPA did not address in its proposal. For example, commenter s stat ed that it is unclear how a state could set obligations and enforce adherence to a SIP for federally financed energy efficiency programs

. According to the

commenter s , the alternative approach of transferring the financing of these projects to consumer

owne d utilities is not efficient or politically feasible. C ommenter s stated that incorporating BPA's energy efficiency programs is essential to meeting the state's compliance goal, but without a protocol for doing so (e.g., an agreement between EPA and BPA) th is vital contribution may, by necessity, have to be excluded.

Response 9 : By not finalizing the portfolio approach and instead finalizing the option to submit

a state measures plan type or an emission standard plan type , EPA has provided states the
flexib ility to consider the kind of programs the commenter describes without making such programs subject to federal enforcement. Under the emission standard plan type , i f a state wants132 to consider an EE program, it can factor the results of that plan into its assumption of how much emissions reduction it anticipate s from such measures and use them in developing a emission standard type plan. Under a state measures plan type, a mass CO2 emission goal may be partially or entirely achieved through state measures t hat impose requirements on entities other than affected EGUs and that are not included in the federally enforceable 111(d) state plan, provided the state submits standards of performance for CO2 emissions from affected EGUs in the form of a federally enfor ceable “backstop” that would be triggered if the state measures fail to achieve the required CO2 emission performance level. See section VIII. We are requiring that state plans include a demonstration that plan measures are enforceable, which for state me asures plans is provided for in § 60.5780 and discussed in section VIII.D.2.c.6 of the preamble. T he existing guidance documents pertaining to enforceability include: (1) September 23, 1987 memorandum and accompanying implementing guidance, “Review of Sta te 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 Energy Measures;” and (3) July 2012 “Roadmap for Incor porating Energy Efficiency/Renewable Energy Policies and Programs into State and Tribal Implementation Plans, Appendix F.”

1.11.8 State agency, authority, or entity

Comment 1 : Some states will be unable to achieve the EPA's reductions under Building Block 2 without adopting laws and regulations that impermissibly intrude upon the exclusive jurisdiction
of FERC

Commenters stated, while states retain some authority to adopt laws and regulations that promote utilization of certain types of generation faciliti es over others (e.g., renewable portfolio standards), federal courts have consistently found the FPA preempted state laws that directly or indirectly impact the rates charged in wholesale markets administered by System Operators, including direct rate subs idies. Commenters said, as a result, states like Pennsylvania 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 jurisdiction of
FE RC.

Response 1 : We disagree with commenters. See section VIII.E of the final rule preamble of the CPP for EPA’s response to this comment. Further, a s 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 hav e 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 th e 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.133 Comment 2 : Utility Commissions and state environmental agencies cannot be sued under the
CAA's ci tizen suit provision, therefore provisions cannot be enforced.

Commenter s stated, EPA suggests that in order to implement Building Blocks 2, 3, and 4, "affected entities" may include "a state agency, authority or entity," such as a state environmental management agency or public utilities commission. 79 Fed. Reg. at 34,917. Com menter s said, in some states, these may be the only entities with authority to implement the redispatch of generation from existing coal

- fired units to NGCC units or to coordinate investments in renewable energy generation or demand

- side energy efficiency campaigns. Commenter s said, these state agencies, however, are immune from suit under the CAA's citizen suit provision. Sierra Club v. Korleski, 681 F.3d 342, 351 (6th Cir. 2012) ("The text and structure of the CAA make plain that [section 304(a)(1)] does not permit citizen suits against state regulators qua regulators."). Commenter s said, thus, it would not be possible to enforce emission

- reducing measures that are the responsibility of state agencies. Commenter s said, in such a case, under the plain terms of EPA's proposal, the state's plan submission would not be approvable unless the state adopts legislation expressly opening its agencies to citizen suits seeking to enforce these obligations, which would plainly exceed the scope of measures EPA may requi re in a state plan.

Response 2 : The EPA is not finalizing the portfolio approach (see section VIII.D of the final rule preamble of the CPP) ; accordingly, entities other than affected EGUs will not be subject to
federal enforcement or citizen suits under section s 111 (d) or 304 of the CAA, respectively

.

Comment 3: Comments that state environmental and energy agencies do not have the legislative authority to impose the control measures specified as the building blocks in the emission guidelines

.

Commenters stated that the EPA has specified BSER in terms of measures that neither the state environmental agencies nor energy agencies have the legislative authority to implement.
Commenters contend that states can limit the emissions from EGUs but do not have the authority to adopt the building block measures specified in the guidelines. Commenters said that EPA cannot set standards based on illegal actions by the states . Commenters gave several examples of states that lack the necessary authority for implementing the building blocks.

Building block #1

. Commenter s states that Alabama, Florida, Georgia, or Mississippi do not have the authority to impose heat rate improvement standards. Commenter s said that although each state has the authority to adopt a standard of performance for a designated facility, none of these states has the authority to require regulated utilities to construct specific capital projects

, even those that improve the efficiency of gen erating units. Commenter said as a result, EPA cannot reasonably identify Building Block 1 as an element of any "best system of emission
reduction."134 Building block #2

. Commenter s stated that neither state environmental agencies nor state utility
commissio ns have the authority to force the increased dispatch of natural gas units and the forced idling of coal units, as required by Building Block 2. Commenters stated that environmental agencies cannot regulate electricity generation because state legislatures often have granted explicit, exclusive authority over certain aspects of electric utilities' generation to public utility
commissions. Commenters said, even so, many states still cannot inclement building block #2
because the authority of utility commissi ons is limited to regulati o n and not management.
Commenters said t he commissions have the authority to ensure that utilities comply with environmental regulations in an economical manner but cannot direct the utilities how to comply. Commenters said, for example, in Alabama, “...the Commission should not be allowed to interfere with the proper operation of the utility as a business concern by usurping managerial prerogatives." Commenters said, similarly

, the Georgia Supreme Court has confirmed that the Georg ia Public Service Commission's ("GPSC") rate and service territory authority does not extend to operational or managerial authority over public utilities (enjoining the GPSC from requiring two utilities to merge or one to sell power to the other). Commente r s pointed out that
neither Alabama , Florida, Indiana, M ississippi , Tennessee, nor West Virginia utility
commission s ha ve the authority to order utilities to run their NGCC units to the exclusion of their coal units or to purchase power from other companie s' NGCC units

. Commenters also stated that
states cannot mandate a specific capacity factor for generating units operated by independent power producers because these units not subject to regulat ion by a public utility commission.

Commenters stated that s tates generally do not have the authority to override economic dispatch of generating units by the RTOs or the RTO decisions to operate certain plants for reliability purposes or voltage support. Commenters pointed out that the regulation of dispatching ha s been brought into question due to a recent court decision [http://www.ferc.gov/legal/court

cases/opinions/2014/13

- 4330.pdf, New Jersey Court Case] in which the state of New Jersey approved contracts for new generation that paid the difference between wha t the generator would make in the wholesale market through PJM and the bid price, thereby providing a predictable and adequate stream of revenues to ensure generation is built in the state in order to address reliability and other concerns. Commenter s said the Third District Court of Appeals concluded: "We affirm the District Court's judgment. Long

- term Capacity Pilot Project (LCAPP) compels participants in a federally

- regulated marketplace to transact capacity at prices other than the price fixed by the ma rketplace. By legislating capacity prices, New Jersey has intruded into an area reserved exclusively for the federal government. Accordingly, federal statutory and regulatory law preempts and, thereby, invalidates LCAPP and the Standard Offer Capacity Agre ements."

Building block #3

. C ommenter s stated that none of the states in which they operate have the authority to mandate construction of non

- emitting generation (renewable or nuclear).
C ommenter s stated that the utility commissions could find that a utility had failed to demonstrate that a proposal for a new resource was in the best public interest, but it may not substitute its judgment for utility management's and dictate a different resource co urse. Commenters stated that in Florida, no state agency has the authority to establish a renewable portfolio standard.135 Building block #4

. C ommenter s stated that none of the four states in which they operate are
authorized to enforce the massive reduction in state

- wide electricity demand that constitutes building block 4. For example, commenters state d that Alabama and Georgia have the authority to approve demand

- side management ("DSM") programs only if the program is cost effective for utility customers, but in most states DSM goals apply only to investor

- owned utilities, and not to municipal utilities or electric cooperatives

. Commenters stated that to implement and enforce the CPP, state legislatures would need to fundamentally reorder the governance of public power utilities in ways that undermine bedrock principles under which energy has been managed for over a century. Commenters said n ew legislation would be needed among other things to realign responsibilities for electricity generation oversight, p rovide state environmental agencies enforcement power against other state agencies; require mandatory integrated resource plans with specific GHG provisions; provide the utility commissions with siting authority; and authorize new energy efficiency and
dem and side energy efficiency standards. Commenters said that energy production and dispatch is determined through a host of regulatory agencies and legislative requirements, and to develop this section 111(d) state plan would require unprecedented interactio ns among agencies that cannot occur without numerous legislative changes. Commenters said that in some states a change to the state constitution would be needed, and this could take more time than is allowed for submitting the section 111(d) state plans. C ommenters said, m oreover, the rule poses the potential to reorder the current jurisdictional relationships and authority between the federal government (e.g., FERC) and the states regarding electricity policy.

Commenters stated that the EPA assumes that s tates have the authority to re

- dispatch large amounts of capacity and generation from existing coal

- fired EGUs to existing NGCC EGUs. Commenters said that simplifying assumption is not based on a review of states' actual authority or capability to do so. C ommenters said in Nevada, for example, it is questionable whether either the NDEP or the PUCN has the authority to require such re

- dispatch. Commenters said the PUCN must provide for the safe, economic, efficient, prudent and reliable operation and service of public utilities. Commenters said that at most, the NDEP has the authority to create a system
of emission reduction credits which could be issued should coal

- fired EGUs choose to re

dispatch to NGCC facilities. Commenters said in order to create an inc entive for the coal

- fired EGUs to do so, however, the NDEP would have to permit those facilities with such low emission limits that it would effectively force them to retire. Commenters said that may subject the NDEP to other legal risks.

Commenters said t hat states cannot mandate the interstate purchase and sale of electricity. Commenters said Building Block 2 of the BSER assumes that states can "substitute" the electricity produced by coal

- fired steam and oil/gas

- fired steam units with electricity produce d by NGCC units through, essentially, preferential dispatch of NGCC units. Commenters said Building Block 2 fails to consider what percent of electricity produced by NGCC facilities is currently committed through long

- term sales contracts and, therefore, n ot available for dispatch. Commenters said that insofar as the capacity of a NGCC facility is already committed through a136 long

- term contract, states lack the authority to mandate that those facilities break existing contracts in order to dispatch and sell into the wholesale markets.

Response 3: As we explain in the preambl e (section VIII.D) and the Legal Memorandum, a state may fulfill its requirements under section 111(d) by adopting a state plan with the emission standards approach, and that imposes rate

- based emission standards at the level of the source subcategory

- specific performance rates or that imposes the equivalent mass

- based emission
standards. The affected EGUs would be able to take actions to implement the building blocks or other emission reduction methods, and thereby achieve their emission standards. As a result, i t is not necessary for state utility or environmental agencies to order the affected EGUs to implement the building blocks and, therefore, it is not necessary for the state agencies to have the authority
to do so or for the states to make the other types of changes to state law that the commenters
describe. Finally, we note that we are note including building block 4 as a component of BSER
in the final rule.

Comment 4 : The proposed guidelines conflict with state laws

Commenter s stated the Proposed Guidelines conflicts with state laws and state constitutions. Commenter said, to override these laws, the CAA would have to provide clear authority, grounded in the Commerce Clause, for EPA to take such action. Commenter s said the Act provides no such authority.

Commenter s stated that Kansas, Kentucky, Louisiana, Missouri, and West Virginia have laws that prohibit those states from regulating power plant emissions by shifting pollution

- control costs to other parts of the economy. C ommenter s referenced a Wyoming law that provides that EPA's emission guidelines must recognize state primacy in establishing carbon regulations, and a Kentucky law precludes BSER at coal

- fired electric generating unit from including fuel

switching, co

- firing with o ther fuels, or limiting utilization. C ommenter s also referenced an Arizona statute that prohibits any state agency from adopting or enforcing a state or regional program to regulate GHG emissions to affect atmospheric temperature without express legislativ e authorization. C ommenter s provided references tallying well over a dozen other instance of conflicting state legislation.

Commenter s stated that EPA has no authority to override these state laws due to the Supremacy
Clause of the U.S. Constitution. U.S. CONST. art. VI, cl. 2. C ommenter s said that wherever possible courts avoid determining that federal preemption of state law has occurred, and cited N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co ., 514 U.S. 645,
654

- 55 (1995); Maryland v. Louisiana , 451 U.S. 725, 746 (1981); Napier v. Atl. Coast Line R.
Co ., 272 U.S. 605, 611 (1926), and courts typically presume that "the historic police powers of the States were not to be superseded by [federal law] unless that was the clear an d manifest purpose of Congress." Rice , 331 U.S. at 230; see also Wisconsin Public Intervenor v. Mortier

, 501 U.S. 597, 605 (1991). . C ommenter s said that when a court examines whether preemption occurs, it looks first to the intent of Congress in passing the statute. C ommenter s indicated that137 the purpose of the CA is to regulate air emissions and not the amount and source of energy generation from utilities.

Commenter s stated that to meet the proposed rule would require legislative changes to Florida
law to provide the requisite powers to state agencies. If the state does to act or act in time to meet the rule compliance deadlines, commenter s believed the EPA does not have the authority to change Florida law.

Response 4 : The Clean Air Act is founded on th e principle of cooperative federalism. In 1970, Congress undertook to create federal mandates to regulate air pollution, for the first time entering a realm of regulatory police power that had long been the exclusive province of the states. Congress did not oust the states from regulating air pollution within their boundaries. Indeed, Congress specifically preserved the states’ authority to regulate air pollution in section 116 of the Act. Notably, however, Congress specifically provided that a state “m ay not adopt or enforce any emission standard or limitation which is less stringent than the standard or limitation under [any applicable implementation plan, or sections 111 or 112 of the Act].” It is clear that Congress was assigning EPA the job of deve loping standards under section 111 that would set a national floor for air pollution control requirements.

Therefore, EPA disagrees with commenters who suggest EPA has no role in setting national standards that apply, and must be complied with, in all the states. Any suggestion that such legislation is beyond the bounds of Congress’s authority under the Constitution’s commerce clause has long since been disposed of. Indeed, air pollution is the quintessential interstate problem that does not respect stat e boundaries and is at the core of Congress’s authority and responsibility under the commerce clause. See EPA V. EME Homer City Generation, 572 U.S. __ (2014)(slip op. at 4

- 5).

With that said, the comments raise an important question about how such nati onal standards get implemented and enforced in the Act’s cooperative federalism regime. Several of these comments raise the scenario where a state has adopted state law that effectively disables the state from implementing or enforcing a state plan consist ent with the requirements of this guideline. The comments suggest that the Act gives EPA no authority to override such state legal requirements.

EPA agrees with the commenter that promulgating this guideline under the Act will not
somehow void or eliminate any state law that limits a state’s ability to develop a state plan, as a matter of state law. The structure of the Act is that it gives states a choice. If a state choses to cooperate in implementing air pollution control requirements consistent with the federal floor under the Act, the state can do so. Once EPA approves the state plan, it assumes the status of
federal law as well as state law and becomes enforceable under the federal Clean Air Act.138 A state can, however, chose not to implement a requirement under the Act, such as this guideline. In that case, the Act provides for EPA to administer a federal program that implements the national floor requirements EPA has set. 42 U.S.C. 7411(d)(2)(A). Nothing about EPA’s implementation of a federa l plan under this guideline overrides the sort of state legal requirements the commenters are highlighting. To the extent a state has disabled itself under state law from administering a state program, the state would remain disabled, consistent with

state law. But under the structure of the Act, it would fall to EPA to undertake implementation of the guideline’s requirements in that state.

In so doing, EPA would not be purporting to change state law. It is true that the federal requirements embodied in the federal plan EPA would implement would become the controlling legal requirements with respect to any source’s compliance obligations under the federal Clean Air Act. State law might become irrelevant to the question of controlling greenhouse gas
emiss ions, but it would remain unchanged. This arrangement is clearly consistent with well

established principles of cooperative federalism that courts routinely uphold. See, e.g., Hodel v. Va. Surface Mining & Reclamation Ass’n, Inc., 452 U.S. 264, 283

– 93 (19 81); Texas v. EPA, 726 F.3d 180, 196

– 97 (D.C. Cir. 2013) (noting that “Supreme Court precedent repeatedly affirm[s] the constitutionality of federal statutes that allow States to administer federal programs but provide for direct federal administration if a State chooses not to administer it”).

1.11.9 Multi

- state approaches

Comment 1: C ommenters requested additional guidance on the enforceability of multi

- state agreements. In general, commenters requested guidance on who will enforce multi

- state agreements, the mechanism for enforcement, and how enforcement will be applied if there are certain underperforming states within the agreement.

Commenter s noted that the State Plans Consideration TSD states that multi

- state enforceability
"would be contin gent, in part, on states having comparable enforcement mechanisms."
C ommenter s asked for guidance on what "comparable enforcement mechanisms" are.
C ommenter s asked if the enactment of legislation implementing a Model Rule is sufficient in the
context of RG GI. C ommenter s further asked if there are other examples of "comparable enforcement mechanisms" that are not legislative

.

Commenter s also asked if the Agency thinks an approvable multi

- state arrangement needs to
include an interstate enforcement mechanism. If not, commenter s asked how states could deal
with “ free riders ” in a potential noncompliance scenario. C ommenter s asked if EPA or all the states in the plan hold the underperforming state liable. Further, commenter s asked if EPA brings139 a federal enforce ment action, would it be brought against all the participating states in the multi

state plan, or only those states in the plan found not to be contributing to compliance

.

Commenter s asked if EPA could explain when a voluntary plan (e.g., RGGI) becomes fed erally enforceable, how the liability of the group is applied. Commenter s said, for example, if one state in the group doesn't achieve its reductions, do the other states face an enforceable action? How does a group plan, adopted by individual legislatures then transform to a group? Commenter s questioned if the group entity takes over the decision

- making currently left for individual states.

Commenter s stated EPA's current proposal is vague on a number of issues surrounding implementation of market

- based approaches, including how compliance and enforcement would
work for multi

- state emission trading programs. C ommenter s recommend ed that EPA clarify
thes e issues in order for states to more clearly evaluate multi

- state, market

- based implementation approaches. Commenter s further said several states have indicated interest in more limited cooperation to address interstate electricity flows in accounting for avoided generation from renewable energy or demand

- side energy efficiency. C ommenter s said EPA should provide guidance on how compliance will be assessed and enforced and should also clearly establish a default rule for interstate accounting for renewable energy and energy efficiency.

Commenter s stated for states in the same inter

- connection that pursue a multi

- state emission

trading program, aggregation of state targets may be the most straightforward means of assessing performance, but EPA should also ex plore different enforcement models that would ensure that only the state that caused non

- compliance would be impacted, rather than all states involved in
the multi

- state plan.

Commenter s said more problematically, a requirement for states that pursue multi

- state programs to aggregate their state targets could be a barrier to cooperation; merging of targets would essentially mean that that multi

- state group would succeed or fail as a whole: if the aggregated target is met, all states are in compliance; if th e aggregated target is exceeded, all states are out of compliance. C ommenter s said an individual state within a multistate plan could thus be subject to EPA enforcement due to another state's actions or inaction, and the perceived encroachment of

state sov ereignty would be a non

- starter for many states.

Commenter s asked who is responsible for enforcement of the regional/multi

- state goal and suggested an alliance of each region's state agencies would be best equipped to enforce compliance with regional/mult i

- state goals.

C ommenters said fourth, the Proposed Rule does not address how a multi

- state integrated electric system, such as TVA's, would allocate or assign variables of compliance among States participating in a joint SIP. C ommenter s said it is unclea r how the seven states served by TVA could, either individually or jointly, develop SIPs that could simultaneously address the requirements of the Proposed Rule on the TVA power system and the other electric utilities that operate in each the seven states.140 Response 1 : See section VIII.E of the final rule preamble for EPA’s response to this comment.

Comment 2 : Commenters support ed allowing multi

- state plans, but recommend that
enforcement activities should be limited solely to the specific underperforming states in these partnerships

. Otherwise, commenters note d that there could be undue burden place d on states that are complying with their goals to be liable to make up for the emission reductions another state partner did not achieve. Commenters said, in e ssence, the multi

- state plan could create
winners and losers if enforcement is not limited to the non

- complying state. C ommenters suggested that EPA should work with states to address any issues that may arise in the event that
one state in a multistate ef fort fails to implement its approved plan.

Response 2 : See section VIII.E of the final rule preamble of the CPP for EPA’s response to this

comment.

Comment 3 : Commenters expressed concerns on how the goal setting described in the proposal
accounts for electricity system operations and allows the option of multi

- state cooperation in meeting goals. Specifically, commenter s objected to situations where , due to the interconnected nature of the electric grid, a state can force this cooperation upon an unwill ing neighbor.
C ommenter s noted that there were no specific details provided on how EPA will address calculating a multi

- state goal. As a result, commenter s claimed that states do not know whether collaborating with other states will pose advantages and the scope of those advantages.

Commenter s stated that the EPA goal

- setting formula does not adequately account for the interstate nature of electricity system operations, or for the closely related disparity in compliance burdens that affects small states tha t export a significant share of power generated
within the State. C ommenter s stated that wholesale transactions within this federally

- regulated marketplace are outside of state jurisdiction. C ommenter s provided an example for Arkansas.

Response 3 : See section VIII.E of the final rule preamble of the CPP for EPA’s response to this

comment.

Comment 4 : Commenters suggested alternative methods other than multi

- state plans of aggregate compliance, including averaging across utilities or units and developing sub

- state regional groups that can be merged to achieve a state goal.

Commenter s stated that the final rule should clarify that averaging across utility fleets is allowed.
Commenters said EPA should clarify in the final rule that, to the extent permitte d by state141 affiliated interest rules, such multi

- unit/multi

- utility compliance aggregation is permissible in addition to individual compliance requirements on a unit specific basis.

Commenter s stated that EPA should permit states to segment their state into separate groups, either geographic or economic, and create multiple compliance plans for each segment so long as the aggregated set of compliance plans meets the state carbon emission rate r eduction goals, or equivalent mass emission reductions. C ommenter s provided an example for
Montana. C ommenter s stated that such flexibility could potentially be useful for states and electricity generators to generate cost

- effective carbon emission rate re ductions and that such partial state compliance plans should be approvable by EPA so long as states can demonstrate that each partial state plan contributes appropriately to the states overarching compliance with EPA's goals. C ommenter s stated further that EPA should permit states to participate in regional compliance plans that are specific to particular types of resources or building blocks.

Response 4 : See section VIII.E of the final rule preamble of the CPP for EPA’s response to this

comment.

Comment 5 : Commenters urged EPA to allow additional time for development and legislative approval for multi

- state approaches. Commenters noted the additional legislative authorization and planning needed to develop multi

- state approaches are not feasible with EPA ’s intended schedule for meeting the goals, noting that an existing program, RGGI, took 6 years to develop and implement. C ommenters suggested re

- proposing new plan submittal and compliance dates.

Commenter s stated that EPA must understand that some state agencies may need additional legislative authorization to collaborate with other states and that such legislation takes time to draft and enact before any multi

- state approach can be formalized. C ommenter s stated that by failing to consider all of the bar riers, EPA does not provide a realistic framework for developing regional plans.

C ommenter s expressed concern about the enforcement of performance goals for multi

- state plans, especially given the short time frame available to develop and obtain legislative approval
for multi

- state approaches. Commenter s stated that the multi

- state approach, as a compliance option identified in the EPA's preamble, would certainly require state legislative approval. C ommenter s pointed to EPA's description of the multi

- state approach as a measurable tool for two or more states meeting performance goals and indicate d that they have limited experience with the type of planning that would be necessary to develop a multi

- state approach
to CO2 emission reductions. C ommenter s noted that this type of state planning would infer a singular plan covering the participating sta tes, who would be reliant upon one another to enforce a previously agreed upon model rule, enacted through each state's regulatory process

. According
to the commenter s , enforcement of a multi

- state plan would be extremely challenging, if not impossible, to achieve

.142 C ommenter s pointed to EPA's discussion of the Regional Greenhouse Gas Initiative (RGGI) as an example of a multi

- state CO2 emissions reduction approach in its preamble and noted that
their staff has read information about RGGI and understand thi s concept was first discussed among several Northeastern states in 2003. C ommenter s noted that a Memorandum of Understanding (MOU) was the initial action step taken by seven states in 2005, with a couple of more states signing the MOU in 2007. C ommenter s f urther noted that a model rule was then established for each state to develop for their respective states statutes. According to the

commenter s , by January 1, 2009, 6 years after this concept was discussed, the first compliance period for this trading prog ram began. C ommenter s argued that the EPA's overall timeframe would severely handicap this approach for states to even consider as a potential path forward due to the planning and administrative procedures required to be followed for legislative approval.

Commenter s stated that EPA must fundamentally revise its proposal and put any new proposal out for public comment and provides several suggestions for a revised rule that address critical implementation issues, including 1) additional time to develop a SI P and multi

- state SIP, 2) allow the States to adopt compliance deadlines that are based on the remaining useful lives of each of the designated existing facilities, and 3) give the States until 2035 to achieve compliance with any emission reduction targets without any intermediate enforceable targets.

Commenter s stated EPA's proposed rule provides an additional two years for submission of state plans from states that wish to pursue multi

- state plans, for a total of three however, states must
indicate their intention to consider multi

- state plans within one year o f finalization of the rule.
C ommenter s said even in states where pursuit of multi

- state programs is politically achievable, the need for coordination across multiple regulatory bodies, such as air agencies, public utility commissions, electric grid operato rs, and potentially state legislatures, will be complicated.
C ommenter s said when you add to this the challenge of coordinating with multiple entities in other states, it is clear that EPA will need to provide significant clarification and provide
enhanced support to ensure that this can be accomplished within the established deadlines.

Response 5 : Commenter s stated that the multi

- state approach would require state legislative approval and suggested that this type of state planning would infer a singular pl an covering the participating states, who would be reliant upon one another to enforce a previously agreed upon model rule, enacted through each state’s regulatory process. According to the commenter s , enforcement of a multi

- state plan would be extremely c hallenging, if not impossible, to achieve. The EPA is finalizing that states can choose to provide to the EPA one multi

- state plan submittal, on behalf of all participating states, or one single submittal for each participating state. If one
multi

- state su bmittal is the option selected, it must be signed by authorized officials for each state participating, and it would have the same legal effect as a single

- state submittal for each

state.

The commenter s provided the example of the Regional Greenhouse Gas Initiative and stated that it took 6 years after the concept was discussed for the first compliance period for this trading143 program to begin. The commenter s argued that the EPA’s overall timeframe would severely handicap this approach for states to even c onsider as a potential path forward due to the planning and administrative procedures required to be followed for legislative approval. The EPA is finalizing that state plan submittals or initial submittals/extension requests are due on September 6, 2016. Final complete state plans must be submitted no later than September 6, 2018.

Comment 6 : Commenter s stated EPA has not provided a rational basis for its legal authority to approve multistate plans under FCAA section 111(d) given the requirement for Congre ssional approval of interstate compacts under FCAA section 102(c).

Commenter s said while FCAA section 102 allows for interstate compacts, section 102(c) states that: "No such agreement or compact shall be binding or obligatory upon any state a party
there to unless and until it has been approved by Congress." Commenter s said EPA asserts that its approval of all state plans will result in federal enforceability of those state plans. Commenter s continued that as the proposed rule specifies in 40 CFR section 6 0.5785, once the EPA has approved a state plan then that plan can only be revised with approval by the EPA. Commenter s said once a multistate plan is federally enforceable by the EPA, states that are parties to that multistate plan cannot revise or withdra w from that multistate agreement without approval from
the EPA. Commenter s said an EPA

- approved multistate plan would be binding on all the states participating in that multistate plan. Commenter s said the EPA has not provided any rational basis for how the multistate plans contemplated under the proposed rule are not subject to the Congressional approval requirements of FCAA section 102(c) or for the EPA's legal authority to approve a multistate p lan in lieu of Congressional approval.

Response 6 : For the reasons stated in the Legal Memorandum, the EPA disagrees that section 102(c) prohibits the types of state pl ans envisioned under this rule.

Comment 7: Commenters noted several complicating factors and potential reasons that would prevent states from entering into multi

- state plans, including lack of detailed guidance, tools, or
incentives , along with competing self

- interests of the individual states

.

Commenter s stated that the Proposed Rule explicitly allows states to create multi

- state plans using a single multi

- state performance goal. Commenter s said the Proposed Rule does not explain how this should be accomplished, and does not provide states with tools or incentives for doing so. Commen ter s said there may be numerous obstacles to creating such a plan.
Commenter s said that, first, given the complexity of the electric generation market, the varying interests of the different electricity producers within a given state, and the multitude of options available to states under the Proposed Rule, it will be a significant challenge for states to create single state plans within the tight time frame that EPA has proposed. Commenter s said in light of this, it seems unlikely that most states would be willing to even consider taking on the added complexity and challenge associated with negotiating a multi

- state plan. Commenter s said that,144 second, even in instances where a group of states might be willing to consider working with their neighbors to crea te a multi

- state plan, these states may be operating under significantly different circumstances, making it difficult to come up with a coherent plan. Commenter s said that, third, states will inevitably, and appropriately, be looking out for their own stat e interests by seeking to negotiate the most favorable plan they can for themselves. Commenter s said even where states are willing to take on the added complexity of negotiating a multi

- state plan and are situated such
that a workable multi

- state plan coul d be created and implemented, self

- interest may preclude states from reaching an agreement. Commenter s said that, fourth, putting aside the logistical and technical complexities associated with negotiating a multi

- state plan, different political viewpoints and preferences will make final agreement on such a plan difficult to achieve.
Commenter s said that, fifth, even if two or more states could agree to a common plan, there might be one or more states that are essential to create such a plan who are unwilli ng to agree. Commenter s said that, finally, entering into an agreement with another state or states will in all cases create the risk that the other state or states will not meet their obligations under the plan.
Commenter s said in light of this risk, stat es may rationally conclude that staying with an individual state plan is the more prudent course of action.

Response 7: See section VIII.E of the final rule preamble of the CPP for EPA’s response to this

comment.

1.11.9a Multi

- state emission budget or rate

- based emission trading programs

Comment 1: C ommenter s argued that EPA does not have the authority to implement beyond

the

- fence measures, such as a cap and trade program, as BSER. C ommenter s said affected sources should have the implementation option to comply with a lawfully set BSER by looking beyond

- the

- fence line to identify the most cost

- effective method for reducing emissions, as this flexibility can provide significant benefits. Commenter s said a source may have an opportunity
to obtain cost

- eff ective reductions by looking beyond

- the

- fence; however, that fact does not grant authority for state regulators to impose more stringent limits on regulated entities.
Commenter s said EPA must not conflate a source's ability or opportunity to "trade" with t he Agency's underlying legal authority for setting a "cap." Commenter s said 111(d) was not designed or intended to set an emissions cap for a trading company, and this conclusion would not change even if the states can successfully pass the needed legislat ion or if states adopt a cap and trade system based on the emission reductions needed to achieve EPA's binding state goals.
Commenter s said BSER must be based on a system of emission reductions achievable at existing sources (i.e., within

- the

- fence), and i mplementing a cap and trade system as BSER remains unsupported and illegal because the required level of emission reductions would be based on (i.e. the "cap" would have been derived from) beyond

- the

- fence mechanisms which rely on the actions of third part ies that are outside the scope of state regulatory agencies' authority.145 Response 1: We disagree with this comment. In the preamble (section IV.A and V.B) we explain why section 111(d)(1) and (a)(1) authorize inclusion of building blocks 2 and 3 in the BSER , and we explain why a state plan that adopts the emission standards approach may include a cap

- and

trade program.

Comment 2: C ommenters suggested that EPA should encourage and allow multi

- state emission budget trading programs such as RGGI and RGGI

- like multistate efforts for compliance with federal emission reduction requirements under CAA Section 111(d). Commenters suggested that the emission budget trading program should stand on its own as a state regulatory matter, but allows for trading with other similar state programs, both currently or in the future.

Further, c ommenter s stated that the RGGI program applies to all units with a nameplate capacity of 25 MW or greater, existing and new. Com menter s said in order to avoid market distortions and level the playing field between RGGI states and other states, EPA should allow states to include new units in 111(d) compliance plans provided the inclusion does not result in greater
overall emissions.

Commenter s stated it is likely that lower

- cost emissions reductions could be acquired through exchange agreements between or among states, or within a utility serving more than one state.
C ommenter s said such multi

- state reduction strategies may also hav e a more predictable and
less

- disruptive effect on power system planning and operations. C ommenter s urge d EPA to enlarge the window for such multi

- state efforts beyond the RGGI design, and to authorize states at any time following adoption of the federal r ule to devise and enter into multi

- state transactions of alternative design (such as single bilateral transactions; complementary resource choices within a utility serving more than one state; an open regional trading "floor", etc.) so long as the
outcome, for the states involved, results in emissions reductions equal to or greater than the sum of those required by EPA of each state acting independently within its boundaries.

Response 2: See section V.A and V.B of the final rule preamble of the CPP for EPA’ s response to this comment.

Comment 3 : Commenter s stated that with regard to state plans assigning legal responsibility for compliance to affected sources and other entities, Connecticut noted that some states adopted such an approach for Municipal Solid Waste Combustors. C ommenter s stated that EPA has acknowledged that RGGI would be an acceptable compliance mechanism to meet the best system of emissions reductions and that under RGGI, participating states each promulgated state rules that apply directly t o affected sources, requiring them to satisfy individual requirements that in aggregate ensure compliance with state and regional mass based targets. C ommenter s stated that Connecticut believes it would be appropriate to assign legal responsibility for mee ting state plan commitments to the owners and operators of affected sources.

Response 3 : We agree with this comment.146 Comment 4 : Commenter s stated for purposes of judging compliance with a state goal, EPA should recognize that multistate efforts like RGGI

- whether implemented through a shared budget or separate budgets

- may result in emissions in one state exceeding the emissions budgets in th at state because of the trading of emissions allowances into that state from other states.
Commenter s said EPA's enforcement focus should be on whether all states in a multistate or joint
coordinated effort have issued allowances in accordance with an EPA

- approved state plan, and are enforcing the requirement that all covered units surrender sufficient allowances to cover their
emissions. Commenter s said as long as no state issues allowances that exceed its state budget and every state enforces its program requirements, the multistate or joint coordinated effort will
succeed

- in the aggregate

- to stay below the combined emissions budget of all the states participating in the multistate program.

Response 4 : The final rule provides considerable discretion to th e 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 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 5 : Commenter s stated EPA should facilitate multi

- state compliance by enabling credits and allowances from approved programs to be used for compliance in multiple states, and should provide a tracking system for these credits to prevent double

- counting.

Commenter s said in the emission guidelines, EPA should provide that states designing such

state

- based plans with credits or allowances can specify that they will accept for compliance credits or allowances originating in their state or originating in another state taking the same type of target (mass or rate

- based) with an approved plan. Commenter s said EPA should also provide a centralized tracking system for credits and allowances that cross state borders in order to
facilitate multi

- state compliance and to ensure that these credits and allowances are not double
counted.

Commenter s stated multistate emissions budget trading programs like RGGI depend on a common emissions allowance "currency" that is fungible and tradable across state lines.
Commenter s also stated that EP A should not erect any barriers to the fungibility and tradability
of emissions allowances. Commenter s stated EPA should provide states with a tracking system based on or compatible with RGGI CO2 Allowance Tracking System (COATS) or EPA's
Emissions and All owance Tracking System (EATS) system that states can choose to use to facilitate interstate trading. Commenters said, as an alternative, states could choose to develop their own tracking system using EPA guidance.

Commenter s said EPA should explore ways that it could assist states in implementing multi

state, market

- based approaches. C ommenter s said such support could include development of an optional model rule for emission trading, provision of an EPA tracking system, or d irect EPA technical assistance to states in implementing market

- based approaches. Commenters said EPA's147 interactions with states may identify other areas where EPA assistance would be helpful.

Response 5 : See section V. B and VIII.C of the final rule pre amble of the CPP for EPA’s response to this comment.

Comment 6 : Commenters suggested that EPA should provide guidance on some key issues surrounding implementation of multi

- state market based approaches , but also allow for less

structured forms of multi

- state compliance as well

. Commenters said t hese issues include
conversions from mass

- based to rate

- based targets; use of carbon pricing to project emissions performance and enforcement; and allowing multi

- sector emissions trading. C ommenter s suggeste d that EPA provide states with a pre

- approved conversion table (updated as needed) for recording reductions consistent with each state's commitment metric. C ommenters suggested providing a model rule.

Commenter s stated EPA should clarify whether conversion to a mass

- based target is required in order for a state to implement a mass

- based trading program. C ommenter s stated they believe there is no inherent conflict between a state retaining a rate

- based emission target against which
it will be evaluated under EPA's proposed rule, while simultaneously establishing a mass

- based target to implement a mass

- based trading program.

Commenter s said EPA has proposed that states could jointly submit plans providing for multi

state compliance with state targets. Commente r s said they strongly support facilitating multi

state compliance, as states working together can secure reductions in carbon pollution more cost

effectively and with greater flexibility; however, they urge EPA to enable a less structured form
of multi

- sta te compliance as well. Commenter s said states may comply with their emission targets by putting in place source

- based trading programs, under which a regulated unit is required under its permit to hold enough allowances to match its emissions (under a mass

- based approach) or enough credits to meet a specified emission rate (under a rate

- based approach).

Commenter s stated they believe that EPA can approve state implementation plans that regulate emissions across multiple sectors and recommend that EPA expli citly state in its final rule that
multi

- sector emissions trading would be a valid state compliance option, provided that the state can demonstrate that it will achieve the necessary emission reductions in the electricity sector to meet its target.

Comment er s stated they suggest that the expected carbon price under the program could be used to model the emission impact on EGUs; specifically, a state could model the expected impact of carbon prices under its program on electricity system dispatch which can t hen be used to project emissions from affected EGUs and demonstrate the state's compliance pathway over the 2020

- 2030 period. C ommenter s said measurement of the state's performance ex

- post would be based on actual emissions of affected EGUs during the 2020 to 2030 period.148 Commenter s said the ISO and RTO Council has proposed a model whereby a regional transmission organization would impose a carbon price in economic dispatch. C ommenter s said EPA should develop guidance on how responsibility for emissions per formance would be assigned, assessed and enforced under such an approach.

Commenter s stated that the EPA should facilitate implementation of multi

- state, market

- based approaches. C ommenter s said the complexity of EPA's rule will make design and implementa tion of multi

- state, market

- based programs challenging, and EPA should help states overcome this barrier by providing more support to states for design and of implementation of
multi

- state, market

- based approaches.

Commenter s said EPA should expand and enh ance the materials on market

- based approaches available under the State Tools section of its website, and EPA should also provide links to relevant analyses and information by other organizations.

Response 6 : See section V.B and VIII.C of the final rule preamble of the CPP for EPA’s response to this comment.

Comment 7 : Commenter s said EPA should articulate what a federal implementation plan would entail to allow states to fully assess their options; in particu lar, EPA should clarify whether a federal implementation plan would be developed for individual states, or whether a federal implementation plan could re quire a multi

- state approach.

Response 7 : Concurrent with the signing of this final rule the EPA propos ed a federal plan and
model rule.

1.11.9b Multi

- state portfolio approaches

Comment 1: EPA's proposed "portfolio approach" would bolster the enforceability of state EE and RE policies by making them federally enforceable. C ommenter s also stated, to the extent possible, EPA's rule should encourage full compliance with any current state energy efficiency and renewable energy standards. To that end, commenters supported EPA's "portfolio approach" to compliance, which would bolster the enforce ability of these state policies.

Commenter s stated, in its proposal, EPA provides two primary compliance options for states: an electric generating unit ("EGU") approach and a portfolio approach. Commenter s said, under the first approach, states submit com pliances plan that holds affected EGUs responsible for achieving compliance with accompanying measurement and verification processes. Commenter s said, under this approach, the state plan would not directly include the "outside the fence"
emission reduction measures such as renewable energy and demand

- side energy efficiency programs. Commenter s said, instead, these activities would be coordinated at the state level to provide credits for affected sources. Commenter s said, because this approach does not inclu de149 auxiliary state energy programs, only affected EGUs would be subject to federally enforceable requirements.

Commenter s stated, in contrast, the portfolio approach allows for participation of secondary
entities in addition to affected EGUs. Commenter sai d, under this approach, such entities, which may include state agencies or electric distribution utilities, take on a portion of the responsibility for reducing carbon emissions in the state. Commenter s said, under this approach, all emission
limits and "o utside the fence" measures become federally enforceable, but instead of the affected sources bearing the full burden of compliance, these secondary entities would be subject to mandatory measures that would ultimately reduce emissions at the affected sourc es. Commenter s said, such measures may include state energy efficiency and renewable energy policies, which would subsequently become federally enforceable.

Commenter s stated, the primary drivers behind state EE and RE investments are some form of
EERS and RPS policies respectfully. Commenter s said, due to the importance of these state policies, commenters believe d EPA should prioritize the portfolio approach, which would greatly strengthen these efforts by rendering them federally enforceable.

Response 1: We appreciate this comment but as discussed in the preamble (section VIII.E) , we are not adopting the portfolio approach.

1.11.10 Other

Comment 1 : Comment stating that if a state is on its EPA

- approved trajectory, the affected
entities within the state should be deemed to be in compliance with the plan.

Commenter s stated, no enforcement exposure exists for a state or EGU within the state if the state is on its emission rate compliance path established in its approved state plan. Commenter s said, if a state is on its EPA

- approved trajectory, the affected entities within the state should be deemed to be in compliance with the plan. Commenter s said, this principle is important in cases where a state, for instance, is meeting its projected traj ectory and is on track to meet the state goal, but makes a sovereign decision to modify its laws. Commenter s said, before the state has made corresponding modifications to its plan, affected EGUs or utilities may be put in a difficult position of choosing between complying with currently

- effective state law and complying with the plan as originally submitted to and approved by EPA. Commenter s said, alternatively, affected EGUs might find themselves unable to meet obligations in the originally approved plan as the result of later state law or policy changes. Commenter s said, for example, a state's originally submitted plan might have contemplated that affected EGUs or utilities meet their obligations by obtaining RECs, yet the state might later change its RES requirements, rendering the affected EGU's or utility's compliance impossible. Commenter s said, under such a scenario, the affected EGUs or utilities should not be subject to an enforcement action from EPA or150 citizens, particularly in cases where the stat e's emission rate is consistent with the trajectory included in the approved state plan.

Commenter s stated, enforcement actions against a particular affected entity should only be available if: 1) the affected entity is failing to meet its legal obligatio ns established under an approved state plan; 2) those legal obligations are in force as a matter of state law; and 3) the state is not currently meeting its emission rate or mass obligations established in its state plan.
Commenter s said, these principles can establish an enforcement system that simultaneously ensures states are on track to meet their 2030 goals and provides the necessary legal certainty for EGUs and utilities to invest the significant resources that will be required.

Response 1 : 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 does not meet a requirement, the E PA will
address the matter on a case

- by

- case basis, to determine the appropriate response and resolution.

Comment 2 : Commenter s asked if EPA can explain how enforceability might be addressed in the context of entities like cooperatives or municipal utilit ies that are not currently subject to state jurisdiction

. Commenter s asked if EPA does not approve the portion of a state plan addressing cooperatives and municipal utilities due to a lack of authority, would EPA consider legally enforceable emission stand ards and compliance schedules beyond building block 1?

Response 2 : The final rule provides considerable discretion to the states in setting emission standards and related plan requirements for its affected EGUs and entities other than affected
EGUs , includ ing cooperatives or municipal utilities, to meet the applicable state

- level rate

- based
and mass

- based CO 2 goals. In its submittal, a state must adequately demonstrate that it has the legal authority to implement and enforce each component of the state plan, including federal enforceable emissions standards for affected EGUs and state measures. This requirement is further explained in section VII I .D of the preamble.

Comment 3: Commenter s stated a ny program used to demonstrate a state's compliance with a standard of performance must be included in the state implementation plan. Commenter s said once a state receives the EPA's approval for its plan, the provisions in the plan become federally enforceable against the entity responsible for compliance, in th e same manner as the provisions of an approved SIP under Section 110. Commenter s stated accordingly, if the existing state statute and implementing regulations are incorporated as part of the State's compliance plan, under the CPP, such statute and regulat ion become federally enforceable by the EPA and citizen groups and could form the basis of litigation under the Clean Air Act. Commenter s said such claims could be directed at EGUs, the State of Missouri, the State of Illinois, or a third party responsible for implementing the compliance measure

. Commenter s stated by "federalizing" compliance plans, the EPA created a statutory mechanism for dissatisfied stakeholders to challenge compliance with the goals against a whole host of entities and seek enforceabil ity of state programs like renewable energy and energy efficiency in federal court. Commenter s said151 such an enforcement "free

- for

- all" is not constructive nor is it necessary to achieve the reduction goals of the CPP.

Commenter s stated to illustrate the di fficulty of this approach, the Missouri legislature has placed limits on energy efficiency programs so as to mitigate the economic impact of energy efficiency programs. Commenter said RSMo Section 392.245. Commenter s stated the EPA's certain disapproval, a s part of its plan approval process, functions as an administrative veto of that legislative decision. RSMo Section 392.245. Commenter s said in such a circumstance, Missouri may need to provide a compliance demonstration based on other components. Commente r s stated under the CAA, should a state submit a plan that is unacceptable to the EPA, the EPA can begin its disapproval process and proceed to promulgate a federal plan, known as a federal implementation plan ("FIP").

Response 3: We disagree with these c omments. As discussed in section VIII .C of the final rule preamble of the CPP

, the EPA is not finalizing the proposed portfolio approach, and any comments on this proposed approach to 111(d) state plan design are therefore moot . Instead,
the EPA is finalizing an option to submit either an emission standards plan type or a state measures plan type. Under a “state measures” plan type a mass CO 2 emission goal may be partially or entirely achieved through state measures that impose requirements on entities other than affected EGUs and that are not included in the federally enforceable 111(d) state plan, provided the state submits standards of performance for CO 2 emissions from affected EGUs in the form of a federally enforceable “ba ckstop” that would be triggered if the state measures fail to achieve the required CO 2 emission performance level. Under a state measures plan, the backstop emission standards constitute the standards of performance required by section 111(d),
and the stat e plan provides for the implementation and enforcement of such standards of performance by specifying the trigger mechanism and conditions under which the backstop emission standards apply to affected EGUs. Upon EPA approval of a state measures plan under section 111(d), the backstop emission standards become federally enforceable requirements, which EPA and citizens may enforce against affected EGUs under section 113 and section 304 of the Act, respectively, once triggered and implemented to address a shor tfall in necessary
emission reductions. See section VIII

.

Comment 4: The Proposed Rule's Allocation of Renewable Energy Credits Potentially Raises
Constitutional Concerns Under the Article 1 Contracts Clause.

Commenter s stated, the Contract Clause in Art icle 1, Section 10, clause 1 of the Constitution states: "No State shall ... pass any ... Law impairing the Obligation of Contracts[.]" Commenter said, by authorizing state plans that enable states to take the renewable energy and/or RECs of
utilities and others, the Proposed Rule also potentially violates the Contracts Clause.
Commenter s said, APPA member MRES has several contracts with a number of individual entities for the output of wind projects and their associated RECs, totaling 85 MW. Commenter s sai d, a state

- driven portfolio approach that adopts EPA's suggestion to use the renewable energy152 and RECs located in the 7 state to satisfy a state goal will take that RE and RECs out of the hands of the purchaser, such as MRES, and into the hands of the state to meet its objectives.
Commenter s said, the Proposed Rule authorizes state plans that would have this very result.

Commenter s stated, the Proposal authorizes states to take RE and RECs from their owners by disregarding the contractual rights of both the seller and the purchaser. Commenter s said, it vitiates the obligation of the seller to deliver the RE and RECs to the purchaser, and substitutes the state as the beneficiary of the renewable contract (again, without compensation).
Commenter s said, this constitutes an undeniable "substantial impairment of a contractual relationship." Commenter s said, the construct of the state

- driven portfolio approach, including its provisions allowing states to interfere with existing contracts for RE and RECs

- both in

- state and out

- of

- state

- appears to violate the Contracts Clause.

Commenter s stated, specifically, EPA, in the Propose d Rule, essentially invites states to create a substantial impairment in the renewable energy contracts of utilities. Commenter s said, first, it is undeniable that many utilities have such contractual relationships with renewable power producers, and that a regulation that allows the state to step in and use that RE to meet its CO2 reduction obligation would constitute a change in law that impairs that contractual relationship.
Commenter s said, that action satisfies the first of the two elements in the test of a Contract
Clause violation. Commenter s said, the second element, whether the impairment is substantial, while typically the subject of controversy, is also undeniable. Commenter s said, where the regulation establishes the mechanism for the state to un ilaterally use a utility's resources for its own benefit, there can be little doubt that there is a virtual "destruction of contractual expectations" and thus, a substantial impairment.

Response 4: For the reasons stated in the Legal Memorandum accompanyi ng the final rule, the EPA disagrees that this rule is likely to raise Contract Clause concerns. Furthermore, insofar as
this comment concerns the portfolio approach, which EPA is not adopting, the comment is moot

.

Comment 5 : Commenter s said t he Co

- ops fin d it unlikely that EPA possesses the authority to require a State(s) (through a SIP) to compel TVA to undertake activities that are "outside the fence" of the power plant, and therefore creates the significant risk that Tennessee's compliance with the Prop osed Rule could only be achieved through heat rate improvements to existing generation units (building block one). C ommenter s said second, the Co

- ops find it unlikely that under existing law EPA possesses the authority to require a State(s) (through a SIP) to compel TVA to mandate activities among its regulated entities which such a scenario would create of
situation for The Co

- ops of concurrent Federal jurisdiction, and the Co

- ops believe that the prevailing authority is that of the TVA. C ommenter s said third, if as a part of its SIP the State(s) were to consider requirements to be imposed directly upon the Co

- ops (primarily envisioned as
buildin g block four, i.e. energy efficiency requirements, but others are conceivable), such a requirement would not be feasible as the States are pre

- empted from and lack the regulatory authority to issue such requirements.153 Response 5 : In section V .A and V.B of the final rule preamble of the CPP and in the Legal Memorandum, we explain our basis for including building blocks 2 and 3 in the BSER, and how the affected EGUs can implement those building blocks to achieve the subcategory

- specific emission performance rates without the need for states to attempt to mandate implementation of the building blocks.

Comment 6 : Commenter s stated they support the inclusion of formulaic crediting for any measures or programs EPA believes have straightforward results, similar to how formulaic crediting is used in the context of a Section 110 SIP.

Response 6 : Our discussion of crediting measures that reduce CO2 emissions are discussed in section VIII.C and K of the final rule preamble of the CPP

.

Comment 7 : Commenter s stated, EPA must address the penalty structure for non

- compliance as it relates to the withholding of funding for EE programs. Commenters said utilities and other third parties should not be penalized for non

- compliance if the cause was inadequate funding
from the state.

Response 7 : EPA is not including proposed building block 4, involving demand

- side energy efficiency, in the BSER. To the extent that this comment is related to building block 4 it is moot. However, EE m easures would still be available f or compliance purposes to the extent permitted under state plans. As further explained in section VIII.D of the final rule preamble of the CPP , if the state is adopting the state measures plan type, then state plan submittal will need to specify,
in the s upporting 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 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 b asis, to determine the appropriate response
and resolution.

Comment 8 : Commenter s 18238

- 43 stated that since commenter lives in Tennessee, that means that our energy generation comes from Tennessee Valley Authority, TVA. Commenter s said that is a quasi

- fe deral agency with 9 million customers in parts of seven states. Commenter s said that means they don't really have to answer to any state determinations. Commenter s asked what is the relationship is required for interaction between TVA and the State of Tenn essee when it comes to developing a plan to address climate resiliency?

Response 8 : Under the CAA TVA is required to comply with state plan requirements.154 Comment 9 : Commenter s stated that they were particularly concerned about Building Blocks 3 and 4, and potentially Building Block 2 that it could leave Colorado with a higher reduction mandate than would otherwise be supported by the law. Commenter s said the State of Colorado

w ould need to have commensurate authority created, and commenter was worried that the authority that needs to be created would not also be supported by the Clean Air Act.

Commenter s stated that there are real political and institutional realities that have to be taken into
account here. Commenter s said state law needs to change, potentially the state constitution itself.
Commenter s said the EPA simply cannot wave its hand at the states and hope that the rule will be successful as they've done so.

Commenter s stated that systems must be designed and resources allocated at the Federal and State levels so that compliance is verifiable and enforceable.

Commenters asked, do states face potential monetary penalties for not complying with the proposed rule? Commenter s asked, if so, do ratepayers within the state pay the fine? Commenters asked, could an EPA enforcement action require a state legislature to modify a renewable portfolio standard?

Response 9 : As discussed in the sections explaining how EPA designed the BS ER, the EPA designed the emissions reduction goals so that they should be readily achievable using proven methods for efficient and clean energy production. EPA has not finalized either Building Block 4 as part of the design of the BSER, nor is EPA finaliz ing the portfolio approach. It is therefore, the EPA’s expectation that state law will not have to be radically restructured. The guideline does not require a state to change its law in a way that subjects entities other than affected EGU’s to federally en forceable requirements under the state plan. Compliance determinations under the federally approved state plan will focus on measuring the effect of whatever measures the state decides to pursue on the emissions from affected EGU’s, which should be readily verifiable and enforceable. Enforcement of Clean Air Act requirements such as an approved state plan can lead to the assessment of penalties authorized under the Act. Whether the ratepayers or shareholders of an affected EGU subject to such penalties bear the financial burden will likely depend on how state law handles the question. Since EPA is not finalizing the portfolio approach, there is no chance that the direct result of a federal enforcement action would be a mandate to modify a renewable portfolio standard. It is possible that, to provide for the emissions reductions required under the state plan from the affected EGU’s, a state may choose to modify its renewable portfolio standard.

Comment 10 : Commenter s stated that EPA has asked if there could b e components of the state plan that are not federally enforceable. Commenter s said this should only be allowed for components that have no way to achieve enforcement in federal court, such as a state carbon tax.
Commenter s said it is not clear that a feder al court could order a state to increase a tax that is underperforming. Commenter s said in that case, continuing the example, the state plan should155 have federally

- enforceable guarantor measures that would kick in if the non

- enforceable element fails to pro duce the promised savings.

Response 10 : We discuss these issues in the context of the discussion of the state measures approach in section VIII .C of the final rule preamble of the CPP

.

Comment 11 : Commenter s stated that EPA should not make the eligibility of emission rate
reductions

- whether they occur before or during the compliance period

- contingent on state requirements. Commenter s said companies should not be penalized for showing leadership in develop ing renewable resources, especially since they cannot control their state governments.

Response 11 : We discuss the opportunities for early reduction credits in section VIII of the final
rule preamble of the CPP

.

Comment 12 : C ommenters asserted that EPA can not impose sanctions on states for failure to comply.

Commenter s noted that EPA cannot force states to implement Section 111(d) through sanctions
or the threat of sanctions . First, commenter s stated that EPA's authority to issue sanctions under Section 179 applies only to nonattainment areas. See 42 U.S.C. section 7509. Because there is not a NAAQS for CO2, commenter s stated that no attainment or nonattainment areas have been designated for CO 2. Second, commenter s stated that EPA's authority to issue sanctions under Section 110(m) is similarly tied to NAAQS and cannot be applied to Section 111(d) implementation plans. See 42 U.S.C. section 7410(m).

Commenter s stated that EPA must in this rulema king disclaim any authority to impose highway sanctions on states that do not submit an approved SIP . According to the commenter s , if EPA leaves the specter of highway sanctions hanging over the states, EPA's proposed rule will subject itself to a challeng e for unconstitutional coercion of the type successfully brought against the
Affordable Care Act.

Response 12 : EPA agrees that the CAA does not give the Agency the authority to impose
sanctions under section 179 sanctions

— neither “mandatory” sanctions un der section 179(a), nor “discretionary” sanctions under section 110(m)

— for a state’s failure to comply with the Clean Power Plan. EPA disagrees with any assertion that sanctions are available for section 111(d) plan deficiencies. EPA also disagrees that states may be sanctioned under this rule for citizen failures to meet standards under a Federal Implementation Plan, whether under section 110 or under this rule. Both mandatory and discretionary sanctions are only available in
connection with SIPs under s ection 110 of the Act. A state plan under this rule and section 111(d) of the Act is not a SIP and does not arise under section 110. Therefore, neither form of sanctions is available in connection with any state plan under this rule.156 Under section 179(a), mandatory sanctions only apply in connection with nonattainment area SIPs, or with SIPs submitted in response to an EPA finding that a SIP is substantially inadequate under CAA section 110(k)(5) (a “SIP call”). Neither of these events can occur with respe ct to a CPP plan. A state plan under this rule is not a nonattainment plan or any form of SIP under section 110, and is not the result of a SIP call, but instead arises under section 111(d). Accordingly, mandatory sanctions do not apply in connection with Clean Power Plan state plans.

Section 110(m) discretionary sanctions are only potentially available if the Administrator makes a deficiency finding under section 179(a) in connection with “any plan or plan item” under the Act. 42 U.S.C. § 7410(m). The “pla n or plan item” reference in section 110(m) refers to a section 110 plan, not to a section 111(d) plan. The four section 179(a) deficiency findings that may potentially trigger the imposition of discretionary sanctions all appear in the context of the

sect ion’s introductory clause, which explicitly refers to implementation plans and plan revisions under part D, which covers nonattainment areas. Further, two of the four potential section 179(a) findings explicitly refer to nonattainment areas, while a third uses the term “plan” with clear reference to the introductory clause of section 179(a), which likewise limits its applicability to nonattainment areas. See §§ 7509(a)(1), (2), and (4). The remaining section 179(a) finding does use broader language referrin g to “submissions...under this Chapter,” but cites as a specific example only section 110 maintenance plans. Further, it indicates that the submissions involved are to be evaluated under section 110(k)(1)(A), which applies to section 110 SIPs.

EPA’s historic interpretation of the provisions involved is consistent with the reading of the statute described above. In its rulemaking actions concerning sanctions, the Agency has never raised the possibility of imposing discretionary sanctions outside the section 11 0 framework. In fact, the Agency has specifically defined “plan” and “plan item” to mean section 110 implementation plans. See 40 CFR § 52.30. Likewise, in its previous section 111(d) rulemakings,
the EPA has not stated that sanctions are available for sec tion 111(d) plan failures. “Unlike a Federal plan for sources regulated under sections 110 or 172 of the CAA, the section 111(d)/129 Federal plan imposes no statutory or other sanctions because of deficient or unapproved state plans.” Approval and Promulga tion of State Air Quality Plans for Designated Facilities and Pollutants; Pennsylvania; Control of Emissions From Existing Hospital/Medical/Infectious Waste Incinerators, 67 FR 22354, 22355 (May 3, 2002).

Therefore, as indicated by the plain text of the st atute and supported by the Agency’s historic application of the relevant provisions, CAA sanctions are not available with respect to section 111(d) plans.

Comment 13 : In addition, commenter s stated that section 111 does not require "symmetry" between the method through which EPA determines state goals and the mechanisms that states can use to satisfy the goals. For example, commenter s noted that states' authority to take into
account the rema ining useful life of existing sources and other factors when applying performance standards under section 111(d) indicates that existing sources must be allowed to comply by using methods and under timelines that may differ from EPA's formulation of BSER. Clearly, commenter s stated that the EPA may not prohibit a state from relying on any system of157 emission reduction that EPA relies on to establish the guideline; however, both states and EGUs must be free to rely on methods other than those relied upon in s etting the guideline for purposes of compliance.

Response 13 : We agree with this comment about “symmetry,” although we do not view the remaining useful life provision of section 111(d)(1) as necessary to provide the basis for this

comment.

Comment 14 : EPA should clarify several questions regarding the authority of states to administer, execute, and enforce a final section 111(d) rule

Commenter s stated t he question of state authority arises from other presumptions and provisions of EPA's proposed rule:

- Commenter s asked i n a state that includes territory in two or more regional market organizations, what authority will the state agency responsible for developing and (presumably) administering the section 111(d) emissions plan have to compel a regio nal organization's compliance with the state plan, when that regional organization may encompass several states?

- Commenter s asked what authority will a state have to compel multi

- state transmission organizations to alter their dispatch or operati ng procedures?

- Commenter asked i f section 111(d)

- related operational directives from states within a regional market differ from one another, how will the states resolve conflict, and with what authority?

- Commenter s asked w hat authority will a state have to compel compliance with a
section 111(d) rule by generating or transmission facilities that are financed and/or administered by the federal government? ( Commenter s said o ften, federally administered facilities consider themselves exemp t from state energy policies.)

Response 14 : The rule does not call for the state to compel those entities to comply with any requirements , nor does the rule call for the state to impose operational directives. In addition, as noted in section VIII .C of the final rule preamble of the CPP , the EPA is not finalizing the portfolio approach.

Comment 15 : Commenter s asked f or a state in which electric generating units (EGUs) export electricity out

- of

- state, will the rule allow the state to assign the costs of Buil ding Blocks 3 and 4 to be charged to those EGUs, even though their owners may not serve load in the state?
Commenter s asked i f so, what kind of procurement and payment structure does EPA contemplate in this regard?158 Response 15 : We are not finalizing buildi ng block 4 as part of the BSER. In section V .E of the
final rule preamble of the CPP and in the Legal Memorandum we explain how affected EGUs can implement building block 3, which means that Pennsylvania need not change it s renewable energy requirements. I n addition, the Commonwealth has the state measures approach as an option, which could allow it to achieve its section 111(d) obligations based at least in part on the effects of its state law requirements for renewable energy.

Comment 16 : Commenter s asked w hat provisions or contingency plans has the EPA made in developing its compliance timetables and deadlines in anticipation of litigation that is almost
certain to arise from a final section 111(d) rule promulgated by EPA?

Commenter s stated t he prop osed rule is likely to face legal challenges delaying clarity on what is actually required in states' plans. Commenter s said t he proposed rule and the EPA rules governing adoption and submittal of state plans do not provide sufficient flexibility to accoun t for litigation delays. Commenter s requested clarification on how litigation delay will affect timing of state plan submittal.

Response 1 6 : As long as the 111(d) remains effective, states and affected EGUs are required to comply with it, regardless of whe ther the rule is in litigation. The same is true for all EPA rules

.

Comment 1 7 : EPA's RE and EE measures conflict with state RE and EE programs.

Commenter s stated Pennsylvania, like many other states, has implemented aggressive AEPS and EE programs for promoting renewable resources and energy efficiency measures. Commenter said the EPA's proposed CAA Section 111(d) emissions standards purport to regulate renewable energy and demand

- side (RE/DS) resources under BB3 and energy efficiency (EE) programs
unde r BB4 by setting presumptive standards for attainment of renewable resource penetration and EE achievement that would require changes to existing legislation. Commenter s stated the EPA's proposed targets for both BB3 and BB4 are not credible and will be un attainable given current legislative constraints and structural and economic obstacles to further expansion of RE/DS and EE programs in Pennsylvania. Commenter s said further, the CAA Section 111(d) BB3 and BB4 requirements constitute an encroachment on and interference with state legislative authority. Commenter s stated the EPA, in effect, establishes a federal mandate over PA renewable energy programs and presents a direct conflict with PA legislation governing RE.
Commenter s said the EPA should re

- examine its approaches to the design of BB3 and BB4 to more sensibly accommodate existing Pennsylvania legislative and commenter's organization's regulatory mandates for expanding renewable resources and energy efficiency programs.

Commenter s stated Pennsylvania' s alternative/renewable energy legislation, the Pennsylvania's Alternative Energy Portfolio Standard (AEPS), created by enactment of S.B. 1030 on November 30, 2004, requires each electric distribution company (EDC) and electric generation supplier (EGS) to supply to 18% of its electricity using alternative

- energy resources by 2021.159 Commenter s said qualifying resources are divided between Tier I and Tier II. Commenter s stated the percentage of Tier I (8% with 0.5% from solar), Tier II (10%) and solar alterna tive energy credits that must be included in sales to retail customers gradually increases over the compliance period.

Commenter s stated Pennsylvania energy efficiency standards are governed under Act 129 of 2008 (Act 129). Commenter s said the Act expands the commenter's organization's oversight responsibilities for energy efficiency standards and imposes new requirements on EDCs with the overall goal of reducing energy consumption and demand. Commenter s stated under this legislation, commenter's organizati on has implemented an energy efficiency and conservation (EE&C) program. Commenter s said subsequent phases of the Act 129 implementation process will address EDC and default service provider responsibilities; conservation service providers;

smart meter tec hnology; time

- of

- use rates; real

- time pricing plans; default service procurement; market misconduct; alternative energy sources; and cost recovery. Commenter s stated commenter's organization has aggressively implemented both the AEPS and Act 129 over the

p ast several years and the achievements stemming from these programs are well documented.

Commenter s asserted that the CAA proposed BB3 and BB4 targets, as currently designed, establish potentially illegal and unenforceable federal mandates on those states that have actively implemented and promoted RE/EE programs. Commenter s said at a minimum, the EPA proposal conflicts with existing state legislative requirements. Commenter s stated in the case of PA, the EPA has proposed that PA attain a 2029 goal of 9% (i nterim) and 12% (final) of generation resources from RE from a baseline level of 2% (calculated as of 2012). Commenter s said the EPA's alternative scenario establishes PA's 2029 goals of 5% (interim) and 7% (final).
Commenter s stated neither goal is attain able under current PAPUC projections as will be
addressed later in these comments.

Commenter s stated in addition, it is unclear whether the EPA would have the authority to mandate a state to adopt RPS or EE standards absent a state including those components in a plan. Commenter s said the EPA avoids this issue by using RE and EE as a means of calc ulating BSER without mandating specific reductions. Commenter s stated however, because of the aggressive targets used in the BSER calculation, it is unclear how PA would met its reduction targets, effectively turning the RE and EE BBs into mandates.

Respon se 1 7 : We disagree with this comment. We are not finalizing building block 4 as part of
the BSER. In section V .E of the final rule preamble of the CPP and in the Legal Memorandum we explain how affected EGUs can implement building block 3, which means that Pennsylvania need not change it s renewable energy requirements. In addition, the Commonwealth has the state measures approach as an option, which could allow it to achieve its section 111(d) obligations based at least in part on the effects of its state l aw requirements for renewable energy.160 Comment 18 : Commenter s argued that the final rule should provide guidance or principles on how compliance responsibilities should be allocated among load serving entities within a state.
Commenter s argued that all load serving entities should be subject to similar requirements.

Commenter s stated the proposed rule contains the potential to create issues related to the distribution of compliance responsibility within a state. Commenter s added in Nevada, NV Energy is subje ct to the RPS while certain load serving entities such as municipals, electric cooperatives, select commercial or industrial sources, and merchant entities are not. Commenter s stated for example, the natural gas

- fueled Apex plant in Clark County, Nevada, i s owned by the Los Angeles Department of Water and Power and sends its generation out of state. Commenter s stated while this facility is an eligible emission source under the rule, and has a CO2 emission profile higher than either the Nevada interim target of 697 lbs/MWhr or final target of 647 lbs/MWhr, the state does not currently have the authority to require this source to offset its emissions to the target through the use of Building Blocks 3 or 4 or other means. Commenter s stated as well, disparity ex ists between entities such as those that own and operate affected EGUs versus other entities that serve load but purchase and deliver power by wire.

Response 18 : We are not finalizing the portfolio approach. Accordingly, only affected EGUs are subject to the requirements of this rule.

Comment 19 : Expanded renewable energy reliance conflicts with state policies and IRP

processes

Commenter s stated the proposal for states to expand their reliance on renewable energy conflicts with: 1) the policies of dozens of states (e.g. West Virginia) that have adopted renewable energy standards based on a balancing local economic, resource, and environmental considerations; and 2) the Integrated Resource Plan processes that state public utility commissions (e.g., West
Vir ginia) utilize for the long

- term planning of electric supply and demand resources.
C ommenter s said states should retain their authority regarding the nature and extent of any renewable energy standards.

Commenters stated t he proposal relies heavily on additional renewable generation as a means to achieve the state goals. Commenters said most States cannot simply mandate additional renewables though RPS. Commenters stated such authority must come from state legislative actions that can take several years to enact considering that many state legislatures meet only biannually. Commenters said moreover, the legislatures must agree to enact additional mandates, which they may or may not do. Commenters stated most States simply have no authority to adopt
manda tes that additional renewable generation be built. Commenters said moreover, the entities building renewable generation such as wind are not affected entities under this proposal, because they are not in the identified source category; thus they have no in centive to do so, particularly if the production tax credit is not renewed in the future.161 Response 19 : The final rule takes a different approach towards building block 3 than at proposal. In addition, the rule does not require that states change their auth ority regarding the nature and extent of any renewable energy standards or mandate additional renewables through RPS . As we
discuss in section V. E of the final rule preamble of the CPP and the Legal Memorandum,
affected EGUs will be able to achieve the sou rce subcategory specific emission performance rates by implementing the building blocks, including building block 3, without being dependent on state renewable energy standards. In addition, we are not adopting the portfolio approach, so
that non

- affected EGUs are not subject to the requirements of this rule.

Comment 2 0 : Commenter s said that, the proposal places significant, unknown burdens on the yet to be identified on other entities, which would need to be addressed over the duration of the program Comme nter s said these include (1) identification of emission standards for affected entities (which would presumably be negotiated, in some fashion, between the state and the entities); Commenter s said these include (2) the establishment of and progress reporti ng for performance milestones; the establishment and, if necessary, implementation of corrective measures should an affected entity fail to meet performance requirements; and Commenter s said these include (3) the identification and performance of applicabl e monitoring, reporting and recordkeeping. Commenter s said, as a result of these requirements, affected entities other than affected EGUs will incur substantial cost in the service of reducing CO2 emissions from the
affected entities.

Response 2 0 : The final rule addresses, in section VIII of the final rule preamble of the CPP

, many of the concerns raised by the commenter. In addition, we are not finalizing the portfolio approach, so that affected entities are not subject to requirements.

1.12 PROMULGAT ION OF RULES NOT PRO POSED

Comment 1: Several commenters objected to the proposal as the promulgation of rules not proposed

Commenters stated, NSPS rulemakings are subject to section 307(d) of the CAA. CAA section 307(d)(1)(C). Commenters said, among other requirements, the rulemaking proposal must "be accompanied by a statement of its basis and purpose," that includes: "(A) the factual data on which the proposed rule is based; (B) the methodology used in obtaining the data and in analyzing the data; and (C ) the major legal interpretations and policy considerations underlying the proposed rule." Id. section 307(d)(3). Commenters said, further, all of those required "data, information, and documents" must be "included in the docket on the date of publication of the proposed rule." Id. Commenters said, Section 307(d) also establishes requirements for final rules. Commenters said, among other things, the promulgated rule must be accompanied by (1) a statement of basis and purpose like that required for the propo sed rule, (2) an explanation of the reasons for any major changes in the promulgated rule, and (3) a response to each of the significant comments submitted during the comment period. Id. section 307(d)(6)(A), (B).162 Commenters said, these requirements are fu ndamental to both reasoned decision making and judicial review. Small Refiner, 705 F.2d at 519 (the fundamental purpose of section 307(d)(3) is to require that "EPA 'give a detailed explanation of its reasoning at the 'proposed rule' stage" of
the rulemaki ng process); Home Box Office, Inc. v. FCC, 567 F.2d 9, 35 (D.C. Cir. 1977) (per curiam) (without a response to significant comment, the "opportunity to comment is meaningless").

Commenters stated, consistent with these key principles, commenters objects to promulgation of any final rule the content of which commenters could not reasonably have anticipated based on the proposed rule, and to any failure by the Agency to adequately respond to commenters’ comments. Commenters said, in particular, commenters not es the absence from this rulemaking docket of 21 of the 25 IPM modeling runs that EPA performed. Commenters said, EPA relied on these modeling runs in establishing the Proposed Guidelines, and their absence from the rulemaking docket has prevented meaningf ul comment on the Proposed Guidelines, in violation of section 307(d) of the CAA.

Response 1: In the preamble to the final rule, as well as in this Response to Comment document

, the Legal Memorandum, and other supporting documents, the EPA describes at len gth the statement and purpose of the regulation, provides explanations for the major changes in the rule, and responds to all significant comments submitted. This final rule is thus in compliance with the relevant requirements of section 307(d). For a resp onse to comments regarding CAA section 307(d)(3); the requirements associated with a rulemaking proposal, including the docketing of information; and the IPM modeling runs described above, see section 1.13 below.

Comment 2: Commenters stated, the EPA's open

- ended comment solicitation on numerous issues associated with the proposed rule makes it impossible for states to assess the feasibility and potential impacts of the rule because the states cannot reasonably predict the po ssible outcomes in the final rule. Commenters said, while the EPA has proposed specific state goals based on the four specific building blocks, the EPA has also requested comment on numerous issues on the proposed rule, such as alternate approaches to sett ing renewable energy targets not identified by the EPA and expanding BSER to include other strategies.

Response 2: The EPA respectfully disagrees with this comment. The proposed rule and Notice of Data Availability, along with numerous supporting document s including Technical Support Documents and a Legal Memorandum, laid out at length the EPA’s proposals and alternatives, as well as the detailed reasoning behind and goals of the proposal. The EPA has provided this
extensive documentation to ensure that co mmenters have ample notice of the proposals and alternatives under consideration, and in response the EPA received more than two million public comments. This process accords with proper notice and comment procedure. Under 5 U.S.C. § 553(b)(3), a notice of proposed rulemaking shall include “either the terms or substance of the proposed rule or a description of the subjects and issues involved.” The EPA provides adequate opportunity for public comment on a proposed rule where it “ensures a reasonable period for public participation of at least 30 days,” 42 U.S.C. § 7607(h), and “give[s] interested persons an163 opportunity to participate in the rule making through submission of written data, views, or arguments,” 5 U.S.C. § 553(c). The extensive description and documentation provided to support the EPA’s proposal, and the lengthy period for public comment addressed in chapter 1.14 of the Response to Comment document, comply with these requirements. A proposed rule need not reflect the precise components that will comprise the final rule anticipated or ultimately promulgated by the agency, provided the final rule is a “logical outgrowth” of the materials provided at proposal. See, e.g.

, NRDC v. Thomas , 838 F.2d 1224, 1242 (D.C. Cir. 1988); Select Specialty Hosp.

- Akron, LLC v. Sebelius , 820 F. Supp. 2d 13, 23 (D.D.C. 2011) (there is “no requirement that an agency select a final rule from among the precise proposals”). Although the EPA’s own reasoned consideration and its assessment of public comment have resulted i n some modifications from the proposed rule, the proposed rule ensured that interested parties were “fairly apprised” of the elements ultimately included in this final rulemaking. See, e.g.

, United Steelworkers of America v. Schuylkill Metals , 828 F.2d 314 (5th Cir. 1987). In addition , states have ample time to consider how to employ the many flexibilities under the final rule when implementing the standards of performance

.

Comment 3: Commenters stated, EPA is attempting to use the NODA as a means to advance substantive changes to the rule proposal without providing sufficient opportunity for impacted stakeholders to comment. Commenters said, EPA's NODA is not a data

- availability notice; in fact, there is little, if any, new "data." Commenters said, ra ther, EPA has simply listed some initial comments of stakeholders and is attempting to use that as a pretext to re

- propose sections of the Rule Proposal without properly proceeding through a formal re

- proposal process. Commenters said, EPA is also proceedi ng with these changes while failing to provide any substantive findings or concrete examples of revisions in the NODA.

Commenters appreciated EPA recognizing the difficulty states face in complying with the Rule Proposal. Commenters said, however, substant ive changes, including changes that could potentially increase the stringency of the Rule Proposal, cannot be done through a NODA. EPA should only proceed with the substantive changes discussed in the NODA through a formal re

proposal of the underlying Rul e Proposal.

Commenters stated, the rulemaking process is designed by statute and mandated by courts to provide affected entities a full and fair opportunity to receive notice, properly review the notice and proposed rule, and provide comment on substantive rulemaking. Commenters said, the NODA fundamentally undermines these statutory protections by functionally re

- proposing aspects of the underlying Rule Proposal without either going through the correct legal proceeding (i.e. re

- proposing the rule) or even providing sufficient detail to give potentially impacted entities fair notice of what EPA is contemplating. Commenters said, it is not clear whether EPA's contemplated revisions to the glide path, changes to the Building Block methodology, and/or changes t o the goal setting equation will result in any relief to the entities regulated in the Rule Proposal, and in fact, may result in much more burdensome emissions requirements.164 Commenters stated, further, rather than providing concrete proposals in the NODA, EPA solicits comment on a wide range of issues identified thus far by stakeholders. Commenters said, for example, EPA solicits comment "on whether to establish some minimum value as a floor for the amount of generation shift for purposes of building block 2

- [and] on what that value should be." Id. at 64,550. Commenters said, likewise, with respect to an alternative regional approach for renewable energy under Building Block 3, EPA solicits comment on "what the regional structure would be," on "the criteria that should be used to reapportion state RE targets within a given region," and on "what components of the state RE targets should be regionalized." Id. at 64,551. Commenters said, these requests for comment, among others in the NODA, are so broad that
th ey would be more appropriate for an advanced notice of proposed rulemaking. Commenters said, to the extent that EPA decides to adopt any of the alternative options described in the NODA, EPA must engage in a supplemental rulemaking process that presents EP A's proposal in concrete terms and gives the public a full and fair opportunity to comment on that proposal.

Commenters said, it is especially concerning that EPA would seek comment in the NODA on changing the goal without providing a new proposed rule. Co mmenters said, instead, EPA merely states "this adjustment to goal

- setting formula would yield more stringent state goals."

Commenters said the EPA's Notice of Data Availability (NODA) on the proposed rule, published in the October 30, 2014 Federal Regist er, further expands the possible outcomes of the rule. Commenters said, the scope of the rulemaking is effectively open

- ended. Commenters said, the states cannot assess the feasibility of the rule and the potential impacts on electric reliability
without a clear understanding of the proposed rule requirements and a reasonable expectation of how the final rule is likely to be adopted. Commenters said, if the EPA intends to deviate substantially from the state goals included in the proposed rule, then the EPA should withdraw
and re

- propose the rule to allow states and other affected parties adequate opportunity to provide meaningful comment on the substantive changes.

Commenters stated, in the NODA, EPA identifies a number of potential problem areas in the

pro posed rule, and solicits comment on options for addressing those problems. Commenters said, many, if not all, of the challenges identified by EPA in the NODA can be attributed to the complexity associated with EPA's decision to look beyond the fence line i n its BSER analysis. Commenters said, yet, rather than using stakeholder feedback to simplify the proposal, EPA has identified alternative approaches that would further complicate an already complex regulation. Commenters said, for example, rather than eli minating the interim compliance period, EPA proposes alternative glide

- paths that would be based on detailed State

- and source

- specific data and assumptions. 79 Fed. Reg. at 64,548

- 59. Commenters said, likewise, EPA's proposed solution to the current dispa rity in existing NGCC capacity is to adopt a complex regional structure for its BSER analysis. Id. at 64,550

- 51. Commenters said, EPA also proposes a complex regional structure for calculating and allocating renewable energy potential among the
States in a n effort to address concerns over interstate transmission and interstate sale of renewable electricity credits. Id. at 64,551

- 52. Commenters said, finally, EPA suggests that differences in the proposed treatment between renewable energy and energy efficien cy and NGCC facilities can be resolved by increasing even further the displacement of coal

- fired165 electricity generation. Commenters said, thus, if adopted, EPA's suggested alternatives would address the complexity and implementation challenges of the propo sal by increasing, rather than decreasing, the complexity and stringency of the proposal.

Commenters stated that the proposed alternate regional approaches discussed in the October 30 NODA are unclear and too open

- ended to allow states adequate opportunity to comment.

Response 3 : The EPA respectfully disagrees with these comments. The Notice of Data Availability concerned a select array of alternative methodologies proposed by commenters and under consideration by the EPA, in concert with its original proposal on June 18, 2014. This information was properly contained in a Notice of Data Availability because the notice made available certain data from the Emissions and Generation Resource Integrated Database (eGRID) pertaining to the EPA’s state goal

- set ting equation and associated proposals, and because the remaining proposals uniformly concerned technical, methodological, and computational questions related to the compliance trajectory for emissions through 2029 and the calculation of renewable energy r esources under building block 3. More importantly, the Notice of Data Availability provided adequate public notice, as required by the CAA and Administrative Procedure Act, regarding alternative methodologies or approaches to aspects of the EPA’s proposed rule. Neither the CAA nor the Administrative Procedure Act require the EPA to include regulatory text in such a proposal, nor is the EPA barred from proposing alternatives that may increase the complexity or stringency of the proposal. As the Notice of Dat a Availability provided public notice and a full and fair opportunity for comment on the three enumerated topics

– in response to which it received extensive comments

– the EPA has satisfied its obligations under the CAA and Administrative Procedure Act an d need not re

- propose the rule.

Comment 4: Commenters stated EPA must give the public an opportunity to review and comment on Federal rules for measuring and verifying energy efficiency and renewable energy credits before finalizing this rule.

Commenters s tated, emission reductions related to energy efficiency and renewable energy are likely to play a significant role in compliance with the Section 111(d) standards of performance
for fossil fuel

- fired EGUs, regardless of whether EPA proceeds with the Buildi ng Block BSER analysis or gives affected EGUs flexibility to voluntarily incorporate such emission reductions for the purpose of complying with more narrow standards of performance for each source category based on an inside the fence line BSER analysis. C ommenters said, in either case, it is critical that energy efficiency and renewable energy programs can be measured and verified. Commenters said, however, EPA has provided no guidance on how such measurements and
verifications must be made. Commenters sai d, without additional information about how emission reductions associated with these sources will be measured and verified, commenters cannot comment on the technical bases for including these emission reduction opportunities, and States will ultimately b e unable to develop implementation plans that incorporate them.166 Commenters said, this is a serious deficiency with respect to two significant aspects of EPA's proposed standards of performance.

Commenters stated, to ensure that the measurement and verifica tion of energy efficiency and renewable energy programs are incorporated into the final rule in an appropriate manner, it is imperative that EPA conduct a rulemaking to establish the necessary procedures. Commenters said, further, because of their importan ce to this rulemaking, EPA must issue a proposed rule addressing measurement and verification and solicit public comment on it before finalizing this rule. Commenters said, such an approach will, at a minimum, give States some initial guidance regarding th e incorporation of energy efficiency and renewable energy into their implementation plans. Commenters said, given EPA's abbreviated schedule for the States to prepare such implementation plans, failure to provide some initial guidance to States at an early stage will pose significant challenges to the States' ability to develop satisfactory implementation plans that address these two subjects within the time allotted by EPA.

Commenters stated, EPA's proposal cannot proceed until the public has an opportunit y to review and comment on a federal rule(s) that establishes measurement and verification of energy efficiency and renewable energy credits.

Response 4: The EPA is finalizing structural requirements for EE and RE crediting in the final rule, and is propos ing as part of the federal plan this summer, a more detailed set of requirements for ensuring emission reductions from RE and EE are quantifiable, verifiable, enforceable, permanent, and non

- duplicative. The public will have the opportunity to comment on t hese proposals.

Comment 5: Commenters stated, the proposal is incomplete. Commenters said, for example, the proposal does not include a clear and workable compliance formula. Commenters said, the gaps in key aspects of the proposal do not allow for meaning ful review and comment, and is an insufficient indicator of what in fact EPA might adopt.

Commenter states that the EPA has not provided adequate information for the states to evaluate the possible changes to Block 3 and provide meaningful comment.

Respon se 5: The EPA’s final rule consistent with proper notice and comment procedure, as discussed above. In more than a thousand pages comprising the proposed rule and its supporting documents, the EPA provided detailed descriptions of its proposal as well as n umerous suggestions, alternatives, and methodologies. The EPA also issued a Notice of Data Availability that requested further comment on a number of ideas and alternatives arising out of the original proposal. Both the proposed rule and the subsequent Not ice of Data Availability informed the interested public of the proposals under consideration with respect to the application of the building blocks and the potential options for compliance with the resulting standards of performance. The EPA received more than two million comments in response, discussing all aspects of its proposals and providing significant depth of comment on the definition and application of the building blocks, and on industry and state compliance with the resulting16 7 standards of perform ance. The final rule adopted in this rulemaking is the logical outgrowth of the detailed information included in and accompanying the proposed rule and Notice of Data Availability. Although the EPA’s own reasoned consideration and its assessment of public comment have resulted in some modifications to the final rule, such changes are incremental and reflect the goals and alternatives in the EPA’s original proposal and Notice of Data Availability. The EPA has thus provided a full and fair opportunity to comm enters to assess the various components that have come together in this final rulemaking.

Comment 6: Commenters stated that in response to stakeholder concerns regarding the Building Block 3 methodology, EPA in the NODA provided a conceptual discussion of a third methodology for setting RE targets based on a regional approach. Commenters said, this "conceptual discussion" represents an attempt to alter the original proposal, or at least, set the stage for EPA to adopt a final rule that departs significantly from the proposal without meeting proper notice and comment requirements.

Response 6: The EPA respectfully disagrees with this comment. The October 30, 2014 Notice of Data Availability explained that the EPA was considering additional methodologies and

pr oposals related to three discrete areas of the proposed rule , including alternative m ethodologies for applying building block 3 based on regionalization

. These additional ideas and alternatives each built upon the proposals in the July 18, 2014 proposed ru le and the comments the EPA had received on those proposals, and were appropriately published in the Federal Register by way of
the Notice

– a permissible means of seeking further public input on alternatives under consideration by the EPA. As the Notice o f Data Availability provided public notice and a full and fair opportunity for comment on the three enumerated topics, in response to which it received extensive comments, the EPA has satisfied its obligations under the CAA and
Administrative Procedure Act and may finalize proposals or concepts included in the Notice of Data Availability.

Comment 7 : Under The Proposal, States' Reliance on Building Blocks 3 and 4 is Effectively a Requirement, Not An Option and Raises APA Issues.

Commenters stated that EPA c laims the proposal allows states great latitude to craft a plan that will achieve each state's individual goal. Commenters said that EPA claims that "in developing its plan, each state will have the flexibility to select the measure or combination of measu res it prefers in order to achieve its CO2 emission reduction goal." Commenters said that the proposal sets state goals that are based on achievable emissions reductions by applying all four building
blocks:

Commenters stated that federal case law interpre ting the APA (5 U.S.C. section 551 et seq.) demonstrates how courts determine whether policies contained in EPA documents such as policy memoranda are considered binding rules. Commenters said that in Appalachian Power , despite EPA's protestations that its "Periodic Monitoring Guidance" was neither final nor binding, the court held that "the entire Guidance, from beginning to end

- except the last paragraph

- reads like a ukase. It commands, it requires, it orders." Com menters said that the court did not rely168 solely on the Agency's characterization of the documents, but looked to the language of the document and how it was practically applied.

Commenters stated that the CPP is analogous to the guidance document referred to in Appalachian Power. Commenters said the CPP contains a bare bones rule, accompanied by thousands of pages of "technical support documents." Commenters said nowhere in the rule does EPA mention "building blocks" or "heat rate improvement" or "redispat ch." Commenters said that these concepts, intended to be incorporated by states into state plans, are not flexible guidance documents but integral to an understanding of what states, and the existing EGU source category, are expected to do. Commenters said relying solely on the proposed rule and without reviewing the TSDs, no one could possibly understand the CPP as EPA has defined it. Commenters said that clearly we haven't arrived at the enforcement stage since the proposed rule is still a rulemaking. Com menters said that nonetheless, the proposal and supporting technical support documents ("TSDs") state numerous times that the rule allows states flexibility to comply with the state goals by using a variety of means, yet the TSDs then set forth very specif ic equations for determining state goals.

Commenters stated that under this practical effects test, relying on Building Blocks 3 and 4 is really an obligation for states, not a flexible option. Commenters said the proposal as written leads stakeholders to believe that state plans will not be appro ved unless they rely on emissions reductions achieved by relying on all four building blocks. Commenters cited National Mining Ass'n v. Jackson, 2012 U.S. Dist. LEXIS 106057 (D.D.C. July 31, 2012) (rejecting the agencies' stated position that guidance was not binding and imposed no obligations, the court found that the guidance had "caused EPA field offices and the state permitting authorities to believe that permits should and will be denied if its 'suggestions' and 'recommendations' are not satisfied."). Commenters said if states cannot meet their goals, legal consequences will flow. Commenters said if allowed to go final as written, application of the practical effects test proves that Building Blocks 3 and 4 are, contrary to EPA's characterization, manda tory. Commenters said the use of Building Blocks 3 and 4 is a rule within the meaning of the APA, and reliance on those building blocks is improper.

Response 7 : The EPA disagrees and notes that the building blocks are neither guidance nor a mandate. They a re part of a technical determination of what the BSER is. EPA is not establishing any requirement in the guidelines that affected EGUs use particular technology to meet emission
standards set in a state plan or federal plan. Thus, the cases the commenter c ites are inapposite.

1.13 CAA 307(D)

Comment 1: Commenters stated, the EPA's proposal fails to provide the information required to justify any rule under section 111. Commenters said, the Clean Air Act requires that, in order to initiate a rulemaking subj ect to section 307(d) of that Act, the EPA must include in the docket for the rule at the time of proposal the "data, information, and documents ... on which the proposed rule relies." Commenters said, because of the EPA's failure to include these material s in the169 dockets, the Agency must withdraw the Section 111(b) Modification Proposal and the Section 111(d) Proposal and complete the dockets for each rulemaking before re

- proposing any such
rules.

I. The Requirements of Section 307(d)

Commenters stated, t he Clean Air Act provides that "[n]ot later than the date of proposal of any action to which this subsection applies, the Administrator shall establish a rulemaking docket for such action." Commenters said, for actions subject to section 307(d) like the Pr oposed Rules, section 307(d)(3) then addresses the legal requirements for the contents of those rulemaking dockets. Commenters said, specifically, it requires that: "All data, information, and documents referred to in this paragraph on which the proposed r ule relies shall be included in the docket on the date of publication of the proposed rule." Commenters said, the "documents referred to in this paragraph" are: "(A) the factual data on which the proposed rule is based; (B) the methodology used in obtainin g the data and in analyzing the data; and (C) the major legal interpretations and policy considerations underlying the proposed rule."

Commenters stated, these provisions taken together define the statutory limitations on the EPA's authority to initiate Cl ean Air Act rulemaking subject to section 307(d). Commenters said, these statutory limitations reflect Congress's recognition that having the information on which a proposed rule is based available at the time of proposal is critical to meaningful comment and, ultimately, sound rulemaking.

Commenters stated, in this case, the requirements of section 307 (d) mean that EPA was obligated to include in the docket at the time of proposal (i.e., on June 18, 2014) all of the modeling results on which it relies to justify the Section 111(d) Proposal, all of the net heat rate and carbon dioxide emissions data for existing power plants for which it has determined that certain heat rate improvements are achievable, and all of the technical data on which it relies for
i ts proposed standards for modified Subpart Da units and for modified and reconstructed Subpart KKKK units. Commenters said, critical portions of this information, however, were not in the docket as of September 3, 2014, long after publication of the Propos ed Rules.

II. Why the Section 111(d) Proposal Violates Section 307(d)

Commenters stated, the EPA has omitted from the docket of the Section 111(d) Proposal 21 of 25 key modeling runs on which it relied to justify the proposed rule. Commenters said, the EP A also omitted any net (as opposed to gross) heat rate and carbon dioxide emissions data on which it based the proposal.

A. IPM Modeling Runs

Commenters stated, the EPA used the Integrated Planning Model ("IPM") to model whether the Section 111(d) Proposal was achievable and how regulated entities would comply with it in different years. Commenters said, the EPA modeled 25 cases, looking at five different policy170 scenarios (Base, State Option 1, State Option 2, Regional Option 1, and Regional Option 2) in
fi ve different years (2016, 2018, 2020, 2025, and 2030). Commenters said, the model estimates whether particular units will have to shut down, curtail production, improve heat rates, or switch
fuels in each of the 25 cases.

Commenters stated, the five scenar ios EPA modeled were: (1) the Base Case, looking at regulated entity compliance with existing rules like the Clean Air Interstate Rule, the Mercury and Air Toxics Standards, consent decrees and other existing federal and state programs; (2) State Option 1, looking at regulated entity compliance with EPA

- established state CO2 emission goals through 2030; (3) State Option 2, looking at regulated entity compliance with EPA established state CO2 emission goals through 2025; (4) Regional Option 1, looking at reg ulated entity compliance with EPA

- established regional CO2 emission goals through 2030; and (5) Regional Option 2, looking at regulated entity compliance with EPA

- established regional CO2 emission goals through 2025.

Commenters stated, despite the EPA havi ng modeled these five different scenarios in each of five years, for a total of 25 modeling runs evaluating the achievability and impacts of the proposal, the EPA provides the results of only four of the 25 modeling runs in the docket, and no
results for 2 030 (the year in which compliance must be achieved with the final state emission goals). Commenters said, the four files it provides address the 2025 Base Case, the 2025 State Option 1, the 2020 Regional Option 1, and the 2025 Regional Option 2. Commenters said, the other 21 files have not been provided. Commenters said, without these additional 21 files, commenters cannot evaluate the EPA's contention that compliance with the proposed rule is feasible. Commenters said, specifically, without this data, comm enters cannot analyze how the EPA has determined that regulated entities are capable of complying with the remaining Base Case, State Option 1 and 2, and Regional Option 1 and 2 policy options in the years 2016, 2018, 2020, 2025, and 2030.

Commenters state d, indeed, the only real unit

- by

- unit comparison modeling the EPA provides are the 2025 Base Case and 2025 State Option 1, which look at compliance with the interim state goals rather than the final goals EPA proposes to prescribe for the year 2030. Commen ters said, to properly evaluate how the EPA expects regulated entities to achieve their 2030 goals, and how this compliance is balanced within a state, commenters need to have access to the results of the remaining IPM scenarios for 2016, 2018, 2020, 2025, and 2030 for all of the policy options. Commenters said, without these results, the EPA appears to lack any basis for determining that regulated entities can achieve the proposed 2030 goals in the first place.

Commenters stated, on August 1, 2014, comment ers issued a Freedom of Information Act ("FOIA") request seeking the "results of the remaining 21 modeling runs" beyond the four IPM modeling runs the EPA placed in the docket. Commenters specifically requested the "parsed files" for the missing runs. Comm enters said, on August 12, 2014, the EPA responded that it had "conducted and included only four parsed files in the docket for the proposed rule" and that "parsing is a post

- processing step that EPA does not routinely perform."171 Commenters stated, they un derstand that the EPA "parses" modeling results to show unit

- by

- unit impacts of a rule. Commenters said, in the case of the Section 111(d) Proposal, it appears from the response to this FOIA request that the EPA did not analyze the ability of individual un its to comply with the proposed rule's various implementation scenarios, even in the final compliance year of 2030. Commenters said, if this is in fact the case

- i.e., if the EPA did not analyze the ability of individual units to comply with the proposed rule under various implementation
scenarios

- the rule would have no basis and as a result would be unlawful. Commenters said, based on other information and references in the docket, however, the EPA appears to have run the IPM model in these instances, b ut either did not include those runs in the docket or did not "parse" those runs for any scenarios beyond the four that the EPA posted in the docket. Commenters said, the EPA easily could have parsed all the modeling runs it conducted, but apparently chose not to for reasons that are unclear. Commenters said, the EPA may not have examined each scenario due to resource constraints, or it may have simply assumed, without completing the analysis, that compliance with each scenario was feasible for existing uni ts. Commenters said, without these modeling results, the regulated community cannot fully assess EPA's claims that the goals and building blocks in the proposed rule are "achiev[able]," and the EPA would violate the clear statutory results for initiation o f rulemaking.

Commenters stated, finally, the EPA states in the preamble that its "assessments ... regarding the ability of the electricity and natural gas industries to achieve the levels of performance indicated for building block 2 in the state goal com putations are supported by analysis that has been conducted using the Integrated Planning Model (IPM)." Commenters said, with only a very limited and incomplete portion of that analysis in the docket, it is impossible to analyze the basis
for such assertio ns. Commenters said, it is highly unusual if not unprecedented for EPA to have omitted the necessary modeling from a rulemaking docket on which it relies in support of a rule. Commenters said, this again illustrates that the EPA has violated the requiremen ts of section 307(d) for initiation of rulemaking.

B. Net Heat Rate and Emissions Data

Commenters stated, the EPA also has omitted from the docket data to support one of the central elements of its proposed rule: that existing coal

- fired electric generatin g units can achieve a 4

- 6 percent heat rate improvement. Commenters said, to support this proposal, the EPA examined its database of existing coal

- fired units and identified 16 units that it says have achieved heat rate improvements of 3

- 8 percent "year

- to

- year." Commenters said, the EPA omits from the docket, however, any data that supports this assertion.

Commenters stated, the Section 111(d) Proposal docket contains a database of heat rates and carbon dioxide emissions from existing units measured on a gross basis for the past decade. Commenters said, it also contains a single year

- 2012

--- of such data on a net basis.

Commenters stated, because the EPA says that 16 units achieved 3

- 8 percent heat rate improvements on a "year

- to year" basis

- which would re quire more than one year of data

- the172 EPA must be relying on its gross emissions data to support the assertion that a 4

- 6 percent heat rate improvement is achievable and legally supportable. Commenters said, but the EPA is proposing to require that units demonstrate compliance on a net basis, while omitting from the docket any "year

- to

- year" data demonstrating that units are capable of complying with a central element of its proposal: a 4

- 6 percent heat rate improvement on a net basis. Commenters said,
wi thout the net data, the EPA "fail[ed] to provide an accurate picture of the reasoning that has led the agency to the proposed rule."

Commenters stated, this is a particularly glaring omission given that if the EPA had measured heat rate improvements on a n et basis, it would have been unable to show that a 4

- 6 percent heat rate improvement is in fact achievable. Commenters said, measuring compliance on a net basis subtracts from a unit's gross heat rate (and related emissions) any electricity output associat ed with auxiliary power consumed by the unit to enable it to run. Commenters said, significant power can be consumed by pollution control devices at the unit, for instance, and heat rates are compromised when greater auxiliary power is needed. Commenters s aid, with the implementation of the Mercury and Air Toxics Standards rule, more pollution controls are being installed on existing sources, increasing demand for auxiliary power and thus increasing heat rates. Commenters said, furthermore, units that opera te at lower load as a result of these rules would experience a higher level of auxiliary power use relative to their generation. Commenters said, for these reasons, it is critical to have the EPA's data on net (as opposed to gross) heat rate.

Commenters st ated, without a database of net heat rate and associated emissions, the EPA's assertion that compliance with its proposed heat rate reductions (and other parts of the rule) can be achieved on a net (rather than gross) basis cannot be validated. Commenters said, this would render the EPA's proposed rule unlawful. Commenters said, if the EPA has such data, the EPA cannot "play hunt the peanut with technical information, hiding or disguising the information that it employs," and in the process "treat what shou ld be a genuine interchange as mere bureaucratic sport."

Commenters stated, the missing heat rate data, if it exists, are the type of information that must be included in the docket on the date of proposal under section 307(d)(3). Commenters said,
without the net heat rate and emissions data, the EPA cannot satisfy the requirements of section 307(d) for initiation of rulemaking.

Response 1: We disagree with these commenters’ assertions that EPA has failed an obligation under CAA section 307(d)(3). That provision provides in relevant part that a notice of proposed rulemaking shall include a “statement of basis and purpose,” which itself includes, “a summary of (A) the factual data on which the proposed rule is based; (B) the methodology used in obtaining the data and in analyzing the data; and (C) the major legal interpretations and policy considerations underlying the proposed rule.” In addition, section 307(d)(3) provides that, “All data, information, and documents referred to in this paragraph on which the proposed rule relies shall be included in the docket on the date of publication of the proposed rule.” The D.C. Circuit has emphasized that section 307(d)(3) does not establish a “general requirement” to include all173 information of potential relevance to those reviewing the proposal, but rather only requires docketing of those materials “on which the proposed rule relies .” Am. Trucking Ass’ns v. EPA

, 283 F.3d 355, 372 (D.C. Cir. 2002) (quoting 42 U.S.C. § 7607(d)(3)) (emphasis by the court).

Commenters allege that there are essentially three categories of information that the proposal relied on, but which EPA failed to include in the docket. In actuality, the information sought by these commenters was either available to commenters in the docket

, w as not relied upon by the proposal, or does not exist . Accordingly, we disagree with these commenters that EPA failed a docketing requirement under section 307(d)(3).

First, commenters allege that the EPA failed to include in the docket the parsed data files

re lating to 21 Integrated Planning Model (IPM) runs or, alternatively, information regarding those modeling runs. As EPA explained in its Aug. 12, 2004 response to a FOIA request for the parsed files (EPA

- HQ

- 2014

- 009111), all the parsed files created by EPA were already available to commenters, and the remaining “missing” files never existed in the first place. P arsing is a post

- processing step that EPA does not routinely perform. The four parsed files that we executed for this rulemaking were included in the docket at EPA

- HQ

- OAR

- 2013

- 0602

- 0219 through

- 0221. All other modeling runs that EPA relied upon, but did not parse the results of, were available in the docket at the time of proposal. Further extensive information on the IPM modeling conducted for the pr oposal was available in a URL cited numerous times in the preamble and throughout the Regulatory Impact Analysis accompanying the proposed rule.

Second, commenters also request the net heat rate data that they presume EPA used to determine building block 1. As explained in the GHG Abatement Measures TSD accompanying the proposed rule, the EPA used gross data in proposed heat rate assessment, as we do now in
our final heat rate assessment. The reasonableness of this decision is explained in section V.C of

t he final rule preamble of the CPP and Chapter 2 of the GHG Mitigation Measures TSD supporting the final CPP. Insofar as section 307(d)(3) is concerned, however, this concern is

moot.

Third, and finally, commenters requested information pertaining to 16 EG Us referenced
in the GHG Abatement Measures TSD accompanying the proposed rule. The net heat rate data on which EPA purportedly relied never existed to begin with, for the reasons stated more generally above. All of the gross data on which the proposal re l ied was included in the docket, and was used by many commenters to critique the EPA’s heat rate assessment, as discussed in section 3.1.1 through 3.1.5 of this document, in section V.C of the final rule preamble, and in Chapter 2 of the GHG Mitigation Meas ures TSD supporting the final CPP. Additionally, with respect to with respect to the 16 units referenced by commenters, the EPA decided not to include a separate identification of the average quantity of heat rate improvement achievable solely through equi pment upgrades, for the reasons stated in section V.C of the final rule preamble of the CPP and Chapter 2 of the GHG Mitigation Measures TSD supporting the final CPP. Accordingly, it is unlikely that commenters could show a substantial likelihood that the rule would have been changed but for a hypothetical procedural error related to these 16 units. See 42 U.S.C. § 7607(d)(8).174 EPA also disagrees that the NODA or November Supplemental Proposal deprived commenters of sufficient time to meaningfully comment on the proposal. As noted in section I.L of the preamble of the final rule, EPA initially made the proposal available to the public online on June 2, 2014, at http://www.epa.gov/cleanpowerplan/. Over two weeks later, the proposal was published in the Federal Register

, and a 120

- day comment period began. EPA subsequently extended the comment period by an additional 45 days, to December 1, 2014. Commenters thus had over 30 days to comment on the NODA. For the supplemental, EPA offered a separate 45

- day comment period that continued until December 19, 2014. The D.C. Circuit has previously rejected 307(d)(3)

- based claims of inadequate time for comment, noting in one case that after publishing a supplemental proposal, “The EPA even extended the time to accept publ ic input until 30 days after close of the public comment period to provide manufacturers like [plaintiff] with more opportunity to comment.” Husqvarna Ab v. EPA , 245 F.3d 195, 203 (D.C. Cir. 2001). Here too, t he commenters had more than enough time to mean ingfully comment on these documents, as many of them did.

Moreover, setting aside all of the above, commenters fail to explain how this allegedly missing information

— most of which never existed at all, or was not relied upon by the proposal

— hindered their ability to meaningfully comment. To the contrary, the extensive comments provided by these same commenters and many others, including on the very same topics, belie their unsupported assertions of prejudice. See Union Oil Co. v. EPA , 821 F.2d 678,
683

– 84 ( D.C. Cir. 1987) (citing 42 U.S.C. § 7607(d)(8)) (holding that petitioners had failed that but for an alleged procedural error, there was a “substantial likelihood” that the final rule would have been significantly changed).

Comment 2: Several commenters assert that the 111(d) proposal fails to meet 307(d) and should
be withdrawn.

Commenters expressed concerns about the failure of the EPA to include required and critical information in the regulatory dockets of two recent proposed rule s: the Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units (Existing Source Rule), and the Carbon Pollution Standards for Modified and Reconstructed Stationary Sources: Electric Utility Generating Units ( Modified Sources Rule) (together, Proposed Rules). Commenters said, by failing to include in the dockets key materials on which the Agency relies as support for the Proposed Rules, the EPA has violated Section 307(d) of the Clean Air Act (CAA) (codified at 42 U.S.C. Section 7607(d)). Commenters said, both the Existing Source Rule
and the Modified Sources Rule must thus be withdrawn.

Commenters stated, in the Existing Source Rule, the EPA omitted from the docket 84% of the modeling runs on which it relied i n crafting the proposed Rule, without which the States and the public cannot comment meaningfully on the proposal. Commenters said, specifically, the docket does not include 21 out of 25 of the Integrated Planning Model modeling runs that the agency
used t o justify the standards imposed by the Rule. Commenters said, the missing modeling runs175 cover projections for 2016, 2018, 2020, 2025 and 2030. Commenters said, this information is critical to assessing the EPA's claims that States and industry will be able to comply with the four "building blocks" in the proposed Existing Source Rule. Commenters said, the States need the modeling run data for sufficient analysis of what that data shows on a unit by unit and state by state basis.

Commenters stated, similarly , the EPA failed to include in the Existing Source Rule's docket vital net heat rate and emissions data, which are central to the EPA's assertion that existing power plants are able to achieve a four to six percent heat rate improvement under EPA's first

" building block." Commenters said, without the "year

- to

- year" data showing that facilities can comply with the four to six percent heat rate improvement, the States and the public cannot meaningfully comment on the achievability of the EPA's heat rate proje ctions. Some commenters added, in particular, EPA failed to include any supporting data regarding the 16 units that it identified in the preamble as having achieved gross heat rate improvements of 3% to 8% per year. Commenters said, failure to include the data is of particular interest because one of those 16 units was Commenter's Brame Energy Center Unit 2. Commenters dispute EPA's conclusions regarding that unit.

Commenters stated, all told, the missing information unquestionably constitutes "data,
infor mation and documents," and likely contains "policy considerations underlying the proposed rule" that should have been in the rulemaking dockets from the beginning, according to Section 307(d). Commenters said, deprived of this missing information, the noti ces of proposed rulemaking published on June 18 "fail[ed] to provide an accurate picture of the reasoning that has led [EPA] to the proposed rule." Conn. Light. 673 F.2d at 530. Commenters said, this is particularly problematic where, as here, the proposal s seek to overhaul the existing electric generating sector on an unprecedented scale. See Maryland v. E.P.A., 530 F.2d 215, 222 (4th Cir. 1975) (vacating rule due to EPA's failure to comply with notice and comment requirements, emphasizing the "drastic imp act" that compliance with rule would have), vacated on other grounds, 431 U.S. 99 (1977).

Commenters stated, in light of these clear violations of Section 307, the EPA should withdraw the Existing Source Rule and the Modified Sources Rule immediately. Comm enters said, with regard to the proposed Existing Source Rule, that Rule is wholly unlawful on other grounds and therefore may not be re

- proposed at all, even if the EPA were to compile the data and documents required by Section 307. See Letter from Patric k Morrisey. Attorney General of West Virginia. to Gina McCarthy, Administrator. EPA (June 6, 2014); State of West Virginia, et al v. EPA, No.
14

- 1146 (D.C. Cir.); In re Murray Energy corporation, No. 14

- 1112 (D.C. Cir.).

Response 2: The EPA’s response to t his comment is addressed in the response to Comment 1 in
this section 1.13.176 Comment 3: Commenters stated, as an initial matter, Commenters must call attention to EPA's
last

- minute release of information and data concerning key aspects of the Existing Sour ce Proposal. Commenters said, EPA's 60

- page Notice of Data Availability ("NODA"), which addresses several controversial aspects of the proposal, including the proposed interim goals and the building block methodology, was not made available to the public u ntil just over one month prior to the comment deadline. See 79 Fed. Reg. 64543 (October 30, 2014). Commenters said, worse yet, just days before the comment deadline, EPA released a 16

- page technical support document concerning methodologies for converting a state's rate

- based CO2 emission standards

to mass

- based standards. EPA, Technical Support Document: Translation of the Clean Power
Plan Emission Rate

- Based CO2 Goals to Mass

- Based Equivalents (Nov. 2014), available at http:/ /www2.epa.gov/sites/productio nlfiles/20 14

- 11/documents/20 1411 06tsd

- rate

- to

- mass.pdf (last visited Nov. 13, 2014). Commenters said, EPA's late docketing virtually ensures that stakeholders will be unable to fully review, analyze, and comment on this information.

Commenters stated, even if the Existing Source Proposal could withstand the substantive challenges discussed above, it must nevertheless be withdrawn on procedural grounds because EPA omitted from the rulemaking docket key materials upon which the agency relies as support
f

or the proposal, in violation of Section 307(d) of the CAA.

Commenters stated, section 307(d) of the CAA imposes certain mandatory requirements for all proposed rules, which reflect Congress's judgment that information on which a proposed rule is
based mu st be made available to the public at the time of publication to ensure meaningful comment and sound rulemaking. Commenters said, more specifically, Section 307(d) states that "[a]ll data, information, and documents ... on which the proposed rule relies sh all be included in the docket on the date of publication of the proposed rule." Commenters said, "all data, information, and documents" includes a "statement of basis and purpose ... [which] shall include a summary of ... the factual data on which the prop osed rule is based[,] ... the methodology used in obtaining the data and in analyzing the data[,] and ... the major legal interpretations and policy considerations underlying the proposed rule." Commenters said, this docketing requirement is
nondiscretiona ry.

Commenters stated, EPA violated Section 307(d) by omitting from the docket 84 percent of the modeling runs on which it relied in crafting the Existing Source Proposal, without which the public cannot comment meaningfully on the proposal. Commenters sa id, specifically, the docket does not include 21 out of 25 of the Integrated Planning Model modeling runs that the agency used to justify the standards imposed by the Existing Source Proposal. Commenters said, the missing modeling runs cover projections fo r 2016, 2018, 2020, 2025, and 2030. Commenters said, this information is critical to assessing EPA's claims that states and industry will be able to comply with the four "building blocks" in the Existing Source Proposal. Commenters said, the public needs t he modeling run data for sufficient analysis of what that data show on a unit by unit and state by state basis.177 Commenters stated, in addition, EPA failed to include in the docket vital net heat rate and emissions data, which are central to EPA's assertio n that existing power plants are able to achieve a 6 percent heat rate improvement under EPA's first "building block." Commenters said, for example, EPA claims in the Existing Source Proposal to have reviewed its database of existing coal

- fired units and f ound 16 facilities that have achieved heat rate improvements of 3 to 8 percent "year

- to

- year," but it does not include any supporting data. Commenters said, without the "year

- to

- year" data showing that facilities can comply with the requisite 6 percent hea t rate improvement, the public cannot meaningfully comment on the achievability of EPA's heat rate projections. Commenters said, in other words, the public cannot meaningfully comment on the Existing Source Proposal because EPA has "fail[ed] to provide an accurate picture of the reasoning that has led the agency to the proposed rule."

Commenters stated, issuing a rule without providing parties with the technical information necessary for meaningful comment renders the final rule unlawful. Commenters said, n or can the problem be cured by late docketing of the required data, as such late docketing does not permit the public with sufficient time for meaningful review and comment. Commenters said, given EPA's clear violation of Section 307(d), the agency must wi thdraw the Existing Source Proposal.

Response 3: The EPA’s response to this comment is addressed in the response to Comment 1 in
this section 1.13.

Comment 4: Commenters stated that EPA has not followed proper rulemaking procedures.

Commenters stated, EPA's rulemaking schedule is insufficient and contravenes the CAA's public comment requirements. Commenters said, therefore, EPA must withdraw its current proposal, and if it intends to proceed with this effort, issue a new and complete proposal.

Commenter s stated, first, EPA has failed to provide significant supporting materials in the public docket. Commenters said, CAA section 307(d)(3) requires EPA to include in its rulemaking docket on the date of publication of a proposed rule "[a]ll data, information , and documents . . . on which the proposed rule relies." Commenters said, EPA's docket as of the date of the publication of the proposed rule in the Federal Register on June 18, 2014, and to this day, fails to include significant documents EPA acknowledge s it has relied upon. Commenters said, for example, EPA conducted 25 primary modeling runs using the IPM, yet only four of those 25 runs were placed in the docket for public review. Commenters said, in preparing its proposed rule, EPA evaluated numerous co mpliance options and compliance years; however, it only made available in the docket the parsed files from IPM runs that evaluate the 2025 base case, 2025 State Option 1, 2025 Regional Option 2 and the 2020 Regional Option 1. Commenters said, EPA provided none of its modeling runs evaluating the states' ability to comply in 2030 and only one
of five scenarios modeled for the initial 2020

- compliance year. Commenters said, the one scenario provided for 2020 is a regional scenario, not a state

- specific scenari o. Commenters said, EPA's other building blocks were also developed based in part on IPM runs. Commenters said,178 the public thus needs EPA's additional parsed files to complete a meaningful analysis of EPA's proposal.

Commenters stated, also missing from th e docket are data EPA relied on to support the heat rate improvement assumptions underlying EPA's first building block. Commenters said, according to EPA, 16 facilities have achieved heat rate improvements of three to eight percent on a year

- to

year basis, allegedly supporting its assertion that a four to six percent heat rate improvement is
reasonable and achievable across all coal

- fired units in every state. Commenters said, however, despite requests for this information from states and affected entities, EPA has not made that

year

- to

- year heat rate improvement data available in the public docket.

Commenters stated, in September 2014, EPA posted additional materials to its rulemaking docket, but did not include the information referenced above. Commenters said, regardless, EPA is still violating procedural requirements because these materials were not included in the rulemaking docket on the date of publication. Commenters said, despite notice of the deficiencies, the passage of significant time, and EPA's publication of other materials to the docket in the middle of the public comment period, EPA has not remedied the deficiencies in the docket. Commenters said, EPA must correct these deficiencies and allow additional time for public review and comment based on the complete record that it has relied upon in developing its proposal.

Commenters said that many primary documents necessary for analysis of the costs and feasibility of the program in the various states were not placed in the docket, as required, by the date the proposed rule was published in the Federal Register.

Response 4: The EPA’s response to this comment is addressed in the response to Comment 1 in
this section 1.13. The agency has been committed to transparency and public engagement throughout the rulemaking process. The proposed rule and subsequent notices satisfy the procedural requirements of the CAA and/or the APA by providing meaningful notice and gave giving commenters an adequate basis on which to comment. In addition to providing notice and soliciting comment in the Federal Register, EPA conducted an extensive outreach effort including numerous meetings with stakeholder groups. Many of commenters’ suggestions have been reflected throughout the final rule.

Comment 5: Commenters stated, E PA solicits comment on a third "regionalized" approach to RE in Building Block 3. Commenters said, the Agency's new approach was not included in the June 14 Proposed Guidelines and is not actually proposed in the NODA. Commenters said, under a "regionalize d" approach, EPA would "adjust[] each state's RE target based on the RE potential
available across a multi

- state region in which the state is located" rather than attempting to determine what level of renewable energy could be generated within the state it self. 79 Fed. Reg. at 64,551. Commenters said, this approach would "group states into regions; aggregate RE179 generation potential across states within each region; and then reapportion the aggregate identified RE generation to individual states according to criteria that assume regional RE development in which parties in multiple states participate, regardless of the specific state where the generation occurs." Id. Commenters said, EPA believes this approach would "better align RE targets with the proposal t o allow the use of certain out

- of

- state renewables for compliance." Id.

Commenters stated, similarly, EPA solicits comment on using a regional approach to redispatch under Building Block 2 that would include requiring redispatch across state lines. Commen ters said, again, EPA does not actually propose this approach and merely seeks comment on an approach whereby "regional availability of NGCC generation would be considered rather than just in

- state availability of NGCC generation in setting building block 2 targets." Id. at 64,550. Commenters said, under this approach, the levels of required generation shift under Building Block 2 could be determined in at least three different ways

- using six regions whose borders are informed by NERC regions, RTOs, or so me alternative regional structure. Id. at 64,551. Commenters said, the Agency explains that using regional approaches could "mitigate the concerns expressed" by certain unnamed stakeholders "that building block 2 has little or no
effect on certain states w ith large amounts of coal

- fired generation and limited excess NGCC capacity." Id. Commenters said, as noted, EPA has neither proposed any of the regional approaches on which it requests comment nor has it provided sufficient information such as
technical a nalyses that commenters need to allow them to comment in a meaningful way. Commenters said, the Agency provides no direction on how states might be grouped into regions, instead listing four significantly different options and also soliciting comment on "s ome other approach." Id.

Response 5: As noted by the commenter, the agency provided specific information in the NODA regarding how it was considering recalculating certain aspects of the building blocks, including the regionalization approach. EPA put the information out for comment and received numerous comments, including this one. The remainder of this comment is addressed by EPA’s response to comment 1 in Section 1.13.

Comment 6 : Several commenters asserted that the docket is incomplete due to missing modeling results.

Commenters stated, EPAs proposed rule relies heavily upon computer modeling, but many of the key assumptions used throughout the modeling process have not been mad e available for public comment. Commenters said, EPA's refusal to disclose its modeling assumptions and the full suite of model outputs renders regulations based on those models arbitrary and capricious. Commenters said, EPA failed to include key assumptio ns it used when modeling the effects of 111(d) in the record. Commenters said, the agency continues to refuse outside requests for the relevant information. Commenters said, without access to the assumptions used to formulate the rule and the full portfoli o of model outputs, stakeholders cannot confirm or deny the veracity of the Agency's claims about the feasibility of compliance.180 Commenters stated, some, but not all, critical documents were added after the proposed rule was published in the Federal Regist er. Commenters said, for instance, EPA released two new years of data on electricity consumption on October 28th. Commenters said, this new data forced
stakeholders to re

- do their computations just one month before the end of the comment period.
Commenters said, furthermore, EPA has done computer modeling to support its proposed rule but has not made the key details of these modeling runs available for public comment. Commenters said, critical modeling runs that bear upon the economic, consumer, and energy impacts on Indiana remain unavailable.

Commenters stated, EPA failed to provide data on all IPM model runs.

Commenters stated, EPA must provide the basis and purpose for the Proposed Guidelines under section 307(d)(3) of the CAA. Commenters said, the basi s and purpose must include "a summary of . . . the factual data on which the proposed rule is based; . . . the methodology used in obtaining the data and in analyzing the data; and . . . the major legal interpretations and policy considerations underlying the proposed rule." CAA section 307(d)(3). Commenters said, EPA's failure to include the data for 21 of its modeling runs has affected Commenters’ ability to comment meaningfully on the Proposed Guidelines. Commenters said, in response to a request
from Co mmenters under the Freedom of Information Act, EPA responded that it had not parsed the 21 modeling runs, which is why those data are not included in the docket. Letter from Karen Orehowsky, Deputy Dir., Clean Air Markets Div., EPA to Craig S. Harrison, Hu nton & Williams LLP (Aug. 12, 2014) (included in UARG's separately filed Supplemental Materials for the Rulemaking Record). Commenters said, without such parsed data, however, EPA cannot have conducted a reasonable inquiry into the achievability of Buildin g Block 3. Commenters said, this is an egregious failure to comply with section 307(d)(3), and will render any final rule unlawful. Commenters said, EPA is "play[ing] hunt the peanut with technical information, hiding or disguising the information that it employs," and is "treat[ing] what should be a genuine interchange as mere bureaucratic sport." Conn. Light & Power Co. v. Nuclear Regulatory Comm'n, 673 F.2d 525, 530 (D.C. Cir. 1982).

Commenters stated, EPA cannot establish that increases of this magnitu de are achievable

- particularly because it has failed to provide any parsed analysis of its IPM runs for 2030 that would allow states to assess the impact of these required increases. Commenters said, indeed, EPA has provided data for only four of the 25 IPM runs that it performed as support for the Proposed Rule. Commenters said, the Agency must provide the basis and purpose for the Proposed Rule under section 307(d)(3) of the CAA. Commenters said, the basis and purpose must include "a summary of . . . th e factual data on which the proposed rule is based; the methodology used in obtaining the data and in analyzing the data; and the major legal interpretations and policy considerations underlying the proposed rule." Commenters said, EPA's
failure to include the data for 21 of its modeling runs has affected Commenters’ ability to comment meaningfully on the Proposed Rule.181 Commenters stated, the Agency's own analysis demonstrates that it has failed to accurately consider factors such as cost and feasibility. C ommenters said, the IPM results suggest that rapid growth in renewable energy generation is so costly that states are able to achieve only negligible incremental increases in renewable energy generation above the status quo (at best), and they
must instead rely more heavily on other components of EPA's selected BSER in order to comply with the Proposed Rule. Commenters said, this, in turn, will increase the cost of those other building blocks in ways that EPA has failed to analyze in the Proposed Rule. Comm enters said, therefore, EPA must recalculate its renewable energy generation targets to consider factors such as cost and feasibility for each state. Commenters said, a failure to do so would necessitate the Proposed Rule's withdrawal and re

- proposal.

Comm enters stated, since the release of the proposal in June 2014, EPA has continuously added to the rulemaking docket, making it difficult for stakeholders adequately to evaluate the proposal during the comment period. Commenters said, at present, it contains more than 1,500 documents, with significant new information, concepts, and requests for comment added as recently as October 28, 2014 and November 6, 2014 (i.e., Notice of Data Availability ("NODA") and Notice). Commenters said, the docket still does not contain all of the parsed (unit

- level) modeling files depicting critical unit level assumptions and impacts from EPA's analyses. Commenters said, the proposal, as it stands, violates basic statutory requirements for rulemaking set forth in section 307(d) o f the Act.

Commenters stated, EPA completed twenty

- five IPM runs (or scenarios) to support its proposal. Commenters said, each of the 25 model runs produces results for seven model years

- 2016, 2018, 2020, 2025, 2030, 2040, and 2050

- for a total of 175 m odel years. Commenters said, EPA, however, has not provided all of the "parsed files" that depict critical unit

- level assumptions and impacts. Commenters said, only four of the 175 "parsed files" have been uploaded to the docket: 2025 Base Case, 2025 State Option 1, 2020 Regional Option 1, 2025 Regional Option 2. Commenters said, EPA's compliance modeling is therefore completely inadequate as Commenters cannot properly evaluate the Agency's justification for its BSER determination and the proposed guideline s' impacts without proper analysis of all "parsed files."

Commenters stated, some critical documents were not released when the proposed rule was published in the Federal Register, nor have they been added to the docket. Commenters said, perhaps one of the most critical elements missing is the Agency's failure to make key details of the computer modeling they performed to support its proposed rule available for public comment. Commenters said, critical modeling runs that bear upon the economic, consumer, an d energy impacts on both Indiana and Ohio remain unavailable. Commenters said, as a result, commenters believe that preparing informed comments on this important issue is not possible.

Commenters stated, EPA's analysis of the effects the proposed rule consists primarily of IPM model runs. Commenters said, these runs form the basis for EPA's RIA, and they are a key component of EPA's conclusion that EPA's "best system" and the standards i t is imposing as a result of that system are achievable. Commenters said, yet despite the centrality of these model182 runs to EPA's analysis, and despite the fact that the Agency conducted 25 different model runs, EPA (a) failed to include the complete model run information for any years it modeled, (b) included in the record the parsed files for only 4 out of the 25 model runs, and (c) did not include any information for model runs simulating 2030, the key compliance date for the rule. Commenters said, EPA's failure to include this information in the docket for the Proposed Rule does not comply with CAA section 317 nor with EPA's obligation under CAA section 307(d)(5) to create an adequate record and provide the public with an opportunity for notice and comme nt.

Response 6 : The EPA’s response to this comment is addressed in the response to Comment 1 in
this section 1.13.

Comment 7 : Commenters asserted that the NODA fails to satisfy obligations under section 307(d).

Commenters are discouraged that U.S. EPA ha s provided an additional proposal on such an important element of Clean Power Plan with less than 2

- 1/2 weeks left in the comment period to prepare additional comments. Commenters said, in combination with the June 18, 2014 proposal and the October 30, 201 4 NODA, there is just not enough time to thoroughly explore all of the ramifications of these proposals and engage in discussions with U.S. EPA to obtain additional clarification regarding the mass

- based approach in this NODA. Commenters said, regardless, they conducted as complete a review of this new information as possible in this narrow
timeframe.

Commenters, among other interested parties, requested clarification on the rate

- to

- mass conversion process in response to the vague and inadequately developed guidance provided by U.S. EPA in the "Projecting EGU CO2 Emission Performance in State Plans" TSD which was released with the June 18, 2014 proposal. Commenters said, the aforementioned TSD described a methodology in which states would develop various ref erence and future projection scenarios, accounting for load growth, transmission expansion, fuel supply and delivery, among other variables. Commenters said, many questions were left unanswered, such as how states could account for and credit pending unit retirements, what would be considered an adequate load

growth model, and what would the reporting requirements be under a mass

- based goal. Commenters said, EPA, in the name of flexibility, unencumbered itself of the responsibility of providing firm guidanc e that would enable states to adequately assess the pros and cons of a

mass

- based compliance path, and instead placed the burden of developing a mass

- based
conversion on the states.

Commenters stated, EPA is now soliciting comment on two additional approa ches for determining a mass

- based equivalent metric. Commenters said, first, EPA is proposing an approach based on historical data that produces a mass

- based equivalent that applies to existing affected EGUs only. Commenters said, this option simply assume s that the proposed rule will reduce generation demand via elements of the proposed best system of emission reduction (BSER), and that a mass

- based goal can be obtained simply by the multiplication of the rate

based goal by this new, reduced generation val ue. Commenters said, second, U.S. EPA is183 proposing an approach based on a combination of historical data and a projection of future electric demand that produces a mass

- based equivalent that is inclusive of new fossil fuel

- fired sources. Commenters said, t his second approach takes into consideration EPA's proposal of an option for state plans to include an approach where new fossil fuel

- fired sources are incorporated as a component. Commenters said, however, even this method falls far short of the sophistic ation and level of detail put forth in the original proposal.

Commenters stated, neither option presented in the recently released TSD sufficiently addressed stakeholder questions. Commenters said, indeed, the recent rate

- to

- mass TSD bears little
resemblan ce to, nor sheds any new light on, the proposed scenario

- based approach in the June 18, 2014 TSD. Commenters said, there is no guidance on the development of the various projection and reference scenarios, a complete lack of accounting for pending shutdown s (including a fair methodology to credit them), and no recommendations as to the appropriate tools to develop long

- term projections of generation. Commenters believe that, given the far

reaching impacts of the proposed rule, the burden falls on EPA to ful ly develop a rate

- to

- mass conversion methodology along with supporting information that demonstrates the feasibility and legality of such an approach. Commenters said, further, EPA must demonstrate that grid reliability will be maintained whether a state c hooses a rate

- based or mass

- based compliance plan, which EPA has failed to do.

Commenters stated, the NODA provides very little additional "data" beyond U.S. EPA

manipulated eGRID data; this data could be compiled from existing EIA datasets and is of very little utility to entities as they prepare comments. Commenters said, rather, this proposal presents a series of concepts or alternatives based presumably on stakeholder feedback without any supporting data and analysis, without any new goal computations, and without analysis of costs and feasibility associated with these alternatives. Commenters said, U.S. EPA acknowledges these potential changes "could increase or decrease the stringency of the goals or shift stringency levels between and among states" y et U.S. EPA has provided no additional goal computation or data for states to use in providing meaningful comments. Commenters said, additionally, no additional IPM results were provided to assess, on a unit

- by

- unit basis, the implications of these
alterna tives and potential changes.

Commenters asserted that U.S. EPA released critical guidance far too late in the comment period and also omitted vital information from the docket that would allow stakeholders to fully understand the proposal at hand. Comment ers provided a list of the major elements. One Commenter's Appendix EE included a formal request to U.S. EPA for additional necessary
information.

• IPM Parsed Files: Option 1 State, 2030

• IPM Parsed Files: Option 1 Regional, 2025

• IPM Parsed Files: Option 1 R egional, 2030

• IPM Parsed Files: Option 2 State, 2025

• U.S. EPA heat rate improvement analysis data184 • Sufficient detail on enforceability and EM&V approvability

• NODA lacked data, reformulated state goals, cost analysis, technical analysis and other
administrat ive elements

Response 7 : With respect to EM&V approvability, as further discussed in Section VIII of the preamble, the requirements for EM&V under state plans the EPA is finalizing were proposed for comment in its June 18, 2014 proposal. EPA discusses the importance of EM&V in Section VIII of the preamble and establishes a structural requirement in the guidelines. In the proposed federal plan, the agency provides a more robust discussion of particular EM&V requirements which will be available for public co mment, in addition to further guidance the agency intends to issue on EM&V. With respect to the NODA, the EPA included in the NODA the information upon
which it relied. The remainder of this comment, including commenters’ concern regarding the time available to comment on the NODA, is addressed in EPA’s response to Comment 1 in
section 1.13.

Comment 8 : Several commenters stated that the NODA is an improper alte ration of the original proposal, in violation of section 307 of the CAA.

Commenters stated it appears that most of the new approaches represent an attempt to increase the stringency of the final rule without providing any basis to indicate that this incr eased stringency can be achieved, let alone achieved at a reasonable cost. Commenters said, to the extent that this is the case, they assert that EPA is precluded from including these approaches in
the final rule. See 42 U.S.C. Sections 741 l(d), 7607(d); Essex Chemical Corporation v. Ruckelshaus, 486 F.2d 427, 433 (D.C. Cir. 1973).

Commenters stated, in the NODA, EPA asserts that it intends to ensure that other stakeholders have the opportunity to consider these ideas as they formulate their comments on t he proposal. Commenters said, this assertion is unpersuasive. Commenters said, the true purpose of the NODA appears to be an effort by EPA to circumvent proper notice and comment procedures by de facto alteration of the original proposal, in violation of s ection 307 of the CAA.

Commenters stated, the fact that EPA felt compelled to issue the NODA, requesting comment on issues that go beyond the more than 130 requests for comment it made in the June proposal, again underscores the fact that its proposal is not sufficiently expressed. Commenters said, this scoping exercise should have been an Advance Notice of Proposed Rulemaking, rather than a Notice of Proposed Rulemaking. Commenters said, even at the late date on which the NODA was issued, with just 31 day s remaining in the comment period, EPA still failed to address the
critical issue of the rate

- to

- mass conversion methodology. Commenters said, a well

- defined and consistent methodology is crucial for states to formulate meaningful comments and evaluate

com pliance options. Commenters said, the poor trickle of critical information from EPA has left states, affected sources, and the public inadequate time for review and development of

comments.185 Commenters stated, EPA has offered two approaches for revising the state goal

- setting formula: (1) replace all historical fossil generation, or (2) prioritize replacement of historical fossil steam generation. Commenters said, both of these approaches represent a fundamental departure from EPA's original proposal, which Commenters strongly oppose as a violation of section 307 of the CAA. Commenters said, EPA here finally drops its original pretense that coal generation is not targeted for replacement. Commenters said, the agency now expressly solicits comment on a
method that effectively mandates the shutdown of an entire major coal

- fired power plant in West Virginia by 2030. Commenters said, this is unacceptable and flies in the face of claimed flexibility.

Commenters stated, the release of the Rate

- to

- Mass Conversion TSD as a technical support document, not as a formal part of the proposed rule, does not address EPA's failure to propose a transparent, replicable methodology to allow the translation of the proposed rate

- based goals to

mass

- based goals, as discussed previou sly in these comments.

Response 8 : EPA disagrees with this comment. In the June 18 proposal, EPA took comment on a number of ways that States could convert rate based targets to mass based targets. Following the proposal, EPA received significant input from a wide variety of commenters that more detail on a methodology for calculating mass based equivalent targets based on historical data. Many stakeholders also developed methodologies. Based on this large response, EPA supplemented the
record on this l imited portion of the rule. In particular, EPA proposed a methodology (similar to methodologies a range of commenters had developed independently) to convert the rate based targets to mass based targets. EPA believes the amount of time that commenters had to provide additional comment on this limited comment was sufficient because: 1) the fact that a range of commenters independently developed similar approaches to the approach that EPA requested additional comment on demonstrates how much EPA's methodolog y built off of the original proposal and the fact that even absent the supplemental proposal, many stakeholders were already actively considering this issue as part of their comments. 2) the fact that the methodology that EPA was requesting comment on, wa s merely a calculation methodology and did not change any of the underlying control assumptions. Finally, insofar as commenters claim that the existence of the NODA means that EPA failed an obligation under CAA section 370(d)(3), they are incorrect. As ex plained in response to Comment 1 in section 1.13, the EPA included in the docket at the time of proposal all of the information upon which the proposal
relied.

Comment 9 : Commenters requested on behalf of the Commonwealth of Kentucky and in support of re quests made by the key stakeholders and fellow state Attorneys General that
the EPA make available all data, information, and documents upon which it relied when drafting the proposed rule "Carbon Pollution Emission Guidelines for Existing Stationary Sourc es: Electric Utility Generating Unites." 79 Fed. Reg. 34,830 (June 18, 2014) (hereinafter "111(d) Rule"). Commenters said, all data, information, and documents that the EPA analyzed and upon which the EPA relied when drafting the 111(d) Rule must be made publicly available in order to186 ensure opportunity for meaningful analysis and comprehensive public

comment. Commenters requested that the EPA immediately promulgate and publish a Notice of Data Availability ("NODA") that contains the technical documents an d data requested. Commenters said, further, along with the NODA, they request that the EPA extend the comment period regarding the 111(d) Rule to allow a reasonable period for potentially affected entities to analyze the data and to permit meaningful publi c comment.

Response 9: The EPA’s response to this comment is addressed in the response to Comment 1 in
this section 1.13.

Comment 10 : Commenters stated, first, EPA's timeline fails to comply with the rulemaking requirements of CAA section 307(d) concerning receipt and consideration of public comments. Commenters said, EPA has not provided significant supporting materials in the public docket. Commenters said, section 307(d)(3) requires EPA to include in its rulemaking docket on the date of publica tion of a proposed rule "[a]ll data, information, and documents . . . on which the proposed rule relies." Commenters said, EPA's docket on the date of the publication of the proposed rule in the Federal Register, June 18, 2014, failed to include significan t documents the Agency acknowledges it relied upon. Commenters said, this deficiency persists to this day. Commenters said, for example, EPA conducted 25 primary modeling runs using the IPM, yet only four of those 25 runs were placed in the docket for publ ic review. Commenters said, in preparing its proposed rule, EPA evaluated numerous compliance options and compliance years; however, the Agency only made available in the docket the parsed files from IPM runs that evaluate the 2025 base case, 2025 State Op tion 1, 2025 Regional Option 2 and the 2020 Regional Option 1. Commenters said, EPA provided none of its modeling runs evaluating the states' ability to comply in 2030 and only one of five scenarios modeled for the initial 2020 compliance year. Commenters said, moreover, the one scenario provided for 2020 is a regional scenario, not

a state

- specific scenario. Commenters said, also, according to EPA, its "assessments . . . regarding the ability of the electricity and natural gas industries to achieve the lev els of performance indicated for [B]uilding [B]lock 2 in the state goal computations are supported by analysis that has been conducted using the Integrated Planning Model." Commenters said, other Building Blocks evaluated by EPA were also developed based i n part on IPM runs. Commenters said, EPA's missing, additional parsed files from the IPM results are needed to complete a meaningful analysis of, and to comment on, the guidelines, their underpinnings, and whether and how states and sources are projected t o comply with the proposed guidelines.

Commenters stated, also missing from the docket are data EPA relied on to support the heat rate improvement assumptions underlying EPA's first Building Block. Commenters said, according to EPA, 16 facilities have achi eved heat rate improvements of three to eight percent on a year

- to

year basis, allegedly supporting its assertion that a six percent heat rate improvement is
reasonable and achievable across all coal

- fired units in every state. Commenters said, however,
de spite requests for this information from the states and affected entities, EPA has not made that

year

- to

- year heat rate improvement data available in the public docket. Commenters said, one of187 the 16 facilities is Plant Gorgas in Alabama, which is owned an d operated by Alabama Power, a subsidiary of Southern Company. Commenters are obviously uniquely positioned to comment on the missing data from that plant, in particular, but EPA must make available the missing data from all 16 plants to ensure that EPA ha s properly interpreted it and understands any applicable limitations on it. Commenters said, without those data, commenters could not fully evaluate and comment on the basis for EPA's conclusions that a six percent improvement in heat rate is
reasonable an d achievable.

Commenters stated, in September 2014, EPA posted additional materials to its rulemaking docket. Commenters said, these materials, however, do not include the missing parsed files, heat rate, and other data EPA relied on. Commenters said, even if it did, EPA would still be in error because these materials were not included in the rulemaking docket on the date of publication as required by the CAA. Commenters said, these missing materials may well demonstrate that this proposed rule would be fun damentally different if those materials were properly considered by EPA, based upon meaningful and informed public comment. Commenters said, despite notice of the deficiencies, the passage of significant time, and EPA's publication of other materials to th e docket in the middle of the public comment period, EPA has not remedied the deficiencies in the docket. Commenters said, this legal mandate to provide its supporting material is not a mere ministerial duty but is intended to allow affected persons and ul timately a reviewing court to determine if any agency rule was technically supported, reasonable, and legally authorized. Commenters said, the absence of this information has prejudiced not only Commenters in their ability to participate in this rulemaking proceeding in a meaningful manner, but also any court that may subsequently review this rulemaking. Commenters said, EPA must correct the deficiencies in the record and allow additional time for public review and comment based on the complete record that it has relied upon in developing this proposed rule.

Commenters stated, third, EPA's rulemaking schedule does not provide the Agency sufficient time to consider and respond adequately to public comments. Commenters said, section 307(d)(6)(B) of the CAA req uires that when promulgating a final rule, EPA is to provide "a response to each of the significant comments, criticisms, and new data submitted in written or oral presentations during the comment period." Commenters said, EPA has proposed that it will
ado pt a final rule in this proceeding by June 1, 2015. Commenters said, this self

- imposed deadline is arbitrary and capricious in light of the tremendous volume of comments being developed on this proposed rule. Commenters said, as of November 26, 2014, over 1.2 million comments had been submitted to EPA on the proposal; and additional significant comments will be submitted by the deadline of December 1, 2014. Commenters said, given the volume of comments and new data that EPA must consider, it seems impossibl e for the Agency to understand the comments, incorporate necessary rule revisions, and prepare a meaningful response to the significant comments it received on these proposed rules within the six months it has announced before final promulgation of these r ules. Commenters said, accordingly, EPA should withdraw its June 18, 2014 proposal, re

- propose it along with all supporting materials, and provide adequate time for the public to comment and for EPA to respond thereto.188 Response 10 : This rule was signed on August 3, 2015, and thus commenters’ specific concern about a June 1 deadline is moot. The EPA’s response to the remainder of this comment is addressed in the response to Comment 1 in this section 1.13. The Plant Gorgas is one of the 16
EGUs discussed in t hat response.

Comment 11 : Commenters argued that EPA has not adequately explained the criteria that will be used to evaluate State Plans or measure compliance.

Commenters stated that the CPP is implemented through three key elements: State Goals, State Plans, and Compliance. State Goals are tabulated in the published documents. Commenters noted that the EPA has released supporting documents detailing the formula used to calculate State Goals, which employs a CAA concept called Best System of Emission Red uction (BSER). However, the commenters asserted that the released documents do not clearly lay out the criteria and procedure that will be used to evaluate the suitability of State Plans or measure compliance

. The commenters asserted that this is a critica l omission that makes it impossible to analyze most key items in CPP or scenarios for State Plan development and implementation with certainty. The commenters noted that State governments are quite certain to have severe practical concerns about the ambigu ities in the pathway to State Plan approval and ultimate compliance determinations (in addition to the political objections already raised in August and September)

Response 11 : In the final rule, building off the proposal’s requirements, the EPA has issued clear criteria for approvability of state plans, addressing this commenter’s concern. After reviewing comments concerning the four proposed approvability criteria, the EPA has determined that listing approvability criteria separate from the 12 required pl an components is potentially confusing and redundant. The EPA has concluded that a satisfactory state plan that includes the required components will meet the proposed approvability criteria and is not finalizing the criteria separate from the required pla n components. See sections VII.D.1 and D.2 of the preamble to the final rule.

Comment 12 : Commenters stated that EPA should have provided additional guidance on enforceability of state plans for non

- affected entities and guidance for evaluation, measuremen t, and verification (EM&V) plans prior to proposal so these materials would have been available
for public comment.

Commenters noted that EPA is seeking comment on the appropriateness of existing U.S. EPA guidance on enforceability in the context of state plans under section 111(d), considering the types of affected entities that might be included in a state plan. According to the commenters, EPA acknowledges this guidance serves as the foundation for the types of emission limits that they have found can b e enforced as a practical matter and set forth the general principle that a requirement that is enforceable as a practical matter is one that is quantifiable, verifiable, straightforward, and calculated over as short a term as reasonable. The commenters ci ted the following guidance referenced by EPA:189 1. September 23, 1987 memorandum and accompanying implementing guidance, "Review of State Implementation Plans and Revisions for Enforceability and Legal Sufficiency,"

2. August 5, 2004 "Guidance on SIP Credit s for Emission Reductions from Electric

- Sector Energy Efficiency and Renewable Energy Measures," and

3. July 2012 "Roadmap for Incorporating Energy Efficiency/ Renewable Energy Policies and Programs into State and Tribal Implementation Plans", Appendix F.

Commenters have serious concerns with the use of these existing guidance documents for non

EGU entities. The commenters believe U.S. EPA should provide guidance on enforceability considerations related to requirements in a state plan for entities other th an affected EGUs and should have provided this guidance as part of the rulemaking docket available for comment . The

commenters noted that, especially with RE and EE, it is difficult for states to analyze the ability to meet the goals proposed without the c ontext of how EPA will define enforceability. The commenters argued that states should have had the opportunity to review this proposal within
that context.

Commenters noted that EPA identified a need for approvable plans to have quantification,
monitorin g and verification provisions for EE/RE. The commenters referred to EPA's

statement that state plans must include "an evaluation, measurement, and verification (EM&V) plan that explains how the effect of these measures will be determined in the course of p lan implementation." The commenters noted that these EM&V plans must specify analytical methods, assumptions, and data sources that the state will employ and will be subject to EPA approval. According to the commenters, EPA obviously intends to hold states to a high standard for EM&V, yet provides no indication of what those standards will be. While EPA stated they intend to develop guidance for EM&V, the commenters argued that this guidance should have been developed and made available for comment during t he proposal . The commenters contended that this approach inhibits the states' ability to provide meaningful comments on feasibility of EPA's goals, and could ultimately jeopardize the ability of states to prepare plans that meet EPA's requirements.

Respons e 12 : Commenters stated that EPA should provide guidance on enforceability considerations related to requirements in a state plan for entities other than affected EGUs and should have provided this guidance as part of the rulemaking docket available for comment . In this action, the EPA is finalizing a “state measures approach” which, unlike the proposed portfolio approach, does not require federally enforceable measures against entities other than affected EGUs. In this approach, state enforceable measures again st entities other than affected EGUs should be included in the state plan supporting documentation. Since the EPA will leave requirements for entities other than affected EGUs for the state to determine, the agency is not providing additional guidance on t his topic.190 Concurrent with this final rule, the EPA is issuing EM&V guidance that explains how states can craft regulatory provisions that meet the EPA’s minimum requirements in the emission guidelines for quantification and verification of EE/RE measures

.

Comment 13 : Commenters stated that EPA must take comment on any requirement that state plans include EM&V plans, which are subject to state discretion.

Commenters noted, with respect to state plan approvability criteria, that EPA mentions quantification, monitoring, and verification of EE and RE measures. The commenters noted that
th e Plan TSD in particular discusses a requirement that states include in their plans a separate "evaluation, measurement, and verification plan (EM&V plan )." Pla n TSD at 36. To the extent EPA includes such a requirement in the final rule and to the extent it prepares guidance on EM&V plans, the commenters stated that EPA must first provide adequate notice and opportunity to comment on such issues.

Response 13 : A s further discussed in Section VIII of the preamble, the requirements for EM&V under state plans the EPA is finalizing were proposed for comment in its June 18, 2014 proposal. EPA discusses the importance of EM&V in Section VIII of the preamble and establi shes a structural requirement in the guidelines. In the proposed federal plan, the agency provides a more robust discussion of particular EM&V requirements which will be available for public comment, in addition to further guidance the agency intends to issue on EM&V.

Comment 14 : Commenters stated that in order to make an informed decision on whether to submit a state plan, the states must have a clear understanding of what a federal plan for this section 111(d) rule would require. The commenters stated that the EPA has not provided a rational justification for not including a draft federal plan with the proposed rule. The
commenters asserted that the EPA should withdraw the proposed rule until they have established a draft federal plan and are able to e xplain the basis for their authority to implement that federal plan if necessary.

Response 14 : Comments regarding the Federal plan are beyond the scope of this rulemaking. We note that concurrent with signature of this final rule the Agency has signed a proposed
Federal Plan and model rule. The EPA disagrees that it is under any legal obligation to provide a proposed federal plan at the time it issues emission guidelines under section 111(d). However, the proposed federal plan address es stakeholders ’ requ ests for ideas on how to design an approvable plan, shows how the EPA would implement the guidelines were it necessary to promulgate a federal plan for particular states , and will be out for public comment.191 1.14 REQUEST FOR EXT ENSION OF COMMENT PE RIOD

Co mment 1: Commenters stated that the EPA only provided a 165

- day period for the public to evaluate and submit comments and data on the proposed rules, which are the most complex and
far

- reaching environmental rules ever proposed by EPA. Commenters noted that these rules significantly affect almost every electric generating facility in all 50 states and contemplate significant changes to state regulatory structures for the electric utilities that operate those facilities. Commenters said that, given the br eadth, complexity, and impact of these rules, 165 days is insufficient to evaluate and understand the proposal, the regulatory and technical data, and the analyses that have been provided in support, much less to develop and submit meaningful comments and data in response.

Commenters stated that EPA's proposal for existing sources covers over 130 pages in the Federal Register, with references to numerous Technical Support Documents, a Regulatory Impact Analysis, and complex modeling analyses. Commenters not ed that the material posted in the online rulemaking docket for existing sources, EPA

- HQ

- OAR

- 2013

- 0602, comprises over 1,400 voluminous documents that cover an untold number of pages. Commenters also said that the
165

- day period provided to review and comm ent on this sweeping rule and the voluminous supporting information is unreasonable and arbitrary. Commenters said that the agency should allow a longer public comment period to ensure meaningful public participation and a fully

developed record in support of the rule.

Commenters stated that EPA's public comment process is inadequate. Commenters said, while EPA did ultimately grant a 60

- day extension to the original public comment period, the agency has continued to release data and supplementary informatio n throughout that extension, including as recently as mid

- November. Commenters said that large companies will have difficulty properly analyzing the proposed rule and all of its attendant materials. Commenters stated that small businesses and average citiz ens do not have the resources necessary to conduct such analyses, likely resulting in failure to review the plan at all, or making uninformed decisions at best. Commenters also stated that such a precedent

- setting regulatory scheme affecting the entire U.S . economy should not be finalized in this manner.

Commenters stated that the 165

- day comment period (including the 45

- day extension) is not sufficient time to review this landmark rule and all of its supporting documents. Commenters
said that there remain many gaps and details that must be filled in by the states making it difficult, if not impossible, for affected entities such as the city to provide meaningful comments on the proposed rule. Commenters said, perhaps more importantly, the EPA has yet to co mplete referenced documents that will directly impact the feasibility of the proposal, such as the biomass framework to define carbon neutrality.

Commenters said, U.S. EPA has released numerous new technical documents during the comment period, including the rate to mass guidance within 30 days of the end of the comment period, which normally would result in an extension of the comment deadline. Commenters said,192 with U.S. EPA not extending the deadline on this issue, they stand to lose important input from stakeholders. Commenters said, furthermore, due process dictates that stakeholders have all information at their disposal with sufficient time to review, evaluate, and prepare comments. Commenters said, for this reason, the comment deadline should have be en extended.

Commenters stated, despite the extension of the comment period, the complexity and preliminary nature of the proposed rule have made it extremely difficult to conduct thorough and comprehensive analyses. Commenters believe that it is critical that EPA offer additional opportunity to comment, preferably on a re

- proposed rule that significantly narrows the range of
issues under consideration.

Commenters said, given the importance of these potential changes, EPA is penalizing key
stakeholders in this rulemaking

- especially generators

- by failing to provide sufficient time to fully analyze and comment on the content of the NODA. Commenters said, stakeholders must be given additional time to comment on this NODA.

Response 1: The EPA engaged in ex tensive outreach to stakeholders and the general public at every stage of development of this rule. Our outreach included direct engagement with energy and environmental officials in states, with tribes, and with a full range of stakeholders including
lead ers in the utility power sector, labor leaders, non

- governmental organizations, other federal agencies, other experts, community groups and members of the public. The EPA participated in more than 300 meetings before the rule was proposed and more than 300 meetings after the rule was proposed.

Throughout the rulemaking process, the agency has encouraged, organized, and participated in hundreds of meetings about CAA section 111(d) and reducing carbon pollution from existing power plants. The agency’s outrea ch prior to proposal, as well as during the public comment period, was designed to solicit policy ideas, concerns, and technical information.

The EPA signed and announced the proposed rule on June 2, 2014, and the full text of the proposal was available fo r public review that same day on the EPA website (www.epa.gov/cleanpowerplan). The proposed rule was published in the Federal Register on June 18, 2014, 79 Fed. Reg. 34830, at which time the 120

- day public comment period began. In response to stakeholder r equests for additional time for review the proposal, the EPA extended the comment period by 45 days, to December 1, 2014. This comment period extension gave stakeholders additional time to review all elements of the proposal

— including the topics highlighte d in the Notice of Data Availability (NODA), the notice “ Additional Information Regarding the Translation of Emission Rate

- Based CO 2 Goals to Mass

- Based Equivalents" (79 Fed. Reg. 67406; November 13, 2014), and the technical support document (TSD) that pro vided two examples of how a state, area of Indian country, or territory could translate its rate

- based goal to total metric tons of carbon dioxide (a mass

- based equivalent)

— and to submit their ideas and suggestions about the proposal, the notices and the T SD.193 At the close of the comment period on December 1, the proposal had been available for public review for nearly six months. This extended period for public review and comment complies with Clean Air Act section 307(h), 42 U.S.C. § 7607(h), which require s the EPA to “ensure a reasonable period for public participation of at least 30 days” when promulgating a regulation
under section 111. EPA believes the 165

- day comment period was reasonable to allow
stakeholders to formulate and submit their comments. Th e time provided for public comment on the proposed rule was also consistent with the comment periods for previous Clean Air Act rules, including the 111(b) NSPS for Greenhouse Gases from New Sources (120 days), the Cross

- State Air Pollution Rule (60 days), and the Ground

- Level Ozone NAAQS (90 days).

Although the NODA was published in the Federal Register on October 30, 2014, the close of the comment period on December 1, 2014, still allowed stakeholders “at least 30 days” to review the three topics discusse d in the NODA and formulate any additional comments. This was a reasonable period for public participation given the limited length and number of topics in the NODA, and in light of the fact that the NODA sought comment on issues raised by the

commenters t hemselves. Accordingly, no further extension of the public comment period was
warranted.

Likewise, while the Technical Support Document concerning the translation of emission rate

based goals to mass

- based equivalents was published in the Federal Register on November 13, 2014, this supporting documentation was intended only to inform and assist stakeholders in understanding certain technical aspects of the proposed rule as it was published on June 18, 2014. The information shared in the Technical Support Do cument was not prescriptive, but rather was developed at the request of state commenters to illustrate potential methods states might choose to adopt in implementing the proposed rule.

Stakeholders will also have the opportunity to participate further during the state plan development process. S tates will have to demonstrate that they are actively engaging all members of the public as part of their public participation process. In the initial plan submittal and final plan submittal, states will have to provide a summary of how they are engaging with stakeholders, including vulnerable communities.

Comment 2: EPA issued two notices and a technical support document after the June 18, 2014 proposal: 1) "Notice of Data Availability" (NODA) (79 FR 64543; Oct ober 30, 2014), 2) "Notice; Additional Information Regarding the Translation of Emission Rate

- Based CO 2 Goals
to Mass

- Based Equivalents" (79 FR 67406; November 13, 2014), and 3) associated with the second notice, a technical document that provided two exam ples of how a state, area of Indian country or territory could translate its rate

- based goal to total metric tons of carbon dioxide (a

mass

- based equivalent).

A number of commenters requested that the public comment period for the proposal and/or a
combi nation of one or more of the notices and the TSD be extended beyond the December 1, 2014 closing date by a range of 31 to 60 days. Several other commenters requested an194 unspecified extension of the comment period due to the NODA or otherwise commented on t he inadequacy of time allowed for comment on the notices and TSD.

Commenters recognized the significant, unprecedented amount of outreach that the EPA had done with regard to the proposed guidelines. Commenters also recognized the fact that the EPA
initial ly provided a longer time period for review and comment on the proposed guidelines and then later provided an extension. Commenters appreciated what the EPA did to engage with states throughout the public comment period and is grateful for the longer timef rame for review and comment. Commenters said that despite the accommodations provided by the EPA, they believe, overall, the timeframe provided for review and comment associated with the proposed guidelines was insufficient given the scope and complexity a ssociated with the EPA's proposal, the amount of options provided and the EPA's request for comment on them all, the sheer amount of material and data in the docket (some provided late in the comment period) and the necessity for state agencies to both eva luate and understand the proposal, as well as seek stakeholder feedback. Commenters said that this is particularly concerning because of the potential magnitude and scope of the proposed guidelines

- one that EPA admits could potentially be the most signif icant energy

- environmental regulatory action in decades.

Commenters stated that the volume and complexity of documents associated with the proposed guidelines is unprecedented. Commenters said that the EPA issued a pre

- publication copy of the proposed gui delines on June 2, 2014. Commenters said that the 657

- page document was officially published in the Federal Register on June 18, 2014.

Commenters asked the EPA for additional time for review and analysis of the issues addressed in the NODA and potential i nconsistencies between the rate

- to

- mass TSD and the proposed rule. Commenters stated that, given that: (1) the original draft set of guidelines, plus all the supporting appendices total in excess of 1,800 pages of text; (2) with one month to the deadline, the EPA
Administrator released a 60

- page NODA in which substantive new issues were raised to be addressed in comments; and (3) the EPA generally provides commenters with at least 60 days in which to respond to information requests for additional public com ments.

Commenters stated that, late during the public comment period for the proposed rule, the EPA issued the NODA and the "Notice; Additional Information Regarding the Translation of
Emission Rate

- Based CO2 Goals to Mass

- Based Equivalents." Commenters s aid that the issuances provided critical information regarding the proposed rule, but that this information, which includes interpretation of the original proposal, as well as supporting information, was not available until near the end of the comment peri od. Commenters said that, accordingly, notice is deficient and EPA is required to re

- open the notice and comment period for a period of at least 60 days, in accordance with the CAA and Administrative Procedures Act, 5 U.S.C. Sections 551 et seq.

Commenters stated that the EPA cannot cure defects in the proposed rule through the untimely submission of support documents. Commenters said, in an attempt to cure defects in the content of its original proposal, the EPA has published notices of data availability a nd technical support195 document on October 30, 2014 and November 13, 2014 (79 FR 64543; 79 FR 67406). Commenters said that these new documents raise a series of complex, new issues regarding both EPA's BSER analysis and the procedures for states to submit im plementation plans. Commenters noted that providing full and complete responses to the myriad issues raised by the EPA in these documents will require extensive research and cannot be completed in the few weeks provided by the EPA. Commenters said that, fo r this reason, they requested an extension of the comment deadline in order to respond more completely to the EPA's proposals. Commenters said, on November 18, 2014, the EPA denied that request. Commenters said that the lack of time provided by the EPA has prevented them and other interested stakeholders from receiving a full and fair opportunity to comment on the proposed rule. Commenters said, for this reason, they urge the EPA to reopen the comment period for this rule to give interested stakeholders the additional time necessary to respond to the issues raised in the NODA and technical support documents and how they relate to EPA's proposed rule.

Commenters also stated that the EPA's NODA raised substantial new issues that may dramatically expand the pot ential scope and stringency of the proposed rule. Commenters said that, as such, they believe that thirty (30) days (with an intervening Thanksgiving holiday period) is inadequate to allow meaningful state review and consideration of the many substantial n ew issues raised in the NODA. Commenters said that, for the reasons outlined above and based upon other comments submitted by the states, the EPA should 1) withdraw the proposed rule, and 2) if the administration insists on pursuing carbon dioxide emission regulations, initiate an atmosphere of cooperation by working with the states to develop a plan that follows the law and acknowledges state differences and energy make up, state infrastructure, available technology for existing sources and legal limitatio ns. Commenters said that, if EPA is unwilling to withdraw the proposed rule, it should, at a minimum, grant an extension of the public comment period for an additional forty five (45) days. Commenters said that this additional time is critical to allow for meaningful dialogue on the issues noted above and to allow meaningful consideration of the
EPA's NODA.

Commenters stated that, while they appreciated EPA's efforts to address some of the issues that have been raised by stakeholders since the proposal of the Clean Power Plan, the NODA includes very significant potential changes to the proposal and was released only one month before the comment deadline on this very significant and complex rule. Commenters said, because of the complexity of the rule, numeri cal analysis is necessary to understand how the proposed changes might affect our states and our customers. Commenters said that analysis is lacking at this time. Commenters requested that the EPA provide more information and more
time to comment on the im plications of the NODA.

Commenters stated, EPA originally provided 120

- days for stakeholder comment on this proposal. Commenters requested a much needed extension of 90

- days on the comment period on July 16, 2014 to appropriately analyze the proposal. Comm enters said that the request was denied on July 25, 2014. Commenters said, however, at the urging and request of a 60

- day comment period extension from 53 United States Senators, the EPA announced on September196 16, 2014, one

- month prior to the close of the comment period, an additional 45

- days would be granted (closing December 1, 2014).

Commenters said that the October 30, 2014 NODA requested comment on numerous other alternatives based on early stakeholder comments, all of which have the potential to signi ficantly impact state goals. Commenters said that the November 13, 2014 notice provides options for a very important aspect of this proposal, the conversion of the rate

- based goal to a mass

- based goal. Commenters said that the EPA noticed these additional modifications to the original proposal with very little time remaining and offered no extension to the comment period.

Commenters stated that the EPA proposed and requested comment on not only a regulation, but numerous TSDs that would greatly impact the i mplementation of such a regulation. Commenters said that the original rule alone asked for specific comments in 497 different locations. Commenters said that the numerous TSDs, supporting materials and NODA's also specifically requested comment. Commenters said that many more elements not specifically identified for comment most definitely warrant comment from stakeholders. Commenters said that these comment requests stretched from simple requests to requests on long

- term strategic impacts regarding what wo uld work best for states, regions and the nation. Commenters said that this rule would impact entities far beyond the scope of what the majority of states have ever traditionally regulated. Commenters indicated that they had been placed in a situation wher e consultation with other entities and agencies, in order to understand the true impact of the proposed regulation, was paramount to their ability to provide meaningful comments.

Commenters stated that the overwhelming amount of material that was provided in the docket and subject to comment, combined with the magnitude and far reaching impact of the proposed regulation, has made reviewing this proposal and accompanying NODAs in the time provided, and providing a comprehensive analysis was virtually imposs ible.

Commenters stated that, in addition to reviewing and evaluating all the documents and underlying data noted above, they were overwhelmed with the vast number of stakeholders that wanted to provide input as to both their particular interest in the pr oposed guidelines and their
recommendations for state action.

Commenters stated that, in September 2014, the EPA extended the original deadline to submit comments from October 16, 2014 to December 1, 2014. Commenters were grateful for the
extension of time to review the over 1,700 pages of highly technical content included within the docket for the proposed guidelines. Commenters said that this timeframe, however, still only provided 123 business days between June 18, 2014 and December 1, 2014. Commenters s aid that, then, on October 28, 2014 and November 6, 2014, the EPA issued additional data and documents related to the proposed guidelines but did not extend the comment period. Commenters said that, in short, the EPA provided over 150 additional pages of i nformation and data with only 23 business days remaining in the comment period. Commenters said that those197 documents include data files for 2010 and 2011, as well as documents related to translating state goals from emissions rates to mass

- based equivalent s.

Commenters stated that the EPA also provided data and IPM modeling run results for comment. Commenters said that those modeling runs contained over 70 megabytes of data. Commenters found that the review of this data alone could take weeks to months, de pending on the resources that were available to the department. Commenters said that various other revisions to documents or data, as well as additional information, were issued throughout the comment period. Commenters simply did not have time to review a nd evaluate it all. Commenters said that this is particularly troubling given the nature of the proposed guidelines and the critical role states must play in developing effective, workable state plans. Commenters requested that the EPA consider extending t he deadline for comments specifically relating to information and data issued during
the late October and November time frame.

Commenters recommended that, as stated in a November 13, 2014 letter to the EPA Administrator, the EPA provide the public with more time to comment on the issues raised in the NODA. Letter from Allison D. Wood, Hunton & Williams LLP, to Regina A. McCarthy, Adm'r, EPA at 2 (Nov. 13, 2014). Commenters said that, although the agency had not proposed any specific changes to its origin al June 18, 2014 proposed guidelines, commenters’ members needed additional time to prepare fully informed and well

- considered comments on the issues that have been raised for the first time in the NODA. Commenters said that the October 30, 2014 Federal
Re gister notice was published barely a month before the due date for comments. Commenters said that the proposed guidelines are extraordinarily complex and, as discussed below, the issues raised in the NODA on which EPA solicits comment are very broad, seem to contain some approaches that are either new or that contradict its previous positions, and ultimately obscure to the point of incoherence what approach EPA might ultimately take. Commenters said that obscuring what action an agency might take late in a comment period does not provide adequate notice to the public, is not reasoned decision

- making and provides no grounds for the EPA to assert that its unsupported policy musings are a logical outgrowth of the original proposal.

Commenters recommended that the EPA provide a reasonable time period beyond the proposed comment period deadline of December 1, 2014, to allow states to assess the feasibility of the building block assumptions and provide information to justify any adjustments needed to the states' g oals. Commenters said that, during the comment period ending on December 1, 2014, it will be difficult to ascertain whether states unable to implement one or more of the building blocks per EPA's assumptions will have the flexibility to increase the string ency of other building blocks or measures to achieve their goals. Commenters said that entities such as the Western Electricity Coordinating Council (WECC) are currently undertaking studies to assess the potential impacts of the proposal on resource adequa cy and reliability and the results of such studies will be available after the comment deadline. Commenters said that, in many cases, these198 reliability studies will likely not be completed until after promulgation of a final EPA rule setting
the states' em ission rate goals.

Commenters stated that recently issued EPA support documents fail to provide adequate notice to interested parties or a reasonable opportunity to draft and submit comments. Certain late

issued "notices", including EPA's NODA and Technic al Support Document (TSD), are vague and do not provide a clear rule to respond to or time to prepare appropriately tailored

comments. Commenters said that recently released support documents do not provide a meaningful opportunity to comment. Commenters s aid that federal agencies are required to provide the public with adequate notice of a proposed rule and a meaningful opportunity to comment on the rule's content. Commenters said that, with the proposed rule, the EPA is poised to enact arguably, the most consequential and expensive environmental regulation ever imposed on the electric power sector. Commenters said, affected parties are therefore entitled to a notice

and

- comment process in a manner that is respectful of the magnitude and complexity of the r ule: a mere 30 days before the comment period is set to close for a NODA along with other material guidance that address key compliance concerns, is not appropriate.

Commenters stated that, due to the complexity of this proposal and the significance this r ule will play in the lives of so many American citizens, the EPA should consider extending the comment period. Commenters said that the EPA provided supplemental technical documents and spreadsheets near the end of this comment period (October 28, 2014 and November 6, 2014) to explain some of the concepts presented in greater detail. Commenters said that, because the EPA has stated "once the final goals have been promulgated, a state would no longer have an opportunity to request that the EPA adjust its CO 2 goal", states should be granted ample time to review the data that has been used to calculate the final state goals. Commenters said, the final state goals "would reflect any adjustments as appropriate based on comments provided to the EPA to address any data errors in the analysis for the proposed goals." Commenters said that the comment period for this proposed rule is essential for the reasons mentioned above. Commenters said that the EPA should be fair in allowing the states ample time to review these new documents since that are key factors in the final goal calculation.

Commenters stated that the EPA mentions that states are allowed flexibility to adopt the rate

based goal established by the EPA or the mass

- based form of the goal. Commenters said that

, however, the EPA did not provide sufficient information needed to calculate the state mass

- based goals on the front end. Commenters said that it was not until November 6, 2014, that the EPA
released the mass

- based states goals and supporting documents. C ommenters said, insufficient time has been granted to understand and examine the methodology for the mass

- based state goals. Commenters said, prior to this release of information, states struggled to understand how
to calculate the mass

- based goal. Comment ers said that, while they appreciate that the EPA providing the November 6, 2014, supplemental data, additional time should be granted to review this information and provide comments. Commenters said, this portion of the rule is substantial
in that it offe rs an entirely different alternative means of compliance.199 Commenters stated, given the short 30 days comment period on the NODA, they have been prejudiced in being able to fully evaluate the impact of the NODA on the Proposed Rule and on its operations, in order to provide meaningful and protective comments on the
NODA. Commenters supported the request from certain energy producing states for an
extension of time to comment on the NODA.

Commenters stated, EPA published a NODA on October 30, 2014, seeking specific comment on a number of additional proposals and/or issues identified in the original proposal. Commenters
noted frustration with the late

- issued NODA, which provided several significant rule alternatives for consideration, but with no additional time for review/comment, and no additional data provided to assist States in their review. Commenters said, without additional time and data to review NODA alternatives, it is difficult for states to fully understand and address specific impacts at this ti me.

Commenters stated, since EPA published the NODA just one month before the deadline for submission of comments on the proposed rule, stakeholders have not had adequate time to fully understand the implications of the NODA in relation to the proposed rule. Commenters said, issuing a NODA that late, particularly since the proposed rule is likely the most complex rulemaking ever undertaken by the EPA, does not appear to comply with EPA's obligation under
the Administrative Procedures Act and Clean Air Ac t. Commenters said, EPA should allow additional time for stakeholders to fully assess the NODA.

Commenters stated, the administrative process by which the CPP was drafted and released has been problematic since day one. Commenters said, first, EPA continu es to refuse to release critical modeling runs on the grounds that the assumptions contained therein are proprietary. Commenters said, without complete information, however, it is impossible to test the veracity of the Agency's claims about the feasibility of the CPP. Commenters said, second, EPA did not extend the public comment period for the CPP after releasing a Notice of Data Availability ("NODA") that contained new information critical to a thorough evaluation of the rule. Commenters said that, specif ically, EPA made two additional years of data available that the agency intends to use in formulating the baseline for energy demand in all fifty states. Commenters said that this new information required stakeholders to completely re

- structure their
model ing efforts, with no extra time. Commenters said that they wanted to remind the agency that an "adequate" comment period is required, not only for the proposal but for the NODA as
well

- particularly when its impact is so significant. Commenters said that the NODA purports to restate the glide path for implementation. Commenters said that, even later, the EPA placed a substantive interpretation of the process for calculating the mass

- based approach for demonstrating compliance. Commenters said that both of these efforts required adequate time to comment; neither received it. See e.g., Fla. Power & Light Co.v. U.S., 846 F.2d 765, 772 (D.C. Cir. 1988).

Response 2: As some commenters noted, the EPA did engage in extensive outreach to stakeholders and the gener al public at every stage of development of this rule. The EPA’s200 outreach included direct engagement with energy and environmental officials in states, with tribes, and with a full range of stakeholders including leaders in the utility power sector, labor
l eaders, non

- governmental organizations, other federal agencies, other experts, community groups and members of the public. The EPA participated in more than 300 meetings before the rule was proposed and more than 300 meetings after the rule was proposed.

The agency’s outreach prior to proposal, as well as during the public comment period, was designed to solicit policy ideas, concerns, and technical information. In the notice of data availability (NODA) that we issued on October. 28, 2015, we described spe cific issues and ideas that had been raised by stakeholders and discussed approaches stakeholders had suggested that may have gone beyond the June 18, 2014 proposal, and we sought comment on these through the
notice. We issued the notice to ensure that oth er stakeholders and the public had the opportunity to consider these ideas as they formulated their own comments on the proposal.

The EPA signed and announced the proposed rule on June 2, 2014, and the full text of the proposal was available for public re view that same day on the EPA website (www.epa.gov/cleanpowerplan). The proposed rule was published in the Federal Register on June 18, 2014, 79 Fed. Reg. 34830, at which time the 120

- day public comment period began. In response to stakeholder requests for additional time for review the proposal, the EPA extended the comment period by 45 days, to December 1, 2014. This comment period extension gave stakeholders additional time to review all elements of the proposal

— including the topics highlighted in the No tice of Data Availability (NODA), the notice “ Additional Information Regarding the Translation of Emission Rate

- Based CO 2 Goals to Mass

- Based Equivalents" (79 Fed. Reg. 67406; November 13, 2014), and the technical support document (TSD) that provided

two e xamples of how a state, area of Indian country, or territory could translate its rate

- based goal to total metric tons of carbon dioxide (a mass

- based equivalent)

— and to submit their ideas and suggestions about the proposal, the notices and the TSD.

At the close of the comment period on December 1, the proposal had been available for public review for nearly six months. This extended period for public review and comment complies with Clean Air Act section 307(h), 42 U.S.C. § 7607(h), which requires the EPA t o “ensure a reasonable period for public participation of at least 30 days” when promulgating a regulation
under section 111. EPA believes the 165

- day comment period was reasonable to allow stakeholders to formulate and submit their comments. The time prov ided for public comment on the proposed rule was also consistent with the comment periods for previous Clean Air Act rules, including the 111(b) NSPS for Greenhouse Gases from New Sources (120 days), the Cross

- State Air Pollution Rule (60 days), and the Gr ound

- Level Ozone NAAQS (90 days). In addition, although the comment period closed on December 1, 2014, the EPA has considered all comments that were received by December 31, 2014, so as to accommodate potential delays in the EPA’s receipt of submitted comm ents.

Although the NODA was published in the Federal Register on October 30, 2014, the close of the comment period on December 1, 2014, still allowed stakeholders “at least 30 days” to review the201 three topics discussed in the NODA and formulate any additio nal comments. This was a reasonable period for public participation given the limited length and number of topics in the NODA, and in light of the fact that the NODA sought comment on issues specifically raised by the commenters themselves. Accordingly, no further extension of the public comment period was
warranted.

Likewise, while the Technical Support Document concerning the translation of emission rate

based goals to mass

- based equivalents was published in the Federal Register on November 13, 2014, this supporting documentation was intended only to inform and assist stakeholders in understanding certain technical aspects of the proposed rule as it was published on June 18, 2014. The information shared in the Technical Support Document was not prescriptiv e, but rather was developed at the request of state commenters to illustrate potential methods states might choose to adopt in implementing the proposed rule.

The EPA further notes that the substantive concerns identified by commenters who requested an

ex tension of the public comment period have been adequately addressed in the final rule, even in the absence of an additional extension. Commenters noted, for example, the importance of ensuring that the final guidelines acknowledged state differences and en ergy make up, state infrastructure, and available technology for existing sources. The final rule better recognizes state differences and each states’ different mix of energy sources and provides states with further flexibilities beyond those in the propos al, as described in section I.A.4 of the preamble.

Commenters also expressed concern over whether states unable to implement one or more of the building blocks as for the BSER determination will have the flexibility to increase the stringency
of other buil ding blocks or measures to achieve their goals. In the proposal, states could choose
to include non

- BSER measures in their state plans. The final rule maintains that approach, as explained in sections VIII.I

- VIII.K of the preamble.

Commenters also identifi ed concerns with potential impacts of the rulemaking on resource adequacy and reliability and, in the final rule, we have made adjustments from the proposal to address these concerns further, as described in section VIII.G.2 of the preamble. The EPA’s TSD titled “Resource Adequacy and Reliability Analysis TSD for CPP Final Rule,” provides an analysis of resource adequacy and electric system reliability associated with this final rule. The TSD is available in the docket for this rulemaking.

Other commenters indicated that “once the final goals have been promulgated, a state would no longer have an opportunity to request that the EPA adjust its CO 2 goal.” In the final rule, under certain circumstances, as explained in sections VII.E and VIII.E.6.b of the pream ble, a state may adjust its CO 2 goal.

Comment 3 : Commenters would like to clarify some of the information found in the Technical Support Document for Calculating Carbon Pollution Goals for Existing Power Plants in Territories and Areas of Indian Country th at accompanies the Proposed CO2 Guidelines for the U.S. Territories. Moreover, Commenters are interested in submitting specific comments to the proposal and its supporting documents and therefore, need a 45

- day extension to submit202 comments on the proposal. Commenters requested that the EPA grant a 45

- day extension of the public comment period so that they could provide comments on the CO2 Guidelines for the U.S. Territories and its supporting documents.

Response 3 : The EPA signed and announced a supplementa l proposal to limit carbon pollution from existing power plants in Indian Country and U.S. Territories on October 28, 2014, and the text of the proposal was available for public review that same day on the EPA website ( www.epa.gov/cleanpowerplan ). This supplemental proposal was published in the Federal Register on November 4, 2014, 72 Fed. Reg. 65482, and the 45

- day public comment period began. The Technical Support Document (TSD) for Calculating Carbon Pollution Goals for Existing Power Plants in Territories and Areas of Indian Country was also issued with the supplemental proposal.

The information provided in these documents was supplemental to the June 18, 2014 proposal, and primarily proposed emission rate

- based CO 2 goals for U.S. territories and areas of Indian country with one or more affected EGUs. In tandem with the extended public comment period for the proposed rule, the 45

- day public comment period for the supplemental proposal provided
stakehol ders with a reasonable opportunity to review elements of the proposal specific to Indian Country and U.S. Territories and to provide comments on these additional features.

In the final rule, the EPA has determined that additional information is needed befo re the EPA will be able to establish goals for the U.S. territories and the non

- contiguous states.

Comment 4 : Several commenters stated that the 165

- day public comment period is insufficient, arbitrary, and capricious

.

Commenters stated that the EPA only provided a 165

- day period for the public to evaluate and submit comments and data on the proposed rules, which are the most complex and far

- reaching environmental rules ever proposed by the EPA. Commenters said that these rules significantly
affect almost every electrical generating facility in all 50 states and contemplate significant changes to state regulatory structures for the electric utilities that operate those facilities. Commenters said that, given the breadth, complexity, and impact of these rul es, a 165

- day comment period is insufficient to evaluate and understand the proposal and the regulatory and technical data and analyses that have been provided in support, much less to develop and submit meaningful comments and data in response.

Commenter s stated that the EPA's proposal for existing sources covers over 130 pages in the Federal Register, with references to numerous TSDs, a Regulatory Impact Analysis, and complex modeling analysis. Commenters said that the material posted in the online rulem aking docket for existing sources comprises over 1,300 voluminous documents that cover thousands of pages. Commenters said, the 165

- day period provided to review and comment on this sweeping rule and the voluminous supporting information is unreasonable an d arbitrary. Commenters said, for this reason alone, EPA's 165

- day deadline for comments is in arbitrary and capricious. Commenters said that the agency should allow a longer public comment period to ensure meaningful public participation and a fully

- devel oped record in support of the proposed rule.203 Response 4 : The EPA signed and announced the proposed rule on June 2, 2014, and the full text of the proposal was available for public review that same day on the EPA website (www.epa.gov/cleanpowerplan). The p roposed rule was published in the Federal Register on June 18, 2014, 79 Fed. Reg. 34830, at which time the 120

- day public comment period began. In response to stakeholder requests for additional time for review the proposal, the EPA extended the comment pe riod by 45 days, to December 1, 2014. This comment period extension gave stakeholders additional time to review all elements of the proposal

— including the topics highlighted in the Notice of Data Availability (NODA), the notice “ Additional Information Rega rding the Translation of Emission Rate

- Based CO 2 Goals to Mass

- Based Equivalents" (79 Fed. Reg. 67406; November 13, 2014), and the technical support document (TSD) that provided two examples of how a state, area of Indian country, or territory could transl ate its rate

- based goal to total metric tons of carbon dioxide (a mass

- based equivalent)

— and to submit their ideas and suggestions about the proposal, the notices and the TSD.

At the close of the comment period on December 1, the proposal had been availab le for public review for nearly six months. This extended period for public review and comment complies with Clean Air Act section 307(h), 42 U.S.C. § 7607(h), which requires the EPA to “ensure a reasonable period for public participation of at least 30 da ys” when promulgating a regulation
under section 111. EPA believes the 165

- day comment period was reasonable to allow stakeholders to formulate and submit their comments. The time provided for public comment on the proposed rule was also consistent with th e comment periods for previous Clean Air Act rules, including the 111(b) NSPS for Greenhouse Gases from New Sources (120 days), the Cross

- State Air Pollution Rule (60 days), and the Ground

- Level Ozone NAAQS (90 days). In addition, although the comment peri od closed on December 1, 2014, the EPA has considered all comments that were received by December 31, 2014, so as to accommodate potential delays in the EPA’s receipt of submitted comments.

Although the NODA was published in the Federal Register on October 30, 2014, the close of the comment period on December 1, 2014, still allowed stakeholders “at least 30 days” to review the three topics discussed in the NODA and formulate any additional comments. This was a reasonable period for public participation give n the limited length and number of topics in the NODA, and in light of the fact that the NODA sought comment on issues specifically raised by the commenters themselves. Accordingly, no further extension of the public comment period was
warranted.

Likewise, while the Technical Support Document concerning the translation of emission rate

based goals to mass

- based equivalents was published in the Federal Register on November 13, 2014, this supporting documentation was intended only to inform and assist stakeho lders in understanding certain technical aspects of the proposed rule as it was published on June 18, 2014. The information shared in the Technical Support Document was not prescriptive, but rather was developed at the request of state commenters to illust rate potential methods states might choose to adopt in implementing the proposed rule.204 1.15 OTHER

1.15.1 CAA/Section 111(d) issues

Comment 1: Commenters state that section 111(d) explicitly directs states and the EPA to consider the “remaining useful life” of existing sources when applying any standard of performance. This demonstrates that this section focuses solely on what individual sources can do to improve thei r performance at reasonable cost rather than what the entire source category (or even other entities) can do collectively to reduce overall emissions.

Response 1 : As noted above, the EPA believes its standards of performance reflect achievable,

cost

- effec tive measures that can be undertaken by individual affected sources to reduce their emissions. However, the EPA does not agree that the standards of performance established in the emission guidelines must be determined by considering each individual source ’s capabilities divorced from the electrical system in which the affected sources operate. The “remaining useful life” provisions in 111(d) do not affect this conclusion (we discuss our interpretation of the “remaining useful life” provision at length in t he Legal Memorandum). Section 111(d)(1) states 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 consi deration, among other factors, the remaining useful life of the existing source to which such standard applies.” As is evident from the plain language, this provision bears on states’ considerations when “applying” the standard of performance to a “particu lar” source covered by a state “plan,” and so instructs the EPA to ensure that the emission guidelines provide proper direction to states on doing so. The “remaining useful life” provision thus governs how

states

– as guided by the EPA

– may give practical effect to the standards of performance on a

case

- by

- case basis. But this provision does not speak to how the standards themselves should be established or the proper scope of the BSER used to determine them. In fact, the wording of the remaining useful li fe provision suggests the opposite of what commenters suggest. By requiring EPA’s guidelines to provide reasonable mechanisms for states to address situations where the achievability or cost

- effectiveness of the standards of performance may be limited by t he remaining useful life of the facility, these provisions reinforce the fact that the standards of performance established in the emission guidelines are set on the basis of what the category of sources can generally achieve. Notably, the “remaining usefu l life” provision that applies where the EPA is implementing a federal plan reinforces this distinction. In that instance, the EPA is directed to consider the remaining useful “lives” of the “sources in the category of sources” to which standards of perfor mance are applied. The wording and structure of the statute make clear that this is a factor to be considered in the implementation of standards of performance, rather than a factor that is part of the determinations made under section 111(a)(1).

Comment 2 : Commenters stated that the EPA's 1975 regulation implementing section 111(d) (40 CFR 60, subpart B) exceeds the EPA's authority and are subject to challenge under section 307(b)(1).205 Commenters stated, in its legal arguments in support of the Proposed R ule, EPA relies heavily on its own 1975 regulations (40 C.F.R. sections 60.20

- 60.29) implementing Section 111(d). See 40 Fed. Reg. 53,340. Commenters said, EPA describes the 1975 regulations as documenting its authority to determine the BSER and issue em ission guidelines in the form of the State emission goals. 79 Fed. Reg. at 34,852; Legal Memorandum at 30

- 32. Commenters said, EPA further identifies these regulations as implementing Congress' directive in Section 111(d) that EPA's regulations "shall perm it" States to consider "among other factors, remaining useful life" of existing units in setting standards of performance. 79 Fed. Reg. at 34,925. Commenters said, each time that EPA identifies the 1975 regulations in the Proposed Rule, it is careful to in clude a footnote stating that it does not intend to re

- open the 1975 regulations to challenge by relying on them in the Proposed Rule. Commenters said, but it is the manner of EPA's application of these regulations in the context of the Proposed Rule, not its self

- serving statements, that matters for purposes of determining whether the 1975 regulations are subject to challenge and invalidation. Commenters said, in the Proposed Rule, EPA applies the 1975 rules for the first time to certain
fossil

- fired EGUs and to CO2, and purports to extend authority and discretion under the 1975 regulations far beyond the scope of prior applications. Commenters said, these new applications provide a valid legal basis to challenge and invalidate the 1975 regulations as beyon d the scope of the authority delegated to EPA under Section 111(d).

Commenters stated, EPA describes in the Proposed Rule its interpretation of and reliance on the 1975 regulations:

Some stakeholders have suggested that states themselves should be allowed to quantify the level of emission reduction resulting from the application of BSER or, if the EPA establishes goals, the states should be allowed to adjust the goals or to treat the goals established by the EPA as advisory rather than binding. Consistent with the existing implementing regulations for CAA section 111(d) at 40 CFR part 60, this quantification is the EPA's role... The regulations provide that the EPA is to promulgate an "emission guideline that reflects the application of the BSER (considerin g the cost of such reduction) that has been adequately demonstrated for" affected sources. In this manner, the regulations make clear that the EPA determines the BSER. In this rulemaking, as discussed above, the EPA identifies the BSER. In addition, in thi s rulemaking, the EPA applies the BSER to each state, and then, for each state, calculates the average emission rate that, in the words of the regulations just quoted, "reflects the application of the [BSER]." That average emission rate is the state goal.

By the same token, because the state goals are an integral part of the emission guidelines that the framework regulations authorize the EPA to establish, the goals are binding, and the states, in their CAA section 111(d) plans, must meet those goals and ma y not make them less stringent. This matter, too, is resolved by the implementing regulations. . . . These flexibilities, discussed further in Section VIII of this preamble, ensure that states will be able to achieve their final CO2 emission goals and that no special provision for state adjustment of goals outside the normal
notice

- and

- comment rulemaking process is warranted. 79 Fed. Reg. at 34,897

- 98.206 Commenters stated, EPA has exceeded its statutory authority under Section 111(d) by virtue of the design o f its goal

- setting and implementation requirements in the Proposed Rule. Commenters said, EPA's interpretation of the 1975 regulations as a basis for the Proposed Rule also calls into question the validity of those original regulations under Section 111(d)

. Commenters said, if EPA proceeds with its Proposed Rule, the 1975 regulations will be subject to judicial review and should be deemed beyond EPA's scope of authority.

The commenters stated that the 1975 regulations are subject to challenge by sources th at were not previously regulated under Section 111(d).

Commenters stated, CAA Section 307(b)(1) provides an exception to the general requirement that a petition for review be filed within 60 days of promulgation: "if such petition is based solely on groun ds arising after such sixtieth day, then any petition for review...shall be filed within sixty days after such grounds arise." 42 U.S.C. section 7607(b)(1). Commenters said, in Coalition for Responsible Regulation, Inc. v. EPA, 684 F.3d 102, 130

- 131 (D.C. Cir. 2012), the D.C. Circuit recognized that such other "grounds" could include the fact that certain entities that were not previously subject to the regulations at issue were now included under the scope of the regulations. Commenters said, the D.C. Circ uit held that industry groups representing home builders and oilseed processors

- source categories that were not subject to PSD until EPA began to regulate CO2

- did not have ripe claims until the Tailpipe Rule was promulgated. Id. Commenters said, theref ore, any prior challenge would have alleged only speculative injuries if these groups could show "only the possibility that their members would be injured if EPA were someday to determine that greenhouse gases were a pollutant that endangers human health a nd welfare and to adopt a rule regulating the greenhouse gas emissions of stationary sources." Id.

Commenters stated, the Proposed Rule constitutes the first application of Section 111(d) and the 1975 regulations to EGUs. Commenters said, at the time the 1 975 regulations were promulgated, EPA had not made any determination regarding regulation of EGUs, and had made no determination that any source was to be regulated for CO2. Commenters said, thus, EGU owners had no basis on which to challenge the potential future application of the 1975 regulations at the time they were issued. Commenters said, consistent with the D.C. Circuit's holding in Coalition for Responsible Regulation, the 1975 regulations became ripe for challenge by EGU owners only
when EPA relied on them in issuing the Proposed Rule regulating EGUs. Commenters said, therefore, any challenge brought within 60 days of the issuance of the final ESPS would be timely under Section 307(b)(1).

The commenters stated that the EPA has constructively reopene d the 1975 regulations for challenge under Section 307(b)(1).

Commenters stated, a revision of accompanying regulations that "significantly alters the stakes of judicial review" as the result of a change that "could not have been reasonably anticipated"

c an constructively reopen a rulemaking. Sierra Club v. EPA, 551 F.3d 1019, 1025 (D.C. Cir. 2008) (citing Envtl. Def. v. EPA, 467 F.3d 1329, 1334 (D.C. Cir. 2006)). Commenters said, moreover, an official interpretation of a regulation (or withdrawal of a pro posed reinterpretation) can constructively reopen a rulemaking. Public Citizen v. NRC, 901 F.2d 147, 151 (D.C. Cir.207 1990). Commenters said, EPA's drastic expansion of BSER based on its reading of the 1975 regulations far exceeds any prior interpretation th at it has provided of those provisions and its purported authority under Section 111(d). Commenters said, in addition, EPA's interpretation of the authority reserved to states to consider remaining useful life and other factors in its Proposed
Rule is subs tantially more narrow that the authority granted under Section 111(d) or contemplated in the 1975 regulations and accompanying preamble. Commenters said, the 1975 rulemaking anticipated that states would set standards and promised the states flexibility th at is not reflected in the Proposed Rule. Commenters said, the Proposed Rule deviates substantively from the 1975 rulemaking in that it does not provide the flexibility that was promised in 1975, changing the stakes of judicial review. Commenters said, EPA specifically recognized in 1975 that States were permitted to apply less stringent standards to particular sources (or classes of sources) when economic factors or physical limitations specific to particular sources (or classes of sources) make such appli cation significantly more reasonable. 40 Fed. Reg. at 53,341. Commenters said, given these significant changes in the manner that EPA is interpreting the 1975 regulations to support its Proposed Rule, those regulations have been constructively reopened and can be challenged as beyond EPA's authority under Section 111(d).

Response 2 : EPA disagrees with these comments. As a factual matter, the agency is not reopening subpart B, nor are we relying on subpart B regulations as the basis for the BSER in
this rul emaking. The regulations currently allow for emissions guidelines to vary from general provisions of the subpart B regulations as appropriate. For instance, 60.24(f) which provides for facility specific variances in certain limited circumstances, also prov ides “unless specified in the applicable subpart,” reflecting that in the case of a particular emission guideline, the general variance procedure may not be appropriate. Furthermore, for all pertinent aspects of the agency’s discussion of authority under s ection 111(d), the structure and language of the statute itself remains the touchstone for its interpretation. The agency has pointed to the 1975 regulations or preamble in a number of places in today’s action as evidence of consistency with its longstandi ng interpretations of the statute or policy. Commenters’ comments about authority to challenge the implementing regulations in Court may be relevant in any litigation raising “after

arising” issues over this rule, but are not relevant for this rulemaking.

Comment 3 : Commenters stated that the proposal would result in many changes to Subpart B. However, the commenters noted that the preamble states that the proposal is not reopening Subpart B for comment, [79 FR 34844] and the proposed regulation text sta tes that Subpart B remains in place except where it is inconsistent with the proposed regulation text. [proposed 40 CFR 60.5700] The commenters contended that the current Subpart B has many requirements that are inconsistent with Section 111(d)

- e.g. call ing for EPA to issue "guideline documents" and "emission guidelines," and calling for states to set an EPA

- defined "emission standard" rather than the statutorily required and well

- defined "standard of performance." The commenters stated
that the EPA shoul d withdraw the rule, or revise the current Subpart B to conform to Section 111(d) as part of a re

- proposal.

Commenters stated that the EPA should abandon this rulemaking and postpone any further action to regulate CO2 emissions from existing EGUs. The com menters stated that neither the208 CAA nor EPA's regulations require the Agency to take action to regulate existing EGUs within any specific time frame: Subpart B states only that EPA "will publish a draft guideline document" for existing sources in a listed category; at some point in time either "[c]oncurrently upon or after proposal of standards of performance" for new sources in that category. [40 CFR 60.22(a) (emphasis added).] Therefore, the commenters stated that it would be reasonable and
well within th e Agency's authority to postpone this rulemaking to a later date.

Response 3 : The EPA disagrees with these comments. The present guidelines are consistent with the subpart B framework. The EPA disagrees that delaying action to reduce carbon dioxide
from power plants is reasonable in light of the vast amount of information in the record supporting the need for action to reduce this greenhouse gas pollutant.

Comment 4 : Several commenters stated that because the 111(b) proposal is fatally flawed, EPA

must withdraw the 111(d) proposal.

Commenters requested that the EPA withdraw its proposed rules entitled "Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units" ("Section 111(d) Proposal") and "Carbon Pollutio n Standards for Modified and Reconstructed Stationary Sources: Electric Utility Generating Units ("Section 111(b) Modification Proposal").

Commenters stated, in order for the EPA to issue performance standards for existing sources under section 111(d), th e Clean Air Act requires the EPA to have issued performance standards under section 111(b) that would cover newly constructed sources of the same type that the EPA seeks to regulate under section 111(d). Commenters stated, in a letter dated April 24, 2014, commenters explained why the EPA's proposed standards of performance for new electric utility generating units under section 111(b) did not constitute a new source performance standard as defined in section 111 of the Clean Air Act and why this fatal flaw required the proposed rule to be withdrawn by the Agency. Commenters stated, because the proposed new source performance standards under section 111(b) are unlawful and must be withdrawn by the EPA, the statutory prerequisite for the Section 111(d) Propos al is lacking and that proposal too should be
withdrawn.

Similarly, commenters stated, the EPA's current proposal to regulate new fossil

- fuel fired electric utility units under Section 111(b) of the Act is based on their finding that carbon capture and

seq uestration, CCS, has been adequately demonstrated. Commenters said, CCS has, in fact,

not been adequately demonstrated. Commenters said, the legal implication is critical since the
EPA is barred from implementing an existing source rule under 111(d) withou t having successfully promulgated a new source standard under 111(b).

Commenters stated, the Carbon Pollution Standard Rule

- the CCP's Prerequisite

- is invalid. Commenters stated under CAA section 111(d), EPA must promulgate performance standards for

new sources before it can promulgate performance standards for existing sources. Commenters stated the Carbon Pollution Standard (CPS) rule is the prerequisite for the CPP. Commenters
stated the CPP cannot stand if the CPS rule falls. Commenters stated the CP S rule is unlawful in several ways, including CCS is not adequately demonstrated.209 Commenters stated, EPA's proposal also lacks a lawful New

- Source Standard predicate whereby the EPA must first have established lawful standards under Section 111(b) for new sources in a particular industrial category.

Commenters stated, Section 111(d)(1)(A) requires that each state shall submit to the EPA a plan which "establishes standards of performance for any existing source for any air pollutant ... to
which a standard of performance would apply if such source were a new source." Commenters said, the clear meaning of this provision is that EPA is forbidden under the Act from adopting Section 111(d) rules without having previously promulgated a valid Section 111(b) rule a s a predicate. Commenters said, EPA has stated that its Section 111(b) new

- source rule proposal ("New

- Source 111(b) Rule Proposal") and its Section 111(b) modified

- and reconstructed

- source rule proposal ("Modified/Reconstructed Source 111(d) Rule Proposal ") can serve as this predicate. Commenters have filed comments on both proposals clearly outlining the legal and technical flaws that prevent these rule proposals from serving as a valid predicate for this Rule Proposal.

Commenters stated, both 111(b) rule proposals are still merely that

- proposals

- and until they are finalized and survive legal challenge, they cannot serve as a valid basis for this Rule Proposal. Commenters said, if EPA was to proceed on this course, and the 111(b) rules are vacated, it will remove the foundation for this Rule Proposal as well.

Commenters stated, regarding the technical and legal flaws of the 111(b) rule proposals, the
New

- Source 111(b) Rule Proposal flaws, include, but are not limited to:

- The rule proposal relies on co mmercially unavailable carbon capture and sequestration ("CCS") technology, which is not achievable and has not been "adequately demonstrated" under the requirements of the CAA, to establish unachievable emissions limits;

- EPA failed to properly assess al ternatives to CCS technology which could meet the requirements of the CAA;

- EPA's "component" approach to finding CCS had been adequately demonstrated violates the CAA;

- By imposing one type of control technology, EPA is attempting to dictate the fuel ch oice of power plants in contravention of CAA;

- The rule proposal does not include appropriate subcategories for different types of generation technologies, including lignite

- fired EGUs;

- The rule proposal will result in excessive and unreasonable costs, particularly in comparison to the minimal (if any) benefits of the alleged CO2 reductions in the rule; EPA inappropriately incorporated enhanced oil recovery ("EOR") capabilities as part of the technical review process;
and

- EPA failed to account for chal lenges that utilities will face at the regional level to comply with the rule, including lack of natural gas transmission, CO2 transmission (for EOR), and other
infrastructure.

Commenters stated, the technical and legal flaws of the Modified/Reconstructed Source 111(b) Rule Proposal include, but are not limited to:210 - The rule proposal treats modified and reconstructed sources concurrently as both existing and new sources, which directly conflicts with the plain language to the CAA;

- The rule proposal does not include appropriate subcategories for different types of generation technologies, including a separate subcategory for lignite

- fired EGUs;

- The proposed emissions standards for modified and reconstructed EGUs are legally invalid and technically unachi evable; and

- The regulatory impact analysis is significantly flawed, establishing little or no expected benefits from the rule proposal's reduction in CO2 emissions despite the rule proposal potentially resulting in significant costs and harm.

Commenters stated, given these numerous technical and legal flaws, it is impossible for EPA to use either of the 111(b) rules as a valid foundation for this Rule Proposal.

Commenters stated, in order for EPA to require states to submit Section 111(d) plans to control emissions from existing sources in particular industrial categories, EPA must first have established lawful standards under Section 111(b) for new sources in that category. Commenters said, because EPA has failed to establish such standards for fossil fu el

- fired power plants and its existing regulatory proposal is unlawful, EPA may not finalize any Section 111(d) proposal until
it has rectified this issue.

Commenters stated, section 111(d) provides that Section 111(d) is appropriate to regulate only
"ex isting source[s] for any air pollutant ... to which a standard of performance under this section would apply if such existing source were a new source ... " C.A.A. section 111(d)(1)(A)(ii), 42
U.S.C. section 7412(d)(1)(A)(ii). Commenters said, the Section 111(d) proposal concedes the plain language of this provision: that a lawful Section 111(b) rulemaking is a "requisite predicate" for a Section 111(d) rule. 79 Fed. Reg. at 34,852.

Commenters stated, the Section 111(d) proposal identifies two pending 111 (b) proposals as providing this predicate: the proposed rule regulating carbon dioxide emissions from new power plants, issued in January 2014, and the proposed rule regulating such emissions from modified and reconstructed power plants, issued in June 201 4. Commenters said, but neither of these proposals have been finalized.

Commenters stated, the regulation of existing sources through the Clean Power Plan seems to be premature. See CAA section 111(d)(1)(A), 42 U.S.C. section 7411(d)(1)(A). Commenters sa id, 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.

Response 4: This comment is primarily about the section 111(b) ru le establishing new source performance standards (NSPS) for certain fossil fuel

- fired EGUs. As such, much of this is outside the scope of the section 111(d) emission guidelines for existing EGUs. We note that the agency is not finalizing the proposed interpretation that sources remain subject to section 111(d) even if they modify or reconstruct so as to become subject to a section 111(b) NSPS. The agency will finalize the relevant section 111(b) NSPS rules, and they are lawful. Therefore, commenters’211 assert ions that these guidelines are unlawful because a lawful section 111(b) rule must be finalized first before finalizing a section 111(d) rule are based on an incorrect factual premise.

Comment 5 : Commenters stated that the section 111(b) rules are unlawful and therefore cannot provide the requisite predicate for the 111(d) proposal. Commenters 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 inappropr iately considering certain government

subsidized projects in the Section 111 standard

- setting process. See generally Comments of the Competitive Enterprise Institute on Clear Air Act section 111(b) Carbon Pollution Standards (May 9, 2014). Commenters said, the modified

- source proposal is unlawful because there is no authority under Section 111(b) to issue a regulation covering only modified sources, which the Clean Air Act treats as "new" sources without exception. See C.A.A. section 111(a)(1), 42
U.S.C. se ction 7411(a)(1) ("The term 'new source' means any stationary source, the construction or modification of which is commenced after" proposal or finalization, whichever is earlier, of Section 111 standards). Commenters said, these defects preclude EPA from promulgating Section 111(d) standards until such time (if ever) that it adopts lawful Section 111(b) standards.

Response 5 : EPA disagrees that the 111(b) rules are unlawful. Issues relating to EPAct05 are addressed at preamble section III.H.3.g and RTC ch apter 2. EPA’s authority to issue regulations covering modified sources that differ from the regulations for newly constructed sources comes from section 111(b)(2), which authorizes EPA to distinguish within categories of sources.

Comment 6 : Multiple com menters stated that the EPA Cannot Regulate CO2 under Section 111(d) without First Adopting a Valid Section 111(b) CO2 NSPS

Commenters stated, section 111(d)(1)(a)(iii) requires that EPA establish standards of performance for air pollutants emitted by any source "to which a standard of performance would apply if such source were a new source." Commenters said, thus, EPA must issue standards of performance under Section 111(b) regulating the same types of pollutants from new sources
within the same source c ategory before it can issue a rule under Section 111(d). Commenters said, no valid Section 111(b) predicate rule regulating emissions of CO2 from coal or gas

- fired power plants exists. Commenters said, therefore, the proposed rule exceeds EPA's authority

u nder Section 111(d).

Commenters stated, EPA argues that two newly proposed rules will be finalized before the proposed rule and that each provides the requisite predicate rule. Commenters said, the first of these rules (the Proposed NSPS) establishes stand ards of performance for CO2 emissions from new EGUs. Commenters said, the second rule (the Proposed Modified and Reconstructed Source Rule) establishes standards of performance for CO2 emissions from certain modified and
reconstructed EGUs. Commenters said , even if finalized, neither of these rules can serve as the predicate rule for the proposed rule because each is illegal.

Commenters stated, the Proposed NSPS relies on the utilization of unproven Carbon Capture and Storage (CCS) technology as its standar d of performance. Commenters said, CAA Section 111(a)(1) requires that any "standard of performance" be based on technology that has been212 "adequately demonstrated." Commenters said, adequately demonstrated requires that a standard of performance "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."

Commenters stated, CCS is not currently in operation at any commercial EGU in the U.S. Commenters said, although a few small experimental sites exist, CCS certainly has not been "adequately demonstrated." Commenters said, this, along with a number of other fatal flaws, makes the Proposed NSPS invalid and rip e for post

- finalization challenge. Commenters said, since an invalid rule cannot serve as the required Section 111(d) predicate rule, the proposed rule
is likewise invalid.

Response 6 : This comment is primarily about the section 111(b) rule establishing n ew source performance standards (NSPS) for certain fossil fuel

- fired EGUs. As such, much of this is outside the scope of the section 111(d) emission guidelines for existing EGUs. The agency will finalize the relevant section 111(b) NSPS rules, and they are lawful. Therefore, commenters’ assertions that these guidelines are unlawful because a lawful section 111(b) rule must be finalized first before finalizing a section 111(d) rule are based on an incorrect factual premise.

Comment 7 : Commenters stated, the Proposed Modified and Reconstructed Source Rule also cannot serve as the Section 111(d) predicate rule. Commenters said, in the Proposed Modified and Reconstructed Source Rule, EPA treats modified and reconstructed sources as both n ew and existing sources. Commenters said, it does this by requiring that sources subject to the rule are also subject to any applicable CPP requirements. Commenters said, as defined by the CAA, once a source is modified it becomes a new source subject to N SPS. Commenters said, an existing source is "any stationary source other than a new source." Commenters said, a source cannot simultaneously be both. Commenters said, the CPP rule applies only to existing sources. Commenters said, thus, if EPA decides to t reat modified and reconstructed sources as existing sources by making them subject to CPP requirements as well as NSPS, then EPA cannot simultaneously claim that the Proposed Modified and Reconstructed Source Rule applies to new sources and is the predicat e rule for Section 111(d) purposes.

Response 7 : The premise of this comment is that EPA has concluded that existing sources that modify or reconstruct and become subject to requirements under section 111(b) continue to be subject to requirements under sect ion 111(d). As explained in section VIII of the preamble, the EPA is not finalizing its proposal on that point.

Comment 8 : Commenters stated, the Proposed Rule includes performance standards that are completely inconsistent with the standards of performa nce proposed for new sources.

The commenters said, in proposing an approach for existing sources that is completely unrelated to and operates independently of the proposed approach for regulating new sources, the Proposed Rule ignores the statutory relati onship between the regulation of new and existing sources under213 Section 111. Commenters said, for good reason, the regulation of existing sources under Section 111(d) is intended to represent what amounts to a more flexible and limited version of the
stand ards established for new sources under Section 111(b). Commenters said, however, the Proposed Rule would actually work toward the opposite result

- i.e., it would impose standards of performance on existing sources that are more stringent than those propos ed for new sources.

Response 8 : We disagree that the section 111(d) standards are more stringent than the section 111(b) standards. Further, we explain in the preamble and the Legal Memorandum why the section 111(b) and (d) standards are based on different determinations of the BSER.

Comment 9 : Commenters state that the EPA employs an unprecedented and unreasonable redefinition of what constitutes a "system of emission reduction," by concluding that a "system
of emission reduction" can be "virtuall y any ‘set of things' that reduce emissions,” including the
"reduced utilization" of a source. This is a stunning departure from the plain meaning of Section 111, which has been read over its 44

- year history to authorize only standards of performance that limit a source's rate of emissions based on methods incorporated into the design or operation of a
source itself. The EPA’s broad definition of "system" is not supported by the statute's plain language or context, or by the EPA's past rulemakings under Sec tion 111. Commenters further state that the EPA erroneously conflates the two operative phrases of Section 111(d) that describe its authority. The Agency may require each State to promulgate a state plan that (1) "establishes standards of performance" for (2) "any existing source for any air pollutant." On its face, the term "best system of emission reduction" relates only to the "standard of performance" and the scope of the pollution control measures that may be imposed on the regulated stationary

source. While the definition of BSER may give the EPA latitude with respect to the forms of pollution controls that can be imposed directly on the emitting source, it does not mean that the EPA has any latitude with respect to whether controls can be imposed on e ntities that do not emit pollutants.

Response 9 : The EPA disagrees that the term “system” is limited to measures that can be incorporated into the design or operation of an affected EGU. Our interpretation of the BSER is
discussed in section V.B. of the fi nal rule preamble and in the Legal Memorandum. The ordinary meaning of the word “system,” as noted in the final rule preamble, is a set of things or parts forming a complex whole; a set of principles or procedures according to which something is done; an o rganized scheme or method; or a group of interacting, interrelated, or interdependent elements. Section 111 does not define a “system of emission reduction” and the plain language does not restrict the EPA’s consideration of “system[s] of emission reductio n” to a narrow class of technological or design fixes at a facility. In fact, Congress rejected such a narrow definition through the 1990 CAA Amendments, when it rewrote the definition of “system” in section 111(a)(1) to omit the requirement that such a sy stem be “technological” and “continuous.”

In the absence of language narrowing the EPA’s consideration of potential “system[s] of emission reduction,” the EPA interprets the plain meaning of this phrase to mean a set of measures that work together to redu ce emissions. The EPA further interprets that because the standards of performance reflect the degree of emission limitation achievable through the214 “application” of the BSER, that the scope of systems that the EPA may consider are those that can be impleme nted

– or applied

– by the sources themselves. The fact that some of the measures that EGUs use to reduce emissions may incorporate or depend upon actions by third parties does not mean they are not implementable by the affected EGUs: as explained in secti on V.A. of the preamble, the BSER selected in this final rule reflect proven strategies that are already being implemented within the electricity industry. Furthermore, as the Legal Memorandum describes,

s ection 111 standards have long embraced the notion that source owners or operators can rely on measures undertaken by a third party. The EPA’s application of the BSER thus falls within the forms of pollution control that can be imposed directly on the emitting source, because they rely
on measures that aff ected EGUs can take to reduce their emissions as part of the interconnected electrical grid.

Furthermore, the commenters’ reliance on previous section 111(d) rulemakings is misplaced. As explained in section V.A.2.b. of the final rule preamble, this rulem aking addresses a pollutant and a source category each with unique properties that inform the application of section 111(d).
Few industries share the characteristics of the electricity industry, where generation occurs within a coordinated, interconnected network and the operation of individual source works in concert with the operation of numerous other sources of the same or different type. This networked system allows affected sources within the electricity industry, unlike other industries, to employ a broader range of strategies to operate and manage both production and emissions at a single EGU. Consequently, this final rule is tailored to what is achievable within the particular industry and with respect to this particular pollutant. Whether or not th e same strategies are
available to or in use in other industries

– or would be selected as the “best system of emission reduction” by the EPA in another rulemaking

– does not bear on the EPA’s determination of the BSER for this industry. Moreover, as noted above and as further discussed in the Legal Memorandum, emission reduction measures that can be implemented by sources but that depend upon actions of third parties have long been a component of the EPA’s rulemaking under section
111.

Finally, the EPA is not imposing controls on any entities other than the affected EGUs, so comments regarding the EPA’s latitude to place controls on entities that do not emit pollutants are beyond the scope of this rulemaking.

Comment 10 : Commenters state that section 111(a )(1) requires that any standard of performance be “achievable” by the sources to which it applies based on application of an “adequately demonstrated” system of emission reduction. The achievability requirement clearly indicates that Congress intended stan dards of performance to be based on systems of emission reduction that are within the control of (and thus, incorporated into the design or production process of) an individual source. A standard cannot be “achievable” for a source if the source must rely 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. For example, a standard of performance for coal

fired EGUs that is based on a "system" of reducing the EGU's operations by increasing generation at NGCC units and renewables and discouraging electricity consumption would not215 be achievable for individual coal

- fired EGUs. The achievability requirement thus demonstrates that a system of emission reduction cannot go beyond the fe nce

- line of a source.

Response 10 : The EPA disagrees that the term “achievable” binds the EPA to consider only measures related to the design or production process of an individual EGU. Commenters suggest that only measures related to design or production are within the EGU’s “control” and are thus “achievable.” As a preliminary matter, the plain language of section 111(a)(1) does not limit the EPA to emissions reductions that can be achieved through the application of a particular technology or achieved at a particular location, although such specifications exist in other sections of the Clean Air Act. Had Congress intended that the EPA consider only the narrow class of technologies that could be applied on site at the affected source, it could have so

spec ified. In fact, the 1990 CAA Amendments evidence that Congress intended the opposite result, as the amendments removed language in section 111(a)(1) that had previously required that the “best system” be “technological” and “continuous.” Thus it is reasona ble to conclude that Congress intended the EPA to consider broader systems where the affected EGU might achieve the emission reductions through other, non

- technological or non

- continuous means.

In addition, the BSER adopted in the final rule reflects strat egies that are already well

established and well

- documented within the electricity industry. As evidenced by actual industry practice, EGUs routinely achieve emission reductions through a broad array of strategies

– including emissions based redispatch

– t hat may not be directly incorporated into the design or production process of the facility. Industry acknowledges the feasibility and desirability of many of these broad strategies in comments addressing compliance with the standards of performance,
which advocate for allowing a wide array of EGU actions beyond the facility to be credited as reducing emissions under the final rule. Moreover, the interconnected nature of the electric utility system already requires broad coordination of generation resources. The final rule reflects the existing features of the industry and aligns the BSER with the types of actions and controls that already govern generation. If affected EGUs can meet the emission limits set according to the BSER through the measures available to them, then the standards are achievable

– even if such measures operate through the coordinated, interconnected actions of the industry as a
whole.

Further discussion of the basis of our interpretation appears in section V. of the final rule preamble a nd in the Legal Memorandum. Further discussion of the measures selected as the best system of emission reduction and of their achievability appears in section V. of the final rule preamble.

Comment 11 : Commenters state that section 111 may only be used to regulate the source's performance, i.e., the amount of a certain pollutant that the source emits at a particular level of operations. By its terms, a “standard of performance” assumes that the source will continue to “perform.” A “standard of performance” cannot mandate “non

- performance.”

Response 11 : As discussed in section V.B. of the preamble, i n this final rule, we do not consider reduced utilization alone as an alternative BSER; building blocks 2 and 3 are based on substitute generation. Nevertheless, the EPA disagrees that the use of the word “performance” prevents the216 EPA from setting standards that may rely in part on an individual source’s utilization rate. Changes to the nature or magnitude of a source’s operation are routine aspects of emission

r egulation and are regularly employed as a strategy within the industry to comply with federal regulations, or state or industry initiatives. The Legal Memorandum accompanying the final rule includes a detailed discussion of examples of CAA regulations and permits that incorporate reduced production or utilization. In this instance, reduced utilization also reflects a reality of the electrical system itself, where a coordinated dispatch system increases or reduces the power produced by any single EGU at any given time according to a number of variables. Under this system, the particular “performance” of an EGU is dependent on the performance of the other EGUs within its interconnected region. In any case, the final rule does not mandate the reduced
utilizatio n of any affected EGU, nor does it require that any EGU cease all operations. The final
rule establishes national uniform emission rates for each of the two affected source subcategories, that are achievable at all EGUs using proven, industry

- recognized st rategies. The final rule also gives states significant flexibility to decide what standards are placed on individual sources, or what suite of equivalent measures they will take to comply with the emission guidelines.

Comment 12 : Commenters stated, it is f undamental that a standard of performance under section 111 must "reflect[] 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 an y non

- air quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated." [CAA Section 111(a)(1) (emphasis added).] Commenters said, EPA may not base its determination that a standard is
achi evable on "mere speculation or conjecture." [Lignite Energy Council v. EPA, 198 F.3d 930, 934 (D.C. Cir. 1999) (per curiam).] Commenters said, rather, the Agency bears the burden of showing that a standard is achievable "for the industry as a whole" and "u nder the range of relevant conditions which may affect the emissions to be regulated," including "under most adverse conditions which can reasonably be expected to recur." [Nat'l Lime Ass'n v. EPA, 627 F.2d 416,431 n.46, 433 (D.C. Cir. 1980).] Commenters s aid, in order to show that the Proposal is achievable, EPA must "(1) identify variable conditions that might contribute to the amount of expected emissions, and (2) establish that the test data relied on by the agency are representative of potential indust ry

- wide performance, given the range of variables that affect the achievability of the standard." [Sierra Club v. Castle, 657 F.2d 298,377 (D.C. Cir. 1981) (citing Nat'l Lime Ass'n 627 F.2d at 433)).]

Commenters stated, EPA has not done so in this rulemaki ng. Commenters said, rather, the Agency has set targets under each Building Block that far exceed what is feasible or cost

effective. Commenters said, in particular, the targets under Building Blocks 1 and 2 (i.e., the Building Blocks that involve measures taken by affected EGUs, either individually or collectively across a state) are not supported by the rulemaking docket and are simply not achievable. Commenters said, Building Block 3 is based on unrealistic assumptions, and Building Block 4 gives rise to enforcement difficulties. Commenters said, as a result, compliance with the state goals will be extremely costly and difficult (if not impossible) for any state as a whole and will certainly be impossible for many individual affected EGUs to achieve.217 Resp onse 12 : 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 purpo se, and legislative history. As we also explain in section V.B., the BSER is not based on demand

- side energy efficiency measures and comments on building block 4 are therefore moot. Lastly, as we explain in section V.A. of the preamble, the emission limits are achievable through the application of the BSER, and, as we explain in section VIII of the preamble, the state goals can be achieved in a cost
effective manner.

Comment 13 : Commenters found the following issues with EPA's legal interpretation:

1. Sect ion 111(d) specifically prohibits EPA from regulating power plants under Section 111(d) because the EPA has chosen to regulate those plants under Section 112;

2. The proposed Section 111(d) rule is illegal because EPA has not finalized any lawful rule for equ ivalent new sources;

3. Section 111(d) cannot be used to override state authority to manage power resources;

4. Section 111(d) limits EPA's role to procedure and not substance;

5. Section 111(d) is limited to source level, inside the fence line, unit by unit, emis sion reduction measures; and

6. Recent Supreme Court authority confirms that Section 111(d) does not authorize EPA's proposal.

The commenters recommended that the EPA withdraw this proposed rule and draft a rule that identifies and supports a best system of emission reductions for the following categories separately: coal

- fired; integrated gasification combined

- cycles; and natural gas fired combined cycle power plants.

Response 13 : This comment raises a number of issues that are fully addressed elsewhere in the preamble to the proposed rule, the legal memo and other responses in this RTC.

Comment 14 : Commenters stated that the EPA has failed to follow CAA requirements for addressing international pollution.

Commenters stated, section 115 of the CAA requires EPA to formally notify state governors with emissions that impact public health and welfare in foreign countries; and to d evelop plans under Section 110; and under reciprocity requirements of Section 115, if the foreign country is preventing air pollution from similar sources to the same degree it is being prevented in the U.S. commenters said, the EPA has not done any of the above.218 Response 14 : The emissions guidelines are under the authority of section 111 of the CAA, not section 115. Nothing in section 115 precludes regulation under section 111.

Comment 15 : Multiple commenters questioned the legality of the proposal as justified under section 111(d).

Commenters stated that the legality of the proposed rule is tenuous. The commenters stated that the EPA is not the appropriate body to develop new greenhous e gas laws of this scope. The commenters stated that the unique qualities and widespread impact of new carbon rules require state leadership and congressional action. The commenters stated that it is improper and legally
defective for the EPA to drive ener gy policy and wide

- spread changes to the U.S. power system. The commenters stated, given that the EPA possesses only the authority given to it by Congress, it is concerning that the EPA has ignored Supreme Court guidance to narrowly interpret its authority under the Clean Air Act (CAA) in developing this rule. [Utility Air Regulatory Group v. Environmental Protection Agency, 573 U.S., U.S. Supreme Court Case, 2014.]

The commenters stated that the EPA's proposal is an unprecedented application of the Clean Air Act (CAA). The commenters noted that the EPA has generally only applied the CAA Section 111 standards to direct power

- plant emissions or "inside

- the

- fence" measures where cost

effective actions, such as installing pollution controls, can be implemented directly by the regulated facility. The commenters noted that the proposal mandates aggressive targets, which would almost certainly require "outside

- the

- fence" measures to achieve including significant re

dispatch of power from coal to natural gas genera tion, renewable portfolio standards, and stringent energy efficiency. The commenters stated that the EPA has not established its legal authority to enforce "outside

- the

- fence" provisions, and the EPA also fails to justify its assignment of unequal carbon r eduction targets to different states and does not adequately address the implications of this unequal treatment.

Commenters stated that the Proposed Rule is not consistent with the language, context, legislative history, and consistent past administrative interpretation of CAA section 111(d). The commenters stated that the Proposed Rule is built on new and redefined terminology never before used in the CAA section 111(d) program instead. The commenters noted that the state

- by

state "goals" EPA seeks to set are legally enforceable mandates for all states, however, EPA lacks the authority under either CAA section 111(d) or EPA's CAA section 111(d) regulations to set binding statewide "goals." The commenters also noted that the "system" of emission
reduction E PA defines to be mandated reductions in the amount of time facilities within the regulated source category are allowed to operate, however, forcing coal

- fueled EGUs to reduce operation (or retire) is not a "system" of emission reduction under CAA section 1 11(d).

The commenters stated that the new "interpretation" of CAA section 111(d) set forth in the Proposed Rule encourages states to submit plans that contains what EPA calls "portfolio" measures which would be used, for instance, to dramatically increase the use and deployment of renewable energy and energy efficiency measures throughout the states, targeting citizens and businesses as necessary agents in the reduction of electric consumption. However, the commenters stated that upon EPA approval of a Sta te CAA section 111(d) Plan, these measures219 would become "federally

- enforceable" against those agents (citizens and businesses) required to implement them. The 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, rather, CAA section 111 authorizes standards to
be set for facilities within EPA

- listed source categories. The commenters noted that 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 15 : We disagree. For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorand um, our interpretation of the BSER is reasonable in light of legal precedent, the statutory text, statutory context, statutory purpose, and legislative history.

Further, it cannot be said that because environmental requirements may have an effect on the

en ergy 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.

Lastly, to the extent this comment objects to the portfolio approach, which the EPA is not finalizing, the comment is moot.

Comment 16 : Commenters stated that the EPA impermissibly reaches beyond the individual regulated source in setting its proposed standards of performance.

The commenters stated that the EPA's legal rationale depends on a reading of section 111 that is divorced from the rest of the CAA. [EPA Legal Memorandum at 52.] The commenters stated that other CAA programs and their governing authorities demonstrate that Congress knows the
difference between source

- specific and broad, general programs, that it uses specific language to create each type of program, and that section 111 clearly falls into the source

- specific category. The commenters argued that the EPA is required to read these various provisions as a whole and its failure to do so here has resulted in an unlawful interpretation of section 111. [UARG v. EPA, 134 S. Ct. at 2441 (Agencies must construe the words of a statute "in their context and with a view to their place in the overall statutory scheme.)]

In addition, the commenters stated that the EPA never addresses the decades of precedent conflicting with its new interpretation of section 111. The commenters stated that the Subpart B

reg ulations, every single NSPS rulemaking, and every 111 (d) existing source standard that EPA has promulgated contradict the rationale for the authority the Agency now claims. The commenters noted that when EPA does discuss precedent, moreover, it does so mi sleadingly (suggesting that its emission guidelines for municipal waste combustors and CAMR support its reliance on the types of measures provided for under Building Blocks 2, 3, and 4). [EPA Legal Memorandum at 63 & n.51.] The commenters argued that these rules do not support the EPA's position. The commenters stated that the emission guidelines for municipal waste combustors were not based on measures anything like Building Blocks 2, 3, and 4; they were based on controls that could be implemented at the c overed sources. The commenters stated that CAMR also was based on implementation of pollution controls at individual EGUs. [70 FR 28617

- 20,220 28621] The commenters concluded that these rules do not support EPA's position, but undermine
it.

The commenters sta ted that every piece of evidence points to the conclusion that section 111 requires standards of performance to be achievable by individual sources based on measures implemented at the source. The commenters asserted that the EPA has ignored all of that

ev idence and stretched beyond credibility to reach the opposite conclusion.

Response 16 : EPA disagrees with these comments. The commenters have not pointed to any specific conflicting interpretation of statutory authority in these prior agency actions. That the agency has taken various approaches to standard setting under section 111 in the past does not equate to “conflicting precedent” with its view of an appropriate approach to the BSER in this instance. We note that the emission guidelines provide states with the ability to establish standards of performance that are achievable by the affected EGUs.

Comment 17 : Commenters stated that the EPA should withdraw and re

- propose a rule that follows CAA BSER precedent based on activities within the fence line of the source, and

not through elimination of the source.

Commenters stated that even if existing fossil fuel

- fired electric generating units could be regulated under Section 111(d), EPA's proposed guidelines do not comply with the Clean Air
Act. The commen ters stated that contrary to the direction provided by the Clean Air Act, the Proposal seeks to impose regulatory requirements that do not fit the statutory definition of a "standard of performance" and seeks to impose requirements on facilities and entiti es that are not subject to the Clean Air Act at all. The commenters referred to Section 111(d)(A)(1) and the definition of "standard of performance" in Section 111(a). The commenters stated that in these provisions, it is clear that the Congress intended B SER to be "applied" to existing stationary sources and reflect a "standard of performance" that involves emissions reductions through process changes, operation changes, direct emission control, or other methods applied at the emissions unit. According to the commenters, "standards of performance," while broadly defined, cannot be based on the elimination of the source itself (i.e., no performance) or reduced utilization of the source, which is what EPA's Proposal would mandate. The commenters noted that, w ith the exception of Building Block 1, the Proposal, through Blocks 2, 3, and 4, is based on reducing the amount of power generation at certain existing sources and increasing generation
from others. The commenters argued that approach does not meet the st atutory definition of "standard of performance" and thus violates the Clean Air Act by seeking to require NGCC units to operate at higher capacity factors and thus emit more CO2. In addition, the commenters stated that requiring coal units to operate at lo wer capacity factors is not the BSER because reduced operating levels will result in higher CO2 emission rates at coal units, as their efficiency
declines. The commenters stated that the EPA's approach also violates the Act by effectively imposing regulato ry requirements on renewable resources, nuclear facilities, and end users of electricity that do not emit anything at all.

In contrast to EPA's Proposal, the commenters stated that the EPA's prior Section 111(d) programs have remained within the confines of the statutory authority Congress granted to the221 Agency. The commenters stated that in the past, EPA's definition of BSER in establishing Section 111(d) emission guidelines has always been based on activities that can be applied
within the fence line of the emitting unit. The commenters noted for example, in developing Section 111(d) emission guidelines for Kraft Pulp Mills to control emissions of total reduced sulfur emissions (TRS) in the 1980's, the EPA produced a guideline document (Kraft Pulping

- C ontrol of TRS Emissions at Existing Mills) which contained the determination of BSER for various mill emission sources. The commenters stated that one of the emitting sources evaluated, a black liquor recovery boiler, is very similar to many of the steam g enerators utilized in the electric utility industry in that they both produced high pressure steam used for electricity generation. The commenters stated that the EPA determined that BSER at existing recovery
boilers included state

- of

- the

- art process contr ols and black liquor oxidation (pre

- treatment of fuel). In addition, the commenters stated that the Section 111(d) program provided for sub

categorization of recovery boiler units with different limits assigned based on unit design and unit age. The commen ters stated that in Louisiana, for example, LDEQ set the TRS emission limit for existing boilers at 20 PPM, but in Arkansas the emission limits on existing recovery boilers ranged from 40 PPM to 100 PPM. The commenters stated that this precedent illustrate s how EPA should craft its Section 111(d) emission guidelines for electric utilities

- identifying the best control options that can be applied to the performance of the emitting units covered by the rule, and then allow states to determine the specific le vel of performance required for the specific emitting units within its borders.

The commenters stated that the EPA cites a vacated rule, the Clean Air Mercury Rule (CAMR), as support for its authority to determine flexible compliance mechanisms under Sect ion 111(d), such as cap and trade. However, the commenters stated that CAMR was crafted based only on emission reductions that could be achieved through application of control technology at units within the affected source category. The commenters stated t hat the cap

- and

- trade option did not serve as the basis for determining the BSER; it was simply a compliance option to be implemented at the discretion of the states.

The commenters stated that the EPA should withdraw its Proposal and re

- propose its Sect ion 111(d) emission guidelines to follow the Clean Air Act and past precedent by determining BSER only at the emissions source.

Response 17 : We disagree. For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our i nterpretation of the BSER is reasonable in light of legal precedent, the statutory text, statutory context, statutory purpose, and legislative history.

Additionally, we disagree that the cap

- and

- trade aspect of CAMR was designed as “simply a compliance option”. As discussed in the preamble to this rule, 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 compliance with the Clean Air Intersta te 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. EPA222 determined that by regulating mercury along with CAIR, significant mer cury 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 solely as a co

- benefit of CAIR. Id. at 2 8619. 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 catalytic 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 injection]), 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 are not cost effective to install con trols 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

- and

- trade mechanism and the technolog y 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 changes; whereas if the cap were based so lely 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.

Accordingly, we disagree that cap

- and

- trade was simply a compliance option and, for the reasons discussed in the preamble, believe it is an informative rulemaking under section 111.

Comment 18 : The Clean Air Act ("CAA") Section 111(a) defines Best System of Emissions Reduction (BSER). Even though the same definition of BSER applies to b oth Sections 111(b) and 111(d), EPA interpreted BSER much more liberally under the proposed 111(d) rule for existing units than it did under the proposed 111(b) rule for new units. EPA cannot apply a different interpretation of BSER when setting performan ce standards for new EGUs under Section 111(b) than for existing EGUs under Section 111(d), when both sections are subject to
the same BESR definition

. Response 18 : This comment is legally incorrect. The agency is not “interpreting” section 111(a)( 1) differently in section 111(b) versus section 111(b). Rather, we are applying the term to two quite different classes of facilities: those that are new versus those that are existing. Congress recognized this difference itself in establishing a direct fe deral standard setting regime under section 111(b) while setting up a section

- 110 like cooperative

- federalism planning regime under section 111(d).223 Comment 19 : Commenters argued that the emission guidelines for existing sources are more stringent than the NSPS.

Commenters stated that the EPA's Proposal would unreasonably and illegally impose more stringent emission standards on existing units than it has proposed for new units. The commenters stated that the EPA should recognize that one of the funda mental policies underlying the structure of the CAA is that existing unit standards must be less stringent than new units standards, given that fewer options are available to reduce emissions from existing units and even the options that are available for control retrofits are often more expensive and
less cost

- effective. The commenters stated that control technologies and improved processes can be incorporated far more easily into the design of a new unit than that of an existing unit. However, for Louisia na, the commenters stated that the proposed final limit of 883 lb/MWh is well below the proposed emission limit of 1,000 lb/MWh for a new large gas

- fired unit and the proposed limits of 1,100 lb/MWh for new coal

- fired units and small gas

- fired units. The

c ommenters stated that these unreasonable results illustrate the EPA's failure to follow the direction of Congress in Section 111(d) and the Agency's own implementing rules.

Commenters stated that the ESPS cannot be more stringent than, or regulate sources not covered by, the corresponding NSPS. The commenters stated that the CPP nationwide average emission performance goal for existing power plants in 2030 is 990 lb CO2/MWH (based on their
calculation of state

- by

- state targets), which is below EPA's propos ed NSPS for both new coal power plants (1,100 lb CO2/MWh) and new NGCC power plants (1,000 lb CO2/MWh). The commenters stated that roughly half the states' existing

- source CO2 performance targets are more stringent than the corresponding new source standar ds for either new coal or new NGCC.

The commenters stated that an ESPS that is more stringent than the corresponding NSPS is unheard of in the history of the CAA, and defies the logic and intent of section 111(d), which is to use the experience gained from NSPS regulation to develop performance standards appropriate for the corresponding existing sources.

The commenters stated that section 111(d) regulations "will ordinarily be less stringent than those required by standards of performance for new sources b ecause the costs of controlling existing facilities will ordinarily be greater than those for controlling new sources," EPA's 1975 implementing regulation states. The commenters noted that the regulation implies that in infrequent cases, ESPS may be as str ingent as NSPS but it clearly does not contemplate that ESPS will be more stringent.

The commenters argued that ESPS that are more stringent than the corresponding NSPS are unreasonable. The commenters noted that the ESPS in the CPP are more stringent than EPA's proposed NSPS because the ESPS require shifting base

- load generation from coal to gas and from both to wind, solar, and nuclear. The commenters noted that the ESPS also require reduced production achieved through changes in consumer demand. Thus, th e commenters stated that the ESPS regulate not only fossil

- fuel power plants but also entities different from those regulated by the NSPS. The commenters contended that Congress did not intend for section 111(d) to operate in this way.224 Commenters stated t hat in the alternative methods outlined in the NODA, the underlying algorithm that combines all four building blocks provides a state

- wide emission rate target that is even more stringent than EPA proposed for existing and new power plant and is not a real istic or reasonable outcome. The commenters stated that to highlight the extreme nature of this final result, they calculated a final goal of 336 lb/MWh under this alternative approach, which is significantly more stringent than the 531 lb/MWh final goal s et by EPA in the proposed rule. The commenters stated that when viewed from a statewide performance perspective, EPA is requiring more stringent emission reductions from existing sources than new sources; specifically, EPA is subjecting existing sources to a standard that is 66 to 69 percent more stringent than it is proposing for new sources.

Response 19 : We disagree that the section 111(d) standards are more stringent than the section 111(b) standards. Further, we explain in the preamble and the Legal M emorandum why the section 111(b) and (d) standards are based on different determinations of the BSER. Thus, the commenter makes an apples

- to

- oranges comparison. The use of the term “ordinarily” in the 1975 preamble reflects the agency’s long

- term understan ding 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 chal lenges 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.

While the agency believes the factual predicate of this comment is incorrect, we note that in at least one other part of the CAA, Congress addressed the issue of relative stringency of standards for existing versus new sources. In section 129(a)(2), Congress provided that “emissions standards for existing units in a category may be less stringent than standards for new units in the same category but shall not be less stringent than [ standards not relevant here].” 42 USC 7429(a)(2). Thus, in a place where Congress explicitly addresses the issue, Congress merely authorizes the use of less stringent standards for existing sources, subject to conditions; Congress
does not mandate less str ingent standards for existing sources. The EPA notes that the performance rates in the final guidelines are not nearly as stringent as the commenter calculated.

Comment 20 : The commenters stated that existing sources should not be held to a more stringen t standard than new sources because it may be more difficult to retrofit existing facilities with new emission technology due to siting impossibilities, prohibitive costs or design constraints. The commenters stated that additionally, existing sources may have limited remaining useful lives and not be able to reduce emissions without a modification or reconstruction; additional regulatory burdens and multiple regulatory schemes governing an existing facility may likely endanger the facility's future viabili ty. The commenters stated that for 25 of 48 states for which interim emission limitation rates have been proposed, and 26 of 48 states for which final emission rates are proposed, the proposed rates are more stringent than rates for new NGCC units (1,000 l bs CO2/MWh) under the proposed NSPS. The commenters stated that like Idaho, many state emission targets are 40 to 50 percent lower than the emission225 rates required for new sources; this outcome is illogical and contrary to Congressional intent
under Sectio n 111(d).

Commenters commented that the proposed rule appears to allow for more stringent regulation of existing EGUs than new EGUs.

Commenters stated that EPA does not explain how it is possible for their existing unit standard to be more stringent for m any states than the proposed national new unit standard, something Congress clearly did not intend.

Commenters stated that by going "outside the fence line" in setting mandatory state goals, EPA is proposing requirements for existing units that are more stringent than new unit new source performance standards, which establishes a policy with no basis in the statute or no precedent under regulatory guidance. The commenters stated that EPA offers no justification for proposing source specific standards unde r Section 111(b) and source specific standards for the proposed modification and reconstruction rule but not allowing states to set source specific standards for affected sources within each state's jurisdiction to satisfy Section 111(d).

Commenters stated that the proposed rule is flawed because: it purports to establish emission standards for entities other than existing fossil fuel

- fired EGUs; and, section 111 further provides that standards of performance may be imposed only on stationa ry sources of air pollutants, i.e., any building, structure, facility, or installation that emits or may emit any air pollutant. The commenters stated that, as defined in the EPA's NSPS proposal for GHG emissions from new
EGUs and consistent with section 1 11(b), the sources appropriate for inclusion in these proposed rules are electric utility steam generating units, integrated gasification combined cycle (IGCC) units, and stationary combustion turbines that meet certain capacity and operational criteria. T he commenters stated that, however, under the EPA's section 111(d) proposal, State plans must include emission standards that impose requirements applicable to any affected entity other than an affected source that has the effect of reducing utilization of one or more affected sources; further, the EPA defines affected entity to include any entity with obligations under this subpart for the purpose of meeting the emissions performance goal requirements in these emission guidelines. The commenters stated tha t by this definition, the EPA expands its emission guidelines to encompass any entity that the regulatory authority believes could contribute to reducing the demand for electricity from EGUs. Commenters stated the building blocks chosen
as BSER will includ e owners and operators of renewable energy generators, entities that do not generate electricity but only distribute it to end

- use customers, large industrial consumers and even residential consumers of electricity, thereby expanding the universe of regula ted entities beyond existing electric utility boilers, IGCC units, and stationary combustion turbines that would be regulated under the proposed NSPS. The commenters stated that under the EPA's proposal, it appears that the States themselves are affected e ntities potentially subject to compliance requirements. The commenters stated that the proposal defines an affected entity as226 any entity with obligations under this subpart, and the agency states in no uncertain terms that its proposed interim and final go als would establish binding emission guidelines for state plans. Commenters stated the proposal expands EPA's authority and is plainly impermissible under Section 111(d), i.e., no language in that provision authorizes the EPA (or even the States) to impose obligations on any affected entity other than existing sources in a regulated source category; the EPA must withdraw its proposed rule because it depends on States imposing regulatory obligations under Section 111 on facilities other than existing fossil fuel

- fired EGUs.

Response 20: The agency disagrees that the existing source guidelines are more stringent than the new source standard and explains in response 52.1 why this is an apples

- to

- oranges comparison. Further, the agency explains how it is permitt ing states to consider remaining useful life in Section VIII of the preamble and Section IX of the Legal Memo.

Comment 21 : Commenters stated that in the alternative methods outlined in the NODA, the underlying algorithm that combines all four building blocks provides a state

- wide emission rate target that is even more stringent than EPA proposed for existing and new power plant and is not a realistic or reasonable outcome. The commenters stated that to highlight the extreme nature of this final result, they calculated a final goal of 336 lb/MWh under this alternative approach, which is significantly more stringent than the 531 lb/MWh final goal set by EPA in the proposed rule. The commenters stated that when viewed from a statewide performance perspectiv e, EPA is requiring more stringent emission reductions from existing sources than new sources; specifically, EPA is subjecting existing sources to a standard that is 66 to 69 percent more stringent than it is proposing for new sources.

Commenters stated that EPA has proposed for state

- based CO2 emission performance interim and final goals of 647 lb/MWh and 531 lb/MWh, respectively and, for new EGUs, emission limits ranging from 1,000 lb/MWh /MWh to 1,100 lb/MWh, depending on the type and size of
the unit. The commenters stated that according to EPA's Technical Support Document: Goal Computation, New Jersey's existing EGUs are achieving an emission rate of 1,035 lb/MWh. The commenters stated that if the existing EGUs were to be replaced by new EGUs, the fle et would be subjected to a collective emission rate of 1,000 lb/MWh to 1,100 lb/MWh, which is in the range of New Jersey's existing EGUs. The commenters stated that it is not reasonable to expect deeper emissions reductions from existing EGUs than what is required from new EGUs. Commenters stated a uniform national goal in this range could achieve the same 30 percent CO2 reduction as EPA projects it will achieve under the rule proposal.

Commenters stated that in places EPA has used an NGCC emission rate, in lb/MWh, in calculating the Interim and Final Goals for some states that is lower than the rate specified in EPA's pending NSPS for EGUs. In Arizona, the commenters stated that the EPA used an NGCC emission rate of 900 lb/MWh, based on the average performa nce of Arizona's NGCC units in 2012; the commenters believed that this is unreasonable. The commenters stated that for227 purposes of goal setting, an existing NGCC unit should not be expected to perform at a better level than a new, post

- NSPS unit with newer technology; even if the existing NGCC unit is temporarily exhibiting a better level of performance, it is not clear that such performance would continue over the life of the NGCC unit or would survive the change in operating regime from an
intermediate or peaking load unit to baseload usage (as contemplated by EPA's proposed redispatch). The commenters stated that while they believe that use of the graduated NSPS rates would be best, for purposes of simplicity in goal setting, the commenters believed that use of the 1,000 lb/MWh in the proposed NSPS would be an acceptable solution given that most NGCC units would be subject to the 1,000 lb/MWh limit if they had been constructed post

- NSPS proposal.

Response 21 : We note that the subcategorized emission perfor mance rates in the final rule are significantly less stringent the numbers calculated by these commenters.

Comment 22 : Commenters stated that in places EPA has used an NGCC emission rate, in lb/MWh, in calculating the Interim and Final Goals for some state s that is lower than the rate specified in EPA's pending NSPS for EGUs. In Arizona, the commenters stated that the EPA used an NGCC emission rate of 900 lb/MWh, based on the average performance of Arizona's NGCC units in 2012; the commenters believed that this is unreasonable. The commenters stated that for purposes of goal setting, an existing NGCC unit should not be expected to perform at a better level than a new, post

- NSPS unit with newer technology; even if the existing NGCC unit is temporarily exhibit ing a better level of performance, it is not clear that such performance would continue over the life of the NGCC unit or would survive the change in operating regime from an intermediate or peaking load unit to baseload usage (as contemplated by EPA's pro posed redispatch). The commenters stated that while they believe that use of the graduated NSPS rates would be best, for purposes of simplicity in goal setting, the commenters believed that use of the 1,000 lb/MWh in the proposed NSPS would be an acceptabl e solution given that most NGCC units would be subject to the 1,000 lb/MWh limit if they had been constructed post

- NSPS proposal.

Response 22 : We note that the subcategorized emission performance rates, and the state of Arizona’s equivalent state goal, as expressed in mass or in rate, in the final rule, have been adjusted from the proposal in response this and similar comments. We believe the final guidelines set an achievable emission performance level for the affected EGUs in Arizona, and the apples

- to

- or anges comparison of the stringency of standards under section 111(b) does not
alter that conclusion.

Comment 23 : Commenters stated EPA does not propose these same requirements for existing
coal

- fired EGUs because it is impractical and unachievable. The com menters stated that existing sources should not be held to a more stringent standard than new sources because it may be more difficult to retrofit existing facilities with new emission technology due to siting impossibilities, prohibitive costs or design c onstraints. The commenters stated that additionally, existing sources may have limited remaining useful lives and not be able to reduce emissions without a modification or reconstruction; additional regulatory burdens and multiple regulatory schemes228 govern ing an existing facility may likely endanger the facility's future viability. The commenters stated that for 25 of 48 states for which interim emission limitation rates have been proposed, and 26 of 48 states for which final emission rates are proposed, th e proposed rates are more stringent than rates for new NGCC units (1,000 lbs CO2/MWh) under the proposed NSPS. The commenters stated that like Idaho, many state emission targets are 40 to 50 percent lower than the emission rates required for new sources; t his outcome is illogical and contrary to Congressional intent under Section 111(d).

Commenters stated that in the modified and reconstructed source rule, EPA proposes requiring
modified coal

- fired EGUs to achieve CO2 emissions of 2 percent below the best p erforming year since 2002, with a hard floor of 1,900 lbs. CO2/MWh

- net; yet EPA incongruously sets Pennsylvania's final target under the existing source rule much lower, at 1,052 lbs. CO2/MWh. The commenters stated that this is an unattainable target for t heir EGU or any similarly situated
coal

- fired EGU, EPA provides no basis for holding existing sources to more stringent standards than those proposed for new sources (1,100 lbs./MWh) and modified and reconstructed sources (no more stringent than 1,900 lbs/ MWh).

Commenters stated that the EPA's proposed emission reduction goals for existing fossil fuel

fired sources are far more stringent than the proposed goals for modified/reconstructed sources and for many states, new sources. The commenters stated that t he imposition of more stringent goals for older, less flexible, existing sources defies logic. The commenters stated that generally, new sources are required to adhere to more stringent requirements as new sources can install the
most current and state

- of

- the

- art emissions control technology during construction and can make siting and design decisions necessary to best install and operate those technologies; new sources can be designed and constructed in compliance with both Section 111 and Section 112 in t he first place. The commenters stated that this is demonstrated by EPA's own proposed NSPS for new
coal

- fired EGUs requiring the level of emissions achievable through installation of partial carbon capture and storage and through operation of combined cycl e plants for new natural gas

- fired turbines; EPA does not propose these same requirements for existing coal

- fired EGUs because it is impractical and unachievable to mandate this technology on existing units after they have been
built.

Response 23 : We belie ve the final guidelines set an achievable emission performance level for the affected EGUs, and the apples

- to

- oranges comparison of the stringency of standards under section 111(b) does not alter that conclusion.

Comment 24 : Commenters requested that the EPA withdraw the proposed rule because EPA has no authority to enforce the measures contained in its Proposal, and it is therefore unlawful.

The commenters stated that the EPA cannot adopt a federal plan that governs the order of dispatch, that requires s tate agencies to run energy efficiency programs, or that would order the construction and operation of renewable energy generation sources. Further, the commenters noted that state agencies do not have the authority to regulate the activities of cooperativ es and municipal power providers. The commenters stated that all of this demonstrates how unworkable the Proposal is.229 The commenters argued that Section 111 of the CAA authorizes a narrow regulatory program that applies to sources within listed source cate gories and that authorizes standards of performance based on measures that can be achieved through actions taken at the source itself. The commenters stated that the EPA's Proposal would require something very different: state enacted measures to reduce ag gregate emissions from each state's total fleet of existing EGUs, based on measures that individual EGUs cannot themselves implement or based on curtailment of operations. The commenters stated that the Proposal is inconsistent with the requirements of
the CAA and wanders so far afield from EPA precedent as to be unrecognizable as a rulemaking made pursuant to section 111.

Response 24 : We disagree. For the reasons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpre tation of the BSER is reasonable in light of the statutory text, statutory context, statutory purpose, and legislative history.

Additionally, we disagree with these comments because the authority or practical ability of the EPA to implement or enforce the BSER itself is irrelevant and based on a false premise. In fact, for new sources, the statute plainly forbids EPA from requiring sources to implement a particular
BSER.

By the same token, the EPA could not enforce many logistical aspects of a control requ irement
such as a scrubber

– for instance, the EPA does not have the authority to order the creation of companies that manufacture scrubbers, or order their construction or delivery on a certain schedule. The EPA need not have before it at the stage of det ermining the BSER all of the information regarding manufacturing, transportation of parts, or other logistical requirements to ensure that each scrubber gets constructed and delivered to a source. Nonetheless, the agency can determine the BSER premised on a reasonable assumption that all of those things can actually happen.

What is relevant is that the control requirements that the EPA identifies meet the statutory considerations to qualify as the BSER, which include that the owners or operators of the aff ected sources be able to implement the control measures and achieve their emission limits through those control measures. As we discuss elsewhere, that is the case for all of the building blocks in the final rule. Thus, the EPA can reasonably determine tha t the federally enforceable emission standards that would be set in a federal plan, just as in a state plan, are achievable by the affected EGUs and will be met either through the measures in the building blocks or, if the affected EGUs so choose, through other measures that contribute to its compliance. The agency will provide for the implementation of the standards of performance via the same types of regulatory mechanisms being made available to states in the emission guidelines.

Lastly, t o the extent th is comment objects to the portfolio approach, which the EPA is not finalizing, the comment is moot.230 Comment 25 : Commenters stated that EPA's inclusion of energy efficiency and renewable energy programs is inconsistent with "cooperative federalism."

Response 25: As discussed in the legal memo the clean power plan is consistent with the roles the 111(d) defines for EPA and the states. We note that we are not including energy efficiency
as an element of BSER in the final rule.

Comment 26 : Commenter s argued that the CPP is an impermissible regulation of emissions that are regulated elsewhere in the CAA.

The commenters stated that instead of setting standards of performance, EPA adopts the reduction or retirement of coal generation as the standard of performance for affected EGUs. The commenters stated that while not setting CO2 emissions limitations, the EPA takes credit for reducing other emissions associated with coal

- fired EGUs such as mercury, SOx, NOx, and PM by reducing coal generation. The com menters stated that these air pollutants are regulated elsewhere in the CAA and cannot justify the CPP. The commenters noted that many of the coal

fired EGUs impacted by the proposed rule have recently installed new control technology to
reduce these other air pollutants as required by EPA's other regulations. The commenters stated that these new controls are significant capital investments that will be stranded as a result of the
CPP.

Response 26 : The agency determined the BSER through a bottom

- up approac h to what is reasonably achievable in this source category. The co

- benefits, while significant, are not the basis for this rule. However, as recognized through many years of practice and consistent with longstanding policy in the content of regulatory impa ct analyses, the agency believes information it can provide about the co

- benefits of its actions are just as important as information about costs, in order to fully inform the public of the impacts of its regulations. Regarding so

- called “stranded assets,” the agency conducted a “stranded assets” analysis that shows that the emission performance levels in the final guidelines can be met without the retirement of affected EGUs before the end of their book life, and without the retirement of affected EGUs bef ore the end of the book life of capital

- intensive pollution control retrofits installed on those EGUs. For additional detail, see the July 15 docket memo titled “Stranded assets analysis.”

Comment 27 : Commenters stated that the EPA has clearly over

- reache d its authority under the Clean Air Act in several ways:

a) EPA's interpretation is fundamentally inconsistent with the Federal Power Act's (FPA) division of regulatory authority over the electric utility industry between the federal government
and the st ates.

b) EPA is effectively mandating a restructuring of state electric systems rather than regulating
the environment. EPA is assuming authority greater than even that which Federal Energy Regulatory Commission (FERC) has under the FPA.231 c) EPA's encroach ment on FERC authority includes an attempt to force utilities "not to serve" customers (i.e., through jeopardizing reliability and mandating reduced use by consumers),
which conflicts with the traditional FERC

- recognized utility obligation to serve custome rs. It also interferes with some RTO/ISO designated "reliability must run" arrangements.

d) EPA has exceeded its authority in setting state emission limits. Under the CAA, EPA is to "establish a procedure ... under which each State shall submit to the Administrator a plan" which establishes standards of performance. CAA Section 111(d)(1). By setting the limits, EPA has usurped state authority.

e) If a state fails to submit a satisfactory plan, EPA would be required to implement a federal plan. EPA do es not currently have the authority to enforce the requirements necessary to meet the emission rate limits established in the proposal. For example, EPA cannot currently legally
force re

- dispatch and increased utilization of NGCCs.

f) The Clean Air Act (" CAA") Section 111(a) defines Best System of Emissions Reduction (BSER). Even though the same definition of BSER applies to both Sections 111(b) and 111(d), EPA interpreted BSER much more liberally under the proposed 111(d) rule for existing units
than it did under the proposed 111(b) rule for new units. EPA cannot apply a different interpretation of BSER when setting performance standards for new EGUs under Section 111(b) than for existing EGUs under Section 111(d), when both sections are subject to the s ame BESR
definition

g) Because of the regulatory scope of the CPP, no single regulatory agency in Florida has adequate authority to implement the performance standards of the CPP. A Florida statute limits the regulatory scope of its Department of Environm ental Protection (FDEP) to environmental policy. Aspects of the CPP that are not environmental in nature will have to be addressed by other regulatory agencies and by the Florida Legislature. The elements of the four CPP building blocks are implemented/en forced by different state agencies and each element will likely require State legislative direction to those different agencies. The commenters expressed concern as to what it will have to do and to whom it will be required to demonstrate compliance or
de monstrate progress towards meeting goals. FDEP normally enforces EPA rules, but it has no statutory authority to enforce standards associated with generation re

- dispatch or the development of new renewable energy (RE) sources or the level of energy effici ency (EE) achieved by electricity end

- users. While RE and EE are within the sole purview of the Florida Public Service Commission (FPSC), it is not clear if any Florida regulatory agency can direct the

re

- dispatch of generation. This approach will require almost every state to develop a new regulatory construct to meet an unprecedented federal rule.

h) CPP implementation in Florida could also be hampered by state law that may require legislative review or ratification. Florida's legislature meets for one 60

- day session annually. In addition to this confounding any state plan's implementation, EPA should not discount the political reality of a legislature's inability to reach consensus on a state's development and implementation of the CPP requirements, esp ecially in states that are wary of expansive regulation.232 Response 27 : We disagree with commenters. The guidelines set emission performance levels for an air pollutant, GHGs (here, specifically, carbon dioxide), from a category of sources

— in this case, the category responsible for the largest amount of GHG emissions in the United States. We disagree that we are expanding our authority to include wholesale energy market regulation or state retail regulation nor are we inconsistent with the Federal Power Act’ s division of regulatory authority over the electric utility industry between the federal government and the

state . Our emission guidelines simply reflect an achievable emissions limit through the application of the BSER and do not in themselves require st ates 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 sai d 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 pl ants as a priority source category for regulation under CAA section 111. States that do not submit approvable state plans, possibly due to their lack of state law authority, will have a federal plan promulgated for them to accomplish the same result. Furth er, the flexibility inherent in the final rule allows states and affected EGUs to meet the final rule requirements without jeopardizing reliability. For example, an affected EGU needed to run for reliability reasons (including one that has a reliability mu st run contract) could trade for the necessary ERCs or allowances to continue generating. For a more comprehensive discussion of reliability issues, please see preamble section VIII.G.2. Finally, we note that we are not including building block 4

as a comp onent of the final rule.

Comment 28 : Commenters stated that this overall proposal design to achieve 30% or "meaningful" emissions reductions on a sector

- wide basis is clearly inconsistent with the Section 111(d) requirement for establishing state standar ds of performance on two specific existing source categories. The commenters stated that Section 111(d) regulation cannot be used as an "opportunity" to institute requirements that are not authorized by the Clean Air Act. The commenters stated that through out the proposal, EPA discusses the use of Section 111(d) to take advantage of "opportunities" to reduce carbon dioxide emissions, regardless of what Section 111(d) actually authorizes or requires. The commenters provided numerous quotes from the proposal to support their point.

Response 28 : As explained in the preamble, the final rule is consistent with the requirements of
the Act.

Comment 29 : Commenters stated that EPA failed to conduct an evaluation of how the measure will affect employment as required by section 321(a) of the CAA.

Commenters asserted that the proposed rulemaking is unlawful because EPA has

- as it admits

- failed to satis fy its mandatory obligation under section 321(a) of the CAA, 42 U.S.C. 7621(a), to conduct continuing evaluations of how employment is affected by EPA's actions under the Act. The commenters asserted that the Proposed Rule would in fact have a substantial employment impact and would cause widespread job losses. The commenters noted that section 321(a)'s233 requirements are mandatory, and EPA's conceded failure to comply with section 321(a) renders its proposed rulemaking unlawful. The commenters elaborated ext ensively on the following points (details omitted from this summary):

(1) Section 321(a) mandates "continuing evaluations" of employment impact. (a) The statute's use of the word "shall" establishes its nondiscretionary nature

(b) Section 321(a)' s legislative history removes any doubt about its mandate.

(2) EPA confesses that it does not perform continuous section 321(a) employment evaluations.

(3) EPA has wrongly interpreted section 321(a) as discretionary.

Similarly, commenters stated that secti on 321(a) of the CAA contains a simple and straightforward mandate: EPA "shall conduct continuing evaluations of potential loss or shifts of employment which may result from the administration or enforcement of the provisions of this chapter and applicable implementation plans, including where appropriate, investigating threatened plant closures or reductions in employment allegedly resulting from such administration or enforcement." The commenters stated that EPA failed to conduct such a study with respect to the Clean Power Plan or any other CAA legislation in the past six years, which is in direct defiance of the requirements of section 321(a). The commenters noted that, in a lawsuit filed against EPA by Murray Energy Corp. and other energy employers, the plaintiffs request that EPA be required to conduct a section 321(a) analysis with respect to its implementation of the CAA over the past six years to determine whether it resulted in "job losses or shifts in the coal industry." The commenters stated that plaintiffs further demand that EPA be enjoined from enacting new regulations

- such as the Clean Power Plan

- until this analysis has been completed. The commenters stated that without such a study, it will be impossible for states, employers, and the publ ic to comment meaningfully on the Proposed Rule.

Commenters stated that the EPA persists in its failure to consider in any significant way the employment impacts of Clean Air Act regulations like this one. The commenters stated that the Agency did not use a whole

- economy modeling approach here, which would have captured a much more accurate picture of the likely job losses from this proposal. The commenters stated that the EPA also continues to avoid undertaking an employment analysis under Section 321(a)

o f the Clean Air Act, which requires the continuous review of potential job losses and shifts in employment due to the implementation of the Act.

Response 29 : The EPA disagrees with these comments. Section 321(a) does not require EPA to conduct employment evaluations as part of the rulemaking process or as a prerequisite to the issuance of a rule. The broad language of Section 321(a) does not address the scope, frequency, or timing of employment evaluations, leaving these matters to the discretion of EPA. I n the exercise of its discretion, however, EPA does routinely evaluate employment impacts when it conducts new rulemaking. Indeed, contrary to the commenters’ patently false assertions, EPA conducted a robust employment analysis for this action, including a discussion of economic theory and employment, recent employment trends, and projected sectoral employment changes234 that may result due to the issuance of the final emission guidelines. See Chapter 6 of the RIA for the proposed rule and Chapter 6 of the RI A accompanying this final rule. EPA has conducted similar assessments for other rulemakings and continues to evaluate employment impacts generally and to refine its employment

- analysis methods. Together, these efforts constitute “continuing evaluations of potential loss or shifts in employment” for the purposes of Section 321(a).

To the extent that the commenters are suggesting that Section 321(a) requires EPA to evaluate the cumulative employment impacts of all its rules or prescribes a specific analytical tool, such
as whole

- economy modeling, Section 321(a) contains no such requirements. Nevertheless, in EPA’s continuing effort to advance the evaluation of costs, benefits, and economic impacts associated with environmental regulation, EPA has for med a panel of experts as part of its Science Advisory Board (SAB) to advise the Agency on the technical merits and challenges of using economy

- wide economic models to evaluate the impacts of regulations. The panel of experts will consider a variety of iss ues related to the use of economy

- wide modeling, including their technical appropriateness for assessing employment impacts. Answers from the panel of experts will help EPA assess whether economy

- wide models can be used to evaluate employment and other eco nomic impacts in the future.

Comment 30 : EPA should articulate clear limitations on the precedential effect of its system

wide approach to BSER

Commenters stated t he logical extension of the CPP's proposed systems

- based approach to
BSER would create near

- b oundless EPA authority in the context of the EPA regulating other sectors. Commenters said the EPA's proposed approach departs substantially from previous regulation in a number of ways. Commenters stated at the core of the EPA's proposal is a goal of
redu cing the operation of affected EGUs in favor of: (1) other section 111(d)

- regulated EGUs
with lower

- carbon intensity (Building Block 2); (2) EGUs not subject to regulation under 111(d) (Building Block 3); and (3) measures to reduce consumption of electrici ty (i.e. reducing the electricity consumption of completely independent customers, Building Block 4). Commenters stated the consequence of this approach is that the EPA has, in effect, expanded its reach beyond environmental regulation to regulation of the broader, energy system. Commenters said this broad approach has serious implications for the EPA's potential regulation of other sectors.

Commenters stated there is no apparent limit to the EPA's use of a "systems" approach to reducing greenhouse gas emis sions from the energy and transportation sectors. Commenters said in theory, the EPA could equally apply a systems approach to other sectors of the economy that it may next address, such as the extraction, refining and distribution of fuels; the movement o f goods and even the manufacturing of products. Commenters said it could, for example, establish state carbon intensity targets based on its own determinations regarding the relative carbon intensity of different raw materials or feedstocks, of refining or manufacturing processes or of distribution. Commenters stated it could impose obligations on states, and indirectly on retailers, for the carbon intensity implications of mode choice, such as whether raw materials, fuels, or goods should move by ship, rai l, pipeline or by other means of transport. Commenters said or in235 the realm of passenger vehicle use, it could impose state performance obligations based on levels of multiple occupancy that it deems achievable as a strategy to reduce vehicle miles travell ed (VMT). Commenters stated there may be significant national energy, transportation and
environmental benefits associated with advances in these sectors. Commenters said but it is highly doubtful that Congress intended for the EPA alone to determine the n ation's industrial, energy or transportation choices in such a single

- purpose manner. Commenters stated as proposed, the CPP does not define the dividing line between its approach to regulating EGUs and the potential for it to address other sectors of our economy in similar fashion. Commenters strongly urged the EPA to consider and define the limits to its authority to alleviate concern that the CPP's definition of BSER heralds a broad shift in the EPA authority beyond Congressional
intent.

Response 30 : 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 in light of the statutory text, statutory context, statutory purpose, and legislative history.

As we explain in secti on V. B. of the preamble and in the Legal Memorandum, 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 c ategory specific evaluation. As a result, the BSER is unique to each industry and even may be different for new and existing sources.

Moreover, it cannot be said that because environmental requirements may have an effect on the wholesale energy market tha t 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. Further, in
determinin g the BSER, the EPA is required to take into account “energy requirements,” which, as we discuss in section V., the D.C. Circuit has viewed as indicating that Congress understood that regulation of air pollution was intimately connected with energy needs a nd policy. In this rulemaking, the agency is considering energy requirements, on either or both an individual

source basis and an industry

- or nation

- wide basis. Among other things, the agency believes the measures in building blocks 2 and 3 should be incl uded in the BSER because they will conserve fossil fuel resources, both for individual sources and on an industry

- wide basis, and because renewable resources such as wind and solar are not just environmentally beneficial, but plentiful.
To the extent the r ule has the effect of incentivizing and accelerating the development and deployment of renewable energy technologies, this promotes the goal of reducing emissions while maintaining the supply of electricity, consistent with Congress’ direction to consider “energy requirements” in setting the BSER. Contrary to these comments, this rulemaking has precedent in other EPA rules, described in the preamble, that are based on generation shifting and renewable energy. Indeed, the relative scarcity of lower

- emitting fuels was at the center of Congress’s concerns at the time of the 1977 Amendments. As discussed in section V.B. of the preamble, one of the reasons Congress revised the requirements for determining the NSPS for new power plants was to free up the availabil ity of lower

- emitting fuels, such as low

- sulfur coal236 and oil, that could then be used by existing plants. Thus, in considering energy requirements on an industry

- or nation

- wide basis, it is appropriate to exercise expertise and balanced policy judgment in considering fuels availability and energy needs. The agency is not outside of its lawful authority in doing just that here.

Comment 31 : The EPA’s interpretation of BSER appears to conflict with the text of the Clean
Air Act

Commenters stated, EPA's posi tion that increasing emissions at NGCC units while reducing
them at coal

- fired power plants constitutes BSER appears to conflict with the text of the Clean Air Act. Commenters said, the Act contains two definitions of the term "standard of performance," on e of which defines the term as "a requirement of continuous emission reduction, including any requirement relating to the operation or maintenance of a source to assure continuous emission reduction." See 42 U.S.C. section 7602(l). Commenters said, therefo re, in order to satisfy the plain language of the Act, state performance standards must require continuous, or constant, reductions in emissions of CO2 from all affected sources covered by the
standards.

Commenters stated, EPA's proposal to require states to set performance standards based on re

dispatch from coal to natural

- gas fired units would directly contradict this requirement because it would require NGCC units to increase their emissions of CO2. Commenters said, thus, EPA's proposal to incorporate r e

- dispatch into the BSER on which states must base their standards of performance is plainly at odds with the CAA's requirement that performance standards for stationary sources such as NGCCs ensure "continuous emission reduction."

Response 31 : For the rea sons discussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, our interpretation of the BSER is reasonable in light of legal precedent, the statutory text, statutory context, statutory purpose, and legislative history. Moreover, impl ementing our emission guidelines will ensure reduced emissions at affected sources and will
not result in an increase in overall emissions of CO 2

.

Comment 32 : Commenters indicated that treating RE and EE measures as "implementing" measures because they facilitate sources' compliance with their standards of performance, incorrectly assumes that "implementation" can be understood to mean "facilitation." The

commen ters cited the Webster definition of "implement" to mean "to carry out"; "to give practical effect to and ensure of actual fulfillment by concrete measures[.]" The commenters said this definition is consistent with EPA's use of the word "implement," in pro posed Subpart UUUU, to mean "carry out." [40 CFR 60.5710] The commenters stated that "standards of performance" are what the states would use to achieve the emission performance level, and that the CPP's "emission performance levels" or "state goals" are n ot "standards of performance." The commenters said that the fact that renewable energy and energy efficiency measures might help states achieve their emission performance levels could mean, at most, that such measures help the states "implement" those emis sion performance levels; it does not mean that those measures237 would help EGUs achieve their standards of performance. The commenters also noted that EPA acknowledges that RE and EE measures "are not directly tied to emission reductions that
affected source s are required to make through emission limits" and "are not intended or designed to assist affected EGUs in meeting the performance standards." [79 FR 34,903]

Commenters stated that EPA takes the term "implemented" out of context when claiming that

measu res applicable to facilities outside the regulated source category are measures that "implement" standards of performance. The commenters stated that the "implementation and enforcement" measures that states must include under section 111(d)(1)(b) are for the state

established standard of performance.

Response 32 : The EPA is not finalizing the portfolio approach, which we proposed to allow states to include, as part of the federally enforceable state plan, RE and EE measures as “implementing” measures unde r section 111(d)(1)(b).

Comment 33: Overlap of section 112 and section 111 of the CAA.

Commenters stated that section 111(d) standards cannot apply to sources that are already subject to a standard under section 112. Commenters opposed that the proposal' s reliance on an "ambiguity" created by differing amendments to 111(d) by the House and Senate in the Clean Air Act Amendments of 1990, P.L. 101

- 549 (the "1990 CAA Amendments"), and commenters did not agree with the agency's claim that its interpretation o f this "ambiguity" is due deference under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) because section 108(g) of the 1990 CAA Amendments, as published in the Statutes at Large provides: "(g) REGULATION OF EXISTING SO URCES

- 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[,]" and section 302(a) of P.L. 101

- 549, which lists conforming amendments r elated to the adoption of Title III (the overhaul of section 112), contains the following: "(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)." Commenters believed that both sections of
P .L. 101

- 549 can be fully incorporated into the Act as amended without any conflict at all, and commenters believed that with these amendments, as codified in the U.S. Code, Congress simply expanded the list of independent regulatory actions that would disp lace regulation under 111(d).

Response 33: See section IV.B of the final rule preamble of the CPP for the EPA’s response to
the CAA section 112 exclusion.

Comment 34 Commenters stated that they are also unlawful and therefore cannot provide the requisite predicate for the 111(d) proposal. Commenters 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 the238 Competitive Enterprise Institute on Clear Air Act section 111(b) Carbon Pollu tion Standards (May 9, 2014).] Commenters said the modified

- source proposal is unlawful because there is no authority under Section 111(b) to issue a regulation covering only modified sources, which the Clean Air Act treats as "new" sources without excepti on. [See C.A.A. section 111(a)(1), 42 U.S.C. section 7411(a)(1) ("The term 'new source' means any stationary source, the construction or modification of which is commenced after" proposal or finalization, whichever is earlier, of Section 111 standards).] C ommenters said these defects preclude EPA from promulgating Section 111(d) standards until such time (if ever) that it adopts lawful Section 111(b) standards.

Commenters stated, EPA's proposal lacks a lawful New

- Source Standard predicate whereby the
EPA mu st first have established lawful standards under Section 111(b) for new sources in a particular industrial category.

Response 34: This comment is outside the scope of this rulemaking

Comment 35: Modification/reconstruction rule does not satisfy prerequis ite for 111(d) rule, i.e., standard for new source must apply first, not a standard for modified/reconstructed

Commenters stated that the modified/reconstructed source rule cannot serve as the necessary predicate, required by statute, for issuance of the existing source rule.

Commenters stated that the EPA's assertion that the modified or reconstructed source rule proposed concurrently with the proposed carbon pollution emission guidelines for existing EGUs provides the prerequisite for section 111(d) is c ontrary to the plain language of the statute and is logically flawed.

Commenters stated that where, as here, EPA has chosen to establish two separate categories of NSPS under section 111(b), one for truly new sources and one for modified sources, it cannot lawfully base the validity of a section 111(d) regulation for existing sources on the modified source regulation. The commenters stated that should the new source regulation in this scenario fail against legal challenge, so too must the section 111(d) reg ulation under the plain language of section 111(d). The commenters stated that this legal result is further supported by the practical reality that, as the three regulations for EGUs have been proposed by EPA, the section 111(b) regulation for existing EGU s has virtually no real world effect; neither does EPA's plan to concurrently regulate modified EGUs as existing EGUs under its section 111(d) regulation pass legal muster. The commenters stated that as a result, EPA's section 111(d) regulation will be lef t without the necessary section 111(b) regulation controlling "new" sources and this section 111(d) regulation will be invalid. The commenters stated that the EPA should abandon this rulemaking.

The commenters stated that as with the new source rule, the absence of costs or benefits from regulation demonstrates that there is no valid regulatory purpose; instead EPA's section 111(b) regulation is pretextual; undertaken only with an eye to claiming that a prerequisite for section239 111(d) has been met. The com menters stated that for jurisdictional and regulatory purposes pretextual regulation should be regarded as no regulation at all.

Response 35: EPA disagrees with this comment. Under section 111(d), EPA “shall prescribe regulations” with respect to emission s from existing sources if certain predicates are met. One of the predicates for regulation of a pollutant under 111(d) is that the pollutant be one “to which a standard of performance under this section would apply if such existing source were a new

sourc e.” 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 t he 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 “re construction” in 40 CFR 60.15(b) are considered to be new sources. Thus, standards for any of these three types of sources are properly considered to be “new source” standards, and any of these can serve as the predicate “new source” standard
under sectio n 111(d)(1)(A)(ii).

Comment 36: Standard must be rate

- based

Commenters stated that the language of section 111 requires EPA to provide guidance to states for existing sources to which a standard of performance under this section would apply if such existing source were a new source. The commenters stated that this mandates that the style of standards under 111(d) should be structurally the same as 111(b). The commenters stated that the programs do not have to be identical nor would such an outcome be anticipated by anyone but the "as if" tenor of 111(d) clearly denotes a congressional intent for similarity.

Response 36: We disagree with this comment. By its terms, section 111(d)(1) requires an applicable standard of performance under section 111(b), b ut does not mandate, or indicate congressional intent, that the form of the section 111(d) standards of performance must match the form of the section 111(b) standard of performance.

Comment 37: Allowance systems vacated under NJ v EPA

Commenters stated that any re

- proposed Section 111(d) rule must omit provisions such as allowance systems vacated under New Jersey v. EPA. Commenters stated that current Subpart B still contains remnants of the Clean Air Mercury Rule (CAMR), that was vacated in its entiret y in New Jersey v. EPA. The commenters stated that the decision vacated both the Delisting Rule40 and the CAMR; EPA has removed some but not all of the CAMR

- related regulation changes from Subparts A, B, Da, and HHHH in the CFR, but some CAMR

- related chang es to Subpart B are still there. The commenters stated that specifically, in 40 CFR Subpart B, regulation sections 60.21(f) (definition of emission standard) and 60.24(b)(1) (emissions240 standards and compliance schedules), still include "allowance system" a s an allowable method for states to set an emission standard under Section 111(d); this is contrary to the New Jersey v.
EPA decision that vacated the entire CAMR.

Response 37: The EPA disagrees that the Emission Guidelines must omit provisions for
allowan ce systems. The EPA also disagrees with the commenters that 40 CFR 60.21(f) and 40 CFR 60.24(b)(1) are not promulgated and effective. These subpart B framework regulations are promulgated and effective, and they authorize the use of allowance systems as a form of emission standard. However, to resolve any residual doubt that allowance systems are an acceptable form of emission standard in the Clean Power Plan, we are including regulatory text in the final subpart UUUU regulations authorizing the use of allo wance systems as a form of emission standard under section 111(d). We recognize that the subpart B regulations to which the commenters refer were originally amended in 2005 to include recognition of allowance systems
as a form of emission standard in the C lean Air Mercury Rule (CAMR) (70 FR 28606, 28649; May 18, 2005). As the commenters note, CAMR was vacated in its entirety in New Jersey v.
EPA , 517 F.3d 574 (D.C. Cir. 2008). However, the reason for vacatur was wholly unrelated to the question of whether a n allowance system could be a form of emission standard. In response
to the New Jersey decision, the agency removed CAMR provisions from the Code of Federal Regulations. The agency chose to retain the language of 60.21(f) and 60.24(b)(1) generally recogniz ing allowance systems. This language is broader than CAMR and unrelated to the
reasons for its vacatur. The EPA re

- promulgated these provisions in the final Mercury and Air Toxics Standard (MATS) in February of 2012 (77 FR 9304, 9447; Feb. 16, 2012). Even if this were not the case, the agency would not concede that simply because “allowance systems” were not provided for in the framework regulations of subpart B, they could not be relied upon in specific emission guidelines, such as these for carbon dioxide . The framework regulations generally serve a gap

- filling role where there are not more specific provisions laid out in the relevant emission guidelines. In order to resolve any question whether allowance systems are authorized under the Clean Power Plan, we are including regulatory text in subpart UUUU to make this authorization explicitly clear.

Comment 38: Can EPA require of the states what it cannot do itself?

Commenters stated that a related problem arises from EPA's effort to force state and even federal (for regional systems) utility regulators to be participants in its "BSER." Commenters said the statutes governing those regulatory processes typically require consideration only of cost and reliability when approving generation projects and rates, except as may be allowed under specific, legislatively directed renewable portfolio standards. Commenters said that EPA's assumptions about each state's capabilities fail to account for the fact that slowing or shuttering coal and gas plants and replacing them with wind turbines and solar arrays may raise costs and diminish reliability. Commenters said that the market, as monitored and managed by the utility regulatory system and system operators, takes care of optimizing the generation mix from these

two standpoints. Commenters said the ESPS disturbs the intended operation of those regulatory systems.241 Response 38: As we explain in sections V.A. and V.B. of the preamble, our emission guidelines simply reflect an achievable emissions limit through the applic ation 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 re quirements 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 abl e to choose from a wide range of emission reduction measures, including measures that are not part of the BSER, to meet the final rule’s requirements in the most cost

effective and efficient manner possible.

1.15.2 APA issues

Comment 1 : Commenters sta ted that the proposal is entitled to deference.

Commenters stated, the Clean Air Act defines a "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."

Comment ers stated, Congress did not define "best system of emission reduction" nor did it define "system," and the Act does not expressly preclude EPA from considering the availability of measures that reduce the carbon intensity of affected EGUs. Commenters said , this discretion for the Agency is in contrast to other sections of the Act, where Congress requires EPA to consider specific control technologies. Commenters said, for example, Congress clearly directed EPA to require the installation of the Best Availab le Control Technology under section 169(3) and the Best Available Retrofit Technology under section 169A(g)(2). Commenters said, Congress's use of "system" in section 111 as opposed to "technology" signals its clear intent to
allow EPA the discretion to id entify the best means to reduce emissions from a source category.

Commenters stated, this lack of detail from Congress makes it clear that Chevron deference is appropriate and agency expertise is necessary to design specific requirements. Commenters said, the Court recognized this in AEP v. Connecticut:

The Clean Air Act entrusts such complex balancing to EPA in the first instance, in combination with state regulators. Each "standard of performance" EPA sets must "tak[e] into account the cost of achieving [ emissions] reduction and any nonair quality health and environmental impact and energy requirements." section 7411(a)(1), (b)(1)(B), (d)(1). . . . It is altogether fitting that Congress designated an expert agency, here, EPA, as best suited to serve as pri mary regulator of greenhouse gas emissions."242 Commenters stated, thus, it is EPA's role to identify what emission reduction measures can reduce emissions from the source category based on its examination of existing state and industry practice.

Response 1 : The agency believes this comment is generally consistent with its own views.

Comment 2 : Commenters stated, EPA's interpretations of section 111(d) are unreasonable, arbitrary, and capricious, and are not entitled to deference.

The commenters noted, "[W] hen an agency

- administered statute is ambiguous with respect to what it prescribes, [courts will presume] Congress has empowered the agency to resolve the ambiguity." Commenters said, in such instances, courts will defer to an agency's "permissible

constru ction of the statute." Commenters said, the agency's interpretation must be "reasonable," however. Commenters said, even where Congress has explicitly directed the agency to promulgate rules, courts will not give "[s]uch legislative regulations ...controll ing weight [if] they are arbitrary, capricious, or manifestly contrary to the statute." Commenters said, courts will not defer when "the statute simply will not bear the meaning the [agency] has adopted." Commenters said, for example, "[t]he EPA may not co nstrue [a] statute in a way that completely nullifies textually applicable provisions meant to limit its discretion."

Commenters stated, in weighing an agency's interpretation, the court "must be guided to a degree by common sense as to the manner in whic h Congress is likely to delegate a policy decision of [significant] economic and political magnitude to an administrative agency." Commenters said, reviewing courts "expect Congress to speak clearly if it wishes to assign an agency decisions of
vast 'econo mic and political significance.'" Commenters said, 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." Commenters said, an agency interp retation that "would bring about an enormous and transformative expansion in [its] regulatory authority without clear congressional authorization will be rejected as unreasonable."

Response 2 : The agency disagrees. As discussed in the Legal Memo, its inte rpretations of section 111(d) are reasonable, and in any case are entitled to deference because the agency is tasked with implementation of the Clean Air Act, including section 111(d). The commenter, in the agency’s view, reads certain dicta in UARG out of context. In Utility Air Regulatory Group v.
EPA , 134 S. Ct. 2427 (2014), the Court recognized that greenhouse gases like carbon dioxide are “atypical pollutants” that are emitted in “vast quantities.” Id. at 2442; see also AEP v.
Connecticut , 131 S. Ct. 2 527, 2538 (2011) (“Congress could hardly preemptively prohibit every discharge of carbon dioxide unless covered by a permit.”). Notably, the Court in UARG recognized, and did not disturb, the agency’s conclusion that greenhouse gases are a pollutant
under the CAA because they endanger public health and welfare by fostering global climate change. See UARG , 134 S. Ct. at 2436

- 37. Moreover, the Supreme Court has repeatedly affirmed the authority and responsibility of the agency, charged with implementing the C lean Air Act, to deploy its expertise and the exercise of its discretion to fashion workable regulatory frameworks243 for greenhouse gases. UARG , 134 S. Ct. at 2441, 2442 (directing the agency to use its discretion and look to “statutory context” in applying the CAA to greenhouse gases); AEP , 131 S. Ct. at 2539 (“Congress delegated to EPA the decision whether and how to regulate carbon dioxide emissions from power plants . . . .”). The UARG dicta reflect the facts at issue in that case, regarding implications for CAA permitting programs of an interpretation of the statute the agency itself recognized was likely not consistent with congressional intent. The agency’s approach in this rule does not create conflicts with clear statutory text like numeric thresholds and would be recognizable to the Congress that enacted the law. Further, it is based on a common sense approach to reducing emissions of the GHG air pollutant from the source category that is singularly responsible for the largest quantity of its emission s in the United
States.

Comment 3 : Several commenters stated that the proposal is arbitrary and capricious.

Commenters provided comments identifying aspects of the Proposed Regulation that, as currently drafted, are arbitrary, capricious, unsupported, an d unlawful.

Commenters stated, section 307(d)(9)(A) of the CAA allows a court to reverse a rulemaking by EPA that is found to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." Commenters said, the proposed rule i s riddled with contradictions and inconsistencies. Commenters said, therefore, as proposed, it is arbitrary and capricious.

Commenters stated, an EPA rulemaking may be invalidated if it is "arbitrary, capricious, an abuse of discretion, or otherwise not i n accordance with law," or is "in excess of statutory jurisdiction, authority, or limitations, or short of statutory right." Commenters said, a rulemaking is both not in accordance with law and in excess of statutory authority if it asserts the power to

go "beyond what Congress has permitted it to do." Commenters said, and it is arbitrary and capricious if, among other things, its terms or application are premised upon a fact or factor that "Congress has not intended [EPA] to consider," or fails to articula te a "rational connection
between the facts found and the choice made."

Response 3 : The agency must disagree: our action is lawful and reasonable. Blanket, conclusory assertions that the agency’s action is arbitrary and capricious or unlawful, without f urther detail, do not give the agency a basis to evaluate a particular concern or complaint.

Comment 4 : Commenters stated that the EPA's nationwide BSER analysis is arbitrary and capricious because it fails to account for state

- specific conditions

Commenters stated, in the proposed rule, EPA conducts its BSER analysis on what is essentially a uniform national level, using State electricity generation data from 2012 as a starting point. Commenters said, thus, aside from plugging State

- specific genera tion data into a national uniform model, EPA fails to address a single State specific condition that may warrant additional244 scrutiny and, in some cases, a departure from EPA's generally applicable BSER analysis. Commenters said, unless EPA addresses the pr actical reality that the nation's energy infrastructure is highly dependent upon State specific issues in virtually every instance, EPA's BSER analysis will be arbitrary and capricious.

Commenters stated, first, for example, EPA's treatment of different ty pes of zero

- emission sources in conducting its BSER analysis results in arbitrary and disproportionate treatment of States. Commenters said, for renewable energy sources other than hydroelectric power, EPA includes all electricity generation, including fut ure generation from new sources. Commenters said, for nuclear energy, EPA includes all electricity generation from sources under construction and six percent of electricity generation from existing sources. Commenters said, for hydroelectric power, EPA exc ludes all existing electricity generation. Commenters said, for States such as Arizona, with significant amounts of nuclear and hydroelectric generation, this has a significant effect on the emission reduction target that EPA proposed for the State through its BSER analysis.

Commenters stated, second, by conducting a State

- level BSER analysis that assumes a perfectly fungible electricity generation and transmission system, EPA failed to consider the challenges faced by States which are members of multiple R TOs. Commenters said, in such States, for example, dispatching decisions are made by different regulators for different parts of the State and electricity may not be able to move easily between RTOs. Commenters said, thus, NGCC
facilities located in one RT O may not be capable of substituting for a coal

- fired EGU located in a different RTO. Commenters said, in the same manner, portions of a State with potential for new renewable energy capacity may not be able to serve growing demand in a different RTO.
Comm enters said, South Dakota, for example, has two fossil fuel

- fired EGUs: the gas

- fired Deer Creek Generating Station, which is dispatched through the SPP, and the coal

- fired Big Stone plant, which is dispatched through MISO. Commenters said, despite the fac t that these facilities serve different customer bases and are subject to dispatching by different system operators, EPA assumes that because they are located in the same State, electricity can be shifted seamlessly from Big Stone to Deer Creek. Commenters said, similar problems may exist in other States, such as Arkansas, where electricity is managed by multiple ISOs or RTOs. Commenters said, thus, for States with multiple ISOs or RTOs, the ability of a State to reduce its emissions using the four Building Blocks may be significantly less than what EPA has projected. Commenters said, it is arbitrary and capricious for EPA to set State emission reduction goals on a system basis without considering how the electricity system in each State is managed.

Commente rs stated, third, EPA has failed to account for and credit States that have taken early action with respect to renewable energy and energy efficiency programs. Commenters said, for example, States such as Pennsylvania have already enacted RPS standards and EERS programs and have made strides in implementing those programs. Commenters said, the same concerns arise in the ERCOT grid in Texas. Commenters said, to place those States on equal footing with other States, EPA should give the early actors credit for the emission reductions they achieve in the same manner that EPA proposes to give credit to other States that initiate such programs in the future. Commenters said, instead, EPA has used those early actions to set a more stringent245 baseline for early actin g States and is demanding more, rather than less, in the form of future emission reductions. Commenters said, in this manner, EPA is treating different States in an arbitrary and capricious manner.

Response 4: We disagree with commenters. While the EPA is setting a uniform CO 2 emission performance rate for each of two affected source subcategories, there is flexibility in the final rule with respect to how states and affected EGUs meet the final rule requirements. 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 responsibi lity 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 and taking into account the unique circumstances, set of resources, and infrastructure within their own states. Additionally, trading of ERCs or allowances provides affected EGUs with an additional way to comply with final rule requirements.

We note that with respect to the nucl ear issue raised by commenters, the final rule does not include new or existing nuclear generation in BSER, but does allow new nuclear to be eligible for compliance. This includes capacity uprates resulting from a relicensing process. We are also
not inclu ding existing RE (including hydropower) in the BSER calculation. However, we are including new RE as BSER. This includes capacity uprates at an existing RE facility. For a more comprehensive discussion of these issues, please see preamble section V.E. and the GHG Mitigation Measures TSD.

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 emi ssion 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 technology

- based sta ndards 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 to 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 reduction opportunitie s 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 r ule preamble at section VIII.B.2.

Comment 5 : Commenters stated that the EPA's nationwide BSER analysis is arbitrary and capricious because it fails to account for state

- specific conditions246 Response 5 : The final guidelines took into account this and similar comments in determining the emission performance rates. In particular, we used data from the least stringent region in order to ensure achievability nationwide. Further, the agency calculated state

- s pecific equivalent goals to the performance rates that reflect the unique mix of affected EGUs in each state. And we are allowing states to design state plans that take into account state

- specific issues.

Comment 6 : Commenters stated, first, for example, E PA's treatment of different types of zero

emission sources in conducting its BSER analysis results in arbitrary and disproportionate treatment of States. Commenters said, for renewable energy sources other than hydroelectric power, EPA includes all electri city generation, including future generation from new sources. Commenters said, for nuclear energy, EPA includes all electricity generation from sources under construction and six percent of electricity generation from existing sources. Commenters said,
fo r hydroelectric power, EPA excludes all existing electricity generation. Commenters said, for States such as Arizona, with significant amounts of nuclear and hydroelectric generation, this has a significant effect on the emission reduction target that EPA proposed for the State through its BSER analysis.

Response 6 : EPA made adjustments in the final rule to address these concerns , and we note that nuclear power is no longer included in the BSER while certain hydroelectric is included; both of course, may be used to contribute toward meeting the emission performance level

. In general, the agency set goals that are based on achievability while avoiding extremely disproportionate emission reduction targets that would vary dramatically according to which state a unit is located
in. We note that comments such as in 14.1 are in tension with comments such as in 14.2. On the one hand, some commenters complained that the agency was not focused on unique state and facility

- specific circumstances. On the other hand, oth er commenters complained that the agency proposed emission reduction goals that varied too widely from state to state. Our final rule strikes a balance between these two equally valid concerns and produces an emission performance rate that could be applied uniformly nationwide, but which also provides for equivalent expression as state

- level rate or mass

- based goals but which do not vary too wildly from one state to another. Ultimately, of course, states will have the flexibility to design state plans that achieve the emission performance levels in a way that works best for the units in their

state.

Comment 7 : Commenters stated, second, by conducting a State

- level BSER analysis that assumes a perfectly fungible electricity generation and transmission syste m, EPA failed to consider the challenges faced by States which are members of multiple RTOs. Commenters said, in such States, for example, dispatching decisions are made by different regulators for different parts of the State and electricity may not be ab le to move easily between RTOs. Commenters said, thus, NGCC facilities located in one RTO may not be capable of substituting for a coal

fired EGU located in a different RTO. Commenters said, in the same manner, portions of a State with potential for new re newable energy capacity may not be able to serve growing demand in a different RTO. Commenters said, South Dakota, for example, has two fossil fuel

- fired EGUs: the

gas

- fired Deer Creek Generating Station, which is dispatched through the SPP, and the coal

- f ired Big Stone plant, which is dispatched through MISO. Commenters said, despite the fact that these247 facilities serve different customer bases and are subject to dispatching by different system operators, EPA assumes that because they are located in the sa me State, electricity can be shifted seamlessly from Big Stone to Deer Creek. Commenters said, similar problems may exist in other States, such as Arkansas, where electricity is managed by multiple ISOs or RTOs. Commenters said, thus, for States with multi ple ISOs or RTOs, the ability of a State to reduce its emissions using the four Building Blocks may be significantly less than what EPA has projected. Commenters said, it is arbitrary and capricious for EPA to set State emission reduction goals on a system basis without considering how the electricity system in each State is managed.

Response 7 : EPA has addressed these comments through the final determination of the BSER, which reflects a more regionalized approach to the formula. Further, commenters misund erstand that the agency is not mandating implementation of the building blocks. States and sources have flexibility to achieve their targets through BSER and non

- BSER measures.

Comment 8 : Commenters stated, third, EPA has failed to account for and credit S tates that have taken early action with respect to renewable energy and energy efficiency programs. Commenters said, for example, States such as Pennsylvania have already enacted RPS standards and EERS programs and have made strides in implementing those p rograms. Commenters said, the same concerns arise in the ERCOT grid in Texas. Commenters said, to place those States on equal footing with other States, EPA should give the early actors credit for the emission reductions they achieve in the same manner tha t EPA proposes to give credit to other States that initiate such programs in the future. Commenters said, instead, EPA has used those early actions to set a more stringent baseline for early acting States and is demanding more, rather than less, in
the for m of future emission reductions. Commenters said, in this manner, EPA is treating different States in an arbitrary and capricious manner.

Response 8 : EPA has addressed these comments to some extent in the final determination of the BSER, by reducing the di sparity in goal

- setting between states. The EPA is also establishing a mechanism in the final rule that states can use to recognize certain early actions to increase RE and EE prior to the beginning of the interim performance period in 2022.

Comment 9 : Com menters stated, fourth, EPA is treating different States differently by requiring emission reductions that vary dramatically with respect to the amount of GHGs currently emitted by affected EGUs in the State. Commenters said, for example, Texas is responsi ble for more than 20% of the total CO2 reductions required under EPA's BSER analysis, despite the fact that is only responsible for 11% of the total CO2 emitted from fossil fuel

- fired EGUs nationwide. Commenters said, the reductions required by sources wit hin a State should bear some resemblance to the CO2 emissions for which that State is responsible. Commenters said, it is arbitrary and capricious for EPA to require some States to shoulder a burden so far out of line
with their relative of CO2 emissions.

Response 9 : Ultimately the agency set the BSER, the emission performance rates, and the equivalent state goals based on its expert determination of what is achievable. The final numbers have changed from the proposal to reduce disparities between states. However, ulti mately, the agency is not charged under section 111(d) to achieve perfect equality among states but to248 determine the degree of emission limitation that is achievable using the best system of emission
reduction.

Comment 10 : Several commenters suggested tha t EPA re

- propose the rule.

Commenters stated that the EPA has already publicly acknowledged that changes will be made to the final rule. The commenters recommended that the EPA should provide a comment period after any final rule is issued because of the rule's complexities.

Commenters were concerned that the current rule has such significant uncertainties that comments provided herein are based on assumptions which may not prove to be true in the final Rule. Commenters said, this concern stems from three basic issues. Commenters said, first, to a degree that appears to be singularly unprecedented, EPA has requested comment on virtually every aspect of the Rule including, most significantly, underlying principles that are fundamental
to how the Rule will b e implemented. Commenters said, how EPA chooses to respond to these comments could alter the Rule to a degree that its final form is virtually unrecognizable. Commenters said, second, EPA has chosen to set a standard based on assumptions of state
actions t hat may not come to pass

- calling into question compliance pathways to meet EPA's goals. Commenters said, finally, as affected entities that will have a significant compliance obligation, the setting of goals based on actions that lie well outside our sph ere of influence calls into question our ability to comply.

Commenters stated that the high degree of uncertainty in how EPA might choose to finalize this rule suggests EPA has an obligation to offer an additional round of comments on a more focused
rule. The commenters stated that the EPA should reissue the current Rule after assessing and answering some of the myriad of questions it poses in the rule to allow for a more narrowly tailored analysis by both states and affected entities. The commenters stated that EPA has proposed a legally vulnerable, massive expansion of CAA authority over energy decisions and energy markets in a manner contrary to the statute and inconsistent with existing EPA regulatory guidance and prior statutory interpretations. Comment ers stated that the EPA should withdraw
this Rule and re

- propose the Rule based on firmer legal grounds and inside the fence emissions
reductions. The commenters acknowledging that EPA may be reluctant to limit reductions to inside the fence actions, we ra ise the concern that EPA's Rule is insufficiently developed to be finalized, even after comments are filed. The commenters stated that given the number of unresolved issues and questions posed for comment by EPA, the Proposed Rule should at the very least be re

- proposed after EPA has had the opportunity to evaluate the first round of comments and refine the proposal. The commenters stated, however, EPA must be advised that
failure to withdraw the Rule and reissue it based on inside the fence reductions will inject enormous regulatory and legal risk into a system that already is under considerable strain due to
other environmental and market constraints.

Commenters stated, on November 13, 2014, EPA issued a Technical Support Document regarding the translatio n of emission rate

- based CO2 goals to mass

- based equivalents (TSD on Rate to Mass). Commenters said, when EPA issued its TSD on Rate to Mass, it set new mass

based limits for each state. Commenters said, these new limits effectively revised the CPP.249 Commen ters said, however EPA neglected to re

- propose the rule after this substantial revision. Commenters said, EPA's issuance of the TSD on Rate to Mass without re

- proposing the CPP violates the Administrative Procedures Act. Commenters said, EPA is sidesteppin g the procedures that were established to ensure that the regulated community has adequate time to provide meaningful comments on proposed rules. Commenters said, eighteen days is not sufficient time to provide in depth analysis and comment on this critica l revision to the CPP. Commenters said, EPA must re

- propose the CPP with the revised limitations from the TSD on Rate to Mass and allow adequate time for comment.

Commenters said this rule proposal is more appropriately a pre

- proposal, given the many

uncer tainties within the proposal itself and the roughly 200 instances in which EPA requested comments on its proposed approach. Commenters said, with this late publication of the "Additional Information Regarding the Translation of Emission Rate

- Based CO2 Goal s to Mass

Based Equivalents," coupled with the recent publication of the NODA, EPA again underscores New Jersey's position that the rule proposal simply leaves too many significant and material terms in doubt for regulated entities to evaluate and provide comments. Commenters said, given these deficiencies, the Rule Proposal does not comply with the requirements of the Administrative Procedure Act (APA). Commenters said, EPA should

--- as it did with standards for new EGUs under section 111(b)

--- issue a n ew proposal with more specificity, so that commenters can actually understand the intricacies of the proposed rule, which is impossible to glean from the current proposal. Commenters said, additionally, if the proposed rule is adopted as is, it will not on ly be violative of the APA, but also void for vagueness under the Due Process Clause of the Fifth Amendment. See, e.g., Fed. Cmmc'ns Comm'n v. Fox Television Stations, 132 S. Ct. 2307 (2012). Commenters said EPA does not propose a clear method to determine compliance with the proposed goals, which is necessary to understand the proposal and a basic component of any performance standard.

Response 10 : The agency has been committed to transparency and public engagement throughout the rulemaking process. The p roposed rule and subsequent notices satisfy the procedural requirements of the CAA and/or the APA by providing meaningful notice and gave giving commenters an adequate basis on which to comment. In addition to providing notice and soliciting comment in the Federal Register, EPA conducted an extensive outreach effort including numerous meetings with stakeholder groups. Many of commenters’ suggestions have been reflected throughout the final rule. With respect to the Fifth Amendment due process clause
asserti on, the agency notes that in addition to its legal disagreement with this comment, we believe such a comment may reflect a misunderstanding of the rule. The agency is issuing emission guidelines for states to follow in the design of approvable state plans. Where the commenter sees “vagueness” the agency sees a high degree of flexibility for states reflective of the structure and purpose of section 111(d). In any case, the requirements states must follow in order to have approvable plans are clearly set fort h in the final rule.

Comment 11 : Commenters stated, as part of this NODA, EPA is providing insufficient additional "data" for states to be able to provide meaningful comments on the alternatives to the June 18, 2014 proposal, let alone any analysis of feas ibility or costs. Commenters said, if EPA is250 to consider finalizing any of these alternatives as part of the Section 111(d) requirements, EPA must provide states with a full proposal with all supporting data, analysis, legal support, and adjusted goals so that states may provide meaningful comments.

Commenters stated, the inadequacy of EPA's public comment process for this Proposal is most egregiously highlighted by the Agency's release of a NODA on October 28, 2014 and of the
Translation of the Clean Powe r Plan Emission Rate

- based CO2 Goals to Mass

- Based Equivalents Technical Support Document ("Rate to Mass TSD") on November 6, 2014, a mere thirty

- four and twenty

- five days prior to the comment deadline, respectively. Commenters said,
these documents raise numerous additional issues, alternatives, and methodologies, and the public needs additional time to prepare fully informed and well

- considered comments on the
issues that have been raised for the first time in the NODA and Rate to Mass TSD.

Commenters stated, EPA acknowledges that the various alternative approaches the Agency provided for the first time in the NODA could fundamentally alter the proposed emission guidelines and lead to more stringent goals for all or some states. Commenters said, EPA als o recognizes that many issues in the NODA

- and the four Building Blocks generally

- "interact with each other." Commenters said, and, realistically there is no way to assess how stringent any state's goals will actually be unless EPA provides additional d ata and support for these new alternatives and methodologies. Commenters said, because of these gaps, EPA cannot finalize any of the changes discussed in the NODA without issuing a supplemental proposal that clarifies the Agency's position, provides the ba sis and purpose for its approach pursuant to CAA section 307(d)(3), provides specific details of how each state would be affected, provides sufficient economic analysis of the changes, and provides proposed regulatory text. Commenters said, none
of these t hings are present in the NODA.

Commenters stated, CAA section 307(d)(3) requires EPA to include in its rulemaking docket on the date of publication of a proposed rule "[a]ll data, information, and documents . . . on which the proposed rule relies." Comment ers said, EPA's failure to provide the Rate to Mass TSD at the time of proposal violates this requirement and demonstrates that EPA's proposal remains a work in progress that is more akin to an Advanced Notice of Proposed Rulemaking than a proposed
rule. C ommenters said, even more fundamentally, EPA's issuance of the Rate to Mass TSD twenty

- five days prior to the comment deadline flies directly in the face of CAA section 307(h), which requires EPA to provide "a reasonable period for public participation of at least 30 days . . ." prior to promulgating regulations under the CAA. Commenters said, EPA's late issuance of the
NODA and the Rate to Mass TSD and the number of new issues first raised in these documents leaves the Agency with no permissible choice but to withdraw its June 18, 2014 proposal, re

propose it along with all supporting materials, and provide an adequate time for the public to

comment.

Commenters expressed concern that the current rule that the EPA has requested or invited
comment on virtuall y every aspect of the Rule including, most significantly, underlying principles that are fundamental to how the Rule will be implemented. The commenters stated that the EPA has chosen to set mandated state goals based on assumptions of state actions that251 m ay not come to pass, and that affected entities that will have a significant compliance obligations based on actions that lie well outside their sphere of influence. The commenters stated that the high degree of uncertainty in how EPA might choose to final ize this rule suggests EPA has an obligation to offer an opportunity for an additional round of comments on a more focused rule that meets all section 111(d) requirements. The commenters asserted that the EPA should issue a revised proposal for public comm ent, but only after assessing and answering some of the myriad of questions it poses in the rule to allow for a more narrowly tailored analysis by
both states and affected entities.

Commenters stated, EPA should withdraw this Rule and re

- propose the Rule based on firmer legal grounds and inside the fence emissions reductions. Commenters said, acknowledging that EPA may be reluctant to limit reductions to inside the fence actions we raise the concern that EPA's Rule is insufficiently developed to be finali zed even after comments are filed. Commenters said, given the number of unresolved issues and questions posed for comment by EPA, the proposed rule should at the very least be re

- proposed after EPA has had the opportunity
to evaluate the first round of com ments and refine the proposal. Commenters said, however, EPA
should understand that failure to withdraw the Rule and reissue it based on inside the fence reductions will inject enormous regulatory and legal risk into a system that already is under
consider able strain due to other environmental and market constraints.

Response 11 : The basis for the agency’s actions under the Clean Air Act and other statutes is provided in the administrative record, which is publicly available. The agency has been
committed to transparency and public engagement throughout the rulemaking process. The proposed rule and subsequent notices satisfy the procedural requirements of the CAA and/or the APA by providing meaningful notice and gave giving commenters an adequate basis on w hich to comment. In addition to providing notice and soliciting comment in the Federal Register, EPA conducted an extensive outreach effort including numerous meetings with stakeholder groups. Many of commenters’ suggestions have been reflected throughout the final rule.

Comment 12: Commenters identified instances where it would be beneficial for EPA to provide further guidance or clarification. Commenters said, before going final with the two 111(b) actions and this Proposed Rule, WDEQ requests EPA provid e opportunity for further public evaluation and comment of these interrelated proposed regulations. Commenters said, due to the quantity of requests for comment, and the level of detail EPA is seeking comment on, this proposal more resembles an advanced no tice of proposed rulemaking. Commenters said, in addition to the challenge of assessing a lengthy rule proposal of such premature condition, WDEQ had little time to fully evaluate the subsequent NODA published on October 28, 2014, nor the Technical Support Document (TSD) on conversion from rate based to mass based state goals released on November 6, 2014. Commenters said, due to the heightened public interest in this, and the 111(b) proposed rules, WDEQ anticipates that the EPA will receive extensive

commen ts and data, which will likely influence and change the rule. Commenters said, moreover, the interdependency of all three rule proposals does not allow them to be severable.252 Commenters said, fundamental pieces of these rules are dependent on each other, an d a decision made for one rule could have consequences in another. Commenters said, as such, this and
the 111(b) rule proposals should be changed to follow the intent and authority as specified in
Section 111 of the CAA and re

- proposed jointly.

Commenters stated that considering the numerous requests for comment from EPA (indicating that EPA has not resolved many fundamental issues) and the late release of additional information, the Final Rule will look very different from the Proposed Rule. The commenters
stated that this is especially concerning to states, since goals and compliance options may change significantly without opportunity for further comment unless EPA provides an additional comment period. The commenters stated that one option is for EPA to release a revised Proposed Rule with an appropriate comment period before releasing the Final Rule. The commenters
stated that an alternative is to continue ongoing outreach and afford stakeholders an additional comment period focusing on mass

- based goals and the rate

- to

- mass translation methodology.
The commenters also stated that also recommended an additional comment period should EPA alter the goal setting methodology or limit the compliance options available to states. The
commenters stated that if the Final Rule is significantly different from the Proposed Rule, they recommend the first option

- releasing a revised Proposed Rule with an appropriate comment period to allow states and other stakeholders to analyze the changes. Commenters continued that

t he ambiguity in the Proposed Rule, the current data gaps, and the lack of time to fully analyze the data create uncertainty which may lead to unintended consequences.

Commenters stated that the authority required to implement BB #3 and BB #4 and likely BB #2 appear to be well beyond the authority granted to EPA by the CAA. The commenters stated that the rule as proposed is not only legally vulnerable but also inconsistent with existing EPA guidance and prior statutory interpretations. The commenters stated that the unnecessarily accelerated timelines and emission reduction goals set forth in the proposal would put at risk the reliability of the electric grid and affordability of electric power if finalized as proposed without providing significant global tem perature reduction. The commenters stated that the EPA should
withdraw this rule and re

- propose it based on its statutory authority under the CAA and "inside the fence" emissions reductions. The commenters argued that EPA should also be more transparent wi th the American public as to the actual miniscule impact this proposed rule will have on global climate temperature change in 2050 and 2100 as well as the rule's massive

economy

- wide economic impact.

Commenters stated, if EPA makes any major changes to t he proposed rule through this NODA,
EPA must re

- issue the rule with those proposed changes so that affected companies and states have adequate opportunity for comment.

Commenters stated, the NODA was released by EPA far too late in the comment period to
i nform necessary technical analyses, modeling, or otherwise be adequately reviewed. Commenters said, this lack of timely information on important elements of the proposal is unacceptable. Commenters said, the NODA offers additional alternatives to EPA's ori ginal proposal which, if adopted, would impact other important elements of the proposal. Commenters253 said, therefore, it is critical that EPA provide the public with the opportunity to comment on the next version of the Clean Power Plan proposal, in its ent irety, prior to finalizing any rule.

Commenters stated, EPA should provide an additional comment period if the final rule is significantly different from the currently proposed rule.

Commenters stated, EPA's basis for "best system of emission reduction" ( BSER) is flawed since it neglects to properly take costs into consideration, substantially exaggerates the purported benefits, relies on nebulous predictions of future fuels trends, fails to take the effects of each block in concert with the others, and pe nalizes those who have taken early action. Commenters said, EPA's proposal does not comply with the CAA section 111(a)(1) requirements that the standards of performance take into account "cost" and "energy requirements" (in the form of energy diversity) an d be "adequately demonstrated." Commenters said, EPA's proposal does not comport with the CAA section 111(d)(1) requirements since the proposal effectively precludes states from taking "remaining useful life" of an existing unit into consideration. Comment ers said, EPA should withdraw the subject proposal, work with states to develop a workable standard as intended by the CAA, and reissue the proposal for comment.

Commenters stated, the vagueness and uncertainty of this Proposed Rule, as well as the absenc e of a BSER analysis relevant to Alaska, dictates an additional opportunity to evaluate and
comment on a revised and re

- published rule. Commenters stated Alaska has spent considerable resources studying and analyzing the Proposed Rule designed for states w ith highly interconnected electricity systems. Commenters added it is apparent that the Proposed Rule is not crafted for a state lacking such interconnectedness and that its potential application to Alaska has not been sufficiently analyzed. Commenters sta ted a thorough evaluation of the Proposed Rule proved challenging within even the extended comment period. Commenters stated the absence of a relevant BSER analysis and the sheer volume of information, compounded by the release of
additional data late in t he comment period, contributed to this challenge. Further, the commenters added, the absence of final 111(b) rules for new electric generating units inhibits our ability to fully understand the impacts of the Proposed Rule for existing units. If EPA does n ot withdraw the Proposed Rule or exempt Alaska, the commenters urged EPA to re

- publish a more concrete Proposed Rule with some analysis of the relevant impacts on Alaska to allow for meaningful comment.

Commenters urged the EPA to carefully consider commen ts and re

- propose the rule applying a definition of BSER that is consistent with its authority and past practices under Section 111(d) of the Act. The commenters stated that the EPA cannot correct the fundamental legal and technical
flaws inherent in the P roposed Rule through amendments to its Proposed Rule. However, if EPA continues down its current path, the commenters stated that at a minimum, EPA must: (1) properly evaluate resource adequacy and potential reliability impacts; (2) provide states with
add itional time to craft implementation plans that address all factors identified under Section 111, including remaining useful life; (3) correct the data errors in the Building Blocks; and, (4) take steps to mitigate the consequences of EPA's goal

- setting me thodology.254 Commenters stated, EPA's Regulatory Impact Analysis ("RIA") of the proposed rule does not provide an adequate administrative record to allow for proper evaluation of the proposed rule and subsequent public comment. Commenters said, furthermore, the methodology for assessing both costs and benefits is deeply flawed where information is present to be evaluated. Commenters said, the following areas have been identified as having either inadequate and incomplete
information or information which was m isinterpreted and/or misused within EPA's assessment of the potential cost, impacts and benefits of the proposed rule:

- Lack of Information on State Compliance Actions

- Conflicts Between Results and Purported BSER Elements

- Incomplete and Improper Asse ssment of Compliance Actions, Infrastructure Timing and Costs

- Incomplete Assessment of Employment Impacts

- Improper Treatment of Energy Efficiency

- Improper Use of Social Cost of Carbon

- Incomplete Assessment of Alternative Futures

- Misrepresentation of Energy Efficiency Expenditures/Costs

Commenters stated, EPA should provide another opportunity for comment before issuing its final rule. Commenters said, the Proposed Rule is very broad in scope and would have an extensive impact affecting a host of r egulatory, compliance and operational issues. Commenters said, the EPA has solicited comment on a large number of issues associated with assumptions used in developing the Proposed Rule, making the permutations of the possible final rule unmanageable. Comm enters said, after EPA has reached a conclusion on these issues, the Proposed Rule should be reissued in a more definitive form to permit more specific evaluation and comment prior to the issuance of the final rule.

Commenters stated, EPA should return th e CPP to the drawing board and correct the legal and technical deficiencies identified in these comments. Commenters said, the EPA should re

- issue a revised CPP that sets substantially more stringent targets for carbon emission reductions, that
eliminates reliance on nuclear energy, and that prepares the way for more significant carbon emission reductions in the future by relying much more heavily on renewable energy sources.

Commenters requested that EPA issue a second proposed rule after incorporating com ments received on this initial proposal and after preparing all referenced documents and corresponding frameworks. Commenters said, without all supporting documents prepared, the proposal is not complete and ready for full public comment.

Commenters state d, EPA should consider additional opportunities for stakeholder comment, considering the myriad of ways the Final Rule could change from the Proposed Rule. Commenters said, in the original Proposed Rule, EPA expressly requested comment on 194
distinct issu es. Commenters said, the Notice of Data Availability (NODA), released on October 28, 2014 provided new information and requested additional comment. Commenters said, in addition, during various conference calls, EPA's answers to States' questions were ofte n not definitive, with EPA inviting comment on how the questions should be resolved. Commenters said, further, the NODA's late release date allows insufficient time for states to analyze the255 information presented and to respond appropriately. Commenters sa id, finally, EPA did not
release the rate

- to

- mass translation methodology and presumptive mass

- based state goals (critical elements of the Proposed Rule) until November 6, 2014, less than one month from the end of the comment period.

Response 12 : The EPA disagrees with that its rulemaking process was inadequate. The agency has been committed to transparency and public engagement throughout the rulemaking process. The proposed rule and subsequent notices satisfy the procedural requirements of the CAA and/or the APA by providing meaningful notice and gave giving commenters an adequate basis on which to comment. In addition to providing notice and soliciting comment in the Federal Register, EPA conducted an extensive outreach effort including numerous meetings with stakeholder groups. Many of commenters’ suggestions have been reflected throughout the final
rule.

Comment 13 : Commenters noted that only 9 pages of regulatory text comprise the guidelines, and asserted that guidance and support documents such as th e NODA and TSD released late in the comment process are not substitutes for regulatory language. Noting the Administrative procedures Act, the commenters stated that EPA must re

- issue draft regulations.

Commenters stated, EPA's regulatory language and str ucture

- a mere 9 pages

- is a shell for a program that is vague, ill

- defined but breathtaking in scope. Commenters said, rather than use the thousands of pages of technical support documents, legal justifications and questions to elicit input from the reg ulated community to propose a well

- reasoned rule, EPA has instead proposed a vague and sparse regulation that, standing without the explanatory documents, is unsupportable. Commenters said, the Administrative Procedure Act ("APA"), 5 U.S.C. section 551 et seq., requires more. Commenters said, indeed, at its very core, administrative rulemaking must provide those affected with the opportunity to comprehend and comment on actual regulation. Commenters said, an agency cannot substitute guidance and support doc uments for well

reasoned regulatory language. Commenters said, to do so obfuscates the transparency in regulation that this Administration has so championed. Commenters said, such support documents, whatever their merit, do not constitute legally enforceab le Agency determinations and certainly are not binding on any court that would have occasion to interpret the CPP. Appalachian Power Co., 208 F.3d at 1021. Commenters believed that the proposed regulatory provisions lack the clarity and well

- reasoned decis ion

- making necessary to constitute lawful
notice

- and

- comment rule

- making.

Commenters stated, EPA notice

- and

- comment rulemaking is dictated by the requirements set forth in the APA. Commenters said, EPA must publish a notice of proposed rulemaking in the
F ederal Register. Commenters said, this notice must contain the "terms or substance of the proposed rule." See 5 U.S.C. section 553(b). Commenters said, more specifically, NSPS rulemakings are subject to section 307(d) of the CAA. CAA section 307(d)(1)(C). Commenters said, among other requirements, the rulemaking proposal must "be accompanied by a statement of its basis and purpose," that includes: (A) the factual data on which the proposed rule is based, (B) the methodology used in obtaining the data and in analyzing the data; and (C) the major legal256 interpretations and policy considerations underlying the proposed rule. Id. section 307(d)(3). Commenters said, after consideration of public comments, EPA may then publish a final rule. Commenters said, the fin al rule incorporates a general statement of its basis and purpose. 5 U.S.C. section 553(b).

Commenters stated, the APA's notice

- and

- comment rulemaking process, however, cannot be used as a fishing expedition to determine what the scope of a rule should be and how it should be implemented. See Small Refiner Lead Phase

- Down Task Force v. EPA, 705 F.2d 506, 519 (D.C. Cir. 1983) (the fundamental purpose of section 307(d)(3) is to require that "EPA ....give a detailed explanation of its reasoning at the 'propose d rule' stage" of the rulemaking process"). Commenters said, as it has in the past, EPA should have used an "Advanced Notice of Proposed Rulemaking" ("ANPR") to gather input from the regulated community necessary to propose a
well

- reasoned CPP rule. Commen ters stated, EPA recognizes as much. Commenters said, in 2008, the Agency issued an ANPR associated with greenhouse gas regulation. See ANPR for Regulating Greenhouse Gas Emissions Under the Clean Air Act, EPA

- HQ

- OAR

- 2008

- 0318 (July 11, 2008). Commenters s aid, EPA rationalized that issuance of the ANPR was appropriate "on matters of great complexity, controversy, and active legislative debate" so as to provide EPA the opportunity to "seek comment on the full range of issues" that were raised by the proposed greenhouse gas regulation. See Preface from the Administrator of the EPA on the ANPR for Regulating Greenhouse Gas Emissions Under the Clean Air Act, RIN 2060

- AP12, at 2 (July 11, 2008). Commenters said, indeed, the EPA Administrator explained that signif icant public input was required before issuing a draft rule addressing greenhouse gas emissions because "the Clean Air Act, an outdated law originally enacted to control regional pollutants that cause direct health effects, is ill

- suited for the task of re gulating global greenhouse gases. Based on the analysis to date, pursuing this course of action would inevitably result in a very complicated, time

consuming and, likely, convoluted set of regulations." Id. at 5.

Commenters said, for example, nowhere in th e rule does EPA mention "building blocks" or "heat rate improvement" or "re

- dispatch." Commenters said, yet these concepts, intended to be used by and incorporated by states into state plans, are integral to an understanding of what states, and
the existin g EGU source category, are expected to do. Commenters said, relying solely on the proposed rule and without reviewing the TSDs, no one could possibly understand the CPP as
EPA has defined it.

Commenters stated, further, the process by which EPA has propose d the CPP makes a mockery of the rulemaking process. Commenters said, since initiating the CPP rulemaking docket on June 18, 2014, EPA has supplemented, corrected data, or otherwise updated the docket on 1,436 separate occasions. Commenters said, in fact, in its October 28, 2014, Notice of Data Availability ("NODA"), EPA again floated a series of trial balloons for comment. Commenters said, in fact, EPA's calculations for converting a given state's final 2030 target from a rate to
mass emission basis was no t provided until November 6, two days after the midterm elections. Commenters asked, how can the states much less the regulated community provide meaningful comments on an ever evolving rulemaking that shifts with each official docket entry?257 Commenters Commenters said, this is insufficient and contrary to the APA. Commenters said, Ameren, as well as the rest of the regulated community must have an opportunity to comment on the rule as proposed, not the rule as it might possibly exist. Commenters said, fo r these reasons, Ameren believes the CPP does not constitute proper notice

- and

- comment rulemaking sufficient to support the issuance of final regulations. Commenters said, rather, EPA should give due consideration to the comments that thousands of parties have spent countless hours preparing, engage in proper stakeholder and sister agency consultation, and reissue draft regulations for comment that embody the actual structure and components of the regulatory program.

Response 13 : The agency has been commit ted to transparency and public engagement throughout the rulemaking process. The proposed rule and subsequent notices satisfy the procedural requirements of the CAA and/or the APA by providing meaningful notice and giving commenters an adequate basis on wh ich to comment. In addition to providing notice and soliciting comment in the Federal Register, EPA conducted an extensive outreach effort including numerous meetings with stakeholder groups. Many of commenters’ suggestions have been reflected throughout t he final rule. Further, this comment is based on a misunderstanding that the rule would directly apply the building blocks through regulatory text. The BSER is a technical determination. The regulatory text of the guidelines does not need to discuss the
bu ilding blocks because it does not mandate that states implement the building blocks. Rather, the final guidelines provide states the emission performance levels or state

- goal equivalents that their sources are to achieve via state plans. To some degree, th e lack of specific in the rule text at proposal is a reflection of that flexibility provided to states. The regulatory text of the final rule is is a logical outgrowth of the proposed rule, and while more detailed in some respects, maintains a great deal o f flexibility for states. The requirements for what states must submit in order to have an approvable plan are clearly set forth in the final rule.

Comment 14 : Some commenters indicated that states need more prescriptive guidance (for different reasons)

. Commenters stated that, as presently structured, the rule is prone to failure and unlikely to achieve meaningful results. The commenters stated that granting excessive flexibility to states (or groups of states), the rule lacks clear, consistent, and e nforceable criteria to evaluate emission reductions or the wide variety of substitute actions contemplated in lieu of reducing existing facility emissions. The commenters contended that this is an open invitation to develop vague requirements, questionable metrics, and convoluted methods for assessing reductions that could occur (or supposedly already have occurred), particularly in states hostile to taking action on climate change.

In addition, commenters charged that the rule promotes inequitable standar ds, allowing emission requirements for similar power plants to vary from state to state, or even plant to plant. The commenters stated that, aside from the negative climate consequences of continuing to let some facilities pump high levels of greenhouse ga s into the atmosphere while others conform to a higher standard, this inconsistency regarding what is expected of facilities complicates258 compliance, monitoring, and enforcement. The commenters stated that vague provisions that
allow for demand

- side action instead of reducing power plant emissions also invite questionable
hand

- waving or the counting of consumer actions that would likely occur without the rule. Because individual state targets are very weak, the commenters stated that the rule could even

enco urage plans that simply perpetuate "business as usual." For example, the commenters noted that a state like California, which is expected to exceed its proposed target before 2030 without any additional effort, could transfer its "over

- compliance" to other states, thus discouraging
action that should be taken in all states to reduce emissions. The commenters stated that the wholesale deferral of authority to state legislatures, lack of clear enforcement responsibility, and severely misguided strategies for natural gas and renewables place this rule on incredibly shaky ground. The commenters stated that to avoid these problems, the EPA should revise the proposed rule to offer the most prescriptive guidance possible.

Similarly, commenters asked for strong fed eral enforcement to ensure the rule is implemented in West Virginia.

Other commenters stated that the EPA must provide a second round of public comment prior to issuing the final rule for the proposal. The commenters stated that a regulatory agency must

p rovide adequate notice and a fair opportunity to be heard by those it regulates. [K. Davis, Administrative Law Treatise section 6.1 at 450 (2d ed. 1978)] The commenters noted that the Proposal seeks comments on so many aspects of the rule (approximately 15 0), it is unclear whether the final rule will remotely resemble the Proposal and consequently what potential impacts may result from implementing the rule. The commenters requested that EPA reissue its Proposal with a template State plan with suggested com pliance approaches to address these
uncertainties. The commenters noted that one area of uncertainty is how a State will convert its proposed emission rate

- based target for all affected EGUs to a mass

- based approach. The commenters noted that understanding exactly how the conversion from a rate

- based goal to a

mass

- based goal will occur is absolutely critical in order for a State to be able to understand the implications of complying with its proposed State goal. Specifically, the commenters stated that
the re should be no ambiguity as to a State's mass

- based goal, because a State must be able to
look at this mass

- based goal relative to the various Building Blocks to determine the feasibility of achieving its mass

- based goal. The commenters noted that a State will not be able to analyze the feasibility of entering into a multi

- state cap and trade arrangement with neighboring States
until after it knows its mass

- based goal. The commenters noted that the Proposal touts the flexibility given to the States vis

- a

- v is the various Building Blocks, but this flexibility is meaningless without a clear understanding of what a State's mass

- based compliance target will be. The commenters noted that, similarly, the regulated industry should not be placed in the untenable pos ition of speculating on the ramifications of compliance with the Proposal based on
an uncertain mass

- based compliance target. Here again, the commenters requested that a template State plan be provided, which would describe how a model State would achieve its State goal if it were to take either a rate

- based or mass

- based approach. The commenters noted that the EPA's recent TSD on converting a rate

- based target to a mass

- based target, due to its vague nature, falls short of providing States with adequate gu idance on this critical aspect of the259 CPP. The commenters stated that a template plan should also illustrate how a State could participate in a multi

- state plan.

Response 14 : The EPA is confident that the final rule provides clear criteria for states to follow in developing state plans that achieve the emission performance rates or equivalent, and that will be enforceable. States following the state measures approach will be re quired to have a backstop in place to ensure they are meeting their goals. Other forms of state plan will be based on federally enforceable emission standards. EPA is taking additional steps for rate

- based emission standard plans to ensure that ERCs are pe rmanent, non

- duplicative, and reflect real and verifiable quantities of clean generation. EPA is proposing a federal plan this summer that it will implement in the event states do not submit approvable state plans. This federal plan will also set
enforceab le emission standards on the affected EGUs. The federal plan will also serve as a model rule, satisfying this, and many other commenter’s concerns, that the agency should provide additional support for states on the design of approvable plans. EPA’s action goes beyond a BAU scenario and will achieve real and additional reductions in carbon pollution.

Comment 15 : Several commenters noted that EPA has allowed insufficient time for rule development and implementation.

Commenters were concerned that the time set aside from proposal to compliance is overly
ambitious. Commenters said they are aware that the timeline the EPA is following is the result of a Presidential Memorandum, but observe that President Obama's timeline may not adequately
account for the ma gnitude of this rule. Commenters said, the complexity of the Rule has required considerable analysis and even with the 165 days allowed for comment, significant uncertainty remains as to the real impact of the proposal on the electric sector given the ina bility to fully analyze how individual states may act under the rule.

Commenters stated, unfortunately, because energy efficiency is such a large part of the overall compliance regime, leaving this for resolution until after the state goal is set virtuall y assures that affected entities cannot adequately comment on EPA's proposed goals. Commenters said, utilities, regulators and states continue to grapple with these and a host of other questions. Commenters said, FERC is just beginning to assess the relia bility impacts of the rule on the electric grid. Commenters said, a North American Electric Reliability Coordinating Council (NERC) report released on November 5th clearly states that the industry has had insufficient time to develop analysis of the propo sal and that EPA has failed to adequately assess reliability concerns.

Commenters were concerned that EPA will have insufficient time to analyze and synthesize the
comments it receives. Commenters said, EPA should abandon the current schedule to finalize the rule in June 2015. Commenters said, the June 2015 deadline, set by the President and not a statutory deadline, allows only slightly more than six months to analyze the comments received, weigh the merits of both legal and technical matters raised, revi se the rule in a manner consistent with the CAA that can be attained without jeopardizing the economy, submit the proposal to
OMB for inter

- agency review and release the rule by the President's deadline of June
2015. Commenters said, given that this propos al anticipates incorporating the application of260 CAA authorities over large segments of the economy heretofore never regulated, this is no small
endeavor.

Commenters stated, finally, the state process is compressed to a degree as to virtually assure regulat ory and compliance mayhem. Commenters said, under the proposal, a state which requires more time to develop multi

- state compliance options will have until June of 2018 to submit a final plan to EPA. Commenters said, this allows a very short 18 months for "affected entities" (which constitute a very broad segment of the economy) to understand their obligations under the state plan and to react accordingly to comply with 2020 requirements. Commenters said, while some actions can certainly be taken by "affec ted entities" in advance of submission of a final rule, major investments may not be prudently undertaken until such time as the State Plan is complete and approved by EPA. Commenters said, for electric utilities, whose investments generally require signi ficant planning, design, engineering, financing and permitting even before construction begins, 18 months is a blink of an eye.

Commenters stated, six months is an insufficient time period for EPA to review and incorporate the comments provided into a fina l rule.

Response 15 : The EPA disagrees with this commenter regarding the timelines for this rulemaking. However, we note that the agency has addressed concerns about time needed to develop state plans and meet interim performance levels. Thus, with initi al 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 requi rement 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 selecting the emission reduction glide path for affected EGUs over
tha t period.

Comment 16 : Commenters stated that the Proposed Rule goes beyond EPA's statutory authority. The commenters stated that the Proposed Rule is part of EPA's attempt to implement a June 2013 speech by President Obama in which he announced the Admini stration's "Climate Action Plan." [http://www.whitehouse.gov/climate

- change] The commenters stated that this speech cannot provide EPA with the authority to promulgate the Proposed Rule. The commenters stated that Presidential speeches do not have the forc e of law; indeed, the Supreme Court has dismissed them even as aids to statutory interpretation. [See Horne v. Flores, 557 U.S. 433, 459 n.8 (2009)] The commenters stated that a President's public speech "is an insufficient
basis for the exercise of lawful authority by executive agencies." [American Fed'n of Gov't Emps., AFL

- CIO v. Freeman, 498 F.Supp. 651, 658 (D.D.C.1980)]

Commenters added, as another court remarked, "what President Obama 'thinks' about [an issue],
and his characterization of those belie fs in public speeches, has no legal effect. [Int'l Internships Programs v. Napolitano, 798 F.Supp.2d 92, 101 n.11, (D. D.C. 2011), vacated after appeal dismissed as moot, 463 F. App'x. 2 (D.C. Cir. 2012).] The commenters stated that nor can an
internationa l agreement entered into unilaterally by the President create the basis for a sweeping regulation like the Proposed Rule. [See Laurence H. Tribe, Taking Text and Structure Seriously:261 Reflections on Free

- Form Method in Constitutional Interpretation, 108 HAR V. L. REV. 1221,
1249

- 77 (1995).]

The commenters stated that policymaking

- by

- speechifying is an inherently arbitrary process, because the policy can be reversed by another speech, or by a stroke of the pen, with no political accountability. The commenters noted that 5 months after the Proposed Rule was announced in June 2014, the President announced a new climate target (as part of a U.S.

- China November 12 climate agreement) of reducing U.S. greenhouse gas (GHG) emissions to 26

- 28 percent below
2005 levels by 2025.

The commenters stated that while the President asserts the ability to change goals and policies in the next speech or the next announcement, decisions by utilities, their suppliers, and their customers must be made on a much longer time horizon. The commenters stated that in the real world, these groups must make long

- term investments, build plants and other facilities that last for decades, and enter into multiyear contracts. The commenters stated that an executive regulation

- let alone a speech or announcement

- "altering future regulation in a manner that makes worthless substantial past investment incurred in reliance upon the prior rule" "may for that reason be 'arbitrary' or 'capricious.'" [Bowen v. Georgetown University Hosp., 488 U.S. 204, 220 (1988) (Scalia, J., concurring)] The commenters stated that such an after

- the

- fact disruption of reliance interests would conflict with "fundamental notions of justice" that have been recognized throughout history. [Kaiser Aluminum & Chemical Corp. v. Bonjorno, 494 U.S. 827, 855 (1990) (Scalia, J., concurring)] The commenters stated that the Supreme Court has thus condemned changes in the law that "can deprive citizens of legitimate expectations and upset settled transactions." [General Motors Corp. v. Romein, 503 U.S. 181, 191 (1992)] The commenters stated that the Administration's cavalier disregard for the well

- settled expectations of millions of Americans underscores why any deference to the "Climate Action Plan" would be inappropriate.

Response 16 : The EPA’s action is under the statutory authority Congress provided in the Clean Air Act. The fact that it is consistent with, and carrying out, the policy of the Executive Branch as directed by the President, does not somehow make the action any less la wful or any less authorized by Congress itself. For this reason, all of the cases cited by the commenter are distinguishable. See AEP v. Connecticut , 131 S. Ct. 2527, 2539 (2011) (“It is altogether fitting that Congress designated an expert agency, here, E PA, as best suited to serve as primary regulator of greenhouse gas emissions.”)

.

1.15.3 Constitutional issues

Comment 1 : Commenters stated that the proposed rule would upset well

- settled investment

backed expectations developed in reliance on longstandi ng federal policy and would single out a few to bear burdens that in fairness should be borne by society as a whole.262 The commenters stated that the Proposed Rule represents a radical shift in federal policy that would upset settled, investment

- backed expe ctations, with no corresponding climate or environmental benefits. The commenters noted that the agency does not contend that the proposal would affect the climate in any way. The commenters stated that the EPA has sought to justify the EPA Power Plan as a n economic measure, not a "pollution control" plan. The commenters stated that the EPA Administrator Gina McCarthy testified before the Senate Environment and Public Works Committee on July 23, 2014: "The great thing about this [EPA Power Plan] proposal is that it really is an investment opportunity. This is not about pollution control. It's about increased efficiency at our plants, no matter where you want to invest. It's about investments in renewables and clean energy." [U.S. House. Energy Commerce Comm. Press Release, Pollution vs. Energy: Lacking Proper Authority, EPA Can't Get Carbon Message Straight (Jul. 23, 2014), available at http://energycommerce.house.gov/pressrelease/pollution

- vs

energy

- lacking

- proper

- authority

- epa

- can%E2%80%99t

- get

- carbon

- messa ge

- straight (emphasis added)]

The commenters argued that the Proposed Rule represents the epitome of arbitrary decision

making because the Proposed Rule will entail significant harm to society and disruption of well

settled reliance interests that are not counterbalanced by any gain. The commenters stated that the Proposed Rule is different from other regulations by EPA under the Clean Air Act, in that it is a constitutionally infirm agenda

- driven regulation that has no benefit in achieving the stated goal.

Response 1 : The EPA disagrees with this commenter. The Clean Power Plan is under authority of section 111(d) of the Clean Air Act, and is entirely supportable on the basis of the degree of emission limitation of GHG air pollutants, here, CO 2 as determine d by application of the BSER and taking into account factors such as cost, identified in section 111(a)(1). As explained in the preamble, the rule will have economic and public health co

- benefits. Consistent with longstanding practice across the federal g overnment, the agency discloses those benefits, along with information regarding costs, to inform the public of the impacts of its actions. We address allegations regarding stranded assets in the preamble at VIII.B.1 . Insofar as this comment’s
reference to investment

- backed expectations is intended to reference the Penn Central balancing test for regulatory takings, see the discussion of the Just Compensation Clause in the Legal Memorandum accompanying the final rule.

Comment 2 : Commenters argued that the EPA's proposal clearly violates the Tenth Amendment which defines the respective roles of the federal government and the states.

According to the commenters, the Tenth Amendment makes it abundantly clear that the fe deral government has only those powers provided by the U.S. Constitution and all other powers are reserved to the states. U.S. Const. Amend. X; Printz v. United States, 521 U.S. 898, 918

- 19 (1997) (quoting U. S. Const. Amend. X. ("Residual state sovereignt y ... was rendered express by the Tenth Amendment's assertion that '[t]he powers not delegated to the United States by the Constitution, nor prohibited by it to the 'States, are reserved to the States respectively, or to the people.")). The commenters indi cated that while Congress has authority to regulate interstate263 commerce via U.S. Const. Art. I, section 8, the states retain authority over intrastate commerce and general police powers, including the power to regulate electric utilities. Bond v. United
St ates, 134 S. Ct. 2077, 2086 (2014) (citing United States v. Lopez, 514 U.S. 549, 567 (1995). According to the commenters, consistent with the Tenth Amendment, Congress recognizes
in section 101 of the Act that "air pollution prevention . . . and air pollut ion control at its source is the primary responsibility of the States and local governments." 42 U.S.C. section 7401(a)(3). The commenters stated that section 111(d) establishes a clear division of authority between EPA and the states in setting performanc e standards for existing sources, and is thus consistent with the principles of cooperative federalism under the Tenth Amendment.

The commenters stated that if EPA's interpretation of section 111(d) and its proposed standards are promulgated, they would v iolate the Tenth Amendment and well recognized federalism doctrines. The commenters stated that the EPA not only strips state environmental agency authority in setting binding performance standards under section 111(d), but it also mandates that state legi slatures and public service commissioners set energy policy according to these new EPA standards. The commenters noted that Mississippi elects, rather than appoints, its public service commissioners. The commenters stated that the EPA cannot, in the guise of CO2 standards, effectively require any elected officials, including our PSC Commissioners, to revise long

- range energy policies and resource plans to accommodate EPA's vision of what a 2030 electric sector should look like. The commenters argued that th is type of commandeering of elected state officials by a federal agency that is not accountable to the electorate significantly undermines the accountability of those elected officials to the voters in our states. See New York, 505 U.S. at 169 (stating tha t "when due to federal coercion, elected state officials cannot regulate in accordance with the view of the local electorate," "[accountability is thus diminished").

The commenters stated that the Act establishes a clear division of authority between EPA a nd the states in setting standards under section 111. The commenters noted that Mississippi does not question that EPA has authority to establish standards of performance for new sources
under section 111(b), however Congress clearly reserved for the state s the authority to set binding standards for existing sources under section 111(d). In fact Section 111(b) provides that "the Administrator shall publish proposed regulations establishing Federal standards of performance for new sources...." 42 U.S.C. sect ion 7411(b)(1)(B). The commenters stated that section 111(d), however, only authorizes EPA to issue regulations that establish a procedure similar to that provided by section [110 of the Act] under which each state shall submit to the Administrator a plan which ... establishes standards of performance. 42 U.S.C. section 7411(d)(1)(A). The commenters stated that the statute is clear on its face that Mississippi and thus MDEQ, not EPA, has the authority for individual facilities within its jurisdiction to
"es tablish" standards of performance. The commenters noted that Congress also provided flexibility to the states in terms of how those standards are applied to individual sources within their borders. Section 111(d)(1) provides that "the Administrator shall p ermit the State in applying standards of performance to any particular source .... to take into consideration, among other factors, the remaining useful life of existing source to which the standard applies." 42
U.S.C. section 7411(d)(1)(B). The commenters noted that Congress authorized "EPA to set264 binding existing source standards only if and when a "state fails to submit a satisfactory plan...." 42 U.S.C. section 7411(d)(2)(A).

The commenters stated that the EPA's own implementing regulations confirms its role under section 111(d) because those regulations provide that EPA will establish "guidelines," not emission standards for existing sources. 40 CFR 60.22. The commenters noted that the EPA itself defines an "emission guideline" as "a guideline ...which reflects the degree of emission reduction achievable through application of the best system of emission reduction..." 40 CFR 60.21(e). Yet notwithstanding clear language to the contrary and by EPA's own admission, the commenters noted the proposal would es tablish legally enforceable ("binding") allowable emissions rates for existing sources on a state

- wide basis for each state. 79 FR 34892 ("As promulgated in the final rule following consideration of comments received, the interim and final goals will be bi nding emission guidelines for state plans."). According to the commenters, the proposal establishes "emission standards," not guidelines, which clearly violates EPA's own role under 40 CFR 60.22. The commenters asserted that in no regulation has EPA ever s et binding

state

- wide emission rates under section 111(d) and there is no legal authority or precedent that EPA can point to for the approach it proposes to take in this rule.

Response 2 : EPA disagrees with these comments. The Emission Guidelines do not establish binding standards of performance on affected EGUs, and are consistent with the subpart B regulations. The agency has done exactly what is provided for in the statute, and 60.21 and .22: it has determined the degree of emission reduction achievab le through the application of the BSER. States now have the opportunity to develop state plans that achieve that degree of emission performance, and have flexibility in the manner in which they set unit

- level standards of performance. Further, these commen ters misunderstand the nature of the emission performance levels or state goals EPA is finalizing. They are only “binding” in the sense that the state must develop a plan that meets them, should the state wish to do so. They are not enforceable CAA obligat ions under section 113, on either the source, or the state. Rather, if the state plan is such that performance levels are not achieved by the affected EGUs, the consequence is that EPA disapproves the plan and promulgates a federal plan. EPA has always int erpreted section 111(d)(2) as giving it authority to review the substantive adequacy of these plans, to disapprove them if they are unsatisfactory, and to promulgate a federal plan that does accomplish the degree
of emission limitation that is achievable. For the reasons discussed in the Legal Memorandum accompanying the final rule, neither this rule nor CAA section 111(d) violate the principles of
federalism embodied in the Tenth Amendment.

Comment 3 : Commenters disagreed with adoption of policies that fa vor certain fuel sources.

Commenters argued that there is no state "flexibility" in the rule or any discretion provided to states to develop their own standards of performance or develop variances and exceptions to the standards, as required by the Act. The commenters stated that the EPA's own modeling shows many of the coal

- fired units that will be forced into retirement by state CO2 budgets were built in response to, and in reliance upon, the Power plant and Industrial Fuel Use Act of 1978. [42
U.S.C. 8301(b)(2)] The commenters stated that the Act included as one of its purposes "to265 encourage and foster the greater use of coal and other alternate fuels, in lieu of natural gas and petroleum, as a primary energy source." [Id] The commenters stated that fo r EPA to undermine the hundreds of millions of dollars investment that resulted from the Act without an express directive of Congress to do so is a punitive abuse of the agency's powers that fundamentally violates the separation of powers doctrine.

Comment ers stated that even where the Proposal's state goals would not require coal

- fired EGUs to shut down entirely, the goals are based on reduced utilization of these units, which could limit their ability to recover the costs of installing emission controls.

Commenters stated that the Clean Power Plan's methodology for calculating each state's emission reduction goal forces states to enact laws that are preferential to specific energy sources. The commenters argued that it is not the role of federal agencies to use regulatory authority to force states to adopt policies that favor specific energy sources. The commenters noted that such tactics set a dangerous precedent for future regulation of energy production.

Response 3 : Section 111(d) of the Clean Air Act does not create exemptions for facilities on the basis of whether they received federal support in any way under other laws. Furthermore, for the reasons discussed in section 1.2 of this response to comments document, this rule provides states significant flexibility and meaningful choice consistent with cooperative federalism principles of the CAA. Finally, for the reasons discussed in the Legal Memorandum accompanying the final rule, this rule does not coerce or commandeer states into implementing a feder al regulatory program in violation of the Tenth Amendment.

Comment 4 : Commenters stated that the CPP undermines the separation of powers and that
the EPA is making law rather than implementing it. The commenters noted that the CPP and
NSPS are similar to the Waxman

- Markey bill which failed, and that the CPP is an attempt to circumvent the democratic process.

Commenters stated that the CPP undermines the separation of powers. The commenters stated that, even assuming for the sake of argument that the CAA a uthorizes EPA to regulate CO2 as an "air pollutant," the EPA stretches section 111(d) beyond all recognition.

The commenters argued that states cannot meet their CPP emission

- reduction requirements by applying demonstrated emission

- control technology to e xisting power plants. Rather, the commenters noted that they must, in varying degrees, transform their electric power sectors. The commenters stated that there is no evidence in the text of section 111(d), EPA's implementing regulations, or legislative his tory that Congress authorized EPA to restructure state electricity markets, revise state electricity policies, or set CO2 emission caps for state electric

- power sectors. The commenters argued that the EPA is making law rather than implementing it.

The comm enters stated that when striking down EPA's Timing and Tailoring Rules, the Supreme Court cautioned the agency not to interpret the CAA in ways that "would bring about an enormous and transformative expansion in EPA's regulatory authority without clear266 con gressional authorization." The commenters stated that the CPP runs afoul of the Supreme Court's admonition that "Congress does not hide elephants in mouse holes."

The commenters stated that Congress, after all, debated and declined to approve similar polic ies during the first Obama administration. The commenters stated that the CPP sets CO2 emission reduction requirements that states can meet only by enacting (or tightening) three of the four main climate policies contained in H.R. 2454, the American Clean Energy and Security Act of 2009, commonly known as the Waxman

- Markey bill. The commenters stated that those policies are: CO2 emission caps, renewable energy quota, and demand

- side reduction mandates.

The commenters noted that the fourth major Waxman

- Marke y policy

- new source performance standards (NSPS) requiring new coal power plants to install carbon capture and storage (CCS) technology

- is the centerpiece of EPA's Carbon Pollution Standard (CPS) rule. The commenters stated that the EPA anticipates no CO2 emission reductions or climate benefits from the CPS rule, since the agency assumes no new coal power plants would be built anyway. The commenters noted that the CPS rule is a regulatory stepping stone to the CPP. The commenters
stated that under the C AA, the EPA must promulgate performance standards for new sources before it can promulgate performance standards for existing sources.

Response 4 : The agency is acting under the statutory authority provided it by Congress, and as recognized by the Supreme Court in Massachusetts v. EPA

, AEP v. Connecticut , and UARG v.
EPA . In all of those cases, the Court recognized that EPA had substantial authority to regulated GHGs, as well as substantial discretion to use its delegated authority reasonably in light of

s tatutory context and a variety of important policy considerations. EPA disagrees with this comment insofar as it claims that EPA may not promulgate regulations addressing CO2 emissions from existing power plants under section 111(d); EPA’s discussion of th at issue is in section IV of the final rule preamble. Furthermore, 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 under the Clean Air Act in the manner cautioned against by the UARG Court. Our emission guidelines simply re flect 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 s tandards 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 regulatio n. 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 5 : Multiple commenters (citing the 2014 UARG v. EPA decision on the Tailoring Rule) stated that the CPP must be withdrawn because it violates Separation of Powers principles.267 Commenters stated that the EPA's proposed regulations are unlawful at the most fundamental
level. The commenters stated that the Administration ha s decided to bypass Congress in implementing far

- reaching Executive Branch energy and environmental policy goals. The commenters stated that basic Separation of Powers principles, however, prohibit the Administration from doing so. The commenters stated th at the EPA should withdraw this rule and abandon its attempt to remake the US electricity system by a misguided and highly flawed executive fiat, and limit itself, at most, to allowing the states to determine what reductions can be made through realistic e fficiency improvements on a case

- by

- case basis at individual existing

sources.

Response 5 : We disagree with this comment. With respect to the separation of powers aspect of this comment, EPA may promulgate regulations addressing CO2 emissions from existi ng power plants under section 111(d) for the reasons stated in section IV of the final rule preamble. Furthermore, 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. Our emission guidelines simply reflect an achievable emissions limit through the application of
the BSER and do not in t hemselves 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 stat es. 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. Accordingly, commenters are incorrect to claim that this rule expands EPA authority under the Clean Air Act in contravention
of UARG v. EPA. Additionally, for the reasons stated in the Legal Memorandum, this rule does
not violate the Tenth Amendment.

Comment 6 : Commenters stated that the EPA's proposed Clean Power Plan is illegal and
unconstitutional and should be withdrawn.

The commenters stated that the EPA has only just recently been reminded that it cannot simply seize massive new regulatory authority for itself. In Utility Air Regulatory Group v. EPA, 134 S. Ct. 2427 (2014) ("UARG v. EPA"), the Supreme Court of the United States invalidated another
of EPA's regulations aimed at limiting the emission of CO2 because EPA overstepped the authority granted to it in the Clean Air Act. In doing so, the Court provided valuable lessons that EPA should heed in these proceedings. The commenters noted that the Supreme Court made clear that regulation of greenhouse gases, including CO2, cannot be "'extreme,' 'counterintuitive,' or contrary to 'common sense.'" Id. at 2441 (quoting Massachusetts v. EPA, 549 U.S. 497, 531 (2007)). The commenters stated that regulations of ten fall into those impermissible categories, the Court explained, when an agency interprets a statute in a way that "would ... bring about an enormous and transformative expansion in [its] regulatory authority without clear congressional
authorization." Id. at 2432 (citing FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 160 (2000)). The commenters stated that the Supreme Court further cautioned that "[w]hen an268 agency claims to discover in a long

- extant statute an unheralded power to regulate a 'sig nificant portion of the American economy,' ... we typically greet its announcement with a measure of skepticism." Id. at 2,444 (quoting Brown & Williamson, 529 U.S. at 159).

The commenters argued that the EPA lacks the authority under the CAA to advance t his proposal
to a final rule. The commenters stated that the EPA is prohibited from regulating power plants under section 111(d) because it has regulated these same plants under CAA section 112. 42 U.S.C. 7411(d)(1)(A). In addition, the commenters stated t hat CAA section 111(d) does not allow EPA to set the CO2 reduction goals of each state or to go "beyond the fence"

- that is, beyond the boundaries of a power plant which is the source of a pollutant

- to regulate that pollutant. It is limited by statute to "establish[ing] a procedure

- under which each State shall
submit

- a plan which establishes standards of performance for any existing source. Id. (emphasis added).

The commenters stated that the proposal blatantly disregards the mandate that EPA must explicitly take into account the remaining useful life of the sources being regulated, i.e. power plants. The commenters noted that CAA 111(d)(2)(B) states "... the Administrator shall take into consideration, among other factors, remaining useful lives o f the sources in the category of sources to which such standard applies." Id. (emphasis added). The commenters stated that the Clean Power Plan is structured in such a way as to eliminate useful life from the entire range of considerations for a state pl an to take into account to achieve compliance. The commenters stated that although the proposal purports to take into account remaining useful life by "provid[ing] states with the flexibility to determine how to achieve reductions ... and to adjust the
tim ing in which reductions are achieved in order to address key issues such as cost to consumers, electricity system reliability and the remaining useful life of existing generation assets[,]" it is a
baseless assertion. 79 FR 34836.

According to the comment ers, first, the statute requires that the Administrator take into account the remaining useful life (not the state plan) and second, the proposal rigidly establishes deadlines for compliance. The commenters stated that it does not give states meaningful c ontrol to "adjust the timing" of either the glide path or the final goal, despite its claims that allowing regulation of specific EGUs creates a situation where a state could potentially consider remaining useful life. 79 FR 34926. The commenters contende d that there is virtually no way that a state plan can take into account remaining useful life given the interim goals and compliance time frames that are established in the rule. The commenters asserted that the rigid compliance deadlines have effectively denied states any meaningful opportunity to use any "flexibility" in setting compliance for EGUs based on their remaining useful life.

The commenters noted that the Notice of Data Availability (NODA) addresses some of these issues when it asks for additional comment on glide path issues and a book value approach to
avoid stranded costs. 79 FR 64547

- 549. However, the commenters stated tha t because it simply requests additional input, it too entirely fails to resolve the failure of the plan to provide meaningful consideration of the remaining useful lives of coal plants.269 Commenters stated that the CPP is unconstitutional and should be wit hdrawn. The commenters contended that the CPP violates the Article I Contracts Clause, the Fifth Amendment's Takings Clause, and the Tenth Amendment (state sovereignty). The commenters elaborated extensively on each of these points. The commenters stated t hat it is likely that additional constitutional issues, including possible Commerce Clause, and Separation of Powers claims, among others may prove fatal to the CPP because the proposed rule is drafted in such a way as to provide optional compliance paths for states.

For similar reasons, commenters concluded that the proposed 111(d) existing

- source power plant rule must be withdrawn. The commenters stated that the proposed rulemaking is contrary to the plain language of Section 111(d), which expressly prohi bits the regulation of source categories already regulated under Clean Air Act section 112. The commenters stated that the proposed existing source

- rule also is unlawful because no final new

- source rule has been promulgated
under Clean Air Act section 111( b). The commenters stated that the proposed rulemaking is based on a contemplated "Best System of Emission Reduction" that arbitrarily includes factors well beyond the EGUs themselves and which has not been adequately demonstrated. Finally, the

commenters stated that contrary to the clear mandates of the Federal Power Act and the principles of federalism, the proposed existing

- source rule extends the EPA's authority to reach Ohio's fundamental economic structures and unlawfully usurps authority from the Sta te of Ohio to control its distribution of electricity.

Response 6 : We disagree with this comment. As an initial matter, Commenters’ citation of section 111(d)(2)(B) is beside the point; that provision applies to federal plans, not these emission guidelin es. As explained in section VIII.G.1 of the preamble and the Legal Memorandum, these emission guidelines permit States, consistently with section 111(d)(1), to consider remaining useful life through several reasonable mechanisms. We respond there to

comme nts about adjusting the goals. We respond elsewhere to comments about the NODA.

With respect to the separation of powers aspect of this comment, EPA may promulgate regulations addressing CO2 emissions from existing power plants under section 111(d) for t he reasons stated in section IV of the final rule preamble. Furthermore, 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. 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 impl ement 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 environm ental 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 sour ce category for regulation under CAA section 111. Accordingly, commenters are incorrect to claim that this rule expands EPA authority under the Clean Air Act in contravention of UARG v. EPA. Finally, the Legal Memorandum accompanying the final rule responds to commenters’ concerns270 about the constitutional implications of this rule under the Contract Clause, Takings Clause, and
Tenth Amendment.

Comment 7 : Commenters stated that states cannot implement building block 3 without arbitrarily penalizing in

- state generators or violating the contracts clause.

The commenters stated that there is no feasible means for states to incorporate renewable energy into the state compliance plans without pena lizing electric generating companies operating within their borders or illegally disrupting existing contracts. The commenters mentioned that the Proposed Rule uses all existing renewable generation within a state to set emission rate goals, but states may not be able to utilize the portion of renewable generation sold out of state toward compliance. The commenters stated that most contracts for renewable generation also contract for the environmental attributes associated with the generation and states do not have the authority to abrogate these contracts in order to comply with the proposed emission rate goals. The commenters stated that any attempt to do so would violate the Contracts Clause in the constitution. The commenters stated that exporting states like Oklahoma are placed in the untenable position of needing to make additional reductions in state to offset the portion of renewable generation embedded in the state goal that is sold out of state, as a result.

Response 7 : We disagree with this comme nt. For the reasons stated in the Legal Memorandum accompanying this rule , state implementation of building block 3 measures is unlikely to violate
the Contract Clause.

Comment 8 : Commenters stated that the EPA has clearly over

- reached its authority ways
because EPA's interpretation violates the Tenth Amendment ("The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.")

Response 8 : For the reasons sta ted in the Legal Memorandum, the EPA disagrees that this rule
coerces or commandeers states in violation of the Tenth Amendment.

Comment 9 : Commenters stated that federal commandeering of state governments is such a novel phenomenon that the Court's first experience with it did not occur until the 1970s, when the EPA promulgated regulations requiring States to prescribe auto emissions testing, monitoring and retrofit programs, and to designate preferential bus and carpool lanes. The commenters noted
that t he Courts of Appeals for the Fourth and Ninth Circuits invalidated the regulations on statutory grounds in order to avoid what they perceived to be grave constitutional issues, and the District of Columbia Circuit invalidated the regulations on both consti tutional and statutory grounds. According to the commenters, after [the Court] granted certiorari to review the statutory and constitutional validity of the regulations, the Government declined even to defend them, and
instead rescinded some and conceded t he invalidity of those that remained, leaving [the Court] to vacate the opinions below and remand for consideration of mootness. [Printz, 521 U.S. at 925 (internal citations omitted).]

The commenters stated that the history of this overreach had developed as follows:271 • In 1970, Congress passed the Clean Air Amendments.

• In 1971, EPA promulgated the first rule requiring state air quality plans under the new
amendments.

• On December 6, 1973, EPA promulgated regulations to reduce motor vehicle emissions throug h tailpipe controls, but also mandated outside

- the

- vehicle conservation measures such as express bus lanes, bicycle concourses, inspection programs and commuter surcharges.

The commenters stated that the EPA purported to require the States to enact laws a nd appropriate monies to guarantee enforcement of these regulations in their CAA state plans. The commenters stated that the D.C. Circuit, in District of Columbia v. Train, rejected EPA's rule, however, finding that Congress did not delegate to EPA the pow er to require States to adopt and enforce the changes that the Agency wanted to implement, and that EPA could not do so by requiring States to hand over their police power, under pain of federal penalty. The commenters noted that following on the heels of the Fourth and Ninth Circuits, which had struck down EPA's vehicle emissions rules on statutory grounds [See Maryland v. EPA, 530 F.2d 215, 226 (4th Cir. 1975); Brown v. EPA, 521 F.2d 827, 838

- 42 (9th Cir. 1975).] in order to avoid "grave constitutional

pr oblems," the D.C. Circuit also invalidated EPA regulations on both statutory and constitutional grounds. [District of Columbia v. Train, 521 F.2d 971, 986

- 88, 992 (D.C. Cir. 1974), vacated and remanded as moot, EPA v. Brown, 431 U.S. 99 (1977) (per curiam) .] The commenters stated that court rejected EPA's attempt "to commandeer the regulatory powers of the states, along with their personnel and resources, for use in administering and enforcing a federal regulatory program." [Train, 521 F.2d at 992.] The com menters stated that the Train Court further repudiated "the novel approach of empowering a federal agency to order unconsenting states to enact state statutes and regulations, thereby converting state legislatures into arms of the EPA ...." [Id. at 984; se e Id. at 992

- 94]

According to the commenters, it is well

- established under Printz and New York both that the United States may not commandeer state officials or commandeer state authority in order to
administer a federal program and that the anti

- commande ering doctrine has an historical association with the CAA. The commenters stated that there are three ways that the coercion and commandeering doctrines are likely to come up under the Proposed Rule: (1) if EPA fails to disclaim the intent and authority to impose highway sanctions if a State refuses to issue a SIP at all; (2) if a State refuses to issue a SIP acceptable to EPA; and (3) if a State ceases to enforce a SIP that depends on state powers that EPA does not itself have under the CAA. According to t he commenters, under the commandeering doctrine, EPA cannot order an unwilling State to issue a SIP in the first instance nor command that it use its police power

- a power not possessed by
EPA

- to continue enforcement of a SIP it initially agrees to issu e.

The commenters stated that the latter situation was recently addressed by the Sixth Circuit in Sierra Club v. Korleski. [681 F.3d 342] The commenters explained that in 1980 the Sixth Circuit,
in a 2

- 1 decision, in United States v. Ohio Department of Hi ghway Safety, [635 F.2d at 1204

- 05] had permitted EPA to sue Ohio state administrative officials to order them to deny vehicle registration to certain vehicles, as provided in a SIP, despite the failure of the Ohio legislature to272 adopt implementing legisla tion. The commenters noted that Korleski reversed Highway Safety with the observation that Highway Safety "came during an era whose conception of the state

federal relationship has been superannuated by the Supreme Court's later decisions in New York
and P rintz." [681 F.3d at 351

- 52] The commenters noted, according to Korleski, if a State fails to enforce a SIP, EPA "can order the regulated parties to comply . . . , or impose an administrative penalty upon them, or sue them." [Id.] With respect to a State, however, the commenters noted "the EPA can [only] engage the State directly through the process of dialogue and inducement so plainly contemplated by the Act's sanctions provision, section 7509." [Id.] The commenters noted that sanctions provision permits a partial withholding of highway funds, in nonattainment areas, with numerous exceptions, following lengthy negotiations. [42 U.S.C. 7509(b)(1)(A), (B).] The commenters noted that there is also an offsets penalty running against private parties. [42
U.S.C. 7509 (b)(2)] The commenters stated that even these statutory powers are limited by a
second constitutional doctrine: non

- coercion.

The commenters explained that although EPA may try to convince the States to cooperate, it may not resort to "outright coer cion." [Virginia v. Browner, 80 F.3d 869, 881 (4th Cir. 1996)] The commenters stated that this means that the penalty imposed for non

- cooperation must be small enough to leave States with the ultimate decision whether to conform to federal desires. [See
Un ited States v. Dole, 483 U.S. 203, 211

- 12 (1987) (upholding five percent reduction in highway funds as representing "relatively mild encouragement to the States")] the commenters noted that when the Medicaid expansion penalty was struck down by a 7

- 2 vote in NFIB v. Sebelius, it was held to be impermissible coercion both because the penalty for not expanding Medicaid

- loss of all Medicaid funding

- was too large and because the mandated Medicaid expansion represented too fundamental a shift in the program to be deemed part of the earlier bargain to accept Medicaid funding. [132 S. Ct. at 2603

- 07] The commenters stated that regulating greenhouse gas emissions beyond the fence line of existing sources, including by mandating the establishment of
renewable ene rgy portfolios and the imposition of conservation programs upon the State's citizenry, is the same sort of programmatic shift and very far removed from the agreed terms under which highway funds were originally accepted.

Response 9 : For the reasons stat ed in the Legal Memorandum, the EPA disagrees that this rule
coerces or commandeers states in violation of the Tenth Amendment.

1.15.4 General illegality/exceedance of EPA authority

Comment 1 : Commenters stated, as proposed, the guidelines would allow environmental regulatory agencies to establish programs that are more related to achieving desired social and economic outcomes rather than developing and implementing performance standards to achieve emission reductions. Commenters said, Pennsylvania beli eves these types of social and economic decisions should be made by elected officials.

Commenters stated that they serve on the judiciary committee and the legislature, and the legislative rulemaking and review committee in the West Virginia legislature. T he commenters273 noted that not all states have a legislative review of rules; West Virginia does. The commenters stated that they have the opportunity to have some oversight over not only state agency rules, but also the State agency rules that are promulgat ed as a result of federal rules. The commenters expressed concern that the Proposed Rule is just coming from a Federal agency without the support of the elected officials in D.C.

Commenters stated, because stabilizing the concentrations of GHGs in the atmosphere will require the transformation of our energy, transportation and manufacturing systems, they believe that the existing Clean Air Act (CAA) is not the appropriate vehicle for regulation toward that goal. Commenters said, rather, Congress should craft national climate legislation that balances multiple national priorities, including economic stability, energy independence, national security and defense, and energy reliability and affordability, in addition to environmental goals, and that assigns responsibility across federal departments and agencies according to their respective expertise. The commenters recognized, however, that such an ambitious, coordinated approach is unlikely to occur in the near term. Commenters said, instead, EPA needed to respond to the Supreme Court's decision in Massachusetts v. EPA by addressing the question of endangerment under section 202(a) and, in doing so, chose to proceed with certain rulemakings. Commenters also recognized that states and regions already are deve loping significant regulatory programs to address GHG emissions and that prompt EPA action, if structured appropriately and designed to avoid harmful impacts, may provide a useful national framework for action in the form of a federal program that could av oid difficulties likely to arise under a patchwork of state and regional programs. Commenters said, EPA rulemaking activity may also assist Congress in developing appropriate national legislation.

Commenters believed that Congress, and not EPA, should dete rmine the framework to address greenhouse gases and ensure the balance of affordable and reliable electricity from a variety of fuels and sources. Commenters asked the EPA to withdraw or reconsider its proposed rules for regulating carbon dioxide emissions from existing EGUs. Commenters said, the complex and
far

- reaching issue of reducing greenhouse gas emissions is best addressed by Congress and the states. Commenters said, the proposal is legally and technically problematic. Commenters said, the proposal is an unprecedented application of the CAA to the power sector, is inadequately justified, and unfairly seeks to shift the enormous burden.

Commenters were concerned that the proposed rule attempts to establish climate change policy not yet approved throu gh an act of Congress. Commenters believed that federal legislation is the proper place to address climate change policies and not through administrative action. Commenters urged EPA to withdraw the proposed rule.

Commenters supported the supremacy of Con gress to make laws. Commenters said, it is the responsibility of Congress, not the administration, to define the scope of regulatory jurisdiction under the CPP and not for EPA to seek to expand the area of its jurisdiction through rulemaking

processes.

Com menters stated, national energy policy should be determined by Congress, not by EPA. Commenters said, if Congress decides that transitioning to a lower

- carbon economy is the energy274 policy path to pursue, then that transition should be done in an orderly an d cost

- effective fashion

- one that recognizes reliability concerns and realistic time horizons and considers the useful life that remains in the valuable generating resources that currently exist.

Commenters stated, if enacted, the proposed rule would, i n effect, set energy policy for the United States. Commenters contended that such an important socioeconomic decision should be made by the legislative branch of government, especially so given that, by EPA's own admission, this effort is symbolic. Comment ers said, if the United States is to offer a high

- cost, low

- impact, symbolic reduction program to spark similar actions world

- wide, Congress is the appropriate body to do so.

Commenters suggested that a better overall approach would have the EPA working w ith Congress on a legislative action that involves all sectors for a balanced approach to carbon limited economies, and to eliminate legal obstacles that the proposed rule is bound to face.

Commenters stated, while they applaud EPA's efforts in addressing this complex and controversial issue, a rule of this magnitude with such far

- reaching effects is best addressed through the legislative, rather than administrative, process. Commenters said, uniform national policy is needed. Commenters said, EPA's unprec edented effort is indeed clear through the large body of work that comprises the proposed Clean Power Plan. Commenters said, the City of Tallahassee aligns with the EPA in their significant efforts to address climate change through responsible regulation, and appreciates the EPA's dedication to this topic, not taking this charge lightly. Commenters said, however, it is also clear through the comments, identified errors in data and calculation, as well as the questionable statutory basis noted above, that th is is not yet "ready for press". Commenters said, this in no way suggests that the EPA's efforts are not fruitful

- just that the magnitude of this undertaking is enormous and it would be unadvisable, undue haste to rush to a final rule with so many areas of comments and known errors needing to be resolved. Commenters said, while the need to address climate change is present, the need to get a final regulation correct based on accurate data, science, and statistics is even greater. Commenters said, an accur ate and appropriate regulation is especially necessary for a rule with
such far

- reaching impacts, and at least as proposed, an unchangeable (even for cause) state goal that will last forevermore. Commenters said, as such, the City of Tallahassee suggests t hat an
additional re

- proposal is necessary after resolving these and others' comments, and that a final rule promulgated by June 1, 2015 under a politically

- imposed

- only deadline would not allow the necessary input from all stakeholders to ensure EPA's upd ates to this proposal also undergo appropriate review. Commenters said, the City also suggests that EPA use the feedback from this comment period and work with Congress to develop a national framework under a new law that is written for this purpose. Comme nters said, the new proposal can then be derived from a statute designed to address the challenges of climate change regulation, and not rely on a creative
redefinition of a 44

- year old statute.

Commenters stated, as proposed, the guidelines would allow en vironmental regulatory agencies to establish programs that are more related to achieving desired social and economic outcomes rather than developing and implementing performance standards to achieve emission reductions.275 Commenters said, Pennsylvania believ es these types of social and economic decisions should be made by elected officials.

Response 1 : We discuss our authority to promulgate this rule in section IV of the preamble. The EPA disagrees; as recognized multiple times by the Supreme Court, Congres s empowered the agency through the Clean Air Act to address air pollution problems in the United States, including the problem of GHG pollution. The final rule does set energy policy for the country. It sets an achievable level of emissions performance fro m the affected EGUs and gives states the opportunity to design state plans in the first instance to achieve these emission reductions. The EPA itself could implement emission standards itself through a federal plan if necessary. The rule is not “symbolic” in the commenter’s sense. It will achieve actual emission reductions.

Comment 2 : Commenters stated that requiring re

- dispatch from coal to NGCC exceeds EPA's authority.

Commenters stated that the dramatic increase in NGCC utilization set forth in the Pr oposed Rule would require a fundamental redesign of the existing electric grid and force substantial changes in how the natural gas industry and organized markets operate, both of which are outside the scope of the Proposed Rule and EPA's lawful authority under the CAA.

Commenters stated that the EPA's proposed revisions to Block 2 stringency are largely illegal, provide little relief to coal

- generating units, and may actually increase stringency on coal electricity generators. The commenters explained th at even if these shifts in generation in low

NGCC states do contribute to a reduction in the stringency of Block 2 for high

- NGCC states, the proposal is still fundamentally flawed. For example, the commenters noted that the EPA is considering mandating low

- NGCC states to build more NGCC plants. The commenters stated that, like all of Block 2 through Block 4 requirements, this sort of forced operational/construction changes are not allowed by the CAA

- they are beyond

- the

- fence requirements that are not "sys tems of emissions reductions." See 42 U.S.C. 7411(a)(1). The commenters asserted that
this existing

- source 111(d) Rule Proposal is in direct conflict with the CAA to mandate the construction of new sources to comply with an existing

- source rule.

Comment ers stated concerns about the significant impact of the very recent additional EPA proposal for creating a minimum value of re

- dispatched coal to non

- existent NGCC power plants

or to co

- firing natural gas in existing coal

- fueled boilers. The commenters men tioned that EPA is further proposing another potential means for increasing the stringency of a state "goal" by adding incremental renewable energy and energy efficiency to the "goal" which replaces coal

fueled generation pro

- rata or prioritizes there

- disp atch of coal

- fueled generation based on
historic emissions. The commenters stated that the EPA's NODA also discusses that the anticipated emission rate reductions calculated under building block 2 are inconsistent from state
to state because certain states have little or no NGCC affected EGUs. The commenters stated that EPA then asserts that one way to address this discrepancy would be to require a floor on the
amount of re

- dispatch in each state, and finally argued that for states with little or no existin g NGCC units this floor could be achieved through the construction and utilization of new NGCC units. The commenters noted that there is nothing in the text of CAA 111(d) that even remotely276 suggests that EPA has the authority to set limits or require emiss ion reductions for existing sources premised on the construction of new sources nor does EPA have the authority to require

re

- dispatch. Accordingly, the commenters noted that EPA is precluded from applying this approach in any final rule.

The commenters objected to the lateness of the NODA

- raised issues in the comment period for the Proposed Rule, with especial concerns that EPA would seek comment on changing the goal without providing a new proposed rule. The commenters noted that EPA merely states "thi s adjustment to goal

- setting formula would yield more stringent state goals" instead.

Response 2 : The EPA disagrees with this commenter. Section 111(d) does not specify which technologies or measures may comprise a “system of emission reduction.” The ter m is intentionally very broad. The legal authority for the rule is explained in the Legal Memo and Section V of the preamble. The authority of the agency to directly order dispatch is irrelevant and misunderstands the rule, as explained in Section VII of t he Legal Memo. In addition, the agency believes the NODA process, including opportunity to comment, satisfies procedural requirements.

Comment 3 : Commenters asserted that the EPA is mandating that states impose a carbon tax which the federal government is not itself authorized to levy. The commenters stated that the tax
would have to be calculated and enacted on a state

- by

- state basis. If not, then the commenters stated that the EPA would assert the 111(d) analog of a Federal Implementation Plan (FIP) and have to enact its own tax, which is outside the EPA's authority under this section of the Clean Air Act. The commenters argued that the Agency does not point to where the authority exists to implement such a tax under current federal law and in particular Section 111(d). The commenters stated that while they would have no argument regarding each state's individual 10th Amendment right to impose a tax of its own volition, they take issue with the federal government mandating states to do so.

Response 3 : Thi s comment is incorrect. Nowhere do the emission guidelines direct states to establish a carbon tax; nor is EPA proposing a carbon tax in the proposed federal plan.

Comment 4 : Commenters stated that the Administration has disregarded whether EPA even has

t he legal authority under the Clean Air Act to move forward with this proposal.

The commenters stated that the existing source proposal goes beyond the plain reading of the Clean Air Act, and it includes failed elements from the cap

- and

- trade program rejec ted by the
United States Senate in June 2008.

Response 4 : The commenter is incorrect that the agency has disregarded whether it has legal authority. It has provided extensive analysis of its authority for the public to comment on in the Legal Memo at prop osal, and it is issuing its updated legal analysis in Section V of the preamble and in the Legal Memo accompanying the final rule. Further, the failure of Congress to enact other legislation does not detract from the agency’s analysis of its legal authorit y. As discussed at277 length in the Legal Memo, EPA’s authority is located in the Clean Air Act as enacted by Congress, and interpreted by the Supreme Court.

Comment 5 : Commenters stated that the proposed rule establishes new energy policy, exceeds
EPA's aut hority, and will result in prolonged legal battles

Commenters stated that EPA is essentially establishing new national energy policy by setting emission goals that are so stringent that they cannot be accomplished by end

- of

- stack control or
internal sour ce process changes. The commenters noted that the EPA has constructed CO2 budget goals that must rely on the growth of renewable energy (RE) generation and energy efficiency projects for their attainment. The commenters stated that in effect, the rule is

c ontrolling, not merely CO2 emissions, but the amount of energy on the grid and the means of energy generation which the commenters argued exceeds EPA's traditional authority as given it by the Clean Air Act of 1970.

The commenters asserted that by delving into the realm of energy generation and dictating its means, the Clean Power Plan proposal expands the previously

- recognized bounds of regulatory authority beyond that of emissions controls for an emissions unit (in this case a fossil fuel fired power pla nt) and into that of micro

- management of an entire industry. The commenters stated that the proposed rule would essentially create a brand new paradigm for how electrical generation is dispatched in the United States. According to the commenters, under the Clean Power Plan, the EPA may now have final authority not only on what electrical generation can be dispatched throughout the year, but also when existing plants must be retired and when and what type of new electrical generation must come on line based only on annual average carbon intensity. The commenters stated that the proposed rule may even create a situation where renewable generation capacity is added just to average down a utility's overall carbon intensity and achieve compliance with the rule li mits, even though additional power is not actually needed at the expense of utility customers and other potential environmental impacts.

The commenters stated that the EPA has long held a role in defining the resulting impact of air
emissions allowed from dispatched and new generation, but the Clean Power Plan goes beyond approval of environmental impacts and allows EPA to regulate decisions which have necessarily included additional considerations, such as a combination of environment, economics and
reliab ility. In addition, the commenters stated that this authority overlaps the jurisdiction of traditional state agencies such as the Florida Public Service Commission which regulates the state's energy market, and may be viewed by rule opponents as outside th e allowable limits of EPA's current authority. The commenters expressed concern that the proposed rule, and particularly several of the building blocks, are founded on questionable statutory interpretation and may allow for prolonged legal battles creating regulatory uncertainty and deferring when
additional reductions in CO2 emissions will occur.

Response 5 : The Clean Power Plan sets achievable emission performance levels for the affected EGUs taking into account the factors identified in section 111(a)(1 ), and it does not dictate any particular means of energy generation. Thus the rule does not intrude on the regulatory domain278 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. The agency explain s it role vis

- à

- vis states and the affected EGUs, and how this is consistent with congressional intent and longstanding agency interpretation in section VII of the Legal Memo.

Comment 6 : Commenters stated that the CPP violates the REA's federal mandate that rural America receive reliable, low cost electric services because it will result in the significant reduction in operation of or retirement of nearly all coal

- fired generation.

The commenters noted that the EPA recognizes in the proposal that there is no technological option to reduce CO2 emissions from power plants, yet EPA determines that the BSER for CO2 emissions from EGUs is primarily the reduction or elimination of coal genera tion. The commenters explained that grid reliability is threatened with coal generation, and that coal generation is essential to serving this county's electric load, ensuring that the owners and operators of coal generation remain viable and preventing dr amatic increases in electricity rates. The commenters noted that rural electric cooperatives are particularly vulnerable to the impacts of reduced coal generation, and these impacts will unacceptably fall on the poorest electric consumers in the country. B ecause of the CPP, the commenters contended that the CAA and the REA (and it progeny) can no longer be read and applied harmoniously. The commenters stated that the CPP and EPA's promulgation of the CPP is, therefore, illegal and must be withdrawn.
The com menters noted that the NODA published on October 30, 2014 in this docket seeks additional comments on CPP options that either will worsen or not address the rule's impacts on reliability and excessive costs.

Response 6 : The agency believes the emission p erformance levels it is establishing are in general affordable, achievable, and will not pose reliability issues for the power sector, including in rural areas. Section VIII.G.2 of the preamble and section 9.8 of the RTC discuss the agency’s
treatment of r eliability concerns and how they will be addressed. In addition, the agency conducted a “stranded assets” analysis as discussed in Section VIII.B.1. The agency disagrees that anything in the Rural Electrification Act of 1936 was intended to trump the agenc y’s authority and responsibility under the Clean Air Act with respect to air pollution control, and the commenter has not pointed to any specific provisions of the REA that are directly in conflict
with either the CAA or the Clean Power Plan.

Comment 7 : Commenters stated that the CPP is a major federal action warranting NEPA review, and that EPA should voluntarily develop an EIS for the proposed rule to satisfy each criteria needed to inform EPA regarding whether to voluntarily develop a NEPA document. Commenters suggested that the EIS process would allow: improved coordination with other federal agencies, such as FERC, which may be involved in future licensing actions; assessment of the large

- scale environmental impacts that may result from the build

- o ut of the nation's279 energy

- supply infrastructure that may arise as a result of the Proposed Rule's mandates; expansion of public involvement to address matters of controversy such as the significant reliability impacts the will result from the proposed rule implementation; full consideration of impacts on special resources and public health.

Commenters also discussed the possible elements of the build out, including more than 100 GW of generating capacity, associated electrical transmission infrastructure, natural gas transmission infrastructure, and renewable

- energy capacity, some of which may be constructed in remote or

as

- yet undeveloped areas. Commenters stated that some of the impacts will fall disproportionately on minority or low

- income populations an d trigger environmental justice implications without a robust EIS process.

Response 7 : This action under the CAA is not subject to the National Environmental Policy
Act. See 15 U.S.C. 793(c)(1). Project

- specific licensing and environmental reviews may need to be conducted at the time of actual project development and implementation undertaken to achieve emission standards set by state plans or a federal plan. This does not undermine in any way the legality of this action or the agency’s determination th at the degree of emission
limitation of the BSER is achievable . The agency includes robust discussion of the effects and impacts of the final guidelines in Sections IX

– XII of the P reamble, including potential impacts
on EJ and low

- income communities.

C omment 9 Commenters stated that the EPA has gone far beyond simply proposing "guidelines" for the states and asserts that the emissions performance goals imposed on the states are mandatory, cannot be changed during the course of the program, and each stat e is required to develop a "federally enforceable" plan that must be achieved in the timetable set forth by EPA. The commenters stated that the mandatory state goals leave no room for states to treat certain units differently or otherwise to modify their p lans in a meaningful manner as provided by the

statute.

Response 9: We disagree with this comment. We discuss the legal authority for the goals in section VII of the preamble.

1.15.5 Data and information

Comment 1 : Commenters stated, EPA's October 30, 2 014 Notice of Data Availability (NODA) does not contain any specific EPA proposals or proposed regulatory language and for the most part cannot be included in any final guidelines.

• The NODA contains virtually no "data," and is rather a series of questions and musings about different policies the Agency could employ. The content in this document is more appropriate for an advance notice of proposed rulemaking.280 • EPA provided insufficient time to allow stakeholders to provide fully informed and well

considere d comments on the NODA. The Proposed Guidelines are extraordinarily complex, and the issues raised in the NODA are broad and seem to contain some approaches that are either new or that contradict its previous positions.

• The regionalized approach to Buildi ng Block 3 and the regional approach to re

- dispatch under Building Block 2 were not included in the Proposed Guidelines and are not actually proposed in the NODA. There is insufficient information such as technical analyses and the other items required by section 307(d)(3) of the CAA that would allow UARG to comment on these approaches in a meaningful way.

Commenters stated, late in this rulemaking process EPA issued a "notice of data availability" (NODA), 79 Fed. Reg. 64,543

- 53 (Oct. 30, 2014). For the mo st part, NODA is a misnomer; it contains virtually no discussion of any relevant new "data," but instead is described as a means to "provid[e] additional information on several topics raised by stakeholders.' Id. at 64,543. The NODA identifies three topics that the Agency says have been raised either in public or private meetings with certain unnamed stakeholders: (1) "the emission reduction compliance trajectories created by the interim goal for 2020 to 2029"; (2) "certain aspects of the building block

met hodology"; and (3) "the way state

- specific [CO2] goals are calculated." Id. Although some of the stakeholders' suggestions regarding EPA's Proposed Guidelines might have profound effects on the requirements that states and regulated entities might have to meet in any final guidelines, the Agency has not budged on its December 1, 2014 deadline for comments on the Proposed Guidelines or on the NODA itself. Id. In any event, the NODA contains no EPA proposals or proposed regulatory language but rather is musin gs about different policies that the Agency might prefer. These seem more appropriate for an advance notice of proposed rulemaking rather than a NODA on the eve of a comment deadline. Most of the suggestions that are discussed in the NODA cannot be pursued without EPA undertaking additional analyses after which it could

re

- propose the rule for comment. See CAA section 307(d)(3).

Commenters stated, EPA acknowledges that the various alternative approaches the Agency is now contemplating in the NODA could fund amentally alter the proposed emission guidelines and lead to more stringent goals for all or some states. 79 Fed. Reg. at 64,544. Commenters stated EPA also recognizes that many issues in the NODA

- and the four Building Blocks generally

- "interact with e ach other." Id. Commenters stated realistically there is no way to assess how stringent any state's goals will actually be until EPA provides greater certainty on its preferred approach. Because of this fundamental ambiguity, commenters stated EPA cannot finalize any of the changes discussed in this NODA without issuing a supplemental proposal that clarifies the Agency's position, provides the basis and purpose for its approach pursuant to CAA section 307(d)(3), provides specific details of how each state would be affected, provides sufficient economic analysis of the changes, and provides proposed regulatory text. None of these things are present in the NODA. UARG is pleased that EPA appears to recognize some of the legal flaws and irrational consequences inherent in the Proposed Guidelines. For example, commenters stated EPA now appears to recognize that the Proposed Guidelines do not consider the remaining useful lives of existing EGUs, despite the explicit statutory command to do so in section 111(d)(1)( B) of the CAA. Id.; see also Id. at 64,549. Commenters stated the Agency has281 discovered that if finalized the Proposed Guidelines would create an enormous stranded asset problem with the required shutdown of many coal

- fired EGUs that have recently been

con structed or have recently received significant capital investment to comply with other EPA regulations, such as the MATS Rule and measures to reduce emissions of visibility

- impairing pollutants. Id. at 64,546. Commenters stated EPA now concedes that its r equirement for re

dispatch in Building Block 2 will in many situations distort regional electricity markets. Id. at 64,549. Finally, commenters stated the Agency now seems to acknowledge that the Proposed Guidelines render illusory its oft

- stated purpose o f providing states with flexibility with respect to time and emission reduction strategies. Id. at 64,544. The commenters stated that the EPA should withdraw the Proposed Guidelines, resolve the many problems that it has finally recognized, and propose a f undamentally different approach. The commenters stated that the EPA's scattershot efforts to date fail to satisfy the basic elements of notice and comment rulemaking. See CAA section 307(d)(3); 5 U.S.C. section 553.

Response 1 : The EPA disagrees with this comment for numerous reasons. The NODA gave the public notice of the changes it was considering making from the proposal and provided an opportunity to comment on those. The agency disagrees that this information must as a matter of
law need take the form of a re

- proposal of the rule itself, when the proposal itself is just a proposal, and could, as in any rulemaking process, change from proposal to final. Further, the commenter misunderstands the building blocks, and particularly building block 2. The agen cy is not mandating particular building blocks be implemented in every case, and the agency believes the sector can implement necessary reductions from measures in the BSER, or using other compliance measures, that do not “distort regional electricity mark ets.” Further, the agency conducted a stranded assets analysis to accompany the final rule, in response to this and other comments, which shows that in general, assets with extended remaining book life need not be forced to shut down. The final rule, like the proposal, provides real flexibility to the states. See Section VIII of the preamble.

Comment 2 : Commenters argued that the EPA has not provided all critical documents for review, nor engaged in a meaningful dialogue with FERC regarding reliability.

The commenters stated that the EPA has not provided all critical documents necessary for a thorough review of the proposed Guidelines and should provide additional time for states and affected sources to review these new materials and for EPA to respond m eaningfully to concerns raised by the recent report on reliability by the North American Reliability Council, and as reflected in the comments filed in this matter by the Midcontinent Independent System Operator (MISO) and other regional transmission organ izations. The commenters stated that the EPA has been adding documents to the Federal Register throughout the pendency of the public comment period. As an example, the commenters noted that the EPA recently released two years of data on electric consumptio n

- components of the modeling underlying EPA's proposed Guidelines

- as late as October 28. The commenters stated, more importantly for states like Indiana that have predominantly coal

- fired generation and a significant number of announced retirements, E PA has failed to provide sufficient guidance on how to calculate a mass

- based emissions target. The commenters stated that on November 6 EPA finally released a technical support document which282 seeks to illustrate potential methodologies for converting a st ate's rate

- based goal to a comparable mass

- based goal. However, the commenters stated that 3 weeks is not sufficient time to review the conversion examples and the multiple economic assumptions about future electric demand, future fuel usage and other impo rtant modeling inputs that EPA used to make the rate
conversion.

In addition to the administrative process concerns noted above, the commenters stated that the EPA has not held a robust dialogue regarding reliability with the Federal Energy Regulatory
Comm ission (FERC), regional reliability organizations, regional transmissions organizations, or state regulatory commissions. The commenters stated that these federal and state agencies are the agencies tasked under federal and state law with the authority tha t EPA attempts to extend to itself under Section 111(d), namely regulation of regional power markets, and implementation of renewable energy standards and energy efficiency programs. The commenters stated that the FERC, through the North American Reliabili ty Council (NERC), is charged under federal law with ensuring reliability of the electric grid. The commenters noted that on November 5, NERC issued its preliminary report on potential reliability impacts from EPA's proposed Guidelines, finding that the in terim goals required by EPA may threaten reliable electricity delivery in 2020, the proposal's initial compliance deadline. As NERC is the federal entity charged with grid reliability, the commenters stated that the EPA should pause the current administrat ive rulemaking process to thoroughly review and address NERC's reliability concerns before going forward with the current proposal. At a minimum, the commenters stated that the EPA should revise the interim deadlines for compliance in accordance with the r ecommendations in the NERC report.

Response 2 : We disagree with commenters. The EPA has fully considered reliability issues in developing this final rule. 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 reliab ility
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. 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. For a more comprehensive discussion of reliability issues, as well as the EPA’s coordination with both FERC and DOE, please see preamble section VIII.G.2. 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 prov ide 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 selecting the emissio n reduction glide path for affected EGUs over that period.283 1.15.6 Economic/industry issues

Comment 1 : Commenters stated that this proposal is a precedent for future GHG rules.

Commenters stated, EPA's regulations on power plants are only the first step of the Administration's broader greenhouse gas regulatory agenda. Commenters said, as the agency has
committed to a suite of follow

- on rules, many partnership member organizations will be impacted twice

- both as electricity customers and also as industri es "next in line" for subsequent rules that EPA has committed to pursuing. Commenters said, for example, last month EPA proposed new rules restricting emissions from municipal landfills, and the agency's current budget request to Congress notes it will soo n begin considering new GHG regulations on the following sectors: refineries, pulp and paper, iron and steel production, livestock operations, and cement manufacturing. Commenters said, the substance, process, and ultimate outcome of the initial regulation s on power plants are certain to influence the regulations that follow.

Response 1 : Comments regarding other sources categories are outside the scope of this rulemaking. As we have previously indicated the Agency intends to take a common sense approach to regulating GHGs and thus, at this time, consistent with the President’s climate Action plan and Methane strategy, the Agency has announced plans to further address emissions from landfills and oil and gas operations. The Agency disagrees that future reg ulations will result in “double impacts.” Each NSPS applies to a unique category of sources. Regulating municipal landfills will not impact electricity prices.

Comment 2 : Commenters stated that the proposed guidelines are not justified by their purported benefits when those benefits are characterized properly.

Commenters stated, if the benefits of the Proposed Guidelines are properly characterized

- that is, without inappropriately claiming benefits from the U.S. Government's social cost of carbon ("SCC") estimates and the benefits of reducing pollutants that are regulated to protective levels by other rules

- there are no benefits to weigh against the exorbitant costs. Commenters said, the Proposed Guidelines therefore cannot be justified and are thus unl awful. Commenters said, in fact, EPA never claims the Proposed Guidelines will mitigate climate change, despite describing the issue of climate change at length as a purported rationale for the rule. Commenters said, while the Agency quantifies the estimat ed emission reductions that the Proposed Guidelines will achieve, it never makes the connection between those emission reductions and the resulting impact on climate change, raising questions about the purpose of the rule. Commenters said, a "standard of p erformance" for purposes of section 111 is defined as the degree of emission limitation achievable through the best, adequately demonstrated system of emission reduction, "taking into account the cost of achieving such reduction . . . ." CAA section 111(a) (1) (emphasis added). Commenters said, a section 111 standard that imposes greater costs than benefits is therefore unlawful. Commenters said, EPA's reliance on the SCC and public health benefits to claim benefits from the Proposed Guidelines is arbitrary and capricious. Commenters said, any regulation whose costs outweigh its benefits is unlawful and is also ineffective and misguided.284 See CAA section 301(a) (authorizing EPA to adopt "such regulations as are necessary to carry out [its] functions under [the Act]"; regulations that yield no benefits cannot be "necessary").

Response 2 : The commenters are incorrect on multiple fronts. First, there is no requirement that a rule’s costs outweigh its benefits. Many benefits are difficult to monetize, so cost

- ben efit analysis is just one tool that the Agency may use when considering costs. Second, the RIA for the final rule clearly demonstrates that the benefits of the final rule will far exceed its costs. Finally, the commenters’ critiques of the social cost of c arbon are self

- serving. The social cost of
carbon is a well

- recognized and scientifically sound method of monetizing the damages avoided by reducing GHG emissions.

Comment 3 : Commenters stated that the EPA has not considered the feasibility of specific nuclear installations, has not thoroughly assessed economics of nuclear generation, and does not appear to have consulted with state public service commissions or the nuclear regulatory commission to determine feasibility or planning for future nuclear ins tallations. The commenters stated that because EPA lacks authority to require construction or operation of new nuclear units, the Rule is ultra vires, arbitrary, capricious, an abuse of discretion, not in accordance with law
and must be withdrawn.

Response 3 : Nuclear generation has been removed from the BSER calculation. Nonetheless, we note that this comment is based on the false notion that EPA is ordering, or requiring states to order, the implementation of the specific measures that comprise the BSER. This is incorrect. See Legal memo Section VII.C and D.

Comment 4 : Commenters supported a "pledge and review" approach that allows the United States to modify its participation in climate action if the rest of the world does not follow suit and
the Unit ed States is placed at an untenable economic disadvantage. The commenters stated that the Administration's November 12, 2014 announcement of a preliminary agreement with China to cut or cap CO2 emissions in China and the United States, although on differen t timelines and to different extents, may develop into a multi

- national agreement on this front. However, the commenters continued to believe that the pledge and review safety valve, which is not contained as part of the Proposed Rule, is needed as part of a national carbon policy.

Response 4 : The Clean Power Plan is under authority of domestic law found within the Clean Air Act, and, while supportive of international efforts to address the global problem of climate change, is not legally dependent on part icular international obligations. The degree of emission
limitation the agency determined to be achievable was based on analysis of the domestic sector. For discussion of the relationship of this action to international actions, see Section II.G of the
Pre amble.

Comment 5 : Commenters stated that the proposed rule must account for unique challenges faced by utilities that do not control the units that they own.285 The commenters stated that the EPA's Proposed Rule is also flawed because it is based on the faulty assumption that all utilities have full control over the units they own. The commenters described partial ownership arrangements of selected plants in Minnesota. Under the O&M agreement, during times that the plant is running, two companies are each required to offer enough generation so that the co

- owned plant can operate at a minimum level of 500 MW. Commenters stated neither company unilaterally decide that it does not want to run the unit. Thus, commenters added, if one party decides to run its s hare of the unit, the other party is obligated to run its share at the minimum level.

The commenters stated that these circumstances create unique challenges for the two companies in implementing the different building blocks set forth in the Proposed Rule . Commenters stated if, for example, company 1, whose generation fleet is much more diversified than company 2 determines that, to meet its obligations under the Proposed Rule, it cannot offer its minimum generation at the co

- owned unit, while company 2, o n the other hand, determines that it could
continue to run the co

- owned plant, both utilities would be put in a very precarious predicament. Commenters stated Company 1 would either have to 1) breach its agreement to offer its minimum generation from the p lant, thereby precluding company 2's ability to run the unit, or 2) offer the required minimum generation for the co

- owned plant and run afoul of the Proposed Rule. The commenters stated that both outcomes are problematic. Accordingly, the commenters

state d that the EPA must address in any final rule the unique challenges that co

- owners face in implementing the different building blocks set forth in the Proposed Rule.

Response 5 : The agency recognizes that the compliance strategies for individual units may vary and is not mandating facilities use a particular technology or set of measures to achieve
reductions. W e note that the state in which the facility is located will have the first opportunity to design a state plan that applies emission standards to th e unit and has opportunities to provide various flexibilities. The guidelines do not require the implementation of the specific building blocks that constitute the BSER, rather they establish emission performance levels that the states implement through st andards of performance.

1.15.7 State

- specific issues

Comment 1 : Commenters expressed concern that the Notice of Data Availability ("NODA'') published on October 28, 2014 did not comply with the requirements to comply with the Administrative Procedures Act (APA), because the information presented in the NODA implied a change in the stringency of the proposed BSER, and did not provide an adequate state of basis for the proposed changes.

The commenters noted that the NODA seeks comment on a variety of propose d changes to the states "goal" setting without providing a revised rule or the associated time to fully comment on the proposed changes. In the case of Wyoming, the commenters argued that these potential "changes" may result in a significant further increa se in the stringency of any final Wyoming compliance obligation with incremental and unavoidable costs of compliance.286 The commenters expressed concerned about the significant impact of the additional EPA proposal for creating a minimum value of re

- dispatch ed coal to non

- existent NGCC power plants or to co

- firing natural gas in existing coal

- fired boilers. The commenters also noted that the EPA is proposing another potential means for increasing the stringency of a state "goal" by adding incremental renewabl e energy and energy efficiency to the "goal" which replaces fossil generation pro

- rata or prioritizes the re

- dispatch of fossil generation based on historic emissions. In addition, the commenters objected to the lateness of the NODA

- raised issues in the co mment period for the Proposed Rule, and the fact that the EPA would seek comment on changing the goal (merely stating "this adjustment to goal

- setting formula would yield more stringent state goals") without providing a new proposed rule.

The commenters no ted that EPA readily admits that certain elements proposed in the NODA could alter the stringency of the BSER. The commenters argued that the proposed approaches in the NODA do potentially impact the final BSER goal for each state and must undergo the same treatment given the BSER put forth in the June 2014 proposal. This would include, but not be limited to, technical support documents detailing how each state could apply these alternatives, additional parsed IPM results enabling states to understand the u nit

- by

- unit impact of these alternatives, revised regulatory impact analyses, substantial demonstration of the technical and economic feasibility of these alternatives as part of BSER, and a complete and transparent demonstration of how renewable generatio n and EE measures can displace large amounts of base

- load fossil generation on a relatively short time frame without impacting the reliability of power grid. Absent this, the commenters argued that the additional approaches put forth in the NODA represent only vague and nebulous concepts that have not been fully developed and analyzed by EPA. The commenters argued that the burden of analyzing these vague and poorly developed alternatives should not be shouldered by the states; a burden which is exacerbated given the paucity of supporting data and technical information provided by EPA. Going forward on these concepts does not provide the adequate statement of basis as required by the APA.

Response 1 : EPA provided adequate notice and opportunity to comment on both the proposed rule, and the updated information provided in the NODA. See response to Comment 1 in section
1.13.

Comment 2 : Commenters, using context from North Dakota, suggested that EPA must re

propose the rule.

Commenters stated, federal agencies are required to provide the public with adequate notice of a proposed rule and a meaningful opportunity to comment on the rule's content. Commenters said, with the CPP, the EPA is poised to enact the most consequential and expensive environmental regulati on ever imposed on the electric power sector. Commenters said, given that so much is at stake, interested parties are entitled to a notice

- and

- comment process that does not involve EPA floating vague new proposals or handing down crucial technical support documents a mere 30 days before the comment period is set to close.

Commenters stated, with its NODA, EPA foists an ill

- defined and far

- reaching proposal on both the people and power sector of North Dakota. Commenters said, after proposing a rule in June which apparently calls for no reduction in coal

- fired power generation in North Dakota, EPA
made an about

- face in the last week of October, raising for the first time the possibility of287 imposing "some" required shift to natural gas. Commenters said, any " adequacy" such an 11th

hour notice might have is undermined when EPA goes on to define "some" as any value between 0% and 55% of a state's electric generation output. Commenters said, it is difficult for any North Dakota stakeholder wishing to draft and su bmit comments to know where to start with such an indeterminate rule, to say nothing of the mere 30

- day time clock ticking against their efforts to
do so.

Commenters stated, even more recently, EPA issued its long

- awaited technical support document
for th e CPP, entitled Translation of the Clean Power Plan Emission Rate

- Based CO2 Goals to
Mass

- Based Equivalents. Commenters said, in it, EPA outlines two potential ways for authorities to take their state's rate based emission targets and translate them into m ass

- based equivalents. Commenters said, but EPA's guidance provides little help at this juncture in the notice

- and

comment process. Commenters said, if any changes are made from the goals set in the Proposed Rule that increase the stringency of the goals o r otherwise increase impacts to states, additional opportunity for comment must be provided.

Commenters stated, under the rate

- based regulatory scheme laid out in June, the primary difficulty facing state authorities was one of allocation. Commenters said , compelling states to reduce their overall rate of CO2 emission by a particular factor state

- wide meant authorities would have to determine which of their state's EGUs to regulate and to what degree, hoping their efforts would land them on their target ra te. Commenters said, in the wake of EPA's technical support document, however, authorities are faced with a completely different problem. Commenters said, unlike rate

- targeting regulations, it is easy for states to regulate EGUs by telling each how many to ns of CO2 they can emit each year in order to hit a mass

- based target. Commenters said, instead, the primary difficulty in a mass

- based regulatory scheme is accounting for demand growth. Commenters said, this problem is particularly acute in North
Dakota w hich has experienced significant growth in demand for electricity subsequent to the 2012 baseline year that is used in the CPP. Commenters said, but authorities and interested parties are provided with just over three weeks to grapple with this issue and r espond to the EPA with comments. Commenters said, this is an insufficient amount of time to properly assess legitimate party concerns.

Commenters stated, if EPA wants to include significant limitations on operations of North
Dakota's coal

- fired EGUs in its final rule, it must re

- propose the CPP with those limitations and provide an adequate opportunity for comment. Commenters said, courts have held that any final rule must, at a minimum, be a "logical outgrowth" of its proposed rule. Commenters said, that

s tandard requires courts to ask whether a new round of notice and comment would "provide commenters with 'their first occasion to offer new and different criticisms which the agency might find convincing.'" Commenters said, two policies are reflected by thi s inquiry: giving the regulated a chance to voice concerns to the regulator and ensuring that each regulator considers the full scope of relevant evidence that may bear on its decision.

Commenters stated, under the rate

- based regulatory scheme laid out in June, the primary difficulty facing state authorities was one of allocation. Commenters said, compelling states to288 reduce their overall rate of CO2 emission by a particular factor state

- wide meant authorities
would have to determine which of their state's EGUs to regulate and to what degree, hoping their efforts would land them on their target rate. Commenters said, in the wake of EPA's technical support document, however, authorities are faced with a completely different problem. Commenters said, unlike ra te

- targeting regulations, it is easy for states to regulate EGUs by telling each how many tons of CO2 they can emit each year in order to hit a mass

- based target. Commenters said, instead, the primary difficulty in a mass

- based regulatory scheme is

account ing for demand growth. Commenters said, this problem is particularly acute in North Dakota which has experienced significant growth in d e mand for electricity subsequent to the 2012 baseline year that is used in the CPP. Commenters said, but authorities and interested parties are provided with just over three weeks to grapple with this issue and respond to the EPA with comments. Commenters said, this is an insufficient amount of time to properly assess legitimate party concerns.

Response 2 : EPA provided adeq uate notice and opportunity to comment on both the proposed rule, and the updated information provided in the NODA. See response to Comment 1 in section
1.13. Additional opportunity to consider and comment on this issue of rate

- based versus mass

based implementation will be available during the comment period on the proposed federal plan and model trading rules. But we note that while either approach poses benefits and challenges, under the final guidelines, it ultimately remains in the state’s hands to choose which approach is best for it. The agency is not mandating a particular form of implementation in the final rule.

Comment 3 : EPA purports to offer the North Dakota Companies, and many others similarly situated, wit h an occasion to submit a full range of criticisms unique to the NODA and TSD, but does not actually do so. Commenters said, a combination of the NODA's vague and broadly drawn guidelines and a joint comment period totaling just over three weeks conspires to deny these parties with a true occasion to submit all "new and different criticisms" each may have. Commenters said, through October 29, the North Dakota Companies had no reason to consider submitting their own comments to EPA and made no effort to do s o. Commenters said, on October 30, however, those same companies suddenly faced the prospect of indeterminate restrictions on their customer base as a result of the potential loss of anywhere from 0% to 55%
of the state's coal

- fired EGUs. Commenters said, and the futility of comments on these indeterminate restrictions became even more pronounced with the issuance of the TSD on November 6 that presents mass

- based alternatives that do not appear to account for recent economic growth in North Dakota. Commente rs said, this abrupt and amorphous form of regulating, combined with a prohibitively short response period, denies the North Dakota Companies of an opportunity to fully evaluate all questions, concerns, and constructive suggestions they might have and leav es a pronounced gap in EPA's catalog of relevant

comments.

Response 3 : EPA provided opportunity to comment on the data in the NODA, as acknowledged by the commenter. It is not unusual that the potential range of stringency of regulation under a289 proposed rule could vary greatly depending on the options that are under consideration. Comments offered by parties in North Dakota or elsewhere were by no means in futility, considering the variety of changes undertaken by the agency to improve the final rule in r esponse to the concerns raised.

Comment 4 : Commenters urged that EPA in developing the guidelines for existing power plants, to respect the primacy of Virginia and Pennsylvania and other states and to rely on state regulators to develop performance standa rds for CO2 emissions that take into account the unique policies, energy needs, resource mix, and economic priorities the states. The commenters stated that the guidelines should reflect and approve state

- established performance standards
undertaken at fos sil

- fueled power plants. Commenters stated that EPA should allow Virginia and other states to set less stringent performance standards or longer compliance schedules for power plants within their jurisdiction; and allow stated maximum flexibility to implem ent CO2 performance standards for fossil

- fueled power plants within their jurisdiction.

Response 4 : We explain our authority to require that in order to be approvable, state plans must meet the emission performance levels established in the guidelines in Section VII of the Legal Memo and Section V of the Preamble. At least since the promulgation of the subpart B regulations in 1975, the agency has interpreted its authority to review and approve or disapprove state plans as based on substantive criteria. St ates do have considerable flexibility in the design of their plans here, to take into account local needs.

Comment 5 : Commenters asked that the EPA support a balance approach considering both environmental stewardship and the need for affordable, reliab le electricity.

Commenters stated, the MPUC is directed by state law to provide retail consumers of electric service in Minnesota with adequate and reliable services at reasonable rates) consistent with the financial and economic requirements of public ut ilities. Commenters said, the MPUC must set rates that are just and reasonable, not unreasonably preferential, prejudicial or discriminatory, and, to the maximum extent possible, set rates that encourage energy conservation and renewable energy use, and re duce the State's reliance on fossil fuels. See Minn. Stat. sections 2168.01 and 2168.03. Commenters said, these directives guide the decisions of the MPUC as it addresses the utilities' requests to build or purchase new generation) refurbish or close exist ing facilities, develop incentives for energy efficiency, and monitor compliance with the statutory renewable energy and greenhouse gas reduction goals. Commenters said, environmental stewardship is a key element of the Commission's decisions, balanced wit h the obligation to assure a reliable electric system and affordable rates. Commenters said, thus, each decision of the MPUC takes into account the type and timing of change, as well as the cost. Commenters urged the EPA to support this balanced approach t o meeting carbon reduction goals.

Response 5 : The EPA has established a balanced approach to meeting carbon reduction goals. The agency believes that state PUCs and relevant state laws can be supportive of, contribute to,290 or otherwise complementary to mee ting the emission performance levels of the guidelines, depending in part on how a state chooses to design its state plan.

Comment 6 : Commenters stated that the proposed rule does not permit States to consider remaining useful life.

Commenters stated th at the Proposed Rule does not permit States to consider the remaining useful life of any particular source to which the Proposed Rule will apply. The commenters
stated that the EPA proposes to require that all states strictly adhere to a carbon emission li mit on a specified schedule; however, Section 111(d) mandates that EPA allow states to consider the remaining useful life of a source when applying standards of performance to that particular
source. 42 U.S.C. section 7411(d)(1). The commenters stated that with a strict carbon emission limit in place, states cannot exercise their statutorily mandated discretion. The commenters stated that the EPA is without authority to deny states this statutory right, and therefore, may not proceed with this rulemaking.

C ommenters stated that the EPA claims that the breadth of the proposed BSER imbues these regulations with so much flexibility that states do not need to alter the strict emission limits. The
commenters stated that this claim is false because states are enti tled to flexibility over time, which the Proposed Rule does not allow. The commenters stated that to meaningfully take the remaining life of a source into consideration, states must be able to lengthen the compliance time to the source's anticipated retire ment date. The commenters stated that strictly limiting emissions by a compliance schedule denies states the ability to take the remaining useful life of any source
into consideration.

Commenters stated that the EPA should amend its proposed regulation to allow states to adjust a state emission limit or provide for longer time to meet the goal to account for the remaining useful life, and other site

- specific factors, of existing EGUs in accordance with CAA Section 111(d). The commenters argued that Congres s would not have mandated that remaining useful life be considered if EPA was to be given the power in CAA Section 111(d) to force retirements. In addition, the commenters charged that the EPA has not shown that all of its state emission
limits are achieva ble without consideration of remaining useful life

- it simply assumes this to
be so. The commenters noted that if states cannot meet system reliability obligations to their citizens, FERC and state regulators under the goals as formulated by EPA, then the goals must yield. The commenters noted that since states have the necessary local information to make that valuation, not EPA, the rule must give states authority to adjust their goals as necessary to reflect reality on the ground, to protect the remainin g useful life of sources, and to protect the reliability and affordability of electric power. The commenters argued that failure to provide states the authority to adjust their "goal" to account for remaining useful life will almost certainly result in
for ced early retirements which would constitute a taking of private property in contravention of
the fifth amendment to the United States Constitution.

Response 6 : We disagree. As explained in Section VIII.G.1 of the preamble and Section IX of the Legal Memo randum, these emission guidelines reasonably permit States to consider remaining useful life. Most of commenters’ arguments are addressed there; arguments regarding291 the Takings Clause are addressed in section X.D of the Legal Memorandum. For responses to reliability concerns, please see Section VIII.G.2 of the preamble. We explain our interpretation of remaining useful life in section VIII.G.1 of the Preamble and Section IX of the Legal Memo. We explain there that the guidelines reasonably permit states to consider remaining useful life and other facility specific factors. The guidelines are designed to permit trading, the creation of
interstate emission markets , and reallocation of the costs of compliance. We view the remaining
useful life consideration as primarily regarding a concern for facilities with relatively short remaining useful lives and the potential that they may be required to install unreasonably costly pollution control devices (these guidelines to not impose such a requirement). Nonetheless , the agency also conducted a “stranded assets” analysis to determine if commenters’ concerns were correct that the rule would force widespread retirements of units with relatively long book lives. As explained in Section VIII.B.1 of the Preamble, we found that this need not be the case. This of course may depend on how states choose to design their state plans, but it cannot be said that this rule requires the result. Insofar as this comment asserts that there may be a potential takings claim, see the disc ussion of the Just Compensation Clause in the Legal Memorandum accompanying the final rule.

With respect to the argument that to “meaningfully take the remaining life of a source into consideration, states must be able to lengthen the compliance time to t he source's anticipated retirement date,” we disagree. The result of lengthening compliance time in the way the commenter suggests is to not require compliance at all. As explained in section IX of the Legal Memorandum, EPA reasonably interprets the remai ning useful as not providing an outright exemption.

Comment 7 : Commenters noted that the EPA's rules specify that states may set forth their compliance schedules for designated facilities, and the state can choose to adopt EPA's "guidelines" for impleme ntation or can choose to adopt its own. 40 CFR 60.24. ("Emission standards shall either be based on an allowance system or prescribe allowable rates of emissions except when it is clearly impracticable." ); 79 FR 34844, n. 39 ("In the 1975 rulemaking, the E PA explained that it used the term 'emissions guidelines'

- instead of emissions
limitations

- to make clear that guidelines would not be binding requirements applicable to the sources, but instead are 'criteria for judging the adequacy of State plans.' 40 F R 53343." ).

The commenters noted that courts have recognized that the state is in charge of setting its compliance timetable. See, e.g., Bethlehem Steel Corp., 742 F.2d at 1036 ("Congress has given the states the initiative and a broad responsibility rega rding the means to achieve those ends through state implementation plans and timetables for compliance.... The CAA is an experiment in federalism, and the EPA may not run roughshod over the procedural prerogatives that the Act
has reserved to the states... ." ).

According to the commenters, one would expect the deadlines to be more realistic because Congress did not establish compliance deadlines for Section 111(d), as it did with Section 111(b), but Congress did require EPA to consider remaining useful life, ener gy and cost considerations. The commenters stated that yet EPA allows a 30

- year averaging time frame for292 new coal

- fired power plants to meet the stringent new standard, while instituting the "carbon
cliff" in the CPP. Given EPA's oft

- stated rationale for t he CPP that each state has different resources and policy implementation, the commenters stated that one would also expect the rule to allow the states themselves to establish a realistic rate of progress given the unique nature of each state's legislative and regulatory environment and the makeup of the generation units located within the state. The commenters suggested that the EPA should modify the rule to require states to set reasonable rates of progress, thereby eliminating the need for interim goals.

Response 7 : We address the binding nature of the emission guidelines in the Legal
Memorandum. The agency agrees with the commenter that states should have flexibility in implementation, and has designed the final emission guidelines to provide a great de al of flexibility . Indeed EPA has provided extended timelines for compliance in the final rule and has taken steps to address the so called “cliff” problem. Regarding commenters’ assertions that states should be able to determine the degree of stringency, and schedule for compliance for their sources, without being subject to the EPA’s oversight, such assertions are simply not borne out by the text and structure of section 111(d). Congress twice in section 111(d) directs the agency to
section 110 for guidance regarding the nature of the sec tion 111(d) program. This is highly instructive on the question of whether the agency has the authority to see to it that the ultimate
end is achieved

— i.e., that sources achieve the emission performance levels the ag ency determines are achievable

. Under the NAAQS framework, t he agency establishes the NAAQS

, and while states have great flexibility in designing SIPs that assure the NAAQS are attained and maintained, they ultimately must achieve that end , subject to the potential that EPA may disapprove a plan, call for plan revision, and/or issue a FIP. In Section 111(d) , Congress established the same framework, where the agency is charged to determine the “degree of emission limitation achievable” for particular categor ies of sources, and then provide guidelines for how states may design plans to meet that end result. Congress authorized the agency to disapprove state plans that are not satisfactory and, directly cross

- referencing to the NAAQS program, giving the agency the “same authority to prescribe” a federal plan as it would have to promulgate a FIP under section 110(c). See CAA section 111(d)(2). We note that Bethlehem
Steel is inapposite as that case was about the nature of EPA approval actions on SIPs that had

t he effect of altering the state’s intended SIP. See also 80 FR 33840, 33876

– 79 (June 12, 2015).

We disagree that the court cited by commenter recognized the state is “in charge of setting its compliance timetable.” T he commenter has simply misread the di cta in Bethlehem Steel Corp. v.
Gorsuch , 742 F.2d 1028

, 1036 (7th Cir. 1984), which refers to the schedules set by the Clean Air
Act. This can be ea sily seen by following the cite to Train v. Natural Resources Defense Council, Inc. , 421 U.S. 60, 64

- 65 (1975) (“The difference under the [1970] Amendments was that the States were no longer gi ven any c hoice as to whether they would meet this responsibility. For the first time they were required to attain air quality of specified standards,
and to do so within a specified period of time .”) (emphasis added).

The fact that Congress did not speci fy compliance deadlines in section 111(d) simply means that Congress delegated to EPA to reasonably decide what those deadlines should be. (Note that plan submittal deadlines should be “similar” to those in section 110, see Section VIII.E.9.a of the293 preamb le.) EPA has done so here. As a result of comments, we are permitting States to set their own glide path and we are moving the start of the compliance period from 2020 to 2022. We disagree with the commenter that our compliance schedule is unreasonable

. As explained in section V of the preamble, EPA has reasonably determined BSER, and as explained in section VIII.G.1 of the preamble and Section IX of the Legal Memorandum, these emission guidelines reasonably permit States to consider remaining useful life.

Comment 8 : Commenters stated that the EPA's guidance regarding "reasonable rates of progress" as set forth for NAAQS demonstrations is applicable here. The commenters stated that the CAA recognizes that states are the front

- line implementers for emi ssion sources within their jurisdictions. Specifically, the commenters noted that 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 f inancial 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) and (a)(4) (emphasis added).

The commenters stated that no need for strict interim deadlines exists unless EPA finds that the states are not properly demonstrating reasonable progress toward attainment of the goal. The commenters noted that if it does make such a finding, EPA has the authority to require an
addit ional showing that the state's plan will achieve the goal and/or to impose a Federal Implementation Plan. 42 U.S.C. Section 7411(d)(2)(A). Here, the commenters contended that the EPA has conflated the distinct division of responsibilities created by Congre ss in the CAA.

Response 8 : We disagree that the timelines provided in the final rule do not allow for a reasonable timeline for progress. We disagree that NAAQS guidance is directly applicable under 111(d). While the agency agrees with commenters that Con gress viewed states and local governments should have primary responsibility for air pollution control, the CAA was enacted, and authorizes EPA, to ensure that national air pollution control objectives are ultimately achieved. The final rule gives states t he opportunity to develop state plans in the first instance. The commenter is correct that if states do not choose to take advantage of this opportunity, then the EPA will develop a federal plan for the affected EGUs in that state. Far from “conflate[ing] the distinct division of responsibilities,” this follows the letter of section 111(d).

Comment 9 : Because of the regulatory scope of the CPP, no single regulatory agency in Florida has adequate authority to implement the performance standards of the CPP. A Florida statute limits the regulatory scope of its Department of Environmental Protection (FDEP) to environmental policy. Aspects of the CPP that are not environmental in nature will have to be addressed by other regulatory agencies and by the Florida Legislature. The elements of the four CPP building blocks are implemented/enforced by different state agencies and each element will likely require State legislative direction to those different agencies. The commenters expressed
concern as to what it wi ll have to do and to whom it will be required to demonstrate compliance or demonstrate progress towards meeting goals. FDEP normally enforces EPA rules, but it has no statutory authority to enforce standards associated with generation re

- dispatch or the
d evelopment of new renewable energy (RE) sources or the level of energy efficiency (EE)294 achieved by electricity end

- users. While RE and EE are within the sole purview of the Florida Public Service Commission (FPSC), it is not clear if any Florida regulatory agency can direct the

re

- dispatch of generation. This approach will require almost every state to develop a new regulatory construct to meet an unprecedented federal rule. CPP implementation in Florida could also be hampered by state law that may require legislative review or ratification. Florida's legislature meets for one 60

- day session annually. In addition to this confounding any state plan's implementation, EPA should not discount the political reality of a legislature's inability to reach

consensus on a state's development and implementation of the CPP requirements, especially in states that are wary of expansive regulation.

Response 9 : EPA disagrees with this comment since it commits categorical errors about the nature of the BSER, the role of EPA in determining an emission performance level in the guidelines, the role of the states in establishing emission standards through state plans, and the responsibility of the sources in achieving them. These roles are explained in Section VII of the Legal M emo. Among other things, if a state is incapable of providing itself with the legal authority to carry out an approvable state plan, then the EPA will implement a federal plan for the sources in that state through setting emission standards on the faciliti es that achieve the degree of emission limitation determined to be achievable in the guidelines. See also RTC 1.15, response 70, infra.

Comment 10 : Commenters described state legislative actions that would allow for less stringent standards and longer tim elines that called for in the CPP.

Commenters stated that Louisiana has legislation governing carbon emissions regulations. The commenters stated that the EPA's proposed rule is inconsistent with Louisiana Revised Statute
Title 30 section 2060.1, which re quires the LDEQ, "in collaboration with and input from the
Commission" to set fossil

- fueled electric generating unit performance standards, not the EPA. [La. R.S. 30:2061.1 (2014).] The commenters stated that these agencies are to set the standard
based on inside

- the

- fence measures, and allow for a more lenient standard based on such factors as cost and impacts on the ratepayers and the economy. The commenters noted that the EPA's proposed rule is in direct conflict with the interests of Louisiana citizens, as expressed through their elected representatives, by refusing to allow Louisiana a sufficient role in setting the standard, or any flexibility or exceptions based on cost, engineering or economic factors. The commenters stated that the statute provides:

In developing a plan for the implementation of any guidelines for greenhouse gas emissions that the United States Environmental Protection Agency may issue under Section 111 (d) of the Clean Air Act, the Department of Environmental Quality, in collaborati on with and input from the Public Service Commission, may establish standards of performance for carbon dioxide emissions from existing fossil fuel

- fired electric generating units.

The commenters stated that the Louisiana standard of performance shall be based on:

(1) The best system of emission reduction, taking into account the cost of achieving such reduction;295 (2) Reductions that can reasonably be achieved through measures undertaken at each fossil fuel

fired electric generating unit; (3) Efficiency im provements that can be undertaken without switching to other fuels, co

- firing with other fuels, or limiting the utilization of the unit.

The commenters noted that the Louisiana statute goes on to provide that the Department may adopt "less stringent standa rds or longer compliance schedules" than those provided in federal
rules based on:

(1) Consumer impacts, including any disproportionate impacts of energy price increases on lower income populations; (2) Unreasonable cost due to plant age, location, or basi c process design; (3) Physical difficulties or impossibility of implementing emission reduction measures; (4) Absolute cost of applying the performance standard to the unit; (5) Expected remaining useful life of the unit; (6) Economic impacts of closing th e unit; (7) Need to maintain reliability on electric grid; and, (8) [A]ny other factors specific to the unit." [Id]

According to the commenters, these criteria for setting a more lenient standard and longer compliance schedule in Louisiana are based on the federal implementing regulations promulgated by EPA, at 40 CFR 60.24(f).

Other commenters stated that 2014 legislation in Missouri exempts Missouri utilities from compliance with EPA carbon reductions. [Missouri HB 1631 crafted by the American Legislative Exchange Council (ALEC)]. The commenters noted that this bill is designed to exempt Missouri from acting in compliance with the EPA's rules to reduce greenhouse gases on a state by state basis across the U.S. The commenters stated that while it is decept ively worded to convey cooperative intent, the operable language of HB 1631 is,

"The [Air Quality] commission may develop... [power plant] ...emission standards that are less stringent, but not more stringent, than applicable federal emission guidelines or longer compliance schedules than those required by federal regulations." http://www.house.mo.gov/billtracking/bills141/billpdf/truly/HB1631T.PDF

In other words, the commenters stated that power plants in Missouri would not have to comply
with the new CO2 emission standards, when the EPA rules are finalized. The commenters stated that the bill goes on to specify qualifying factors that are qualitative and inexact, rather than quantitative and definitive, and therefore subject to extensive debate. The commen ters stated that this embraces the utility industry's time

- honored tradition of stalling progress in environmental protections by tying the rules up in court, for years on end.

Response 10 : EPA thanks these commenters for the information they have provid ed on the laws and regulations of these States. Ultimately, state plans will be subject to the agency’s substantive review for approvability, on the basis of meeting the requirements of the federal Clean Air Act,296 including the requirements of the emission guidelines. If a state does not submit plans that are approvable, the EPA will promulgate a federal plan for the affected EGUs in that state. We note the Act provides that States have reserved authority to set standards more stringent than federal guidelin es under section 116. We also note that 60.24(f) clearly provides that an applicable subpart (i.e., emission guidelines for a particular pollutant from a particular source category) may supersede its general provisions. States may in some cases set emissio n standards under 111(d), including in these guidelines, for a particular unit that are less stringent than the subcategorized emission performance rates for the two subcategories of sources covered by these guidelines. However, in these guidelines, this i s subject to conditions such as that the affected EGUs in the state continue to meet the overall state goal. (As the agency explains elsewhere, this is possible through the availability of trading and other mechanisms that provide flexibility in these guid elines.).

Comment 11 : Commenters stated that as evidence of congressional intent, EPA lacks resources to develop and administer the expansive plans required under the proposed rule.

The commenters noted that in the event that States do not or cannot prop ose their own plans, Section 111(d) tasks EPA with developing those plans instead. 42 U.S.C. section 7411(d)(2). The
commenters stated that traditional end

- of

- stack BSER require only limited resources for EPA to stand in a State's shoes and prepare a plan for the existing sources of pollution subject to a particular BSER. The commenters stated that the variety of existing EGUs and the varied circumstances in each State requires resource

- intensive analysis and the wise exercise policy discretion in deciding which commercial activities will be advantaged and disadvantaged. Beyond lacking legal authority, the commenters asserted that the EPA simply does not have the staff or expertise or legitimacy to complete these tasks for all 50 States. The commenters state d that the fact that EPA is itself subject to these practical constraints is further proof that Congress did not intend to sanction economy

- wide regulation of GHGs through Section 111(d).

Response 11 : The EPA disagrees with this comment. The EPA will be p roposing two separate approaches to a federal plan, each of which it is fully capable of implementing for every state in the country, if necessary, to achieve the emission performance levels established in the guidelines. Both are emission trading programs , and the EPA has considerable expertise and competency in the implementation of emission markets, which the Congress has widely authorized throughout the CAA and particularly in title I, see , e.g., CAA section 110(a)(2)(A) and section 302(y).

Comment 12 : The commenters affirmed the TVA's comments, specifically as they pertain to TVA's future ability to comply. The commenters noted the TVA's numerous actions to reduce carbon emissions have resulted in a more than 20% reduction since 2005 and should be

com mended. However, the commenters stated that the Proposed Rule's inconsistencies and technicalities leave TVA with a limited range of feasible actions to achieve compliance because of those same early actions. The commenters stated that companies bearing th e cost of early actions to reduce TVA's carbon footprint should not now be penalized with additional cost(s) they would not otherwise be required to bear if these early actions had not been taken

- simply297 because the rule fails to credit such early actions towards compliance. The commenters stated that this is especially true as it pertains to the Proposed Rule's treatment of under

- construction nuclear generation.

The commenters stated that the emission rates are unachievable because the Proposed Rule arbitrarily excludes hydropower, a zero

- carbon resource, from inclusion in its calculation of a state's existing emissions rate, thereby unfairly denying the State the option of counting that

zero

- carbon generation resource toward compliance with the Proposed Rule's requirements (the existing hydropower generation is not included in the denominator of the emission rate calculation). The commenters noted that it has been stated that the rationale for this method was to encourage future behavior, rather than reward past behavior.

The commenters argued that the exclusion is inexplicable, as other existing zero

- carbon resources (such as wind and solar) are included in the c alculation. The commenters stated that this inconsistency unfairly punishes companies based on a preference for certain sources of
carbon

- free generation. The commenters stated that existing hydropower supplies as much as 10% of energy needs, while their s tate's capacity for wind generation is practically non

- existent, and the capacity for solar in the Tennessee is severely limited. The commenters stated that the rule favors generation methods that are impracticable for them and ignores methods that would

e ase their compliance burden. The commenters stated that the practical application of the
calculation is to de

- incentivize maintenance and expansion of existing hydropower facilities in favor of constructing new and much more expensive and limited forms of generation in lieu of the hydropower, imposing additional costs that do nothing to reduce carbon emissions.

Response 12 : Nuclear has been removed from the BSER calculation, while certain hydroelectric power has been added. We note that under the emission guidelines, depending on how state plans are designed, non

- carbon emitting sources of incremental generation are generally available to states to use in meeting the emission performance rates or equivalent state goals. EPA believes the targets in the final rule are achievable.

1.15.8 Recommend EPA delay, modify, withdraw proposal

Comment 1 : Commenters stated, the EPA appears to be picking winning and losing states for economic development. Commenters said, clearly, that should not be the objective and goa l of the Clean Air Act or any actions to fight climate change. Commenters urged the EPA to withdraw and reconsider the proposed rules.

Response 1 : The EPA disagrees with this comment. The agency’s purpose has never been to discriminate amongst states. We u nderstand this comment as related to the disparity among state goals under the proposed rule. The final guidelines address this comment and similar comments by establishing nationally uniform subcategorized emission performance rates, and equivalent

state goals that vary less dramatically than the proposed rule.298 Comment 2 : Commenters said, section 111(d) is extremely prescriptive requiring implementation to occur inside the fenceline, using a carbon control technology that is
established and feasible for existing units. Commenters said, the CPP is too "unprecedented"
for section 111(d).

Response 2 : We disagree that section 111(d) is “extremely prescriptive.” Its terms are quite broad reflecting Congress’s intent that it serve to prevent serious air pollut ion problems that may have been unknown at the time of enactment from going unaddressed under the Clean Air Act.

Comment 3 : Commenters stated, EPA should withdraw the current proposal, convene a Small Business Advocacy Review panel, and prepare a regulator y flexibility analysis before proceeding with a new proposal under Section 111(d).

Response 3 : The EGs do not directly regulate small entities and so an SBAR Panel is unnecessary. However, the agency did convene an SBAR Panel for the proposed federal plan

, and many of the Panel’s recommendations will be reflected in that proposal.

Comment 4 : Commenters suggested the EPA to withdraw the Proposed Rule because it is not
consistent with the federal Clean Air Act. The commenters stated that even if EPA had the authority to promulgate a final rule based on the building block approach set forth in the Proposed Rule, EPA's proposed requirements for the Wyoming CO2 emission reductions is
based on numerous material errors.

Response 4 : EPA believes the rule is very c onsistent with the CAA. Conclusory assertions of error do not give the agency a reasoned basis on which to modify the rule.

Comment 5 : Commenters stated, EPA has asked for comment on so many fundamental issues of rule design that this proposed rule should have been put forward as an Advance Notice of Proposed Rulemaking (ANOPR). Commenters said, we find the rule to be so unrealistic and unworkable, based on timelines for both comment and compliance that are totally unrealistic, and likely to introduce far greater uncertainty into forward utility and state planning, that we respectfully request that EPA withdraw the rule to allow for a more cooperative state

- federal approach to rule design and addressing CO2 emissions.

Response 5 : The agency believes it foll owed an incredibly transparent process of rulemaking, including substantial outreach even before proposal to all stakeholder groups in every region of the country. Its requests for public comment on the proposal should not be mistaken as evidence
that the agency failed to put forward a complete, intact, proposed rule, upon which this final rule is clearly a logical outgrowth. In the course of any rulemaking, the public is free to comment on all aspects of the proposal, whether the agency asks for them or no t. Requests for comment are not in themselves evidence of the agency’s lack of a proposed path, but a recognition that it will truly value the input of comments on an important and far

- reaching rule. In addition, we note that the agency has adjusted compli ance timeframes in the final rule in response to comments.

Comment 6 : Commenters stated, with respect to multi

- state arrangements, the EPA acknowledges that they "could introduce novel enforceability considerations," as if the entire299 Proposed Rule does no t do so. The commenters stated that having to go so far beyond traditional regulation to describe how the rule might operate demonstrates that EPA has gone beyond its authority in ways that UARG warns against. Furthermore, the commenters stated that under the principles of Virginia v. EPA, it is already apparent that there will be enough State nonparticipation to invalidate EPA's state

- by

- state target model and so invalidate the Proposed Rule. The commenters argued that because these problems are irremediab le within the framework of the Proposed Rule, it should be withdrawn.

Response 6 : The final rule provides a clear set of requirements for states in order to develop approvable plans. The agency explains its view of enforceability in the preamble and the L egal Memo. The agency has no reason to believe that the rule is so unworkable that the states or the EPA would be unable to enforce a state or federal plan. We note that the permitting consequences that were at issue in UARG are not present in this current rulemaking. We note that states are given a wide range of flexibility to design state plans to achieve the emission performance levels of the guidelines, and therefore we do not believe there is a Train

- Virginia

type concern with this rule either. See also 80 FR 33840, 33876

– 79 (June 12, 2015).

Comment 7 : The commenters argued that the building blocks upon which it rests have never been adequately demonstrated, and that the Proposed Rule is thus both unlawful and arbitrary.
The commenters stated that if EPA is to proceed at all, it must define as BSER the ability of companies to manage their own portfolios as necessary to achieve the targeted emission reductions without the artificial constraints of political boundaries, which is an approach more
consist ent with the structural foundations of the power supply industry.

Response 7 : To the contrary, EPA believes each of the building blocks are demonstrated by themselves and in combination. The EPA has given states in the final guidelines a variety of
methods by which to give companies flexibility within their fleet. Section 111(d) directs the agency to work with states in a cooperative federalism model. The agency will not circumvent the states to directly regulate owners and operators of affected EGUs under section 111(d), unless through a federal plan in the event a state does not submit an approvable state plan.

Comment 8 : Commenters urged EPA to withdraw its interpretation of CAA Section 111(a)(1) to avoid creating numerous constitutional issues. The comm enters stated that courts must avoid constitutional difficulties by interpreting CAA Section 111(d) narrowly, as a grant of authority to regulate only inside the fence line. Jones v. United States, 529 U.S. 848, 857 (2000) ("where

a statute is susceptible of two constructions, by one of which grave and doubtful constitutional questions arise and by the other of which such questions are avoided, our duty is to adopt the latter") (citation omitted).

Response 8 : The agency disagrees that this rule of case la w is applicable given that the agency’s interpretation of the statute does not raise “grave and doubtful constitutional questions,” as explained in the Legal Memo.

Comment 9 : Commenters stated that in 2009 the President announced his goal of a 17%
reductio n below 2005 levels by 2020, and the power industry is on track to meet its share of that300 target. The commenters stated that over the long term, they see dramatic long term emission reductions in our sector very much in line with the President's 2050 goals given the average retirement age of a coal plant, the transformative shift to gas due to the enormous domestic resource now economically recoverable, MATS and other proposed EPA rules. Given these facts, the commenters questioned the need for the current structure of the proposed rule.

Response 9 : The EPA believes the rule is appropriate even in light of recent reductions in GHGs in the sector. The rule builds on these reductions and ensures they will be permanent. In addition, the rule appropriately ben efits the near

- term advantages of natural gas with the long

term advantages of zero

- emitting resources such as wind and solar. The EPA also reasonably
concludes that business

- as

- usual does not achieve reductions in the GHG air pollutant that reflect the ap plication of the “best” system of emission reduction, taking into account cost and other
factors.

Comment 10 : Several commenters requested that the EPA withdraw the proposed Rule.

Commenters stated, the proposal is based on a flawed interpretation of the Clean Air Act, and urged EPA to withdraw the current proposal and substantially revise this rule.

Commenters stated, the EPA appears to be picking winning and losing states for economic development. Commenters said, clearly, that should not be the object ive and goal of the Clean Air Act or any actions to fight climate change. Commenters urged the EPA to withdraw and reconsider the proposed rules.

Commenters urged EPA to withdraw this proposal and work with us on a new common

- sense approach that will be a true all

- of

- the

- above energy strategy.

Commenters stated, the EPA needs to go back to the drawing board and publish a rule that addresses the global problem. Commenters said, the rule should be based on the best interest of the nation, and not designed to pick winners and losers based on the desires of those who make the decisions or those who have the ability to influence that decision.

Commenters stated, the EPA's proposed Clean Power Plan is an assault on electric reliability and economic viability of t he State of Texas and, particularly on Houston County. The commenters requested the EPA withdraw this version of the Clean Power Plan until a plan can be proposed that has more realistic expectations and provides more actual flexibility so that the unique challenges of each Texas county can be appropriately considered.

Commenters suggested that the proposal should be withdrawn. The commenters stated that not only does EPA lack expertise in the areas of energy generation, transmission, distribution, and
end

- use, rendering the Proposed Rule both unwise and ultra vires, but EPA has not consulted with the numerous government entities

- for example FERC, state PSCs, entities such as MEAG, reliability organizations such as NERC, public power associations, and rural power associations, all of which have vast experience and expertise in the matters EPA seeks to directly regulate: the nation's entire electric power system. Accordingly, the commenters stated that the EPA has not fully assessed the effects of the propose d rule, has made numerous assumptions which are301 contrary to the facts, and has issued a Proposed Rule which is arbitrary, capricious, an abuse of discretion, and not in accordance with law.

Commenters stated that the CPP is illegitimate and unlawful. Comm enters said, its implementation costs are likely much greater than EPA estimates; it will increase electricity prices and raises reliability concerns; its putative climate benefits are illusory; and the regulation
should be withdrawn.

Commenters stated tha t the proposal is contrary to the Clean Air Act in several critical ways and recommended that the EPA should withdraw the Section 111(d) proposal. The commenters noted that if a state fails to submit a "satisfactory" plan under 111(d), EPA is authorized to directly prescribe a plan itself. CAA 111(d)(2), 42 U.S.C. 7411(d)(2). The commenters stated that the EPA lacks authority to directly regulate the substance of all but its first "building block"

- e.g., to require the development of new renewable generati on or to require end

- use efficiency

measures. The commenters noted that these measures are the traditional subject of state police powers, with federal regulation authorized only where Congress has expressly done so. For this reason, the commenters stated that the 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

- state emission goals. The commenters stated that 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 could directly regulate itself under its 111(d)(2) authority, should the need arise.

Commenters advised that EPA withdraw the CPP based on the following observations, in addition to comments previously stated. Commenters said, first, states and stakeholders have made tremendous strides in reducing carbon emissions from the po wer industry without regulation. Commenters said, EPA has indicated that this proposal "would continue progress already underway to lower the carbon intensity of power generation in the United States." Commenters said, therefore, this proposal is unnecessa ry to continue the progress established to this point. Commenters said, EPA should consider entering into a true partnership with states and stakeholders instead of one contrived by mandate and driven by regulation. Commenters said, EPA should look to spea rhead these collaborations and encourage information sharing to assist states in developing state

- level energy policies that could be tailored to each state's unique resources. Commenters said, second, EPA has called this proposal an "unprecedented effort" , yet EPA attempts to accomplish implementation through the very restrictive mechanism of section 111(d). Commenters said, section 111(d) is extremely prescriptive requiring implementation to occur inside the fenceline, using a carbon control technology th at is established and feasible for existing units. Commenters said, the CPP is too "unprecedented" for section 111(d).

Commenters urged EPA to withdraw the current Proposed Rule and to reissue the rule, if at all, with modifications addressing the issues and concerns raised by these comments.

Commenters stated, EPA should withdraw the current proposal, convene a Small Business Advocacy Review panel, and prepare a regulatory flexibility analysis before proceeding with a new proposal under Section 111(d).302 Commenters stated, if the U.S. is determined to solve the climate change issue alone, we will be at a competitive disadvantage to other countries and, in Arizona, we will be further hampered by a competitive disadvantage to other states. Commenters said, o ur businesses, economy and community rely upon reliable and affordable electricity to provide food for the nation. Commenters urged EPA to rescind this proposal.

Commenters stated that EPA lacks the statutory authority to proceed and must withdraw the Prop osed Rule. The commenters stated that, assuming that EPA has the statutory authority to proceed with the Proposed Rule, EPA has failed to follow the requirements of Section 111(d).
The commenters noted that in the event that EPA chooses to move forward wit h the Proposed Rule they must do so in a reasoned and rational manner as outlined above.

Commenters suggested the EPA to withdraw the Proposed Rule because it is not consistent with
the federal Clean Air Act. The commenters stated that even if EPA had the authority to promulgate a final rule based on the building block approach set forth in the Proposed Rule, EPA's proposed requirements for the Wyoming CO2 emission reductions is based on numerous
material errors.

Commenters requested that this proposal be withdrawn or considered a request for information from states and other affected parties. The commenters invited the EPA to engage in a more constructive process led by states and Congress to find legally sound, affordable, practical and effective approach es to reducing green

- house gas emissions.

Commenters stated, in addition to the burdens that the Section 111(d) proposal would place on state governments and ratepayers, the proposal is contrary to the Clean Air Act in several critical ways. Commenters s aid, individually and taken together, these legal infirmities mean that the Section 111(d) proposal, if finalized in a manner that includes one or more of these flaws, would constitute an unlawful rule. Commenters said, given the fundamental nature of thes e legal flaws, EPA should withdraw the Section 111(d) proposal.

Commenters concluded that the proposed rule imposes costs on those least able to pay which will cause them to forego food, medicine, and medical care and such increases in energy costs
have been documented to increase illness in these poorest of the poor. The commenters stated that the proposal is also illegal. The commenters asked that it be withdrawn until such time as it is determined to be a legal exercise of authority under the Clean Air Act, and is shown to in fact create more benefit than the costs it imposes.

Commenters stated, EPA has asked for comment on so many fundamental issues of rule design that this proposed rule should have been put forward as an Advance Notice of Proposed
Rul emaking (ANOPR). Commenters said, we find the rule to be so unrealistic and unworkable, based on timelines for both comment and compliance that are totally unrealistic, and likely to introduce far greater uncertainty into forward utility and state planning , that we respectfully request that EPA withdraw the rule to allow for a more cooperative state

- federal approach to rule design and addressing CO2 emissions.303 Commenters stated, with respect to multi

- state arrangements, the EPA acknowledges that they
"could introduce novel enforceability considerations," as if the entire Proposed Rule does not do so. The commenters stated that having to go so far beyond traditional regulation to describe how the rule might operate demonstrates that EPA has gone beyond its au thority in ways that UARG warns against. Furthermore, the commenters stated that under the principles of Virginia v. EPA, it is already apparent that there will be enough State nonparticipation to invalidate EPA's state

by

- state target model and so invalid ate the Proposed Rule. The commenters argued that because these problems are irremediable within the framework of the Proposed Rule, it should be
withdrawn.

Response 10: As explained in the preamble and the legal memo, this action is consistent with

our authority under 111. Commenters have identified no material infirmity warranting withdraw or reproposal.

Comment 11 : Several commenters requested that the EPA withdraw the proposed guidelines and issue new guidelines that allow states to establish pol icies that are in the best interest of their respective cities and the nation. Commenters stated the guidelines should:

1. Respect the primacy of states by allowing states to develop plan that establish performance standards and discretion and flexibility in establishing compliance mechanisms.

2. Maintain an adequate, reliable, affordable electrical generating fleet.

3. Be based on EPA guidelines for cost

- effective, achievable reductions at the affected power plant units, rather than for the state.

4. Esta blish emission guidelines based on adequately demonstrated systems that are fuel and technology specific.

5. Provide credit for significant emissions reductions already made or being made.

6. Avoid premature retirements and stranded assets.

7. Be fair and equitable to all electricity consumers; and

Commenters said the EPA should adopt policies that do not conflict with the responsibility of states and their respective cities to provide affordable and reliable supplies of electricity for their
citizens.

Response 11 : The agency does not believe it needs to withdraw and re

- propose a new rule to satisfy this commenter’s suggestions. The final rule generally accomplishes these things.

Comment 12 : Commenters discussed the need for conforming changes to the pr oposed rule to accommodate the reliability safety valve (RSV) they suggest.304 Commenters have identified at least three specific provisions of the Proposed Rule that should be modified and clarified to accommodate the RSV. Commenters said, these include:

• T he provision of the Proposed Rule that once finalized, the interim and final targets will be "binding emission guidelines" for state plans, must be met by the states and may not be made "less stringent." [79 FR 34892, 34898]

• The standard set forth in the P roposed Rule that to seek a modification of a target between the proposed and Final Rule, commenters must show that the cost to comply was significantly higher than that proposed by EPA; [79 FR 34893] and

• The provision that "no backsliding" on overall plan emissions performance through a plan modification would be allowed. [79 FR 34917]

Commenters stated, each of these provisions, although well

- intentioned to avoid endless litigation over changes to the individual state targets, ignore the dynamic and ever

- changing nature of the electric grid. Commenters said, as such, these provisions could work to handcuff both states seeking to comply with the rule as well as the agency itself as it seeks to adapt to changing conditions. Commenters said, in fact, prudent planning and operation of the grid requires a discipline to "expect the unexpected" and be able to modify course appropriately. Commenters said, the above provisions, as written, are simply too sweeping in their reach and could unintentionally hamper effor ts to provide a rule that ensures compliance progress while being flexible enough to adapt to reliability issues that could make full achievement during the compliance period infeasible in a given situation.

Response 12 : The agency has reviewed and adjust the rule in response to concerns about flexibility and reliability, and believes the final rule adequately addresses the concerns raised by the commenter, while ensuring that the emission performance levels are achieved.

Comment 13 : Commenters stated th at under the proposed CPP the City of Springfield, Missouri, and its municipal utility, City Utilities of Springfield, will lose close to one

- third of its
base load generation. The commenters stated that this would force the utility and its rate payers

to buy power from another source outside of the community and a source that is in the business of making a profit, not providing reliable and economical electricity to the rate payers and citizens of the community. The commenters asked that the EPA not sacrif ice our nation's economy and electric reliability by developing a rule that does not take into account current commercially

- proven and economically

- viable technology to reduce CO2 such as an American
Electrical Power Turk plant in Fulton, Arkansas. The com menters requested a delay in the implementation of a Clean Power Plan until a common sense approach can be developed to reduce CO2, an approach that will give sites and utilities adequate time to develop and implement compliance strategies.

Response 13 : The EPA disagrees that the final rule will necessarily have a direct effect on any particular generating unit. This misunderstands the nature of the BSER. States including Missouri have the opportunity to develop plans that take into account various facili ty

- specific factors, so long as overall emission performance levels are met. Even under a federal plan that305 utilizes trading, facilities and utilities will have flexibility to make choices about how to achieve compliance that work best for them.

Comment 14 : Several commenters stated that EPA should delay implementation of the rule until all legal challenges to the rule have been exhausted.

Commenters stated, Murray Energy Corporation has asked the U.S. Court of Appeals for the
District of Columbia Circuit to grant a writ of prohibition against EPA declaring the proposed rule for existing stationary source electric generating units is ultra vires, i.e. a prohibited act under the Clean Air Act. Commenters said, for the reasons given below, it is. Commenters said, EPA claims otherwise and has stated unequivocally that they have the power to interpret the Clean Air Act as they have, under the Chevron doctrine, and that they have done so. Commenters said, final briefs on this matter are due in March, 2015. Comme nters said, in the meantime, the states, utilities and utility customers must proceed under an unreasonably short schedule to determine what steps must be taken to comply with the law

- a costly set of planning activities with the effect of having to make engineering decisions long before any Clean Power Plan would actually take effect. Commenters said, this is known as anticipatory regulation. Commenters said, it is costly, it limits the economic freedom of states, utilities and customers to
make investmen t decisions, and these constitute irreversible harms that can only be remedied if EPA withdraws the proposal until such time the Court determines whether the proposed rule is or is not legally authorized under the Clean Air Act. Commenters said, anticipato ry regulation has legal consequences on the regulated industry and on others inexorably tied to the directly regulated industry. Commenters said, the Oil and Gas industry is so tied to the electric generating industry because electricity is such a large in put to industry production. Commenters said, in order for a State to prepare a plan under the proposed rule, the states will be forced to reach agreements with companies who must therefore make production and investment decisions associated with the plan. Commenters said, this fact is evidence of the legal consequences of the anticipatory regulatory effect, and fully provides legal standing to seek immediate judicial relief, as requested by Murray Energy Corporation. Commenters said, EPA should withdraw thi s proposed rule, or at least suspend all planning until the Courts have fully resolved the issues at
law.

Commenters encouraged EPA to delay implementation of the Final Rule until litigation is resolved. Commenters said, compliance with the Final Rule wil l result in significant expenditures that will be borne by utility ratepayers. Commenters said, to the extent compliance requires the early retirement of electric facilities or earlier

- than

- planned construction of new facilities, the uncertainty of litigat ion places ratepayers at risk. Commenters said, investment to comply with portions of the Final Rule that are later vacated by a court will result in stranded assets and wasted costs that will be borne by ratepayers. Commenters said, the planning horizon
f

or new NGCC units is 3 to 4 years, and the horizon for new nuclear units is approximately ten years, with initial costs incurred at the start of the first year. Commenters said, while EPA is doubtlessly confident in the legality of its proposed rule, histo ry shows us that the courts do not always agree. Commenters said, in light of the potential for significantly stranded compliance306 costs associated with Building Blocks 2, 3 and 4, it is prudent to delay and/or extend compliance requirements until litigatio n has been resolved.

Commenters stated, it is widely recognized that the proposed rule raises unprecedented legal issues under the Clean Air Act and that there will be legal challenges to the basic structure of the rule if adopted as proposed. Commenters s aid, Colorado's recent experience developing mercury and Regional Haze rules has been that the State and affected sources expended substantial resources for years developing programs to comply with initial rules that were overruled through judicial challen ges. Commenters recognized EPA's interest in moving to implement this program expeditiously, but appeals to its sense of pragmatism to recognize that changes to the program as a result of judicial review are a reasonable possibility. Commenters said, as su ch, to conserve resources of the Agency, state environmental agencies, and the entire utility industry, it only makes sense to defer implementation of the program until judicial review is complete.

Commenters addressed the issue of limited state resources . Commenters said, if this rule is finalized in its current form, states will be immediately required to amend not only their state air programs, but will be required to fundamentally restructure the state's entire energy generation and delivery system. Co mmenters said, this significant undertaking will run parallel with judicial review of this rulemaking. Commenters said, states have been through several exercises where EPA's legal interpretations have resulted in states taking actions to satisfy a federal rule that is later determined by the Courts to be illegal. Commenters said, look no further than the Clean Air Mercury Rule (CAMR) and the Clean Air Interstate Rule (CAIR). Commenters said, a more recent example is the Prevention of Significant Deteriorat ion (PSD) Tailoring Rule for GHG permitting.

Commenters stated, the final rule, whatever form it ultimately takes, should not require states to begin taking action until the completion of judicial review. Commenters said, this is to preserve
the state's li mited resources and ensure that actions taken in response to the EPA rule will not be for naught. Commenters stated they call this approach a "legal trigger" deadline, and urged the EPA to respect their state partners and include this provision in the fina l rule's implementation schedule. Commenters said, finally, urged that the final compliance deadline be tolled by the litigation timeframe, similar to how EPA handled the implementation of the Cross State Air Pollution rule following the U.S. Supreme Court decision.

Commenters stated, considering the resources that will be required by states to implement this rule as proposed and given the high likelihood that any final rule promulgated by EPA will be litigated, EPA must delay implementation of the rule unt il all legal challenges to the rule have
been exhausted

Commenters stated, as Florida has worked to become a national leader in air quality, we have simultaneously remained committed to ensuring Florida's families have an affordable and secure
source of e nergy. Commenters said, a key factor in maintaining affordable utility prices is ensuring new rules and regulations have been fully discussed and vetted before asking families to pay for new requirements. Commenters said, to that end, it appears virtually certain that this rule will be contested in the courts once it is finalized. Commenters said, as with EPA's relatively307 recent Clean Air Interstate Rule (CAIR) and the Cross

- State Air Pollution Rule (CSAPR) challenges, there will be significant uncertainty for states and potentially a huge state investment being put at risk. Commenters said, given these concerns, EPA should consider voluntarily suspending the aggressive implementation deadlines pending the outcome of the challenges to
avoid the incredible in efficiencies that could result if the rule is not upheld.

Response 14 : The EPA disagrees with comments that it should delay implementation of the rule until all legal challenges have been resolved. The legal basis for the rule is set out in Section V of the preamble, and the agency is confident in its authority to issue the r ule and to see it implemented.

Comment 15 : Commenters noted that the Administration announced a negotiated agreement with the People's Republic of China on November 11, 2014 covering carbon emissions from the two countries post 2020. Commenters stated t hat the only rulemaking currently underway or officially proposed to limit such emissions is the current Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units. Commenters stated that not only does this international agreeme nt propose a new range of dates for compliance (2025 rather than 2030), but creates an entirely new set of reductions (28% rather than 30% reduction), which are below those proposed in this rulemaking. Commenters believed that because the announcement came directly from the President of the United States, the President has improperly prejudiced the process for this rule. Commenters stated that the only action which can be taken to remove this legal impropriety is to withdraw and re

- issue this rule.

Response 15 : The agency disagrees with this comment. The EPA is acting under the authority of the CAA and this action is related to affected EGUs in the power sector. The numbers the commenter is comparing are apples

- to

- oranges.

1.15.9 Recommend EPA strengthen proposal

Comment 1 : Commenters stated that this rule fails to satisfy EPA's legal, political and civil obligations.

The commenters stated that uptake of renewables has been much faster than predicted, whereas EPA projects only minimal renewables expansi on with or without the policy. The commenters stated that the proposed rule assumes massive new natural gas plants and a stall in coal

- plant shutdowns, but at the same time, in the 2013 Proposed Carbon Pollution Standard for New Power Plants [79 FR 1429] t he EPA is regressive. The commenters stated that the 'new power plants' rule proposal creates a BAU pollution standard for NG plants, exempts biomass emissions, and endorses new taxpayer subsidized "carbon capture" coal plants in which scrubbed
CO2 is used to augment oil production. The commenters stated that Carbon Capture with Enhanced Oil Recovery independent research indicates results in a net increase in emissions308 (Jarmillo, Paulina. Environ. Sci. Technol. 2009, 43, 8027

- 8032 http://pubs.acs.org/doi/pd f/10.1021/es902006h.

The commenters noted that the EPA is not proposing a federal mandate to meet a mitigation target, even though the administration has already agreed to an economy

- wide 2020 target of 17% below 2005 levels, and recently announced a 2025 target of 26

- 28% in the context of negotiations in the United Framework Convention on Climate Change. The commenters stated, as EPA notes in RIA included with the proposed rule, "[t]hese state goals are not requirements on individual electric generating u nits. Rather, each state has broad flexibility to meet the rate by 2030 by lowering the overall carbon intensity of the power sector in the state." The commenters asserted that whether in this rule or subsequent rules, EPA has a duty to ensure the US meets international obligations for climate mitigation. The commenters stated that this obligation stems not just from the fact that EPA is the logical federal agency to have this duty, but because it has been specifically stated in legislation including the Cl ean Air Act, Global Warming Protection Act, inter alia.

The commenters stated that this policy proposal is a set of carbon intensity targets with estimated mitigation objectives that hinge on implementation plans from every state, which will vary widely. T he commenters noted that some states can propose to achieve the targets in regional carbon trading regimes, such as the existing Regional Greenhouse Gas Initiative. However, the commenters stated that there is no federal standard for carbon trading. Accord ing to the commenters, civil society will have to expend resources overseeing that the flexibility of this policy doesn't allow weaknesses to be exploited, even if EPA does not technically allow offsets. The commenters noted that the flexibility states wil l have to implement requirements may not prevent loopholes and weaknesses, such as well documented problems like carbon leakage undermining the integrity of actual mitigation (Van den Berg, et al. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2400666)

. The commenters asserted that since this policy addresses the largest polluting sector, it should be the apex of President Obama's climate action. The commenters noted that the 'climate action plan' announced in his fifth year in office compiled possibly everything to be achieved or implemented in the his eight years as the US President, and the 'plan' illustrates how President Obama is responsible for some territorial emissions reductions. However, the commenters noted that the aggregate mitigation achiev ement of Obama's climate plan so far is less than what was achieved by economic downturn and unrelated energy market trends (Hausfather, Zeke. http://www.yaleclimateconnections.org/2013/05/whats

- behind

- the

- good

- news

- declines

- in

- u

- s

co2

- emissions/). While t he Obama administration has expanded extraction and exports of US taxpayer

- owned coal oil, and gas, the commenters stated that no policy to reduce territorial climate pollution achieves more than a few percent reduction in economy

- wide greenhouse gas mitig ation by any end date. The commenters noted that this proposed rule may be the last chance
for President Obama to demonstrate he understands the seriousness of short to medium term action to avoid runaway climate disruption.309 Response 1 : The final EGs cove r emissions from the affected EGUs only and are under authority of the CAA. Therefore, comments regarding other actions and initiatives are generally outside the scope of this rule. The emissions performance levels being finalized reflect the agency’s dete rmination of the BSER under section 111(d). The agency disagrees with this commenter to the extent that they are suggesting the rule should require greater emissions reductions from the affected EGUs than has been determined by the agency.

Comment 2 : Com menters stated that the approach laid out in the draft guidelines is fundamentally sound in its objectives and that EPA has taken great pains to balance a multitude
of relevant considerations in the formulation of the Clean Power Plan. The commenters state d that it is clear that EPA continues to respond to comments from affected stakeholders as well, evident for example in the November 6th Technical Support Document. However, the commenters stated that the draft standards can and should be strengthened, wit h respect to emissions targets, compliance timelines, as well as the addition of clarifying guidance for designing and implementing regional compliance pathways.

Other commenters supported the EPA's Clean Power Plan, and commented on seven areas where
EPA 's proposal can be strengthened and improved.

Commenters supported the EPA's Clean Power Plan, and commented on seven areas where EPA's proposal can be strengthened and improved.

1. The commenters suggested to encourage additional flexibility by clarifyi ng that the use of various types of trading programs can be an acceptable part of a state compliance plan. The commenters has developed a model trading program called the Carbon Reduction Credit Program which we believe is a means by which states can effic iently implement and administer
the Clean Power Plan.

2. The commenters suggested to use renewable energy carbon attribute (RECA) certificates to remove concerns over duplication of renewable energy used by states in their compliance plans, encourage a nat ionwide market for the trading of renewable energy, and accelerate the growth of renewable energy in the United States.

3. The commenters suggested to adopt the "alternative methodology" to computing renewable energy for building block 3, with a modificati on which we believe addresses a shortcoming in that methodology.

4. The commenters suggested to develop a way for multi

- state plans to be organized so that participating states do not have to adopt a single emissions goal.

5. The commenters suggested to mo dify or eliminate EPA's proposed inclusion of 6 percent of nuclear capacity in setting the state emission goals and in calculating state annual emission rates.

6. The commenters suggested to assure that credit for early actions, if given, is not "cherry

pi cked" and does not compromise emission outcomes.310 7. The commenters suggested to preserve the interim targets.

Response 2 : The agency is reflecting a number of these comments in the final rule. The agency is not adopting the suggested CRCP or RECA program s. However, two approaches to the federal plan, which can also be used as a model trading rule, will be proposed concurrently with the
finalization of the EGs.

1.15.10 Information Quality Act Comments

Comment 1: Commenters stated that the EPA had not pro perly reviewed whether the NCA3, the IPCC AR5 assessment, the CCSP assessments, and other assessments met Information Quality Act (IQA standards). Commenters stated that while the peer review of the NOAA assessments did not meet IQA standards, NOAA certifi ed they had been and that EPA improperly accepted that certification. Commenters also accused the NCA, IPCC, and CCSP assessments of conflict of interests for the peer reviewers that were not disclosed in accord with IQA requirements. Specifically, comment ers highlighted that contributors and reviewers of these assessments were sometimes based at universities or other institutions that had received funding from NOAA or EPA, or that reviewers were based at the same universities or government agencies that ha d also provided contributors to the assessments. Commenters stated that because of these claimed IQA violations that EPA is precluded from relying on these assessments as support for rulemakings until the EPA develops a new peer review that meets IQA stand ards.

Validating IQA compliance

Commenters stated that EPA should have validated "whether other federal agencies, the NRC and IPCC vigorously peer reviewed the "major assessments"...which the agency now cites as primary scientific support for its proposed power plant rule."

Commenters said that NOAA developed the Third National Climate Assessment (NCA3

- 2014) report which NOAA claims is compliant with the Information Quality Act (IQA) but commenters said it is not compliant because the document fails to dis cuss the actual peer review process, and three documents listed in Appendix 2 that address IQA compliance are not publically assessable.

Commenters emphasized that EPA still needs to release many records to prove that EPA satisfied level one, two, and thr ee IQA obligations including the records validating the assumptions that support the computer models and datasets for the Highly Influential Scientific Assessments (HISAs). Commenters stated that "EPA ultimately was legally responsible for validating the I QA compliance of the NCA3

- 2014."311 EPA & DOC

- NOAA Failed to Validate the IPCC AR5 and NCA3

- 2014 in Conformance With the IQA

Commenters stated that relevant data quality requirements of the Information Quality Act have
not been achieved for the IPCC's 2013

- 2014 Fifth Assessment Report (AR5) or the USGCRP's 2014 "Climate Change Impacts in the United States" (Third National Climat e Assessment (NCA3

- 2014), and thus, the EPA cannot rely on those documents.

Commenters stated that NOAA is financially invested in the climate science research of 43 U.S. universities, non

- profit institutions and environmental nongovernmental organization s whose
scientists made "substantive contributions to IPCC AR5 and/or NCA3

- 2014" and claims that "NRC, and by extension, NOAA and EPA" did not disclose or properly address instances of
conflict

- of

- interest that violate the Information Quality Act.

Commente rs presented the argument that a conflict of interest occurred because peer reviewers
of the IPCC AR5 and NCA3

- 2014 have research funding connections with EPA, DOC/NOAA or other government agencies. Commenters particularly questioned the validity of NAS pe er review, supporting their statements with a recent article reviewing a NAS review undertaken in 1956. Based on that article, commenters stated that "improprieties of this magnitude can be shown to have permeated as "prestigious" an institution as the NRC /NAS." Commenters stated that the EPA and DOC/NOAA have suborned the NRC/NAS' independence and scientific integrity by contracting with NRC/NAS to develop studies about climate change and climate change mitigation. Commenters discussed institutional and in dividual forms of conflict of interest and subject matter bias, and connected these flaws to the reviews of the IPCC AR5 and
NCA3

- 2014.

Commenters reviewed the affiliations of members of the NRC NCA3

- 2014 Peer Review Panel, the two NRC Boards charged with oversight of the NRC's peer review of NCA3

- 2014

- the Board of Atmospheric Sciences & Climate (BASC) and the Board of Environmental Change & Society (BECS). Commenters stated that the NRC, and by extension, DOC

- NOAA and EPA, failed to identify, disclose a nd properly address apparent, and to the commenter, possibly real,
incidents of institutional conflicts

- of

- interest, subject matter bias and lack of intellectual independence, constituting clear violations of the Information Quality Act and relevant OMB

an d EPA IQA

- implementing guidelines. Commenters included eight appendices that connected reviewers with potential conflicts of interest. Commenters assumed in their discussion that any potential conflict of interest was proof that the conflict occurred.

Comm enters further stated that the reviewers charged with reviewing the NRC NCA3

- 2014 Peer Review Panel report, was not likely well

- balanced with an equal number of members holding majority/popular and minority/unpopular views regarding the credibility of the climate science subject to peer review. Commenters stated that this constitutes a violation of the Information Quality Act and the relevant OMB and EPA IQA

- implementing guidelines. EPA is Precluded from Relying Upon Ten NOAA

- Developed Highly Influential Sc ientific Assessments Not Peer Reviewed in Conformance With Information Quality Act Standards312 Commenters stated, since the time of ITSSD's August 13, 2014 filing of public comments for
inclusion in Docket ID No. EPA

- HQ

- OAR

- 2013

- 0602, ITSSD filed with NOAA a new FOIA request (Request No. DOC

- NOAA

- 2014

- 000714) on September 22, 2014. Commenters said, this FOIA request contains much new information that is relevant and germane to the EPA
Administrator's reliance on ten NOAA

- developed highly influential scientif ic assessments ("HISAs") which, in turn, is relevant and germane to EPA's "Clean Power Plan Proposed Rule."

Commenters stated, EPA used and disseminated these ten (10) NOAA

- developed assessments as the scientific foundation, in part, of both the CAA Sectio n 202(a) GHG Endangerment Findings and the "Clean Power Plan Proposed Rule." Commenters said, having used and publicly disseminated these assessments as its own, EPA had been obliged to ensure that they had been peer reviewed in full conformance with the I nformation Quality Act's peer review conflict

- of

interest, independence and panel balance standards applicable to HISAs. Commenters said, media outlets had previously taken notice of EPA's failure to ensure that the highly influential
scientific assessment s supporting the Administrator's CAA GHG Endangerment Findings had been peer reviewed/validated in conformance with applicable Information Quality Act standards, and how EPA can no longer rely upon them as support for the "Clean Power Plan Proposed
Rule." Commenters said, media outlets also reported about ITSSD's subsequent NOAA FOIA request filing which further substantiates these findings.

Commenters stated, as ITSSD's new NOAA FOIA request makes abundantly clear, NOAA had failed to ensure these ten (10) assessments had been internally or externally peer reviewed (by NOAA, NOAA

- established federal advisory committees, interagency committees or by the National Research Council/National Academy of Sciences) in conformance with the well

defined OMB and NOAA I nformation Quality Act

- implementing conflicts

- of

- interest, financial and intellectual independence and panel imbalance standards applicable to HISAs. Commenters said, although these peer review practices had not been IQA

- compliant, NOAA certified that they had been, and EPA had relied upon said certification without performing any further validation of said practices when it publicly disseminated such assessments as the scientific foundation for both its Endangerment Findings.

Commenters stated, ITSSD's Aug ust 13, 2014 comments make clear that EPA again relied upon said assessments as the scientific foundation, in part, of the "Clean Power Plan Proposed Rule," but did so without validating whether the peer reviews of such assessments conformed with applicabl e IQA conflict

- of

- interest, financial and intellectual independence and panel balance
standards.

Commenters stated, as with the three (3) EPA

- developed HISAs, applicable EPA and OMB IQA

- implementing peer review conflict

- of

- interest guidelines preclude EPA from using these ten (10) NOAA

- developed assessments as the scientific foundation for the "Clean Power Plan Proposed Rule," unless and until EPA peer reviews these assessments once again in conformance with such IQA standards.313 EPA is Precluded from Relying Upon Three EPA

- Developed Highly Influential Scientific Assessments Not Peer Reviewed in Conformance With Information Quality Act Standards: The IQA Nonconformance of USGCRP/CCSP SAP4.1

Commenters stated, in accompanying Appendix 7A: "Author

- Contributors, EPA

- Developed USGCRP/CCSP SAP4.1" and 7B: "Technical Expert Reviewers, EPA

- Developed USCRP/CCSP SAP4.1," please note that at least six peer reviewers had some institutional affiliation with either
SAP author

- contributors or a university or nonprofit insti tute receiving EPA grant funding.

EPA is precluded from relying upon three EPA

- developed highly influential scientific assessments not peer reviewed in conformance with Information Quality Act Standards: The IQA Nonconformance of USGCRP/CCSP SAP4.6

Commen ters stated, in Appendix 8A: "Author

- Contributors, USGCRP/CCSP SAP4.6" and Appendix 8B: "EPA External Peer Review Panel/HICCAC Federal Advisory Committee For USCRP/CCSP SAP4.6," infra, please note that at least six peer reviewers had some institutional
aff iliation with either SAP author

- contributors or a university or nonprofit institute receiving EPA grant funding. Commenters stated, in Appendix 8A: "Author

- Contributors, USGCRP/CCSP SAP4.6" and Appendix 8B: "EPA External Peer Review Panel/HICCAC Federal Ad visory Committee For USCRP/CCSP SAP4.6," infra, please note that at least six peer reviewers had
some institutional affiliation with either SAP author

- contributors or a university or nonprofit institute receiving EPA grant funding.

EPA is precluded from re lying upon three EPA

- developed highly influential scientific assessments not peer reviewed in conformance with Information Quality Act Standards: The IQA Nonconformance of USGCRP/CCSP SAP4.4

Commenters stated, in Appendix 9A: "Author

- Contributors, USGCRP/ CCSP SAP4.4" and Appendix 9B: "EPA External Peer Review Panel/ASCERAC Federal Advisory Committee For USCRP/CCSP SAP4.4," please note that at least six peer reviewers had some institutional
affiliation with either SAP author

- contributors or a university or nonprofit institute receiving EPA grant funding.

Response 1: The EPA has responded at length to critiques of the IPCC and the reliance upon the assessments in both the Response to Comments for the 2009 Endangerment Finding (Volume 1 in particular) and the 2010 Response to Petitions (Volumes 2 and 3). In 2009, the EPA described the review and development processes that each of the major assessments go through, and the numerous levels of review that these assessments undergo make them appropriate sources of

s cientific information. The approach taken by the EPA of relying on these assessments was validated in 2012 by the U.S. Court of Appeals for the D.C. Circuit in Coalition for Responsible Regulation v. EPA (684 F.3d 102, 118

- 124).

The IQA requires the Office of Management and Budget and federal agencies to issue guidelines that “ensur[e] and maximize[e] the quality, objectivity, utility, and integrity of information314 (including statistical information) disseminated by Federal agencies” (Public Law 106

- 554; 44 U.S.C. 3516, note). The IQA does not impose its own standard of “quality” on agency information; instead, it requires only that an agency “issue guidelines” ensuring data quality. Following guidelines issued by the Office of Management and Budget, EPA rele ased its own guidelines to implement the IQA ( http://www.epa.gov/QUALITY/informationguidelines/documents/EPA_InfoQualityGuidelines. pdf (PDF) (61 pp, 89 6K)). NOAA’s guidelines to implement the IQA are available at: http://www.cio.noaa.gov/services_programs/IQ_Guidelines_011812.html . These guidelines describe thorough mech anisms under which the Agencies may review data quality. The commenter did not provide evidence to support their assertion that NOAA did not act consistently with its information quality guidelines when certifying the Third National Climate Assessment, and the EPA has no reason to believe that NOAA’s certification was inadequate.

The EPA has determined that the assessment reports of the IPCC, US Global Change Research Program (USGCRP), and the National Research Council (NRC) of the National Academies of
S ciences have been adequately peer reviewed in a manner commensurate with the guidelines in OMB’s Final Information Quality Bulletin for Peer Review for Highly Influential Scientific Assessments (HISAs). The IPCC reports undergo multiple rounds of expert re view, engaging hundreds of scientists from around the world to comment on “the accuracy and completeness of the scientific, technical and socio

- economic content and the overall balance of the drafts.” The IPCC review procedures are described in Appendix A to the Principles Governing IPCC Work. 6 A number of revisions to IPCC procedures, governance and management, conflict of interest policy, and communications strategy have been made in recent years to strengthen existing

processes. 7 All comments and responses to comments are documented and made publically
available. 8

According to the OMB Final Information Quality Bulletin for Peer Review and guidelines in the EPA's Peer Review Handbook, if the Agency has determined that information has already been

su bject to adequate peer review, then it is not necessary to have further peer review of that information. For the NRC assessments in particular, the OMB Final Information Quality Bulletin

6 http://www.ipcc.ch/pdf/ipcc

- principles/ipcc

- principles

- appendix

- a

- final.pdf

.

7 http://www.i pcc.ch/organization/organization_review.shtml

8 Links to IPCC peer review information:

http://www.climatechange2013.org/background/review

- process/

http://ipcc

- wg2.gov/AR5/background/review

- process/

http://mitigation2014.org/background/review

- process

http://ipcc

- wg2.gov/SREX/report/review

- comments

- disclaimer315 for Peer Review states that an agency may, “rely on scientific inform ation produced by the National Academy of Sciences,” and that “agencies should presume that major findings, conclusions, and recommendations of NAS reports meet the performance standards of this
Bulletin.” 9 Alternatively, an agency may “commission the Nati onal Academy of Sciences to peer review an agency draft scientific information product” 10 in order to meet the performance standards of the OMB Bulletin. Because the USGCRP commissioned NAS to peer review its Third National Climate Assessment (NCA3) 11 , EPA d etermined that NCA3 has been subject to adequate peer review and it is not necessary to have further peer review of that information.

Regarding the accusations of conflict of interest, the commenters apply an unrealistic and flawed
standard. A reviewer who is affiliated with a government agency or university of thousands of individuals does not have a conflict of interest when reviewing an assessment where one of several dozen coauthors also happened to be a member of that agency or university. Similarly, a reviewer affiliated with a university that has received at some point a grant (on an unrelated matter) from an agency that was leading the development of an assessment report does not have a conflict of interest when reviewing that assessment.

Therefore, EPA has considered these comments and finds that they do not provide credible evidence of flaws in EPA’s approach of relying and placing primary weight on the major

assessments.

Comment 2: Discussion of IQA requirements, the data and modeling for PM2.5 and ozone used as a basis for the endangerment finding and the development of the Social Cost of Carbon.

Commenters stated that the EPA has violated the requirements of the Information Quali ty Act in the data and modeling for PM2.5 and ozone used as a basis for the endangerment finding and the development of the Social Cost of Carbon.

Commenters stated that the EPA has not produced original data (the Harvard Six Cities Study
and the American Cancer Society CPS II Study) requested by the House Science, Space and Technology Committee and others that had been used as the basis of the ozone modeling.

Commenters stated that any regulation, including the proposed rule, must be suspended or

retracte d until EPA can provide the public with complete original data and the models that use the data. Commenters provided a list of items that the EPA should provide. Commenters stated that the EPA is knowingly using incorrect PM2.5 health effects data in the E ndangerment Finding and the Social Cost of Carbon used to justify this rule.

9 OMB Final Information Quality Bulletin for Peer Review, page 27.

10 Ibid.

11 http://www.nap.edu/catalog/18322/a

- review

- of

- the

- draft

- 2013

- national

- climate

- assessment

.316 Commenters stated that while the OMB is in the process of reviewing public comments on the SCC, any use of the SCC to justify the proposed rule is not valid, and stated that the E PA should terminate the proposed rule proceeding until the OMB has completed work on the update of the SCC TSD. Commenters provided a discussion about the quality of the data and models used to support the SCC, stating that the SCC does not meet IQA requir ements for process or transparency, does not comply with OMB's guidance for developing influential policy

- relevant information under the Information Quality Act, especially for a Highly Influential Scientific Assessment (HISA).

Commenters stated that his c omments are an IQA petition to correct the record in all regulatory actions of EPA that either used or cited the SCC2010, SCC2013, or SCC2013r since January 2009. Commenters provided a list of information that the commenters stated was necessary to meet IQ A obligations.

Response 2: The commenters are mistaken. First, the argument that procedural rights are violated unless underlying data are made available has been soundly rejected. See American Trucking Assn’s v. EPA , 283 F. 3d 355, 372 (D.C. Cir. 2002) . The court there held both that the CAA imposes no such obligation, and that obtaining such data is not only “impractical and unnecessary”, but would make “plainly relevant scientific information .... unavailable” .

The commenters specifically address the American Cancer Society and Harvard 6 Cities Study. These studies have been not only peer reviewed multiple times, but have also been replicated.
See :

• Original analysis: Dockery DW, Pope CA III, Xu X, Spengler JD, Ware JH, Fay ME, Ferris BG Jr, Speizer FE (1993). An association between air pollution and mortality in six US cities. NEJM 329: 1753

- 1759. Dockery DW, Pope CA III, Xu X, Spengler JD, Ware JH, Fay ME, Ferris BG Jr, Speizer FE (1993). An association between air pollution and mortality in six US cities. NEJM 329: 1753

- 1759.

• Reanalysis: Krewski D, Burnett RT, Goldberg MS, Hoover K, Siemiatycki J, Jerrett M, Abrahamowicz M, White WH (2000). Reanalysis of the Harvard Six Cities Study and the American Cancer Society Study of particulate air pollution and mortality. A special report of the Institute’s particle epidemiology reanalysis project. Cambridge, MA: Health Effects Institute. http://pubs.healtheffects.org/view.php?id=6

• Follow

- up: Laden F, Schwartz J, Speizer FE, Dockery DW (2006). Reduction in fine particulate air pollution and mortality: extended follow

- up of the Harvard Six Cities Study. Am. J. Respir. Crit. Care. Med. 173: 667

- 672.

• Reanalysis of follow

- up: Schwartz J, Coull B, Laden F, Ryan L (2008). The effect of dose and timing of dose on the association between airborne particles and survival. Environ Health Perspect, 116: 64

- 69.

There is no requirement in the IQA to re

- peer review studies which not only have been peer revi ewed already but moreover have been successfully replicated multiple times.