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### Table of Contents
1.11 State Plan Enforceability Considerations .....

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

1.11.1 Legal issues ...............................

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

1.11.2 Federal enforceability of renewable energy a nd 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 af fected EGUs ....................................... .... 117

1.11.7 Private or public third-party entity not reg ulated 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) ...................................

................................................... .................................. 169

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 ......................

................................................... ............................. 262

1.15.4 General illegality/exceedance of EPA authori ty................................................. ......... 273

1.15.5 Data and information .......................

................................................... .......................... 280

1.15.6 Economic/industry issues ...................

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

1.15.7 State-specific issues ......................

................................................... ............................... 286

1.15.8 Recommend EPA delay, modify, withdraw propos al ................................................ . 298

1.15.9 Recommend EPA strengthen proposal ..........

................................................... ........... 308

1.15.10 Information Quality Act Comments ..........

................................................... ............. 3102

1.11 STATE PLAN ENFORCEABILITY CONSIDERATIONS

1.11.1 Legal issues

Comment 1: Commenters argued that EPA's Subpart B rules requi re state emission standards to be generally no less stringent than the emission gu idelines, but they cannot be binding and enforceable against any source. Commenters argued t hat 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 genera lly require state emission standards to "be no less stringent than" the emission guidelines setforth by EPA. Commenters stated, when it first adopted its section 111(d) regulations, EPA took pa ins to emphasize that, in contrast to the "emission standards" that states adopt under their section 111(d) plans, emission guidelines are not "legally enforceable," (emphasized by the fact that the term emission guideline was used in place of emission limitation). Commenters noted tha t what the Administrator determines to be BSER is merely one of the many factors states must consider in determining the level and form of any existing source performance standard as appl ied to a specific EGU. Commenters argued that EPA's Section 111(d) guideline document is sup posed to contain an "emission guideline" for designated facilities.

Commenters argued that EPA itself recognized state primacy in 1975 when it promulgated the Subpart B regulations to interpret and implement se ction 111(d): "States will have primary responsibility for developing and enforcing control plans under section 111(d)[.]" Commenters 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 degree of emission reduction achievable through application of the best system of emission reductio n . . . .” Commenters said, by contrast, EPA’s regulations separately define an “emission standard ” as “a legally enforceable regulation setting

forth an allowable rate of emissions into the atmos phere.” Commenters said, yet, by EPA’s own admission, its proposal would establish legally enf orceable (“binding”) allowable emission rates for each state. Commenters argued that, thus, apply ing EPA's own definitions, the proposal establishes "emission standards," not guidelines, w hich contravenes section 111(d) and EPA's
stated role for itself under 40 C.F.R. section 60.2 2.

Response 1: We disagree that the proposal established “emissio n 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 provid e the substantive criteria 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. The interim and final goals are intended to reflect such

substantive criteria.3

Comment 2: Commenters argued that despite the clear requiremen ts of section 111(d), the CPP

would include emission reduction standards based al most entirely on measures that cannot be incorporated or achieved by individual units. Comme nters stated, specifically, three 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 app roach inappropriately commingles all elements of electricity production and distribution into a single "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 ha s the legal authority to carry out the plan. See 40 C.F.R. 60.26. Commenters argued that because indivi dual facilities cannot implement Building Blocks 2 through 4 under any circumstances, there i s nothing that states can require of facility owners and operators that will enable compliance wi th the CPP.

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

Comment 3: Commenters argued that EPA's BSER interpretation u nder section 111(d) is inconsistent with the structure of section 111(d) b ecause the BSER includes measures that the EPA has determined the Agency itself cannot require of states and sources as part of a Federal Plan if 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 au thority to impose RES requirements on utilities within a state, nor require new renewable energy construction through the integrated resource planning process. Commenters said, similar ly, with respect to Building Block 2, EPA

has no control over wholesale electric market rules to impose changes in the dispatch of units. Commenters stated, finally, the EPA does not have c ontrol 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 efficient 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 categor ies, 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, bec ause it shows that EPA's BSER approach in the proposed guidelines is inconsistent with both i ts own prior determinations and the structure of CAA section 111. Commenters argued that EPA's ac tions regarding sources regulated under CAA section 111(b) show that the Agency tacitly rec ognizes the limits on its own authority, and that its BSER interpretation in the proposed guidel ines 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 appro val, "a state plan must contain enforceable

measures that reduce EGU CO 2 emissions," and once approved by the Agency, its p rovisions - including its requirements for affected entities - would then generally become federally enforceable by EPA and by private individuals in ci tizen suits. Commenters argued that it is4

unclear what kind of "enforceable" obligations a st ate could impose on affected entities in order to implement Building Blocks 2, 3, and 4, or how th ose requirements could be enforced in the event they are not implemented; therefore, it may w ell prove impossible for states to submit plans that are "approvable" under EPA's criteria.

Commenters argued that the EPA acknowledges that st ate and federal enforceability of measures applied against affected entities other than EGUs m ay present practical challenges, but the EPA does not attempt to resolve these issues. For insta nce, state agencies are immune from suit under the CAA's citizen suit provision. Further, commente rs questioned, if a state imposes renewable energy investment obligations on a third party othe r than a state agency, would an investment obligation alone be sufficient to ensure federal en forceability, or would more, such as a specific amount of renewable generation capacity, be require d? How would such obligations be enforced by a court?

Commenters argued that these uncertainties are pres ent because section 111 was never intended to be used in the manner the EPA contemplates. Comm enters 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 imp lement to reduce their own emissions.

Response 3: We disagree with these comments. The state plans t hat adopt emission standards impose either emission rates or mass limits on affe cted EGUs, and those measures are enforceable by the states and by the EPA. The affec ted 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 themselves be enforceable by the stat e or by the EPA. We are not finalizing the portfolio approach. We explain in the Legal Memoran dum why the section 111(b) rule does not rely on the building blocks as the BSER.

Comment 4: Commenters believe EPA has overstepped its authori ty with the portfolio approach, and cannot legally require emission reduc tions from any source outside of fossil-fuel fired EGUs. Commenters stated that they would suppo rt the ability of sources not subject to regulation under the CPP to voluntarily opt-into a State plan, if that option were to be included in the final CPP, and it was clear that such action wo uld be taken solely at the discretion of the nonregulated source, and under no circumstances would be required by any State. In return, commenters suggested that States should have the di scretion to provide non-regulated sources that voluntarily opt-in with incentives, such as of fsets or exclusion from future State plans directly targeting the sector.

Response 4: The EPA is not requiring or authorizing state plan s to impose federally enforceable requirements on non-affected EGUs Also, as explaine d in section V.B of the final rule preamble to the CPP, the EPA is not finalizing the proposed portfolio approach and any comments on that proposed approach to 111(d) state plan design are t herefore moot.

Comment 5: Commenters stated, EPA's broad approach is authori zed, 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 statut e directs the Administrator to "prescribe regulations which shall establish a procedure simil ar to that provided by [Clean Air Act section 110] under which each State shall submit to the Adm inistrator a plan..." 42 U.S.C. section 7411(d)(1).Commenters said, under section 110, EPA uses its expertise in safeguarding public health and welfare to set NAAQS for designated crit eria pollutants that states must attain through implementation of emission limits set forth in thei r SIPs. Commenters said, EPA does not set source-specific emission limitations; that is left to the states. Commenters said, following that lead, the Proposed Rule sets statewide emission goa ls that represent the BSER for each state, and

leaves it to the states to determine how to allocat e individual emission limitations to meet 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 generally supportive of EPA’s pr oposal.

Comment 6: Building blocks 2-4 do not qualify as standards o f performance because they are

not “for” the affected source.

Commenters stated that EPA's argument that RE and E E measures are "for" EGUs because they

would have an effect on affected sources is contrar y 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 generat ing technologies and demand-side energy efficiency measures such as ener gy efficiency programs, building energy codes, state appliance standards, t ax credits, and benchmarking requirements for building energy use are not "stand ards of performance." The commenters stated that a "standard of performance" 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 sou rces, and not merely standards

that "have an effect on" those sources. The comment ers noted that there are only four sentences in section 111(d), and stated that t wo of those sentences make this conclusion crystal clear: "Regulations of the Admin istrator under this paragraph shall permit the State in applying a standard of pe rformance to any particular source under a plan submitted under this paragraph to take into consideration, among other factors, the remaining useful life of t he existing source to which such standard applies. ... 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 applies."

The commenters concluded that when viewed in contex t, 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 clear whether the p ortfolio measures would be considered standards of performance under the approach that me asures on sources outside the regulated category are "for" sources within the regulated sou rce 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 standard s of performance, the commenters presume that they would be since EPA tries to justify these measures as "standards of performance for any existing source." The commenters stated that either the measures contained within the portfolio approach are (a) standards of performance or measur es 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 i s 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 nonlisted source category into a standard that applies to and is therefore "for" facilities in a listed source category). Commenters stated that the propos al violates the core tenet of administrative law that "[t]he definition of words in isolation .. . is not necessarily controlling in statutory construction. A word in a statute may or may not ex tend to the outer limits of its definitional possibilities." e.g., Dolan v. U.S. Postal Serv., 5 46 U.S. 481, 486 (2006).

Commenters argued that building blocks 2, 3, and 4 do not quality as a standard of performance, charging that EPA is using a circular logic to defe nd their position because blocks 2, 3, and 4 as implementation measures are not part of BSER but st ill are used to calculate the goals. The

commenters stated that these measures are needed to meet the standards but will be difficult to implement and enforce, e.g., to avoid double counti ng and to account for entities in different

states.

Regarding the suggestion that state emission perfor mance levels (i.e., the "state goals") could be considered "standards of performance," commenters s tated that the agency presumably intends to argue that if the state goals are "standards of per formance," then EE and RE measures would be "implement[ing] measures that could be included in the state plans. The commenters said this argument is flawed, and that "standard of performan ce" does not mean "a requirement that concerns emissions"; it means, "a standard for emis sions of air pollutants" or "a requirement of

continuous emission reduction." The commenters said that state goals cannot be "standards of performance" because state goals are not requiremen ts on individual electric generating units.

Commenters indicated that what EPA calls "standards of performance" are more akin to state implementation plan measures. The commenters indica ted that the portfolio measures cannot be called performance standards, and that state plan r equirements that create obligations on third parties are not "standards for emissions of air pol lutants."

Commenters stated that EPA goes far beyond any read ing of the term "standard of performance" in the proposed rule.

Commenters stated, the fundamental tenet of guideli nes under Section 111(d) is that they set standards of performance for existing sources that are achievable by that source. Commenters said, EPA ignores the very essence of the section 1 11 regulatory program-regulation of sources7

in a source category. Commenters said, EPA has seve red the link between the standard of performance and the source category and instead eff ectively 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 affect ed sources, "for" is also reasonably interpreted to have a more capacious meaning: Stand ards (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 am ount of generation needed from affected EGUs." Commenters argued this is an unprecedented a nd tenuous interpretation of EPA's authority over setting standards for stationary sou rces under Section 111.

Commenters stated, in attempting to support the sui te of measures not directly tied to the source, EPA also compares its approach to the kind of measu res adopted in state implementation plans ("SIPs") under Section 110. Commenters said, this a rgument 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 funda mentally, the argument regarding the SIP comparison fails because under Section 110, it is t he state that must develop a state plan to achieve a national ambient air quality standard 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 o f 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, Congre ss has only authorized establishment of standards of performance (or guidelines under 111(d )) for stationary sources that reflect the application of BSER for the source, not some genera l target of emissions reduction from all sources that may in some way help reduce GHG emissi ons. 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, a s explained in section V.B of the final rule preamble to the CPP, the EPA is not finalizing the proposed 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 said, section 111(d) markedly relies on this model. Comme nters 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 ex isting sources, 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 plan s designed for the particular existing source populations in their states. Commenters said, recog nizing this reality, Congress gave the states primary responsibility to implement and enforce sta ndards 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 s tate 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 emiss ions to the required "best system of emissions reduction" (BSER) level and comply with other requi rements, the standards of performance contained within these plans are to be "establishe[ d]" by the states. See id. section 7411(d)(1). Commenters said, a state plan will not be "satisfac tory" if it does not "establish" standards that "reflect the degree of emission limitation achievab le 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 p erformance.

Commenters stated, the Act leaves that design quest ion to the states, subject to U.S. EPA approval. Commenters said, the Act provides that st ate plans must "provide for the implementation and enforcement" of standards "for a ny existing source" consistent with BSER reduction levels. Id. section 7411(d)(1). Commenter s said, the statute does not say what constitutes a plan "for" any existing source, nor d oes it specify particular mechanisms for state implementation and enforcement. Commenters said, th us, ARB staff agrees with U.S. EPA that the requirement that state standards be "for" sourc es affords U.S. EPA discretion to approve a range of plans that satisfactorily address existing source emissions. See 79 Fed. Reg. at 34,903. Commenters said, although a plan would not be "sati sfactory" if its implementation and enforcement design failed to guarantee that BSER em issions levels were achieved and maintained, the form of the plan and its standards is otherwise primarily up to the state.

Commenters stated, the statute does not provide muc h further substantial direct guidance on the content of the state plans. Commenters said, althou gh the "procedure" under which they are submitted is to be "similar to that provided by sec tion 7410" (section 110) for criteria pollutant plans, id. section 7411(d)(1), it is not required t o be identical, and no particular requirements are provided by statute. Commenters said, state planner s 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 em ission limitations so long as the national standards are met"); Texas v. U.S. EPA, 690 F.3d 67 0, 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 partic ular control strategies they will use to achieve the statutory requirements"); Luminant Gene ration Co., LLC v. U.S. EPA, 714 F.3d 841, 845-46 (5th Cir. 2013) (affirming this principle). Commenters said, indeed, the design flexibility for section 111 plans is likely greater than that a fforded 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 pr ovide a similarly directive list under section 111, noting only that procedures for those plans sh ould be "similar" to section 110. Id. section 711(d)(1).9

Commenters stated, it is especially reasonable for U.S. EPA to consider creative state plan designs for greenhouse gas emissions from EGUs beca use of the nature of the best system of

emission reduction for these sources. Commenters sa id, as U.S. EPA discusses at length in the proposal, the most effective systems for controllin g 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 s aid, grid-level actions that displace the need for higher emitting sources can enable very su bstantial reductions at the sources

themselves.

Commenters stated, to capture these reductions- tha t is, to be "satisfactory"- states' plans thus must operate in the larger world of the electric sy stem, and so relate in a complementary way to the many regulators and regulations, state and fede ral, 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 said , the section 111(d) state plans will benefit from this experience. Commenters said, stat es 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 requirements while work ing within the structure of electric system regulation set out by state and federal laws, inclu ding the Federal Power Act. See, e.g., Morton v. Mancari, 417 U.S. 535, 551 (1974) (statutes are to be interpreted harmoniously).

Commenters stated, clearly U.S. EPA has the discret ion to consider for approval a broad range of state plan types given: the principles of cooperati ve federalism at the foundation of the Clean Air Act; the marked contrast between the national, one- size-fits-all standards for new sources under section 111(b) versus the state plan approach in se ction 111(d) which provides even greater latitude in some respects to states than in the sec tion 110 context; the statute's reliance on the best system of emission reduction, a term that on i ts face extends beyond the bounds of any particular source; and, in the particular context o f this rule, the interconnected nature and diversity of EGUs and the need to harmonize emissio n reductions with other statutory directives. Commenters said, there is, in other words, every in dication 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 perfor mance because they are “for” the

affected source.

Commenters stated that although the "for" in settin g performance standards "for" affected sources could reasonably be read as meaning that th e standards must apply to affected sources, "for" is also reasonably interpreted to have a more capacious meaning to include standards with

an effect on affected sources. Commenters indicated that standards such as those for renewable energy, are reasonably considered to be "for" affec ted sources if they would have an effect on10

affected sources by, for example, causing reduction s in affected EGUs' carbon emissions by decreasing the amount of generation needed from aff ected EGUs. Commenters 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 E GUs, even if the standards 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 a ffected sources are reasonably read to include the emission performance level (i.e., the s tate goal) on the grounds that the level is a

standard for emissions. Commenters said it is in th e nature of a requirement that concerns

emissions and it is "for" the affected sources beca use it helps determine their obligations under the plan. Commenters said that measures, such as re newable 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 ma ke through emission limits, and if they are requirements on entities other than the affected so urces.

Response 8: These comments generally support EPA’s proposal. Th e EPA thanks the

commenter for these comments.

Comment 9: Commenters said that, EPA makes clear in the propos al, and they support, that states have substantial flexibility to determine th e most cost-effective means to meet the applicable target based on the specific resources a nd opportunities in a state. Commenters said that, consistent with the applicable case law, in t he 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 t he measures that constitute BSER or include measures that were not part of EPA's BSER determina tion 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 me ans to comply but rather impose a mass-based target on affected EGUs. Commenters said that, anot her state may elect to continue to develop renewable energy generation as a compliance mechani sm in combination with a rate-based trading program that encourages the displacement of higher emitting sources with lower emitting generation. Commenters said that, as long as a stat e can demonstrate that its compliance choices can achieve its applicable emission reduction level , EPA appropriately proposes to recognize those measures as compliance options.

Commenters said that, given the flexibility Congres s 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 specific state dynamics and utilizing11

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

Commenters said that, allowing states significant c ompliance flexibilities for reducing or displacing emissions, is analogous to the approach Congress specified for the consideration of a wide variety of transportation control measures ava ilable to States in formulating their SIPs under section 110, which Congress referenced in sec tion 111(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 thatreduces emission from the transportation sector by reducing vehicle use or changing traffic flow or congestion conditions. Commenters said that, Congress intended that such measures rec eive the same credit as those which depend upon actual tailpipe reductions. Commenters said th at, this recognition by Congress that a broad range of measures can lead to a reduction in emissi ons is consistent with EPA's approach of providing significant flexibility for states to dem onstrate compliance in the section 111(d) plans.

Response 9: These comments generally support EPA’s proposal. Th e EPA thanks the

commenter for these comments.

Comment 10: EPA's Inclusion of Energy Efficiency and Renewabl e 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 stat es would work together to control air pollution. Commenters said that when enacting the C AA in 1970, Congress found that "air pollution prevention... and air pollution control a t its source is the primary responsibility of state s and local governments" and that "Federal financial assistance and leadership is essential for the development of cooperative federal, state, regional , and local programs to prevent and control air pollution." Commenters said that as a federal appea ls court recently explained, "Congress chose

a balanced scheme of state-federal interaction to i mplement the goals of the Clean Air Act."

Commenters stated that the CAA establishes a cooper ative framework whereby EPA and the states work in partnership to achieve air quality o bjectives. Commenters said that the CAA's "cooperative federalism structure is a defining fea ture of the statute." Commenters said when enacting this law, Congress found that "air polluti on 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 deve lopment of cooperative federal, state, regional, and local programs to prevent and control air pollu tion."

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

(1) to protect and enhance the quality of the Natio n's air resources so as to promote the public health and welfare and the productive capacity of i ts 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 technical and financial assistance t o State and local governments in connection with the development and execution of their air pol lution prevention and control programs; and

(4) to encourage and assist the development and ope ration of regional air pollution 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 chapter, for pollution preve ntion."

Commenters stated that EPA, in its CPP, does more t han encourage or promote state actions - it

federalizes them. Commenters said that EPA is build ing bold assumptions regarding EE and RE, beyond-the-unit measures traditionally regulated atthe state or regional level, into each state goal calculation, effectively requiring states to utiliz e these beyond-the-unit measures to achieve the standard. Commenters said besides being simply unne cessary, another major problem exists with it - by requiring states to include their state-reg ulated EE and RE programs into its federallyenforceable SIP, EPA effectively subjects state pro grams to federal enforcement. Commenters said that the EE programs and many of the RE progra ms have to date 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 S upply 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 "exclusively within state control."

Commenters stated that EPA deviates from this prohi bition in the proposed rule. Commenters said by regulating state-run EE and RE programs, wh ich EPA argues affect CO2 emissions from the source category by reducing demand of electrici ty generated from fossil-fuel fired EGUs, EPA is failing to respect the state's explicit auth ority to regulate its own retail electricity demand

. Commenters said that FERC Commissioner Tony Clark s tated in his testimony before the House Energy and Commerce Subcommittee on Energy and Powe r that:

"More than any regulation I have seen during the ti me I have been involved in the energy sector, this EPA proposed rule has the potential to compreh ensively reorder the jurisdictional relationship between the federal government and sta tes 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 seni or partner...[States] will have entered a comprehensive "mother-may-I relationship with the E PA that has never before existed."

Commenters stated that this "Mother-may-I" relation ship will have profound implications beyond just the CPP. Commenters said that Clark wen t on to explain:13

"To use just one example, if a future legislature d ecides that its renewable portfolio standard is not working for the citizens of its state, that leg islature may effectively be prevented from changing course, because its 'EPA-approved' RPS wil l still be in full effect; and likely enforceable by either the EPA or subject to a priva te party lawsuit. The same would apply to any future state utility commission action to the degre e it implicates an EPA approved plan. And because basically everything in the electricity sec tor 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 stated that these are powerful and insig htful words to hear from a federal energy regulator, and they articulate a crystal clear visi on of what will result from EPA's oversight of state electricity regulation. Commenters said that if FERC, the federal energy agency, lacks authority to regulate electricity demand under the FPA, EPA most certainly does not have the authority under its emission statute - the Clean Ai r Act.

Response 10: The EPA disagrees with these comments. See section V.A and V.B of the final rule 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 o ver any entity other than affected EGUs and would be limited to enforcing the emission stan dards applicable to the affected EGUs, and thus this rule does not require that states make th eir 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 i n the final rule, but EE may be available as a compliance measure. The EPA has the clear authority from Congress, reco gnized by the Supreme Court, to regulate GHGs from the affected E GUs.

The rule is consistent with the cooperative federal ism structure throughout the CAA. EPA’s oversight authority is plainly provided in the textof 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 finalizing the portfol io approach. Our emission guidelines simply reflect an achievable emissions limit through the a pplication of the BSER and do not in themselves require states or sources to implement t he BSER. Moreover, these emission guidelines provide states with the flexibility to e stablish, implement, and enforce standards of performance and do not intrude on the regulatory do main 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 regulati on. 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 comprehensive discussion of cooperative federalism and the final 111(d) rule, p lease see EPA’s response to comments in

section 1.2.14

Comment 11: Commenters stated that the CAA empowers states, no t EPA, to apply appropriately tailored standards to individual sour ces, explaining that under some provisions of the CAA, EPA itself sets federal standards that app ly directly to individual sources - for instance, under Section 112, or under Section 111(b), which e mpowers the agency to set performance

standards for new sources but under the Section 111 (d) system, EPA is limited to establishing a procedure for states to submit plans under which th e states will set performance standards for existing sources within their jurisdiction, taking into account plant-specific characteristics such as the remaining useful life of each facility. Comm enters contended that the states are expressly afforded this discretion by the statute, and the ag ency 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 fede ral plan may only remain in force until the state corrects its plan. Commenters stated that the current proposal upends this by setting binding and inflexible state "goals" in the form of statewi de limits on CO2 emissions for a state's entire power sector, and this contradicts Congress's inten t to respect and harness states' local knowledge. Commenters remarked that even assuming t hat Section 111 contemplates beyondthe-fence, grid-wide "systems of emission reduction " - which, as explained above, it does not - Congress's design of the statute makes clear that i t 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 sources. Commenters said, instead, states are relegated to a purely ministerial role in achieving the limits handed down from the federal g overnment. Commenters stated that this gets Section 111 entirely backwards: 111(d) was designed to establish cooperative state-federal regulation, with less of a role for the federal gov ernment than under 111(b), and the CPP imposes cookie-cutter regulation.

Commenters stated that significant uncertainties ex ist regarding the design, implementation, and demonstration of compliance strategies to achieve t he Building Block 3 goals, and this includes uncertainty regarding who has the regulatory author ity to require the development and operation of specified amounts of renewable resources and nuc lear 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 obligation r esides.

Commenters stated that even though EPA invokes Sect ion 111(d)(2) for the Administrator's authority to implement "a satisfactory plan as he w ould have under section 7410 of this title in the case of [a State's] failure to submit an implem entation plan," the Clean Air Act still requires the Administrator to have the authority to impose i ndividual elements of that plan. Commenters believed that regardless of how serious the problem an administrative agency seeks to address, it may not exercise its 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 Pipeline Project v. Missouri, 484 U.S. 495, 517, 108 S.Ct. 8 05, 98 L.Ed.2d 898 (1988)). Commenters argued that the CAA granting EPA authority "to impo se a plan" does not confer on the Agency15

the authority to impose elements of a plan that the States may have 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 electri city or the basis for transmission of electricity i n the state (prices, reserves, a preference for envir onmental dispatch over lower-cost electricity) does not confer that authority on EPA should the St ate fail to exercise that authority. Commenters argued that EPA's authority under CAA Se ctions 110 and 111 are confined to establishing "emissions standards" applicable to "a ffected sources"; the State PUC or PSC is not an "affected source" that EPA has authority over; n or are the elements of Blocks 2,3, or 4 such as the production and sale of electricity, authority f or 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 re lating to the operation or maintenance of a

source to assure continuous emissions reduction and any design, equipment, work practice or operational standard 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, supports 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 al low for the purchase of RE credits from other nations such as Canada. Commenters explained that w hile Michigan's current Renewable

Portfolio Standard does not consider out-of-state h ydropower as eligible, allowing international trading of low or non-emitting electricity generati on 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 wit h 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 13: Comments stating that section 111 does not allow E PA to reestablish BSER as part of "out-year" requirements beyond an alternati ve 2025 performance goal.

Commenters noted that in connection with the altern ative state goals, for the years after 2027, EPA requests comment on the same "out-year" issues and concepts for maintaining or improving emission performance over time that are described f or the final goal (i.e., whether a state plan should provide for emission performance after 2025 solely through post-implementation16

emission checks that do not require a second plan s ubmittal, or whether a State should also be required to make a second submittal prior to 2025).

The commenters stated that EPA lacks legal authorit y under Section 111 to establish a subsequent BSER based on levels of improved perform ance (i.e., section 111 does not permit EPA to reestablish a second BSER or performance goa l). 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 misplace d because EPA cannot re-issue a NSPS for new sources that have already gone through the proc ess. Likewise here, the commenters stated that existing sources that have undergone a section 111(d) process cannot be forced to undergo it again.

The commenters stated that the only legally permiss ible alternative is post-implementation emission checks. When goal exceedances arise due to unforeseen circumstances the commenters stated that goals should be adjusted accordingly. F or other exceedances, the commenters suggested that post-implementation checks coupled w ith state readjusted plans are appropriate.

Response 13: See section VIII.B of the final rule preamble of t he CPP for the EPA’s response to this comment. See section V.A. of the final rule pr eamble 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 informa tion regarding the final performance rates and goals.

Comment 14: Portfolio approach is not allowed under section 11 1(d)

Commenters indicated that EPA cannot approve and ma ke federally enforceable nonperformance measures, and the section 110 authority which gives states discretion to include various types of measures in their SIPs to attain N AAQS is a fundamentally different program. The commenters stated that Congress specifically ga ve states the authority to formulate any measures they wish to meet the NAAQS, but under sec tion 111(d), state plans must include "standards of performance" which is a defined term with a specific regulatory context. The commenters stated that no CAA authority exists for section 111(d) plans to contain other types of federally enforceable substantive measures.

Response 14: The EPA has decided not to finalize the portfolio approach to designing a state plan under this guideline, so any comments objectin g to the portfolio approach are moot.

Comment 15: Comments on the enforceability of a federal plan c ontaining 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 author ity to develop and implement a Federal Implementation Plan (FIP) based on the portfolio ap proach. Commenters stated that it is unclear from the proposal whether EPA believes it could imp ose portfolio measures in a federal plan. Commenters argued that the EPA does not have the au thority to implement a FIP based on the portfolio approach and believed that "an interpreta tion of the CAA that permits the issuance of a BSER that cannot be enforced through a FIP runs con trary to one of the oldest plain statement rules in American jurisprudence: 'we must generally assume, in the absence of a plain indication to the contrary, that Congress when it enacts a sta tute is not making the application of the federal act dependent on state law'." Commenters stated th at the recognition that "federal statutes are generally intended to have uniform nationwide appli cation" and the concern "that the federal program would be impaired if state law were to cont rol" "apply with substantial force to an interpretation of section 111 that would permit a B SER that depends upon the States willingness to exercise police powers that EPA does not possess and cannot assume."

Commenters stated the issue of plan enforceability is further complicated in the event a state does not submit a plan or a state is not on track t o meet its interim state goal. Commenters said the EPA needs to identify how it will handle such s ituations. Commenters stated the EPA does not have jurisdiction over retail sales of electric ity and does not have jurisdiction to compel nonEGU entities to participate in an emissions reducti on program applicable to EGUs. Commenters said in light of these constraints, they did not be lieve 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. Commenters stat ed when the EPA attempted to require state regulators to implement federal transportation cont rol plans in the 1970s, courts held that the EPA could not require state officials to affirmativ ely implement vehicle inspection and maintenance programs because it commandeered state agencies in violation of the 10th Amendment. Commenters said, EPA cannot impose requi rements on states that the agency itself does not have the authority to enforce.

Commenters noted that 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. The commenter argued that even under a mass-based syste m, EPA would effectively be regulating by proxy: because mass-based plans must be equivalent to rate-based plans, [Without their inclusion in a state compliance plan, EPA could not on its ow n regulate any of the areas implicated by blocks two, three, or four through a federal plan.] a state would still be required to make changes across the entire electricity sector in order to me et EPA's proposed emission targets. Commenters said that the necessary regulatory authority to imp lement building blocks two through four is, in many states, conferred through statutory provisions to commissions or other entities established by state constitutions and not to the federal gover nment. Commenters cautioned that states might not participate, and as was the case with the Patie nt Protection and Affordable Care Act, might not prefer state flexibilities (state exchanges) to federal implementation. Commenters questioned how EPA would make re-dispatch federally enforceabl e in a federal plan.18

Commenters stated that if a state chooses not to fi le a SP, it risks the loss of authority over its electricity market when EPA imposes a FP to impleme nt the rule. Commenters stated that it is unclear how the EPA would exercise its "claimed jur isdiction, i.e., the authority to require Colorado lawmakers to enact energy statutes" were t he Agency to impose a CAA 111(d) federal implementation plan.

Commenters stated concern with potential federal re quirements for demonstrating compliance with 111(d) rules based on renewable electricity co nsumption will preempt state renewable portfolio standard rules, which typically vary cons iderably from one state to the next. Commenters said it will not be possible for the EPA to honor the RPS rules for each state while maintaining a coherent national policy regarding wh at renewable electricity is eligible for use in compliance with 111(d). Commenters stated as a resu lt, states and utilities will have a strong incentive to revise their renewable electricity pro curement 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 specifi c interests and goals of that state.

Commenters stated in addition, there is the potenti al for the development of clean energy resources, such as incremental hydro upgrades at ex isting 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 m ay not be known nor would any RECs be generated by the facility or purchased and retired by an electricity consumer. Commenters stated a perfect example of this already exists in Montana , where PPL Montana completed a capacity expansion at its Rainbow Dam in 2013, increasing it s nameplate capacity from 35 MW to 60 MW. Commenters said however, the incremental electr icity generation from Rainbow Dam's 25 MW of additional capacity is not considered an elig ible renewable energy resource under Montana's RPS and Rainbow's increased electricity s ales are sold as null power on the wholesale market alongside PPL Montana's other electricity ge neration. 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 state would be abl e to take credit for Rainbow Dam's incremental electricity generation if 111(d) compliance is base d 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 par ticipate 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 plan that meets with EPA's approval, EPA would mandate a federal plan and

could sanction the State if its citizens fail to me et the federal standards. Commenters stated, if the state refuses to participate, the Proposed Rule will abrogate its sovereignty and impose
federal control.19

Response 15: The EPA is not finalizing the portfolio approach fo r 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 a pproach in either a state plan or a federal plan are moot. EPA anticipates that any proposed fe deral plan will rely on emission standards that apply to affected EGUs. To the extent that the commenters are asserting the EPA implementing a federal plan of any sort somehow imp airs 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 stat e has made a choice not to participate in implementing this guideline, and consistent with th e cooperative federalism structure of the CAA as it has operated for decades, EPA is then left wi th the task of implementing the guideline. EPA would not infringe upon a state’s choice not to par ticipate in implementing the guideline, but would rather take over that duty. As described in s ection VIII of the final rule preamble of the CPP, EPA is not requiring states to adopt any measu res that EPA itself could not enforce. States may choose to use state measures to reduce emission s, but those measures must be backstopped by standards on affected EGUs. EPA would not exertenforcement authority over any entity

other than affected EGUs.

Comment 16: Commenters stated that standards must be enforceab le, not just by the EPA, but by citizens, including groups like the American Lun g Association.

Commenters stated that in the final rule, the EPA m ust make it clear who ultimately has the responsibility for meeting the targets, from gettin g the targets and taking the actions required by state plans to meet the goals of those plans. Comme nters said ambiguous responsibility will lead to emission reduction goals not being met. Commente rs said that progress reducing pollution and the Clean Air Act has not only been the result of i ndependent actions by EPA states, but also the citizens holding responsible the parties accountabl e to Section 304 of the Act. Commenters said together we need to be able to hold accountable pow er from these states and third parties for making the target plans work. Commenters said the p rograms intended to achieve state targets must be directly enforceable by citizens against so urces and other parties responsible for achieving reductions under the provisions of the st ate or federal implementation plans. Commenters said EPA must also provide explicit requ irements in the final rule to assess quarterly agencies that are promoting obligation an d timing for establishing a plan for states that have inadequate plans or that fail to submit any pl an.

Commenters stated that EPA must amend its proposed regulations to ensure that emissions standards are enforceable by citizens. Commenters s aid EPA has proposed a regulation which would mandate that each state plan include emission s standards that satisfy certain criteria, including the requirement that emission standards m ust be "enforceable with respect to each affected entity." Commenters said the proposed regu lation 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 secu re appropriate corrective actions pursuant to sections 113(a) through (h) of the Act." Commenters said the proposed regulation omits any20

requirement that the emission standards are enforce able by citizens. Commenters said the Clean Air Act provides that citizens may sue for violatio n 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 ti tle." Commenters said that if the state plans establish emission standards without ensuring that citizens have the ability to enforce violations and secure appropriate corrective actions pursuant to section 304 of the Act, citizens may not be able to enforce those standards as a practical matt er. Commenters said EPA must cure this
omission.

Commenters stated that correcting the proposed regu lations by including a requirement that emission standards 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 emiss ion limits that the EPA has found can be enforced as a practical matter." Commenters said th e 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 informatio n obtained from the source [and] can file suits against the source for violations." Commenters said that reductions achieved through energy efficiency or renewable energy actions for which a party other than a source bears responsibility are considered enforceable if, among other things, "[c]itizens have access to all the required activity information from the responsible party [an d] can file suits against the responsible party
for violations."

Commenters stated there is also uncertainty as to w hether the state-driven portfolio approach under the proposed rule allows citizen suits agains t states (or non-EGUs). Commenters said this potential for citizen suits could result in signifi cant additional costs.

Commenters stated in a portfolio approach, where en tities covered by an energy sector measurean RPs, for example-are included in a state plan, d o these entities have citizen suit liability if they do not comply? Commenters asked, relatedly, if the state wishes to alter an energy policy contained with the plan, what EPA approval process would be applicable?

Response 16: In the proposed regulatory text describing the enf orcing measures that states must include in state plans, the EPA inadvertently exclu ded 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. Comme nters noted the EPA’s intent to require this demonstration based on statements in both the propo sal preamble 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 oth er third parties can enforce against violations of an emission standard included in a state plan vi a civil action as part of the required plan component demonstrating enforceability. We are fina lizing this requirement as a logical

1 State Plan Considerations technical support docume nt for the Clean Power Plan Proposed Rule: http://www2.epa.gov/carbon-pollution-standards/clea n-power-plan-proposed-rule-state-plan-consideration s.21

outgrowth of proposal preamble text, the proposal p reamble citation to existing enforceability guidance documents that discuss this requirement, c omments received, and the clear statutory
foundation.

As explained in section V.B and VIII of the preambl e, the EPA is not finalizing the proposed portfolio approach and any comments on that propose d approach to 111(d) state plan design are therefore moot. Instead, the EPA is finalizing an o ption to submit either an “emission standard” plan type, which imposes requirements solely on aff ected EGUs in the form of federally enforceable emission standards, and a “state measur es” 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 t hat are not included in the federally enforceable 111(d) state plan, provided the state s ubmits standards of performance for CO 2 emissions from affected EGUs in the form of a feder ally 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 sta te plan provides for the implementation and enforcement of such standards of performance by spe cifying the trigger mechanism and conditions under which the backstop emission standa rds 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 c itizens may enforce against affected EGUs

under section 113 and section 304The 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 s tate reporting to the EPA on plan implementation and progress toward meeting the requ ired CO 2 emission performance level. For state measures plans in particular, the final emiss ion guidelines also require states to submit annual reports to the EPA that address periodic pro grammatic milestones to show progress in program implementation; see section VIII. The EPA i ntends to review each submitted state plan on a case-by-case basis to determine whether it sat isfactorily addresses the Act’s enforceability requirements. Final EPA action on any submitted 11 1(d) state plan, including a state measures plan, is subject to judicial review under section 3 07(b) of the Act.

Commenters argue that the language of section 304 o f 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 acti on on [their] own behalf against any person ... who is alleged to have violated (if there is evid ence that the alleged violation has been repeated) or to be in violation of an emission stan dard 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 11 1 ... which are in effect under this chapter”22

are those in a state plan that are necessary to sat isfactorily “provide for ... enforcement” of the standards of performance.

Because the phrase “provide for ... enforcement” is a mbiguous, EPA has been delegated authority to interpret what elements in a state pla n 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 ensu re enforceability. Under the state measures plan type, those requirements are the trigger and t he backstop. The backstop must satisfy the same enforceability criteria as the emission standa rds in an emission standards plan type. The trigger must be capable of being activated by EPA a nd citizens. Details of the interpretation of section 111(d)(1) with respect to the state measure s approach are provided in the Legal
Memorandum.

Finally, we note that a requirement in a state pla n is not federally enforceable until EPA has approved it as part of the federally enforceable pl an. 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, un der the emission standards plan type, the emission standards and associated monitoring, recor dkeeping, and reporting that EPA has approved into the federally enforceable plan are “r equirements under section 111 which are in effect under this chapter,” and are thus enforceabl e under section 304. Under the state measures plan type, the trigger and backstop are approved in to the federally enforceable and are therefore “requirements under section 111 which are in effectunder this chapter” and are thus enforceable
under section 304.

Comment 17: Commenters stated that a mix of entities might hav e enforceable obligations under a state plan. Commenter said various provisio ns of EPA's proposed Clean Power Plan rely on the assumptions that states themselves may take responsibility 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. Commenters provided the example EPA so licits comment on a "state commitment approach" to section 111(d) plans, under which stat es would commit to implement, say, RE and demand-side EE programs "that would achieve a speci fied portion of the required emission performance level on behalf of affected EGUs." Comm enters said EPA explains that those commitments would not be part of the state plan, pe r 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-f or violating CAA requirements and, as a result, could be held liable for CAA penalties." Co mmenters said EPA suggests, states could "impose the full responsibility for achieving the e mission performance level on the affected EGUs, but ... credit the EGUs with the amount of em ission reductions expected to be achieved from, for example, RE or demand-side EE measures" a nd "then assume responsibility for that

credited amount of emission reductions ...." Commen ters said EPA's proposal ignores important restrictions on the ability to sue state agencies u nder the Clean Air Act's citizen suit provisions.23

Commenters said Section 304 of the Clean Air Act au thorizes "any person" to commence "citizen suits" against "any person (including ... any ... governmental instrumentality or agency to the extent permitted by the Eleventh Amendment to t he Constitution) ... who is alleged to have violated ... or to be in violation of-certain requi rements of the Clean Air Act. Commenters said the relevant provisions of section 304 would permitsuit only for violations 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 li mitation under this chapter" is defined, in section 304(f)(3), to include "any requirement unde r 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. Commenters said Section 304 does not, however, provide citizens the ability to sue state agencies for failure to administer sec tion 111 requirements. Commenters 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 n ot 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 what are the consequences for an e ntity assigned responsibility in a state plan that has failed to perform? Commenters asked if the mix of responsible entities in a state plan includes local, state, regional, and federal organi zations, what authority will a state have to evaluate, judge, and penalize non-performance?

Response 17: As explained in section VIII.C of the final rule pr eamble of the CPP, the EPA is not finalizing the proposed state commitment approa ch or crediting approach for state plan design. Therefore, any comments about the state com mitment 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 federa lly enforceable obligations under a 111(d) state plan. See section VIII.

Comment 18: EPA is usurping state authority to set standards o f performance.

Commenters argued that the proposed rule usurps the rights of states to set performance standards. Commenters argued that under Section 111 (d), the states, not EPA, have the authority to establish standards of performance for existing sources. Commenters stated that EPA does not and cannot identify anything in section 111(d) or e lsewhere in the CAA that authorizes it to displace states' legal authority to establish emiss ion standards. Commenters quoted Am. Library

Ass'n v. FCC, 406 F.3d 689, 698 (D.C. Cir. 2005) noting thatan agency's "power to promulgate legislative regulations is limited to the scope of the authority Congress has delegated to it." Commenters said, EPA cannot grant itself authority unless Congress delegated to EPA. Commenters stated the CAA itself directly addr esses the interrelationship between EPA and other federal agencies, and EPA and the states. Commenters said, section 310 of the CAA states that the CAA "shall not be construed as supe rseding 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 regard ing the balance of state and EPA authority: "Section 111(d) allows each State to tak e the first cut at determining how to best

achieve EPA emissions standards within its domain" and, "For existing sources, EPA issues emissions guidelines; in compliance with those guid elines and subject to federal oversight, the states then issue performance standards for station ary 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 beyo nd the scope of reach allowed by the law. Commenters stated that a state's authority to deter mine 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 allo cation of resource attributes located within a state. Commenters stated that while a state may cho ose under certain circumstances to agree to

allocate an attribute of its resources to other sta tes, this prerogative belongs to the states and not the EPA. Commenters stated that many factors lead t o the development of a state's natural resources, including state tax credits, state infra structure 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 tha t cooperatively address any reallocation of
these resources or resource attributes.

Commenters argued that the EPA would exceed its law ful authority by establishing the standards of performance itself and specifying binding, state wide 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 re duction goals in the event that affected facilities cannot fully implement any element of BSER.

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

Commenters argued that the EPA has long recognized that its role in developing state-specific existing source emission guidelines is limited. Com menters stated that in the preamble to EPA's 1975 rules (Subpart B) establishing the framework f or developing existing source emission guidelines, EPA explained that it used the term "em issions guidelines" rather than "limitations" to make it clear that the guidelines were not inten ded to be binding requirements but rather "criteria for judging the adequacy of State plans."

Commenters argued that 40 CFR Section 60.22 (Subpar t B) specifically authorizes EPA to issue only a nonbinding "guideline document" that "contai n[s] information pertinent to control of the designated pollutant from designated facilities." C ommenters argued that the use of the words "guidance" and "information," rather than "standard s" 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 rea d to authorize EPA to issue binding statewide emission reduction goals that are "guidel ines" in name only. Commenters stated that under CAA section 111(a)(1) and EPA's Subpart B rul es, the Agency is authorized only to set25

"emission guidelines" addressing factors relevant t o the states' determination of the "best system of emission reduction" that has been "adequately de monstrated" and is "achievable" for each source type. Commenters said that EPA's guidelines are not legally binding or directly enforceable on sources, and that they simply set ou t considerations for states to address in adopting their own standards for existing sources.

Commenters stated that in the proposed rule, howeve r, EPA grossly oversteps their authority and sets EPA-developed, state-specific emission reducti on targets that the states have no ability to alter, and has set binding "limits" that both the s tatute and EPA's regulations prohibit. According to the commenters, the only authority that EPA cite s for establishing mandatory "goals" is the EPA regulations to implement section 111(d) of the CAA. Commenters notes that these regulations provide for EPA to promulgate "guidelin es" 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 commenters, the "guid eline" is a performance standard.

Commenters noted EPA's statement that goals are "ba sed on an assessment of the amount of emissions that can be reduced at existing fossil fu el-fired EGUs through the application of the BSER" and stated, that is exactly what a standard o f performance is under the statute: "a standard for emissions of air pollutants which refl ects the degree of emission limitation achievable through the application of the best syst em of emission reduction."

Commenters said that EPA's claim that the measures that create obligations on third parties are "standards of performance" because they reduce emis sions from the regulated source category only serves to emphasize that EPA's "goals" are no different from performance standards. The commenters 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) adopting "portfolio" measures which have the effect of reducing generation (and therefo re emissions) from the source category, or (c) some combination of both approaches. Commenters sta ted that whatever plan the state submits, it must ensure that emissions from the regulated so urce 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 factors. Commenters stated that as a result, EPA is promulga ting performance standards within the meaning of section 111(a), which is authority that Congress gave to states, not EPA.

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

Commenters said, EPA has made clear that when it is sues 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 woul d no longer have an opportunity to request that EPA adjust its CO2 goal because they will repr esent the application of BSER for the states'
affected sources."

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

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

Commenters stated that EPA may reasonably establish binding emission guidelines, and that, as a preliminary matter, EPA reasonably interpreted se ction 111(d) in its 1975 regulations to provide for the promulgation, after notice and comm ent, of binding emission guidelines that specify the emissions performance level that is req uired of standards of performance included in state plans. Commenters indicated that section 111( d) provides for EPA to review state plans, approve them if "satisfactory," and requires EPA to issue a federal plan if a state fails to submit a satisfactory plan. Commenters stated that these pro visions authorize EPA to apply substantive criteria, not only procedural criteria, in making t he determination whether a state plan is "satisfactory." Commenters also stated that it is " the Administrator" who determines the "best system of emission reduction." Commenters stated th at 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 gov ern its approval/disapproval decisions beforehand, in emission guidelines adopted through notice and c omment.

Commenters continued to explain that Congress recog nized and approved the guidelines' setting process that EPA established in its 1975 regulation s, when amending the CAA in 1977 and 1990. Commenters stated that in 1977, the House committee explained that under section 111(d) the Administrator would establish guidelines as to whatis the best system for each category of existing sources. Commenters stated that in 1990, i n CAA section 129, Congress directed EPA to adopt standards for solid waste combustion through a process that expressly refers to guidelines under section 111(d). Commenters noted that CAA sec tion 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 e ach state to submit to EPA a plan to implement and enforce those guidelines within a year followin g their promulgation. Commenters also noted that an attack on the 1975 regulations would now be time barred.

Commenters stated, EPA's longstanding interpretatio n of its authority, as set forth in its implementing regulations (Subpart B), further affir ms that EPA is, at a minimum, allowed to establish substantive guidelines. Commenters said, in its initial rulemaking proposal to establish general procedures under section 111(d), EPA explai ned that it would publish guideline documents setting minimum emission guidelines that reflect the best available demonstrated systems of emission control. Commenters said, EPA r eiterated in the preamble to its final27

implementing regulations that the agency has the st atutory authority to set minimum emission guidelines for state emission standards included in state plans. Commenters said in responding to industry comments questioning EPA's authority to pr escribe more than procedural requirements for state plan adoption and submittal, EPA correctl y reasoned that its interpretation was necessary to implement section 111(d) effectively. Commenters said, if EPA had no authority to set minimum substantive guidelines, the states woul d 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 t o force meaningful action." Id. at 53,343. Commenters 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 respect ive plan.

Response 19: We agree with these comments.

Comment 20: Proposed rule conflicts with the Tenth Amendment

Commenters expressed concern that the EPA had seize d authority from states granted by the

CAA and the Tenth Amendment. Commenters believed th at by proposing binding state emission rate limits, EPA is violating state sovereignty pri nciples under the Tenth Amendment.

Commenters stated that the rule raises substantial Constitutional issues under the Tenth Amendment's reservation of local regulatory powers to the states. Commenters noted that the Tenth Amendment "clearly places limits on the autho rity 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 t o coerce the States into implementing a federal regulatory program in violation of the Tent h Amendment. Commenters stated that, if finalized, the proposed rule would violate the Tent h Amendment because it would compel State regulatory (and likely legislative) activities thatlie at the heart of the States' sovereign authorit y to regulate the retail electricity market.

Commenters said that since the proposed CO 2 emission reductions were determined by EPA and not individual states, the decreases violate the Te nth Amendment. Commenters stated that each state knows best its own capabilities and should be able to ensure the reliability, safety, and affordability of its electric system.

Commenters stated that the fundamental purpose of t he Constitution's federal structure is to

secure to citizens the liberties that derive from t he diffusion of sovereign power. Commenters said the Tenth Amendment codifies that concept by r eserving to the States and the people all powers not delegated to the United States by the Co nstitution. Commenters 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 Congres s, and, having the power to make decisions and to set policy is what gives the state its sover eign nature. The commenters 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 argument.

Commenters believed that re-dispatch from coal EGUs to NGCCs or low-emission sources and implement and enforce demand-side efficiency progra ms were precluded by the federal structure of the Constitution itself, and the Tenth Amendment

.

Commenters indicated that the courts have repeatedl y rejected federal attempts to compel the States to enact or administer a federal regulatory program, and cited New York . Commenters also

noted that in Printz v. U.S ., 521 U.S. 898 (1997), the Court invalidated a sta tute attempted to direct state law enforcement officers to participat e in the administration of a federally enacted regulatory scheme, and stated that the federal gove rnment may neither issue directives requiring the states to address particular problems, nor comm and the states' officers to administer or enforce a federal regulatory program.

Commenters indicated that the courts have not hesit ated to strike down attempts by EPA to dictate to the states actions that they must take t o reduce pollution, and cited Brown v. EPA , 521 F.2d 827 (9th Cir. 1975). Commenters also reference d 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). Commenters 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. Commenters also cited Maryland v. EPA , 530 F.2d 215 (4th Cir. 1975) and indicated the Fourth Circuit rejecte d EPA's attempt to require Maryland to enact similar regulatory programs pursuant to a transport ation control plan, and stated that the court did not believe that an Act of Congress may be cons trued to permit a U.S. agency to direct a state legislature to legislate. Commenters also reference d 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 enfo rce the EPA-promulgated transportation control programs, because the Constitution contempl ates direct federal regulation of the offending activity and not coerced state policing o f the details of an intricate federal plan.

Commenters stated that the fact that the proposed r ule would require states to enact a host of new laws makes clear that the proposed rule would imper missibly intrude on core, sovereign state prerogatives protected by the Tenth Amendment. Comm enters 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 prop osed rule, the remaining states could be forced to enact RPSs, which would require action by state utility regulatory commissions, legislatures or citizen ballots. Commenters stated the same is true of state energy efficiency

standards. Commenters stated that under the Tenth A mendment, the decision to enact a law lies with the state legislature, not unelected federal o fficials.29

Commenters stated that the proposed rule would viol ate the Tenth Amendment even in states that would not need to enact new legislation to meet EPA 's prescribed targets. Commenters stated that these cases reflect not only the structure of dual sovereignty that is built into the Constitution, but also the fact that political acco untability would suffer if the federal government could strong-arm the states into acting on its beha lf, and quoted again from New York and Printz

. Commenters said, the Supreme Court made clear in Printz that commandeering state executive and regulatory authority is no less a Tenth Amendme nt violation than commandeering a state legislature. Commenters stated that EPA can no more direct state PUCs or other regulatory bodies to enact its programs than it can require st ate 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 ag encies ... [by] forcing them to regulate"). Commenters stated that EPA has no authority to chan ge the dispatch order of power plants, to mandate that power plants be utilized a certain per centage of time, to delay the retirement of nuclear plants, to require that a certain percentag e of each state's power be generated through solar and wind power, or to require that citizens r educe their demand for electricity, and that EPA cannot accomplish the same result by commandeer ing the States to take steps that EPA

could not take itself. Commenters also cited Printz to point out that commandeering violates the

Constitution. Commenters stated that in this instan ce the Agency has set standards that even EPA

itself could not mandate. Commenters stated that as a result, states do not have the option of simply leaving regulation to the federal government . Commenters contended that absent express congressional authorization, it is unprecedented fo r EPA to rely on public utility commissions and other state and local agencies to impose measur es necessary to achieve emissions reductions. Commenters stated that because state public utility commissions and other state and local agencies are not delegated the authority to impleme nt the CAA, for EPA to promulgate a program that can be implemented only through their action is a form of direct commandeering at
odds with the Tenth Amendment.

Commenters said that defining a specific rate for e ach state and then mandating that each state meet that predetermined rate runs counter to the Co nstitution and cases that stand for limitations the Constitution places on federal agencies when th ey 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, commenters stated that the propo sal 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.")

Commenters stated that the proposed rule would viol ate 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 legisla tors to make policy choices that they would not

otherwise make. Commenters referenced Printz and noted that the Constitution does not empower Congress to command state governments to im plement legislation enacted by Congress. Commenters indicated that forcing states to regulate interstate commerce in particular ways is in conflict with Tenth Amendment anti-comma ndeering precedents, and that the30

proposed rule would be struck down as constitutiona l commandeering. Commenters provided an example problem of where a facility that is forced to close blames the State, even though the State was acting under federal compulsion. Commente rs said that canon of constitutional avoidance would compel a reviewing court to reject the EPA's interpretation of section 111(d). Commenters also provided a several page summary of agencies' authority to implement statutes, particularly as it relates to the traditional balan ce of power between states and the federal
government.

Commenters also stated that in Reno v. Condon, the Court reaffirmed that Congress may not

"control or influence the manner in which States re gulat[e] private parties." Commenters stated that applying that principle, the Court upheld a la w regulating resale and disposal of personal

information contained in DMV records. Commenters sa id 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." Commenters said that the court thus distinguished between permissible federal regulatio n of interstate commerce and impermissible regulation of States in their "sovereign capacity" as "regulat[ors of] their own citizens."

Commenters said that the U.S. Constitution specific ally limits EPA's authority to exercise authority reserved to the States ("powers not deleg ated 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 York v. United States , 505 U.S. 144, 156, 112 S. Ct. 2408, 2417, 120 L. Ed. 2d 120 (1992) (If a power is delegated t o Congress in the Constitution, the Tenth Amendment expressly disclaims any reservation of th at power to the States; if a power is an attribute of state sovereignty reserved by the Tent h Amendment, it is necessarily a power the Constitution has not conferred on Congress.) Commen ters stated that EPA would violate the Tenth Amendment because the authority over the prod uction and sale of electricity is reserved to the states. Commenters stated that if Congress inte nds 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. " Gregory v. Ashcroft , 501 U.S. 452, 460-61, 111 S. Ct. 2395, 2401, 115 L. Ed. 2d 410 (1991). Co mmenters also quoted Atascadero State Hospital v. Scanlon , 473 U.S. 234, 242 (1985)), and others, "In the ab sence of such clarity, courts 'refer to basic principles of federalism emb odied in the Constitution to resolve ambiguity in a federal statute.' Bond, 134 S. Ct. at 2090.

Commenters stated that EPA's consideration of the p otential for energy efficiency and renewable energy to contribute to state BSER goals that may i ncentivize states to adopt such policies does not offend the Tenth Amendment, nor the balance str uck between areas of state and federal jurisdiction in the power sector. Commenters said t he Illinois Commerce Commission, is instructive on this point. Commenters continued the re, 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 f ederal government's conscripting a state government into federal service" by, for example, " ordering states to build transmission lines the federal government wants to use for its own purpose s." Commenters paralleled the argument to31

this proposal and said here, the same may be said o f EPA's action-it may 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 formul ating their state plans. Commenters 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, 55 2 F.2d 25 (2d Cir. 1977) (citing the Clean Air Act's cooperative federalism model in rejecting Tenth Amendment claim by city challenging state's adoption of implementation plan to control pollution from transportation sector).

Response 20: For the reasons stated in the Legal Memorandum, th e EPA disagrees that this rule

coerces or commandeers states in violation of the T enth Amendment.

Comment 21: Rule violates the principle of cooperative federal ism

Commenters stated EPA cannot set a standard for sta te implementation plans that EPA itself lacks the authority to implement in a federal imple mentation plan. Commenters stated that as a federal agency, EPA has limited regulatory authorit y and can only exercise the power that has been delegated to it by Congress. See North Carolin a v. EPA, 531 F.3d 896 (D.C. Cir. 2008) ("Lest EPA forget, it is 'a creature of statute,' a nd has 'only those authorities conferred upon it by Congress'; 'if there is no statute conferring autho rity, a federal agency has none.' Michigan v. EPA, 268 F.3d 1075, 1081 (D.C. Cir. 2001)."). Comme nters pointed out that under CAA section 111, EPA only has authority to regulate emissions o f air pollutants from existing fossil fuel-fired

EGUs and cannot mandate emissions reduction from ot her sources, including those addressed in Blocks 2, 3, and 4. For example, the commenters poi nted out the following:

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

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

• EPA lacks authority to amend state renewable portfo lio standards

• EPA cannot mandate demand-side energy efficiency pr ograms

Thus, if a state fails to submit a satisfactory imp lementation plan, commenters contended that EPA will lack the legal authority to impose the emi ssions reduction requirements necessary to meet the state's emissions reduction target. Commen ters 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 f or EPA to use the CAA to require States to do so. Commenters cited American Trucking Ass'n v. Whi tman, in stating that Congress would not have hidden an elephant (i.e., an exception to coop erative federalism) in the regulatory mouse hole that is CAA section 111(d).

The proposed rule prevents States from exercising t heir primary policymaking responsibility for developing plans that establish standards of perfor mance. The EPA does not have authority32

under Section 111(d) to override a state plan estab lishing a standard of performance because it disagrees with the "factors" that a State deems imp ortant or relevant. For instance, the EPA cannot directly or indirectly override a State's de termination of the mix of electricity generation required to provide the most reliable and efficientpower supply needed to serve its citizens. And it certainly cannot require, in the guise of settin g performance standards for existing coal generators, significant increases in the use of NGC Cs, renewable resources, nuclear resources, and energy efficiency programs. Such resource-plann ing decisions are reserved to the States. The proposed rule, however, would establish emissions " goals" that States cannot adjust, and that are so stringent that they can be met only by an EPA-ma ndated approach -an approach that necessarily strips States of their policymaking rol e and runs afoul of the CAA.

Commenters stated that proposed rule would vanquish state policymaking authority in other ways as well. Commenters said, for example, many St ates will be unable to implement the EPA's proposal without changing their laws or extensively coordinating among state agencies. Commenters stated, to the extent the EPA is even au thorized to co-opt State legislators in this manner, these splits of authority will require sign ificant additional time and coordination, beyond that envisioned by the EPA, to address through new or revised state legislation or regulation, before the State can even begin to develop its Sect ion 111(d) plan. Commenters also stated that the rule violate the principles of cooperative fede ralism because it allow direct federal intrusion into generation resource planning, which is a core state function that cannot be intruded upon without a clear statement from Congress.

Response 21 : See section III.B and VIII.G of the final rule pr eamble of the CPP for EPA’s

response.

Comment 22: Commenters stated that the proposed rule's requirem ent of a State Plan, and the imposition of a Federal Plan, would constitute comm andeering within the meaning of New York v. United States, 505 U.S. 144 (1992), and Printz v . United States, 521 U.S. 898 (1997). Commenters 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. Vir ginia Surface Mining & Reclamation Assn., Inc., 452 U.S. 264, 288 (1981). Commenters stated t hat the Court warned that accountability is diminished when, due to federal coercion, elected s tate officials cannot regulate in accordance

with the views of the local electorate in matters n ot preempted by federal regulation. (New York v. United States, 505 U.S. 144, 169 (1992). Comment ers 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 Machine 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 l oss of affordable and reliable power.

Commenters 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 pr ovince of the states. Bond v. U.S. , 134 S.Ct.33

2077 (2014). Commenters pointed out that although B ond 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 commenters see no intent o f Congress in the CAA to intrude upon the historic authority of the states to establish energ y policy at the state level.

Commenters maintained that EPA cannot use section 1 11(d) to compel states to do what the federal government is not authorized to do, i.e., r egulate electricity generation policies that are expressly reserved to the states. Commenters stated that the proposal violates both the Tenth amendment and the principle of cooperative federali sm and cited a number of court decisions (many of them cited below by other commenters) to j ustify their position. Commenters 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 a dopt legislation and regulations to implement a federal regulatory program for power generation and distribution over which EPA has no legal authority. Commenters stated that air quality regul ation under the CAA is an exercise in cooperative federalism, and indicated that the prop osed rule departs from that principle. Commenters’ arguments in this regard are included i n their comments on the Tenth Amendment (also under Section 1.11.1 of their comments). Comm enters 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 t heir statement that the CAA is intended to be a model of cooperative fe deralism.

Response 22: For the reasons stated in the Legal Memorandum, the EPA disagrees that this rule

coerces or commandeers states in violation of the T enth Amendment. For reasons provided in section 1.2 of this response to comments, EPA simil arly disagrees that this rule violates aspects of cooperative federalism under the CAA.

Comment 23: Commenters stated that under section 111(d), neithe r state nor EPA officials possess sufficient authority on their own to determ ine both the appropriate methods for obtaining and the degree of emission reductions that can be o btained from existing units. Commenters stated that instead, section 111(d) embodies the pr inciple of cooperative federalism, making distinct and exclusive delegations of authority to federal and state officials that complement one another in establishing standards for existing sour ces. Commenters stated that with its proposed rule, EPA blatantly violates this principle, effect ively usurping from the states all power to

determine what emission reductions can be obtained from existing units. Commenters stated that the proposed rule relegates states to the ministeri al role of implementing and enforcing the substantive standards of performance and specific, state-wide emission reduction goals that EPA has predetermined in the rule, which cannot be squa red with the cooperative federalism principles the Clean Air Act embodies. Commenters a dded that the rule requires states to enact laws to change resource planning decisions that alr eady are adopted pursuant to state planning
authorities.

Response 23: See section V.A of the final rule preamble of the C PP for the EPA’s response to
this comment.34

Comment 24: Commenters stated that EPA cannot legally coerce th e states to regulate any entity other than affected existing EGUs because itviolates the principle of state sovereignty guaranteed by the Commerce Clause of the Constituti on. Commenters contended that the Constitution does not give Congress the ability to commandeer the legislative process of the States by directly compelling them to enact and enf orce a federal regulatory program and that Congress cannot require States to govern according to Congress' instructions. Commenters went to say that the federal government may encourage St ates to act through the spending power, but even in that context States may not be coerced. Butbecause of the anti-commandeering doctrine, commenters stated that the EPA cannot, through the promulgation of CAA implementation plans, oblige a non-consenting State to adopt law o r 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 unam endable without EPA consent under the CAA, commenters 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 legislative entrenchment that prevents one legislature or admin istration from binding a later one and the doctrine of reserved powers that prevents the legis lature from prospectively limiting, or relinquishing to another, a State's police power.

Commenters stated, the agency must also reexamine t he 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 24: For the reasons stated in the Legal Memorandum, the EPA disagrees that this rule

coerces or commandeers states in violation of the T enth Amendment. See section VI.A and V.B of the final rule preamble for the EPA’s response t o this comment.

Comment 25: Commenters said EPA has directed States to incorpor ate into SIPs assurances that the States will alter their laws to provide for enf orcement under state police power. Commenters said EPA pursues this route because it cannot itsel f promulgate the Clean Power Plan as a FIP, as Congress gave EPA no authority over power generatio n or distribution. Commenters said, because the Clean Power Plan relies almost complete ly on state authority to reach its 30 percent reduction target, and a present state legislature c annot 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 ca n be required to adopt a SIP in the first instance. Commenters said, furthermore, even where a State adopts a SIP, the argument that SIPs become federal law which may not be amended withoutapproval of EPA should not be sufficient to prevent a State from ceasing to emplo y its police powers that are beyond the direct powers of EPA. Commenters noted that the Sixth Circ uit recently had occasion to observe that the anti-commandeering rule is applicable to the CA A. Commenters said the same should be true for the rule against legislative entrenchment. As a consequence, commenters stated that EPA will encounter States that will not issue SIPs or, if th ey 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 r equirements through a FIP.

Response 25: 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 pr omulgate a federal plan that would consist of

emission standards that the sources could achieve b y implementing the building blocks or taking other approaches. The EPA would not need to – and c ould not – assert authority over power generation or distribution. If action by a state le gislature 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 no t dependent on a state legislature binding subsequent 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: Commenters stated that EPA does not have the legal authority to require states to

submit a SIP for this rule. Commenters stated that because of the flexibility granted to states to account for differences among states, CAA assumes t wo legal facts: that the political officers of the States can say no., i.e., cannot be commandeere d into legislating or executing federal policy, and that the BSER determined by the Administrator i s within the delegated authority of EPA to promulgate and, if necessary, enforce. Commenters s aid a standard of performance premised upon a BSER 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 wil ling States for as long as they remain willing. Commenters said, as a matter of federal agency rule making, particularly rulemaking aimed at addressing national issues that know no political b oundaries, 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 a t the heart of the CAA Section 111(d) process and therefore it is critical that any emiss ion guideline proposed by EPA should respect that principle. Commenter 23542 said, states and lo cal air agencies have the primary responsibility for regulating sources in their juri sdictions and the CAA affords them wide

discretion.

Commenter 33118 stated, the principle of cooperativ e federalism embedded in the Act and longstanding EPA regulations implementing Section 1 11(d) is rooted in "reality and humility: the reality that no Washington agency can ever effi ciently attain the local knowledge necessary to make prudent judgments concerning the effective implementation of BSER across the entire national electricity generation sector, and the hum ility 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 responsibility to promulgate and implement a federal plan. EPA would, of course, pre fer 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 structure this guideline so that a plan can ultimately be

based on emission standards enforced at affected EG Us, 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

Commenters said that section 111(d)(1) does not exp licitly address whether, in addition to emission limits on affected EGUs, state plans may i nclude other measures for achieving the required emission performance goals, and that the C AA does not address whether entities other than affected EGUs may be subject to requirements t hat contribute to reducing EGU emissions. Commenters stated that consistent with the U.S. Sup reme Court determination in Chevron U.S.A.

Inc. v. NRDC (1984), where the statute leaves a gap the agency h as discretion to fashion an interpretation that is a reasonable construction of the law. Commenters stated that EPA's reasonable construction of 111(d) is a valid interp retation.

Response 27: We are not finalizing the portfolio approach, as d escribed in sections V.B and VIII of the final rule preamble of the CPP.

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

Commenters said EPA's assertion that its proposal t o authorize a portfolio approach must be afforded deference is incorrect. Commenters said, t he fact that Congress did not specifically address the merits of a "portfolio approach" does n ot mean that there is a statutory gap for EPA

to fill. Commenters stated that EPA cannot claim au thority to exercise rulemaking power merely because that authority is not expressly denied to i t. Ethyl Corp. v. EPA, 51 F.3d 1053, 1060 (D.C. Cir. 1995).

Commenters disagreed with EPA's arguments that sect ion 111(d) does not explicitly prohibit states from including measures other than performan ce standards and implementation and enforcement measures, and that the principle of coo perative federalism provides EPA the authority to regulate outside the affected source c ategory. Commenters pointed to Michigan v.

EPA , 268 F.3d at 1081 as establishing that EPA has "on ly those authorities conferred upon it by Congress." Commenters said that in section 111(d), Congress conferred authority on EPA to prescribe regulations under which states would subm it plans that include (1) "standards of performance" and (2) "[provisions] for the implemen tation and enforcement of such standards of performance." Commenters said Congress did not auth orize EPA to prescribe regulations under which states may submit plans that include measures other than performance standards and37

implementation and enforcement measures. Commenters said, because Congress did not give EPA that authority, EPA does not have that authorit y. Commenters 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 presum e delegation of power absent an express withholding of such power, agencies would enjoy vir tually limitless hegemony...", and stated that Congress' silence on this matter does not pres ume a delegation of such vast authority to regulation the energy market.

Commenters stated that EPA's primary argument in ap plying the "portfolio approach" that there is no specific language in CAA section 111(d) or el sewhere in the Act that prohibits states from including measures other than performance standards and implementation and enforcement measures in state plans for existing sources, erron eously assumes that under the CAA any action that Congress did not explicitly prohibit is permit ted. Both commenters stated that just the opposite is true. Commenters cited Ethyl Corp. v. E PA, 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). Commenters said Congress must "speak clearly if it wishes to assign to an agency decisions of vast 'economic and political significance.'" UARG v. EPA , 134 S. Ct. at 2444. Commenters said, a reading of the CAA that gives EPA and states the authority to potentially impose obligations on any entity that uses electricity would unquestionab ly bear vast economic and political significance. Commenters noted that EPA admits, "th e terms of CAA section 111(d)(1) do not explicitly address whether, in addition to emission limits on affected EGUs, state plans may include other measures for achieving the emission p erformance level." Commenters indicated that without such explicit authorization, EPA may n ot seize regulatory authority beyond the affected sources on which section 111's narrow regu latory program is focused.

Response 28: As discussed in sections V.B and VIII, after consid ering comments on the proposed portfolio approach, EPA is not finalizing that approach. Therefore, these comments are moot. Instead of the proposed portfolio approach, E PA is finalizing an option to submit a “state measures” plan type, under which a mass CO2 emissio n goal may be partially or entirely achieved through state measures that impose require ments on entities other than affected EGUs and that are not included in the federally enforcea ble 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 trig gered if the state measures fail to achieve the required CO2 emission performance level. See sectio n VIII.

Comment 29: Commenters said that EPA's suggestion that Chevron step two is implicated any time a statute does not expressly negate the existe nce of a claimed administrative power (i.e.,

when the statute is not written in "thou shalt not" terms), is both flatly unfaithful to the principle s38

of administrative law and refuted by precedent. Com menters stated that if courts were to presume a delegation of power absent an express wit hholding of such power, agencies would enjoy virtually limitless hegemony, a result plainl y out of keeping with Chevron and quite likely with the Constitution as well. The commenters provi ded 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, Judici al Review of Questions of Law and Policy, 38 Admin. L. Rev. 363, 373 (1986) ("To read Chevron as laying down a blanket rule, applicable to all agency interpretations of law, such as "alwa ys defer to the agency when the statute is silent," would be seriously overbroad, counterprodu ctive, and sometimes senseless.").

Commenters indicated that nothing in section 111(d) can be read to authorize the shift in power that the proposed rule would cause towards infringe ment of state sovereignty, and courts would not defer to EPA's construction of section 111(d). Commenters 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.

Commenters said EPA's interpretation is nonsensical and circular and fails Chevron step 2. Commenters 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. Commenter s said 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." Comme nters said that clearly the "system" that is to be applied to the source must be something other than the source itself or a system of which is already a part. Commenters said that EPA proposes t o dictate how an existing system is operated. Commenters noted that is outside the scop e of Section 111 and underscores the illegal nature of EPA's proposal.

Response 29: We disagree with this comment. For the reasons dis cussed in section V.A. and V.B. of the preamble and in the Legal Memorandum, o ur interpretation of the BSER is reasonable in light of legal precedent, the statuto ry text, statutory context, statutory purpose, and legislative history.

Comment 30: State plans may include non-BSER measures, and nee d not be limited to the

measures EPA determines are BSER

Commenters stated that section 111(d) references se ction 110, and that EPA should create a similar procedure for section 111(d) compliance pla ns. Commenters said the extensive case law interpreting the federal-state relationship under s ections 109 and 110 is instructive in understanding the breadth and limits on EPA and sta te authorities to propose and evaluate compliance plans. Commenters said that the courts h ave been clear that each state, not EPA, has

discretion under section 110 to determine the best compliance mechanisms for its circumstances. Commenters said, so long as the state's selection o f measures in its plan satisfies the EPAestablished 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 Ac t to a secondary role in the process of determining and enforcing the specific, source-by-s ource emission limitations which are necessary if the national standards it has set are to be met."). Commenters 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 measu res 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 s ection 111(d) plans; Section 111(d) plans may include other control measures, means, or techn iques (including economic incentives, such as marketable permits or auctions of emissions allo wances.

Response 30: We agree with these comments, and discuss in secti ons III.A, V.A, V.B, and VIII.D of the final rule preamble of the CPP the ty pes of other measures sources may implement and states may implement through the state measures approach.

Comment 31: Commenters noted that section 111(d) was modeled on section 110, and referenced state implementation plan (SIP) submissi on, review, and disapproval provisions in

section 110. Commenters noted that to attain the NA AQS, each state must submit a SIP that

establishes "enforceable emission limitations and o ther control measures, means, or techniques (including economic incentives such as fees, market able permits, and auctions of emissions rights)". Commenters stated, based on the structura l 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 sect ion 111(d) may also include “enforceable emission limitations or other control measures, mea ns, or techniques (including economic incentives, such as marketable permits or auctions of emissions allowances).” Accordingly, commenters concluded that it is a reasonable interp retation of the statute for EPA to set standards of performance for existing sources predicated on B uilding Block 1 and credits from activities described in Building Blocks 2–4. Commenters said t he four building blocks represent a “system of emission reduction” that taps the emission reduc tion potential achievable at reasonable cost across the interconnected electricity system, using emission limitation methods, including crediting systems, authorized under section 110(a)( 2).

Response 31: We agree with this comment, although we not that we are not finalizing building block 4 as part of the BSER.

Comment 32: Section 110 provides guidance for section 111(d) plans; State plans may include "implementation" measures

Commenters said that EPA is correct that states may include portfolio measures in their 111(d) plans as "implementation" measures. Commenters note d 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 pollu tion sources. Commenters indicated that section40

111(d) provides that its state plans should be mode led on SIPs, and that it is reasonable for EPA to conclude that state section 111(d) plans "for th e implementation [of] ... standards of performance" may include similar measures.

Response 32: As discussed in sections V.B and VIII of the final rule preamble of the CPP, the EPA is not finalizing the portfolio approach.

Comment 33: Commenters stated they are pleased to see EPA's ack nowledgement that the state plans required under section 111(d) and the state i mplementation plans (SIPs) required under section 110 serve different purposes. Commenters po inted out that EPA states in the Existing Source proposal, "[i]t is a well-established princi ple that states have discretion regarding the measures adopted in their state implementation plan s under CAA section 110 to attain the NAAQS." Commenters 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 perfor mance for affected sources." Commenters said they believe that EPA's conclusion is in error, bec ause the mechanics of the regulatory frameworks under sections 110 and 111(d) have littl e in common. Commenters said under the NAAQS program, EPA sets ambient air quality standar ds that must be met collectively by all sources within a region, and establishing implement ation plans under those circumstances necessarily involves tradeoffs between controlling emissions from different sources and even different sectors in a region. Commenters said the fact that electricity generation must be evaluated comprehensively in order to meet health-b ased standards promulgated under 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). Commenters said section 111(d) is a source- category based rule and leaves little room for innovative approaches implemented outside of th e specific category. Commenters said EPA reports several states already adopted RE and EE me asures in their CAA section 110 SIPs for attaining and maintaining NAAQS. Commenters said th ey support state efforts to implement RE and EE policies in the context of the NAAQS, becaus e section 110 was designed as an economywide regulatory approach, and they are not seeking to restrict the use of RE and EE to reduce CO2 emissions; however, their concern is that the s ection 110 and 111(d) regulatory frameworks

are intended to achieve different aims and must nec essarily regulate different types of entities using different approaches. Commenters said EPA can not 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 33: We disagree with this comment. We explain in sectio n V.B of the final rule preamble of the CPP our basis for including the bui lding blocks as part of the BSER, and in section VIII our basis for allowing states flexibil ity. We are not finalizing the portfolio approach, and building blocks 2 and 3 may be includ ed as part of the BSER without subjecting non-affected EGUs to section 111(d) regulatory requ irements.41

Comment 34: Commenters said that the proposal is unenforceabl e.

Commenters stated in reference to building blocks 2 , 3 and 4 that enforcement of a system-based limit becomes unenforceable as a practical matter i n the real world of unit-specific sources. Commenters said that EPA's theory that they may app ly a standard of performance over a collection of sources has not been tested in court, and the CAA does not support the EPA interpretation. Commenters said that standards of p erformance should be unit-specific.

Commenters maintained that EPA does not have the au thority to enforce the proposed rule because the CAA grants EPA the authority to regulat e sources, but only the state has the authority to regulate generation

‐ related compliance options.

Response 34: To the extent these comments address either buildin g block 4 or the portfolio approach, they are moot, because the EPA is not fin alizing those elements of the proposal. Furthermore, as explained in section V.B.6 of the f inal 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 categor y at issue. In this rule, as with all CAA section 111(d) rules, the EPA is not directly regulating an y entities. Accordingly, the EPA is neither requiring nor authorizing the states to regulate en tities other than affected EGUs in their CAA 111(d) plans.

The federal enforceability considerations raised in the comment arose primarily under the proposed portfolio approach for state plans. As men tioned above and explained in section VIII.C of the final rule preamble, the EPA is not finalizi ng the portfolio approach, which would have allowed state plan submittals to include federally enforceable measures that apply to entities that are not affected EGUs. However, as further explaine d 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 provi des considerable discretion to the states in setting emission standards and related plan require ments 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.

As proposed, we are requiring that state plans incl ude a demonstration that plan measures are enforceable, which for state measures plans is prov ided for in § 60.5780 and discussed in section VIII.D.2.c.6 of the final rule preamble. The exist ing guidance documents pertaining to enforceability include: (1) September 23, 1987 memo randum and accompanying implementing guidance, “Review of State Implementation Plans and Revisions for Enforceability and Legal Sufficiency;” (2) August 5, 2004 “Guidance on SIP C redits for Emission Reductions from Electric-Sector Energy Efficiency and Renewable Ene rgy Measures;” and (3) July 201242

“Roadmap for Incorporating Energy Efficiency/Renewable Energy Policies and Programs into State and Tribal Implementation Plans, Appendix F.”

Comment 35: Commenters noted that the EPA says it is not "re-o pening" these implementing regulations for section 111(d) in this current rule making. Commenters argued that it is uncertain whether the EPA, by this statement, means to assertthat these regulations may not be challenged as a part of an appeal of EPA's Section 111(d) rule s given the passage of time since they were adopted. Commenters argued that this is not a reaso nable assertion given that no one could have anticipated, when these implementing regulations we re adopted, that the EPA would use them to try to significantly reduce coal usage in the Unite d States or that existing fossil fuel-fired EGUs would be regulated by EPA and the States pursuant t o Section 111(d). Thus, commenters concluded that a challenge to these implementing re gulations should not be foreclosed at this time. See Coalition for Responsible Regulation v. E PA, 684 F.3d 102, 131-32 (2012). Commenters stated that in subpart B, EPA has given itself the authority to conduct a BSER analysis and establish standards of performance tha t are legally binding on the states, thus abrogating the intent of Congress that states estab lish the standards of performance for existing sources. Commenters claimed that they have standing to challenge subpart B now, even thought it was adopted in 1975, because prior to this rulem aking 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 Section 111(d). Commenters said, here, for the first time, EPA has proposed to apply those regulations t o the Associations' members' existing fossil fuel-fired EGUs in a manner that, if finalized, wou ld cause their members harm.

Response 35: In the proposal, our statement that we are not re-o pening the implementing regulations meant that we are not taking comment on or revising those regulations. Commenters commented about authority to challenge the implemen ting regulations in Court may be relevant in any litigation raising “after-arising” issues ov er this rule, but are not relevant for this rulemaking.

Comment 36: CPP's Federal-state collaboration similar to Secti on 110

Commenters believed the federal-state collaboration is very similar to the process implemented

under section 110. Commenters cited the section 110 plan development process and cases that describe EPA's role, and concluded that sections 11 0 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 ac hieved, states use their discretion to develop plans to achieve the emission reductions, and EPA r eviews plans to ensure they are meeting the relevant statutory criteria.

Commenters stated, the very language upon which opp onents rely, requiring EPA to establish a "procedure similar to that provided by section 7410 ," undermines their argument. Commenters43

said, EPA uses its scientific expertise to establis h substantive standards under section 110 (national ambient air quality standards or NAAQS), which the states then develop plans to implement. Commenters said, thus, like the section 110 state implementation plan (SIP) framework and procedure, section 111(d) directs EPA to work hand-in-hand with the states to ensure that each state - through its plan - achieve s the reductions that EPA has determined are achievable through the application of the BSER thathas been adequately demonstrated. Commenters said, this cooperative federalism allows EPA to establish the amount of reductions required, while giving the states flexibility to de termine how to achieve those reductions (or more).

Response 36: We agree with these comments.

Comment 37: Commenters addressed the legal basis of the four i ndividual plan approvability criteria the EPA proposed to use to determine wheth er a state’s plan is “satisfactory” under CAA section 111(d)(2)(A) and, thus, approvable. 79 FR 3 4909.

(1) Enforceable Measures: Commenters argued that en forceability issues with the Proposed Rule present serious cooperative federalism concerns.

Commenters noted that the CAA foundation rests on t hree straightforward themes: cooperative federalism, narrowly tailored emission control prog rams for enumerated purposes, and avoidance of duplicative regulation. Commenters noted that wh ile 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 be tween federal and state authorities. Commenters stated that Congress thus crafted a stat ute that would leave to States the task of enacting and administering programs to meet federal standards and noted that the process for setting, implementing, and enforcing the NAAQS typi fies this approach. Commenters noted that under the NAAQS, the EPA may step in to take over t he States' plan-preparation responsibility only if a State fails to make a required plan submi ssion or submits a plan that has not satisfied the minimum criteria of the Act, and then does not timely correct the deficiency. Commenters 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.

Commenters stated that one essential criterion for EPA approval of a state plan is for a state to ensure that its plan is enforceable. Commenters not ed that the proposal requires that a state plan must include enforceable emission limits that apply to affected EGUs and can also include

enforceable measures such as RE standards or demand -side EE measures under a portfolio approach. According to the commenters, EPA admits t hat requiring enforceable measures beyond the affected EGUs present a special challeng e at 79 FR 34917. Commenters posited that it is not just challenging but impossible, and forc ing a state to extend its authority in such a manner violates the basic precepts of federalism em bedded in the CAA.44

Response 37: As described in section V.B and VIII of the final rule preamble, we are not adopting the portfolio approach in the final rule.

Comment 38: Commenters stated that based on historical experien ce, they believed that to implement the final rule, EPA will use its authorit y to constrain State preferences with respect to program design, potentially going so far as dictati ng policies that restrict when American families can do the laundry or run the air conditio ning, and thus diminish the role of the States in our system of cooperative federalism.

Response 38: We disagree with these comments. We discuss in sec tions V. and VIII of the final rule preamble of the CPP the flexibilities that sou rces 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 rule is consistent with section 111(d) and does not represe nt over-reaching.

Comment 39: (2) Emission Performance: Commenters expressed conc ern that the second approvability criterion for state plans (that the p rojected CO2 emission performance by affected EGUs must be equivalent to, or better than, the req uired CO2 emission performance level in the state plan) intrudes on state authority under secti on 111(d). Commenters argued that this leaves states none of the authority section 111(d) provide s to establish different performance standards

for individual sources based on their individual characteristics and needs . Moreover, commenters stated that EPA appears to be contemplating highly involved demonstration requirements that are not consistent with what the Agency may impose unde r section 111(d) and that cannot realistically be performed in the time that would b e permitted under the proposed guidelines.

(3) Quantifiable and Verifiable Emission Performanc e: Commenters 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

. Commenters stated that EPA should recognize that states have discretion ov er how to address these issues.

(4) Reporting and Corrective Actions: Commenters qu estioned the EPA's proposal that approvable state plans must specify a process for annual reporting of overall plan performance and implementation (including complianc e of affected entities with applicable emission standards) during the plan performance per iods. Commenters argued that the EPA has no legal basis to impose a regulatory requirement f or annual reporting of overall plan performance and implementation. Commenters stated t hat no such requirement exists under Section 110 for SIPs, and no other Section 111(d) e mission guideline requires states to submit an annual report identifying compliance of affected en tities with applicable emission standards. Commenters stated that even U.S. EPA's Emerging and Voluntary Measures guidance (at page 21) contemplates an initial evaluation of the effec tiveness of each measure within 18 months of the measures being in place and then provides for s tates to re-evaluate these measures every 3 years. Commenters stated that reporting under Regio nal Haze only requires a performance check every 5 to 10 years. Commenters stated that Section 110 maintenance plans do not require any reporting back to U.S. EPA after initial submittal.45

Commenters disagreed with the proposed requirement that state plans include a process and schedule for implementing corrective measures if re porting shows that the plan is not achieving the projected level of emission performance. Commen ters noted that EPA requested comment on whether the process should include the adoption of new plan measures and subsequent resubmission of the plan to EPA for review and appr oval, 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, an d 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 no ted by the commenters, self-correcting mechanisms will not require corrective measures be included in the plan.

Commenters argued that corrective, or contingency, measures are not appropriate or lawful for a section 111(d) plan. According to the commenters, a ny BSER developed by EPA that would necessitate contingency measures cannot be the type of BSER ever intended under the CAA.

Commenters argued that states have discretion to de termine the manner in which they will address any shortfalls in their plans and annual re porting on plan performance and corrective measures should not be criteria for approving a pla n.

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 provisi on is discussed in section VIII.G.1 of the preamble and in the legal memorandum.

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

Regarding reporting of plan performance, we disagre e. Although provisions in section 110 are not dispositive of the issue, section 110 specifica lly 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 (r equiring 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 state s 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 f or measuring ambient air quality and reporting ambient air quality,” id. § 58.2(a). In the case of plans under these emissi on guidelines, plan performance is related to emission s and electrical generation, both of which have well-established monitoring methods. Thus, de termining 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 moni toring network plan to EPA to ensure that the network remains adequate. 40 CFR 58.10. In any ca se, as mentioned in the preamble the46

statutory language “provide for implementation and enforcement” of the standards of performance is ambiguous and EPA may reasonably int erpret it. It is of course reasonable, and in fact possibly compelled, for EPA to require repo rting on plan performance to ensure that the plan “provides for implementation” of the standards of performance.

With respect to the comment that corrective measure s are not appropriate or lawful for a section 111(d) state plan, we disagree. We note that a bas ic emission standards plan adopting the performance rates 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 assured to achieve BSER ; because those plans are flexibility alternatives provided to states, EPA may require ad ditional mechanisms to assure BSER is achieved. See section VIII of the preamble for add itional discussion.

With respect to the comment that states have essent ially unfettered discretion to address shortfalls in their plan, we disagree. See the Lega l Memorandum for a discussion of EPA’s general authority. See section VIII of the preambl e for discussion of EPA’s authority to require
corrective measures and address shortfall.

Comment 40: Commenters stated 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. Commenters sa id the Compact Clause provides that "[n]o State shall, without the Consent of Congress - ente r into any Agreement or Compact with another State, or with a foreign Power, or engage in War un less actually invaded, or in such imminent Danger as well not admit of delay." Commenters said critics argue that multi-state plans amount to interstate compacts and cannot be put into place without specific congressional authorization. Commenters said they do not agree.

Commenters stated Congress has already sanctioned a greements of this nature under the Clean Air Act. Commenters 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 particular subject matter. Commenters exemplified that in Cuyler v. Ad ams, Congress authorized joint state action

on criminal enforcement and allowed states to coord inate on policies and laws in the Crime
Control Consent Act of 1934. Commenters said the la nguage of the statute did not authorize a specific compact, but rather, approved future inter state agreements for the general purpose of "mutual assistance in the prevention of crime." Com menters said similarly, Congress foresaw interstate coordination on air pollution issues. Co mmenters said Clean Air Act section 102 expressly instructs the Administrator to "encourage cooperative activities" and "encourage the making of agreements and compacts between States fo r the prevention and control of air pollution." Commenters said this provision cannot b e interpreted in any way other than that Congress anticipated interstate compacts as a usefu l tool and pre-authorized them for efforts to improve air pollution control. Commenters said as i n 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. Commenters s aid multi-state plans comfortably qualify under the broad purpose of "prevention and control of air pollution."

Commenters stated the Supreme Court has never interpreted the Compact Clause to require Congressional approval of every agreement between m ultiple states. Commenters said in one of its earliest cases concerning the Compact Clause, t he Court remarked, "[t]here are many matters upon which different states may agree that can in n o respect concern the United States." Commenters said the Court repeatedly recognized in subsequent cases that the Constitution "did not purport to exhaust imagination and resourcefuln ess in devising fruitful interstate relationships" and it was "not to be construed to l imit the variety of arrangements which are possible through the voluntary actions of individua l States with a view to increasing harmony within the federalism created by the Constitution." Commenters said having established in Virginia v. Tennessee, 148 U.S. 503, 518 (1983), th at the Compact Clause did not apply to all interstate agreements, the Court affirmed that posi tion in New Hampshire v. Maine, 426 U.S. 363 (1976), another state boundary dispute case, an d again declined to broaden its reading of the Compact Clause in United States Steel Corporation v . Multistate Tax Commission, 434 U.S. 452 (1978). Commenters said in Multistate Tax, the Supr eme Court explained in detail which interstate agreements require Congressional approva l, and laid out the applicable test. Commenters said the case involved multi-state corpo rate taxpayers seeking to invalidate a compact between twenty-one states that created an a dministrative body to facilitate determination of liability for multi-state taxpayer s and avoid duplicative taxation. Commenters said the Court stated that "[t]he relevant inquiry must be one of impact on our federal structure," as the Compact Clause only covered agreements "tend ing to the increase of political power in the States, which may encroach upon or interfere with t he just supremacy of the United States." Commenters said this bar is extremely high, and in all of the interstate compacts that the Court has reviewed, it has never found an interstate comp act to encroach on federal power. Commenters said for that reason alone, it is unlike ly that multi-state plans at issue here would trigger the Court's disapproval. Commenters said th e Court in Multistate Tax listed the following indicia to evaluate whether an interstate agreementencroaches on federal power: if a compact (1) authorizes member states to exercise any powers the y could not in its absence, (2) delegates sovereign authority, or (3) encroaches on the power of the United States with respect to foreign relations. Commenters provided more discussion in a footnote. Commenters said multi-state plans under EPA's proposed rule do not exhibit thes e indicia. Commenters said multi-state plans serve the same function as single-state plans and m ay even be submitted as one plan. Commenters said they do not "create" more authority for the states involved any more than if each of the member states submitted individual plan s. Commenters said it is true that the power sector is relatively unique because the sources ope rate in an interconnected grid system that is typically regional in scale. Commenters said a mult i-state plan that comprises a subset of states in a regional grid system could potentially exert e conomic influences on non-member states, but such pressure alone is unlikely to constitute feder al encroachment. Commenters 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

Commenters stated a multi-state plan does not creat e any type of regulatory body with delegated authority that has greater powers than the sum of t he member states acting individually or could bind member states in a way that would impact the f ederal structure. Commenters said even in Multistate Tax, the Court took no issue with member states empowering an administrative body to handle typically individualized tax legislative initiatives, noting that the individual states coul d have adopted the procedures on their own. Commenter s said under the proposed rule, states may meet EPA's emissions goals under individual plans a s well as multi-state ones, albeit that the latter may capitalize on efficiencies. Commenters s aid this is no different than what the Court permitted in Multistate Tax.

Commenters stated while the federal government is u ndoubtedly interested in climate policy on an international scale, interstate compacts that me rely speak to federal interests do not necessarily encroach on federal supremacy. Commente rs said the Court emphasized that the regulatory organization in Multistate Tax did not i nterfere or foreclose federal action, and therefore did not encroach on federal supremacy. Co mmenters said even the fact that the member states were acting in concert to enhance their capa city to lobby for legislation did not constitute encroachment. Commenters 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 a ction, both from a domestic standpoint and if the United States were to enter into any internatio nal agreements on climate change.

Commenters stated for the multi-state plans to viol ate the Compact Clause, they would have to increase state power at the expense of federal supr emacy. Commenters said ultimately, the primary difference between multi-state plans and si ngle state plans is one of form, rather than function. Commenters said the multistate plans do n ot enhance state power any more than single state plans do; therefore, it is unnecessary to rec eive 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. Commenters said it is the type of inters tate cooperation that Congress envisioned and provided for when drafting the Clean Air Act. Comme nters said it is not their view that the Compact Clause argument is valid, the argument woul d be annulled if EPA were to make clear through a model rule the approvable elements of a m ultistate plan, including such plans intended to adopt multi-state mass-based allowance trading s ystems. Commenters said in that case, multistate plans could not arguably be increasing p olitical power in the States, or "encroach[ing] upon or interfere[ing] with the just supremacy of t he 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 40: We agree with these comments.

Comment 41: Commenters said earlier this year, the Missouri Ge neral Assembly and the
Governor enacted House Bill 1631 authorizes the sta te to develop such regulations. Commenters said this bill, which was passed in the last legisl ative session and signed by Governor Nixon on49

July 7, 2014, requires the Missouri Air Conservatio n Commission (MACC) of the Department of Natural Resources (DNR) to set Missouri's carbon st andard. Commenters said to assure that the resulting emission standards make sense for Missour i and best 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 rat epayers and the economy.

Commenters 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." Commenters said, MACC "s hall consider," among other factors, the remaining useful life of the existing affected sour ce, and the overall economic impact from any and all emission standards and compliance schedules developed and implemented under Section 111(d). Commenters said, MACC has the explicit auth ority 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 d ue to plant age, location, or basic process design; (2) Physical impossibility of installing ne cessary control equipment; or (3) Factors specific to the existing affected source or class o f such sources that make a less stringent standard or compliance schedule more reasonable, in cluding: (a) absolute cost of the emission standard or compliance schedule; (b) economic impac t of closing the affected source, including job losses if the source is unable to comply with t he performance standard; and (c) customer impacts of the emission standard and compliance sch edule, including disproportionate rate impacts on low income populations.

Response 41: 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 perform ance.

The general thrust 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 misunderstands the cooperative federalism structure of the Clean Air A ct in general and section 111(d)(1) in particular. Under the Act, EPA establishes standar ds based on health, welfare, and/or technology considerations. States may then choose to implemen t 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 com menter, those factors are derived from the framework regulation in 40 CFR 60.24(f) that permit s 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. Wi th 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 42: Comments stating that the EPA has not answered ess ential implementation questions, and that the guidelines are far removed from section 111’s narrow source-focused regulatory program.

Commenters said that EPA has not answered essential implementation questions, nor can the CAA or EPA's past rulemakings under section 111 pro vide answers to any of these questions. Commenters said that the types of aggregate emissio n reduction measures and the broad universe of affected entities that EPA asserts authority ove r 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. Commenters said, the CAA "do[es] not explicitly address" any of these 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 nonsensi cal in a statutory provision that has nothing to say about those issues. Commenters said, section 111, on its face, is singularly concerned with design or process changes that individual new and e xisting stationary sources within specific categories can implement to reduce their own emissi ons. Commenters said, that EPA is now grappling with the complex question of how to impos e 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 CAA's regulatory path.

Response 42: We disagree with these comments. We explain in sect ion V.B of the final rule preamble of the CPP our basis for including buildin g blocks 2 and 3 as part of the BSER and we explain in section VIII of the final rule preamble that we are not finalizing the portfolio approach.

Comment 43: Commenters said that, EPA maintains that it may spe cify in proposing an emission guideline that less stringent standards or a delayed compliance schedule would not be appropriate". Commenters said, in several of the p ast Section 111(d) guidelines, EPA expressly foreclosed the availability of any "variances" to b e within state plans. Commenters said all of the regulations in which EPA foreclosed variances excep t one were regulations affecting solid waste incinerators under Section 129, and therefore it co uld be argued that these regulations were responsive to the particular language of Section 12 9(b)(2) provides that state plans "shall be at least as protective as the guidelines promulgated b y the Administrator." Commenters said that language is not in Section 111(d). Commenters said EPA has prescribed the same by regulation in the implementing regulations. Commenters said th at, EPA has acknowledged that there is a

difference between the discretion afforded states u nder Section 111 compared to Section 129 guidelines.

Response 43: We disagree with the thrust of this comment, which is that EPA should allow for variances in these emission guidelines due to diffe rences between section 129(b) and section 111(d). Section 129(b) does provide, as commenter s tates, that state plans “shall be at least as protective as the guidelines promulgated by the Adm inistrator.” This does not create a necessary inference that section 111(d)(1) requires EPA to al low 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 reflec t the maximum achievable control technology (MACT) standard in section 129(a)(2) for existing s olid 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 perce nt of units in the category.” 42 USC 7429(a)(2). Thus, to a certain extent the requirem ent 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 i nference that the remaining useful life provision in section 111(d)(1) must be interpreted to allow f or 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 C ongress added section 129 and made clear that section 129 did not allow for less stringent s tate plans. Instead, section 111(d)(1) is silent a s to whether the state plan must be as stringent as t he guidelines. Thus, Congress intended to delegate to EPA to reasonably decide the issue.

Finally, the remaining useful life provision was ad ded in the 1977 Amendments. (See the detailed legislative history in section IX of the L egal Memorandum.) As noted in the legislative history discussion in the Legal Memorandum, Congres s appears to have been aware of and informed by EPA’s 1975 framework regulations, yet C ongress 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 7411(d)(1) (“Regulations of the Administrator under this parag raph shall permit the State in applying a standard of performance to any particular source un der a plan submitted under this paragraph to take into consideration, among other factors, the r emaining useful life of the existing source to which such standard applies.”) with 40 Fed. Reg. 53,340, 53,347/3 (Nov. 17, 1975) (“Sta tes may provide for the application of less stringent emiss ion standards ...”). Thus, the legislative history confirms that Congress intended to delegate to EPA to reasonably decide. The document quoted by commenter, “Section 129 Rules for Solid W aste Combustion,” is a one-page descriptive document on EPA’s website that lacks le gal relevance. 2 However, even if EPA had officially taken the interpretation stated in the d ocument, that “Section 129 requires that Section 111(d)/129 State plans be ‘at least as protective a s’ the Guidelines, whereas Section 111(d) allows States flexibility to consider other factors ,” and that meant that 111(d) plans necessarily had to allow variances, EPA would be entitled to ch ange 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 a nd demand-side energy efficiency

measures

Comment 1: Emission reductions from EE and RE projects are dif ficult 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 projec ts undertaken.

Commenters stated the EPA is not proposing to provi de any additional funding to states to manage their plans as a part of this highly complex proposal. Commenters said and as a legal matter, EE and RE projects, even with the best avai lable data, do not always achieve the levels predicted. Commenters stated with the added pressur e that sources or third parties could be liable, not only to the EPA but also citizens, if r eductions are not achieved as expected, is a risk many entities may not want to take and could greatl y limit the amount and type of projects
undertaken.

Response 1: We disagree with these comments. For the reasons d escribed in the preamble, 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 section VIII.C of the final rule preamble of the CPP, the EPA is not finalizing the portfolio approa ch, which would have allowed state plan submittals to include federally enforceable measure s 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 measures type plan, the state pl an submittal will need to specify, in the supporting materials, the state enforceable measure s that the state is relying upon in conjunction with any federally enforceable emission standards f or affected EGUs to meet the emission guidelines. And states that submit emission standa rd type plans would include in the state plans only standards of performance on their affected EGU s, and would not independently require any RE projects. In addition, building block 4 is not p art of the BSER.

Comment 2: EE and RE measures should not be made federally en forceable; other EPA regulations have not made EE and RE measures federa lly enforceable.

Commenters stated that mandating an EE/RE program t hat must meet the requirements proposed under this rule or face the ramifications is comple tely inappropriate 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 incorporat e EE/RE. Commenters said under Section 110 this option is at the states discretion when th ey see it as viable. Commenters 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 incorpora te EE/RE into a state plan. Commenters said under this proposed Section 111(d) program, states are being set up to fail.53

Response 2: We disagree with these comments. As described in se ction V of the final rule preamble of the CPP, states are not required to imp lement RE measures; rather, they may submit an emissions standards state plan that imposes stan dards of performance on their sources.

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

Commenters stated instead [of making EE and RE fede rally 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 plan deficient in terms of i ts effectiveness in reducing emissions, as laid out in the plan, and call for a revised plan to bet ter achieve the specified levels of emission

reductions.

Commenters said instead, the EPA envisioned requiri ng contingency measures or a SIP call to make up any shortfall. Commenters requested that th e EPA clarify if and how this guidance is applicable in the context of a rate-based plan. Com menters said or if, under the mass-based alternative, the EPA intends to allow states to pre sent EE/RE measures as a binding commitment to capture such reductions as a part of the baselin e emissions projections.

Commenters provided an EE analogy to transportation emissions controls in SIPs and transportation conformity. Commenters stated that t he EPA should recognize that smaller, dispersed EE measures are analogous to transportati on emission reduction measures (many of which are, indeed, transportation EE). Commenters s tated that the EPA should consider viewing them in a manner similar to how transportation meas ures are treated in NAAQS SIPs and for transportation conformity. Commenters stated that t he EPA allows and provides guidance for the use of various transportation-related emissions con trol and prevention approaches and these measures are not subject to strict interpretations of enforceability. Nonetheless, commenters stated that the impacts of these types of measures can be credibly modeled and do deliver significant emissions reductions and air quality be nefits. Commenters stated that modeling results can be compared with selective sampling and monitoring to verify progress. Commenters noted that States are afforded the opportunity to m ake up for shortfalls that occur despite good faith efforts and can modify their plans, models, p rograms and measures accordingly.

Response 3: These comments generally focus on the concern thatmaking RE and EE measures federally enforceable as EPA has interpreted that c oncept would not be appropriate. Instead they argue for a more planning based 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 t he 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 r ule does not require that states make their EE or RE programs federally enforceable. . It is possible that such entities would be subjec t 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 prog rams.

As discussed extensively in section V and VIII of t he final rule preamble of the CPP describing the state measures plan approach EPA is promulgatin g, EPA has essentially embraced the idea that states should have the flexibility to rely on innovative RE and EE programs to accomplish reductions under these plans, while giving the stat e the flexibility to avoid incorporating those programs into the plan as a federally enforceable m easure. If the state’s assumptions about the efficacy of the programs on which the state’s plan relies do not prove accurate over time, the final guideline allows the state to use a combinati on of backstop emission standards on EGUs and a planning response, rather than subjecting oth er entities undertaking RE or EE measures to be subject to direct federal enforcement. The state must implement backstop measures or submit a new plan design to address any emissions reductio n shortfall.

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

Commenters said making Section 111(d) plans federal ly enforceable would undermine California's authority under Section 111(d). Commen ters stated instead, the EPA should encourage California to continue to use its broad d iscretion under California state law to choose emission reduction programs best suited to its need s over time, and, consistent with the terms of Section 111(d), provide California with the fullestability to recalibrate and redirect California's programs over time to comply with federal emission GHG reduction targets.

Commenters stated in 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 av oid requiring states to cede jurisdiction over aspects of their plans that involve state or other non-EPA authorities and jurisdictions.

Commenters said such excessive federal enforceabili ty could give the EPA and third parties the ability to seek to change activities over which the y have no current jurisdiction (or expertise) through litigation. Commenters stated this outcome should be avoided. Commenters said the EPA should leave all state jurisdictional and non-C lean Air Act jurisdictional policy and regulatory determinations fully under state or othe r authority and not attempt to make them federally enforceable through its 111(d) rulemaking process.

Commenters stated the states must be able to use st ate-run programs, such as those for energy efficiency and renewable energy, for compliance wit h the rule without the risk of the EPA assuming any authority or control over state progra ms if they fail to deliver the anticipated emissions reductions. Commenters said instead, if t hese programs fall short of their goals, the55

state should be responsible for attaining those emi ssions reductions in another manner. Commenters stated such an approach is currently use d by states that include contingent reduction plans in criteria pollutant SIPs to be used in the event a shortfall in reductions occurs within the core approach. Commenters said this approach allows states to retain authority of all state programs used for compliance with the Clean Power P lan while assuring the program objectives will be met even if the planned approach falls shor t.

Response 4: We appreciate this comment and agree with many aspe cts 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.

Commenters stated that to the extent a state intend s to comply by establishing a mass based target, the state's EE program, including its EM&V protocols should 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 parti es.

Commenters expressed concern about direct federal e nforcement on third parties if a portfolio or mass-based approach is taken. Commenters explained that part of either of these approaches should require a CO2 limit on the regulated EGUs, a nd the regulation of the EGUs would be presumed to also be federally enforceable. Commente rs expressed concern if some of the other obligations of the state plan, RE and EE, were view ed as federally enforceable against third parties. Commenters argued that the state plan shou ld be acceptable if the state has enforcement authority over the in-state third party entities

. Commenters 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

.

Commenters noted that the EPA proposes to approve state plans based on four general criter ia,

the first of which is "enforceable measures that re duce EGU CO2 emissions." Commenters stated that a plan that includes re-dispatch using Buildin g Block 2 from a state where the grid is run by

an RTO would not be enforceable

. Commenters noted that generation dispatch in Michi gan is managed by MISO or PJM (not the state) based on sec urity-constrained economic dispatch (i.e., Michigan does not decide which units are dispatched and does not have the au thority to enforce re-dispatch to reduce CO2 emissions). Commenters st ated 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 emissions that the EPA itse lf will not approve. Commenters asserted that approach is irrational, and the proposed rule is therefore arbitrary and capricious. Commenters noted that where the state plan includes emission limits for the affected EGUs, and56

when the sole responsibility for meeting the state goals are established with requirements for individual affected EGUs, it leaves little doubt th at the state plan would be enforceable and the affected EGUs could be held responsible for meeting the goals in the state plan.

Commenters stated CPP is unclear about the regulato ry approach that would hold them

accountable for the actions and inactions of third parties outside of the control of the commenter's city. Commenters understands that there are ways to incentivize demand side management, but there are no enforcement mechanisms or ways to guarantee this compliance. Commenters stated past Clean Air Act actions impact ing electric generating units (EGUs) - as with other New Source Performance Standards (NSPS) regulated industries have been imposed

at the affected unit. Commenters stated once the 11 1(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 finali zing the portfolio approach, so that states may either submit state plans for EPA a pproval 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 measu res implemented by

entities other than affected EGUs should not be fed erally enforceable.

Commenters opposed the EPA's proposal "that all mea sures relied on to achieve the emission performance level be included in the state plan ren ders those measures federally enforceable” Commenters recommended that the EPA finalize guidel ines for state plans to explicitly exclude all complementary measures implemented by entities other than affected EGUs that support reductions in generation by affected EGUs. Commente rs stated emissions reductions achieved through DSM programs should not be federally enforc eable measures included in a state plan. Commenters said the 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. Commenters urged the EPA to reevaluate the scope of options and appr oaches available to states and ensure that any guidelines finalized by the Agency ensure the treat ment of energy efficiency and DSM programs as complementary measures. Commenters said while st ate 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 desig ning their state plans. Commenters added the EPA is proposing guidelines for states that pro vide multiple pathways for developing a state plan that influence the scope of program measures c overed as well as who the responsible

entities will be. Commenters said a more limited sc ope of plan approaches that treat DSM programs as complementary measures should help ensu re that ultimate legal responsibility for the achievement of required emissions reductions re mains 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 p rograms.

Commenters stated the inclusion of DSM programs in the state plan will make these programs federally enforceable as well as mandatory. Comment ers said thus, 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. Commenters said given thatthe EPA has no authority over DSM programs it would be unlawful for the EPA to seek i mplementation or enforcement of these programs. Commenters stated the obligation for ensu ring emission reductions at affected EGUs

must rest with the affected utilities or the state and must not extend out to the participants in such programs. Commenters stated otherwise, the specter of federal enforcement will limit participation in DSM programs, especially given tha t 304 of the Clean Air Act allows citizens to bring civil suits to compel federal enforcement. Co mmenters stated to create such a disincentive for participation will undermine the success of exi sting programs and run counter to the Clean Power Plan's goal of achieving emission reductions though end use energy efficiency programs. Commenters said as proposed, the rule would not imp ose any such limitation on responsible entities. Commenters stated indeed, the EPA acknowl edges that "a portfolio approach may result in enforceable state plan obligations accruing to a diverse range of affected entities beyond
affected EGUs."

Commenters 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. Co mmenters said for example, while the Administrator acknowledged that the EPA lacks the a uthority 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 onc e a state submits it as part of a State Plan. Commenters stated without clarification, we are lef t to assume that the EPA is entertaining the possibility of overreaching its authority in this a rea.

Commenters asked under your proposal, if a state ad opts a renewable portfolio 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 o f subsequent legislation? If so, commenters questioned what is the source of the EPA's legal au thority to take such action?

Commenters stated EPA cannot hold affected EGUs sol ely responsible for meeting the entirety of a state's emission reduction goal. Commenters sa id 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 mec hanisms in its BSER analysis, EPA set state goals that cannot be met solely through emission re duction measures achievable at affected EGUs, short of wholesale retirement of existing fos sil fuel-fired generation, given that several58

state goals are well below the CO2 emission rate ac hievable by fossil fuel-fired generation, even

for new NGCCs. Commenters said EPA does not have th e authority to enforce the entire emission reduction commitments against affected uni ts even though affected units are the only entities within EPA's jurisdiction. Commenters said due to the proposed broad definition of "affected entity," EPA's proposal would transform e mission reduction measures in state plans that are the responsibility of non-affected EGU ent ities into federally enforceable requirements, and commenter opposed this approach. Commenters sai d according to the proposal, an affected entity is an affected EGU, or another entity with o bligations under this subpart for the purpose of meeting the emissions performance goal requirements in these emission guidelines. Commenters

said this definition would include entities that EP A has no authority to regulate under Section 111(d), such as electric distribution utilities and independent non-profit entities that administer RE and EE programs. Commenters agreed that states s hould be able to rely on emission reductions achieved by affected entities to achieve compliance with their state goals, EPA does not have the authority to make these emission reduc tion commitments federally enforceable.

Commenters stated the EPA explains in the Proposed Rule that if a state wants to avoid imposing legal responsibility on affected EGUs for the entir ety 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.

Commenters did not agree with the EPA's interpretat ion. Commenters said, first, including any requirements related to RE and EE programs would pu t the EPA in the position of regulating retail electricity sales, over which the states (or in the case of the commenter, the commenter's Board) have exclusive jurisdiction. Commenters said the EPA cannot enforce where it does not have jurisdiction. Commenters stated, second, contr ary to the EPA's assertion that the portfolio approach "accommodate[s] a diverse range of state approaches," implementation of the portfolio approach requires a state to have either (i) a lega lly binding RPS or EERS or (ii) a vertically integrated electricity sector that engages in integ rated resource planning. Commenters said both these options would be reliant on participation of the electric utility sector for emissions

reductions - states do not have an alternative to r egulation of the utility sector. Commenters saw no path in which the states can compel non-EGUs to participate in an emissions reduction program applicable to EGUs. Commenters said this su ggests the portfolio approach is unworkable and the states could not rely on this ap proach in developing state compliance plans.

Commenters stated, the new "interpretation" of CAA section 111(d) set forth in the Proposed Rule encourages Wyoming to submit a plan that conta ins what EPA calls "portfolio" measures. Commenters said, these measures would be used, for instance, to dramatically increase the use and deployment of renewable energy and EE throughou t the state, targeting Wyoming citizens and businesses as necessary agents in the reduction of electric consumption. Commenters said, however, upon EPA approval of a Wyoming CAA section 111(d) Plan, these measures would become "federally-enforceable" against those agents (citizens and businesses) required to implement them. Commenters said, yet, CAA section 1 11(d) does not provide EPA the authority to create federally enforceable obligations on enti ties that do not own or operate facilities within the regulated source category. Commenters said, rat her, CAA section 111 authorizes standards to59

be set for facilities within EPA-listed source cate gories. Commenters said, CAA section 111 does not apply to, nor can it permissibly reach , any other facilities or entities that are not par t of the listed source category.

Commenters stated EPA has no legal authority to reg ulate activities or sources that are not existing fossil fuel-fired EGUs, and its reliance o n the "integrated nature" of the power sector cannot create such authority where none exists. Com menters said EPA cannot enforce where it does not have jurisdiction, see 42 U.S.C. section 7 413(a)(3), and, consequently, cannot take enforcement action against entities other than affe cted EGUs. Commenters said holding affected EGUs legally responsible for obtaining all of the e mission 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 involv ed in applying the emission rate goals solely to affected EGUs. Commenters said EPA cannot develop a nd 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 re quired by such an expansive BSER

determination. Commenters said such a result would clearly circumvent Section 111's requirement that standards of performance be "achie vable." 42 U.S.C. section 7411(a)(1). Commenters said this would be the epitome of arbitr ary and capricious rulemaking. Commenters said EPA itself recognizes that state goals cannot be met solely through emission-reducing measures that may be taken by affected EGUs. Commen ters said that, even with affected coalfired EGUs reducing emissions by 6 percent and addi tional reductions from sources other than affected EGUs, 65 gigawatts of affected sources wil l retire as a result of this proposal. Commenters said affected EGUs have no authority to ensure that other affected entities attain the projected emissions reductions required for the sta te 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 re nder the rulemaking arbitrary and capricious.

Commenters stated that EPA does not have the author ity to regulate activity outside the sources subject to the CAA's performance standards. Comment ers said renewable energy projects and energy efficiency measures have no CO2 emissions an d cannot be regulated under these building blocks by the EPA. Commenters said the state agenci es do not believe that the distinction

between "inside the fence" and "outside the fence" is artificial. Commenters stated renewable energy projects and the measures to reduce end-user demand are not emissions reductions inside the fence, but rather, alternatives to fossil fuel generation outside the fence. Commenters said yet, the Clean Power Plan expands the EPA enforceme nt authority by requiring states to include renewable portfolio standards and energy efficiency measures within their state plans if the states intend on using these Building Blocks, which would then make them federally enforceable. Commenters stated concern that the state goal set f orth in the Clean Power Plan cannot be met without utilizing each Building Block. Commenters e xpressed concern over BB2, BB3, and BB4 that would be incorporated in state plans that expa nd the EPA's jurisdiction. Commenters said the EPA may initiate an enforcement action against any person that has violated a state plan; therefore making the state plan federally enforceab le. Commenters 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 a nd to citizen suits of litigation against the state's public utilities commission.

Response 8: These commenters focus on the scope of EPA’s autho rity to regulate sources other than affected EGUs. The federal enforceability co nsiderations raised in the comment arose 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 authori ty 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 choi ce whether to rely on emissions limits 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 su bject to the state plan and federal enforcement.

EPA is requiring, however, that the state plan resu lt in emissions reductions that meet the state’s emission goal under this guideline. And EPA is set ting those emission goals based on an assessment of what the best system of emission redu ction 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 E GU’s are dispatched, thereby reducing the utilization of a high-emitting EGU, the state can p ut that emission limit on the EGU. That emission limit simply becomes one of the several fa ctors that limit how an EGU gets dispatched. It would be no different than an EGU that is subjec t to a temperature limit in its NPDES permit

under the Clean Water Act. If that limit constrains the generating capacity of the EGU on a hot day, it will not be able to dispatch as much electr icity to the grid as it might unconstrained by environmental limits. If the state anticipates a ce rtain level of emissions reduction might come from RE development, and imposes emission limits on its EGU’s in anticipation of those alternative energy supplies, those limits simply be come another factor in how the EGU’s get dispatched. There is nothing beyond the affected so urces’ 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 avail able to adjust for these BSER-based limits on

EGU’s.

Comment 9: EE and RE measures may not be enforceable as a pra ctical matter.

Commenters stated that challenges persist as to whe ther or not all DSM measures can meet the EPA's own general principle regarding enforceabilit y that "a requirement that is enforceable as a practical matter is one that is quantifiable, verif iable, straightforward, and calculated over as

short a term as reasonable." Commenters stated the EPA notes that "a plan that assigns responsibility to affected entities other than affe cted 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 a uthority to subject such affected entities other than affected EGUs to the federally enforceable req uirements specified in its state plan." Commenters said implementing the increased regulato ry requirements of the Clean Power Plan, as proposed, will likely result in commenters’ orga nization's members incurring unnecessary costs and liabilities as this uncertainty is resolv ed over time. Commenters suggested that treatment 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 i n the comment arose primarily under the proposed portfolio approach for state pla ns. As explained in section 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 further explaine d 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 provi des considerable discretion to the states in setting emission standards and related plan require ments 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.

As proposed, we are requiring that state plans incl ude a demonstration that plan measures are enforceable, which for state measures plans is prov ided for in § 60.5780 and discussed in section VIII.D.2.c.6 of the final rule preamble. The exist ing guidance documents pertaining to enforceability include: (1) September 23, 1987 memo randum and accompanying implementing guidance, “Review of State Implementation Plans and Revisions for Enforceability and Legal Sufficiency;” (2) August 5, 2004 “Guidance on SIP C redits for Emission Reductions from Electric-Sector Energy Efficiency and Renewable Ene rgy Measures;” and (3) July 2012 “Roadmap for 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 su ccess of these state measures with sufficient accuracy to anticipate whether the design assumptio ns behind its plan remain valid. In any case, the ultimate measure of the success of these comple mentary measures will be the emissions measured from the affected EGU’s, which should redu ce consistent with the state’s design assumptions. It is relatively easy for EGU’s and th e state to track carbon emissions, and they have been under the greenhouse gas reporting rule f or years now.

Comment 10: It is unclear what constitutes compliance or non-co mpliance with RE and EE programs; a clearer definition is required.62

Commenters stated, in some cases it is unclear whatwould constitute a "violation" warranting an enforcement action or how a court would enjoin thatviolation. Commenters said, for example, a state might assign responsibility for implementing Building Block 3 (increased renewable energy generation) to a third party, such as an electric d istribution utility, and require that utility to invest a certain amount of money each year into new renewable energy development. Commenters expressed concern whether there any guar antee that those investments will result in the required reduction in EGU CO2 emissions to rend er the state plan approvable. Commenters asked whether the utility demonstrate compliance wi th 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. Commenters questioned whe ther the utility would "violate" its obligation if new renewable energy capacity failed to materialize, or if that renewable capacity was not utilized enough (e.g., due to variations in weather) to generate the contemplated amount of renewable energy. Commenters requested clarifica tion on whether a court would enjoin that violation by requiring greater investments, or by r equiring increased renewable generation. Commenters questioned whether that the owners of re newable energy projects receiving investments under the state plan would also be "aff ected entities" subject to enforceable obligations requiring a minimum amount of generatio n each year. Commenters also asked if it they were affected entities, would it be a violatio n of that requirement if a solar or wind-powered energy source did not meet its generation target be cause of insufficient sun or wind.

Response 10: As explained in section VIII.D of the final rule pr eamble of the CPP, if the state is adopting the state measures type plan, the state pl an submittal will need to specify, in the supporting materials, the state enforceable measure s that the state is relying upon in conjunction with any federally enforceable emission standards f or affected EGUs to meet the emission guidelines. The final rule provides considerable d iscretion to the states in setting emission standards and related plan requirements. How the s tate structures its plan will determine what constitutes a violation of the plan.

As proposed, we are requiring that state plans incl ude a demonstration that plan measures are enforceable, which for state measures plans is prov ided for in § 60.5780 and discussed in section VIII.D.2.c.6 of the final rule preamble. The exist ing guidance documents pertaining to enforceability include: (1) September 23, 1987 memo randum and accompanying implementing guidance, “Review of State Implementation Plans and Revisions for Enforceability and Legal Sufficiency;” (2) August 5, 2004 “Guidance on SIP C redits for Emission Reductions from Electric-Sector Energy Efficiency and Renewable Ene rgy Measures;” and (3) July 2012 “Roadmap for Incorporating Energy Efficiency/Renewable Energy Policies and Programs into State and Tribal Implementation Plans, Appendix F.”

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

Commenters stated whether a state has deregulated i ts electricity sector or has a binding RPS or EERS further limits state options under the portfol io approach. Commenters 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 thr ough 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 an d EERS, like Arizona, would have to rely on its RPS and EERS to incorporate EE and RE measur es into its state plan. Commenters said a state that has a deregulated energy sector and no m andatory RPS or EERS, like Virginia, may not be able incorporate EE and RE measures into its sta te plan at all unless it enacts mandatory RPS and EERS or partially regulates its energy sector. Commenters said despite EPA's assertion that the CPP accommodates a range of state energy regula tory structures through the portfolio approach, the portfolio approach offers states no f lexibility in whether to regulate the energy sector and little flexibility in the means of regul ating the energy sector. Commenters said EPA has not fully explained how EE, RE and redispatch m easures included in state plans could be enforced against entities that are not affected uni ts under "portfolio approach." Commenters said however, it is not clear that EPA or citizens can e nforce state plan RE and EE measures against such entities. Commenters questioned if a RE compan y proposes to build a new wind system but chooses not to do so because of economic reasons, h ow EPA or an environmental organization would purport to bring an enforcement action. Comme nters requested clarification on if a third party service company (perhaps even a non-governmen tal organization) contracts to provide EE services but achieves less conservation than expect ed, how would EPA really expect that it can bring an enforcement actions against the company an d how EPA would enforce against the plan. Commenters stated that EPA cannot bring an enforcem ent action against EGUs simply because they have relied on a state plan that proposes to a chieve specific levels of RE and EE that were subsequently not achieved. Commenters added that re gulating the RE and EE requirements of electric distribution utilities and EE providers wo uld put EPA in the position of regulating retail electricity sales, over which the states have exclu sive jurisdiction. EPA cannot enforce where it does not have jurisdiction.

Response 11: First, as noted, EPA is not finalizing the portfoli o approach, and the final guideline provides for state plan structures that ultimately rely on emission standards on affected EGUs, while giving states the flexibility 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 decl ine 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 abili ty of the sources in those states, and those states, to comply with their section 111(d) obligat ions. 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 c an choose to implement an emission standard type plan. As further described in section VIII of the preamble, the final rule provides considerable discretion to the states in setting em ission standards and related plan requirements.

Comment 12: Demand-side energy programs should be enforceable t hrough citizen’s suit under

CAA section 304.64

Commenters stated one of the two options the EPA ha s 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 renewabl e portfolio standards. Commenters thinks that to the extent a commitment to implement such p rograms is included in a State Implementation Plan for criteria pollutants, it cou ld 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 recognized in cases such as CBE v. Deukmejian, 731 F. Supp. 14 48; 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. Supp. 1285, 1289 (D. N.J. 1987); Bayview Hunter's Point Comty. Advocates v. M etro. 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 provide additional guidance regarding w hat would be an acceptable federally enforceable plan for RE and EE.

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

Commenters asked what mechanisms EPA envisioned wou ld be acceptable for states to propose in their plans to make energy efficiency projection s and measures federally enforceable in states where deregulation has decoupled generation from di stribution and delivery and the state has no existing statutory authority to enforce energy effi ciency programs.

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

Commenters stated that the Proposed Rule acknowledg es that the plans EPA envisions would differ significantly from other types of Clean Air Act implementation plans and plans submitted under Section 111(d). Commenters stated that the Pr oposal, however, glosses over the unprecedented and arguably unlawful elements of eac h 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) requireme nts as "standards of performance" for the affected EGUs. Commenters asserted that EPA must pr ovide a more thorough analysis of these issues rather than simply leaving states to grapple with them.

Similarly, commenters noted that EPA acknowledges " there may be challenges to practically enforcing against some entities in the event of non compliance" resulting from the untested nature65

of its Proposed Guidelines. 79 FR 34909. Commenters stated that there are serious legal problems with the enforceability of EPA's Proposed Guidelines. Commenters stated that indeed, the Plan TSD also acknowledges the enforceability c hallenges presented by the Proposed Guidelines, and according to the commenter, imprope rly suggests that it falls to states to resolve these questions. Plan TSD at 13-19. Commenters argu ed that EPA cannot make enforceability a prerequisite to plan approval without first resolvi ng these issues.

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

As discussed in section VIII of the preamble, after considering comments on the proposed portfolio approach, EPA is not finalizing that appr oach. Therefore, these comments to the extent they relate to the portfolio approach are moot. Ins tead of the proposed portfolio approach, EPA is finalizing an option to submit a “state measures” p lan 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 affe cted EGUs and that are not included in the federally enforceable 111(d) state plan, provided t he state submits standards of performance for

CO2 emissions from affected EGUs in the form of a f ederally enforceable “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 requirements for its affected EGUs. C onsistent 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, th e EPA will address the affected EGU’s violation on a case-by-case basis, to determine the appropria te response and resolution. Third parties have authority under section 304 of the CAA that is simi lar to the EPA’s authority under section 113(a)-(h) of the CAA.

As proposed, we are requiring that state plans incl ude a demonstration that plan measures are enforceable, which for state measures plans is prov ided for in § 60.5780 and discussed in section VIII.D.2.c.6 of the final rule preamble of the CPP. The existing guidance documents pertaining to enforceability include: (1) September 23, 1987 m emorandum and accompanying implementing guidance, “Review of State Implementat ion Plans and Revisions for Enforceability and Legal Sufficiency;” (2) August 5 , 2004 “Guidance on SIP Credits for Emission Reductions from Electric-Sector Energy Eff iciency and Renewable Energy Measures;” and (3) July 2012 “Roadmap for Incorporating Energy Efficiency/Renewable Energy Policies and Programs into State and Tribal Implementation P lans, Appendix F.”66

Comment 14: EPA should implement enforceable emissions targets, but should also allow programmatic flexibility, including enforcement at the state or municipal level.

Commenters stated the EPA should implement enforceable emissions targets but allow programmatic flexibility. Commenters said EPA is pr oposing 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 enforce able. Commenters said in light of current state programs, and of stakeholder expressions of concern s, 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 leve l, as well as on measures imposed on affected

EGUs to achieve the balance of that level. Commente rs said they do not take a position on any of the approaches put forth by EPA regarding the struc ture of state plans, but what is important is that the EPA require states to commit to binding an d verifiable emission reductions, while allowing states significant programmatic flexibilit y in achieving those reductions. Commenters said EPA and states have much flexibility in the st ate plans, and commenters urged the EPA to take advantage of this flexibility and allow states to maintain autonomy over their emission reduction programs to the extent possible. Commente rs said states have shown that they can achieve significant reductions through a combinatio n of programs and measures developed and managed at the state level. Commenters said they ar e concerned that taking an overly prescriptive approach to enforcing state programs w ill render the programs less effective by exposing states to litigation risk and disrupting t he administration of the programs by state agencies; therefore, commenters suggested the EPA r equire states to commit to binding emission reductions, but allow states significant programmat ic flexibility in achieving their reduction goals.

Commenters stated similarly, a federal enforcement scheme is not appropriate for Building Blocks 3 and 4. Commenters said for many years, the commenters’ organization have had RE and EE requirements in place for electric utilities . Commenters stated the commenter's organizations’ rules require the utilities to obtai n commenters’ organizations’ approval for many aspects of these programs on at least a yearly basi s. Commenters said the evolving nature of both programs, including approval of various EE measures and RE projects, makes inclusion of these programs under a federal enforcement scheme highly problematic. Commenters stated if state plans are forced to contain specific requirements o n renewables and energy efficiency, the commenters’ organizations’ ability to make appr opriate changes to these programs and properly discharge its constitutional authority wou ld be adversely impacted.

Commenters stated agreement with the EPA that renew able energy and energy efficiency programs should be enforceable as a practical matte r to be used for compliance. Commenters said the question is which entity should be respons ible for enforcement. Commenters stated in the proposed CPP, the EPA asserts that elements in state plans must be enforceable by the state and the federal government. 79 Fed. Reg. at 34,953- 54 (proposed section 60.5780(f)(5)).

Commenters stated this can raise serious issues for municipal regulators. Commenters said for67

example, the city council is the entity responsible for managing the provision of power to its ratepayers, rather than the state public service co mmission. Commenters said the city council is the entity that implements municipal programs in th e energy efficiency and renewable energy fields, and the state public service commission has no authority to enforce such programs in the city.

Commenters stated this means that it is the city co uncil, and not the state or the state public service commission, which implements, oversees and "enforces" municipal regulations relating to electricity (to the extent they are enforceable and not voluntary programs or aspirational goals). Commenters stated while the city council fu lly 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. Commenters said such higher-level oversight and enforcement is hardly appropriate for what are inhe rently local programs based on local factors, needs and expertise.

Commenters stated rather than make such programs en forceable by the state or federal government (except to the extent they are state-led programs), the proper implementation could be ensured by appropriate reporting and auditing re quirements that could be written into the programs and implemented locally. Commenters said m oreover, a state which adopts in its plans such municipal programs need not "enforce" those pr ograms in the traditional sense of policing compliance. Commenters stated rather, the state cou ld be held accountable by the EPA for reductions estimated to occur from those programs t hat are elements of state plans, and would be required to find reductions from elsewhere to cover any shortfalls in reductions ascribed to these municipal programs. Commenters said this is similar to the way the EPA authorizes states to adopt voluntary programs for mobile source emission reductions and stationary source emission reductions as measures in state implementation plan s ("SIPs") under Clean Air Act section 110.

Commenters stated, ultimately, the EPA should minim ize the conditions and requirements it imposes on state programs, especially those based o n local implementation, as red tape and prolonged bureaucratic review can be a powerful dis incentive to these programs. Commenters 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. Commenters stated the EPA can certainly provide gui dance to the states on how best to achieve these goals, but it should not take over enforcemen t.

Response 14: See section IV.A of the final rule preamble 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 order to satisfy it regula tions, while maintaining operating space for state regulators.

Commenters stated that EPA should carefully conside r which elements of an allowance system must be federally enforceable in order to satisfy i ts regulations, while maintaining operating68

space for state regulators to flexibly address more granular market function issues. Commenters stated that designing allowance systems is a comple x task, requiring a significant state regulatory

effort to define how the allowance market will func tion

. Commenters stated that in California's experience, these market rules have required carefu l elaboration and ongoing market monitoring, along with several sets of regulatory amendments ov er the past few years. Commenters did not believe that the full suite of regulatory efforts s upporting state allowance systems necessarily need be subject to federal enforcement if the syste ms are used as all or a portion of 111(d) compliance plan- i.e., not every market rule need b e subject to federal approval, or open entities to the possibility of federal citizen suit. Comment ers stated that such rigidity would make it difficult to adjust these rules as needed, and coul d impose undue compliance liabilities for market participants. Commenters stated that it is v ery important to the commenter to ensure that 111(d) requirements do not cause disruptions 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 especia lly important

.

Instead, commenters stated that EPA should confirm that it will evaluate state plans with allowance system designs in accordance with the bro ad plan design and enforcement latitude that section 111 indicates is appropriate. Although they expect to continue to explore options with EPA and stakeholders, the commenter initially sugge sted that appropriately bounded enforceability designs might include a commitment t o continue operating the system itself and (an obligation for covered EGUs to participate in t he system as a federally enforceable obligation

- but not federal enforcement of more detailed stat e-level allowance system rules. Commenters expected that EPA would carefully scrutinize any su bmitted allowance plan to ensure that it would produce the required reductions (in combinati on with other programs or on its own). Commenters stated that allowance program designs ne ed to be carefully reviewed to ensure, for instance, that they are not over-allocated and thatthey will function effectively as markets and pollution reduction tools. Commenters stated that s uch an approach could be appropriate if a state demonstrated to a reasonable certainty that m arket competition between entities and market design generally, in concert with complimentary mea sures reducing EGU emissions, demonstrate that covered EGUs would not acquire sufficient allo wances as to collectively exceed the 111(d) levels under a wide range of plausible market condi tions. Commenters stated that upon such a demonstration, the underlying market rules would no t be included in the plan, but a requirement that entities participate in the plan would be, alo ng with a requirement that the state continue to operate the system as a whole

.

As a result, commenters stated that EPA and citizen s would have the authority to enforce the obligation to operate the market as against state a gency 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 e ntities, see 42 U.S.C. sections 7411(d)(2)(B) and 7413 (EPA may enforce state plan requirements against covered entities). Commenters stated, however, EPA would not enforce c ompliance with particular program rules; these rules would also not require direct EPA appro val before amendment (unless rule changes significantly changed the compliance demonstration)

.69

Commenters stated that other designs may also be ap propriate

. Commenters stated, for instance, EPA may determine that additional EGU-specific mark et design features are necessary in economy-wide carbon markets. If so, commenters reco mmended that EPA work very closely with state officials to ensure that any such featur es do not disrupt the market as a whole, nor unwittingly cause reliability issues within the ele ctrical grid. Commenters stated that the large emission reductions which efficient economy-wide carbon markets provide should not inadvertently be compromised by sector-specific sec tion 111 programs. Commenters stated that the goal, in considering the interactions between s tate allowance systems and the federal rules, should be to ensure that plans are "satisfactory" f or federal compliance purposes without potentially significantly disrupting the continuing management and operation of state allowance systems. Commenters stated that in a sense, higher level federal enforceability of allowance systems is a variant of the "enforceable commitment " approach discussed below. Commenters stated that states would be making a federally enfo rceable commitment to run an allowance system, with a particular emissions cap, but underl ying program details would not themselves be federally enforceable (though a more general requir ement for EGUs to participate in the system might be).

Response 15: EPA agrees with some of the broad principles in thi s 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 enforcemen t” of the standards of performance. For details please see the Legal Memorandum discussion of the state measures approach.

We have designed certain features of these guidelin es, such as various state plan approaches available under the state measures plan type and em ission standards plan type, with the aim of accommodating existing state programs, such as allo wance-based trading programs that cover a broader range of sources to meet the requirements o f section 111(d)(1) with minimal disruption to those programs. See section VIII.J.2.d. Howeve r, we are not approving any state’s specific program in this action; we will act on a state subm ittal of its program through notice-andcomment rulemaking.

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

We are not finalizing a state commitment approach. Instead, we are finalizing the state measures approach, which includes a federally enforceable tr igger and backstop.

Comment 16: Federal enforcement is critical for fair and consi stent rule implementation and for rapidly reducing emissions.70

Commenters said the history of air pollution contro l shows that it is only effective under the potential for federal enforcement; therefore, given the urgency of addressing climate change, the

commenters believed that federal enforcement is cri tical both for fair and consistent rule implementation and for rapidly reducing emissions t hat 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 ap proach to state plan design. As the comments above indicate, it raised many questions about lega l authority. The final rule provides considerable discretion to the states in setting em ission standards and related plan requirements for its affected EGUs. Consistent with longstandin g 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 th e affected EGU’s violation on a case-by-case basis, to determine the appropriate response and re solution. 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 majeure and cost caps would not be available in cases where they are needed.

Commenters stated that provisions such as force maj eure and cost cap have not been accounted for in U.S. EPA's rule, and federally enforceable R E would not allow states the flexibility to apply such measures in cases when it is needed. Com menters said states would be locked into goals that do not account for real world changes an d do not allow state agencies to fully utilize their knowledge regarding these measures and what i s the most beneficial for the state. Commenters 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 beco mes 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.

Commenters stated in regards to implementing EE pro grams 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 distribution utility, the

commission determines that the amendment is necessa ry because the utility cannot reasonably achieve the benchmarks due to regulatory, economic, or technological reasons beyond its

reasonable control." Commenters 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. Commenters said the U.S. EPA must re-evaluat e the RE and EE goals, base them on all provisions provided in the individual state RPS pro grams and provide needed flexibility for goals and state plans to be adjusted when warranted, with out 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 sta te 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 satisfactory plan as he would have under section [1 10(C)] in the case of failure to submit an implementation plan .... " Commenters said that wha tever EPA requires must be something that it can lawfully do if the state does not. Commenter s said that while EPA certainly could adopt and impose emission limitations on "existing source s," it has no authority to prescribe state-wide energy policy, as the proposal would direct the sta tes to do for themselves. Commenters said that EPEC is not aware of any CAA provision that authori zes EPA to establish and enforce renewable portfolio standards, to direct dispatch d ecisions, to provide rebates for programmable thermostats, or to undertake any of the other notio ns that it has for Blocks 2-4 of its BSER.

Commenters said that those blocks are outside of th e 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 E E 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 unsuppor ted by the Clean Air Act. Commenters said, what if the retail customers and homeowners i ntegral to these programs do not act the way they are assumed or expected to? Commenters said, u nder the Clean Air Act, how can either these homeowners (who are not within the scope of 1 11(d)) or the existing carbon emitters (who are within the scope of 111(d), but are not respons ible 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 commerce, much less the regulatory construct of the Clean Air Act.

Commenters stated, the Proposed Regulation's propos al for the States to resolve this dilemma and to assume accountability for enforcing activity beyond the bounds of the Clean Air Act is unlawful. Commenters said, far from cooperative fed eralism, the Proposed Regulation unlawfully expands coverage of the Clean Air Act an d commandeers significant state resources. Commenters said, shortly after the Proposed Regulat ion was issued, the Supreme Court of the United States overturned an aspect of the EPA's Tai loring Rule for reasons that apply no less to the Proposed Regulation. Commenters said, in Utilit y Air Regulatory Group, the Court stated, among other things, that:

• The fact that EPA's greenhouse-gas-inclusive interp retation of the PSD and Title V triggers would place plainly excessive demands on l imited governmental resources is alone a good reason for rejecting it; but that is n ot the only reason. EPA's interpretation is72

also unreasonable because it would bring about an e normous and transformative expansion in EPA's regulatory authority without cle ar congressional authorization. When an agency claims to discover in a long-extant statu te an unheralded power to regulate "a significant portion of the American economy," we ty pically greet its announcement with a measure of skepticism. We expect Congress to spea k clearly if it wishes to assign to an agency decisions of vast "economic and political si gnificance."

Response 19: See section IV.A of the final rule preamble of the CPP for the EPA’s response to

this comment.

1.11.3 Plans with state commitments

Comment 1: The proposed state commitment approach conflicts with Congress’s intent that state plans be federally enforceable; EPA should re quire enforceability and accountability in state plans.

Commenters opposed the state commitment approach. C ommenters believed that state plans that count non-federally enforceable measures to reach t he BSER would be illegal and contrary to the Clean Air Act and argued that the EPA should rejectthem. Commenters argued the state commitment approach would conflict with Congress's intent that state plans must be federally enforceable by the EPA and citizens. Commenters sta ted that enforceability and accountability must remain strong to ensure that states do not fal ter implementing their plans in the face of political or economic pressure. Commenters urged th e EPA to not allow states to use the state commitment approach because it would make states un accountable. Commenters believed the state commitment approach would be unenforceable an d would exclude the specific standards of performance from the federally enforceable state pl an.

Commenters stated that section 111(d)(1) specifical ly requires state plans to establish standards of performance and provide for their implementation and enforcement. Commenters argued Congress has not given the EPA authority to allow s tates to exclude standards of performance and the EPA does not have plenary authority subjectonly to congressional 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 t he delegation of authority" from Congress). "Were courts to presume a delegation of power absen t 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. Commenters stated that EPA's rationale that it has authority to allow the state commitment appr oach because Congress has not prohibited the state commitment approach has no legitimate basis.

Commenters stated that citizen enforcement under se ction 304 and 307 must be available, as it is for NAAQS. Citizen suits are an essential element o f Clean Air Act enforcement and citizens are specifically authorized to sue to enforce "any requ irement under [section 111] (without regard to73

whether such requirement is expressed as an emissio n standard or otherwise)". Commenters said the EPA cannot issue any regulations in violation o f this specific statutory requirement, and should expressly provide for citizen suit enforceme nt.

Commenters argued the EPA must establish clear requ irements for the contents of state plans to ensure that states commit not only to overall targe ts and standards, but also spell out precise and enforceable emissions reduction obligations, method s and timelines, and identify by name the sources responsible for obtaining those reductions. Commenters stated in addition, state plans must contain monitoring, reporting and verification procedures. Commenters said this level of detail in state plans is necessary to guarantee the ir enforceability.

Commenters stated the Clean Air Act contains all th e procedures necessary for the federal enforcement of state plans under section 111(d). Se ctions 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 sect ion 110 SIP enforcement procedures. Commenters said these statutory references give the EPA clear authority to enforce section 111(d) state plans in the same manner as SIP violat ions under sections 108 to 110. Commenters stated that section 110 provides that state plans m ust include enforceable emission limitations and other control measures, means, or techniques (i ncluding economic incentives such as fees, marketable permits, and auctions of emissions right s), as well as schedules and timetables for compliance, as may be necessary or appropriate to m eet the applicable requirements of this Act. 42 U.S.C. 7410(a)(2)(A). Commenters said the EPA re ached these conclusions when it first considered section 111(d) plans in 1975.

If states opt to rely on actions by third parties t o reduce emissions at power plants, commenters argued that these obligations should become part of the approved state plans and therefore federally enforceable. Commenters stated that state plans must name the responsible parties, set specific reduction targets, and be sufficiently det ailed so that effective enforcement can take place. If a state implements a state plan that exce ed federal requirements, commenters argued that the state would still have to identify the spe cific measures designed to meet the guidelines to ensure those measures are federally enforceable.

Commenters thought the EPA included the state commi tment 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 pr eamble 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 desi gn are therefore moot. Instead, the EPA is finalizing an option to submit a “state measures” p lan 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 “backst op” 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 th e 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 st andards become federally enforceable requirements, which EPA and citizens may enforce ag ainst affected EGUs under section 113 and section 304 of the Act, respectively, once triggere d 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 r equirements for affected EGUs, demonstrate that plan measures are enforceable, and contain the process, content and schedule for state reporting to the EPA on plan implementati on and progress toward meeting the required

CO 2 emission performance level. For state measures pla ns in particular, the final emission guidelines also require states to submit annual rep orts 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 enforceability r equirements. Final EPA action on any submitted 111(d) state plan, including a state meas ures plan, is subject to judicial review under section 307(b) of the Act.

Comment 2: Commenters opposed the state commitment approach d ue to concerns the proposed approach would make enforcement impractical.

Commenters opposed the state commitment approach be cause they felt it raises practical enforceability issues. Commenters noted that if the standards of performance are not part of the state plan, then citizens and the EPA would have di fficulty determining compliance with the

state commitment because citizens and the EPA would need to evaluate many different state programs and measures and independently challenge a state's claim that it has met the performance level. Commenters argued that enforceme nt is more practical when citizens and the EPA can enforce specific, verifiable, and enforceab le standards of performance identified in state plans.

Response 2: The EPA is not finalizing the proposed state commit ment approach and comments on this approach to 111(d) state plan design are th erefore moot. Instead, as explained in section VIII of the preamble and above, the EPA is finalizi ng an option to submit a “state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieve d 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 fede rally enforceable “backstop” that would be triggered if the state mea sures fail to achieve the required CO 2 emission performance level. The state measures approach ensures that, if the st ate measures fail to achieve necessary emission reductions, the EPA a nd citizens can enforce backstop emission75

standards against affected EGUs, once these backsto p requirements are triggered and implemented.

Comment 3: Commenters expressed support for the state commitm ent approach and asserted that state plans with state commitments would maint ain appropriate level of federal enforceability while providing states with greater flexibility to implement state programs.

Commenters supported the state commitment approach because it would provide greater flexibility to states, while maintaining an appropr iate level of federal enforceability. Commenters believed the state commitment approach would enable states to continue to develop and implement effective and innovative energy policies that will support compliance with federal emissions targets. Commenters argued the state comm itment approach ensures continuous progress towards achieving the federal goals is leg ally 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 e nforceability of the fine details of state allowance systems, by rendering the emissions reduc tions achieved by those systems federally enforceable, but not the system of measures used to meet the emission reductions. Commenters stated that the state commitment approach would avo id any integration challenges between EPA's and the state's emissions enforcement respons ibilities under the Clean Air Act, and the enforcement of state energy programs. Commenters su pported the state commitment approach

because it would focus federal enforcement on ensur ing the state's compliance with its plan and would avoid transforming state policies and process es into federal programs.

Commenters argued that states that select the state commitment approach would be subject to federal and citizen law suits if they fail to meet their commitments. Commenters also noted 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, commenters also cited two court cases: ( 1) e.g., Citizens for a Better Environment v. Deukmejian, 731 F. Supp. 1448, 1457 (N.D. CCll. 199 0) (explaining that citizen suits under 42 U.S.C. section 7604 are available to secure injunct ive relief against state agency officials that fail to uphold enforceable commitments in a section 110 plan; and (2) BCCA Appeal Group v. U.S. EPA, 355 F.3d 817, 837, n.25 (5th Cir.2003) (collec ting cases on state commitment enforcement).

Commenters thought the state commitment approach wo uld allow states to retain flexibility to administer their own programs in the most efficientand cost-effective manner, without the complexities of unnecessary federal mandates, and a void subjecting non-EGU entities to multiple levels of regulation and enforcement autho rity. Commenters noted under existing programs, California's EGUs and other affected enti ties already provide reports to state agencies and submit detailed information regarding their com pliance with state mandates to reduced emissions reductions. Commenters argued the imposit ion of additional and duplicative reporting requirements on the EGUs and affected entities woul d add no value to the EPA's proposal, but76

rather would only result in additional compliance c osts, and should be avoided. Commenters said the reporting and verification obligations already required in California support a robust and comprehensive means by which the state would be abl e ensure its emission reduction commitment under the Clean Power Plan, without furt her burdening compliance entities.

Commenters said the state commitment approach avoid s potentially duplicative federal and enforcement processes for particular energy program designs and fine plan details which might otherwise make it difficult to continue to ad just State energy and climate programs as circumstances shift over the coming years. Commente rs thought the state commitment approach was important for maintaining state control over th e energy programs and would allow the states to adapt programs to respond to new challenges. Com menters 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 pro grams in place and rendering them federally

enforceable.

Commenters argued that states understand the EPA wi ll enforce commitments made under 111(d) should they fail to meet their commitments i n a timely manner.

Commenters said this alternative approach would avo id the legal issue associated with placing partial or full responsibility on entities other th an EGUs

Commenters thought the state commitment approach wa s consistent with cooperative federalism upon which the Clean Air Act is founded and urged t he EPA to preserve the states' role as primary implementers of the 111(d) performance stan dards, as envisioned by the Act.

Response 3: The EPA is not finalizing the proposed state comm itment approach and comments on this approach to 111(d) state plan design are th erefore moot. Instead, as explained in section VIII of the preamble and above, the EPA is finalizi ng an option to submit a “state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieve d 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 fede rally enforceable “backstop” that would be triggered if the state mea sures fail to achieve the required CO 2 emission performance level. The state measures appr oach allows states to rely on implementation of a wide variety of state-administe red programs in their 111(d) state plans without subjecting these programs to federal enforc ement under the CAA. At the same time, the state measures approach ensures that if the state m easures fail to achieve necessary emission reductions, the EPA and citizens can enforce backst op emission standards against affected EGUs, once these backstop requirements are triggere d and implemented.

Comment 4: Commenters supported the proposed state commitmentapproach 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 othe rwise be counted towards state goals.77

Commenters supported the proposed state commitment approach because it would reduce

enforcement risks for EGUs and allow states to enco urage, implement, and account for a number of programs and policies that could not otherwise b e counted towards state goals.

Commenters noted that if a state incorporates an RP S in its entirety into its section 111(d) plan, then all aspects of the RPS would become federally enforceable and open to citizen suits. Commenters stated that federal enforcement of progr ams that are outside the EPA's jurisdiction is not authorized by the CAA and creates greater en forcement risk for EGUs and other entities. Commenters further observed that litigation by envi ronmental groups has increased in the last few years, with groups seeking energy policy object ives rather than righting a permitting or statutory infraction. Commenters said this is evide nced by the multi-million dollar efforts behind Sierra Club's "Beyond Coal" campaign, which the com menter believed was designed to "replace [dirty] coal with clean energy by mobilizing grassr oots 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, commenters re ferenced several examples, including:

• December 2013 Sierra Club suit filed in U.S. Distri ct Court in Springfield that argued the court should force more controls on the carbon sequ estration FutureGen project.

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

• Sierra Club "Beyond Gas" campaign which opposes fra cking and the use of natural gas in

the United States.

Commenters stated that EGUs affected by the propose d 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. Commenters said incorporating state policies such as an RPS into a state plan would lead to a vast expansion of litigation a nd would lead to potential federal enforcement of every state approval process under every energy regulation. Commenters thought federal enforcement of an RPS would allow environmental gro ups to challenge business decisions that these groups would otherwise have no standing to pu rsue. For this reason, commenters thought the state commitment approach may be appropriate fo r states that wish to rely on state RE and demand-side EE programs but that do not want to inc lude those programs in their state plans. Commenters said the state commitment approach may a lso encourage participation since third parties would no longer be concerned with subjectin g themselves to federal enforcement.

Commenters stated the EPA also proposed a modified variation of the state commitment approach, under which the state would credit the EG Us with the amount of emission reductions expected to be achieved from RE or demand-side EE m easures. Commenters said the state would then assume responsibility for the credited amount of emission reductions. Commenters stated78

while he agrees with this modified variation, the f ull state commitment approach provides greater flexibility.

Response 4: As explained in section VIII of the final rule pr eamble of the CPP, the EPA is not finalizing the proposed portfolio approach, state c ommitment approach, or crediting approach, and any comments on these proposed approaches to 11 1(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, u nder which a mass CO 2 emission goal may be partially or entirely achieved through state measur es 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. The state measures ap proach allows states to rely on implementation of a wide variety of state-administered programs, including state renewable portfolio standards, in their 111(d) stat e 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 emi ssion reductions, the EPA and citizens can enforce backstop emission standards against affecte d EGUs, once these backstop requirements are triggered and implemented.

Comment 5: State commitment approaches are well established a nd have been used for criteria pollutant regulations in section 110 (attainment ar ea plans) and section 172 (non-attainment area plans).

Commenters supported the state commitment approach and argued that this approach is well

established. Commenters noted that the Clean Air Ac t explicitly recognizes the use of state commitments in contingency planning for areas with extreme local criteria pollutant pollution problems and suggests this type of plan is appropri ate for section 111(d) plans that address public health challenges across a broader geographi c scope. Commenters noted that both section 110 (for attainment plans) and section 172 (for non attainment plans) endorse the use of a wide array of enforceable measures that clearly can incl ude such commitments. Commenters said that the U.S. EPA and the states have long used such com mitments for other criteria pollutant plans. See, e.g., 79 Fed. Reg. 52,526, 52,534 (Sept. 3, 20 14) (endorsing enforceable commitments for nonattainment planning generally, per 42 U.S.C. sec tion 7502(c)(6), as part of South Coast air district plan); 77 Fed. Reg. 12,562, 12,653-655 (Ma r. 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 comm itment approach and comments on this approach to 111(d) state plan design are th erefore moot. Instead, as explained in section VIII of the final rule preamble of the CPP and abov e, 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 require ments on entities other than affected EGUs and that are not included in the federally enforcea ble 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 trig gered if the state measures fail to achieve the required CO 2 emission performance level. The state measures app roach allows states to rely on implementation of a wide variety of state-administe red programs in their 111(d) state plans without subjecting these programs to federal enforc ement under the CAA. At the same time, the state measures approach ensures that if the state m easures fail to achieve necessary emission reductions, the EPA and citizens can enforce backst op emission standards against affected EGUs, once these backstop requirements are triggere d and implemented.

Comment 6: Courts have upheld plans with enforceable commitme nts.

Commenters supported the state commitment approach and noted that the federal courts have previously upheld plans with enforceable commitment s. Commenters specifically mentioned the following court decisions:

• Environmental Defense v. U.S. U.S. EPA, 369 F.3d 19 3, 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 enforceab le commitment as a means or technique [of ensuring compliance] is reasonable an d therefore should be upheld");

• BCCA Appeal Group v. U.S. U.S. EPA, 355 F.3d 817, 8 41 (5th Cir.2003) (approving Texas plan, holding that "U.S. EPA reasonably concl uded that an enforceable commitment to adopt additional control measures on a fixed schedule was an 'appropriate' means, technique, or schedule or time table for compliance under the statute" and noting that U.S. EPA had maintained this interp retation "[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 e lement was an enforceable commitment);

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

• Citizens for a Better Environment v. Deukmejian, 73 1 F. Supp. at 1457 (analyzing enforceable commitments and holding that "the basic commitment to adopt and implement additional measures, should the identifie d conditions occur, constitutes a specific strategy, fully enforceable in a citizens action, although the exact contours of those measures are not spelled out.").

Commenters stated that courts and the EPA have foun d commitments appropriate for situations where the state demonstrates it is capable of fulfi lling the commitment, the commitment covers a reasonable period of time, and the commitment "addr esses a limited portion" of the plan, at least in the case where the state is committing to enact new programs. Commenters noted that the state80

must submits a "comprehensive and detailed plan" fo r its commitments, allowing U.S. EPA to "deem the proposals sufficient to make the necessar y emission reductions." Commenters believed that the state commitment approach is appr opriate for section 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. Commenters believed that Congress expected a high degree of state flexibility and that a broad approa ch to state commitments, including allowing commitments to cover a potentially larger portion o f state plans, would be appropriate.

Response 6: The EPA is not finalizing the proposed state comm itment approach and comments on this approach to 111(d) state plan design are th erefore moot. Instead, as explained in section VIII of the preamble and above, the EPA is finalizi ng an option to submit a “state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieve d 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 fede rally enforceable “backstop” that would be triggered if the state mea sures fail to achieve the required CO 2 emission performance level. The state measures appr oach allows states to rely on implementation of a wide variety of state-administe red programs in their 111(d) state plans without subjecting these programs to federal enforc ement under the CAA. At the same time, the state measures approach ensures that if the state m easures fail to achieve necessary emission reductions, the EPA and citizens can enforce backst op emission standards against affected EGUs, once these backstop requirements are triggere d and implemented.

Comment 7: State commitment approach would address legal issu es related to extending federal enforcement to RE and demand-side EE programs that are currently controlled by state utility
commissions.

Commenters supported the state commitment approach because it would allow state requirements for renewable energy and energy effici ency programs to be excluded federal oversight and enforcement. Commenters said, instead , the state plan would include an enforceable commitment by the state itself to imple ment state-enforceable measures that would achieve a specified portion of the required emissio n performance level on behalf of affected EGUs. Commenters thought the state commitment appro ach would addresses the legal issues that could arise with extending federal enforcementrenewable energy and demand-side energy efficiency requirements that to date have been with in the exclusive purview of state utility regulatory commissions.

Response 7: The EPA is not finalizing the proposed state comm itment approach and comments on this approach to 111(d) state plan design are th erefore moot. Instead, as explained in section VIII of the preamble and above, the EPA is finalizi ng an option to submit a “state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieve d through81

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 fede rally enforceable “backstop” that would be triggered if the state mea sures fail to achieve the required CO 2 emission performance level. The state measures appr oach allows states to rely on implementation of a wide variety of state-administe red programs in their 111(d) state plans without subjecting these programs to federal enforc ement under the CAA. At the same time, the state measures approach ensures that if the state m easures fail to achieve necessary emission reductions, the EPA and citizens can enforce backst op emission standards against affected EGUs, once these backstop requirements are triggere d and implemented.

Comment 8: Commenters expressed concern that the state commit ment approach may subject state utility regulatory commissions to federal enf orcement and challenges brought by citizen groups for violations CAA violations.

Commenters were concerned the sate commitment appro ach would subject state utility regulatory commission to federal enforcement and ci tizen lawsuits. Commenters acknowledged that the EPA has been willing to work with state re gulators to address compliance concerns and

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. Commenters also noted that their state had a lot of experience implementing energy efficiency and renewable energy programs and was implementing a

technical reference manual to better assure the int egrity of demand-side energy efficiency

investments and results. Commenters believed these efforts greatly limit the potential risk of
enforcement claims.

Response 8: The EPA is not finalizing the proposed state comm itment approach and comments on this approach to 111(d) state plan design are th erefore moot. Instead, as explained in section VIII of the preamble and above, the EPA is finalizi ng an option to submit a “state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieve d 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 fede rally enforceable “backstop” that would be triggered if the state mea sures fail to achieve the required CO 2 emission performance level. The state measures appr oach allows states to rely on implementation of a wide variety of state-administe red programs in their 111(d) state plans without subjecting these programs to federal enforc ement under the CAA. At the same time, the state measures approach ensures that if the state m easures fail to achieve necessary emission reductions, the EPA and citizens can enforce backst op emission standards against affected EGUs, once these backstop requirements are triggere d 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

Commenters supported the state commitment approach, but recommended the EPA not impose penalties on states that fail to meet milestones, i nterim goals, or final goals. Commenters stated the state's Environment Department does not have an d does not intend to seek authority for enforcement of items such as renewable portfolio st andards and energy efficiency resource standards (EERS). However, commenters stated that t hey will continue to work closely with those state agencies that have authority in these areas. Commenters stated that it is not appropriate for the EPA to have federal authority o ver the actions of other agencies within the state such as the Public Regulation Commission. Ins tead, commenters stated that it is appropriate for the EPA to enforce upon the State and for the S tate to work with those agencies in determining how to correct any deficiencies in meet ing State goals. Rather than imposing penalties on states, commenters recommended the EPA follow a process similar to a "SIP Call" wherein, if a state fails to meet a milestone or go al 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 mileston e or goal. If the state fails to do so,

commenters noted the EPA could then issue a federal implementation plan. Commenters argued that the “SIP Call” approach would be beneficial si nce it would ensure corrective actions are

taken.

Response 9: The EPA is not finalizing the proposed state comm itment approach and comments on this approach to 111(d) state plan design are th erefore moot. Instead, as explained in section VIII of the preamble and above, the EPA is finalizi ng an option to submit a “state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieve d 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 fede rally enforceable “backstop” that would be triggered if the state mea sures fail to achieve the required CO 2 emission performance level. The state measures appr oach allows states to rely on implementation of a wide variety of state-administe red programs in their 111(d) state plans without subjecting these programs to federal enforc ement under the CAA. At the same time, the state measures approach ensures that if the state m easures fail to achieve necessary emission reductions, the EPA and citizens can enforce backst op emission standards against affected EGUs, once these backstop requirements are triggere d and implemented.

Comment 10: EPA should include provisions clarifying the exten t of federal jurisdiction to

ensure enforcement is limited and other measures no t included in state plans are not subject to
federal enforcement.

Commenters expressed concern about the federal juri sdiction for requirements that are not included in state commitment plans. Commenters note d that measures that achieve the state goals, and measures applicable to non-EGUs should b e enforceable solely by the state, and not the EPA, even to the extent that they impact "affec ted entities." Commenters recommended the EPA include provisions in the final rule that clari fy in the final rule the extent of the federal jurisdiction, and ensure that federal enforcement i s limited and only invoked in instances where83

the state has violated its own plan or refuses to e nforce state plan provisions. Commenters were concerned that state-level RPS and EE requirements (such as California's RPS) would become federally enforceable against municipalities and pu blic power entities if the state decided to use the state commitment approach. Commenters believed that a major advantage of the state commitment approach is that it could avoid imposing federal energy regulatory obligations on municipalities and public power entities.

Although commenters were generally supportive of th e state commitment approach, they suggested the EPA provide additional details on how this approach would work, confirm that the state commitment approach would be approvable, and clarify what aspects of the state commitment, if any, would be federally enforceable and on which entity. Commenters also recommended the EPA clarify that any state that com mits to meet its goal through a combination of measures to be implemented 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 goal. Commenters emphasized that the EPA and citizens sho uld 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 pr ograms should be enforceable only under state
law.

Commenters noted that Oregon may choose to develop a state plan using the "portfolio approach" identified by EPA, and use the planned Bo ardman retirement, the state RPS program, and state efficiency efforts to meet its Clean Powe r Plan goals. Commenters stated that the EPA should clarify that such a construct would make Ore gon's commitment to achieve the emissions goals subject to federal law, but would not make th e underlying RPS and energy efficiency programs themselves subject to federal law.

Response 10: As explained in section VIII of the final rule pr eamble 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 desi gn are therefore moot. Instead, the EPA is finalizing an option to submit a “state measures” p lan 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 “backst op” 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. 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 thes e backstop requirements are triggered and implemented. Under the final emission guidelines, o nly affected EGUs have federally enforceable obligations under a 111(d) state plan. See section VIII.84

Comment 11: State commitments approach would not prevent impro per interference in areas that are traditionally regulated by states. EPA see ks 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 interferenc e in areas of state jurisdiction and argued that the state commitment approach does not allay t heir concerns. Commenters stated that the EPA had not addressed how elements necessary to ens ure that state plans are implemented could be left out of state plans. Commenters stated that the state commitment approach would not

avoid EPA interference in areas that are traditiona lly regulated only by states argued that EPA was trying “to avoid the appearance of such interfe rence.”

Response 11: As explained in section VIII of the final rule pr eamble 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 fin alizing an option to submit a “state measures” plan type, under which a mass CO 2 emission goal may be partially or entirely achieve d 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 fede rally enforceable “backstop” that would be triggered if the state mea sures fail to achieve the required CO 2 emission performance level.

The state measures approach allows states to rely o n implementation of a wide variety of stateadministered programs in their 111(d) state plans w ithout subjecting these programs to federal

enforcement under the CAA. Under the state measures approach, the backstop emission standards constitute the standards of performance r equired 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 und er which the backstop emission standards apply to affected EGUs. Upon EPA approval of a stat e measures plan under section 111(d), the backstop emission standards become federally enforc eable components of the state plan. See

section VIII.

Comment 12: What enforcement measures would EPA be able to tak e against states that fail to

meet their state commitments?

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

commenters asked what remedies the EPA would have t o help the state get back on track. Commenters also asked what types of contingencies a nd backstops state planners should consider for state plans using the state commitmentapproach.85

Response 12: As explained in section VIII of the final rule pre amble 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 13: EGUs should not be held responsible if states choo se the "state commitment approach" for control measures that are beyond thei r control, such as RE and demand-side EE

programs.

Commenters thought the EPA should ensure that only those entities who have full control over the reduction measure(s) be held responsible for me eting those requirements for entities in states with state commitment plans. Specifically, commente rs noted that if a state chooses to require a specific level of RE generation in its compliance p lan, then owners/operators of an affected fossil

fuel-fired EGU with no control over the RE resource s should not be responsible for meeting the RE generation goal. Commenters recommended that aff ected EGUs should not be held responsible if states choose the "portfolio approac h" or the "state commitment approach" for control measures that are beyond their control, inc luding RE and demand-side EE programs.

Response 13: As explained in section V.B and VIII of the final rule preamble of the CPP, the EPA is not finalizing the proposed portfolio approa ch or state commitment approach, and any comments on these proposed approaches to 111(d) sta te 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 a nd that are not included in the federally enforceable 111(d) state plan, provided the state s ubmits standards of performance for CO 2 emissions from affected EGUs in the form of a feder ally enforceable “backstop” that would be triggered if the state measures fail to achieve the required CO 2 emission performance level. The backstop provision would impose enforceable obligat ions 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 t he statutory requirements of section 111(d) while accommodating the wide range of regulatory re quirements and other programs that states have deployed or will deploy in the electricity sec tor that reduce CO 2 emissions from affected EGUs, such as RE and demand-side EE programs.

Comment 14: Commenters expressed concern that the state commit ment approach would lead to attempts by citizen groups to dictate state actions through enforcement actions.

Commenters were concerned that the proposed state c ommitment approach would result in EPA or citizens potentially bringing suit against the s tate for violating the CAA if RE and demandside EE measures were not implemented. Commenters w ere concerned that citizen groups would attempt to dictate state actions either through enf orcement actions or the threat of such actions.

Response 14: The EPA is not finalizing the proposed state comm itment approach and comments on this approach to 111(d) state plan desi gn are therefore moot.86

Comment 15: Commenters questioned how the EPA would take fede ral enforcement action against a state that takes obligations upon itself and expressed concern that EPA may be abdicating enforcement to third parties, thereby cr eating less flexibility and greater uncertainty for the power sector.

Commenters questioned how the EPA would prosecute a federal enforcement action against a state that took obligations upon itself in a state- based portfolio approach. Commenters were concerned the proposed rule would rely on citizen s uits for enforcement and felt that the EPA was abdicating enforcement to third parties, which they believed would result in a loss of flexibility and increased regulatory certainty for long-term power planning.

Response 15: As explained in section V.B and VIII of the final rule preamble of the CPP, the EPA is not finalizing the proposed portfolio approa ch or state commitment approach, and any comments on these proposed approaches to 111(d) sta te 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 a nd that are not included in the federally enforceable 111(d) state plan, provided the state s ubmits standards of performance for CO 2 emissions from affected EGUs in the form of a feder ally 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 im plementation of a wide variety of stateadministered programs in their 111(d) state plans w ithout subjecting these programs to federal enforcement under the CAA. At the same time, the st ate measures approach ensures that if the state measures fail to achieve necessary emission r eductions, the EPA and citizens can enforce backstop emission standards against affected EGUs, once these backstop requirements are triggered and implemented. See section VIII.

Comment 16: 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.

Commenters supported the state commitment approach but recommended the EPA provide guidance to regional offices for the review of thes e plans to ensure consistency across the regions.

Response 16: The EPA is not finalizing the proposed state comm itment approach, so comments on this approach to 111(d) state plan design are mo ot. 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 measures approach.

Comment 17: EPA must ensure the state commitments are federall y enforceable.

Commenters cautioned that state plans that contain state commitments should be crafted in a way that ensures enforceability against the states. Com menters said for example, a state commitment87

that is dependent on passage of state legislation o r administrative rules would be unacceptable given the inability of the implementing agency to e nsure passage of such laws.

Response 17: The EPA is not finalizing the proposed state commi tment approach, so comments on this approach to 111(d) state plan design are mo ot.

Comment 18: Commenters said that, EPA suggests that States sub ject themselves to EPA enforcement authority. Commenters said, this course of action would raise non-entrenchment issues. Commenters said, it is not clear that the necessary political support exists for such prospective waivers of the Eleventh Amendment.

Response 18: The EPA is not finalizing the proposed state comm itment approach, so comments on this approach to 111(d) state plan design are mo ot.

Comment 19: EE and RE measures should be federally enforceable. EPA's proposal to substantially undermine, or eliminate completely, f ederal 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 ach ieve 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 achie ve the state performance goal. Commenters stated nor may states simply commit to achieving th e performance goal. Commenters said the EPA acknowledges that its proposals stem from state s' desire to avoid federal enforceability.

Commenters stated the EPA's proposals miss the poin t here. Commenter said Congress requires that the plans and standards of performance be fede rally enforceable. Commenters stated moreover, Congress wants citizens to be able to enf orce the standards of performance and any requirement under section 111. Commenters stated ju st because states want a section 111(d) rule that excludes some or all of the strategies designe d to achieve the performance goals, that desire does not justify eviscerating enforceability. Comme nters said for the reasons described below, the EPA's proposal to substantially undermine, or e liminate completely, federal enforceability

violates the Clean Air Act.

Commenters stated 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 limit ations and other control measures, means, or techniques (including economic incentives such as f ees, marketable permits, and auctions of emissions rights), as well as schedules and timetab les 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-app roved plans required by section 110. Commenters said Congress also authorized citizens t o enforce "any requirement under section 111 or 112 (without regard to whether such requirem ent is expressed as an emission standard or88

otherwise)." Commenters stated the EPA correctly st ates 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 enforce able." 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). Commenter s stated the EPA then illegally proposes to evade federal enforceability.

Commenters stated under the "portfolio approach," t he EPA proposes to allow states to utilize renewable energy ("RE") and demand-side energy effi ciency ("EE") measures from the state plans. Commenters said such measures must be federa lly enforceable, including verifiable by citizens and enforceable as a practical matter. Com menters said the EPA discusses, and appears to propose, that states may exclude these portfolio approach measures from the state plans and thus federal enforceability. Commenters stated Sect ion 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 e stablish "standards of performance for any existing source" and "provides for the implementati on and enforcement of such standards of performance." Commenters said Sections 111 and 302 define "standard of performance." Commenters stated Congress required 111(d) state pl ans to include these emissions standards and spoke directly to the issue. Commenters said Se ction 111(d)(2)(B) also specifically mandates that the EPA have the same authority to enforce suc h plans under sections 113 and 114 with respect to State Implementation Plans required by s ection 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. Commente rs stated adopting the portfolio approach and allowing states to exclude any standards, inclu ding 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 has no authority to allow states to exclude measures from their state plans. Comment ers said to ensure enforceability, states must

submit measures to the EPA and demonstrate that the measures produce quantifiable, verifiable, non-duplicative, permanent, and enforceable reducti ons.

Response 19: As explained in section V.B and VIII of the final r ule preamble of the CPP, the EPA is not finalizing the proposed portfolio approa ch and any comments on that proposed approach 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 im pose requirements on entities other than

affected EGUs and that are not included in the fede rally 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 tr iggered 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 perf ormance required by section 111(d), and the state plan provides for the implementation and enfo rcement of such standards of performance by specifying the trigger mechanism and conditions und er which the backstop emission standards89

apply to affected EGUs. Upon EPA approval of a stat e measures plan under section 111(d), the backstop emission standards become federally enforc eable requirements, which EPA and citizens may enforce against affected EGUs under se ction 113 and section 304 of the Act, respectively, once triggered and implemented to add ress 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 r equirements for affected EGUs, demonstrate that plan measures are enforceable, and contain the process, content and schedule for state reporting to the EPA on plan implementati on and progress toward meeting the required

CO 2 emission performance level. For state measures pla ns in particular, the final emission guidelines also require states to submit annual rep orts 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 enforceability r equirements. Final EPA action on any submitted 111(d) state plan, including a state meas ures plan, is subject to judicial review under section 307(b) of the Act.

Commenters argue that the language of section 304 o f 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 acti on on [their] own behalf against any person ... who is alleged to have violated (if there is evid ence that the alleged violation has been repeated) or to be in violation of an emission stan dard 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 11 1 ... which are in effect under this chapter” are those in a state plan that are necessary to sat isfactorily “provide for ... enforcement” of the standards of performance.

Because the phrase “provide for ... enforcement” is a mbiguous, EPA has been delegated authority to interpret what elements in a state pla n 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 ensu re enforceability. Under the state measures plan type, those requirements are the trigger and t he backstop. The backstop must satisfy the same enforceability criteria as the emission standa rds in an emission standards plan type. The trigger must be capable of being activated by EPA a nd citizens. Details of the interpretation of section 111(d)(1) with respect to the state measure s approach are 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 th e federally enforceable plan. In other words, measures in a state plan are not “in effect under t his chapter” for the purposes of section 30490

until EPA has made them part of the federally enfor ceable plan. As a result, under the emission standards plan type, the emission standards and ass ociated 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 s ection 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 preamble 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” procedu res, again as explained in section VIII of the preamble. As also explained in the preamble, subst antive requirements in section 110, such as that in section 110(a)(2)(A), do not directly apply ; however EPA may adopt analogous substantive requirements if doing so would be reaso nable in light of the purposes of section 111(d)(1). In this case, EPA is reasonably interpr eting the language “provide for implementation and enforcement” as allowing the state measures app roach and not requiring every collateral measure aimed at reducing CO2 emissions from affect ed 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 Cir. 2004) and El Comité para el Bienestar de Earlimart v. Warmerd am , 539 F.3d 1062 (9th Cir. 2008), support the state measures approach, as they support the en forceability of the trigger through section 304.

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

Commenters opposed requiring specific state plan pr ovisions, such as targeted performance under individual building blocks or specific state programs, to be federally enforceable. Commenters stated unless otherwise requested by a s tate, 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 EP A approves. Commenters stated such a requirement could expose specific programs or proje cts, such as gas dispatch, energy efficiency or renewable energy projects, to the threat of fede ral enforcement or citizen suit. Commenters stated such an enforcement risk would be wholly inappropriate for state energy planning and states should be permitted to avoid this risk for p rojects implemented to achieve CPP-mandated reductions. Commenters said a commitment approach i s particularly important where states cannot guarantee specific dispatch outcomes nor ens ure the success of specific renewable energy or demand-side efficiency strategies. Commenters st ated the EPA acknowledged similar

concerns and has asked for comment on a "state comm itment approach" to including energy efficiency and renewable energy in state plans. Com menters said the EPA and the states have considerable experience with such an approach, and under CAA section 110, the EPA has

allowed states to include limited commitments in SI Ps in certain circumstances instead of91

specific adopted measures. Commenters stated that c ourts 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 proposed portfolio approa ch or state commitment approach, and any comments on these proposed approaches to 111(d) sta te 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 a nd that are not included in the federally enforceable 111(d) state plan, provided the state s ubmits standards of performance for CO 2 emissions from affected EGUs in the form of a feder ally 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 im plementation of a wide variety of stateadministered programs in their 111(d) state plans w ithout subjecting these programs to federal enforcement under the CAA, while ensuring that the EPA and citizens can enforce backstop emission standards against affected EGUs once these are triggered and implemented to address a shortfall in necessary emission reductions.

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

Comment 1: Commenters argued that under the CAA a source is e ither “existing” or “new” and that Section 111(d) cannot apply to sources subjectto 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.

Commenters stated the critical fact then is that on ce an existing source is modified or reconstructed, it ceases to be an existing source s ubject to section 111(d) and becomes a new source subject to 111(b). Commenters said, under th e CAA, a source is either "existing" or it is "new"; it cannot be both at the same time. Commente rs stated, moreover, under its explicit terms, section 111(d) may not apply to sources subject to section 111(b). Commenters said, because the EPA's proposal ignores this clear statutory languag e, the Proposed Rule must be withdrawn and re-proposed to conform to the clear statutory langu age of CAA section 111.

Commenters stated that it is inconsistent with the CAA to subject units that are modified or

reconstructed after the effective date of a state o r federal section 111(d) plan to both programs, and noted that a unit is either new or existing, bu t cannot be both simultaneously. Commenters noted, if a unit is modified or reconstructed after state plan approval, the unit would no longer be subject to existing source requirements.

Commenters stated EPA's proposal would unlawfully s ubject modified and reconstructed sources to standards of performance under both Sections 111 (b) and 111(d). Commenters said under the92

plain meaning of Section 111, these standards of pe rformance are mutually exclusive and cannot both be applied to the same source: A source cannotsimultaneously be "new" and "existing." Commenters said EPA's proposed justifications for c ontinuing to regulate modified and reconstructed sources under Section 111(d) are unre asonable, and even if EPA's underlying factual assumptions are correct, this merely unders cores the legal and practical defects in the proposed rule. Commenters said to the extent that E PA's proposed regulations are incompatible with the plain meaning of the Clean Air Act, it is EPA's proposal that must yield.

Commenters stated that EPA proposes that units thatbecome "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 section 111(b). Commenters said thi s result is precluded by the plain language of the statute, which contains definitions for "new" a nd "existing" sources that are mutually
exclusive.

Commenters 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 existin g source were a new source." 42 U.S.C. Section 7411(d)(1) (emphasis added). Commenters sai d 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 p erformance under Section 111(b). Commenters said the fact that Section 111(d) does not expressl y 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 ambiguous in isolation is often clarified by the remainder of the statutory scheme.'" UARG, 134 S. Ct. at 2442 (quoti ng United Sav. Ass'n of Tex., 484 U.S. at 374). Commenters said here the definitions themselv es make clear that regulation under Sections 111(b) and 111(d) must be mutually exclusive. Comme nters noted that the regulatory structure of Section 111 further underscores the mutually exclus ive nature of Sections 111(b) and (d). Commenters said Section 111(b) authorizes EPA to re gulate new sources while Section 111(d) directs States to establish standards of performanc e for existing sources. Commenters said there is no basis to suggest that Congress would have int ended a source to be subject to two different standards of performance adopted by two different r egulators.

Commenters said EPA cannot lawfully require modifie d sources to be subject to both 111(d) and 111(b) requirements. Commenters 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. Commenters 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 regulation s) prescribing a standard of performance under this Section which will be applicable to such sourc e." Commenters said, alternatively, the CAA defines an existing source as "any stationary sourc e other than a new source." Commenters said these definitions contain no ambiguities- an existi ng source is not a new source, and a new93

source includes modified sources; therefore, EPA ma y not subject modified sources to both existing source and new source standards, and the A gency's stated rationale for attempting to do
so evidences the flaw in EPA's BSER determination.

Commenters stated the standards of performance established by EPA under Section 111(b) extend beyond newly constructed sources and also in clude "modified" sources. 42 U.S.C. Section 7411(a)(2). Commenters said EPA expanded th e definition of new sources to include

reconstructed sources as well. See 40 C.F.R. Sectio n 60.15. Commenters said existing sources are then defined in Section 111 as "any stationary source other than a new source." 42 U.S.C. Section 7411(a)(6). Commenters concluded existing s ources are defined as the residual sources that are not considered "new" under Section 111, an d the two categories are mutually exclusive. Commenters continued by explicitly defining new and existing sources in mutually exclusive terms, the plain language of Section 111 dictates t hat a source cannot simultaneously be both a new source and an existing source. Commenters said this follows logically then that the applicability of standards of performance under Sec tion 111(b) for new sources and Section 111(d) for existing sources must also be mutually e xclusive. Commenters concluded a single source cannot be simultaneously subject to standard s of performance under both Sections 111(b) and (d).

Commenters said under the EPA's proposed reinterpretation, exi sting 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 111 (b) requirements for modified or reconstructed sources.

Commenters stated the EPA's rationale is that Secti on 111(d) does not explicitly exclude existing sources that modify or reconstruct from inclusion under 111(d). Commenters stated the EPA expresses that uncertainty about whether affected p ower plants would remain subject to a 111(d) plan would be detrimental to the plan's long-term s tability and integrity, and that it must avoid creating an incentive for sources to undertake modi fications simply to avoid obligations under a 111(d) plan. Commenters stated the EPA's reinterpretation of Section 111(d ) is at odds with prior Clean Air Act language, rulemakings, and interpreta tions, which clearly delineate the application of Section 111 (b) and (d) between new and existing sources.

Commenters stated we are also concerned that this a spect 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 commen ced after the publication of regulations (or, if earlier, proposed regulations) prescribing a sta ndard of performance under this section .... " Commenters said an "existing source," meanwhile, is defined as "any stationary source other than a new source." Commenters stated it appears th at under the statute, the definitions of "new source" and "existing source" are mutually exclusiv e: under section 111(a)(2), an existing source that commences modification after the publication o f an applicable NSPS becomes a "new source." Commenters said meanwhile, under section 1 11(a)(6), this "new source" cannot also be an existing source to which section 111(d) would ap ply, because that section defines an existing source as any source "other than a new source."94

Commenters noted that EPA has not proposed that eit her new sources or modified and reconstructed sources that commence construction pr ior 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 "ne w sources." Commenters noted that EPA has not explained why it has chosen to include only a s ubset 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 interpr etation raises further substantial risk that this aspect of the Proposed Rule will be overturned on j udicial review.

Commenters stated, the agency's justification for r einterpreting the Clean Air Act to fit the policy goals of the section 111(d) proposal is to avoid di sruption "to the operation of the program" caused by "uncertainty about whether units would re main in the program" and to avoid creating

"incentives for sources to seek to avoid their obli gations under a CAA section 111(d) plan by undertaking modifications." Commenters said, EPA ha s no statutory authority to do this, particularly in light of the plain language of the text. Commenters said, in its UARG decision, the Supreme Court is again instructive, where it de clared that "An agency has no power to 'tailor' legislation to bureaucratic policy goals by rewriti ng unambiguous statutory terms." Commenters 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 pre amble of the CPP, the EPA is not finalizing its proposal concerning ongoing applicab ility 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 o f 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 r ulemaking docket.

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

Commenters said EPA's proposal would result in dupl icative and overly burdensome regulation for the sources and confusion regarding the obligat ions of state permitting authorities. Commenters said this purported "ambiguity" arises s olely as a result of EPA's decision to invert the nature of the proposed standards, seeking far m ore aggressive emission reductions from existing sources than those that would apply if a s ource became "new" as a result of a

modification. Commenters 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 pre amble of the CPP, the EPA is not finalizing its proposal concerning ongoing applicab ility 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 o f 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 r ulemaking docket.

Comment 3: EPA’s justifications for continuing to regulate mo dified 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.

Commenters stated EPA's purported justifications fo r continuing to regulate modified and reconstructed sources under Section 111(d) are unpe rsuasive and simply underscore the unlawful, arbitrary, and capricious nature of the p roposed rule. Commenters said EPA asserts that its approach is necessary "to assure the integ rity of the CAA 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. Commenters continued even if EPA is correct that the potential for modified and reconstructed sources to be removed from Section 111(d) implementation plans may create unce rtainty 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 und er Section 111(d). Commenters said as the Supreme Court recently held, "[a]n agency has no po wer to 'tailor' legislation to bureaucratic policy goals by rewriting unambiguous statutory ter ms." UARG, 134 S. Ct. at 2445.

Commenters stated in sum, the EPA's proposal that m odified 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 to be contradicted by the plain language of section 111. Commenters said for these reasons, they encourage the EPA to abandon this novel and unneces sary interpretation when it issues a final
rule.

Commenters stated the EPA's 111(b) proposal has maj or implications for its section 111(d) proposal. Commenters said primarily, an EGU that wa s initially governed by section 111(d), which later becomes subject to section 111(b) crite ria, would be governed by both standards instead of just section 111(b). Commenters did not support EPA's contention that a "reconstructed facility" is still an existing facil ity. Commenters said a "new source" is defined as "any stationary source, the construction or modific ation of which is commenced after the publication of regulations (or, if earlier, propose d regulations) prescribing a standard of96

performance under this section which will be applic able to such source." Commenters said an "existing source" is "any stationary source other t han a new source."

Response 3: As explained in section VIII of the final rule prea mble of the CPP, the EPA is not finalizing its proposal concerning ongoing applicab ility 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 o f 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 r ulemaking docket.

Comment 4: Commenters disagreed with EPA’s concern that exist ing units would avoid section 111(d) by undertaking modifications and reconstruct ions because performance standards for
modified and reconstructed sources should be more s tringent than section 111(d) standards.

Commenters stated EPA expresses "concern[] that own ers or operators of units might have incentives to modify purely because of discrepancie s in the stringency of the two programs." 79 Fed. Reg. at 34,904. Commenters said again, the fac t that EPA concedes that the standards of performance for existing sources will be more strin gent than those for modified and reconstructed sources simply underscores the unlawf ul nature of the proposed rule. Commenters

said the inclusion of modified and reconstructed so urces under Section 111(b) reflects the intent of Congress and EPA that such sources may be subjec t to more stringent standards of performance than existing sources. See, e.g., 40 Fe d. Reg. at 58,416, 58,417 ("The reconstruction provision is intended to apply where an existing fa cility'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 re flected in EPA's emission guidelines will take into account the costs of retrofitting existing fac ilities and thus will probably be less stringent than corresponding standards of performance for new sources."). Commenters said this approach is inherently sensible, as facilities undergoing mo dification or reconstruction may have opportunities to incorporate emission control techn ology not available to other existing sources. Commenters said here, EPA turns that logic on its h ead and suggests that existing fossil fuelfired EGUs may be subject to standards of performan ce 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. C ommenters said the fact that a source could gain relief by undergoing a modification or reconst ruction is clear evidence that the proposed regulations for existing sources are unlawfully str ingent.

Commenters stated EPA's stated reasons for proposin g to merge the separate "new" and "existing" provisions of Section 111 is a "concern[ ] that . . . units might have incentives to97

modify purely because of discrepancies in the strin gency of the two programs . . . ." Commenters said in order to maintain an interpretation of Sect ion 111 which allows for Section 111(d) to be more stringent than Section 111(b), EPA has to stra in to prevent existing units from "escaping" Section 111(d) and becoming "new units" by undertak ing 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 pre amble of the CPP, the EPA is not finalizing its proposal concerning ongoing applicab ility 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 o f modification or reconstruction on preexisting section 111(d) state plan requirements are moot as to this rulemaking.

The EPA disagrees with commenters’ assertion that t he requirements for existing sources are more stringent than those for modified and reconstr ucted sources. As explained in the preamble, comparison of the control requirements in the secti on 111(d) emission guidelines to those in the section 111(b) standards of performance is an “appl es-to-oranges” comparison, in particular because the two sets of rules become applicable at different points in time and have significantly different compliance periods. Additionally, the fle xibility that this rule offers the states has important implications for its stringency and for a ny comparison to the section 111(b) rule.

Comment 5: EPA cannot simultaneously treat modified and recon structed units as existing sources under CAA 111(d) and as new sources under C AA 111(b) because the source categories the EPA is regulating under its proposed modified/r econstructed source rule and its proposed existing source rule are different.

Commenters stated the EPA cites no precedent for se parating its "new" source standards into two separate rulemakings--one for new sources and anoth er for modified/reconstructed source-with either one of them sufficient for supporting existi ng source standards. Commenters said, regardless, EPA's approach does not work. Commenter s said the EPA's proposal to set performance standards for modified and reconstructe d coal units states that modified and reconstructed sources will be treated as existing s ources that remain subject to any CAA 111(d)

standard that is then in effect. Commenters stated the EPA cannot simultaneously treat modified and reconstructed units as existing sources under C AA 111(d) and as new sources under CAA 111(b). Commenters said the source categories the E PA is regulating under its proposed modified/reconstructed source rule and its proposed existing source rule are different. Commenters stated under the proposed modified/recon structed source rule, the EPA is regulating coal-fueled EGU's. Commenters said under the propos ed existing source rule, the EPA is nominally regulating a combined coal/natural gas ca tegory but in reality is setting standards applicable to entire state electric utility systems . Commenters 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 so urce 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, an y 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 modified and reconstructed sou rces subject to both section 111(b) and section 111(d) because both rules have v ery different emission limits and compliance requirements.

Commenters were very concerned that the EPA is prop osing that modified and reconstructed electric generating units be subject to both CAA se ction 111(b) and section 111(d), which have widely disparate proposed compliance requirements. Commenters said under the proposed section 111(b) language, new, modified or reconstru cted fossil-fuel fired EGUs must emit no more than 1,100 lb CO2/MWh. However, under this sec tion 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 S tates requiring modified and reconstructed EGUs to emit less than 1,100 lb CO2/MWh as per sect ion 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 pr eamble of the CPP, the EPA is not finalizing its proposal concerning ongoing applicab ility 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 o f modification or reconstruction on preexisting section 111(d) state plan requirements are moot as to this rulemaking.

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

Commenters stated ultimately, there should be an el ection made between the New Source Performance Standards and Existing Source Performan ce Standards. Commenters said if a facility owner elects to incur the expense of modif ying 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 any affected steam generating unit, IGCC, or stationary combustion tur bine 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 prea mble of the CPP, the EPA is not finalizing its proposal concerning ongoing applicability of sectio n 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 conc urrently with these final emission guidelines. Therefore, any comments on the effect of modificati on 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) a nd 111(d) will result in higher costs for ratepayers.

Commenters said in section 111(b), the EPA has prop osed a limit that is more stringent than BSER by forcing an EGU to comply with both sections 111(b) and 111(d). Commenters stated with no relief provided on 111(d) for the modificat ion/reconstruction of an existing source, the economics of doing so become even more difficult. C ommenters stated ultimately, such a standard will only cause the ratepayers to incur ev en higher costs.

Response 8: As explained in section VIII of the final rule pr eamble of the CPP, the EPA is not finalizing its proposal concerning ongoing applicab ility 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 o f 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.

Commenters stated further, should conflicts arise b etween 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 pr eamble of the CPP, the EPA is not finalizing its proposal concerning ongoing applicab ility 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 o f 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 re quire modified and reconstructed units to remain subject to section 11 1(d) and agreed that sources may have incentives to modify units due to discrepancies in the rules.

Commenters stated, section 111(d) continues to appl y even after a modification or reconstruction of a source. Commenters 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 prov ide a reasonable interpretation, under the Supreme Court's decision in Chevron U.S.A. Inc. v N RDC. Commenters agreed with EPA's proposal that an existing source subject to require ments under Section 111(d) will continue to be subject to those requirements even after it underta kes a modification or reconstruction. Commenters said, under this interpretation, a modif ied or reconstructed source would be subject to both: (1) the section 111(d) requirements that i t had previously been subject to; and (2) the

modified source or reconstructed source standard be ing promulgated under Section 111(b) simultaneously with this rulemaking. Commenters sai d, this interpretation, which is supported by the statutory text, is a sensible policy and will f urther the goals of the statute.

Commenters agreed with EPA that owners and operator s of units might have incentives to modify purely because of potential discrepancies in the stringency of the two programs, which would undermine the emission reduction goals of Sec tion 111(d). Commenters said, and, the uncertainty about whether units would remain in the program could be very disruptive to the operation of the program. Commenters said, EPA's in terpretation of Section 111(d) will avoid creating incentives for sources to seek to avoid th eir obligations thereunder by undertaking modifications and, therefore, will assure the integ rity of the Section 111(d) program.

Commenters stated Section 111 is ambiguous as to wh ether existing sources continue to be subject to 111(d) requirements after modification o r reconstruction makes that source subject to section 111(b) standards. Commenters said EPA has r easonably 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. Commenters said this interpretation is consistent with the statutory tex t, EPA's past practice, and judicial interpretations of the framework of section 111, an d is necessary to avoid perverse incentives that could undermine the regulatory scheme and weak en limits on carbon pollution.

EPA's Duty to Establish Emission Guidelines for Exi sting Sources is Not Altered By the Continuing Applicability of 111(d) Requirements to Sources that Subsequently Elect to Modify

or Reconstruct

Commenters stated, EPA has properly recognized thatits duty to issue emission guidelines for existing sources now that the Agency has proposed s tandards of performance for reconstructed or modified sources is not affected by the clarific ation that 111(d) requirements continue to apply to sources that modify or reconstruct after becomin g subject to 111(d) state plan requirements. Commenters said, contrary to industry arguments, th e modified and reconstructed standard of performance is a sufficient predicate for the regul ation 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 "n ew' and "existing' sources are relevant only to the initial applicability of the respective standar ds. Commenters said, consequently, a source can be subject to ongoing 111(d) requirements because i t 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.

Commenters stated, industry comments rely on the fl awed 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). Commenters 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." Co mmenters, based on this conclusion, asserted

that if the modified and reconstructed sources are actually existing sources, the proposed rule cannot be a predicate for regulation under the comm and of section 111(d)(1)(A). Commenters said section 111 is ambiguous as to whether 111(d) requirements continue to apply to a source that modifies or reconstructs. Commenters said, a r easonable 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 sour ce, but do not constrain whether that standard continues to apply once the same source meets the r equirements for applicability of another standard under section 111. Commenters said, conseq uently, the question of whether a source continues to be subject to a standard is separate f rom whether that source initially meets the statutory definition of "new source" or "existing s ource."

Commenters stated, under EPA's interpretation of th e statutory ambiguity, sources that modify or reconstruct continue to be subject to the 111(d) st andard not because they are still "existing" sources, but rather because the statute does not re lieve sources of requirements that were imposed on them at an earlier time, when they were "existing" sources. Commenters 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 111(a)(1) requires. Commenters said –

the BSER for modified and reconstructed EGUs necess arily encompasses not just systems such as heat rate improvements, considered in the propos ed standards here, but also the potential to reduce carbon pollution through shifts in utilizati on towards lower- or zero-emitting generation and demand-side energy efficiency. Commenters said, this is the system that EPA has identified as the "best system of emission reduction" in the p roposed emission guidelines for all existing plants because it achieves the greatest pollution r eductions considering cost, energy requirements, and other health and environmental ou tcomes. Commenters 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 identif ied by EPA remains the best system for that plant, achieving the greatest emission reductions c onsidering cost and the other statutory factors. Commenters said, rather, the modification or recons truction means that there is an additional component of the best system for that source to ens ure that the section 111(b) standard serves its technology-forcing, emission-reducing role when sig nificant investments are being made in these plants.102

Commenters stated, because EPA' interpretation that111(d) requirements continue to apply to sources that later modify or reconstruct does not r ely on defining those sources as continuing to be "existing" sources, the proposed 111(b) standard s of performance for modified and reconstructed EGUs are in no way standards for "exi sting" sources.

Commenters said requiring, in the finalization of t hese standards, that state plans apply to all sources that were "existing" as of the date the emi ssion guidelines were proposed is also consistent with the statutory text. Commenters said section 111(d) vests EPA with broad authority to establish procedures governing the sub mission and content of state plans that "establish" performance standards for "any existing source." Commenters 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 based on the BSER for all EGUs that were under construction or in operation as of January 8, 2014. Commenters said itis reasonable and consistent with the statute for EPA - acting under its authority to establish m inimum requirements for state plans, including determining the scope of those plans to require tha t state plans establish performance standards for the same set of existing sources addressed in t he emission guidelines.

Response 10: As explained in section VIII of the final rule pre amble of the CPP, the EPA is not finalizing its proposal concerning ongoing applicab ility 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 o f 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 r ulemaking docket.

Comment 11: Commenters supported EPA’s proposal that section 1 11(d) remain applicable to modified and reconstructed sources, but recommend t he EPA undertake frequent review of the NSPS to ensure the emissions guidelines for existin g EGUs are effectively coordinated with the

NSPS standards.

Commenters stated they support EPA's proposal that Section 111(d) standards remain applicable to sources that modify or reconstruct, and they sug gested EPA take on more frequent review of the NSPS to ensure that the proposed emission guide lines for existing EGUs are coordinated effectively with the proposed standards for modifie d and reconstructed sources. Commenters said although section 111(b) of the Clean Air Act c learly requires that carbon pollution standards for new sources be reviewed at least once every eig ht years, EPA could establish a more frequent schedule for revision (such as once every five year s) in recognition of the rapid evolution of methods to reduce carbon pollution from the power s ector. Commenters said this would ensure that sources that modify or reconstruct quickly com e into compliance with section 111(d), consistent with EPA's past practice of subjecting m odified and reconstructed sources to state plans upon revision of an applicable NSPS, and in s o doing, EPA would also reduce potential103

incentives for EGUs to modify or reconstruct for th e purpose of avoiding state plan requirements under section 111(d).

Response 11: As explained in section VIII of the final rule pr eamble of the CPP, the EPA is not finalizing its proposal concerning ongoing applicab ility 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 o f modification or reconstruction on preexisting section 111(d) state plan requirements are moot as to this rulemaking.

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

Comment 12: If EPA decides modified and reconstructed EGUs are not required to continue to comply with section 111(d), then the EPA should req uire the emissions from modified and

reconstructed units to continue to be counted when determining state compliance with section 111(d).

Commenters stated that if modified or reconstructed EGUs are excluded from state plans under section 111(d), EPA could require that emissions fr om modified and reconstructed units "count" when determining state compliance with Section 111( d). Commenters said EPA could require

that emissions from those units continue to be "cou nted" when determining whether states have complied with the goals promulgated in the emission guidelines. Commenters said this requirement would not impose any section 111(d) obl igations on the modified or reconstructed EGUs, but would ensure that limits on carbon pollut ion under section 111(d) are not undermined by "leakage" resulting from increased emissions at those modified or reconstructed EGUs.

Commenters said in practice, state regulators would have a strong incentive to ensure that modified and reconstructed units are subject to eit her state plans or to additional emission limitations in order to ensure compliance with the section 111(d) goals.

Commenters said this approach is not precluded by t he 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 appr oach as necessary to ensure an accurate accounting of emissions from affected EGUs. Comment ers said this is because generation from any EGU that modifies or reconstructs would effecti vely be substituting for generation from the same EGU prior to its modification or reconstructio n. Commenters said 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). Commenters said EPA could reasonably conclude that to protect against such "over-crediting,"

emissions from modified and reconstructed EGUs mustbe included in a state's average emission rate. Commenters said this approach would also have the effect of treating modified or104

reconstructed EGUs in a way that is comparable to i ncremental nuclear, renewable energy and energy efficiency-all of which are considered as re sources that displace affected EGUs and therefore enter into the compliance determination f or each state as zero-emitting resources. Commenters said the emissions from the units in que stion were taken into account when EPA established the state goals, and it would be approp riate to find that those emissions must continue to count in determining compliance with that target . Commenters said because the proposed state goals reflect the emissions from those units, the s tate's compliance demonstration must also
include the emissions from those units.

Response 12: 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 so urce 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, an y 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 bas ed state plans, Section VIII.J. of the preamble also discusses how states, as an option an d 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 ar e met.

Comment 13: States should be given the discretion to address s ection 111(b) and 111(d) requirements for modified and reconstructed sources on a case-by-case basis.

Commenters stated the EPA noted in the Proposed Rul e that regulations proposed under 111(b)

for modified and reconstructed sources affect the i mplementation 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). Commenters said accounting for any 111(b ) actions only adds to the complexity of a state plan and increases the administrative burden. Commenters 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 process for 111(d) state plans.

Response 13: Section VIII of the preamble discusses how new EGU s covered under the CAA section 111(b) rule are not allowable measures in s ection 111(d) state plans because the EPA

believes it would result in increased emission leak age. 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 obligations regarding affected EGUs regulate d under a section 111(d) state plan are met.

If commenters’ are concerned about treating modifi ed and reconstructed units both as existing sources under section 111(d) and as new sources und er section 111(b), as noted above, the EPA105

is not finalizing its proposal concerning ongoing a pplicability of section 111(d) state plan requirements after an existing source modifies or r econstructs. 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.

1.11.5 Obligations on affected EGUs

Comment 1: The compliance obligation should be kept to only co vered source units.

Commenters stated, as a legal matter, the final obl igation to comply with standards of performance lies with each such plant. To minimize legal uncertainty, the compliance obligation should be kept to only covered source units, with t he assumption that system-wide compliance tools, such as renewable energy generation, would r educe overall electricity generation at covered sources, thereby reducing overall emissions

.

Response 1 All affected EGUs that are subject to an emission s tandards state plan will be subject to standards of performance, as described in sectio n VIII.C of the final rule preamble of the CPP, that will be enforceable by their terms.

Comment 2: Commenters stated that the electric utility industry is made up of dozens of entities operating across state lines and bounded by dispatc h region s; commenters asserted that setting state goals that require entities separate from tho se responsible for carbon-emitting EGUs to take certain actions is inequitable. Commenters argued t hat a state's ratepayers would be penalized for living in the same state as affected EGUs where the ir actions are not connected with, and thus have no effect on, affected EGU emissions in the st ate.

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 compliance on EGUs.

Commenters stated that state plans must ensure thataffected EGU’s are responsible for meeting emission reductions required by federally enforceab le emission limits in the rule. Commenters stated that the Act explicitly provides for state p lans requiring affected sources to be the entities legally responsible for achieving the required emis sion standards. Commenters said emission limits that are federally enforceable against affec ted EGUs clearly fall within the definition of a "standard of performance." Commenters added that th e federally enforceable limits would106

require affected EGUs to demonstrate compliance in the event that the portfolio measures fail to deliver the required emissions reductions. Commente rs noted that section 111(d) does not prevent states from imposing obligations on non-aff ected entities so long as it ensures that affected EGUs are ultimately responsible for all em ission reductions; what a state may not do, however, is shift responsibility away from affected EGUs and onto other entities. Commenters said states must craft their plans to ensure that a ffected entities can claim proper credit for emission reductions that are not automatically refl ected in their source-specific emission rates.

Commenters noted that a state plan that includes po rtfolio measures can only be approved if the plan also "provides for the ... enforcement of [the ] standards of performance" established for the

affected sources. Commenters added that EPA could a dd provisions that could take the form of a requirement that regulated EGUs make sufficient red uctions or secure sufficient credits from redispatch, renewable energy generation, and energy e fficiency activities to make up the shortfall within the same compliance year. Commenters suggest ed that the obligation to make up the shortfall could be allocated among sources in any m anner acceptable to the state. Commenters said the backstop would be included in the operatin g permits of the regulated entities, and would be federally enforceable by EPA under section 113 o f the Clean Air Act, and by citizens under

section 304 of the Act.

Commenters stated under a portfolio approach, the E GU would be responsible for implementing Building Blocks 2, 3 and 4 in addition to "inside t he fence" improvements in Building Block 1. Commenters said EGUs are fully capable of developin g and implementing demand side and energy efficiency programs, and many do so in India na voluntarily. Commenters stated in addition, EGUs are capable of developing renewable energy sources and refueling to natural gas or developing new natural gas plants. Commenters st ated EGUs can do all of the above more quickly and efficiently than the state or other sma ller, lower capitalized entities, and they can enter contracts with other entities to meet their g oals. Commenters stated with the EPA’s alternative to having third party entities partiall y responsible under the state plan for Building Blocks 2, 3 and 4, the state would assume the respo nsibility of ensuring reductions to be credited toward the state goals by third parties other than EGUs. Commenters said this alternative may avoid the legal issue associated with placing parti al or full responsibility on entities other than EGUs. Commenters stated a further variation is to p lace full responsibility on EGUs for meeting the state goals, but would allow the states to cred it EGUs with progress towards those goals for emissions reductions expected from renewable energy , demand side management or energy efficiency measures. Commenters stated of the two a lternatives, 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 responsibility would be clear at the outset, and EGUs would be mot ivated 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 emissions.

Response 3: EPA agrees that section 111(d) specifically require s a state to submit standards of performance. The final rule satisfies this requirem ent by making two types of state plans available: the emission standards type, which appli es 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 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 enforceabl e “backstop” that would be triggered if the state measures fail to achieve the required CO2 emi ssion 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 C FR § 60.5775.

To the extent the comments concern the proposed por tfolio approach, the comments are moot. As explained in sections V.B and VIII.C of the fina l rule preamble of the CPP, the EPA is not finalizing that proposed approach, and is instead f inalizing the option to submit the state measures plan type, including a requirement for a f ederally enforceable emission standards backstop. 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 performance by specifying the trigger mechanism and conditions under which the backstop emission standa rds apply 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 raisin g the legal issues that some commenters raised in connection with the portfolio approach.

Comment 4: State plans should not place the entire burden of compliance on EGUs.

Commenters stated that the entire burden of complia nce should not be placed on EGU’s.

Commenters stated that federal and state enforcemen t must take into account that other parties, such as renewable and energy efficiency providers, likely will have a role in meeting the emission reduction requirements through the approac h of the EPA Plan's building blocks; otherwise, the entire burden of compliance is place d inappropriately on the regulated EGUs that only have direct control over emissions from their affected units. Commenters added that state plans should be able to include measures and polici es (e.g., renewable portfolio standards) for which the state itself is responsible. Commenters s upported 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 affec ted EGUs to achieve the balance of that level. Commenters added that state plans should include me asures enforceable against other entities that support reduced generation by, and therefore c arbon emission reductions from, the affected

EGUs.

Commenters stated that plans with rate-based emissi on limits could incorporate enforceable renewable energy measures by adjusting an EGU's car bon emission rate when demonstrating compliance through either an administrative adjustm ent by the state or use of a tradable credit approach. Commenters emphasized states should be ab le 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. Commenters108

said the EGU emission limits would be federally enf orceable, but certain renewable energy measures could serve as complementary measures and would not be enforceable under federal law; instead, they would remain enforceable under s tate law. Commenters said this approach would work for certain types of state programs, suc h as RPSs, particularly because they are wellestablished and can be expected to achieve their in tended results. Commenters said the state plan would include an enforceable commitment (state comm itment approach) by the state itself to implement state-enforceable (but not federally enfo rceable) measures that would achieve a specified portion of the required emission performa nce level on behalf of the affected EGUs. Commenters added that a state plan that imposes a m ass limit on affected EGUs that is sufficiently stringent to achieve the emission perf ormance level should not need to include renewable energy measures as an enforceable compone nt of the plan to assure the achievement of that performance level. Commenters added that th e 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 lim it at lesser cost.

Commenters expressed concern that there are no curr ent mechanisms for imposing legal responsibility on the state for providing for the f unding and regulatory 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. Commenters added that RGGI is an existing source pe rformance 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 re newable generation development. Commenters continued that presuming the RGGI overall emission cap will decrease over time, it is absolutely essential that the State take responsibility for me eting its portion of the emission reduction paradigm. Commenters stated that even in situations where a utility or non-state entity implements energy efficiency or renewable energy de velopment programs, the state ultimately holds the obligation for authorizing funding and en abling regulation for these programs. Commenters rejected the concept that "... state pla ns must impose all of the legal responsibility for achieving the required emission performance lev el on the affected EGUs" and encourages the EPA to ensure that no RGGI-based state plan relianton outside-the-fence measures leaves the affected EGUs exposed as the only compliance entity . Commenters explained that this 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 wit h the EPA and the EPA should not approve that state plan unless the legislation requiring this in creased level of legal responsibility has been
enacted.

Response 4: Because section 111(d) specifically requires a stat e to submit standards of performance for existing sources, state plans must include federally enforceable standards applicable to EGUs. As noted above, however, the st ate measures plan type allows states to design plans that include state-enforceable measure s applicable to EGUs and to other entities as

well. These measures could include mechanisms advoc ated 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 en suring through the backstop mechanism that the requirements of section 111(d) are satisfied.109

Commenter 5: EGUs or group of EGUs cannot enforce RE and EE prog rams.

Commenters stated, there is sufficient evidence tha t these building blocks can be legally enforceable emissions performance standard at affec ted EGUs, no matter who the responsible party is. However, commenters said, an affected EGU or group of EGUs cannot enforce RE and EE programs, especially in non-vertically integrate d 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 enfor cing against multiple entities will be difficult and complicate enforcement.

Commenters stated the States and the EPA have limit ed resources to devote to enforcement. Commenters stated allowing plans that apply to mult iple entities will complicate enforcement. Commenters stated instead, requiring EGUs to meet t he emission limitations will simplify enforcement and ensure greater success toward meeti ng the carbon emission goals. Commenters said as stated in the Draft Rule, demonstrating com pliance would be achieved by quantifying reduced generation at the EGUs resulting from build ing Blocks 2, 3 and 4, rather than requiring costly compliance and enforcement strategies aimed at multiple entities.

Response 6: As discussed in section V of the final rule preamb le of the CPP explaining how EPA designed the BSER, the EPA designed the emissio ns reduction goals so that they should be readily achievable using proven methods for efficie nt and clean energy production. EPA is not finalizing the portfolio approach. It is therefore, the EPA’s expectation that state law will not have to be radically restructured. The guideline do es 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. 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.

Comment 7: States will need to take an active role in craftin g state plans that apportion emission

reductions across affected units.

Commenters stated that states will need to take an active role in crafting state plans that apportion emission reduction obligations across the ir 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 EGU s. Commenters said rate-based states will need to include a mechanism in their implementation plan s 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 p reamble of the CPP and the Legal Memorandum, a state may fulfill its requirements un der section 111(d) by adopting a state plan with the emission standards approach, and that impo ses rate-based emission standards at the level of the source subcategory-specific performanc e rates or that imposes the equivalent massbased emission standards. The affected EGUs would b e 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 sta te 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.

Comment 8: EGUs that are subject to System Support Resource A greements (SSRs) should not be assigned sole responsibility for compliance beca use they may be required to operate by FERC, and should be excluded from the rule

Commenters stated the EPA requested comment on whet her the responsibility to achieve the emission performance level should be assigned solel y to EGUs. Commenters said while this may be possible, it does lead to some questionable scen arios. Commenters indicated that one such scenario is when a regulated unit is subject to a S ystem Support Resource Agreement (SSR) that requires a unit to operate to maintain system reliability. Commenters 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 Escanaba Plant, and White Pine No. 1. Commenters questioned if a unit cannot run because of a CO2 limit, how this would i nteract with a SSR ordered by FERC.

Commenters stated power plants with System Support Resource agreements in place with an electric system operator that prohibit plants from retiring and require them to remain in service due to reliability issues should be excluded from t his rule since these plants will be retired once the system reliability issue is resolved. Commenter s listed the Presque Isle Power Plant in Michigan's Upper Peninsula as an example. Commenter s stated it appears reasonable to exclude these units since, once the system reliability issu es are resolved, these units will not be a source

of future GHG emissions. Commenters said the need f or this type of flexibility could be demonstrated by unit SSR status, or through some ot her similar type of electric system operator procedure. Commenters stated alternatively, a mecha nism is needed to provide state flexibility for treatment of units that are designated for reti rement 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 exc lude 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 is sues in developing this final rule. Specifically, we note that affected EGUs that are required to run for reliability reasons have means to do so,111

including trading for ERCs or allowances. For a mor e comprehensive discussion of reliability issues and final rule, please see preamble section VIII.G.2.

Comment 9: EPA should clarify the legal obligations placed on EGUs subject to section 111(d) plans.

Commenters requested clarification on appropriate e nforcement mechanisms for affected EGUs not regulated by the state public utility commissio n, especially merchant power plants

. Commenters stated, the final emission guidelines sh ould offer greater clarity regarding how obligations placed on EGU owners, electric utilitie s and others contained in state plans will be
enforced.

Response 9: All affected EGUs that are subject to an emission s tandards state plan will be subject to standards of performance, as described i n section VIII.C of the final rule preamble of the CPP, that will be enforceable by their terms.

Comment 10: Commenters stated if this format for state goals is adopted in the Final Rule, the EPA should provide additional clarity that state go als 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 assure that the state’s standards of performance on its sources result in an emission performance level from those sources that is equiva lent to the source subcategory-specific emission performance rates.

Comment 11: Commenters supported the option of enforcing emis sions 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 v erified.

Commenters stated as for states that already have a spects of Building Blocks 2,3 and 4 in place

and are under the control of the state or other ent ities, those states be allowed to include these projects and the reductions they will achieve in 20 20-2029 in their plans so long as an enforceable mechanism exists to maintain the progra ms. Commenters 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 verified in the state plans. Commenters 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 ap proach is designed to achieve the policy objectives that the commenters s upport.

Comment 12: Some commenters disagreed with both approaches argu ing that placing the entire responsibility of compliance on EGUs would be arbit rary and capricious and that EPA does not have authority to enforce regulations for other non -EGU entities.

Commenters stated the EPA's proposed BSER presents challenges with the enforcement of the standards. Commenters said under the Act, the EPA i s 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 implementatio n plan. Commenters said the EPA proposes two different options to address the federal enforc ement statute, both of which are unlawful. Commenters stated the first option would be arbitra ry and capricious, as it places the entire responsibility of achieving a state's emissions per formance level fully and solely on the affected EGUs. Commenters said the 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. Commenters said the EPA is with out 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 sect ion 111 sources that Congress did not intend to be regulated.

Response 12 : EPA disagrees that a rule that allows a state to place the responsibility for compliance on EGUs is either arbitrary or capriciou s, because as explained above Section 111(d) specifically requires a state to submit standards o f performance for existing sources. The final rule satisfies this requirement while adding flexib ility 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 a nd that are not included in the federally enforceable 111(d) state plan. To ensure that the s tate 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 f ederally 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 mu st 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 portfoli o approach, the comments are moot. As explained in section V.B and VIII.C of the final ru le preamble of the CPP, the EPA is not finalizing that proposed approach.)

In response to this comment’s concerns regarding en forcement, the final rule gives considerable discretion to the states in setting emission standa rds and related plan requirements for affected EGUs. Under the final rule, the states may choose w hether to rely on emissions limits placed entirely on the EGUs that are affected sources unde r 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 ad dress the 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. St ates need not face the issue of making entities “outside the fence” subject to direct fede ral enforcement.

Comment 13: EGUs should not be subject to enforcement if they are complying with any unitspecific emission limits; EGUs should not be subjec t to enforcement if the state fails to demonstrate emission reductions are occurring consi stent with the trajectory or that the state fails to procure sufficient RE and EE.

Commenters stated, the failure of a state to meet i ts projected emission rate may occur for many reasons that are beyond the control or responsibili ty of individual EGUs and utilities. Commenters said the approach to enforcement under s ection 111(d) plans should follow two principles: first, that affected EGUs will not be s ubject 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 demonstrate 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.

Commenters stated that an affected EGU should have no enforcement exposure so long as it is complying with its obligations written into an EPA- approved state plan. Commenters said EPA should make clear that the legal obligation on indi vidual EGU owners, utilities, or other affected entities is to comply with the applicable requireme nts contained in the relevant state plan where that entity is located. Commenters 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 allowances in a cap-and-trade program, submit RECs under an RES, or invest a set amount of funds in energy efficiency programs---that entity w ill be considered in compliance and so cannot be subject to any enforcement actions by EPA or und er the Clean Air Act citizen suit provisions.

See CAA section 304. Commenters stated EPA should m ake 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 sub mission or, after 2030, from its goal. Commenters said, the fact that the state is off of its complia nce pathway may be a basis for triggering corrective measures or otherwise modifying a state plan, but it is not a basis for pursuing enforcement action against an individual entity in an attempt to achieve additional emission reductions or other actions beyond those required b y the EPA-approved state compliance plan.

Commenters in cases where states place obligation o n 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. Commenters stated that if a state may require affected EGUs (or a group of EGUs, such as all EGUs operated by an in tegrated utility) to meet emission standards114

less stringent than the state goal, an affected EGU or utility that complies with the state-set

emission standard should be considered to have fulf illed 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, the state's overall emission rate performance was not consistent with the level required by trajectory established in the approved compliance plan. Commenters stated, altern atively, if a state makes a commitment to administratively adjust the EGU or utility's emissi on rate, EPA should make clear that the failure to procure sufficient alternative generation or ene rgy savings should not expose the EGU or utility to enforcement action.

Commenters stated there are circumstances where an affected entity's obligations under the state plan will change from those originally set out by t he state plan submitted and approved by EPA. Commenters said, for example, if a state plan resul ts 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 measure s. Commenters added that if a state's corrective measures are still not enough for the st ate'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. Commenters said, in such cases, principles of fairness and due process require that no new enforceable obligations for EGUs or utilities be cr eated under the modified state plan without procedural protections including notice, and the op portunity to provide public comment on those
modifications.

Commenters stated the appropriate remedy for a stat e whose plan is not resulting in expected emission rate reductions notwithstanding faithful e xecution is modification of the state plan, not an enforcement action against regulated entities. C ommenters said, under such circumstances, neither EPA nor private litigants may bring an enfo rcement action against EGUs or utilities for underperformance of the state plan. Commenters adde d 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. Commenters said that t here are significant concerns that EPA or private parties may attempt enforcement actions eve n if an EGU or utility is fully implementing the required measures included in a state plan, mer ely because RE, EE or other state or thirdparty actions do not result in the emission reducti ons built into the state's plan projections or because of unexpected circumstances such as increas ed electricity demand due to economic recovery. Commenters said that EPA should more clea rly establish that an EGU or utility that is complying with its obligations under an EPA-approve d state compliance plan is legally meeting all federally enforceable obligations and therefore cannot be subject to an EPA enforcement

action or citizen suit.

Response 13: 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 pla ns the federally enforceable backstop would be triggered, as described in section VIII.C.3 of t he 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 pl an requirements for its affected EGUs. And, consistent with longstanding practice under the Cle an 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 affecte d EGUs should have clear compliance obligations under their control and a chance to com ment on the structure of a state plan. The guideline as finalized meets both those goals. As a matter of direct federal enforcement, a state plan will include emission standards on affected EG Us. 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 bala nce. 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 comme nt on how those limits are structured, and, if a state uses a state measures plan design with backst op EGU emission standards, the EGUs can

comment on the conditions under which those backsto p standards become effective.

Comment 14: EPA is not permitted to enforce a state plan if a state fails to meet its state goals.

Commenters stated that a state's failure to meet it s state goal does not permit EPA to enforce the state's plan. Commenters said EPA can take over adm inistration of a state plan when "violations of an applicable implementation plan or an approved permit 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 effec tively." 41 U.S.C. section 7413(a)(2). Commenters said if a state has implemented the meas ures in its state plan then there would be no widespread violations meriting EPA enforcement. Com menters said if EPA cannot enforce against a state for failing to meet a state goal, t hen EPA must explain whether and how it will

address a state that is not on track to meet its in terim state goal (per the progress checks every two years). Commenters said EPA needs to clarify wh ether the Agency would issue a federal plan or whether it would require the state to amend its plan. Commenters 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 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 pla ns the federally enforceable backstop would be triggered, as described in section VIII.C.3 of t he 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 pl an requirements for its affected EGUs. And, consistent with longstanding practice under the Cle an 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 affected unit or program fails to meet expe ctations, 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.

Commenters stated as states develop their complianc e strategy 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.) I nstalled capacity and generation from in-state qualified renewable resources; (iv.) Renewable ener gy credits transferred into or out of state; (v.) Existing and incremental capacity and generation fr om in-state nuclear resources; (vi.) Incremental capacity and generation from hydroelect ric resources; and (vii.) Energy efficiency and demand-side management energy savings. Commente rs said most vertically integrated

utilities will be able to draw on some or all of th e aforementioned resources in states in which they operate, and as such, it will be most efficien t if the compliance requirement for such utility was placed upon the company as a whole and not on t he individual resources and programs which it controls. Commenters said this is importan t to avoid a potential unintended consequence where the utility is in compliance overall, but cer tain individual components may have not met the original expectations and as such could receive a Notice of Violation for being out of compliance with the state expectation for such unit . Commenters gave as an example, in a hotterthan-normal year, a certain state may lean more hea vily on its fossil-fueled 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. Commenters said if an affected unit or program has a specific requirement as part of a state plan, that unit or program should not be deemed to be out of complianc e if the utility as a whole is meeting the requirement imposed upon it by the state for a give n year.

Response 15: The final rule provides considerable discretion to the states in setting emission standards and related plan requirements for its aff ected EGUs. Consistent with longstanding practice under the Clean Air Act, if a regulated en tity does not meet a requirement, the EPA will address the matter on a case-by-case basis, to dete rmine the appropriate response and resolution.

Comment 16: States should have the ability to enforce state pl ans.

Commenters urged EPA to ensure that affected EGUs are not necessarily the only entities responsible for achieving the final emission perfor mance levels. Commenters said it is important for EPA to urge states to consider which entities w ould be responsible for the measures states include in compliance plans as some entities may be responsible for implementing energy efficiency measures but also dependent on decisions beyond their control to achieve the projected reductions. Commenters provided examples in their comment.

Commenters recommended that the requirements to mee t renewable or energy efficiency obligations should be enforced consistent with curr ent practice. Commenters said states should have the authority to determine whether they want t o design a plan consistent with EPA'sdescribed "portfolio approach" or the "state commit ment approach". Commenters said provided117

states are ensuring implementation and enforcement of the appropriate emission reductions, state plans can be designed consistent with the requireme nts of 111(d). Commenters said the choice of the federally enforceable entity should be a state' s decision. Commenters 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; however, as an altern ative, a state can commit to achieve a portion of the required emission performance level on behal f of affected EGU, and the state can be responsible for demonstrating those reductions with out the associated state programs becoming federally enforceable. Commenters said this alterna tive is consistent with the procedures under
section 110 to which section 111 references.

Response 16: We appreciate these comments. The final rule requir es that states adopt either an emissions standards approach or a state measures ap proach 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 sig nificant uncertainties that greatly diminish the potential for states to translate those assumpt ions into feasible requirements that can be implemented and enforced. Commenters also summarize d 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. Acco rdingly, states must either (i) submit state plans that adopt the emission standard s approach and that therefore include standards of performance for the affected EGUs, butthat do not impose requirements on nonaffected EGUs, which standards of performance are f ederally enforceable; or (ii) adopt the state measures approach that may include some or no feder ally enforceable emission standards for affected EGUS and state-law requirements on non-aff ected EGUs and other non-EGU entities, which are not federally enforceable.

1.11.6 Parties regulated by the state other than af fected EGUs

Comment 1: Concern regarding the liability of the power secto r if Building Block 4 reductions

are not met.

Commenters indicated that problems with Block 4 inc luding the lack of uniform technical standards for measuring EE gains may result in an u nfair shift of liability to EGU owners in states that rely upon significant EE achievements i f EE components are unmet. 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. Commen ters suggested a clear chain of liability in the event that any entity or single EGU misses goals. C ommenters 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 discus sed in section V.B. of the final rule preamble of the CPP, we are not including buil ding 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 that apply to entities beyond the affected EGUs must make those requirements federally enforce able by both EPA and citizens, and incorporate a backstop mechanism that will ensure t hat any shortfall is remedied. Commenters 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 rest s with the regulated EGUs. Commenters said that the state plans must clearly present how liabi lity and enforcement would work when entities other than power plants have responsibility for emi ssion reduction measures as part of a state's implementation plan. Commenters stated that the rul e should be enforceable only against

affected EGUs and no other entities. Commenters fro m electric utilities stated that they should

not be held accountable for measures that are not u nder their direct control.

Response 2: The preamble addresses these concerns by explainin g that 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 f rom affected EGUs in the form of a federally enforceable “backstop” that would be trig gered if the state measures fail to achieve the required CO2 emission performance level. See sectio n VIII of the final rule preamble of the

CPP. T he final rule does not authorize the portfolio appr oach, a s explained in section VIII.C of the final rule preamble, and affected EGUs are able themselves to take acti ons that implement the building blocks and achieve their emission stan dards at the levels of the source subcategory specific emission performance rates. The federal enforceability considerations raised in the comment arose primarily under the proposed portfoli o 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 entiti es that are not affected EGUs. However, as further explained in section VIII.D of the final ru le preamble, if the state is adopting the state measures type plan, the state plan submittal will n eed to specify, in the supporting materials, the state enforceable measures that the state is relyin g 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 wit h longstanding practice under the Clean Air Act, if a regulated entity does not meet a requirem ent, the EPA will address the matter on a caseby-case basis, to determine the appropriate respons e and resolution.119

Comment 3: Comments that section 111(d) does not authorize E PA to make the control measures in building blocks 2-4 federally enforceab le against any entities other than the EGUs that are “designated facilities.”

Commenters said, CAA section 111(d) does not provid e EPA the authority to create federally enforceable obligations on entities that are not wi thin the regulated source category. Commenters said first, the entity must be a "statio nary source," meaning a "building, structure, facility, or installation which emits, or may emit any air pollutant.' Section 111(a)(3). Second, commenters said that stationary source must be an e xisting source that falls within the "category of sources" that EPA has listed as eligible for reg ulation because that category "causes, or contributes significantly to, air pollution which m ay reasonably be anticipated to endanger public health or welfare." Section 111(b)(1)(A). Third, co mmenters said that EPA must have promulgated a standard of performance for new sourc es in the source category. Commenters said finally that EPA's regulations define "designated f acility" as "any existing facility that emits a designated pollutant and that would be subject to a standard of performance for that facility if the existing facility were an affected facility." Comme nters stated, thus, a "designated facility" for which state plans must establish existing-source pe rformance standards is the same as an "affected facility" for which EPA establishes new s ource performance standards, except that a "designated facility" is an existing facility. Comm enters 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 “designated facility.” Comme nters said that if an entity is not a stationary source of pollutants in a category for which the Ag ency has promulgated an endangerment finding and an applicable NSPS, then neither EPA no r the states have authority to impose any obligation on that entity under section 111(d). But instead, commenters said that the Agency proposed to take another wrong turn away from the r egulatory program established in section 111 and to direct states to impose legal obligation s on "affected entities" other than EGUs to obtain the aggregate emission reductions that canno t be achieved by adopting proper standards of performance for existing EGUs. 79 Fed. Reg. at 34,9 01-03. Commenters also pointed out that "affected entity" is not a term that EPA has previo usly used in its Section 111(d) regulations to define the regulated sources and is not defined in the Agency's section 111(d) implementing regulation 40 CFR 60, subpart B.

Response 3: The EPA is not adopting the portfolio approach in t he final rule; accordingly, any requirements that the state adopts for entities oth er than affected EGUs must be limited to the state measures approach and those measures that app ly to entities other than affected EGUs will not be federally enforceable.

Comment 4: Comments 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 co mmissions are the only entities with authority to effectively implement the re-dispatch of generat ion from existing coal-fired units to NGCC units, or to coordinate investments in renewable en ergy 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 the refore, 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 not be approvable unless the state adopts legislation expressly openi ng its agencies to citizen suits seeking to enforce these obligations, which would plainly exce ed the scope of measures the EPA may require in a state plan. Commenters concluded accor dingly, it may well prove impossible for states to submit plans that are "approvable" under the EPA's criteria.

Commenters stated, EPA acknowledges that placing en forceable goals on non-EGUs (i.e., the portfolio approach) may be "challenging" and tasks states with working out these problems. 79 Fed. Reg. at 34,915. Commenters said, EPA cannot im pose 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; acc ordingly, any requirements that the state adopts for entities other than affected E GUs 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 5: Comments suggesting that EPA should define enforce ment and compliance measures for the rule and clarify utilities respons ibilities.

Response 5: The final rule provides considerable discretion to the states in setting emission standards and related plan requirements for its aff ected EGUs. Consistent with longstanding practice under the Clean Air Act, if an affected EG U 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, t o determine the appropriate response and resolution. Third parties have authority under sec tion 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 emi ssion standards plan type or a state measures plan type. If a state fails to achieve the require d 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 EGUs a nd that are not included in the federally enforceable 111(d) state plan. See section VIII of the final rule preamble of the CPP.

As proposed, we are requiring that state plans incl ude a demonstration that plan measures are enforceable, which for state measures plans is prov ided for in § 60.5780 and discussed in section VIII.D.2.c.6 of the final rule preamble. The exist ing guidance documents pertaining to enforceability include: (1) September 23, 1987 memo randum and accompanying implementing guidance, “Review of State Implementation Plans and Revisions for Enforceability and Legal Sufficiency;” (2) August 5, 2004 “Guidance on SIP C redits for Emission Reductions from121

Electric-Sector Energy Efficiency and Renewable Ene rgy Measures;” and (3) July 2012 “Roadmap for Incorporating Energy Efficiency/Renewable Energy Policies and Programs into State and Tribal Implementation Plans, Appendix F.”

Commenters requested that EPA define enforcement an d compliance measures in the rule for EE projects undertaken to help reach the CPP's goals. The commenters argued that the proposed language is ambiguous and compliance and enforcemen t measures should be on the state or entity managing the overall EE program and not the individual sites implementing EE/RE. The commenters wanted EPA to clarify that water and was tewater utilities are only responsible for submitting proper monitoring and verification mater ials to the sponsoring state or electric utility and are not considered regulated entities in this r ule or subject to CAA enforcement under this
rule.

Comment 6: Commenters stated that holding affected EGUs legal ly responsible for obtaining all of the emission reductions required by the state go als would be unreasonable and illegal as proposed. EPA would need to revise its BSER analysi s to consider only the costs and other factors involved in applying the emission rate goal s solely to affected EGUs. Commenters stated EPA cannot develop and analyze a BSER that relies o n reductions throughout the electric sector and then require affected EGUs to be wholly respons ible for meeting the emissions reductions required by such an expansive BSER determination; s uch 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 rulemak ing. Commenters continued, stating that EPA recognizes that state goals cannot be met solely th rough emission-reducing measures that may be undertaken by affected EGUs. See 79 Fed. Reg. at 34 ,838. According to EPA, affected coal-fired EGUs could reduce their emissions by only six perce nt 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 g eneration will retire as a result of the Proposal.(77 See American Legislative Exchange, Cle an Power Plan Fact -- Expected Plant Retirements, at http://www.alec.org/cpp-facts/expec ted-plant-retirements.) Additionally, Commenters remarked, affected EGUs have no authorit y to ensure that other affected entities attain the projected emissions reductions required for the state to achieve its goal. For example, an affected EGU cannot mandate re-dispatch or force consumers to participate in EE programs. Commenters concluded, stating that enforcement agai nst 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.

Response 6: As we explain in sections V.A. and V.B. of the pre amble, our emission guidelines simply reflect an achievable emissions limit throug h the application of the BSER and do not in themselves require states or sources to implement t he BSER. That is, EPA is responsible for determining the level of emission limitation from t he source category, while states have the responsibility of assigning emission requirements t o their sources that will ensure their

achievement of that level of emission limitation. S tates may fulfil their responsibility by establishing emission standards or creating plans c onsistent 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 pro vides a path for a state to achieve the emission performance level as expressed as a state goal in a way that avoids placing enforceable emission standards on affected EGUs (unless and unt il 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 obligati ons to meet an EERS or RPS pursuant to state regulations

Comment 1: Commenters disagreed that distribution utilities s hould have enforceable requirements for EE and RE measures. Commenters sa id if the state plans provide that an electric distribution utility will be fined if it t ransmits electricity that does not satisfy proclaim ed EERS or RPS, then it is difficult to see how this c omports with due process; or if EPA is suggesting that a distribution utility not transmitelectricity from sources not in compliance, then the rule will have electricity reliability impacts. Commenters said that if alternative compliance payment (ACP) provisions are not be permitted for a n RPS, or not fully permitted, then EPA's

determination of demonstrated BSER for RE is not va lid because current state plans allow ACPs.

Response 1: The final rule provides considerable discretion to the states in setting emission standards and related plan requirements for its aff ected EGUs. 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 impos e requirements on entities other than affected EGUs and that are not included in the federally enf orceable 111(d) state plan. See section VIII.

As proposed, we are requiring that state plans incl ude a demonstration that plan measures are enforceable, which for state measures plans is prov ided for in § 60.5780 and discussed in section VIII.D.2.c.6 of the preamble. The existing guidanc e documents pertaining to enforceability include: (1) September 23, 1987 memorandum and acco mpanying implementing guidance, “Review of State Implementation Plans and Revisions for Enforceability and Legal Sufficiency;” (2) August 5, 2004 “Guidance on SIP Credits for Emi ssion Reductions from Electric-Sector Energy Efficiency and Renewable Energy Measures;” a nd (3) July 2012 “Roadmap for Incorporating Energy Efficiency/Renewable Energy Po licies and Programs into State and Tribal Implementation Plans, Appendix F.”

1.11.6b Vertically integrated electric utility with obligations under a state-approved integrated resource plan

Comment 1: The proposed rule is unenforceable against traditi onal utilities, perhaps even more so against Cooperatives and other Public Power Syst ems. Commenters stated that the states have123

jurisdiction over electric utility planning for tra ditional utilities and EPA has no authority to intervene. Municipal utilities and co-operatives ar e not subject to the jurisdiction of the state and therefore the state has even less authority to mand ate action by these utilities.

Response 1: The final rule does not adopt the portfolio approa ch ; accordingly, any requirements that the state adopts on entities other than affect ed EGUs must be limited to the state measures approach and requirements that apply to entities ot her than affected EGUs will not be federally

enforceable.

Comment 2: Commenters disagreed that states could reduce or d eny rate recovery to vertically integrated, state-regulated utilities for failure t o meet emissions obligations or to empower agencies to issue direct compliance orders. Comment ers 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 influence CO2 emissions , particularly for building blocks, such as energy efficiency, over which the utility lacks dir ect control.

Response 2: As we explain in the section VIII.D of the final ru le preamble of the CPP and the Legal Memorandum, a state may fulfill its requireme nts under section 111(d) by adopting a state plan with the emission standards approach, and thatimposes rate-based emission standards at the level of the source subcategory-specific performanc e rates or that imposes the equivalent massbased emission standards. The affected EGUs would b e able to take actions to implement the building blocks or other emission reduction methods , and thereby achieve their emission standards. In regulated states, we note that a vert ically integrated utility operating under cost-ofservice would obtain cost recovery through state Pu blic Utility Commissions (PUCs) or other authorities with jurisdiction over their rates. We note that “In states where electric utilities own affected power plants, such costs will tend to be p assed along to those utility’s consumers through regulated rates as a pass-through of a vari able expense, or as recovery of and a return on compliance capital investments.” 3 “Typically, state regulators in states that own po wer plants determine whether large capital investments at thos e 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 expendit ures 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 em ission allowances; and the cost of federally mandated carbon 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 Im pacts , at 11 (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 block 4 as a component of BSER in the final rule.

1.11.7 Private or public third-party entity not reg ulated by the state

Comment 1: Commenters said that, making State 111(d) Plans "e nforceable" could require major changes in Indiana law, given Building Blocks 2, 3, and 4, because Indiana has not authorized the Indiana Utility Regulatory Commissio n (IURC) to mandate specific dispatch decisions, implement renewable portfolio standards, or require end-use energy efficiency measures and lacks the authority to directly regula te some electricity markets in Indiana. Commenters 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.

Commenters said that, Local Boards of Trustees and City Councils are educated in the operation of their respective municipal electric utilities an d are in the best position to make decisions regarding municipal utilities generating resources, and they are in the best position to understand the impact those decisions will have on the ratepay er-citizens in the communities in which they

serve.

Commenters said that, EPA suggests that States migh t use public funds to induce voluntary submission to state control for private or public t hird-party entities not now regulated by a State. Commenters said that "Alternatively, a municipal ut ility or utility cooperative might voluntarily submit to state authority as a condition of the sta te agreeing to let the entity implement a portfolio approach, in lieu of the application of c ertain direct CO2 emission limits for affected EGUs owned and operated by such entities through a state regulation." Commenters said that, it is not clear that these tactics could be employed e verywhere because in some States such locally controlled entities enjoy constitutional protection . Commenters said that it is not clear that the funding could be secured much less dedicated fundin g or that conditioning environmental concessions on surrender of control of the governan ce of an entity is lawful regulation.

Response 1: As explained in the section V.B and VIII.C of the p reamble of the CPP, the final rule does not adopt the portfolio approach; accordi ngly, any requirements that the state adopts on

non-affected EGUs must be limited to the state meas ures 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 requirem ents are limited to the affected EGUs and, as described in the preamble, those entities are ab le to take actions, including implementing the

5 Regulatory Assistance Project, Incorporating Environmental 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.org.125

building blocks, that will allow them to achieve em ission standards at the level of the source subcategory-specific emission performance rates. Th e state may also adopt the state measures approach although, of course, if that approach prov es challenging in a particular state for any reason, the state may use the emission standards ap proach.

Comment 2: Comments that proposed rule is unenforceable again st traditional utilities (larger, vertically integrated) and perhaps even more so aga inst cooperatives and other public power systems, and that local boards and City Councils ar e in a better position to make resource decisions related to their respective municipal uti lities.

Commenters said that, the Proposed Rule is unenforc eable against traditional utilities, perhaps even more so against cooperatives and other public power systems.

Commenters said that, the differences between small er, public utilities (like cooperatives and municipals) and larger, more traditional and vertic ally integrated utilities are even more pronounced in the laws of some states, which tend t o exert greater control over traditional investor-owned utilities. Commenters said, states p ossess exclusive authority over investorowned utilities (IOUs), including decisions regardi ng the need for additional generating capacity; the type, location, and construction of generating facilities to be licensed; and the retirement of existing generators. Commenters said, for such syst ems, states maintain jurisdiction over the integrated resource plan (IRP), which represents th e utility's plan for meeting its anticipated energy demand through a combination of supply and d emand-side resources. Commenters said, most states, including Georgia, require such utilit ies to file their IRP with the public utility commission. Commenters said, some states may use th e information in IRPs to develop renewable portfolio standards (RPS) that require th e affected utilities to serve retail load with certain levels of renewable generation.

Commenters said that , some state laws may treat smaller systems, like ele ctric cooperatives or municipals differently from traditional utilities. Commenters said, this is the case in Georgia. Under Georgia law, an electric membership corporati on (EMC) is not subject to the jurisdiction of the Georgia PSC:

Except as otherwise provided in Part 1 of Article I of this chapter, the "Georgia Territorial Electric Service Act," electric members hip corporations shall not be subject to the jurisdiction of the commission.

O.C.G.A. section 46-3-177 (2004 & 2014 Supp.). Comm enters stated consequently, unlike traditional IOUs, a wholesale service EMC like Ogle thorpe Power is not subject to regulation by the Georgia Public Service Commission (PSC). Commen ters 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 Environment al Protection Division (EPD), the PSC or any other Georgia regulatory agency - cannot impose ren ewable energy production or demand-side management requirements on Georgia EMCs, including Oglethorpe Power. Commenters stated126

instead, Georgia law grants its EMCs the power to g enerate, manufacture, purchase, acquire, and accumulate electricity, and to transmit, distribute , sell, furnish and dispose of such electricity.

Commenters said that, based on the way Georgia regu lates traditional utilities and cooperatives, EPA's proposed rule is unenforceable against both t ypes of entities. Commenters 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. Commenters said, this structure has been upheld through federal law and j udicial precedent. Commenters said not only does the Federal Power Act (FPA) prohibit Federal E nergy Regulatory Commission (FERC) from regulating generation either directly or indir ectly, but also a recent D.C. Circuit decision rejected FERC's attempt to intrude on state authori ty to regulate its own retail electricity market. Commenters said, if FERC lacks such authority, comm on sense dictates that EPA would not possess it either. Commenters said EPA cannot pointto any statute enacted by Congress that would extend it such authority. Commenters said, EP A's proposed rule is invalid to the extent that it infringes on a state's traditional rights t o regulate those portions of its electric market addressed by the Proposed Rule.

Commenters stated that furthermore, given that the EPA cannot, through its proposed rule, require Georgia to implement certain steps in regar d to traditional utilities, then it similarly cannot require Georgia to implement measures in reg ard to cooperatives. Commenters said as discussed above, subject to a limited exception for retail EMCs (Oglethorpe Power is not a retail EMC and thus is not subject to that limited excepti on), Georgia cooperatives are not subject to the jurisdiction of the PSC like IOUs, lessening th e State's ability to exert control over them, especially in the areas contemplated by the Proposa l. Commenters 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 t he necessary jurisdiction to implement the Proposal in regard to Georgia EMCs - especially one s 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 st ate plans regulating “any existing source” of certain pollutants “to which a standard of performa nce 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 municipaliti es and electric cooperatives, are subject to air quality requirements, including meeting such st andards of performance that a state may establish to meet emissions performance levels thatthe EPA determines are achievable under CAA 111(d). We give states and affected EGUs flexib ility determining how they meet these requirements. No state or affected EGU must impleme nt the precise measures included in the building blocks in order to do so. The agency recog nizes that states must have legal authority to implement approvable state plans. In the event thatstates lack the necessary state-law authority to implement a plan, the EPA will implement a feder al plan for that state under section 111(d)(2). Additionally, we are not requiring any s tate or affected EGU to construct electric generation. Further, we note that we are not includ ing 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 standard s of performance.

Comment 3: Commenters said that, electric cooperatives face a n entirely different and unique regulatory framework from investor-owned utilities and municipal utilities operating in the state, as well as from generation and transmission coopera tives. Commenters said, Texas legislatures have largely chosen to leave it up to the electric cooperatives' members (through voting for their boards of directors) to regulate themselves. Commen ters 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 n ew law regulating Texas electric cooperatives. Commenters questioned whether the fed eral government can legally dictate a change in state policy and mandate that Texas regul ate electric cooperatives. Commenters said that the EPA's attempt to coerce the state legislat ure to change the way it regulates electric cooperatives who do business entirely in the State of Texas is highly questionable from a legal perspective.

Commenters said that, from state's rights perspecti ve, 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'' relationshi p with EPA, as to how a state may regulate how it generates, transmits and consumes energy. Co mmenters said that the Proposed Rule will comprehensively reorder, perhaps forever, the way t hat states interact with the Federal government in regard to electric energy. Commenters said that federalism and state-sovereignty issues are not being adequately considered by EPA i n this rulemaking.

Response 3: We disagree with commenters. CAA section 111(d)(1) requires the EPA to promulgate regulations under which states submit st ate plans regulating “any existing source” of certain pollutants “to which a standard of performa nce 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 municipaliti es and electric cooperatives, are subject to air quality requirements, including meeting such st andards of performance that a state may establish to meet emissions performance levels thatthe EPA determines are achievable under CAA 111(d). We give states and affected EGUs flexib ility determining how they meet these requirements. No state or affected EGU must impleme nt the precise measures included in the building blocks in order to do so. We recognize tha t states must have legal authority to implement approvable state plans. In the event thatstates lack the necessary state-law authority to implement a plan, the EPA will implement a feder al plan for that state under section 111(d)(2). Finally, for reasons that we fully expla in in preamble section V.B. and the legal memo, we are within our legal authority and the fin al rule is consistent with past EPA practice and interpretation in setting standards of performa nce.128

Comment 4: Commenters said that, Rural Cooperatives and Munic ipal facilities should be subject to the same requirements as electric genera ting units under this rule, especially in deregulated markets where they would operate at a c ompetitive advantage, as compared to units subject to the proposed rule. Commenters said, any longer-term capacity planning strategies advantage could be misconstrued as market distortio n.

Response 4: We appreciate this comment and note that to the ex tent that electric cooperatives and municipalities own affected EGUs as defined in the final rule, they will be subject to the final rule requirements. Please see 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 ins ight into which body should take the lead, Colorado Department of Public Health and Environment or Public Utilities Commission, and that the legislature would have to decide by passing an enabling statute.

Commenters said that, historically, the Colorado De partment of Public Health and Environment (CDPHE) has administered the federal Clean Air Act in Colorado. Commenters said, however, currently, environmental regulators at the CDPHE an d the Air Quality Control Commission (AQCC) are not authorized to regulate "beyond the f ence" of an individual pollution source, so they would not possess the authority to implement m uch of the Clean Power Plan. Commenters said that if the legislature were to grant this aut hority to environmental regulators, such a delegation no doubt would conflict with the Public Utilities Commission's (PUC's) century-old jurisdiction over the electric industry.

Commenters 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 approximately 24 percent and 17 percent respectivel y of Colorado's power. Commenters 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 regulatio n by the State, and are otherwise subject to far less onerous oversight from the Public Utilitie s Commission (PUC).

Commenters said that, the lack of PUC resource plan ning over coops and munis is particularly problematic in the context of the CPP. Commenters s aid, unlike investor-owned utilities, generation and transmission providers are only requ ired to file its resource plan with the PUC as a report rather than filing it for approval through a litigated proceeding. Commenters said that member-systems and the other coops in the state hav e voted to exempt themselves from PUC regulation as allowed for under state law. Commente rs said that these coops are therefore not subject to the resource planning jurisdiction of th e PUC and do not need to file resource plans for approval. Commenters said, the PUC does not have re source planning or any other regulatory authority over munis. Commenters said, the PUC lack s approval authority over the resource planning activities of all utilities except the two investor-owned utilities in Colorado. Commenters said that the resource planning is the o nly regulatory process where all "building blocks," as a general matter, are holistically eval uated and considered in conjunction with each129

other. Commenters said the proposed CPP does not in clude how Colorado should incorporate its "coops" and "munis" into a compliance plan. Comment ers said that, any attempt to further regulate these entities will result in political an d legal battles.

Response 5: We disagree with commenters. CAA section 111(d)(1) requires the EPA to promulgate regulations under which states submit st ate plans regulating “any existing source” of certain pollutants “to which a standard of performa nce 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 municipaliti es and electric cooperatives, are subject to air quality requirements, including meeting such st andards of performance that a state may establish to meet emissions performance levels thatthe EPA determines are achievable under CAA 111(d). We give states and affected EGUs flexib ility determining how they meet these requirements. No state or affected EGU must impleme nt the precise measures included in the building blocks in order to do so. The agency recog nizes that states must have legal authority to implement approvable state plans. In the event thatstates lack the necessary state-law authority to implement a plan, the EPA will implement a feder al plan for that state under section 111(d)(2). Further, we note that we are not includi ng 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 authori ty and the final rule is consistent with past EPA practice and interpretation in setting standard s of performance.

Comment 6: Broad definition of system raises enforcement and Home Rule issues for municipal electric systems.

Commenters noted that the concept of an "outside- t he-fence" regulatory approach would hold individual generating units accountable for the act ions and inactions of third parties outside their control. Commenters questioned how states might inc orporate outside-the-fence strategies into a section 111(d) plan, including whether such measure s are legally permissible/defensible, and whether they are necessarily central to a complianc e strategy. Commenters argued that past CAA actions impacting EGUs -- as with other NSPS regula ted industries -- have been imposed "inside the fence line" at the affected unit and these comp liance strategies and tools are familiar to states and regulated entities. Commenters said once the 11 1(d) plans step outside that fence line, the regulatory landscape becomes more difficult, partic ularly when moving beyond state air or utility agency traditional authorities. Commenters argued t hat the proposal would require a reworking

of state enforcement authorities to account for mun icipal electric systems and rural electric cooperatives that in most states do not fall under state renewable and energy efficiency standards because of local governance. Commenters argued thatHome Rule authorities are extremely important to municipal electric systems and must be maintained. Commenters argued that EPA's proposed rule should not be used to impose state ut ility commission oversight of public power utilities for purposes of compliance in contraventi on of longstanding state laws and policies.

Response 6: We disagree with commenters. CAA section 111(d)(1 ) requires the EPA to promulgate regulations under which states submit st ate plans regulating “any existing source” of certain pollutants “to which a standard of performa nce 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 municipaliti es and electric cooperatives, are subject to air quality requirements, including meeting such st andards of performance that a state may establish to meet emissions performance levels thatthe EPA determines are achievable under CAA 111(d). We give states and affected EGUs flexib ility determining how they meet these requirements. No state or affected EGU must impleme nt the precise measures included in the building blocks in order to do so. The agency recog nizes that states must have legal authority to implement approvable state plans. In the event thatstates lack the necessary state-law authority to implement a plan, the EPA will implement a feder al plan for that state under section 111(d)(2). Further, we note that we are not includi ng 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 authori ty and the final rule is consistent with past EPA practice and interpretation in setting standard s 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.

Commenters said that, the state environmental agenc ies lack the authority to require individual companies to invest in natural gas generating asset s or infrastructure to comply with a rule setting the BSER using parameters outside the exist ing units.

Response 7: We disagree with commenters that the final rule r equires state environmental agencies to require private companies to invest in new infrastructure. There are many ways in which affected EGUs can comply with the final rule. CAA section 111(d)(1) requires the EPA to promulgate regulations under which states submit st ate plans regulating “any existing source” of certain pollutants “to which a standard of performa nce 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 individual c ompanies, are subject to air quality requirements, including meeting such standards of p erformance that a state may establish to meet emissions performance levels that the EPA determine s are achievable under CAA 111(d). We give states and affected EGUs flexibility determini ng how they meet these requirements. No state or affected EGU must implement the precise me asures included in the building blocks in order to do so. The agency recognizes that states m ust have legal authority to implement approvable state plans. In the event that states la ck 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 pream ble section V.B. and the legal memo, we are within our legal authority and the final rule is co nsistent with past EPA practice and interpretation in setting standards of performance.

Comment 8: Commenters said, EPA delegates the development of p erformance standards to the States through a requirement that each state develo p a State Implementation Plan ("SIP") that details the actions that will be required to meet t he emission rate targets set by the rule. Commenters said to achieve compliance with the Prop osed Rule, the State(s) in which the Co-131

ops operate would be required to develop enforceabl e requirements on a Federal agency which raises 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 st ate plans regulating “any existing source” of certain pollutants “to which a standard of performa nce 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 coo peratives, are subject to air quality requirements, including meeting such standards of p erformance that a state may establish to meet emissions performance levels that the EPA determine s are achievable under CAA 111(d). We give states and affected EGUs flexibility determini ng how they meet these requirements. No state or affected EGU must implement the precise me asures included in the building blocks in order to do so. The agency recognizes that states m ust have legal authority to implement approvable state plans. In the event that states la ck 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 expl ain in preamble section V.B. and the legal memo, we are within our legal authority and the final rul e is consistent with past EPA practice and interpretation in setting standards of performance.

Comment 9: Clarification needed on how programs funded or impl emented by federal entities such as the Bonneville Power Administration may be incorporated in state compliance plans as

enforceable measures

.

Commenters 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

. Commenters stated that the energy efficiency programs implemented by BPA are invaluable to the r egion and to customers of these utilities, and are also programs which EPA has implicitly incl uded in setting its energy efficiency target since over half of the state's population is served by these utilities. Commenters stated that tying enforceable measures (such as accomplishing energy efficiency improvements) to budget decisions made by a federal agency is a scenario wh ich EPA did not address in its proposal. For example, commenters stated that it is unclear how a state could set obligations and enforce adherence to a SIP for federally financed energy ef ficiency programs

. According to the commenters, the alternative approach of transferrin g the financing of these projects to consumerowned utilities is not efficient or politically fea sible. Commenters stated that incorporating BPA's energy efficiency programs is essential to me eting the state's compliance goal, but without a protocol for doing so (e.g., an agreement between EPA and BPA) this vital contribution may, by necessity, have to be excluded.

Response 9: By not finalizing the portfolio approach and instea d finalizing the option to submit a state measures plan type or an emission standard plan type, EPA has provided states the flexibility to consider the kind of programs the co mmenter describes without making such programs subject to federal enforcement. Under the emission standard plan type, if a state wants132

to consider an EE program, it can factor the result s of that plan into its assumption of how much emissions reduction it anticipates from such measur es and use them in developing a emission standard type plan. Under a state measures plan typ e, a mass CO2 emission goal may be partially or entirely achieved through state measures that im pose requirements on entities other than

affected EGUs and that are not included in the fede rally enforceable 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 tr iggered if the state measures fail to achieve the required CO2 emission performance level. See se ction VIII. We are requiring that state plans include a demonstration that plan measures are enfo rceable, which for state measures plans is provided for in § 60.5780 and discussed in section VIII.D.2.c.6 of th e preamble. The existing guidance documents pertaining to enforceability inc lude: (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-Secto r Energy Efficiency and Renewable Energy Measures;” and (3) July 2012 “Roadmap for Incorpora ting Energy Efficiency/Renewable Energy Policies and Programs into State and Tribal Impleme ntation Plans, Appendix F.”

1.11.8 State agency, authority, or entity

Comment 1: Some states will be unable to achieve the EPA's re ductions under Building Block 2 without adopting laws and regulations that impermis sibly intrude upon the exclusive jurisdiction

of FERC

Commenters stated, while states retain some authori ty 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 subsidies. Commenters said, a s a result, states like Pennsylvania will be unable to achieve the EPA's estimates of possible r eductions under Building Block 2 without adopting laws and regulations that impermissibly in trude upon the exclusive jurisdiction of

FERC.

Response 1: We disagree with commenters. See section VIII.E of the final rule preamble of t he 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 re quire states or sources to implement the BSER. That is, EPA is responsible for determining t he level of emission limitation from the source category, while states have the responsibili ty 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 stand ards or creating plans consistent with the guidelines. In doing so, states will be able to cho ose from a wide range of emission reduction measures, including measures that are not part of t he BSER.133

Comment 2: Utility Commissions and state environmental agencie s cannot be sued under the CAA's citizen suit provision, therefore provisions cannot be enforced.

Commenters stated, EPA suggests that in order to im plement Building Blocks 2, 3, and 4, "affected entities" may include "a state agency, au thority or entity," such as a state environmental management agency or public utilities commission. 7 9 Fed. Reg. at 34,917. Commenters said, in some states, these may be the only entities with au thority to implement the redispatch of generation from existing coal-fired units to NGCC u nits or to coordinate investments in renewable energy generation or demand-side energy e fficiency campaigns. Commenters said, these state agencies, however, are immune from suitunder 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 permitcitizen suits against state regulators qua regulators."). Commenters said, thus, it would not be possible to enforce emission-reducing measures that are the responsibility of state agenc ies. Commenters said, in such a case, under the plain terms of EPA's proposal, the state's plan sub mission would not be approvable unless the state adopts legislation expressly opening its agen cies to citizen suits seeking to enforce these obligations, which would plainly exceed the scope o f measures EPA may require in a state plan.

Response 2: The EPA is not finalizing the portfolio approach (s ee section VIII.D of the final rule preamble of the CPP) ; accordingly, entities other than affected EGUs wi ll not be subject to

federal enforcement or citizen suits under sections 111(d) or 304 of the CAA, respectively.

Comment 3: Comments that state environmental and energy agenc ies 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 i n 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 emissi ons from EGUs but do not have the authority to adopt the building block measures specified in t he guidelines. Commenters said that EPA cannot set standards based on illegal actions by th e states. Commenters gave several examples of states that lack the necessary authority for implem enting the building blocks.

Building block #1. Commenters states that Alabama, Florida, Georgia, or Mississippi do not have the authority to impose heat rate improvement standards. Commenters 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 generatin g units. Commenter said as a result, EPA cannot reasonably identify Building Block 1 as an e lement of any "best system of emission
reduction."134

Building block #2. Commenters stated that neither state environmental agencies nor state utility commissions have the authority to force the increas ed 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 bec ause 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 commissions is lim ited to regulation and not management. Commenters said the commissions have the authority to ensure that utilities comply with environmental regulations in an economical manner b ut 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 Geor gia Supreme Court has confirmed that the Georgia Public Service Commission's ("GPSC") rate a nd 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 pow er to the other). Commenters pointed out that neither Alabama, Florida, Indiana, Mississippi, Ten nessee, nor West Virginia utility commissions have the authority to order utilities t o 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 fo r generating units operated by independent power producers because these units not subject to regulation by a public utility commission.

Commenters stated that states generally do not have the authority to override economic dispatch of generating units by the RTOs or the RTO decision s to operate certain plants for reliability purposes or voltage support. Commenters pointed outthat the regulation of dispatching has been brought into question due to a recent court decisio n [http://www.ferc.gov/legal/courtcases/opinions/2014/13-4330.pdf, New Jersey Court C ase] in which the state of New Jersey approved contracts for new generation that paid the difference between what the generator would make in the wholesale market through PJM and the bi d price, thereby providing a predictable and adequate stream of revenues to ensure generatio n is built in the state in order to address reliability and other concerns. Commenters 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 t o transact capacity at prices other than the price fixed by the marketplace. By legislating capacity p rices, New Jersey has intruded into an area reserved exclusively for the federal government. Ac cordingly, federal statutory and regulatory law preempts and, thereby, invalidates LCAPP and th e Standard Offer Capacity Agreements."

Building block #3. Commenters stated that none of the states in which they operate have the authority to mandate construction of non-emitting g eneration (renewable or nuclear). Commenters stated that the utility commissions coul d 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 dif ferent resource course. Commenters stated that in Florida, no state agency has the authority to establish a renewable portfolio standard.135

Building block #4. Commenters stated that none of the four states in which they operate are

authorized to enforce the massive reduction in stat e-wide electricity demand that constitutes building block 4. For example, commenters stated th at 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 app ly 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 powe r utilities in ways that undermine bedrock principles under which energy has been managed for over a century. Commenters said new legislation would be needed among other things to r ealign responsibilities for electricity generation oversight, provide state environmental a gencies enforcement power against other state agencies; require mandatory integrated resour ce plans with specific GHG provisions; provide the utility commissions with siting authori ty; and authorize new energy efficiency and demand 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 unprec edented interactions among agencies that cannot occur without numerous legislative changes. Commenters said that in some states a change to the state constitution would be needed, a nd this could take more time than is allowed for submitting the section 111(d) state plans. Comm enters said, moreover, the rule poses the potential to reorder the current jurisdictional rel ationships and authority between the federal government (e.g., FERC) and the states regarding el ectricity policy.

Commenters stated that the EPA assumes that states have the authority to re-dispatch large amounts of capacity and generation from existing co al-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. Commenters said in Nevada, for example, it is questionable whether either the NDEP or the PUCN has the authority to require s uch 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 redispatch to NGCC facilities. Commenters said in ord er to create an incentive for the coal-fired EGUs to do so, however, the NDEP would have to perm it those facilities with such low emission limits that it would effectively force them to reti re. Commenters said that may subject the NDEP to other legal risks.

Commenters said that states cannot mandate the inte rstate purchase and sale of electricity. Commenters said Building Block 2 of the BSER assume s that states can "substitute" the electricity produced by coal-fired steam and oil/ga s-fired steam units with electricity produced by NGCC units through, essentially, preferential di spatch 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 contrac ts and, therefore, not available for dispatch. Commenters said that insofar as the capacity of a N GCC facility is already committed through a136

long-term contract, states lack the authority to ma ndate that those facilities break existing contracts in order to dispatch and sell into the wh olesale markets.

Response 3: As we explain in the preamble (section VIII.D) and the Legal Memorandum, a state may fulfill its requirements under section 111(d) b y adopting a state plan with the emission standards approach, and that imposes rate-based emi ssion standards at the level of the source subcategory-specific performance rates or that impo ses 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 achie ve their emission standards. As a result, it is not necessary for state utility or environmental ag encies to order the affected EGUs to implement the building blocks and, therefore, it is not neces sary 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 includi ng building block 4 as a component of BSER

in the final rule.

Comment 4: The proposed guidelines conflict with state laws

Commenters stated the Proposed Guidelines conflicts with state laws and state constitutions. Commenter said, to override these laws, the CAA wou ld have to provide clear authority, grounded in the Commerce Clause, for EPA to take su ch action. Commenters said the Act provides no such authority.

Commenters stated that Kansas, Kentucky, Louisiana, Missouri, and West Virginia have laws that prohibit those states from regulating power pl ant emissions by shifting pollution-control costs to other parts of the economy. Commenters ref erenced a Wyoming law that provides that EPA's emission guidelines must recognize state prim acy in establishing carbon regulations, and a Kentucky law precludes BSER at coal-fired electric generating unit from including fuelswitching, co-firing with other fuels, or limiting utilization. Commenters also referenced an Arizona statute that prohibits any state agency fro m adopting or enforcing a state or regional program to regulate GHG emissions to affect atmosph eric temperature without express legislative authorization. Commenters provided refe rences tallying well over a dozen other instance of conflicting state legislation.

Commenters 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. V I, cl. 2. Commenters said that wherever possible courts avoid determining that federal pree mption of state law has occurred, and cited N.Y. State Conference of Blue Cross & Blue Shield P lans 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 p resume that "the historic police powers of the States were not to be superseded by [federal la w] unless that was the clear and manifest purpose of Congress." Rice , 331 U.S. at 230; see also Wisconsin Public Intervenor v. Mortier

, 501 U.S. 597, 605 (1991). . Commenters said that w hen a court examines whether preemption occurs, it looks first to the intent of Congress in passing the statute. Commenters indicated that137

the purpose of the CA is to regulate air emissions and not the amount and source of energy generation from utilities.

Commenters stated that to meet the proposed rule wo uld require legislative changes to Florida law to provide the requisite powers to state agenci es. If the state does to act or act in time to meet the rule compliance deadlines, commenters believed the EPA does not have the authority to change Florida law.

Response 4: The Clean Air Act is founded on the principle of co operative federalism. In 1970, Congress undertook to create federal mandates to re gulate air pollution, for the first time entering a realm of regulatory police power that had long be en the exclusive province of the states. Congress did not oust the states from regulating ai r pollution within their boundaries. Indeed, Congress specifically preserved the states’ authori ty to regulate air pollution in section 116 of the Act. Notably, however, Congress specifically provi ded that a state “may not adopt or enforce any emission standard or limitation which is less s tringent than the standard or limitation under [any applicable implementation plan, or sections 11 1 or 112 of the Act].” It is clear that Congress was assigning EPA the job of developing st andards under section 111 that would set a national floor for air pollution control requiremen ts.

Therefore, EPA disagrees with commenters who sugges t 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 auth ority under the Constitution’s commerce clause has long since been disposed of. Indeed, ai r pollution is the quintessential interstate problem that does not respect state 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 que stion about how such national standards get implemented and enforced in the Act’s cooperative f ederalism regime. Several of these comments raise the scenario where a state has adopt ed 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 auth ority to override such state legal requirements.

EPA agrees with the commenter that promulgating thi s 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 th at it gives states a choice. If a state choses to cooperate in implementing air pollution control req uirements consistent with the federal floor under the Act, the state can do so. Once EPA appro ves the state plan, it assumes the status of
federal law as well as state law and becomes enforc eable under the federal Clean Air Act.138

A state can, however, chose not to implement a requ irement under the Act, such as this guideline. In that case, the Act provides for EPA t o 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 federal plan under this guideli ne overrides the sort of state legal requirements the commenters are highlighting. To th e extent a state has disabled itself under state law from administering a state program, the s tate would remain disabled, consistent with state law. But under the structure of the Act, it w ould 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 com pliance obligations under the federal Clean Air Act. State law might become irrelevant to the question of controlling greenhouse gas emissions, but it would remain unchanged. This arra ngement is clearly consistent with wellestablished principles of cooperative federalism th at courts routinely uphold. See, e.g., Hodel v. Va. Surface Mining & Reclamation Ass’n, Inc., 452 U .S. 264, 283–93 (1981); 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: Commenters requested additional guidance on the en forceability of multi-state agreements. In general, commenters requested guidan ce 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

.

Commenters noted that the State Plans Consideration TSD states that multi-state enforceability "would be contingent, in part, on states having com parable enforcement mechanisms." Commenters asked for guidance on what "comparable e nforcement mechanisms" are. Commenters asked if the enactment of legislation im plementing a Model Rule is sufficient in the

context of RGGI. Commenters further asked if there are other examples of "comparable enforcement mechanisms" that are not legislative.

Commenters also asked if the Agency thinks an appro vable multi-state arrangement needs to

include an interstate enforcement mechanism. If not , commenters asked how states could deal with “free riders” in a potential noncompliance sce nario. Commenters asked if EPA or all the states in the plan hold the underperforming state l iable. Further, commenters asked if EPA brings139

a federal enforcement action, would it be brought a gainst all the participating states in the multistate plan, or only those states in the plan found not to be contributing to compliance.

Commenters asked if EPA could explain when a volunt ary plan (e.g., RGGI) becomes federally enforceable, how the liability of the group is appl ied. Commenters 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 legislatur es then transform to a group? Commenters questioned if the group entity takes over the decis ion-making currently left for individual states.

Commenters stated EPA's current proposal is vague o n a number of issues surrounding implementation of market-based approaches, includin g how compliance and enforcement would work for multi-state emission trading programs. Com menters recommended that EPA clarify these issues in order for states to more clearly ev aluate multi-state, market-based implementation approaches. Commenters 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. Commenters said EPA should provide guidance on how compliance will be assessed and enf orced and should also clearly establish a default rule for interstate accounting for renewabl e energy and energy efficiency.

Commenters stated for states in the same inter- con nection that pursue a multi-state emissiontrading program, aggregation of state targets may b e the most straightforward means of assessing performance, but EPA should also explore 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.

Commenters said more problematically, a requirementfor 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 the aggregated target is exceeded, all states are out of compliance. Commenters said an individual state wit hin a multistate plan could thus be subject

to EPA enforcement due to another state's actions o r inaction, and the perceived encroachment of state sovereignty would be a non-starter for many s tates.

Commenters asked who is responsible for enforcementof the regional/multi-state goal and suggested an alliance of each region's state agenci es would be best equipped to enforce compliance with regional/multi-state goals.

Commenters said fourth, the Proposed Rule does not address how a multi-state integrated electric system, such as TVA's, would allocate or assign var iables of compliance among States participating in a joint SIP. Commenters said it is unclear 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 E PA’s response to this comment.

Comment 2: Commenters supported allowing multi-state plans, b ut recommend that enforcement activities should be limited solely to the specific underperforming states in these partnerships. Otherwise, commenters noted that ther e could be undue burden placed 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 essence, the multi-state plan could create

winners and losers if enforcement is not limited to the non-complying state. Commenters suggested that EPA should work with states to addre ss any issues that may arise in the event that one state in a multistate effort fails to implementits approved plan.

Response 2: See section VIII.E of the final rule preamble of t he CPP for EPA’s response to this

comment.

Comment 3: Commenters expressed concerns on how the goal sett ing described in the proposal accounts for electricity system operations and allo ws the option of multi-state cooperation in meeting goals. Specifically, commenters objected to situations where, due to the interconnected nature of the electric grid, a state can force this cooperation upon an unwilling neighbor. Commenters noted that there were no specific detail s provided on how EPA will address calculating a multi-state goal. As a result, commen ters claimed that states do not know whether collaborating with other states will pose advantage s and the scope of those advantages.

Commenters 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 that e xport a significant share of power generated

within the State. Commenters stated that wholesale transactions within this federally-regulated marketplace are outside of state jurisdiction. Comm enters provided an example for Arkansas.

Response 3: See section VIII.E of the final rule preamble of t he CPP for EPA’s response to this

comment.

Comment 4: Commenters suggested alternative methods other tha n multi-state plans of aggregate compliance, including averaging across ut ilities or units and developing sub-state regional groups that can be merged to achieve a sta te goal.

Commenters stated that the final rule should clarif y that averaging across utility fleets is allowed. Commenters said EPA should clarify in the final rul e that, to the extent permitted by state141

affiliated interest rules, such multi-unit/multi-ut ility compliance aggregation is permissible in addition to individual compliance requirements on a unit specific basis.

Commenters 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 st ate carbon emission rate reduction goals, or equivalent mass emission reductions. Commenters pro vided an example for Montana. Commenters stated that such flexibility co uld potentially be useful for states and electricity generators to generate cost-effective c arbon emission rate reductions and that such partial state compliance plans should be approvable by EPA so long as states can demonstrate that each partial state plan contributes appropriat ely to the states overarching compliance with EPA's goals. Commenters stated further that EPA sho uld permit states to participate in regional compliance plans that are specific to particular ty pes of resources or building blocks.

Response 4: See section VIII.E of the final rule preamble of t he 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 not ed the additional legislative authorization and planning needed to develop multi-state approach es are not feasible with EPA’s intended schedule for meeting the goals, noting that an exis ting program, RGGI, took 6 years to develop and implement. Commenters suggested re-proposing ne w plan submittal and compliance dates.

Commenters stated that EPA must understand that som e 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. Commenters stated that by failing to consider all of the barriers, EPA does n ot provide a realistic framework for developing regional plans.

Commenters expressed concern about the enforcement of performance goals for multi-state plans, especially given the short time frame availa ble to develop and obtain legislative approval for multi-state approaches. Commenters stated that the multi-state approach, as a compliance option identified in the EPA's preamble, would cert ainly require state legislative approval. Commenters pointed to EPA's description o f the multi-state approach as a measurable tool for two or more states meeting performance goa ls and indicated that they have limited experience with the type of planning that would be necessary to develop a multi-state approach

to CO2 emission reductions. Commenters noted that t his type of state planning would infer a singular plan covering the participating states, wh o would be reliant upon one another to enforce a previously agreed upon model rule, enacted throug h each state's regulatory process

. According to the commenters, enforcement of a multi-state plan would be extremel y challenging, if not impossible, to achieve

.142

Commenters pointed to EPA's discussion of the Regio nal 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 und erstand this concept was first discussed among several Northeastern states in 2003. Commente rs noted that a Memorandum of Understanding (MOU) was the initial action step tak en by seven states in 2005, with a couple of more states signing the MOU in 2007. Commenters fur ther noted that a model rule was then established for each state to develop for their res pective states statutes. According to the commenters, by January 1, 2009, 6 years after this concept was discussed, the first compliance period for this trading program began. Commenters a rgued 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 requi red to be followed for legislative approval.

Commenters stated that EPA must fundamentally revis e its proposal and put any new proposal out for public comment and provides several suggest ions for a revised rule that address critical implementation issues, including 1) additional time to develop a SIP and multi-state SIP, 2) allow the States to adopt compliance deadlines thatare 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 int ermediate enforceable targets.

Commenters stated EPA's proposed rule provides an a dditional two years for submission of state plans from states that wish to pursue multi-state p lans, for a total of three however, states must indicate their intention to consider multi-state pl ans within one year of finalization of the rule. Commenters said even in states where pursuit of mul ti-state programs is politically achievable, the need for coordination across multiple regulator y bodies, such as air agencies, public utility commissions, electric grid operators, and potential ly state legislatures, will be complicated. Commenters said when you add to this the challenge of coordinating with multiple entities in other states, it is clear that EPA will need to pro vide significant clarification and provide enhanced support to ensure that this can be accompl ished within the established deadlines.

Response 5: Commenters stated that the multi-state approach wo uld require state legislative approval and suggested that this type of state plan ning would infer a singular plan 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 commenters, enforcement of a multi-state plan would be extremel y challenging, if not impossible, to achieve. The EPA is finalizing that states can choose to pro vide to the EPA one multi-state plan submittal, on behalf of all participating states, or one singl e submittal for each participating state. If one multi-state submittal is the option selected, it mu st be signed by authorized officials for each state participating, and it would have the same leg al effect as a single-state submittal for each

state.

The commenters 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 commenters argued that the EP A’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 follow ed for legislative approval. The EPA is finalizing that state plan submittals are due on Au gust 31, 2016, which is 13 months after finalization of the emission guidelines. In order t o address the concern that 13 months is not sufficient time for states to prepare and submit a complete plan submittal and to allow consistent timelines for both a single state and multi-state approach to state plan submittals, the EPA is also finalizing a plan submittal process which provides additional time to submit a complete plan submittal after August 31, 2016. This approach invo lves the option that we refer to as an initial submittal, followed by submittal of a complete stat e plan submittal no later than August 31, 2018, for both single state and multi-state plan su bmittals.

Comment 6: Commenters 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 Congressional approval of interstate compacts under FCAA section 102(c).

Commenters said while FCAA section 102 allows for i nterstate compacts, section 102(c) states that: "No such agreement or compact shall be bindin g or obligatory upon any state a party thereto unless and until it has been approved by Co ngress." Commenters said EPA asserts that its approval of all state plans will result in federal enforceability of those state plans. Commenters continued that as the proposed rule specifies in 40 CFR section 60.5785, once the EPA has approved a state plan then that plan can only be re vised with approval by the EPA. Commenters said once a multistate plan is federally enforceabl e by the EPA, states that are parties to that multistate plan cannot revise or withdraw from thatmultistate agreement without approval from the EPA. Commenters said an EPA-approved multistate plan would be binding on all the states participating in that multistate plan. Commenters s aid the EPA has not provided any rational basis for how the multistate plans contemplated und er 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 plan in lieu of Congressional approval.

Response 6: For the reasons stated in the Legal Memorandum, th e EPA disagrees that section 102(c) prohibits the types of state plans envisione d 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.

Commenters stated that the Proposed Rule explicitly allows states to create multi-state plans using a single multi-state performance goal. Commen ters said the Proposed Rule does not explain how this should be accomplished, and does n ot provide states with tools or incentives for doing so. Commenters said there may be numerous obs tacles to creating such a plan.144

Commenters said that, first, given the complexity o f the electric generation market, the varying interests of the different electricity producers wi thin a given state, and the multitude of options available to states under the Proposed Rule, it wil l be a significant challenge for states to create single state plans within the tight time frame thatEPA has proposed. Commenters said in light of this, it seems unlikely that most states would be w illing to even consider taking on the added complexity and challenge associated with negotiatin g a multi-state plan. Commenters said that, second, even in instances where a group of states m ight be willing to consider working with their neighbors to create a multi-state plan, these state s may be operating under significantly different circumstances, making it difficult to come up with a coherent plan. Commenters said that, third, states will inevitably, and appropriately, be looki ng out for their own state interests by seeking to negotiate the most favorable plan they can for them selves. Commenters said even where states are willing to take on the added complexity of nego tiating a multi-state plan and are situated such that a workable multi-state plan could be created a nd implemented, self-interest may preclude states from reaching an agreement. Commenters 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 agreemen t on such a plan difficult to achieve. Commenters said that, fifth, even if two or more st ates could agree to a common plan, there might be one or more states that are essential to c reate such a plan who are unwilling to agree. Commenters said that, finally, entering into an agr eement with another state or states will in all

cases create the risk that the other state or state s will not meet their obligations under the plan. Commenters said in light of this risk, states may r ationally 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 t he CPP for EPA’s response to this

comment.

1.11.9a Multi-state emission budget or rate-based e mission trading programs

Comment 1: Commenters argued that EPA does not have the autho rity to implement beyondthe-fence measures, such as a cap and trade program , as BSER. Commenters said affected sources should have the implementation option to co mply with a lawfully set BSER by looking beyond-the-fence line to identify the most cost-eff ective method for reducing emissions, as this flexibility can provide significant benefits. Comme nters said a source may have an opportunity to obtain cost-effective reductions by looking beyo nd-the-fence; however, that fact does not grant authority for state regulators to impose more stringent limits on regulated entities.

Commenters said EPA must not conflate a source's ab ility or opportunity to "trade" with the Agency's underlying legal authority for setting a " cap." Commenters 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 legislation or if states adopt a cap and trade system based on the emission reductions n eeded to achieve EPA's binding state goals. Commenters said BSER must be based on a system of e mission reductions achievable at existing145

sources (i.e., within-the-fence), and implementing 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 parties that are outside the scope of state regulatory agencies' authority.

Response 1: We disagree with this comment. In the preamble (sec tion IV.A and V.B) we explain why section 111(d)(1) and (a)(1) authorize inclusio n of building blocks 2 and 3 in the BSER, and we explain why a state plan that adopts the emissio n standards approach may include a cap-andtrade program.

Comment 2: Commenters 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 S ection 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 program s, both currently or in the future.

Further, commenters stated that the RGGI program ap plies to all units with a nameplate capacity of 25 MW or greater, existing and new. Commenters s aid 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 provid ed the inclusion does not result in greater
overall emissions.

Commenters stated it is likely that lower-cost emis sions reductions could be acquired through exchange agreements between or among states, or wit hin a utility serving more than one state. Commenters said such multi-state reduction strategi es may also have a more predictable and less-disruptive effect on power system planning and operations. Commenters urged EPA to enlarge the window for such multi-state efforts bey ond the RGGI design, and to authorize states at any time following adoption of the federal rule to devise and enter into multi-state transactions of alternative design (such as single bilateral tra nsactions; complementary resource choices within a utility serving more than one state; an op en regional trading "floor", etc.) so long as the outcome, for the states involved, results in emissi ons reductions equal to or greater than the sum of those required by EPA of each state acting indep endently 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: Commenters 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 Combusto rs. Commenters stated that EPA has acknowledged that RGGI would be an acceptable compl iance mechanism to meet the best system of emissions reductions and that under RGGI, participating states each promulgated state rules that apply directly to affected sources, requ iring them to satisfy individual requirements146

that in aggregate ensure compliance with state and regional mass based targets. Commenters stated that Connecticut believes it would be approp riate to assign legal responsibility for meeting state plan commitments to the owners and operators of affected sources.

Response 3: We agree with this comment.

Comment 4: Commenters stated for purposes of judging complian ce 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 that state because of the trading of emissions allowance s into that state from other states.

Commenters said EPA's enforcement focus should be o n whether all states in a multistate or joint

coordinated effort have issued allowances in accord ance with an EPA-approved state plan, and are enforcing the requirement that all covered unit s surrender sufficient allowances to cover their emissions. Commenters said as long as no state issu es 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 the states in setting emission standards and related plan requirements for its aff ected EGUs. Consistent with longstanding practice under the Clean Air Act, if a regulated en tity does not meet a requirement, the EPA will address the matter on a case-by-case basis, to dete rmine the appropriate response and resolution.

Comment 5: Commenters stated EPA should facilitate multi-stat e 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.

Commenters said in the emission guidelines, EPA sho uld provide that states designing such state-based plans with credits or allowances can sp ecify 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 pla n. Commenters said EPA should also provide a centralized tracking system for credits and allow ances that cross state borders in order to facilitate multi-state compliance and to ensure tha t these credits and allowances are not double

counted.

Commenters stated multistate emissions budget tradi ng programs like RGGI depend on a common emissions allowance "currency" that is fungi ble and tradable across state lines.

Commenters also stated that EPA should not erect an y barriers to the fungibility and tradability

of emissions allowances. Commenters stated EPA shou ld provide states with a tracking system based on or compatible with RGGI CO2 Allowance Trac king System (COATS) or EPA's Emissions and Allowance Tracking System (EATS) syst em that states can choose to use to147

facilitate interstate trading. Commenters said, as an alternative, states could choose to develop their own tracking system using EPA guidance.

Commenters said EPA should explore ways that it cou ld assist states in implementing multistate, market-based approaches. Commenters said suc h support could include development of an optional model rule for emission trading, provision of an EPA tracking system, or direct EPA technical assistance to states in implementing mark et-based approaches. Commenters said EPA's interactions with states may identify other areas w here EPA assistance would be helpful.

Response 5: See section V.B and VIII.C of the final rule pream ble of the CPP for EPA’s response to this comment.

Comment 6: Commenters suggested that EPA should provide guida nce on some key issues surrounding implementation of multi-state market ba sed approaches, but also allow for lessstructured forms of multi-state compliance as well. Commenters said these issues include conversions from mass-based to rate-based targets; use of carbon pricing to project emissions performance and enforcement; and allowing multi-sec tor emissions trading. Commenters suggested that EPA provide states with a pre-approv ed conversion table (updated as needed) for recording reductions consistent with each state's c ommitment metric. Commenters suggested providing a model rule.

Commenters stated EPA should clarify whether conver sion to a mass-based target is required in order for a state to implement a mass-based trading program. Commenters stated they believe

there is no inherent conflict between a state retai ning a rate-based emission target against which it will be evaluated under EPA's proposed rule, whi le simultaneously establishing a mass-based target to implement a mass-based trading program.

Commenters said EPA has proposed that states could jointly submit plans providing for multistate compliance with state targets. Commenters sai d they strongly support facilitating multistate compliance, as states working together can se cure reductions in carbon pollution more costeffectively and with greater flexibility; however, they urge EPA to enable a less structured form of multi-state compliance as well. Commenters said states may comply with their emission targets by putting in place source-based trading pr ograms, 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 emi ssion rate (under a rate-based approach).

Commenters stated they believe that EPA can approve state implementation plans that regulate emissions across multiple sectors and recommend tha t EPA explicitly state in its final rule that multi-sector emissions trading would be a valid sta te compliance option, provided that the state can demonstrate that it will achieve the necessary emission reductions in the electricity sector to meet its target.148

Commenters 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 syst em dispatch which can then be used to project

emissions from affected EGUs and demonstrate the st ate's compliance pathway over the 2020- 2030 period. Commenters said measurement of the sta te's performance ex-post would be based on actual emissions of affected EGUs during the 202 0 to 2030 period.

Commenters said the ISO and RTO Council has propose d a model whereby a regional transmission organization would impose a carbon pri ce in economic dispatch. Commenters said EPA should develop guidance on how responsibility f or emissions performance would be assigned, assessed and enforced under such an appro ach.

Commenters stated that the EPA should facilitate im plementation of multi-state, market-based approaches. Commenters said the complexity of EPA's rule will make design and implementation of multi-state, market-based program s 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.

Commenters said EPA should expand and enhance the m aterials on market-based approaches

available under the State Tools section of its webs ite, and EPA should also provide links to relevant analyses and information by other organiza tions.

Response 6: See section V.B and VIII.C of the final rule pream ble of the CPP for EPA’s response to this comment.

Comment 7: Commenters said EPA should articulate what a feder al implementation plan would entail to allow states to fully assess their option s; in particular, EPA should clarify whether a federal implementation plan would be developed for individual states, or whether a federal implementation plan could require a multi-state app roach.

Response 7: Concurrent with the signing of this final rule the EPA proposed 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 enforceabl e. Commenters also stated, to the extent possible, EPA's rule should encourage full complian ce with any current state energy efficiency and renewable energy standards. To that end, commen ters supported EPA's "portfolio approach" to compliance, which would bolster the enforceabili ty of these state policies.149

Commenters stated, in its proposal, EPA provides tw o primary compliance options for states: an electric generating unit ("EGU") approach and a por tfolio approach. Commenters said, under the first approach, states submit compliances plan thatholds affected EGUs responsible for achieving compliance with accompanying measurement and verification processes. Commenters said, under this approach, the state plan would notdirectly include the "outside the fence" emission reduction measures such as renewable energ y and demand-side energy efficiency programs. Commenters said, instead, these activitie s would be coordinated at the state level to provide credits for affected sources. Commenters sa id, because this approach does not include auxiliary state energy programs, only affected EGUs would be subject to federally enforceable requirements.

Commenters stated, in contrast, the portfolio appro ach allows for participation of secondary

entities in addition to affected EGUs. Commenter sa id, 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. Comment ers said, under this approach, all emission

limits and "outside the fence" measures become fede rally enforceable, but instead of the affected sources bearing the full burden of compliance, thes e secondary entities would be subject to mandatory measures that would ultimately reduce emi ssions at the affected sources. Commenters said, such measures may include state energy effici ency and renewable energy policies, which would subsequently become federally enforceable.

Commenters stated, the primary drivers behind state EE and RE investments are some form of EERS and RPS policies respectfully. Commenters said , due to the importance of these state policies, commenters believed EPA should prioritize the portfolio approach, which would greatly strengthen these efforts by rendering them federall y 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-appr oved trajectory, the affected

entities within the state should be deemed to be in compliance with the plan.

Commenters stated, no enforcement exposure exists f or a state or EGU within the state if the state is on its emission rate compliance path estab lished in its approved state plan. Commenters 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 project ed trajectory and is on track to meet the state goal, but makes a sovereign decision to modify its laws. Commenters said, before the state has made corresponding modifications to its plan, affec ted EGUs or utilities may be put in a difficult position of choosing between complying with current ly-effective state law and complying with150

the plan as originally submitted to and approved by EPA. Commenters 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. Commenters said, for example, a state's originally submitted plan might have contemplated t hat 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 impossib le. Commenters said, under such a scenario, the affected EGUs or utilities should not be subjec t to an enforcement action from EPA or citizens, particularly in cases where the state's e mission rate is consistent with the trajectory included in the approved state plan.

Commenters stated, enforcement actions against a pa rticular affected entity should only be available if: 1) the affected entity is failing to meet its legal obligations 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. Commenters said, these principles can establish an enforcement system that simultaneously ensures states are on track to meet their 2030 goal s and provides the necessary legal certainty for EGUs and utilities to invest the significant resour ces 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 aff ected EGUs. Consistent with longstanding practice under the Clean Air Act, if a regulated en tity does not meet a requirement, the EPA will address the matter on a case-by-case basis, to dete rmine the appropriate response and resolution.

Comment 2: Commenters asked if EPA can explain how enforceabi lity might be addressed in the context of entities like cooperatives or munici pal utilities that are not currently subject to state jurisdiction. Commenters asked if EPA does no t approve the portion of a state plan addressing cooperatives and municipal utilities due to a lack of authority, would EPA consider legally enforceable emission standards and complian ce 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 aff ected EGUs and entities other than affected EGUs, including 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 compo nent of the state plan, including federal

enforceable emissions standards for affected EGUs a nd state measures. This requirement is further explained in section VIII.D of the preamble

.

Comment 3: Commenters stated any program used to demonstrate a state's compliance with a standard of performance must be included in the sta te implementation plan. Commenters said once a state receives the EPA's approval for its pl an, the provisions in the plan become federally enforceable against the entity responsible for comp liance, in the same manner as the provisions of an approved SIP under Section 110. Commenters st ated accordingly, if the existing state statute and implementing regulations are incorporat ed as part of the State's compliance plan,151

under the CPP, such statute and regulation become f ederally enforceable by the EPA and citizen groups and could form the basis of litigation under the Clean Air Act. Commenters said such claims could be directed at EGUs, the State of Miss ouri, the State of Illinois, or a third party responsible for implementing the compliance measure . Commenters stated by "federalizing" compliance plans, the EPA created a statutory mecha nism for dissatisfied stakeholders to challenge compliance with the goals against a whole host of entities and seek enforceability of state programs like renewable energy and energy eff iciency in federal court. Commenters said

such an enforcement "free-for-all" is not construct ive nor is it necessary to achieve the reduction goals of the CPP.

Commenters stated to illustrate the difficulty of t his approach, the Missouri legislature has placed limits on energy efficiency programs so as to mitig ate the economic impact of energy efficiency programs. Commenter said RSMo Section 392.245. Comm enters stated the EPA's certain disapproval, as part of its plan approval process, functions as an administrative veto of that legislative decision. RSMo Section 392.245. Comment ers said in such a circumstance, Missouri may need to provide a compliance demonstration base d on other components. Commenters 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 promul gate a federal plan, known as a federal implementation plan ("FIP").

Response 3: We disagree with these comments. As discussed in s ection VIII.C of the final rule preamble of the CPP, the EPA is not finalizing the proposed portfolio ap proach, 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 measur es 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 measures plan, the backstop emission standards constitute the standard s 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 bec ome 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 implem ented to address a shortfall 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 Contrac ts Clause.152

Commenters stated, the Contract Clause in Article 1 , Section 10, clause 1 of the Constitution states: "No State shall ... pass any ... Law impair ing 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 potent ially violates the Contracts Clause. Commenters said, APPA member MRES has several contr acts with a number of individual entities for the output of wind projects and their associated RECs, totaling 85 MW. Commenters said, a state-driven portfolio approach that adopts EPA's suggestion to use the renewable energy and RECs located in the7 state to satisfy a state g oal 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. Commenters said, the Proposed Rule authorizes state plans that would have this very result.

Commenters stated, the Proposal authorizes states t o take RE and RECs from their owners by disregarding the contractual rights of both the sel ler and the purchaser. Commenters said, it vitiates the obligation of the seller to deliver th e RE and RECs to the purchaser, and substitutes the state as the beneficiary of the renewable contr act (again, without compensation). Commenters said, this constitutes an undeniable "su bstantial impairment of a contractual relationship." Commenters said, the construct of th e state-driven portfolio approach, including its provisions allowing states to interfere with existi ng contracts for RE and RECs - both in-state and out-of-state - appears to violate the Contracts Clause.

Commenters stated, specifically, EPA, in the Propos ed Rule, essentially invites states to create a substantial impairment in the renewable energy cont racts of utilities. Commenters said, first, it is undeniable that many utilities have such contractua l relationships with renewable power producers, and that a regulation that allows the st ate to step in and use that RE to meet its CO2 reduction obligation would constitute a change in l aw that impairs that contractual relationship. Commenters said, that action satisfies the first of the two elements in the test of a Contract Clause violation. Commenters said, the second eleme nt, whether the impairment is substantial, while typically the subject of controversy, is also undeniable. Commenters said, where the regulation establishes the mechanism for the state to unilaterally use a utility's resources for its own benefit, there can be little doubt that there i s a virtual "destruction of contractual expectations" and thus, a substantial impairment.

Response 4: For the reasons stated in the Legal Memorandum acc ompanying the final rule, the EPA disagrees that this rule is likely to raise Con tract Clause concerns. Furthermore, insofar as this comment concerns the portfolio approach, which EPA is not adopting, the comment is moot.

Comment 5: Commenters said the Co-ops find it unlikely that EP A 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 th e significant risk that Tennessee's compliance with the Proposed Rule could only be achieved throu gh heat rate improvements to existing generation units (building block one). Commenters s aid second, the Co-ops find it unlikely that under existing law EPA possesses the authority to r equire a State(s) (through a SIP) to compel TVA to mandate activities among its regulated entit ies which such a scenario would create of situation for The Co-ops of concurrent Federal juri sdiction, and the Co-ops believe that the153

prevailing authority is that of the TVA. Commenters said third, if as a part of its SIP the State(s) were to consider requirements to be imposed directl y upon the Co-ops (primarily envisioned as building block four, i.e. energy efficiency require ments, 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.

Response 5: In section V.A and V.B of the final rule preamble o f the CPP and in the Legal Memorandum, we explain our basis for including buil ding blocks 2 and 3 in the BSER, and how the affected EGUs can implement those building bloc ks to achieve the subcategory-specific emission performance rates without the need for sta tes to attempt to mandate implementation of the building blocks.

Comment 6: Commenters stated they support the inclusion of for mulaic crediting for any measures or programs EPA believes have straightforw ard results, similar to how formulaic crediting is used in the context of a Section 110 S IP.

Response 6: Our discussion of crediting measures that reduce C O2 emissions are discussed in section VIII.C and K of the final rule preamble of the CPP.

Comment 7: Commenters stated, EPA must address the penalty st ructure for non-compliance as it relates to the withholding of funding for EE pro grams. Commenters said utilities and other third parties should not be penalized for non-compl iance if the cause was inadequate funding

from the state.

Response 7: EPA is not including proposed building block 4, in volving demand-side energy efficiency, in the BSER. To the extent that this c omment is related to building block 4 it is moot. However, EE measures would still be available for c ompliance 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 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 consi derable discretion to the states in setting emission standards and related plan requirements fo r 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.154

Comment 8: Commenters 18238-43 stated that since commenter li ves in Tennessee, that means that our energy generation comes from Tennessee Val ley Authority, TVA. Commenters said that is a quasi-federal agency with 9 million customers in parts of seven states. Commenters said that means they don't really have to answer to any state determinations. Commenters asked what is the relationship is required for interaction betwee n TVA and the State of Tennessee when it comes to developing a plan to address climate resil iency?

Response 8 : Under the CAA TVA is required to comply with stat e plan requirements.

Comment 9: Commenters stated that they were particularly conc erned about Building Blocks 3 and 4, and potentially Building Block 2 that it cou ld leave Colorado with a higher reduction mandate than would otherwise be supported by the la w. Commenters said the State of Colorado would need to have commensurate authority created, and commenter was worried that the authority that needs to be created would not also b e supported by the Clean Air Act.

Commenters stated that there are real political and institutional realities that have to be taken into

account here. Commenters said state law needs to ch ange, potentially the state constitution itself. Commenters said the EPA simply cannot wave its hand at the states and hope that the rule will be successful as they've done so.

Commenters stated that systems must be designed and resources allocated at the Federal and State levels so that compliance is verifiable and e nforceable.

Commenters asked, do states face potential monetary penalties for not complying with the proposed rule? Commenters asked, if so, do ratepaye rs within the state pay the fine? Commenters asked, could an EPA enforcement action r equire a state legislature to modify a renewable portfolio standard?

Response 9 : As discussed in the sections explaining how EPA d esigned 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 has not finalized either Building Block 4 as part of the design of the BSER, nor is EPA final izing 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 enforceable requirements under the sta te plan. Compliance determinations under the federally approved state plan will focus on measuri ng the effect of whatever measures the state decides to pursue on the emissions from affected EG U’s, which should be readily verifiable and enforceable. Enforcement of Clean Air Act requireme nts 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 t he financial burden will likely depend on how state law handles the question. Since EPA is not fi nalizing the portfolio approach, there is no

chance that the direct result of a federal enforcem ent action would be a mandate to modify a renewable portfolio standard. It is possible that, to provide for the emissions reductions required155

under the state plan from the affected EGU’s, a sta te may choose to modify its renewable portfolio standard.

Comment 10: Commenters stated that EPA has asked if there could be components of the state plan that are not federally enforceable. Commenters said this should only be allowed for components that have no way to achieve enforcement in federal court, such as a state carbon tax.

Commenters said it is not clear that a federal cour t could order a state to increase a tax that is underperforming. Commenters said in that case, cont inuing the example, the state plan should have federally-enforceable guarantor measures that would kick in if the non-enforceable element fails to produce the promised savings.

Response 10: We discuss these issues in the context of the disc ussion of the state measures approach in section VIII.C of the final rule preamb le of the CPP.

Comment 11: Commenters stated that EPA should not make the elig ibility of emission rate reductions - whether they occur before or during th e compliance period - contingent on state requirements. Commenters said companies should not be penalized for showing leadership in developing renewable resources, especially since th ey cannot control their state governments.

Response 11: We discuss the opportunities for early reduction cr edits in section VIII of the final rule preamble of the CPP.

Comment 12: Commenters asserted that EPA cannot impose sanctio ns on states for failure to comply.

Commenters noted that EPA cannot force states to im plement Section 111(d) through sanctions or the threat of sanctions. First, commenters state d that EPA's authority to issue sanctions under Section 179 applies only to nonattainment areas. Se e 42 U.S.C. section 7509. Because there is not a NAAQS for CO2, commenters stated that no atta inment or nonattainment areas have been designated for CO2. Second, commenters stated that EPA's authority to issue sanctions under Section 110(m) is similarly tied to NAAQS and canno t be applied to Section 111(d) implementation plans. See 42 U.S.C. section 7410(m)

.

Commenters stated that EPA must in this rulemaking disclaim any authority to impose highway sanctions on states that do not submit an approved SIP. According to the commenters, if EPA leaves the specter of highway sanctions hanging ove r the states, EPA's proposed rule will subject itself to a challenge for unconstitutional coercion of the type successfully brought against the
Affordable Care Act.156

Response 12: EPA agrees that the CAA does not give the Agency th e authority to impose
sanctions under section 179 sanctions — neither “ma ndatory” sanctions under 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 s tates 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 discreti onary sanctions are only available in

connection with SIPs under section 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 u nder section 110. Therefore, neither form of sanctions is available in connection with any state plan under this rule.

Under section 179(a), mandatory sanctions only appl y 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 respect to a CPP plan. A state plan under this rule is not a non attainment plan or any form of SIP under section 110, and is not the result of a SIP call, b ut instead arises under section 111(d). Accordingly, mandatory sanctions do not apply in co nnection with Clean Power Plan state plans.

Section 110(m) discretionary sanctions are only pot entially available if the Administrator makes a deficiency finding under section 179(a) in connec tion with “any plan or plan item” under the Act. 42 U.S.C. § 7410(m). The “plan or plan item” r eference in section 110(m) refers to a section 110 plan, not to a section 111(d) plan. The four se ction 179(a) deficiency findings that may potentially trigger the imposition of discretionary sanctions all appear in the context of the section’s introductory clause, which explicitly ref ers to implementation plans and plan revisions under part D, which covers nonattainment areas. Fur ther, two of the four potential section 179(a) findings explicitly refer to nonattainment areas, w hile 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 referring to “submissions...unde r 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), whi ch applies to section 110 SIPs.

EPA’s historic interpretation of the provisions inv olved 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 sa nctions outside the section 110 framework. In fact, the Agency has specifically defined “plan” an d “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 section 111(d) plan failures. “Unlike a Federal plan for sources regulated under sections 1 10 or 172 of the CAA, the section 111(d)/129 Federal plan imposes no statutory or other sanction s because of deficient or unapproved state plans.” Approval and Promulgation of State Air Qual ity Plans for Designated Facilities and Pollutants; Pennsylvania; Control of Emissions From Existing Hospital/Medical/Infectious Waste Incinerators, 67 FR 22354, 22355 (May 3, 2002 ).157

Therefore, as indicated by the plain text of the st atute and supported by the Agency’s historic application of the relevant provisions, CAA sanctio ns are not available with respect to section 111(d) plans.

Comment 13: In addition, commenters stated that section 111 doe s not require "symmetry" between the method through which EPA determines sta te goals and the mechanisms that states can use to satisfy the goals. For example, commente rs noted that states' authority to take into account the remaining useful life of existing sourc es and other factors when applying performance standards under section 111(d) indicate s that existing sources must be allowed to comply by using methods and under timelines that ma y differ from EPA's formulation of BSER. Clearly, commenters stated that the EPA may not pro hibit a state from relying on any system of

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 re lied upon in setting the guideline for purposes of compliance.

Response 13: We agree with this comment about “symmetry,” althou gh 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 th e authority of states to administer, execute, and enforce a final section 11 1(d) rule

Commenters stated the question of state authority arises from other presumptions and provisions of EPA's proposed rule:

- Commenters asked in 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) emiss ions plan have to compel a regional organization's compliance with the state plan, when that regional organization may encompass several states?

- Commenters asked what authority will a st ate have to compel multi-state transmission organizations to alter their dispatch or operating procedures?

- Commenter asked if 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?

- Commenters asked what authority will a st ate have to compel compliance with a section 111(d) rule by generating or transmission f acilities that are financed and/or administered by the federal government? (Commenters said often, federally administered facilities consider themselves exempt from state en ergy policies.)158

Response 14: The rule does not call for the state to compel tho se 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: Commenters asked for a state in which electric gene rating units (EGUs) export electricity out-of-state, will the rule allow the s tate to assign the costs of Building Blocks 3 and 4 to be charged to those EGUs, even though their owne rs may not serve load in the state? Commenters asked if so, what kind of procurement an d payment structure does EPA contemplate in this regard?

Response 15: 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 Mem orandum we explain how affected EGUs can implement building block 3, which means that Pe nnsylvania need not change it 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 law requirements for renewable energy.

Comment 16: Commenters asked what provisions or contingency pla ns 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 p romulgated by EPA?

Commenters stated the proposed rule is likely to fa ce legal challenges delaying clarity on what is actually required in states' plans. Commenters said the proposed rule and the EPA rules governing adoption and submittal of state plans do not provide sufficient flexibility to account for litigation delays. Commenters requested clarifi cation on how litigation delay will affect timing of state plan submittal.

Response 16: As long as the 111(d) remains effective, states and affected EGUs are required to comply with it, regardless of whether the rule is i n litigation. The same is true for all EPA rules.

Comment 17: EPA's RE and EE measures conflict with state RE and EE programs.

Commenters stated Pennsylvania, like many other sta tes, has implemented aggressive AEPS and EE programs for promoting renewable resources and e nergy efficiency measures. Commenter said the EPA's proposed CAA Section 111(d) emission s standards purport to regulate renewable energy and demand-side (RE/DS) resources under BB3 and energy efficiency (EE) programs under BB4 by setting presumptive standards for atta inment of renewable resource penetration and EE achievement that would require changes to ex isting legislation. Commenters stated the EPA's proposed targets for both BB3 and BB4 are notcredible and will be unattainable given current legislative constraints and structural and economic obstacles to further expansion of RE/DS and EE programs in Pennsylvania. Commenters s aid further, the CAA Section 111(d)159

BB3 and BB4 requirements constitute an encroachmenton and interference with state legislative authority. Commenters stated the EPA, in effect, es tablishes a federal mandate over PA renewable energy programs and presents a direct con flict with PA legislation governing RE. Commenters said the EPA should re-examine its appro aches to the design of BB3 and BB4 to more sensibly accommodate existing Pennsylvania leg islative and commenter's organization's regulatory mandates for expanding renewable resourc es and energy efficiency programs.

Commenters stated Pennsylvania's alternative/renewable energy legislation, the Pennsylvania's Alternative Energy Portfolio Standard (AEPS), creat ed by enactment of S.B. 1030 on November 30, 2004, requires each electric distribution compa ny (EDC) and electric generation supplier (EGS) to supply to 18% of its electricity using alt ernative-energy resources by 2021. Commenters said qualifying resources are divided be tween Tier I and Tier II. Commenters stated the percentage of Tier I (8% with 0.5% from solar), Tier II (10%) and solar alternative energy

credits that must be included in sales to retail cu stomers gradually increases over the compliance period.

Commenters stated Pennsylvania energy efficiency st andards are governed under Act 129 of 2008 (Act 129). Commenters said the Act expands the commenter's organization's oversight responsibilities for energy efficiency standards an d imposes new requirements on EDCs with the overall goal of reducing energy consumption and dem and. Commenters stated under this legislation, commenter's organization has implement ed an energy efficiency and conservation (EE&C) program. Commenters said subsequent phases o f the Act 129 implementation process will address EDC and default service provider respo nsibilities; conservation service providers; smart meter technology; time-of-use rates; real-tim e pricing plans; default service procurement; market misconduct; alternative energy sources; and cost recovery. Commenters stated commenter's organization has aggressively implement ed both the AEPS and Act 129 over the past several years and the achievements stemming fr om these programs are well documented.

Commenters asserted that the CAA proposed BB3 and B B4 targets, as currently designed, establish potentially illegal and unenforceable fed eral mandates on those states that have actively implemented and promoted RE/EE programs. Commenters said at a minimum, the EPA proposal conflicts with existing state legislative requireme nts. Commenters stated in the case of PA, the EPA has proposed that PA attain a 2029 goal of 9% ( interim) and 12% (final) of generation resources from RE from a baseline level of 2% (calc ulated as of 2012). Commenters said the EPA's alternative scenario establishes PA's 2029 go als of 5% (interim) and 7% (final). Commenters stated neither goal is attainable under current PAPUC projections as will be
addressed later in these comments.

Commenters stated in addition, it is unclear whethe r the EPA would have the authority to mandate a state to adopt RPS or EE standards absenta state including those components in a plan. Commenters said the EPA avoids this issue by using RE and EE as a means of calculating BSER without mandating specific reductions. Comment ers stated however, because of the160

aggressive targets used in the BSER calculation, itis unclear how PA would met its reduction targets, effectively turning the RE and EE BBs into mandates.

Response 17: We disagree with this comment. We are not finalizi ng 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 renewable energy requirements. I n addition, the Commonwealth has the state measures approach as an option, which could allow i t to achieve its section 111(d) obligations based at least in part on the effects of its state law requirements for renewable energy.

Comment 18: Commenters argued that the final rule should provid e guidance or principles on how compliance responsibilities should be allocated among load serving entities within a state. Commenters argued that all load serving entities sh ould be subject to similar requirements.

Commenters stated the proposed rule contains the po tential to create issues related to the distribution of compliance responsibility within a state. Commenters added in Nevada, NV Energy is subject to the RPS while certain load ser ving entities such as municipals, electric cooperatives, select commercial or industrial sourc es, and merchant entities are not. Commenters stated for example, the natural gas-fueled Apex pla nt in Clark County, Nevada, is owned by the Los Angeles Department of Water and Power and sends its generation out of state. Commenters stated while this facility is an eligible emission source under the rule, and has a CO2 emission profile higher than either the Nevada interim targe t of 697 lbs/MWhr or final target of 647 lbs/MWhr, the state does not currently have the aut hority to require this source to offset its emissions to the target through the use of Building Blocks 3 or 4 or other means. Commenters stated as well, disparity exists between entities s uch 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. Acc ordingly, only affected EGUs are subject to the requirements of this rule.

Comment 19: Expanded renewable energy reliance conflicts with state policies and IRP

processes

Commenters stated the proposal for states to expand their reliance on renewable energy conflicts with: 1) the policies of dozens of states (e.g. Wes t Virginia) that have adopted renewable energy standards based on a balancing local economic, reso urce, and environmental considerations; and 2) the Integrated Resource Plan processes that stat e public utility commissions (e.g., West Virginia) utilize for the long-term planning of ele ctric supply and demand resources.

Commenters said states should retain their authorit y regarding the nature and extent of any renewable energy standards.161

Commenters stated the proposal relies heavily on ad ditional renewable generation as a means to achieve the state goals. Commenters said most State s cannot simply mandate additional renewables though RPS. Commenters stated such autho rity must come from state legislative actions that can take several years to enact consid ering that many state legislatures meet only biannually. Commenters said moreover, the legislatu res must agree to enact additional mandates, which they may or may not do. Commenters stated mos t States simply have no authority to adopt mandates that additional renewable generation be bu ilt. 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; thu s they have no incentive to do so, particularly if the production tax credit is not renewed in the fut ure.

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 authority 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 o f the CPP and the Legal Memorandum,

affected EGUs will be able to achieve the source su bcategory specific emission performance rates by implementing the building blocks, includin g building block 3, without being dependent on state renewable energy standards. In addition, w e are not adopting the portfolio approach, so that non-affected EGUs are not subject to the requi rements of this rule.

Comment 20: Commenters said that, the proposal places significa nt, unknown burdens on the yet to be identified on other entities, which would need to be addressed over the duration of the program Commenters said these include (1) identific ation of emission standards for affected entities (which would presumably be negotiated, in some fashion, between the state and the entities); Commenters said these include (2) the es tablishment of and progress reporting for performance milestones; the establishment and, if n ecessary, implementation of corrective measures should an affected entity fail to meet per formance requirements; and Commenters said these include (3) the identification and performanc e of applicable monitoring, reporting and recordkeeping. Commenters said, as a result of these requirements, affected entities other than

affected EGUs will incur substantial cost in the se rvice of reducing CO2 emissions from the
affected entities.

Response 20: The final rule addresses, in section VIII of the fi nal rule preamble of the CPP, many of the concerns raised by the commenter. In ad dition, we are not finalizing the portfolio approach, so that affected entities are not subjectto requirements.

1.12 PROMULGATION OF RULES NOT PROPOSED

Comment 1: Several commenters objected to the proposal as the promulgation of rules not proposed162

Commenters stated, NSPS rulemakings are subject to section 307(d) of the CAA. CAA section 307(d)(1)(C). Commenters said, among other requirem ents, 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 methodolo gy used in obtaining the data and in analyzing the data; and (C) the major legal interpr etations and policy considerations underlying the proposed rule." Id. section 307(d)(3). Commente rs said, further, all of those required "data, information, and documents" must be "included in th e 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 promulgate d rule must be accompanied by (1) a statement of basis and purpose like that required f or the proposed rule, (2) an explanation of the reasons for any major changes in the promulgated ru le, and (3) a response to each of the significant comments submitted during the comment p eriod. Id. section 307(d)(6)(A), (B). Commenters said, these requirements are fundamental to both reasoned decision making and judicial review. Small Refiner, 705 F.2d at 519 (th e fundamental purpose of section 307(d)(3) is to require that "EPA 'give a detailed explanation o f its reasoning at the 'proposed rule' stage" of the rulemaking process); Home Box Office, Inc. v. F CC, 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 princi ples, commenters objects to promulgation of any final rule the content of which commenters coul d 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, commenter s notes the absence from this rulemaking docket of 21 of the 25 IPM modeling runs that EPA p erformed. Commenters said, EPA relied on these modeling runs in establishing the Proposed Gu idelines, and their absence from the rulemaking docket has prevented meaningful 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 th is Response to Comment document, the Legal Memorandum, and other supporting document s, the EPA describes at length the statement and purpose of the regulation, provides e xplanations 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 rulem aking proposal, including the docketing of information; and the IPM modeling runs described ab ove, see section 1.13 below.

Comment 2: Commenters stated, the EPA's open-ended comment sol icitation on numerous issues associated with the proposed rule makes it i mpossible for states to assess the feasibility and potential impacts of the rule because the state s cannot reasonably predict the possible 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 appr oaches to setting renewable energy targets not identified by the EPA and expanding BSER to include other strategies.163

Response 2: The EPA respectfully disagrees with this comment. The proposed rule and Notice of Data Availability, along with numerous supportin g documents including Technical Support Documents and a Legal Memorandum, laid out at lengt h 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 commenters h ave ample notice of the proposals and alternatives under consideration, and in response t he EPA received more than two million public comments. This process accords with proper notice a nd comment procedure. Under 5 U.S.C. § 553(b)(3), a notice of proposed rulemaking shall in clude “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 w here it “ensures a reasonable period for public participation of at least 30 days,” 42 U.S.C . § 7607(h), and “give[s] interested persons an opportunity to participate in the rule making throu gh submission of written data, views, or arguments,” 5 U.S.C. § 553(c). The extensive descri ption and documentation provided to support the EPA’s proposal, and the lengthy period for publ ic comment addressed in chapter 1.14 of the Response to Comment document, comply with these req uirements. A proposed rule need not reflect the precise components that will comprise t he 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 “n o requirement that an agency select a final rule from among the precise proposals”). Although the

EPA’s own reasoned consideration and its assessmentof public comment have resulted in some modifications from the proposed rule, the proposed rule ensured that interested parties were “fairly apprised” of the elements ultimately includ ed 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 NOD A as a means to advance substantive changes to the rule proposal without pr oviding sufficient opportunity for impacted stakeholders to comment. Commenters said, EPA's NOD A is not a data-availability notice; in fact, there is little, if any, new "data." Commente rs said, rather, 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 th rough a formal re-proposal process. Commenters said, EPA is also proceeding with these changes while failing to provide any substantive findings or concrete examples of revisi ons in the NODA.

Commenters appreciated EPA recognizing the difficul ty states face in complying with the Rule Proposal. Commenters said, however, substantive cha nges, including changes that could potentially increase the stringency of the Rule Pro posal, cannot be done through a NODA. EPA should only proceed with the substantive changes di scussed in the NODA through a formal reproposal of the underlying Rule Proposal.164

Commenters stated, the rulemaking process is design ed by statute and mandated by courts to provide affected entities a full and fair opportuni ty to receive notice, properly review the notice and proposed rule, and provide comment on substanti ve rulemaking. Commenters said, the NODA fundamentally undermines these statutory prote ctions by functionally re-proposing aspects of the underlying Rule Proposal without eit her going through the correct legal proceeding (i.e. re-proposing the rule) or even pro viding sufficient detail to give potentially impacted entities fair notice of what EPA is contem plating. Commenters said, it is not clear whether EPA's contemplated revisions to the glide p ath, changes to the Building Block methodology, and/or changes to the goal setting equ ation will result in any relief to the entities regulated in the Rule Proposal, and in fact, may re sult in much more burdensome emissions requirements.

Commenters stated, further, rather than providing c oncrete proposals in the NODA, EPA solicits comment on a wide range of issues identified thus f ar by stakeholders. Commenters said, for example, EPA solicits comment "on whether to establ ish 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 resp ect to an alternative regional approach for renewable energy under Building Block 3, EPA solici ts 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 ta rgets should be regionalized." Id. at 64,551. Commenters said, these requests for comment, among others in the NODA, are so broad that they would be more appropriate for an advanced noti ce of proposed rulemaking. Commenters said, to the extent that EPA decides to adopt any o f the alternative options described in the NODA, EPA must engage in a supplemental rulemaking process that presents EPA'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 E PA would seek comment in the NODA on changing the goal without providing a new proposed rule. Commenters said, instead, EPA merely states "this adjustment to goal-setting form ula would yield more stringent state goals."

Commenters said the EPA's Notice of Data Availabili ty (NODA) on the proposed rule, published in the October 30, 2014 Federal Register, further e xpands the possible outcomes of the rule. Commenters said, the scope of the rulemaking is eff ectively open-ended. Commenters said, the states cannot assess the feasibility of the rule an d 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. Comment ers 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 a ffected parties adequate opportunity to provide meaningful comment on the substantive changes.

Commenters stated, in the NODA, EPA identifies a nu mber of potential problem areas in the proposed rule, and solicits comment on options for addressing those problems. Commenters said, many, if not all, of the challenges identified by E PA in the NODA can be attributed to the complexity associated with EPA's decision to look b eyond the fence line in its BSER analysis.165

Commenters said, yet, rather than using stakeholder feedback to simplify the proposal, EPA has identified alternative approaches that would furthe r complicate an already complex regulation. Commenters said, for example, rather than eliminati ng the interim compliance period, EPA proposes alternative glide-paths that would be base d on detailed State- and source-specific data and assumptions. 79 Fed. Reg. at 64,548-59. Comment ers said, likewise, EPA's proposed solution to the current disparity 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 allo cating renewable energy potential among the

States in an effort to address concerns over inters tate transmission and interstate sale of renewable electricity credits. Id. at 64,551-52. Co mmenters said, finally, EPA suggests that differences in the proposed treatment between renew able energy and energy efficiency and NGCC facilities can be resolved by increasing even further the displacement of coal-fired electricity generation. Commenters said, thus, if a dopted, EPA's suggested alternatives would address the complexity and implementation challenge s of the proposal by increasing, rather than decreasing, the complexity and stringency of the pr oposal.

Commenters stated that the proposed alternate regio nal 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 alternativ e 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 D ata Availability because the notice made

available certain data from the Emissions and Gener ation Resource Integrated Database (eGRID) pertaining to the EPA’s state goal-setting 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 resources under building block 3. More importantly, the Notice of Data Availability provided adequate public notice, as re quired 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 Administrati ve 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 pr oposal. As the Notice of Data Availability provided public notice and a full and fair opportun ity 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 Proced ure Act and need not re-propose the rule.

Comment 4: Commenters stated EPA must give the public an oppo rtunity to review and comment on Federal rules for measuring and verifyin g energy efficiency and renewable energy credits before finalizing this rule.166

Commenters stated, emission reductions related to e nergy efficiency and renewable energy are likely to play a significant role in compliance wit h the Section 111(d) standards of performance for fossil fuel-fired EGUs, regardless of whether E PA proceeds with the Building Block BSER analysis or gives affected EGUs flexibility to volu ntarily incorporate such emission reductions for the purpose of complying with more narrow stand ards of performance for each source category based on an inside the fence line BSER ana lysis. Commenters said, in either case, it is critical that energy efficiency and renewable energ y programs can be measured and verified. Commenters said, however, EPA has provided no guida nce on how such measurements and verifications must be made. Commenters said, withou t additional information about how

emission reductions associated with these sources w ill be measured and verified, commenters cannot comment on the technical bases for including these emission reduction opportunities, and States will ultimately be unable to develop impleme ntation plans that incorporate them. 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 a nd verification 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 establi sh the necessary procedures. Commenters said, further, because of their importance to this rulemaking, EPA must issue a proposed rule addressing measurement and verification and solicitpublic comment on it before finalizing this rule. Commenters said, such an approach will, at a minimum, give States some initial guidance regarding the incorporation of energy efficiency an d renewable energy into their implementation plans. Commenters said, given EPA's abbreviated sch edule for the States to prepare such implementation plans, failure to provide some initi al 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 un til the public has an opportunity to review and comment on a federal rule(s) that establishes m easurement 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 proposing 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 hav e the opportunity to comment on these proposals.

Comment 5: Commenters stated, the proposal is incomplete. Com menters said, for example, the proposal does not include a clear and workable comp liance formula. Commenters said, the gaps in key aspects of the proposal do not allow for mea ningful review and comment, and is an insufficient indicator of what in fact EPA might ad opt.

Commenter states that the EPA has not provided adeq uate information for the states to evaluate the possible changes to Block 3 and provide meaning ful comment.167

Response 5: The EPA’s final rule consistent with proper notice and comment procedure, as discussed above. In more than a thousand pages comp rising the proposed rule and its supporting documents, the EPA provided detailed descriptions o f its proposal as well as numerous suggestions, alternatives, and methodologies. The E PA 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 subsequentNotice of Data Availability informed the interested public of the proposals under considerat ion with respect to the application of the building blocks and the potential options for compl iance 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 resulting standards of performance. The final rule adopted in this rulemaking is the logical outgrowth of the detailed information included in and accompanyi ng the proposed rule and Notice of Data Availability. Although the EPA’s own reasoned consi deration 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 ori ginal proposal and Notice of Data Availability. The EPA has thus provided a full and fair opportuni ty to commenters to assess the various components that have come together in this final ru lemaking.

Comment 6: Commenters stated that in response to stakeholder concerns regarding the Building Block 3 methodology, EPA in the NODA provided a con ceptual discussion of a third methodology for setting RE targets based on a regio nal approach. Commenters said, this "conceptual discussion" represents an attempt to al ter the original proposal, or at least, set the stage for EPA to adopt a final rule that departs si gnificantly 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 consid ering additional methodologies and proposals related to three discrete areas of the pr oposed rule, including alternative methodologies for applying building block 3 based on regionalizat ion. These additional ideas and alternatives each built upon the proposals in the July 18, 2014 proposed rule 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 of Data Ava ilability provided public notice and a full and fair opportunity for comment on the three enume rated 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 propo sals or concepts included in the Notice of Data Availability.

Comment 7: Under The Proposal, States' Reliance on Building B locks 3 and 4 is Effectively a Requirement, Not An Option and Raises APA Issues.

Commenters stated that EPA claims the proposal allo ws states great latitude to craft a plan that will achieve each state's individual goal. Commente rs said that EPA claims that "in developing its plan, each state will have the flexibility to s elect the measure or combination of measures it168

prefers in order to achieve its CO2 emission reduct ion goal." Commenters said that the proposal sets state goals that are based on achievable emiss ions reductions by applying all four building
blocks:

Commenters stated that federal case law interpretin g 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 G uidance" was neither final nor binding, the court held that "the entire Guidance, from beginnin g to end - except the last paragraph - reads like a ukase. It commands, it requires, it orders." Commenters said that the court did not rely solely on the Agency's characterization of the docu ments, 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 improve ment" or "redispatch." 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 relyi ng solely on the proposed rule and without reviewing the TSDs, no one could possibly understan d 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. Commenters said that nonethe less, the proposal and supporting technical support documents ("TSDs") state numerous times tha t the rule allows states flexibility to comply with the state goals by using a variety of m eans, yet the TSDs then set forth very specific 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 opt ion. Commenters said the proposal as written leads stakeholders to believe that state plans will not be approved 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 i mposed 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 'suggestio ns' 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 characterizat ion, mandatory. Commenters said the use of Building Blocks 3 and 4 is a rule within the meanin g of the APA, and reliance on those building blocks is improper.

Response 7: The EPA disagrees and notes that the building bloc ks are neither guidance nor a mandate. They are part of a technical determination of what the BSER is. EPA is not establishing any requirement in the guidelines that affected EGU s use particular technology to meet emission standards set in a state plan or federal plan. Thus , the cases the commenter cites are inapposite.169

1.13 CAA 307(D)

Comment 1: Commenters stated, the EPA's proposal fails to pro vide the information required to justify any rule under section 111. Commenters said , the Clean Air Act requires that, in order to initiate a rulemaking subject to section 307(d) of that Act, the EPA must include in the docket for the rule at the time of proposal the "data, informa tion, and documents ... on which the proposed rule relies." Commenters said, because of the EPA's failure to include these materials in the dockets, the Agency must withdraw the Section 111(b ) Modification Proposal and the Section 111(d) Proposal and complete the dockets for each r ulemaking before re-proposing any such

rules.

I. The Requirements of Section 307(d)

Commenters stated, the Clean Air Act provides that "[n]ot later than the date of proposal of any action to which this subsection applies, the Admini strator shall establish a rulemaking docket for such action." Commenters said, for actions subject to section 307(d) like the Proposed Rules, section 307(d)(3) then addresses the legal requirem ents 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 rule relies shall be included in the docket on the date of publication of the proposed rule." Comm enters 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 obtaining the data and in analy zing the data; and (C) the major legal interpretations and policy considerations underlyin g the proposed rule."

Commenters stated, these provisions taken together define the statutory limitations on the EPA's authority to initiate Clean Air Act rulemaking subj ect to section 307(d). Commenters said, these statutory limitations reflect Congress's recognitio n that having the information on which a proposed rule is based available at the time of pro posal is critical to meaningful comment and, ultimately, sound rulemaking.

Commenters stated, in this case, the requirements o f section 307 (d) mean that EPA was obligated to include in the docket at the time of p roposal (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 powe r plants for which it has determined that certain heat rate improvements are achievable, and all of the technical data on which it relies for its proposed standards for modified Subpart Da unit s and for modified and reconstructed Subpart KKKK units. Commenters said, critical portions of t his information, however, were not in the docket as of September 3, 2014, long after publicat ion of the Proposed Rules.

II. Why the Section 111(d) Proposal Violates Sectio n 307(d)170

Commenters stated, the EPA has omitted from the doc ket of the Section 111(d) Proposal 21 of 25 key modeling runs on which it relied to justify the proposed rule. Commenters said, the EPA also omitted any net (as opposed to gross) heat rat e and carbon dioxide emissions data on which it based the proposal.

A. IPM Modeling Runs

Commenters stated, the EPA used the Integrated Plan ning Model ("IPM") to model whether the Section 111(d) Proposal was achievable and how regu lated entities would comply with it in different years. Commenters said, the EPA modeled 2 5 cases, looking at five different policy scenarios (Base, State Option 1, State Option 2, Re gional Option 1, and Regional Option 2) in five different years (2016, 2018, 2020, 2025, and 2 030). Commenters said, the model estimates whether particular units will have to shut down, cu rtail production, improve heat rates, or switch
fuels in each of the 25 cases.

Commenters stated, the five scenarios EPA modeled w ere: (1) the Base Case, looking at regulated entity compliance with existing rules lik e 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 complia nce 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 regulated entity compliance with EPA-established regional CO2 emission goals through 2030; and (5) Regional Option 2, looking at regulated entity comp liance with EPA-established regional CO2 emission goals through 2025.

Commenters stated, despite the EPA having modeled t hese five different scenarios in each of five years, for a total of 25 modeling runs evaluat ing 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 2030 (the year in which compliance mustbe 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 s aid, without these additional 21 files,

commenters cannot evaluate the EPA's contention tha t compliance with the proposed rule is feasible. Commenters said, specifically, without th is data, commenters 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 a nd 2 policy options in the years 2016, 2018, 2020, 2025, and 2030.

Commenters stated, indeed, the only real unit-by-un it comparison modeling the EPA provides are the 2025 Base Case and 2025 State Option 1, whi ch look at compliance with the interim state goals rather than the final goals EPA proposes to p rescribe for the year 2030. Commenters said, to properly evaluate how the EPA expects regulated entities to achieve their 2030 goals, and how this compliance is balanced within a state, comment ers need to have access to the results of the171

remaining IPM scenarios for 2016, 2018, 2020, 2025, and 2030 for all of the policy options. Commenters said, without these results, the EPA app ears to lack any basis for determining that regulated entities can achieve the proposed 2030 go als in the first place.

Commenters stated, on August 1, 2014, commenters is sued a Freedom of Information Act ("FOIA") request seeking the "results of the remain ing 21 modeling runs" beyond the four IPM modeling runs the EPA placed in the docket. Comment ers specifically requested the "parsed files" for the missing runs. Commenters said, on Au gust 12, 2014, the EPA responded that it had "conducted and included only four parsed files in t he docket for the proposed rule" and that "parsing is a post -processing step that EPA does n ot routinely perform."

Commenters stated, they understand that the EPA "pa rses" 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 units to comply with the proposed rule's various implementat ion scenarios, even in the final compliance year of 2030. Commenters said, if this is in fact t he case - i.e., if the EPA did not analyze the ability of individual units to comply with the prop osed rule under various implementation

scenarios - the rule would have no basis and as a r esult would be unlawful. Commenters said,

based on other information and references in the do cket, however, the EPA appears to have run the IPM model in these instances, but either did no t include those runs in the docket or did not "parse" those runs for any scenarios beyond the fou r that the EPA posted in the docket. Commenters said, the EPA easily could have parsed a ll the modeling runs it conducted, but apparently chose not to for reasons that are unclea r. 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 units. Commenters said, without these modeling results, th e 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 i nitiation of rulemaking.

Commenters stated, finally, the EPA states in the p reamble that its "assessments ... regarding the ability of the electricity and natural gas industri es to achieve the levels of performance indicated for building block 2 in the state goal computations 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 assertions. Commenters said, it is highly unusual if not unprecedented for EPA to have omitted the necessary modeling from a rulemaking do cket on which it relies in support of a rule. Commenters said, this again illustrates that the EP A has violated the requirements of section 307(d) for initiation of rulemaking.

B. Net Heat Rate and Emissions Data

Commenters stated, the EPA also has omitted from th e docket data to support one of the central elements of its proposed rule: that existing coal-f ired electric generating units can achieve a 4-6172

percent heat rate improvement. Commenters said, to support this proposal, the EPA examined its database of existing coal-fired units and identifie d 16 units that it says have achieved heat rate improvements of 3-8 percent "year-to-year." Comment ers said, the EPA omits from the docket, however, any data that supports this assertion.

Commenters stated, the Section 111(d) Proposal dock et contains a database of heat rates and carbon dioxide emissions from existing units measur ed on a gross basis for the past decade. Commenters said, it also contains a single year-201 2---of such data on a net basis.

Commenters stated, because the EPA says that 16 uni ts achieved 3-8 percent heat rate improvements on a "year-to year" basis-which would require more than one year of data - the 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 complia nce on a net basis, while omitting from the docket any "year-to-year" data demonstrating that u nits are capable of complying with a central element of its proposal: a 4- 6 percent heat rate i mprovement on a net basis. Commenters said, without 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 o mission given that if the EPA had measured heat rate improvements on a net basis, it would hav e 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 relate d emissions) any electricity output associated 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 said, with the implementation of the Mercury and Air Toxics Standa rds rule, more pollution controls are being installed on existing sources, increasing demand fo r auxiliary power and thus increasing heat rates. Commenters said, furthermore, units that ope rate 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 stated, without a database of net heat r ate and associated emissions, the EPA's assertion that compliance with its proposed heat ra te reductions (and other parts of the rule) can be achieved on a net (rather than gross) basis cann ot 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 informa tion, hiding or disguising the information that it employs," and in the process "treat what sh ould be a genuine interchange as mere bureaucratic sport."

Commenters stated, the missing heat rate data, if i t exists, are the type of information that must be included in the docket on the date of proposal u nder section 307(d)(3). Commenters said,173

without the net heat rate and emissions data, the E PA cannot satisfy the requirements of section 307(d) for initiation of rulemaking.

Response 1: We disagree with these commenters’ assertions thatEPA has failed an obligation under CAA section 307(d)(3). That provision provid es 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 a ddition, section 307(d)(3) provides that, “All data, information, and documents referred to in thi s paragraph on which the proposed rule relies shall be included in the docket on the date of publ ication of the proposed rule.” The D.C. Circuit has emphasized that section 307(d)(3) does not establish a “general requirement” to include all information of potential relevance to those reviewi ng 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, was not relied upon by the proposal, or does not exist. Accordingl y, we disagree with these commenters that EPA failed a docketing requirement under section 30 7(d)(3).

First, commenters allege that the EPA failed to inc lude in the docket the parsed data files relating to 21 Integrated Planning Model (IPM) runs or, alternatively, information regarding those modeling runs. As EPA explained in its Aug. 1 2, 2004 response to a FOIA request for the parsed files (EPA-HQ-2014-009111), all the parsed f iles created by EPA were already available to commenters, and the remaining “missing” files ne ver existed in the first place. Parsing is a post-processing step that EPA does not routinely pe rform. 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. Fu rther extensive information on the IPM modeling conducted for the proposal was available i n a URL cited numerous times in the preamble and throughout the Regulatory Impact Analy sis accompanying the proposed rule.

Second, commenters also request the net heat rate d ata 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 propo sed 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 the 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 informatio n pertaining to 16 EGUs referenced in the GHG Abatement Measures TSD accompanying the proposed rule. The net heat rate data on which EPA purportedly relied never existed to be gin with, for the reasons stated more174

generally above. All of the gross data on which the proposal relied 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 se ction V.C of the final rule preamble, and in Chapter 2 of the GHG Mitigation Measures TSD suppor ting 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 o f heat rate improvement achievable solely through equipment upgrades, for the reasons stated in section V.C of the final rule preamble of the CPP and Chapter 2 of the GHG Mitigation Measure s TSD supporting the final CPP. Accordingly, it is unlikely that commenters could s how a substantial likelihood that the rule would have been changed but for a hypothetical proc edural error related to these 16 units. See 42 U.S.C. § 7607(d)(8).

EPA also disagrees that the NODA or November Supple mental Proposal deprived commenters of sufficient time to meaningfully comme nt on the proposal. As noted in section I.L of the preamble of the final rule, EPA initially ma de the proposal available to the public online on June 2, 2014, at http://www.epa.gov/cleanpowerpl an/. Over two weeks later, the proposal was published in the Federal Register, and a 120-day co mment period began. EPA subsequently extended the comment period by an additional 45 day s, to December 1, 2014. Commenters thus had over 30 days to comment on the NODA. For the su pplemental, 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 e xtended the time to accept public input until 30 days after close of the public comment per iod 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, the commenters had more than enough time to meaningfully comment on these documents, as many of them did.

Moreover, setting aside all of the above, commenter s 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 com ment. 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 preju dice. 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 “s ubstantial 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 recentproposed rules: the Carbon Pollution Emission Guidelines for Existing Stationary Sources : Electric Utility Generating Units (Existing Source Rule), and the Carbon Pollution Standards fo r Modified and Reconstructed Stationary175

Sources: Electric Utility Generating Units (Modifie d Sources Rule) (together, Proposed Rules). Commenters said, by failing to include in the docke ts key materials on which the Agency relies as support for the Proposed Rules, the EPA has viol ated Section 307(d) of the Clean Air Act (CAA) (codified at 42 U.S.C. Section 7607(d)). Comm enters said, both the Existing Source Rule
and the Modified Sources Rule must thus be withdraw n.

Commenters stated, in the Existing Source Rule, the EPA omitted from the docket 84% of the modeling runs on which it relied in crafting the pr oposed 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 Pla nning Model modeling runs that the agency used to justify the standards imposed by the Rule. Commenters said, the missing modeling runs cover projections for 2016, 2018, 2020, 2025 and 20 30. 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 Sou rce Rule. Commenters said, the States need the modeling run data for sufficient analysis of wh at that data shows on a unit by unit and state by state basis.

Commenters stated, similarly, the EPA failed to inc lude in the Existing Source Rule's docket vital net heat rate and emissions data, which are c entral to the EPA's assertion that existing power plants are able to achieve a four to six perc ent heat rate improvement under EPA's first "building block." Commenters said, without the "yea r-to-year" data showing that facilities can comply with the four to six percent heat rate impro vement, the States and the public cannot meaningfully comment on the achievability of the EP A's heat rate projections. Some commenters added, in particular, EPA failed to include any sup porting 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 informatio n unquestionably constitutes "data, information and documents," and likely contains "po licy considerations underlying the proposed rule" that should have been in the rulemaking docke ts from the beginning, according to Section 307(d). Commenters said, deprived of this missing i nformation, the notices of proposed rulemaking published on June 18 "fail[ed] to provid e an accurate picture of the reasoning that has led [EPA] to the proposed rule." Conn. Light. 6 73 F.2d at 530. Commenters said, this is particularly problematic where, as here, the propos als seek to overhaul the existing electric generating sector on an unprecedented scale. See Ma ryland v. E.P.A., 530 F.2d 215, 222 (4th Cir. 1975) (vacating rule due to EPA's failure to c omply with notice and comment requirements, emphasizing the "drastic impact" that compliance wi th rule would have), vacated on other grounds, 431 U.S. 99 (1977).

Commenters stated, in light of these clear violatio ns of Section 307, the EPA should withdraw the Existing Source Rule and the Modified Sources R ule immediately. Commenters said, with176

regard to the proposed Existing Source Rule, that R ule is wholly unlawful on other grounds and therefore may not be re-proposed at all, even if th e EPA were to compile the data and documents required by Section 307. See Letter from Patrick Mo rrisey. 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 corporatio n, No. 14-1112 (D.C. Cir.).

Response 2: The EPA’s response to this comment is addressed in the response to Comment 1 in

this section 1.13.

Comment 3: Commenters stated, as an initial matter, Commenter s must call attention to EPA's

last-minute release of information and data concern ing key aspects of the Existing Source Proposal. Commenters said, EPA's 60-page Notice of Data Availability ("NODA"), which addresses several controversial aspects of the prop osal, including the proposed interim goals and the building block methodology, was not made available to the public until just over one month prior to the comment deadline. See 79 Fed. Reg. 645 43 (October 30, 2014). Commenters said, worse yet, just days before the comment deadline, E PA 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 Doc ument: Translation of the Clean Power Plan Emission Rate-Based CO2 Goals to Mass-Based Eq uivalents (Nov. 2014), available at http:/ /www2.epa.gov/sites/productionlfiles/20 14-1 1/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, analyz e, and comment on this information.

Commenters stated, even if the Existing Source Prop osal could withstand the substantive challenges discussed above, it must nevertheless be withdrawn on procedural grounds because EPA omitted from the rulemaking docket key material s upon which the agency relies as support for the proposal, in violation of Section 307(d) of the CAA.

Commenters stated, section 307(d) of the CAA impose s certain mandatory requirements for all proposed rules, which reflect Congress's judgment t hat information on which a proposed rule is based must be made available to the public at the t ime 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 whic h the proposed rule relies shall be included in the docket on the date of publication of the propos ed rule." Commenters said, "all data, information, and documents" includes a "statement o f 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." Comme nters said, this docketing requirement is nondiscretionary.

Commenters stated, EPA violated Section 307(d) by o mitting from the docket 84 percent of the modeling runs on which it relied in crafting the Ex isting Source Proposal, without which the177

public cannot comment meaningfully on the proposal. Commenters said, specifically, the docket does not include 21 out of 25 of the Integrated Pla nning Model modeling runs that the agency used to justify the standards imposed by the Existi ng Source Proposal. Commenters said, the missing modeling runs cover projections for 2016, 2 018, 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 Exist ing Source Proposal. Commenters said, the public needs the modeling run data for sufficient a nalysis of what that data show on a unit by unit and state by state basis.

Commenters stated, in addition, EPA failed to inclu de 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 Prop osal to have reviewed its database of existing coal-fired units and found 16 facilities t hat have achieved heat rate improvements of 3 to 8 percent "year-to-year," but it does not include a ny supporting data. Commenters said, without the "year-to-year" data showing that facilities can comply with the requisite 6 percent heat rate improvement, the public cannot meaningfully commenton the achievability of EPA's heat rate projections. Commenters said, in other words, the p ublic 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 r ule."

Commenters stated, issuing a rule without providing parties with the technical information necessary for meaningful comment renders the final rule unlawful. Commenters said, nor 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 revi ew and comment. Commenters said, given EPA's clear violation of Section 307(d), the agency must withdraw 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 ins ufficient and contravenes the CAA's public comment requirements. Commenters said, therefore, E PA must withdraw its current proposal, and if it intends to proceed with this effort, issu e a new and complete proposal.

Commenters stated, first, EPA has failed to provide significant supporting materials in the public docket. Commenters said, CAA section 307(d)(3) requ ires EPA to include in its rulemaking docket on the date of publication of a proposed rul e "[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 Reg ister on June 18, 2014, and to this day, fails to include significant documents EPA acknowledges it h as relied upon. Commenters said, for example, EPA conducted 25 primary modeling runs usi ng the IPM, yet only four of those 25178

runs were placed in the docket for public review. C ommenters said, in preparing its proposed rule, EPA evaluated numerous compliance options and compliance years; however, it only made available in the docket the parsed files from IPM r uns 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 s tates' ability to comply in 2030 and only one of five scenarios modeled for the initial 2020-comp liance year. Commenters said, the one scenario provided for 2020 is a regional scenario, not a state-specific scenario. Commenters said, EPA's other building blocks were also developed bas ed in part on IPM runs. Commenters said, the public thus needs EPA's additional parsed files to complete a meaningful analysis of EPA's proposal.

Commenters stated, also missing from the docket are data EPA relied on to support the heat rate improvement assumptions underlying EPA's first buil ding block. Commenters said, according to EPA, 16 facilities have achieved heat rate improvem ents of three to eight percent on a year-toyear basis, allegedly supporting its assertion thata four to six percent heat rate improvement is

reasonable and achievable across all coal-fired uni ts in every state. Commenters said, however, despite requests for this information from states a nd affected entities, EPA has not made that year-to-year heat rate improvement data available i n the public docket.

Commenters stated, in September 2014, EPA posted ad ditional materials to its rulemaking docket, but did not include the information referen ced 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. Comme nters 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 def iciencies and allow additional time for public review and comment based on the complete rec ord 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 place d 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 p ublic engagement throughout the rulemaking process. The proposed rul e and subsequent notices satisfy the procedural requirements of the CAA and/or the APA b y providing meaningful notice and gave giving commenters an adequate basis on which to com ment. In addition to providing notice and soliciting comment in the Federal Register, EPA con ducted an extensive outreach effort including numerous meetings with stakeholder groups . Many of commenters’ suggestions have been reflected throughout the final rule.179

Comment 5: Commenters stated, EPA 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 pro posed in the NODA. Commenters said, under a "regionalized" 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 g enerated within the state itself. 79 Fed. Reg. at 64,551. Commenters said, this approach would "gr oup states into regions; aggregate RE generation potential across states within each regi on; and then reapportion the aggregate identified RE generation to individual states accor ding to criteria that assume regional RE development in which parties in multiple states par ticipate, regardless of the specific state where the generation occurs." Id. Commenters said, EPA be lieves this approach would "better align RE targets with the proposal to allow the use of certa in 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. Commenters said, again, EPA does not actually propose this app roach and merely seeks comment on an approach whereby "regional availability of NGCC gen eration would be considered rather than just in-state availability of NGCC generation in se tting 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 diffe rent ways - using six regions whose borders are informed by NERC regions, RTOs, or some alterna tive regional structure. Id. at 64,551. Commenters said, the Agency explains that using reg ional approaches could "mitigate the concerns expressed" by certain unnamed stakeholders "that building block 2 has little or no effect on certain states with large amounts of coal -fired generation and limited excess NGCC capacity." Id. Commenters said, as noted, EPA has n either proposed any of the regional approaches on which it requests comment nor has it provided sufficient information such as technical analyses that commenters need to allow th em to comment in a meaningful way. Commenters said, the Agency provides no direction o n how states might be grouped into regions, instead listing four significantly differe nt options and also soliciting comment on "some other approach." Id.

Response 5: As noted by the commenter, the agency provided spec ific information in the NODA regarding how it was considering recalculating cert ain aspects of the building blocks, including the regionalization approach. EPA put the informati on 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 inc omplete due to missing modeling results.

Commenters stated, EPAs proposed rule relies heavil y upon computer modeling, but many of the key assumptions used throughout the modeling proces s have not been made available for public180

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 assumpti ons it used when modeling the effects of 111(d) in the record. Commenters said, the agency c ontinues to refuse outside requests for the relevant information. Commenters said, without acce ss to the assumptions used to formulate the rule and the full portfolio of model outputs, stake holders cannot confirm or deny the veracity of the Agency's claims about the feasibility of compli ance.

Commenters stated, some, but not all, critical docu ments were added after the proposed rule was published in the Federal Register. Commenters said, for instance, EPA released two new years of data on electricity consumption on October 28th. Co mmenters said, this new data forced stakeholders to re-do their computations just one m onth 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 u pon the economic, consumer, and energy impacts on Indiana remain unavailable.

Commenters stated, EPA failed to provide data on al l IPM model runs.

Commenters stated, EPA must provide the basis and p urpose for the Proposed Guidelines under section 307(d)(3) of the CAA. Commenters said, the basis and purpose must include "a summary of . . . the factual data on which the proposed rul e 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 s ection 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. Co mmenters said, in response to a request

from Commenters under the Freedom of Information Ac t, EPA responded that it had not parsed the 21 modeling runs, which is why those data are n ot included in the docket. Letter from Karen Orehowsky, Deputy Dir., Clean Air Markets Div., EPA to Craig S. Harrison, Hunton & Williams LLP (Aug. 12, 2014) (included in UARG's separately filed Supplemental Materials for the Rulemaking Record). Commenters said, without such p arsed data, however, EPA cannot have conducted a reasonable inquiry into the achievabili ty of Building 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. Ligh t & Power Co. v. Nuclear Regulatory Comm'n, 673 F.2d 525, 530 (D.C. Cir. 1982).

Commenters stated, EPA cannot establish that increa ses of this magnitude are achievable - particularly because it has failed to provide any p arsed analysis of its IPM runs for 2030 that would allow states to assess the impact of these re quired increases. Commenters said, indeed,181

EPA has provided data for only four of the 25 IPM r uns that it performed as support for the Proposed Rule. Commenters said, the Agency must pro vide the basis and purpose for the Proposed Rule under section 307(d)(3) of the CAA. C ommenters said, the basis and purpose must include "a summary of . . . the factual data o n which the proposed rule is based; the methodology used in obtaining the data and in analy zing the data; and the major legal interpretations and policy considerations underlyin g 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.

Commenters stated, the Agency's own analysis demons trates that it has failed to accurately consider factors such as cost and feasibility. Comm enters 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 generatio n 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 t urn, will increase the cost of those other building blocks in ways that EPA has failed to anal yze in the Proposed Rule. Commenters said, therefore, EPA must recalculate its renewable energ y 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.

Commenters stated, since the release of the proposa l in June 2014, EPA has continuously added to the rulemaking docket, making it difficult for s takeholders adequately to evaluate the proposal during the comment period. Commenters said, at pres ent, it contains more than 1,500 documents, with significant new information, concepts, and req uests 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 notcontain all of the parsed (unit-level) modeling files depicting critical unit level assump tions and impacts from EPA's analyses. Commenters said, the proposal, as it stands, violat es basic statutory requirements for rulemaking set forth in section 307(d) of the Act.

Commenters stated, EPA completed twenty-five IPM ru ns (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 tota l of 175 model 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 "par sed 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 there fore completely inadequate as Commenters cannot properly evaluate the Agency's ju stification for its BSER determination and the proposed guidelines' impacts without proper ana lysis of all "parsed files."

Commenters stated, some critical documents were notreleased when the proposed rule was published in the Federal Register, nor have they be en added to the docket. Commenters said, perhaps one of the most critical elements missing i s the Agency's failure to make key details of182

the computer modeling they performed to support its proposed rule available for public comment. Commenters said, critical modeling runs th at bear upon the economic, consumer, and energy impacts on both Indiana and Ohio remain unav ailable. Commenters said, as a result, commenters believe that preparing informed comments on this important issue is not possible.

Commenters 24110 stated, EPA's analysis of the effe cts the proposed rule consists primarily of IPM model runs. Commenters said, these runs form th e basis for EPA's RIA, and they are a key component of EPA's conclusion that EPA's "best syst em" and the standards it is imposing as a result of that system are achievable. Commenters sa id, yet despite the centrality of these model runs to EPA's analysis, and despite the fact that t he Agency conducted 25 different model runs, EPA (a) failed to include the complete model run in formation 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 info rmation 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 comment.

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 has provid ed an additional proposal on such an important element of Clean Power Plan with less tha n 2-1/2 weeks left in the comment period to prepare additional comments. Commenters said, in co mbination with the June 18, 2014 proposal and the October 30, 2014 NODA, there is just not en ough time to thoroughly explore all of the ramifications of these proposals and engage in disc ussions 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 inf ormation as possible in this narrow
timeframe.

Commenters, among other interested parties, request ed clarification on the rate-to-mass conversion process in response to the vague and ina dequately developed guidance provided by U.S. EPA in the "Projecting EGU CO2 Emission Perfor mance in State Plans" TSD which was released with the June 18, 2014 proposal. Commenter s said, the aforementioned TSD described a methodology in which states would develop various r eference and future projection scenarios, accounting for load growth, transmission expansion, fuel supply and delivery, among other variables. Commenters said, many questions were lef t unanswered, such as how states could account for and credit pending unit retirements, wh at would be considered an adequate loadgrowth model, and what would the reporting requirem ents be under a mass-based goal. Commenters said, EPA, in the name of flexibility, u nencumbered itself of the responsibility of providing firm guidance that would enable states to adequately assess the pros and cons of a183

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 approaches for determining a mass-based equivalent metric. Comment ers said, first, EPA is proposing an approach based on historical data that produces a m ass-based equivalent that applies to existing affected EGUs only. Commenters said, this option si mply assumes that the proposed rule will reduce generation demand via elements of the propos ed best system of emission reduction (BSER), and that a mass-based goal can be obtained simply by the multiplication of the ratebased goal by this new, reduced generation value. C ommenters said, second, U.S. EPA is proposing an approach based on a combination of his torical data and a projection of future electric demand that produces a mass-based equivale nt that is inclusive of new fossil fuel-fired sources. Commenters said, this second approach take s 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 sophistication and level of detail put forth in the original propo sal.

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 resemblance to, nor sheds any new light on, the pro posed 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 shutdowns (including a fair methodology to credit them), and no recommendations as to the appropriate tools to develop long-term projections of generatio n. Commenters believe that, given the farreaching impacts of the proposed rule, the burden f alls on EPA to fully develop a rate-to-mass conversion methodology along with supporting inform ation that demonstrates the feasibility and legality of such an approach. Commenters said, furt her, EPA must demonstrate that grid reliability will be maintained whether a state choo ses a rate-based or mass-based compliance plan, which EPA has failed to do.

Commenters stated, the NODA provides very little ad ditional "data" beyond U.S. EPAmanipulated 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 presumab ly 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" yet U.S. EPA has p rovided no additional goal computation or data for states to use in providing meaningful comm ents. Commenters said, additionally, no additional IPM results were provided to assess, on a unit-by-unit basis, the implications of these alternatives and potential changes.184

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. Commenters provide d a list of the major elements. One Commenter's Appendix EE included a formal request t o 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 Regional, 2030

• IPM Parsed Files: Option 2 State, 2025

• U.S. EPA heat rate improvement analysis data

• Sufficient detail on enforceability and EM&V approv ability

• NODA lacked data, reformulated state goals, cost an alysis, technical analysis and other
administrative 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 pla ns the EPA is finalizing were proposed for comment in its June 18, 2014 proposal. EPA discusse s the importance of EM&V in Section VIII of the preamble and establishes a structural requir ement 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 fur ther 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, inc luding 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 impr oper alteration 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 increased 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), 7 607(d); Essex Chemical Corporation v. Ruckelshaus, 486 F.2d 427, 433 (D.C. Cir. 1973).

Commenters stated, in the NODA, EPA asserts that itintends to ensure that other stakeholders have the opportunity to consider these ideas as the y formulate their comments on the proposal. Commenters said, this assertion is unpersuasive. Co mmenters said, the true purpose of the NODA appears to be an effort by EPA to circumvent p roper notice and comment procedures by de facto alteration of the original proposal, in vi olation of section 307 of the CAA.185

Commenters stated, the fact that EPA felt compelled to issue the NODA, requesting comment on issues that go beyond the more than 130 requests fo r comment it made in the June proposal, again underscores the fact that its proposal is notsufficiently expressed. Commenters said, this scoping exercise should have been an Advance Notice of Proposed Rulemaking, rather than a Notice of Proposed Rulemaking. Commenters said, eve n at the late date on which the NODA was issued, with just 31 days remaining in the comm ent period, EPA still failed to address the

critical issue of the rate-to-mass conversion metho dology. Commenters said, a well-defined and consistent methodology is crucial for states to for mulate meaningful comments and evaluate compliance options. Commenters said, the poor trick le of critical information from EPA has left states, affected sources, and the public inadequate time for review and development of

comments.

Commenters stated, EPA has offered two approaches f or 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 approach es 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 or iginal pretense that coal generation is not targeted for replacement. Commenters said, the agen cy 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 unaccept able 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 tr anslation of the proposed rate-based goals to mass-based goals, as discussed previously in these comments.

Response 8: EPA disagrees with this comment. In the June 18 pr oposal, EPA took comment on a number of ways that States could convert rate bas ed 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 equival ent targets based on historical data. Many stakeholders also developed methodologies. Based on this large response, EPA supplemented the record on this limited portion of the rule. In part icular, EPA proposed a methodology (similar to methodologies a range of commenters had developed i ndependently) to convert the rate based targets to mass based targets. EPA believes the am ount of time that commenters had to provide

additional comment on this limited comment was suff icient because: 1) the fact that a range of commenters independently developed similar approach es to the approach that EPA requested

additional comment on demonstrates how much EPA's m ethodology built off of the original proposal and the fact that even absent the suppleme ntal 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, was merely a calculation methodology and did not change any of the underlying control assump tions. Finally, insofar as commenters claim

that the existence of the NODA means that EPA faile d an obligation under CAA section 370(d)(3), they are incorrect. As explained in res ponse to Comment 1 in section 1.13, the EPA186

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 requests made by the key stakeholders an d fellow state Attorneys General that the EPA make available all data, information, and d ocuments upon which it relied when drafting the proposed rule "Carbon Pollution Emission Guidel ines for Existing Stationary Sources: Electric Utility Generating Unites." 79 Fed. Reg. 3 4,830 (June 18, 2014) (hereinafter "111(d) Rule"). Commenters said, all data, information, an d documents that the EPA analyzed and upon which the EPA relied when drafting the 111(d) Rule must be made publicly available in order to ensure opportunity for meaningful analysis and comp rehensive public comment. Commenters requested that the EPA immediat ely promulgate and publish a Notice of Data Availability ("NODA") that contains the techni cal documents and 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 public co mment.

Comment 9: NO RESONSE HAS BEEN ADDED

Comment 10: Commenters stated, first, EPA's timeline fails to comply with the rulemaking requirements of CAA section 307(d) concerning recei pt and consideration of public comments. Commenters said, EPA has not provided significant s upporting materials in the public docket. Commenters said, section 307(d)(3) requires EPA to include in its rulemaking docket on the date of publication of a proposed rule "[a]ll data, info rmation, and documents . . . on which the proposed rule relies." Commenters said, EPA's docke t on the date of the publication of the proposed rule in the Federal Register, June 18, 201 4, failed to include significant documents the Agency acknowledges it relied upon. Commenters said , this deficiency persists to this day. Commenters said, for example, EPA conducted 25 prim ary modeling runs using the IPM, yet only four of those 25 runs were placed in the docke t for public review. Commenters said, in preparing its proposed rule, EPA evaluated numerous compliance options and compliance years; however, the Agency only made available in the dock et the parsed files from IPM runs that evaluate the 2025 base case, 2025 State Option 1, 2 025 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 scen arios modeled for the initial 2020 compliance year. Commenters said, moreover, the one scenario p rovided for 2020 is a regional scenario, not a state-specific scenario. Commenters said, also, a ccording to EPA, its "assessments . . . regarding the ability of the electricity and natura l gas industries to achieve the levels of performance indicated for [B]uilding [B]lock 2 in t he state goal computations are supported by analysis that has been conducted using the Integrat ed Planning Model." Commenters said, other Building Blocks evaluated by EPA were also develope d based in part on IPM runs. Commenters said, EPA's missing, additional parsed files from t he IPM results are needed to complete a187

meaningful analysis of, and to comment on, the guid elines, their underpinnings, and whether and how states and sources are projected to 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 Buil ding Block. Commenters said, according to EPA, 16 facilities have achieved heat rate impro vements of three to eight percent on a year-toyear basis, allegedly supporting its assertion thata six percent heat rate improvement is

reasonable and achievable across all coal-fired uni ts in every state. Commenters said, however, despite requests for this information from the stat es and affected entities, EPA has not made that year-to-year heat rate improvement data available i n the public docket. Commenters said, one of the 16 facilities is Plant Gorgas in Alabama, which is owned and operated by Alabama Power, a subsidiary of Southern Company. Commenters are obvi ously uniquely positioned to comment on the missing data from that plant, in particular, bu t EPA must make available the missing data from all 16 plants to ensure that EPA has properly interpreted it and understands any applicable limitations on it. Commenters said, without those d ata, commenters could not fully evaluate and

comment on the basis for EPA's conclusions that a s ix percent improvement in heat rate is
reasonable and achievable.

Commenters stated, in September 2014, EPA posted ad ditional 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 ru lemaking 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 fundamentally different if t hose materials were properly considered by EPA, based upon meaningful and informed public comm ent. 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, this legal mandate to prov ide its supporting material is not a mere ministerial duty but is intended to allow affected persons and ultimately a reviewing court to determine if any agency rule was technically suppor ted, reasonable, and legally authorized. Commenters said, the absence of this information ha s prejudiced not only Commenters in their ability to participate in this rulemaking proceedin g in a meaningful manner, but also any court that may subsequently review this rulemaking. Comme nters said, EPA must correct the

deficiencies in the record and allow additional tim e for public review and comment based on the complete record that it has relied upon in developi ng this proposed rule.

Commenters stated, third, EPA's rulemaking schedule does not provide the Agency sufficient time to consider and respond adequately to public c omments. Commenters said, section 307(d)(6)(B) of the CAA requires that when promulga ting a final rule, EPA is to provide "a response to each of the significant comments, criti cisms, and new data submitted in written or oral presentations during the comment period." Comm enters said, EPA has proposed that it will adopt a final rule in this proceeding by June 1, 20 15. Commenters said, this self-imposed deadline is arbitrary and capricious in light of th e tremendous volume of comments being188

developed on this proposed rule. Commenters said, a s 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. C ommenters said, given the volume of comments and new data that EPA must consider, it se ems impossible 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 ru les. Commenters said, accordingly, EPA should withdraw its June 18, 2014 proposal, re-prop ose it along with all supporting materials, and provide adequate time for the public to commentand for EPA to respond thereto.

Response 10: This rule was signed on August 3, 2015, and thus co mmenters’ 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 sect ion 1.13. The Plant Gorgas is one of the 16 EGUs discussed in that response.

Comment 11: Commenters argued that EPA has not adequately expl ained the criteria that will be used to evaluate State Plans or measure complian ce.

Commenters stated that the CPP is implemented throu gh 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 deta iling the formula used to calculate State Goals, which employs a CAA concept called Best Syst em of Emission Reduction (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 sui tability of State Plans or measure compliance.

The commenters asserted that this is a critical omi ssion that makes it impossible to analyze most key items in CPP or scenarios for State Plan develo pment and implementation with certainty. The commenters noted that State governments are qui te certain to have severe practical concerns about the ambiguities in the pathway to State Plan approval and ultimate compliance determinations (in addition to the political object ions already raised in August and September)

Response 11: In the final rule, building off the proposal’s req uirements, the EPA has issued clear criteria for approvability of state plans, ad dressing this commenter’s concern. After reviewing comments concerning the four proposed app rovability criteria, the EPA has determined that listing approvability criteria sepa rate from the 12 required plan components is potentially confusing and redundant. The EPA has co ncluded that a satisfactory state plan that includes the required components will meet the prop osed approvability criteria and is not finalizing the criteria separate from the required plan 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 ad ditional guidance on enforceability of state plans for non-affected enti ties and guidance for evaluation, measurement, and verification (EM&V) plans prior to proposal so these materials would have been available for public comment.189

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 i n a state plan. According to the commenters, EPA acknowledges this guidance serves as the founda tion for the types of emission limits that they have found can be enforced as a practical matt er and set forth the general principle that a requirement that is enforceable as a practical matt er is one that is quantifiable, verifiable, straightforward, and calculated over as short a ter m as reasonable. The commenters cited the following guidance referenced by EPA:

1. September 23, 1987 memorandum and accompanying i mplementing guidance, "Review of State Implementation Plans and Revisions for Enforc eability and Legal Sufficiency,"

2. August 5, 2004 "Guidance on SIP Credits for Emis sion Reductions from Electric-Sector Energy Efficiency and Renewable Energy Measures," a nd

3. July 2012 "Roadmap for Incorporating Energy Effi ciency/ Renewable Energy Policies and Programs into State and Tribal Implementation Plans ", Appendix F.

Commenters have serious concerns with the use of th ese existing guidance documents for nonEGU entities. The commenters believe U.S. EPA shoul d provide guidance on enforceability considerations related to requirements in a state p lan for entities other than affected EGUs and should have provided this guidance as part of the r ulemaking docket available for comment. The commenters noted that, especially with RE and EE, i t is difficult for states to analyze the ability to meet the goals proposed without the context of h ow EPA will define enforceability. The commenters argued that states should have had the o pportunity to review this proposal within
that context.

Commenters noted that EPA identified a need for app rovable plans to have quantification, monitoring and verification provisions for EE/RE. T he commenters referred to EPA's statement that state plans must include "an evaluat ion, measurement, and verification (EM&V) plan that explains how the effect of these measures will be determined in the course of plan implementation." The commenters noted that these EM &V plans must specify analytical methods, assumptions, and data sources that the sta te will employ and will be subject to EPA approval. According to the commenters, EPA obviousl y 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 durin g the proposal. The commenters contended that this approach inhibits the states' ability to provide meaningful comments on feasibility of EPA's goals, and could ultimately je opardize the ability of states to prepare plans that meet EPA's requirements.

Response 12: Commenters stated that EPA should provide guidance on enforceability considerations related to requirements in a state p lan for entities other than affected EGUs and190

should have provided this guidance as part of the r ulemaking docket available for comment. In this action, the EPA is finalizing a “state measure s approach” which, unlike the proposed portfolio approach, does not require federally enfo rceable measures against entities other than affected EGUs. In this approach, state enforceable measures against entities other than affected EGUs should be included in the state plan supportin g 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 this topic.

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 min imum requirements in the emission guidelines for quantification and verification of E E/RE measures.

Comment 13: Commenters stated that EPA must take comment on an y requirement that state plans include EM&V plans, which are subject to stat e discretion.

Commenters noted, with respect to state plan approv ability criteria, that EPA mentions quantification, monitoring, and verification of EE and RE measures. The commenters noted that

the Plan TSD in particular discusses a requirement thatstates include in their plans a separate "evaluation, measurement, and verification plan (EM &V plan)." Plan TSD at 36. To the extent EPA includes such a requirement in the final rule a nd to the extent it prepares guidance on EM&V plans, the commenters stated that EPA must fir st provide adequate notice and opportunity to comment on such issues.

Response 13: As further discussed in Section VIII of the preambl e, the requirements for EM&V under state plans the EPA is finalizing were propos ed for comment in its June 18, 2014 proposal. EPA discusses the importance of EM&V in Section VII I of the preamble and establishes a structural requirement in the guidelines. In the pr oposed federal plan, the agency provides a more robust discussion of particular EM&V requirements w hich 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 informe d decision on whether to submit a state plan, the states must have a clear u nderstanding of what a federal plan for this section 111(d) rule would require. The commenters s tated that the EPA has not provided a rational justification for not including a draft fe deral plan with the proposed rule. The

commenters asserted that the EPA should withdraw th e proposed rule until they have established a draft federal plan and are able to explain the ba sis 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 fina l rule the Agency has signed a proposed191

Federal Plan and model rule. The EPA disagrees thatit is under any legal obligation to provide a proposed federal plan at the time it issues emissio n guidelines under section 111(d). However, the proposed federal plan addresses stakeholders’ r equests 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, an d will be out for public comment.

1.14 REQUEST FOR EXTENSION OF COMMENT PERIOD

Comment 1: Commenters stated that the EPA only provided a 165 -day period for the public to evaluate and submit comments and data on the propos ed rules, which are the most complex and far-reaching environmental rules ever proposed by E PA. Commenters noted that these rules significantly affect almost every electric generati ng 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 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 Sup port Documents, a Regulatory Impact Analysis, and complex modeling analyses. Commenters noted 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 comment on th is sweeping rule and the voluminous supporting information is unreasonable and arbitrar y. Commenters said that the agency should allow a longer public comment period to ensure mean ingful public participation and a fullydeveloped 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 inf ormation throughout that extension, including as recently as mid-November. Commenters s aid that large companies will have difficulty properly analyzing the proposed rule and all of its attendant materials. Commenters stated that small businesses and average citizens d o not have the resources necessary to conduct such analyses, likely resulting in failure to revie w 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 fin alized 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 al l of its supporting documents. Commenters said that there remain many gaps and details that m ust be filled in by the states making it192

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 complete 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, with U.S. EPA not extending the deadline on this is sue, they stand to lose important input from stakeholders. Commenters said, furthermore, due pro cess 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 deadl ine should have been extended.

Commenters stated, despite the extension of the com ment 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 pote ntial changes, EPA is penalizing key stakeholders in this rulemaking - especially genera tors - by failing to provide sufficient time to fully analyze and comment on the content of the NOD A. Commenters said, stakeholders must be given additional time to comment on this NODA.

Response 1: The EPA engaged in extensive outreach to stakeholde rs and the general public at every stage of development of this rule. Our outrea ch 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 leaders, non-governmental organizations, other federal agencies, other experts, community groups and membe rs 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 e ncouraged, organized, and participated in hundreds of meetings about CAA section 111(d) and r educing carbon pollution from existing power plants. The agency’s outreach prior to propos al, as well as during the public comment period, was designed to solicit policy ideas, conce rns, and technical information.

The EPA signed and announced the proposed rule on J une 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 proposed rule was published in the Federal Register on June 18, 2014, 79 Fed. Reg. 34830, at which time th e 120-day public comment period began. In response to stakeholder requests for additional tim e for review the proposal, the EPA extended193

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 Notice of Data Availability (NOD A), 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 techni cal support document (TSD) that provided 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 TSD.

At the close of the comment period on December 1, t he 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 to “ensure a reasonable period for public participation of at le ast 30 days” when promulgating a regulation under section 111. EPA believes the 165-day commentperiod 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 the comm ent 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 Regi ster on October 30, 2014, the close of the comment period on December 1, 2014, still allowed s takeholders “at least 30 days” to review the three topics discussed in the NODA and formulate an y additional comments. This was a reasonable period for public participation given th e limited length and number of topics in the NODA, and in light of the fact that the NODA soughtcomment on issues raised by the commenters themselves. Accordingly, no further exte nsion of the public comment period was

warranted.

Likewise, while the Technical Support Document conc erning the translation of emission ratebased goals to mass-based equivalents was published in the Federal Register on November 13, 2014, this supporting documentation was intended on ly to inform and assist stakeholders in understanding certain technical aspects of the prop osed rule as it was published on June 18, 2014. The information shared in the Technical Suppo rt Document was not prescriptive, but rather was developed at the request of state commen ters to illustrate potential methods states might choose to adopt in implementing the proposed rule.

Stakeholders will also have the opportunity to part icipate further during the state plan development process. States will have to demonstrat e that they are actively engaging all members of the public as part of their public parti cipation process. In the initial plan submittal and final plan submittal, states will have to provi de a summary of how they are engaging with stakeholders, including vulnerable communities.

Comment 2: EPA issued two notices and a technical support doc ument after the June 18, 2014 proposal: 1) "Notice of Data Availability" (NODA) ( 79 FR 64543; October 30, 2014), 2)194

"Notice; Additional Information Regarding the Trans lation of Emission Rate-Based CO 2 Goals to Mass-Based Equivalents" (79 FR 67406; November 1 3, 2014), and 3) associated with the second notice, a technical document that provided t wo 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).

A number of commenters requested that the public co mment period for the proposal and/or a

combination of one or more of the notices and the T SD be extended beyond the December 1, 2014 closing date by a range of 31 to 60 days. Seve ral other commenters requested an unspecified extension of the comment period due to the NODA or otherwise commented on the inadequacy of time allowed for comment on the notic es and TSD.

Commenters recognized the significant, unprecedente d amount of outreach that the EPA had done with regard to the proposed guidelines. Commen ters also recognized the fact that the EPA initially provided a longer time period for review and comment on the proposed guidelines and then later provided an extension. Commenters apprec iated what the EPA did to engage with states throughout the public comment period and is grateful for the longer timeframe for review and comment. Commenters said that despite the accom modations 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 com plexity associated with the EPA's proposal, the amount of options provided and the EPA's reques t for comment on them all, the sheer amount of material and data in the docket (some pro vided late in the comment period) and the necessity for state agencies to both evaluate and u nderstand 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 guide lines - one that EPA admits could potentially be the most significant energy-environm ental regulatory action in decades.

Commenters stated that the volume and complexity of documents associated with the proposed guidelines is unprecedented. Commenters said that t he EPA issued a pre-publication copy of the proposed guidelines on June 2, 2014. Commenters sai d that the 657-page document was officially published in the Federal Register on Jun e 18, 2014.

Commenters asked the EPA for additional time for re view and analysis of the issues addressed in the NODA and potential inconsistencies between the rate-to-mass TSD and the proposed rule. Commenters stated that, given that: (1) the origina l 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 subs tantive new issues were raised to be addressed in comments; and (3) the EPA generally pr ovides commenters with at least 60 days in which to respond to information requests for additi onal public comments.

Commenters stated that, late during the public comm ent period for the proposed rule, the EPA issued the NODA and the "Notice; Additional Informa tion Regarding the Translation of Emission Rate-Based CO2 Goals to Mass-Based Equival ents." Commenters said that the issuances provided critical information regarding t he proposed rule, but that this information,195

which includes interpretation of the original propo sal, as well as supporting information, was not available until near the end of the comment period. 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 Administrat ive 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, i n an attempt to cure defects in the content of its original proposal, the EPA has published not ices of data availability and technical support document on October 30, 2014 and November 13, 2014 (79 FR 64543; 79 FR 67406).

Commenters said that these new documents raise a se ries of complex, new issues regarding both EPA's BSER analysis and the procedures for states t o submit implementation 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 canno t be completed in the few weeks provided by the EPA. Commenters said that, for 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. Com menters said that the lack of time provided by the EPA has prevented them and other in terested stakeholders from receiving a full and fair opportunity to comment on the proposed rul e. 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 rul e.

Commenters also stated that the EPA's NODA raised s ubstantial new issues that may dramatically expand the potential scope and stringe ncy 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 new issues raised in the NODA. Commenters said that, fo r the reasons outlined above and based upon other comments submitted by the states, the EPA sho uld 1) withdraw the proposed rule, and 2) if the administration insists on pursuing carbon dioxi de emission regulations, initiate an atmosphere of cooperation by working with the state s 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 limitations. Commenters said that, if EPA is unwilling to withdraw the proposed rule, it should, at a minimum, grant an ex tension of the public comment period for an additional forty five (45) days. Commenters said th at this additional time is critical to allow for meaningful dialogue on the issues noted above and t o 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 significan t and complex rule. Commenters said, because of the complexity of the rule, numerical an alysis is necessary to understand how the196

proposed changes might affect our states and our cu stomers. Commenters said that analysis is lacking at this time. Commenters requested that the EPA provide more information and more time to comment on the implications of the NODA.

Commenters stated, EPA originally provided 120-days for stakeholder comment on this proposal. Commenters requested a much needed extens ion of 90-days on the comment period on July 16, 2014 to appropriately analyze the proposal . Commenters 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 Sena tors, the EPA announced on September 16, 2014, one-month prior to the close of the comme nt period, an additional 45-days would be granted (closing December 1, 2014).

Commenters said that the October 30, 2014 NODA requ ested comment on numerous other alternatives based on early stakeholder comments, a ll of which have the potential to significantly impact state goals. Commenters said that the Novemb er 13, 2014 notice provides options for a very important aspect of this proposal, the convers ion of the rate-based goal to a mass-based goal. Commenters said that the EPA noticed these ad ditional modifications to the original proposal with very little time remaining and offere d no extension to the comment period.

Commenters stated that the EPA proposed and request ed comment on not only a regulation, but numerous TSDs that would greatly impact the impleme ntation of such a regulation. Commenters said that the original rule alone asked for specifi c 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 e lements not specifically identified for comment most definitely warrant comment from stakeh olders. Commenters said that these comment requests stretched from simple requests to requests on long-term strategic impacts regarding what would 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 where 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 co mments.

Commenters stated that the overwhelming amount of m aterial 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 ac companying NODAs in the time provided, and providing a comprehensive analysis was virtuall y impossible.

Commenters stated that, in addition to reviewing an d 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 proposed guidelines and their
recommendations for state action.197

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 an d December 1, 2014. Commenters said that, then, on October 28, 2014 and November 6, 201 4, the EPA issued additional data and documents related to the proposed guidelines but di d not extend the comment period. Commenters said that, in short, the EPA provided ov er 150 additional pages of information and data with only 23 business days remaining in the co mment period. Commenters said that those 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 a nd 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, depending on the resources that were available to the department. Commenters s aid that various other revisions to documents or data, as well as additional information, were is sued throughout the comment period. Commenters simply did not have time to review and e valuate it all. Commenters said that this is particularly troubling given the nature of the prop osed guidelines and the critical role states must play in developing effective, workable state plans. Commenters requested that the EPA consider extending the deadline for comments specifically re lating to information and data issued during

the late October and November time frame.

Commenters recommended that, as stated in a Novembe r 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 & William s LLP, to Regina A. McCarthy, Adm'r, EPA at 2 (Nov. 13, 2014). Commenters said that, alt hough the agency had not proposed any specific changes to its original June 18, 2014 prop osed 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. Comment ers said that the October 30, 2014 Federal Register notice was published barely a month before the due date for comments. Commenters said that the proposed guidelines are extraordinari ly complex and, as discussed below, the issues

raised in the NODA on which EPA solicits comment ar e very broad, seem to contain some approaches that are either new or that contradict i ts previous positions, and ultimately obscure to the point of incoherence what approach EPA might ul timately 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-maki ng and provides no grounds for the EPA to assert that its unsupported policy musings are a lo gical outgrowth of the original proposal.

Commenters recommended that the EPA provide a reaso nable time period beyond the proposed comment period deadline of December 1, 2014, to all ow states to assess the feasibility of the198

building block assumptions and provide information to justify any adjustments needed to the states' goals. Commenters said that, during the com ment period ending on December 1, 2014, it

will be difficult to ascertain whether states unabl e to implement one or more of the building blocks per EPA's assumptions will have the flexibil ity to increase the stringency 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 a dequacy and reliability and the results of such

studies will be available after the comment deadlin e. Commenters said that, in many cases, these reliability studies will likely not be completed un til after promulgation of a final EPA rule setting the states' emission rate goals.

Commenters stated that recently issued EPA support documents fail to provide adequate notice to interested parties or a reasonable opportunity t o draft and submit comments. Certain lateissued "notices", including EPA's NODA and Technica l Support Document (TSD), are vague and do not provide a clear rule to respond to or ti me to prepare appropriately tailored comments. Commenters said that recently released su pport documents do not provide a meaningful opportunity to comment. Commenters said that federal agencies are required to provide the public with adequate notice of a propos ed 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 expen sive environmental regulation ever imposed on the electric power sector. Commenters said, affe cted parties are therefore entitled to a noticeand-comment process in a manner that is respectful of the magnitude and complexity of the rule: 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 n ot appropriate.

Commenters stated that, due to the complexity of th is proposal and the significance this rule will play in the lives of so many American citizens, the EPA should consider extending the comment period. Commenters said that the EPA provided suppl emental technical documents and spreadsheets near the end of this comment period (O ctober 28, 2014 and November 6, 2014) to explain some of the concepts presented in greater d etail. Commenters said that, because the EPA has stated "once the final goals have been promulga ted, 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 appro priate 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 st ates ample time to review these new documents since that are key factors in the final goal calcul ation.

Commenters stated that the EPA mentions that states are allowed flexibility to adopt the ratebased goal established by the EPA or the mass-based form of the goal. Commenters said that, however, the EPA did not provide sufficient informa tion needed to calculate the state mass-based goals on the front end. Commenters said that it was not until November 6, 2014, that the EPA199

released the mass-based states goals and supporting documents. Commenters 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 in formation, states struggled to understand how to calculate the mass-based goal. Commenters said t hat, 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 s aid, this portion of the rule is substantial in that it offers an entirely different alternative means of compliance.

Commenters stated, given the short 30 days comment period on the NODA, they have been prejudiced in being able to fully evaluate the impa ct 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 certai n 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 iden tified 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. Commente rs said, without additional time and data to review NODA alternatives, it is difficult for state s to fully understand and address specific impacts at this time.

Commenters stated, since EPA published the NODA jus t one month before the deadline for submission of comments on the proposed rule, stakeh olders 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 pr oposed rule is likely the most complex rulemaking ever undertaken by the EPA, does not app ear to comply with EPA's obligation under

the Administrative Procedures Act and Clean Air Act . Commenters said, EPA should allow additional time for stakeholders to fully assess th e NODA.

Commenters stated, the administrative process by wh ich the CPP was drafted and released has been problematic since day one. Commenters said, fi rst, EPA continues to refuse to release critical modeling runs on the grounds that the assu mptions contained therein are proprietary. Commenters said, without complete information, howe ver, it is impossible to test the veracity of the Agency's claims about the feasibility of the CP P. 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, specifically, EPA made two ad ditional years of data available that the agency intends to use in formulating the baseline f or energy demand in all fifty states. Commenters said that this new information required stakeholders to completely re-structure their modeling efforts, with no extra time. Commenters sa id 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 significa nt. Commenters said that the NODA purports to200

restate the glide path for implementation. Commente rs said that, even later, the EPA placed a substantive interpretation of the process for calcu lating 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 e xtensive outreach to stakeholders and the general public at every stage of development of this rule. The EPA’s outreach included direct engagement with energy and environmental officials in states, with tribes, and with a full range of stakeholders inclu ding leaders in the utility power sector, labor leaders, non-governmental organizations, other fede ral agencies, other experts, community groups and members of the public. The EPA participa ted 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 tec hnical information. In the notice of data availability (NODA) that we issued on October. 28, 2015, we described specific 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, an d we sought comment on these through the

notice. We issued the notice to ensure that other s takeholders and the public had the opportunity to consider these ideas as they formulated their ow n comments on the proposal.

The EPA signed and announced the proposed rule on J une 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 proposed rule was published in the Federal Register on June 18, 2014, 79 Fed. Reg. 34830, at which time th e 120-day public comment period began. In response to stakeholder requests for additional tim e 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 Notice of Data Availability (NOD A), 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 techni cal support document (TSD) that provided 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 TSD.

At the close of the comment period on December 1, t he 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 to “ensure a reasonable period for public participation of at le ast 30 days” when promulgating a regulation under section 111. EPA believes the 165-day commentperiod 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 the comm ent periods for previous Clean Air Act rules,201

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 period closed on December 1, 2 014, the EPA has considered all comments that were received by December 31, 2014, s o as to accommodate potential delays in the EPA’s receipt of submitted comments.

Although the NODA was published in the Federal Regi ster on October 30, 2014, the close of the comment period on December 1, 2014, still allowed s takeholders “at least 30 days” to review the three topics discussed in the NODA and formulate an y additional comments. This was a reasonable period for public participation given th e limited length and number of topics in the NODA, and in light of the fact that the NODA soughtcomment 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 conc erning the translation of emission ratebased goals to mass-based equivalents was published in the Federal Register on November 13, 2014, this supporting documentation was intended on ly to inform and assist stakeholders in understanding certain technical aspects of the prop osed rule as it was published on June 18, 2014. The information shared in the Technical Suppo rt Document was not prescriptive, but rather was developed at the request of state commen ters 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 extension of the public comment period have been ad equately 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 sta te differences and energy make up, state infrastructure, and available technology for existi ng 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 proposal, as desc ribed in section I.A.4 of the preamble.

Commenters also expressed concern over whether stat es 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 building blocks or measures to achieve the ir 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 identified 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 sec tion 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 r eliability associated with this final rule. The TSD is available in the docket for this rulemaking.

Other commenters indicated that “once the final goa ls 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, under202

certain circumstances, as explained in sections VII .E and VIII.E.6.b of the preamble, a state may adjust its CO 2 goal.

Comment 3: Commenters would like to clarify some of the infor mation found in the Technical Support Document for Calculating Carbon Pollution G oals for Existing Power Plants in Territories and Areas of Indian Country that accomp anies the Proposed CO2 Guidelines for the U.S. Territories. Moreover, Commenters are interest ed in submitting specific comments to the proposal and its supporting documents and therefore , need a 45-day extension to submit comments on the proposal. Commenters requested thatthe EPA grant a 45-day extension of the public comment period so that they could provide co mments on the CO2 Guidelines for the U.S. Territories and its supporting documents.

Response 3: The EPA signed and announced a supplemental propos al 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 revie w 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, a nd the 45-day public comment period began. The Technical Support Document (TSD) for Cal culating Carbon Pollution Goals for Existing Power Plants in Territories and Areas of I ndian Country was also issued with the supplemental proposal.

The information provided in these documents was sup plemental 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 w ith the extended public comment period for the proposed rule, the 45-day public comment pe riod for the supplemental proposal provided stakeholders with a reasonable opportunity to revie w elements of the proposal specific to Indian Country and U.S. Territories and to provide comment s on these additional features.

In the final rule, the EPA has determined that addi tional information is needed before the EPA will be able to establish goals for the U.S. territ ories 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, whi ch are the most complex and far-reaching environmental rules ever proposed by the EPA. Comme nters 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 elec tric utilities that operate those facilities. Commenters said that, given the breadth, complexity , and impact of these rules, a 165-day comment period is insufficient to evaluate and unde rstand 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.203

Commenters stated that the EPA's proposal for exist ing 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 rulemaking docket for existing sources comprises over 1,300 vo luminous 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 u nreasonable and arbitrary. Commenters said, for this reason alone, EPA's 165-day deadline for c omments is in arbitrary and capricious. Commenters said that the agency should allow a long er public comment period to ensure meaningful public participation and a fully-develop ed record in support of the proposed rule.

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 tha t 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 th e 120-day public comment period began. In response to stakeholder requests for additional tim e 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 Notice of Data Availability (NOD A), 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 techni cal support document (TSD) that provided 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 TSD.

At the close of the comment period on December 1, t he 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 to “ensure a reasonable period for public participation of at le ast 30 days” when promulgating a regulation under section 111. EPA believes the 165-day commentperiod 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 the comm ent 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 period closed on December 1, 2 014, the EPA has considered all comments that were received by December 31, 2014, s o as to accommodate potential delays in the EPA’s receipt of submitted comments.

Although the NODA was published in the Federal Regi ster on October 30, 2014, the close of the comment period on December 1, 2014, still allowed s takeholders “at least 30 days” to review the three topics discussed in the NODA and formulate an y additional comments. This was a reasonable period for public participation given th e limited length and number of topics in the NODA, and in light of the fact that the NODA soughtcomment on issues specifically raised by the commenters themselves. Accordingly, no further extension of the public comment period was

warranted.204

Likewise, while the Technical Support Document conc erning the translation of emission ratebased goals to mass-based equivalents was published in the Federal Register on November 13, 2014, this supporting documentation was intended on ly to inform and assist stakeholders in understanding certain technical aspects of the prop osed rule as it was published on June 18, 2014. The information shared in the Technical Suppo rt Document was not prescriptive, but rather was developed at the request of state commen ters to illustrate potential methods states might choose to adopt in implementing the proposed rule.

1.15 OTHER

1.15.1 CAA/Section 111(d) issues

Comment 1: Commenters state that section 111(d) explicitly directs states and the EP A to consider the “remaining useful life” of existing so urces when applying any standard of performance. This demonstrates that this section fo cuses solely on what individual sources can do to improve their performance at reasonable cost rather than what the entire source category (or even other entities) can do collectively to red uce overall emissions.

Response 1: As noted above, the EPA believes its standards of p erformance reflect achievable, cost-effective measures that can be undertaken by i ndividual affected sources to reduce their emissions. However, the EPA but not agree that the standards of performance established in the emission guidelines must be determined by consideri ng each individual source’s capabilities divorced from the electrical system in which the af fected sources operate. The “remaining useful life” provisions in 111(d) do not affect this concl usion (we discuss our interpretation of the “remaining useful life” provision at length in the 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 un der a plan submitted under this paragraph to take into consideration, among other factors, the r emaining useful life of the existing source to which such standard applies.” As is evident from th e plain language, this provision bears on states’ considerations when “applying” the standard of performance to a “particular” 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 “remain ing 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 spe ak 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 life provision suggests the opposi te of what commenters suggest. By requiring EPA’s guidelines to provide reasonable mechanisms f or states to address situations where the achievability or cost-effectiveness of the standard s of performance may be limited by the remaining useful life of the facility, these provis ions reinforce the fact that the standards of performance established in the emission guidelines are set on the basis of what the category of205

sources can generally achieve. Notably, the “remain ing useful life” provision that applies where the EPA is implementing a federal plan reinforces t his distinction. In that instance, the EPA is directed to consider the remaining useful “lives” o f the “sources in the category of sources” to which standards of performance are applied. The wor ding and structure of the statute make clear that this is a factor to be considered in the imple mentation of standards of performance, rather than a factor that is part of the determinations ma de 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).

Commenters stated, in its legal arguments in suppor t of the Proposed Rule, 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 th e 1975 regulations as documenting its authority to determine the BSER and issue emission 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 Congre ss' directive in Section 111(d) that EPA's regulations "shall permit" States to consider "amon g 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 include 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, no t its self-serving statements, that matters for purposes of determining whether the 1975 regulation s 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 exten d authority and discretion under the 1975 regulations far beyond the scope of prior applicati ons. Commenters said, these new applications provide a valid legal basis to challenge and invali date the 1975 regulations as beyond the scope of the authority delegated to EPA under Section 111 (d).

Commenters stated, EPA describes in the Proposed Ru le its interpretation of and reliance on the 1975 regulations:

Some stakeholders have suggested that states themse lves should be allowed to quantify the level of emission reduction resulting from the applicatio n 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 e xisting implementing regulations for CAA section 111(d) at 40 CFR part 60, this quantificati on is the EPA's role... The regulations provide that the EPA is to promulgate an "emission guidelin e that reflects the application of the BSER (considering the cost of such reduction) that has b een 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 this rulemaking, the EPA applies the BSER to each state, and then, f or each state, calculates the average emission rate that, in the words of the regulations just quo ted, "reflects the application of the [BSER]." That average emission rate is the state goal.206

By the same token, because the state goals are an i ntegral part of the emission guidelines that the framework regulations authorize the EPA to establis h, the goals are binding, and the states, in their CAA section 111(d) plans, must meet those goa ls and may not make them less stringent. This matter, too, is resolved by the implementing r egulations. . . . These flexibilities, discussed further in Section VIII of this preamble, ensure th at states will be able to achieve their final CO2 emission goals and that no special provision for st ate adjustment of goals outside the normal notice-and-comment rulemaking process is warranted. 79 Fed. Reg. at 34,897-98.

Commenters stated, EPA has exceeded its statutory a uthority under Section 111(d) by virtue of the design of its goal-setting and implementation r equirements in the Proposed Rule. Commenters said, EPA's interpretation of the 1975 r egulations as a basis for the Proposed Rule also calls into question the validity of those orig inal 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 that were not previously regulated under Section 111(d).

Commenters stated, CAA Section 307(b)(1) provides a n exception to the general requirement that a petition for review be filed within 60 days of promulgation: "if such petition is based solely on grounds 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" c ould include the fact that certain entities that were not previously subject to the regulations at i ssue were now included under the scope of the regulations. Commenters said, the D.C. Circuit 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 th e Tailpipe Rule was promulgated. Id. Commenters said, therefore, any prior challenge wou ld 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 p ollutant that endangers human health and welfare and to adopt a rule regulating the greenhou se gas emissions of stationary sources." Id.

Commenters stated, the Proposed Rule constitutes th e first application of Section 111(d) and the 1975 regulations to EGUs. Commenters said, at the t ime the 1975 regulations were promulgated, EPA had not made any determination regarding regula tion of EGUs, and had made no determination that any source was to be regulated f or CO2. Commenters said, thus, EGU owners had no basis on which to challenge the potential fu ture 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 be came ripe for challenge by EGU owners only when EPA relied on them in issuing the Proposed Rul e 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).207

The commenters stated that the EPA has constructive ly reopened the 1975 regulations for challenge under Section 307(b)(1).

Commenters stated, a revision of accompanying regul ations that "significantly alters the stakes of judicial review" as the result of a change that "could not have been reasonably anticipated" can 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, 13 34 (D.C. Cir. 2006)). Commenters said, moreover, an official interpretation of a regulatio n (or withdrawal of a proposed reinterpretation) can constructively reopen a rulemaking. Public Citi zen v. NRC, 901 F.2d 147, 151 (D.C. Cir. 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). Commenter s said, in addition, EPA's interpretation of the authority reserved to states to consider remain ing useful life and other factors in its Proposed Rule is substantially more narrow that the authorit y granted under Section 111(d) or contemplated in the 1975 regulations and accompanyi ng preamble. Commenters said, the 1975 rulemaking anticipated that states would set standa rds and promised the states flexibility that is not reflected in the Proposed Rule. Commenters said , the Proposed Rule deviates substantively from the 1975 rulemaking in that it does not provid e 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 limitati ons specific to particular sources (or classes of sources) make such application significantly mor e 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, thos e regulations have been constructively reopened and can be challenged as beyond EPA's auth ority 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 rulemaking. The regulations currently allow fo r emissions guidelines to vary from general provisions of the subpart B regulations as appropri ate. For instance, 60.24(f) which provides for facility specific variances in certain limited circ umstances, also provides “unless specified in the applicable subpart,” reflecting that in the case of a particular emission guideline, the general variance procedure may not be appropriate. Furtherm ore, for all pertinent aspects of the agency’s discussion of authority under section 111(d), the s tructure 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 longstanding interpretations of the statute or poli cy. Commenters’ comments about authority to challenge the implementing regulations in Court may be relevant in any litigation raising “afterarising” issues over this rule, but are not relevan t for this rulemaking.

Comment 3 : Commenters stated that the proposal would resultin many changes to Subpart B. However, the commenters noted that the preamble sta tes that the proposal is not reopening Subpart B for comment, [79 FR 34844] and the propos ed regulation text states that Subpart B remains in place except where it is inconsistent wi th the proposed regulation text. [proposed 40208

CFR 60.5700] The commenters contended that the curr ent Subpart B has many requirements that are inconsistent with Section 111(d) - e.g. calling for EPA to issue "guideline documents" and "emission guidelines," and calling for states to se t an EPA-defined "emission standard" rather than the statutorily required and well-defined "sta ndard of performance." The commenters stated that the EPA should withdraw the rule, or revise th e 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 commenters stated that neither the CAA nor EPA's regulations require the Agency to tak e action to regulate existing EGUs within any specific time frame: Subpart B states only thatEPA "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 commente rs stated that it would be reasonable and well within the Agency's authority to postpone this rulemaking to a later date.

Response 3 : The EPA disagrees with these comments. The prese nt guidelines are consistent with the subpart B framework. The EPA disagrees tha t delaying action to reduce carbon dioxide from power plants is reasonable in light of the vas t amount of information in the record supporting the need for action to reduce this green house 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 prop osed rules entitled "Carbon Pollution Emission Guidelines for Existing Stationary Sources : Electric Utility Generating Units" ("Section 111(d) Proposal") and "Carbon Pollution S tandards for Modified and Reconstructed Stationary Sources: Electric Utility Generating Uni ts ("Section 111(b) Modification Proposal").

Commenters stated, in order for the EPA to issue pe rformance standards for existing sources under section 111(d), the Clean Air Act requires th e EPA to have issued performance standards under section 111(b) that would cover newly constru cted 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 standar ds of performance for new electric utility generating units under section 111(b) did not const itute 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, beca use the proposed new source performance standards under section 111(b) are unlawful and mus t be withdrawn by the EPA, the statutory prerequisite for the Section 111(d) Proposal is lac king and that proposal too should be

withdrawn.

Similarly, commenters stated, the EPA's current pro posal to regulate new fossil-fuel fired electric utility units under Section 111(b) of the Act is ba sed on their finding that carbon capture and sequestration, CCS, has been adequately demonstrate d. Commenters said, CCS has, in fact, not been adequately demonstrated. Commenters said, the legal implication is critical since the209

EPA is barred from implementing an existing source rule under 111(d) without having successfully promulgated a new source standard unde r 111(b).

Commenters stated, the Carbon Pollution Standard Ru le - the CCP's Prerequisite - is invalid. Commenters stated under CAA section 111(d), EPA mus t promulgate performance standards for new sources before it can promulgate performance st andards 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 CPS rule is unlawful in several ways, including CCS is not adequately demon strated.

Commenters stated, EPA's proposal also lacks a lawf ul New-Source Standard predicate whereby

the EPA must first have established lawful standard s under Section 111(b) for new sources in a particular industrial category.

Commenters stated, Section 111(d)(1)(A) requires th at 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 E PA is forbidden under the Act from adopting Section 111(d) rules without having previously prom ulgated a valid Section 111(b) rule as 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 p roposals clearly outlining the legal and technical flaws that prevent these rule proposals f rom serving as a valid predicate for this Rule Proposal.

Commenters stated, both 111(b) rule proposals are s till merely that - proposals - and until they are finalized and survive legal challenge, they can not 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 Rul e Proposal as well.

Commenters stated, regarding the technical and lega l flaws of the 111(b) rule proposals, the New-Source 111(b) Rule Proposal flaws, include, butare not limited to:

- The rule proposal relies on commercially unavailable carbon capture and sequestration ("CCS") technology, which is not achievable and has not bee n "adequately demonstrated" under the requirements of the CAA, to establish unachievable emissions limits; - EPA failed to properly assess alternatives to CCS technology which could meet the requirements of the CAA; - EPA's "component" approach to finding CCS had bee n adequately demonstrated violates the CAA; - By imposing one type of control technology, EPA i s attempting to dictate the fuel choice of power plants in contravention of CAA; - The rule proposal does not include appropriate su bcategories for different types of generation technologies, including lignite-fired EGUs;210

- The rule proposal will result in excessive and un reasonable costs, particularly in comparison to the minimal (if any) benefits of the alleged CO2 re ductions in the rule; EPA inappropriately incorporated enhanced oil recovery ("EOR") capabili ties as part of the technical review process;

and - EPA failed to account for challenges that utiliti es will face at the regional level to comply with the rule, including lack of natural gas transmissio n, 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:

- The rule proposal treats modified and reconstruct ed sources concurrently as both existing and new sources, which directly conflicts with the plai n language to the CAA; - The rule proposal does not include appropriate su bcategories 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 unachievable; and - The regulatory impact analysis is significantly f lawed, 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 a nd legal flaws, it is impossible for EPA to use either of the 111(b) rules as a valid foundatio n for this Rule Proposal.

Commenters stated, in order for EPA to require stat es to submit Section 111(d) plans to control emissions from existing sources in particular indus trial categories, EPA must first have established lawful standards under Section 111(b) f or new sources in that category. Commenters said, because EPA has failed to establish such stan dards for fossil fuel-fired power plants and its existing regulatory proposal is unlawful, EPA may n ot finalize any Section 111(d) proposal until

it has rectified this issue.

Commenters stated, section 111(d) provides that Sec tion 111(d) is appropriate to regulate only "existing source[s] for any air pollutant ... to wh ich a standard of performance under this section would apply if such existing source were a new sour ce ... " 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 Sec tion 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 iden tifies two pending 111(b) proposals as providing this predicate: the proposed rule regulat ing carbon dioxide emissions from new power plants, issued in January 2014, and the proposed ru le regulating such emissions from modified and reconstructed power plants, issued in June 2014 . Commenters said, but neither of these proposals have been finalized.211

Commenters stated, the regulation of existing sourc es 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 said, section 111(d)(1)(A)(ii) requires EPA to first fina lize 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) rule establishing new source performance standards (NSPS) for certain fossil fue l-fired EGUs. As such, much of this is outside the scope of the section 111(d) emission gu idelines for existing EGUs. We note that the agency is not finalizing the proposed interpretatio n 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 rule s, and they are lawful. Therefore, commenters’ assertions that these guidelines are unlawful becau se 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) prop osal. Commenters said, the new-source proposal is unlawful because it violates express re strictions on Section 111(b) rulemakings imposed by the Energy Policy Act of 2005 by inappro priately considering certain governmentsubsidized projects in the Section 111 standard-set ting process. See generally Comments of the Competitive Enterprise Institute on Clear Air Act s ection 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 regulatio n covering only modified sources, which the Clean Air Act treats as "new" sources without excep tion. See C.A.A. section 111(a)(1), 42 U.S.C. section 7411(a)(1) ("The term 'new source' m eans any stationary source, the construction or modification of which is commenced after" propos al or finalization, whichever is earlier, of Section 111 standards). Commenters said, these defe cts 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 cha pter 2. EPA’s authority to issue regulations covering modified sources that differ from the regu lations for newly constructed sources comes from section 111(b)(2), which authorizes EPA to dis tinguish within categories of sources.

Comment 6 : Multiple commenters stated that the EPA Cannot R egulate CO2 under Section 111(d) without First Adopting a Valid Section 111(b ) CO2 NSPS

Commenters stated, section 111(d)(1)(a)(iii) requir es that EPA establish standards of performance for air pollutants emitted by any sourc e "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 sam e types of pollutants from new sources within the same source category before it can issue a rule under Section 111(d). Commenters said, no valid Section 111(b) predicate rule regula ting emissions of CO2 from coal or gas-fired power plants exists. Commenters said, therefore, th e proposed rule exceeds EPA's authority under Section 111(d).212

Commenters stated, EPA argues that two newly propos ed 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 standar ds of performance for CO2 emissions from new EGUs. Commenters said, the second rule (the Pro posed Modified and Reconstructed Source Rule) establishes standards of performance for CO2 emissions from certain modified and reconstructed EGUs. Commenters said, even if finali zed, neither of these rules can serve as the predicate rule for the proposed rule because each i s illegal.

Commenters stated, the Proposed NSPS relies on the utilization of unproven Carbon Capture and Storage (CCS) technology as its standard of perform ance. Commenters said, CAA Section 111(a)(1) requires that any "standard of performanc e" be based on technology that has been "adequately demonstrated." Commenters said, adequat ely demonstrated requires that a standard of performance "has been shown to be reasonably rel iable, reasonably efficient and . . . reasonably expected to serve the interests of pollu tion control without becoming exorbitantly costly in an economic or environmental way."

Commenters stated, CCS is not currently in operatio n 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, a long with a number of other fatal flaws, makes the Proposed NSPS invalid and ripe for post-f inalization 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 new source performance standards (NSPS) for certain fossil fue l-fired EGUs. As such, much of this is outside the scope of the section 111(d) emission gu idelines for existing EGUs. The agency will finalize the relevant section 111(b) NSPS rules, an d they are lawful. Therefore, commenters’ assertions that these guidelines are unlawful becau se 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 Recon structed 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 new and existing sources. Commenters said, it does this by requiring that sources subject to the rule are also subject to any applicable CPP requirements. Co mmenters said, as defined by the CAA, once a source is modified it becomes a new source subjec t to NSPS. Commenters said, an existing source is "any stationary source other than a new s ource." Commenters said, a source cannot simultaneously be both. Commenters said, the CPP ru le applies only to existing sources. Commenters said, thus, if EPA decides to treat modi fied 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 predicate rule for Section 111(d ) purposes.213

Response 7: The premise of this comment is that EPA has conclu ded that existing sources that modify or reconstruct and become subject to require ments under section 111(b) continue to be subject to requirements under section 111(d). As e xplained in section VIII of the preamble, the EPA is not finalizing its proposal on that point.

Comment 8 : Commenters stated, the Proposed Rule includes pe rformance standards that are completely inconsistent with the standards of perfo rmance proposed for new sources.

The commenters said, in proposing an approach for e xisting sources that is completely unrelated to and operates independently of the proposed appro ach for regulating new sources, the Proposed Rule ignores the statutory relationship between the regulation of new and existing sources under Section 111. Commenters said, for good reason, the regulation of existing sources under Section 111(d) is intended to represent what amounts to a m ore flexible and limited version of the

standards established for new sources under Section 111(b). Commenters said, however, the Proposed Rule would actually work toward the opposi te result - i.e., it would impose standards of performance on existing sources that are more st ringent than those proposed for new sources.

Response 8 : We disagree that the section 111(d) standards ar e more stringent than the section 111(b) standards. Further, we explain in the preamb le and the Legal Memorandum why the section 111(b) and (d) standards are based on diffe rent determinations of the BSER.

Comment 9: Commenters state that the EPA employs an unpreceden ted and unreasonable redefinition of what constitutes a "system of emiss ion reduction," by concluding that a "system of emission reduction" can be "virtually any ‘set o f things' that reduce emissions,” including the

"reduced utilization" of a source. This is a stunni ng departure from the plain meaning of Section 111, which has been read over its 44-year history t o 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 "syste m" is not supported by the statute's plain language or context, or by the EPA's past rulemakin gs under Section 111. Commenters further state that the EPA erroneously conflates the two op erative 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 tha t may be imposed on the regulated stationary source. While the definition of BSER may give the E PA 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 contro ls can be imposed on entities 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 aff ected EGU. Our interpretation of the BSER is discussed in section V.B. of the final rule preambl e 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 pro cedures according to which something is214

done; an organized 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 “syste m[s] of emission reduction” 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 th e definition of “system” in section 111(a)(1) to omit the requirement that such a syste m be “technological” and “continuous.”

In the absence of language narrowing the EPA’s cons ideration of potential “system[s] of emission reduction,” the EPA interprets the plain m eaning of this phrase to mean a set of measures that work together to reduce emissions. Th e EPA further interprets that because the standards of performance reflect the degree of emis sion limitation achievable through the “application” of the BSER, that the scope of system s that the EPA may consider are those that can be implemented – or applied – by the sources th emselves. The fact that some of the measures that EGUs use to reduce emissions may incorporate o r depend upon actions by third parties does not mean they are not implementable by the affected EGUs: as explained in section V.A. of the preamble, the BSER selected in this final rule refl ect proven strategies that are already being implemented within the electricity industry. Furthe rmore, as the Legal Memorandum describes, section 111 standards have long embraced the notion that source owners or operators can rely on measures undertaken by a third party. The EPA’s app lication of the BSER thus falls within the forms of pollution control that can be imposed dire ctly on the emitting source, because they rely

on measures that affected EGUs can take to reduce t heir emissions as part of the interconnected electrical grid.

Furthermore, the commenters’ reliance on previous s ection 111(d) rulemakings is misplaced. As explained in section V.A.2.b. of the final rule pre amble, this rulemaking addresses a pollutant and a source category each with unique properties t hat inform the application of section 111(d).

Few industries share the characteristics of the ele ctricity industry, where generation occurs within a coordinated, interconnected network and th e operation of individual source works in concert with the operation of numerous other source s 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 tail ored to what is achievable within the particular industry and with respect to this particular pollut ant. Whether or not the same strategies are

available to or in use in other industries – or wou ld 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 an d 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 comp onent of the EPA’s rulemaking under section

111.

Finally, the EPA is not imposing controls on any en tities other than the affected EGUs, so comments regarding the EPA’s latitude to place cont rols on entities that do not emit pollutants are beyond the scope of this rulemaking.215

Comment 10: Commenters state that section 111(a)(1) requires th at any standard of performance be “achievable” by the sources to which it applies based on application of an “adequately demonstrated” system of emission reduct ion. The achievability requirement clearly indicates that Congress intended standards of perfo rmance 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 cannotbe “achievable” for a source if the source must rely on measures taken by some other entity th at it does not control, or if the source must not operate, in order to achieve the standard. For example, a standard of performance for coalfired EGUs that is based on a "system" of reducing the EGU's operations by increasing generation at NGCC units and renewables and discour aging electricity consumption would not

be achievable for individual coal-fired EGUs. The a chievability requirement thus demonstrates that a system of emission reduction cannot go beyon d the fence-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 proces s 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 la nguage of section 111(a)(1) does not limit the

EPA to emissions reductions that can be achieved th rough the application of a particular technology or achieved at a particular location, al though such specifications exist in other sections of the Clean Air Act. Had Congress intende d that the EPA consider only the narrow class of technologies that could be applied on site at the affected source, it could have so specified. In fact, the 1990 CAA Amendments evidenc e that Congress intended the opposite result, as the amendments removed language in secti on 111(a)(1) that had previously required that the “best system” be “technological” and “cont inuous.” Thus it is reasonable 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 strategies that are already wellestablished and well-documented within the electric ity industry. As evidenced by actual industry practice, EGUs routinely achieve emission reduction s through a broad array of strategies – including emissions based redispatch – that may notbe directly incorporated into the design or production process of the facility. Industry acknow ledges the feasibility and desirability of many of these broad strategies in comments addressing co mpliance with the standards of performance, which advocate for allowing a wide array of EGU act ions 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 th e BSER with the types of actions and controls that already govern generation. If affected EGUs ca n meet the emission limits set according to the BSER through the measures available to them, th en the standards are achievable – even if such measures operate through the coordinated, inte rconnected actions of the industry as a
whole.

Further discussion of the basis of our interpretati on appears in section V. of the final rule preamble and in the Legal Memorandum. Further discu ssion of the measures selected as the best216

system of emission reduction and of their achievabi lity 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 pollutan t that the source emits at a particular level of operations. By its terms, a “standard of performanc e” assumes that the source will continue to “perform.” A “standard of performance” cannot manda te “non-performance.”

Response 11: As discussed in section V.B. of the preamble, in th is final rule, we do not consider reduced utilization alone as an alternative BSER; b uilding blocks 2 and 3 are based on substitute generation. Nevertheless, the EPA disagrees that th e use of the word “performance” prevents the 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 op eration are routine aspects of emission regulation 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 r egulations and permits that incorporate reduced production or utilization. In this instance , reduced utilization also reflects a reality of th e electrical system itself, where a coordinated dispa tch system increases or reduces the power produced by any single EGU at any given time accord ing to a number of variables. Under this system, the particular “performance” of an EGU is d ependent on the performance of the other EGUs within its interconnected region. In any case, the final rule does not mandate the reduced utilization of any affected EGU, nor does it requir e that any EGU cease all operations. The final

rule establishes national uniform emission rates fo r each of the two affected source subcategories, that are achievable at all EGUs usin g proven, industry-recognized strategies. The final rule also gives states significant flexibilit y 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 fundamental that a standar d of performance under section 111 must "reflect[] the degree of emission limitation achievable through the application of the best system of emission reduction which (tak ing into account the cost of achieving such reduction and any non-air quality health and enviro nmental impact and energy requirements) the Administrator determines has been adequately demons trated." [CAA Section 111(a)(1) (emphasis added).] Commenters said, EPA may not bas e its determination that a standard is achievable on "mere speculation or conjecture." [Li gnite 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 indu stry as a whole" and "under 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).] Commenter s said, in order to show that the Proposal is achievable, EPA must "(1) identify variable conditi ons that might contribute to the amount of expected emissions, and (2) establish that the testdata relied on by the agency are representative of potential industry-wide performance, given the r ange of variables that affect the achievability217

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 rule making. Commenters said, rather, the Agency has set targets under each Building Block th at far exceed what is feasible or costeffective. Commenters said, in particular, the targ ets under Building Blocks 1 and 2 (i.e., the Building Blocks that involve measures taken by affe cted EGUs, either individually or collectively across a state) are not supported by t he rulemaking docket and are simply not achievable. Commenters said, Building Block 3 is ba sed on unrealistic assumptions, and Building Block 4 gives rise to enforcement difficul ties. Commenters said, as a result, compliance with the state goals will be extremely costly and d ifficult (if not impossible) for any state as a whole and will certainly be impossible for many ind ividual affected EGUs to achieve.

Response 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 purpose, and legislative histor y. As we also explain in section V.B., the BSER is notbased on demand-side energy efficiency measures and comments on building block 4 are there fore moot. Lastly, as we explain in section V.A. of the preamble, the emission limits are achie vable 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. Section 111(d) specifically prohibits EPA from regu lating 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 equivalent new sources;

3. Section 111(d) cannot be used to override state aut hority to manage power resources;

4. Section 111(d) limits EPA's role to procedure and n ot substance;

5. Section 111(d) is limited to source level, inside t he fence line, unit by unit, emission reduction measures; and

6. Recent Supreme Court authority confirms that Sectio n 111(d) does not authorize EPA's proposal.

The commenters recommended that the EPA withdraw th is proposed rule and draft a rule that identifies and supports a best system of emission r eductions for the following categories separately: coal-fired; integrated gasification com bined-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 o ther responses in this RTC.218

Comment 14 : Commenters stated that the EPA has failed to fol low 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 welfar e in foreign countries; and to develop plans under Section 110; and under reciprocity requiremen ts of Section 115, if the foreign country is preventing air pollution from similar sources to th e same degree it is being prevented in the U.S. commenters said, the EPA has not done any of the ab ove.

Response 14 : The emissions guidelines are under the authority of section 111 of the CAA, not section 115. Nothing in section 115 precludes regul ation under section 111.

Comment 15 : Multiple commenters questioned the legality of t he 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 greenhouse gas laws of this scope. The commenters stated that the unique qualities and wid espread impact of new carbon rules require state leadership and congressional action. The comm enters stated that it is improper and legally defective for the EPA to drive energy policy and wi de-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 C ourt guidance to narrowly interpret its authority under the Clean Air Act (CAA) in developi ng 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 ge nerally only applied the CAA Section 111 standards to direct power-plant emissions or "i nside-the-fence" measures where costeffective actions, such as installing pollution con trols, can be implemented directly by the regulated facility. The commenters noted that the p roposal mandates aggressive targets, which would almost certainly require "outside-the-fence" measures to achieve including significant redispatch of power from coal to natural gas generati on, 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 reduction targets to d ifferent states and does not adequately address the implications of this unequal treatment.

Commenters stated that the Proposed Rule is not con sistent with the language, context, legislative history, and consistent past administra tive interpretation of CAA section 111(d). The commenters stated that the Proposed Rule is built o n new and redefined terminology never before used in the CAA section 111(d) program inste ad. The commenters noted that the state-bystate "goals" EPA seeks to set are legally enforcea ble mandates for all states, however, EPA lacks the authority under either CAA section 111(d) or EPA's CAA section 111(d) regulations to219

set binding statewide "goals." The commenters also noted that the "system" of emission

reduction EPA defines to be mandated reductions in the amount of time facilities within the regulated source category are allowed to operate, h owever, forcing coal-fueled EGUs to reduce operation (or retire) is not a "system" of emission reduction under CAA section 111(d).

The commenters stated that the new "interpretation" of CAA section 111(d) set forth in the Proposed Rule encourages states to submit plans tha t contains what EPA calls "portfolio" measures which would be used, for instance, to dram atically increase the use and deployment of renewable energy and energy efficiency measures thr oughout 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 State CAA section 111(d) Plan, these measures would become "federally-enforceable" against those agents (citizens and businesses) required to implement them. The commenters stated that CAA sect ion 111(d) does not provide EPA the authority to create federally enforceable obligatio ns on entities that do not own or operate facilities within the regulated source category, ra ther, CAA section 111 authorizes standards to

be set for facilities within EPA-listed source cate gories. The commenters noted that CAA section 111 does not apply to, nor can it permissibly reach , any other facilities or entities that are not par t of the listed source category.

Response 15 : We disagree. For the reasons discussed in sectio n 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, s tatutory purpose, and legislative history.

Further, it cannot be said that because environment al requirements may have an effect on the energy market that the EPA is therefore intruding i nto energy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Con gress expressly identified power plants as a priority source category for regulation under CAA section 111.

Lastly, to the extent this comment objects to the p ortfolio approach, which the EPA is not finalizing, the comment is moot.

Comment 16 : Commenters stated that the EPA impermissibly rea ches beyond the individual regulated source in setting its proposed standards of performance.

The commenters stated that the EPA's legal rational e depends on a reading of section 111 that is divorced from the rest of the CAA. [EPA Legal Memor andum at 52.] The commenters stated that other CAA programs and their governing authori ties demonstrate that Congress knows the difference between source-specific and broad, gener al programs, that it uses specific language to create each type of program, and that section 111 c learly falls into the source-specific category. The commenters argued that the EPA is required to r ead these various provisions as a whole and

its failure to do so here has resulted in an unlawf ul interpretation of section 111. [UARG v. EPA, 134 S. Ct. at 2441 (Agencies must construe the word s of a statute "in their context and with a view to their place in the overall statutory scheme .)]220

In addition, the commenters stated that the EPA nev er addresses the decades of precedent conflicting with its new interpretation of section 111. The commenters stated that the Subpart B regulations, every single NSPS rulemaking, and ever y 111 (d) existing source standard that EPA has promulgated contradict the rationale for the au thority the Agency now claims. The commenters noted that when EPA does discuss precede nt, moreover, it does so misleadingly (suggesting that its emission guidelines for munici pal waste combustors and CAMR support its reliance on the types of measures provided for unde r Building Blocks 2, 3, and 4). [EPA Legal Memorandum at 63 & n.51.] The commenters argued tha t these rules do not support the EPA's position. The commenters stated that the emission g uidelines for municipal waste combustors were not based on measures anything like Building B locks 2, 3, and 4; they were based on controls that could be implemented at the covered s ources. The commenters stated that CAMR also was based on implementation of pollution contr ols at individual EGUs. [70 FR 28617-20, 28621] The commenters concluded that these rules do not support EPA's position, but undermine

it.

The commenters stated 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 evidence and stretched beyond credibility to reach the opposite conclusion.

Response 16 : EPA disagrees with these comments. The commenter s have not pointed to any specific conflicting interpretation of statutory au thority in these prior agency actions. That the agency has taken various approaches to standard set ting 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 prov ide 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 a nd re-propose a rule that follows CAA BSER precedent based on activities with in 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 guid elines do not comply with the Clean Air Act. The commenters stated that contrary to the dir ection provided by the Clean Air Act, the Proposal seeks to impose regulatory requirements th at do not fit the statutory definition of a "standard of performance" and seeks to impose requi rements on facilities and entities 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 BSER to be "applied" to existing stationary sources and reflect a "standard of performance" tha t involves emissions reductions through process changes, operation changes, direct emission control, or other methods applied at the emissions unit. According to the commenters, "stand ards 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 Prop osal would mandate. The commenters noted221

that, with the exception of Building Block 1, the P roposal, through Blocks 2, 3, and 4, is based on reducing the amount of power generation at certa in existing sources and increasing generation from others. The commenters argued that approach do es not meet the statutory definition of "standard of performance" and thus violates the Cle an Air Act by seeking to require NGCC units to operate at higher capacity factors and thus emitmore CO2. In addition, the commenters stated that requiring coal units to operate at lower capac ity 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 appr oach also violates the Act by effectively imposing regulatory requirements on renewable resou rces, nuclear facilities, and end users of electricity that do not emit anything at all.

In contrast to EPA's Proposal, the commenters state d that the EPA's prior Section 111(d) programs have remained within the confines of the s tatutory authority Congress granted to the Agency. The commenters stated that in the past, EP A'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 com menters noted for example, in developing Section 111(d) emission guidelines for Kraft Pulp M ills to control emissions of total reduced sulfur emissions (TRS) in the 1980's, the EPA produ ced a guideline document (Kraft Pulping - Control of TRS Emissions at Existing Mills) which c ontained the determination of BSER for

various mill emission sources. The commenters state d that one of the emitting sources evaluated, a black liquor recovery boiler, is very similar to many of the steam generators utilized in the electric utility industry in that they both produce d high pressure steam used for electricity generation. The commenters stated that the EPA dete rmined that BSER at existing recovery boilers included state-of-the-art process controls and black liquor oxidation (pre-treatment of fuel). In addition, the commenters stated that the Section 111(d) program provided for subcategorization of recovery boiler units with differ ent limits assigned based on unit design and unit age. The commenters stated that in Louisiana, for example, LDEQ set the TRS emission limit for existing boilers at 20 PPM, but in Arkans as the emission limits on existing recovery boilers ranged from 40 PPM to 100 PPM. The commente rs stated that this precedent illustrates how EPA should craft its Section 111(d) emission gu idelines for electric utilities - identifying the best control options that can be applied to the per formance of the emitting units covered by the rule, and then allow states to determine the specif ic level 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 Section 111(d), such as cap and trade. However, the commenters stat ed 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 that 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.222

The commenters stated that the EPA should withdraw its Proposal and re-propose its Section 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 interpretation of the BSER is reasonable in light of legal precedent, the statutory text, statutory context, s tatutory purpose, and legislative history.

Additionally, we disagree that the cap-and-trade as pect 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 fir st phase established a mercury emissions cap at 38 tons per year based on a co-benefit of compli ance with the Clean Air Interstate Rule (CAIR). 70 Fed. Reg. 28606, 28618 (May 18, 2005). C AIR established a cap-and-trade program that would have significantly limited SO 2 and NO x emissions from the power sector. EPA determined that by regulating mercury along with CA IR, significant mercury reductions would be achieved by air pollution controls designed to r educe 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 28619. By using an integrated planning

model that looked at the national and unit levels o f utility mercury emissions under different control scenarios, the EPA projected that sources w ould “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 underCAA section 111, including adding Hgspecific control technologies (model applies ACI [a ctivated carbon injection]), additional scrubbers and SCR, dispatch changes, and coal switc hing.” Id. Further, “[u]nder the cap-andtrade approach,” the EPA projected “that Hg reducti ons result from units that are most cost effective to control, which enables those units tha t are not cost effective to install controls to use other approaches for compliance including buying al lowances, switching fuels, or making dispatch changes.” Id. Based on this analysis, the EPA determined that th e BSER “refers to the combination of the cap-and-trade mechanism and the technology needed to achieve the chosen cap level.” Id. at 28620. By basing the cap in part on the trading program, EPA set the Phase II cap at a level commensurate with widespread impleme ntation, including through dispatch changes; whereas if the cap were based solely on th e installation of control technologies, then the Phase II cap would not be cost-effective for the so urce category and the emission limit could not be justified.

Accordingly, we disagree that cap-and-trade was sim ply a compliance option and, for the reasons discussed in the preamble, believe it is an informa tive rulemaking under section 111.

Comment 18: The Clean Air Act ("CAA") Section 111(a) defines B est 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 liberall y under the proposed 111(d) rule for existing units than it did under the proposed 111(b ) rule for new units. EPA cannot apply a223

different interpretation of BSER when setting perfo rmance 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 n ot “interpreting” section 111(a)(1) differently in section 111(b) versus sect ion 111(b). Rather, we are applying the term to two quite different classes of facilities: those th at are new versus those that are existing. Congress recognized this difference itself in estab lishing a direct federal standard setting regime under section 111(b) while setting up a section-110 like cooperative-federalism planning regime under section 111(d).

Comment 19 : Commenters argued that the emission guidelines f or existing sources are more stringent than the NSPS.

Commenters stated that the EPA's Proposal would unr easonably 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 tha t one of the fundamental policies underlying the structure of the CAA is that existin g unit standards must be less stringent than new units standards, given that fewer options are a vailable to reduce emissions from existing units and even the options that are available for c ontrol retrofits are often more expensive and

less cost-effective. The commenters stated that con trol 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 Louisiana, 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

commenters stated that these unreasonable results i llustrate the EPA's failure to follow the direction of Congress in Section 111(d) and the Age ncy's own implementing rules.

Commenters stated that the ESPS cannot be more stri ngent than, or regulate sources not covered by, the corresponding NSPS. The commenters stated t hat 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 be low EPA's proposed 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' exi sting-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 str ingent than the corresponding NSPS is unheard of in the history of the CAA, and defies th e logic and intent of section 111(d), which is to use the experience gained from NSPS regulation t o develop performance standards appropriate for the corresponding existing sources.

The commenters stated that section 111(d) regulatio ns "will ordinarily be less stringent than those required by standards of performance for new sources because the costs of controlling224

existing facilities will ordinarily be greater than those for controlling new sources," EPA's 1975 implementing regulation states. The commenters note d that the regulation implies that in infrequent cases, ESPS may be as stringent as NSPS but it clearly does not contemplate that ESPS will be more stringent.

The commenters argued that ESPS that are more strin gent 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 bas e-load generation from coal to gas and from both to wind, solar, and nuclear. The commente rs noted that the ESPS also require reduced production achieved through changes in consumer dem and. Thus, the commenters stated that the ESPS regulate not only fossil-fuel power plants butalso entities different from those regulated by the NSPS. The commenters contended that Congress di d not intend for section 111(d) to operate in this way.

Commenters stated that in the alternative methods o utlined in the NODA, the underlying algorithm that combines all four building blocks pr ovides 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 h ighlight 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 fi nal goal set 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 e xisting 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 ar e more stringent than the section 111(b) standards. Further, we explain in the preamb le and the Legal Memorandum why the section 111(b) and (d) standards are based on diffe rent determinations of the BSER. Thus, the commenter makes an apples-to-oranges comparison. Th e use of the term “ordinarily” in the 1975 preamble reflects the agency’s long-term understand ing that standards under 111(d) may differ from those under 111(b). In any case, the statute d oes not dictate that 111(d) standards must be less stringent in all cases. Rather, Congress recog nized that the agency would be faced with different sets of challenges in regulating existing rather than new sources. Congress addressed this in part by establishing a cooperative-federali sm planning regime under section 111(d) similar to section 110. Reflecting this, the guidel ines include significant flexibilities, including the ability to trade and relatively long periods fo r 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 l ess 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 explici tly addresses the issue, Congress merely
authorizes the use of less stringent standards for existing s ources, subject to conditions; Congress225

does not mandate less stringent standards for existing sources.The EPA notes that the performance rates in the final guidelines are not n early as stringent as the commenter calculated.

Comment 20: The commenters 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 impossib ilities, prohibitive costs or design

constraints. The commenters stated that additionall y, existing sources may have limited remaining useful lives and not be able to reduce em issions without a modification or reconstruction; additional regulatory burdens and m ultiple regulatory schemes governing an existing facility may likely endanger the facility' s future viability. The commenters stated that for
25 of 48 states for which interim emission limitati on 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 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; this outcome is ill ogical and contrary to Congressional intent under Section 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 many 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 a re more stringent than new unit new source performance standards, which establishes a policy w ith no basis in the statute or no precedent under regulatory guidance. The commenters stated th at EPA offers no justification for proposing source specific standards under Section 111(b) and source specific standards for the proposed

modification and reconstruction rule but not allowi ng states to set source specific standards for affected sources within each state's jurisdiction t o 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 f uel-fired EGUs; and, section 111 further provides that standards of performance may be imposed only o n stationary 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 NSP S proposal for GHG emissions from new EGUs and consistent with section 111(b), the source s appropriate for inclusion in these proposed rules are electric utility steam generating units, integrated gasification combined cycle (IGCC) units, and stationary combustion turbines that meetcertain capacity and operational criteria. The commenters stated that, however, under the EPA's se ction 111(d) proposal, State plans must226

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 performanc e goal requirements in these emission guidelines. The commenters stated that by this defi nition, the EPA expands its emission guidelines to encompass any entity that the regulat ory authority believes could contribute to reducing the demand for electricity from EGUs. Comm enters stated the building blocks chosen as BSER will include 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 regulated entities beyond existing electric utility boilers, IGCC unit s, and stationary combustion turbines that would be regulated under the proposed NSPS. The com menters stated that under the EPA's proposal, it appears that the States themselves are affected entities potentially subject to compliance requirements. The commenters stated thatthe proposal defines an affected entity as any entity with obligations under this subpart, and the agency states in no uncertain terms that its proposed interim and final goals would establish bi nding emission guidelines for state plans. Commenters stated the proposal expands EPA's author ity 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 tha n existing sources in a regulated source category; the EPA must withdraw its proposed rule b ecause it depends on States imposing regulatory obligations under Section 111 on facilit ies other than existing fossil fuel-fired EGUs.

Response 20: The agency disagrees that the existing source guid elines 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 permitting 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 buildin g blocks provides a state-wide emission rate target that is even more stringent than EPA propose d for existing and new power plant and is not

a realistic or reasonable outcome. The commenters s tated 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 perspective, EPA is requiring more stringent emission reductions from e xisting 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-b ased CO2 emission performance interim and final goals of 647 lb/MWh and 531 lb/MWh, respe ctively and, for new EGUs, emission limits ranging from 1,000 lb/MWh /MWh to 1,100 lb/M Wh, depending on the type and size of227

the unit. The commenters stated that according to E PA's Technical Support Document: Goal Computation, New Jersey's existing EGUs are achievi ng an emission rate of 1,035 lb/MWh. The commenters stated that if the existing EGUs were to be replaced by new EGUs, the fleet 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 r ange 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 NG CC emission rate, in lb/MWh, in calculating the Interim and Final Goals for some st ates that is lower than the rate specified in EPA's pending NSPS for EGUs. In Arizona, the commen ters stated that the EPA used an NGCC emission rate of 900 lb/MWh, based on the average p erformance of Arizona's NGCC units in 2012; the commenters believed that this is unreason able. The commenters stated that for purposes of goal setting, an existing NGCC unit sho uld not be expected to perform at a better level than a new, post-NSPS unit with newer technol ogy; even if the existing NGCC unit is temporarily exhibiting a better level of performanc e, it is not clear that such performance would

continue over the life of the NGCC unit or would su rvive 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 s etting, the commenters believed that use of the 1,000 lb/MWh in the proposed NSPS would be an accep table 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 performan ce 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 N GCC 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 Arizon a, 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 th is 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 exhibiting a better level of perform ance, it is not clear that such performance

would continue over the life of the NGCC unit or wo uld survive the change in operating regime from an intermediate or peaking load unit to baselo ad 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 s etting, the commenters believed that use of the 1,000 lb/MWh in the proposed NSPS would be an accep table solution given that most NGCC units would be subject to the 1,000 lb/MWh limit if they had been constructed post-NSPS proposal.228

Response 22: We note that the subcategorized emission performan ce rates, and the state of Arizona’s equivalent state goal, as expressed in ma ss or in rate, in the final rule, have been adjusted from the proposal in response this and sim ilar comments. We believe the final guidelines set an achievable emission performance l evel for the affected EGUs in Arizona, and the apples-to-oranges 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 unach ievable. The commenters stated that existing sources should not be held to a more stringent stan dard 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 commen ters stated that additionally, existing sources may have limited remaining useful lives and not be able to reduce emissions without a modification or reconstruction; additional regulato ry burdens and multiple regulatory schemes governing an existing facility may likely endanger the facility's future viability. The commenters
stated that for 25 of 48 states for which interim e mission 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 lbs CO2/MWh) under the proposed NSPS. The commenters stated that like Idaho, many state emiss ion targets are 40 to 50 percent lower than the emission rates required for new sources; this o utcome is illogical and contrary to Congressional intent under Section 111(d).

Commenters stated that in the modified and reconstr ucted source rule, EPA proposes requiring

modified coal-fired EGUs to achieve CO2 emissions o f 2 percent below the best performing 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 sour ce rule much lower, at 1,052 lbs. CO2/MWh.

The commenters stated that this is an unattainable target for their EGU or any similarly situated coal-fired EGU, EPA provides no basis for holding e xisting 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 fuelfired sources are far more stringent than the propo sed goals for modified/reconstructed sources and for many states, new sources. The commenters st ated that the imposition of more stringent goals for older, less flexible, existing sources de fies logic. The commenters stated that generally, new sources are required to adhere to more stringen t 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 insta ll and operate those technologies; new sources can be designed and constructed in compliance with both Section 111 and Section 112 in the first place. The commenters stated that this is demonstra ted by EPA's own proposed NSPS for new coal-fired EGUs requiring the level of emissions ac hievable through installation of partial carbon capture and storage and through operation of combin ed cycle plants for new natural gas-fired turbines; EPA does not propose these same requireme nts for existing coal-fired EGUs because it229

is impractical and unachievable to mandate this tec hnology on existing units after they have been

built.

Response 23: We believe the final guidelines set an achievable emission performance level for the affected EGUs, and the apples-to-oranges compar ison of the stringency of standards under section 111(b) does not alter that conclusion.

Comment 24 : Commenters requested that the EPA withdraw the p roposed 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 f ederal plan that governs the order of dispatch, that requires state agencies to run energ y efficiency programs, or that would order the construction and operation of renewable energy gene ration sources. Further, the commenters noted that state agencies do not have the authority to regulate the activities of cooperatives and municipal power providers. The commenters stated th at all of this demonstrates how unworkable the Proposal is.

The commenters argued that Section 111 of the CAA a uthorizes a narrow regulatory program that applies to sources within listed source catego ries 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 aggregate emissions from each state's total fleet of existing EGUs,

based on measures that individual EGUs cannot thems elves implement or based on curtailment of operations. The commenters stated that the Propo sal is inconsistent with the requirements of the CAA and wanders so far afield from EPA preceden t as to be unrecognizable as a rulemaking made pursuant to section 111.

Response 24 : We disagree. For the reasons discussed in sectio n 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 purpos e, and legislative history.

Additionally, we disagree with these comments becau se the authority or practical ability of the EPA to implement or enforce the BSER itself is irre levant and based on a false premise. In fact, for new sources, the statute plainly forbids EPA fr om requiring sources to implement a particular

BSER.

By the same token, the EPA could not enforce many l ogistical aspects of a control requirement such as a scrubber – for instance, the EPA does nothave the authority to order the creation of companies that manufacture scrubbers, or order thei r construction or delivery on a certain

schedule. The EPA need not have before it at the st age of determining the BSER all of the information regarding manufacturing, transportation of parts, or other logistical requirements to ensure that each scrubber gets constructed and deli vered to a source. Nonetheless, the agency can determine the BSER premised on a reasonable assumpt ion that all of those things can actually happen.230

What is relevant is that the control requirements t hat the EPA identifies meet the statutory considerations to qualify as the BSER, which includ e that the owners or operators of the affected sources be able to implement the control measures a nd achieve their emission limits through those control measures. As we discuss elsewhere, th at is the case for all of the building blocks in the final rule. Thus, the EPA can reasonably determ ine that the federally enforceable emission standards that would be set in a federal plan, justas 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 t o 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 guid elines.

Lastly, to the extent this comment objects to the p ortfolio approach, which the EPA is not finalizing, the comment is moot.

Comment 25 : Commenters stated that EPA's inclusion of energy efficiency and renewable energy programs is inconsistent with "cooperative f ederalism."

Response 25: As discussed in the legal memo the clean power pl an is consistent with the roles the 111(d) defines for EPA and the states. We not e that we are not including energy efficiency

as an element of BSER in the final rule.

Comment 26 : Commenters argued that the CPP is an impermissib le regulation of emissions that are regulated elsewhere in the CAA.

The commenters stated that instead of setting stand ards of performance, EPA adopts the reduction or retirement of coal generation as the s tandard of performance for affected EGUs. The commenters stated that while not setting CO2 emissi ons 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 commenters stated that these air pollutants are regulated elsewhere in the CAA and cannot justify the CPP. Th e commenters noted that many of the coalfired EGUs impacted by the proposed rule have recen tly installed new control technology to reduce these other air pollutants as required by EP A's other regulations. The commenters stated that these new controls are significant capital inv estments that will be stranded as a result of the

CPP.

Response 26 : The agency determined the BSER through a bottom- up approach 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 im pact 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” a nalysis that shows that the emission231

performance levels in the final guidelines can be m et without the retirement of affected EGUs before the end of their book life, and without the retirement of affected EGUs before the end of the book life of capital-intensive pollution contro l retrofits installed on those EGUs. For additional detail, see the July 15 docket memo titl ed “Stranded assets analysis.”

Comment 27 : Commenters stated that the EPA has clearly over- reached its authority under the Clean Air Act in several ways:

a) EPA's interpretation is fundamentally inconsiste nt with the Federal Power Act's (FPA) division of regulatory authority over the electric utility industry between the federal government

and the states.

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.

c) EPA's encroachment on FERC authority includes an attempt to force utilities "not to serve" customers (i.e., through jeopardizing reliability a nd mandating reduced use by consumers), which conflicts with the traditional FERC-recognize d utility obligation to serve customers. 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 s hall 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 does not currently have the authority to enforce the requirements necessary to meet the emission rate limits established in the proposa l. For example, EPA cannot currently legally force re-dispatch and increased utilization of NGCC s.

f) The Clean Air Act ("CAA") Section 111(a) defines Best System of Emissions Reduction (BSER). Even though the same definition of BSER ap plies 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 sta ndards for new EGUs under Section 111(b) than for existing EGUs under Section 111(d), when b oth sections are subject to the same BESR

definition

g) Because of the regulatory scope of the CPP, no s ingle regulatory agency in Florida has adequate authority to implement the performance sta ndards of the CPP. A Florida statute limits the regulatory scope of its Department of Environme ntal Protection (FDEP) to environmental policy. Aspects of the CPP that are not environmen tal in nature will have to be addressed by other regulatory agencies and by the Florida Legisl ature. 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 agen cies. The commenters expressed concern as to232

what it will have to do and to whom it will be requ ired to demonstrate compliance or demonstrate progress towards meeting goals. FDEP n ormally 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 efficiency (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 i f any Florida regulatory agency can direct the re-dispatch of generation. This approach will requ ire almost every state to develop a new regulatory construct to meet an unprecedented feder al rule.

h) CPP implementation in Florida could also be hamp ered by state law that may require legislative review or ratification. Florida's legis lature meets for one 60-day session annually. In addition to this confounding any state plan's imple mentation, EPA should not discount the political reality of a legislature's inability to r each consensus on a state's development and implementation of the CPP requirements, especially in states that are wary of expansive regulation.

Response 27 : We disagree with commenters. The guidelines set emission performance levels for an air pollutant, GHGs (here, specifically, car bon dioxide), from a category of sources—in this case, the category responsible for the largestamount 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 indu stry between the federal government and the state. Our emission guidelines simply reflect an ac hievable emissions limit through the application of the BSER and do not in themselves re quire states or sources to implement the BSER. Moreover, these emission guidelines provide s tates with the flexibility to establish, implement, and enforce standards of performance and do not intrude on the regulatory domain of

FERC 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 C AA Amendments, Congress expressly identified power plants as a priority source category for regu lation 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. Further, the flexibility inherent

in the final rule allows states and affected EGUs t o 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 must run cont ract) could trade for the necessary ERCs or allowances to continue generating. For a more compr ehensive discussion of reliability issues, please see preamble section VIII.G.2. Finally, we n ote that we are not including building block 4 as a component of the final rule.

Comment 28 : Commenters stated that this overall proposal des ign to achieve 30% or "meaningful" emissions reductions on a sector-wide basis is clearly inconsistent with the Section 111(d) requirement for establishing state standards of performance on two specific existing source categories. The commenters stated that Secti on 111(d) regulation cannot be used as an "opportunity" to institute requirements that are no t authorized by the Clean Air Act. The233

commenters stated that throughout the proposal, EPA discusses the use of Section 111(d) to take advantage of "opportunities" to reduce carbon dioxi de emissions, regardless of what Section 111(d) actually authorizes or requires. The comment ers 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 satisfy its mandatory obligation under se ction 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 woul d in fact have a substantial employment impact and would cause widespread job losses. The c ommenters noted that section 321(a)'s requirements are mandatory, and EPA's conceded fail ure to comply with section 321(a) renders its proposed rulemaking unlawful. The commenters el aborated extensively 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 remov es any doubt about its mandate.

(2) EPA confesses that it does not perform continuo us section 321(a) employment evaluations.

(3) EPA has wrongly interpreted section 321(a) as d iscretionary.

Similarly, commenters stated that section 321(a) of the CAA contains a simple and straightforward mandate: EPA "shall conduct continu ing 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, includ ing where appropriate, investigating threatened plant closures or reductions in employme nt allegedly resulting from such

administration or enforcement." The commenters stat ed that EPA failed to conduct such a study with respect to the Clean Power Plan or any other C AA legislation in the past six years, which is in direct defiance of the requirements of section 3 21(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) an alysis with respect to its implementation of the CAA over the past six years to determine whethe r it resulted in "job losses or shifts in the coal industry." The commenters stated that plaintif fs 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, itwill be impossible for states, employers, and the public to comment meaningfully on the Proposed Rule.234

Commenters stated that the EPA persists in its fail ure to consider in any significant way the employment impacts of Clean Air Act regulations lik e this one. The commenters stated that the Agency did not use a whole-economy modeling approac h 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) of 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 32 1(a) does not require EPA to conduct employment evaluations as part of the rulem aking process or as a prerequisite to the issuance of a rule. The broad language of Section 3 21(a) does not address the scope, frequency, or timing of employment evaluations, leaving these matters to the discretion of EPA. In the exercise of its discretion, however, EPA does routi nely evaluate employment impacts when it conducts new rulemaking. Indeed, contrary to the co mmenters’ patently false assertions, EPA conducted a robust employment analysis for this act ion, including a discussion of economic theory and employment, recent employment trends, an d projected sectoral employment changes that may result due to the issuance of the final em ission guidelines. See Chapter 6 of the RIA for the proposed rule and Chapter 6 of the RIA accompan ying this final rule. EPA has conducted similar assessments for other rulemakings and conti nues to evaluate employment impacts generally and to refine its employment-analysis met hods. 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 th at 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 o f costs, benefits, and economic impacts associated with environmental regulation, EPA has f ormed a panel of experts as part of its Science Advisory Board (SAB) to advise the Agency o n 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 issues related t o the use of economy-wide modeling, including their technical appropriateness for assessing emplo yment impacts. Answers from the panel of experts will help EPA assess whether economy-wide m odels can be used to evaluate employment and other economic impacts in the future

.

Comment 30: EPA should articulate clear limitations on the pre cedential effect of its systemwide approach to BSER

Commenters stated the logical extension of the CPP' s proposed systems-based approach to BSER would create near-boundless EPA authority in t he context of the EPA regulating other sectors. Commenters said the EPA's proposed approac h departs substantially from previous regulation in a number of ways. Commenters stated a t the core of the EPA's proposal is a goal of reducing 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)235

(Building Block 3); and (3) measures to reduce cons umption of electricity (i.e. reducing the electricity consumption of completely independent c ustomers, 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 broad er, 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 emissions from the energy a nd transportation sectors. Commenters said in theory, the EPA could equally apply a systems ap proach to other sectors of the economy that it may next address, such as the extraction, refining and distribution of fuels; the movement of goods and even the manufacturing of products. Comme nters said it could, for example, establish state carbon intensity targets based on its own det erminations regarding the relative carbon intensity of different raw materials or feedstocks, of refining or manufacturing processes or of distribution. Commenters stated it could impose obl igations on states, and indirectly on retailers, for the carbon intensity implications of mode choic e, such as whether raw materials, fuels, or goods should move by ship, rail, pipeline or by oth er means of transport. Commenters said or in 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 travelled (VMT). Commenters stated there may be significant n ational 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 nation's industrial, energy or transportation choices in such a single-p urpose 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 ou r economy in similar fashion. Commenters strongly urged the EPA to consider and define the l imits 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 legislati ve history.

As we explain in section 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 category specific evaluation. As a result, the BSER is uniqu e to each industry and even may be different for new and existing sources.

Moreover, it cannot be said that because environmen tal requirements may have an effect on the wholesale energy market that the EPA is therefore i ntruding 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 determining the BSER, the EPA is required to take i nto account “energy requirements,” which,236

as we discuss in section V., the D.C. Circuit has v iewed as indicating that Congress understood that regulation of air pollution was intimately con nected with energy needs and policy. In this rulemaking, the agency is considering energy requir ements, on either or both an individualsource basis and an industry- or nation-wide basis. Among other things, the agency believes the measures in building blocks 2 and 3 should be inclu ded 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 rule has the effect of incentiviz ing and accelerating the development and deployment of renewable energy technologies, this p romotes the goal of reducing emissions while maintaining the supply of electricity, consis tent 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 prea mble, 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 Amendme nts. As discussed in section V.B. of the preamble, one of the reasons Congress revised the r equirements for determining the NSPS for new power plants was to free up the availability of lower-emitting fuels, such as low-sulfur coal and oil, that could then be used by existing plants . Thus, in considering energy requirements on an industry- or nation-wide basis, it is appropriat e to exercise expertise and balanced policy judgment in considering fuels availability and ener gy 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 confli ct with the text of the Clean

Air Act

Commenters stated, EPA's position that increasing e missions at NGCC units while reducing them at coal-fired power plants constitutes BSER ap pears to conflict with the text of the Clean Air Act. Commenters said, the Act contains two defi nitions of the term "standard of performance," one of which defines the term as "a r equirement 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. secti on 7602(l). Commenters said, therefore, in order to satisfy the plain language of the Act, sta te 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 redispatch from coal to natural-gas fired units would directly contradict this requirement because it would require NGCC units to increase their emission s of CO2. Commenters said, thus, EPA's proposal to incorporate re-dispatch into the BSER o n which states must base their standards of performance is plainly at odds with the CAA's requi rement that performance standards for stationary sources such as NGCCs ensure "continuous emission reduction."

Response 31: 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 purpos e, and legislative history. Moreover,237

implementing our emission guidelines will ensure re duced emissions at affected sources and will
not result in an increase in overall emissions of C O 2

.

Comment 32: Commenters indicated that treating RE and EE measur es as "implementing" measures because they facilitate sources' complianc e with their standards of performance, incorrectly assumes that "implementation" can be un derstood to mean "facilitation." The commenters cited the Webster definition of "impleme nt" to mean "to carry out"; "to give practical effect to and ensure of actual fulfillmen t by concrete measures[.]" The commenters said

this definition is consistent with EPA's use of the word "implement," in proposed Subpart UUUU, to mean "carry out." [40 CFR 60.5710] The com menters stated that "standards of performance" are what the states would use to achie ve the emission performance level, and that the CPP's "emission performance levels" or "state g oals" are not "standards of performance." The commenters said that the fact that renewable energy and energy efficiency measures might help states achieve their emission performance levels co uld mean, at most, that such measures help the states "implement" those emission performance l evels; it does not mean that those measures would help EGUs achieve their standards of performa nce. The commenters also noted that EPA acknowledges that RE and EE measures "are not direc tly tied to emission reductions that affected sources are required to make through emiss ion 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 "implemen ted" out of context when claiming that measures applicable to facilities outside the regul ated source category are measures that "implement" standards of performance. The commenter s stated that the "implementation and

enforcement" measures that states must include unde r section 111(d)(1)(b) are for the stateestablished 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 enforc eable state plan, RE and EE measures as “implementing” measures under section 111(d)(1)(b).

Comment 33: Overlap of section 112 and section 111 of the CAA.

Commenters stated that section 111(d) standards can not 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 inte rpretation of this "ambiguity" is due deference under Chevron U.S.A., Inc. v. Natural Resources Def ense 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 SOURCES- sect ion 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[,]" a nd section 302(a) of P.L. 101-549, which lists238

conforming amendments related to the adoption of Ti tle III (the overhaul of section 112), contains the following: "(a) Section 111(d)(1) of t he 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 Actas 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 displace 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. Commen ters said the new-source proposal is unlawful because it violates express restrictions o n Section 111(b) rulemakings imposed by the Energy Policy Act of 2005 by inappropriately consid ering certain government-subsidized projects in the Section 111 standard-setting proces s. [See generally Comments of the Competitive Enterprise Institute on Clear Air Act s ection 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 regulatio n covering only modified sources, which the Clean Air Act treats as "new" sources without excep tion. [See C.A.A. section 111(a)(1), 42 U.S.C. section 7411(a)(1) ("The term 'new source' m eans any stationary source, the construction or modification of which is commenced after" propos al or finalization, whichever is earlier, of Section 111 standards).] Commenters said these defe cts 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 Ne w-Source Standard predicate whereby the

EPA must first have established lawful standards un der Section 111(b) for new sources in a particular industrial category.

Response 34: This comment is outside the scope of this rulemaki ng

Comment 35: Modification/reconstruction rule does not satisfy prerequisite for 111(d) rule, i.e., standard for new source must apply first, not a sta ndard for modified/reconstructed

Commenters stated that the modified/reconstructed s ource 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 poll ution emission guidelines for existing EGUs provides the prerequisite for section 111(d) is con trary to the plain language of the statute and is logically flawed.239

Commenters stated that where, as here, EPA has chos en to establish two separate categories of NSPS under section 111(b), one for truly new source s and one for modified sources, it cannot lawfully base the validity of a section 111(d) regu lation for existing sources on the modified source regulation. The commenters stated that shoul d the new source regulation in this scenario fail against legal challenge, so too must the secti on 111(d) regulation under the plain language of section 111(d). The commenters stated that this leg al result is further supported by the practical reality that, as the three regulations for EGUs hav e been proposed by EPA, the section 111(b) regulation for existing EGUs has virtually no real world effect; neither does EPA's plan to concurrently regulate modified EGUs as existing EGU s under its section 111(d) regulation pass legal muster. The commenters stated that as a resul t, EPA's section 111(d) regulation will be left without the necessary section 111(b) regulation con trolling "new" sources and this section 111(d) regulation will be invalid. The commenters stated t hat the EPA should abandon this rulemaking.

The commenters stated that as with the new source r ule, the absence of costs or benefits from regulation demonstrates that there is no valid regu latory purpose; instead EPA's section 111(b) regulation is pretextual; undertaken only with an e ye to claiming that a prerequisite for section 111(d) has been met. The commenters stated that for jurisdictional and regulatory purposes pretextual regulation should be regarded as no regu lation at all.

Response 35: EPA disagrees with this comment. Under section 11 1(d), EPA “shall prescribe regulations” with respect to emissions from existin g 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 ap ply if such existing source were a new source.” See section 111(d)(1)(A)(ii). Clearly, a standard for newly constructed sources is a “new source” standard that is a predicate for 111(d ) regulation. But “new source” is defined to

also include a source “the modification of which is commenced after the publication of regulations (or, if earlier, proposed regulations) prescribing a standard of performance under this section which will be applicable to such source.” Further, under EPA regulations in 40 CFR 60.15, sources that meet the definition of “reconst ruction” in 40 CFR 60.15(b) are considered to be new sources. Thus, standards for any of these t hree types of sources are properly considered to be “new source” standards, and any of these can serve as the predicate “new source” standard under section 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 perform ance under this section would apply if such existing source were a new source. The commenters s tated that this mandates that the style of standards under 111(d) should be structurally the s ame 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 congr essional intent for similarity.240

Response 36: We disagree with this comment. By its terms, sectio n 111(d)(1) requires an applicable standard of performance under section 11 1(b), but 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 performa nce.

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 Ru le (CAMR), that was vacated in its entirety in New Jersey v. EPA. The commenters stated that th e decision vacated both the Delisting Rule40 and the CAMR; EPA has removed some but not a ll of the CAMR-related regulation changes from Subparts A, B, Da, and HHHH in the CFR , but some CAMR-related changes to Subpart B are still there. The commenters stated th at specifically, in 40 CFR Subpart B, regulation sections 60.21(f) (definition of emissio n standard) and 60.24(b)(1) (emissions standards and compliance schedules), still include "allowance system" as an allowable method

for states to set an emission standard under Sectio n 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 mustomit provisions for allowance 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 u se 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 P ower Plan, we are including regulatory text in the final subpart UUUU regulations authorizing t he use of allowance systems as a form of emission standard under section 111(d). We recogniz e 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 Clean Air Mer cury Rule (CAMR) (70 FR 28606, 28649; May 18, 2005). As the commenters note, CAMR was vac ated in its entirety in New Jersey v.

EPA , 517 F.3d 574 (D.C. Cir. 2008). However, the reaso n for vacatur was wholly unrelated to the question of whether an allowance system could b e a form of emission standard. In response

to the New Jersey decision, the agency removed CAMR provisions from t he Code of Federal Regulations. The agency chose to retain the languag e of 60.21(f) and 60.24(b)(1) generally recognizing allowance systems. This language is bro ader than CAMR and unrelated to the reasons for its vacatur. The EPA re-promulgated the se provisions in the final Mercury and Air Toxics Standard (MATS) in February of 2012 (77 FR 9 304, 9447; Feb. 16, 2012). Even if this were not the case, the agency would not concede tha t simply because “allowance systems” were not provided for in the framework regulations of su bpart B, they could not be relied upon in specific emission guidelines, such as these for car bon 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 a ny question whether allowance systems are241

authorized under the Clean Power Plan, we are inclu ding regulatory text in subpart UUUU to make this authorization explicitly clear.

Comment 38: Can EPA require of the states what it cannot do it self?

Commenters stated that a related problem arises fro m EPA's effort to force state and even federal (for regional systems) utility regulators to be par ticipants in its "BSER." Commenters said the statutes governing those regulatory processes typic ally require consideration only of cost and reliability when approving generation projects and rates, except as may be allowed under specific, legislatively directed renewable portfoli o 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 tu rbines and solar arrays may raise costs and diminish reliability. Commenters said that the mark et, 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.

Response 38: As we explain in sections V.A. and V.B. of the pre amble, our emission guidelines simply reflect an achievable emissions limit throug h the application of the BSER and do not in themselves require states or sources to implement t he BSER. That is, EPA is responsible for determining the level of emission limitation from t he source category, while states have the responsibility of assigning emission requirements t o their sources that will ensure their

achievement of that level of emission limitation. S tates may fulfil their responsibility by establishing emission standards or creating plans c onsistent 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, to meet the final rule’s requirements in the most costeffective and efficient manner possible.

1.15.2 APA issues

Comment 1 : Commenters stated that the proposal is entitled to deference.

Commenters stated, the Clean Air Act defines a "sta ndard of performance" as "a standard for emissions of air pollutants which reflects the degr ee of emission limitation achievable through the application of the best system of emission redu ction which (taking into account the cost of achieving such reduction and any [non-air] quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated."

Commenters stated, Congress did not define "best sy stem of emission reduction" nor did it define "system," and the Act does not expressly pre clude EPA from considering the availability of measures that reduce the carbon intensity of aff ected EGUs. Commenters said, this discretion242

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 se ction 169A(g)(2). Commenters said, Congress's use of "system" in section 111 as oppose d to "technology" signals its clear intent to allow EPA the discretion to identify the best means to reduce emissions from a source category.

Commenters stated, this lack of detail from Congres s makes it clear that Chevron deference is appropriate and agency expertise is necessary to de sign specific requirements. Commenters said, the Court recognized this in AEP v. Connecticut:

The Clean Air Act entrusts such complex balancing t o EPA in the first instance, in combination with state regulators. Each "standard of performanc e" EPA sets must "tak[e] into account the cost of achieving [emissions] reduction and any non air 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 primary regulator of greenhouse gas emissions."

Commenters stated, thus, it is EPA's role to identi fy 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 co nsistent with its own views.

Comment 2 : Commenters stated, EPA's interpretations of sect ion 111(d) are unreasonable, arbitrary, and capricious, and are not entitled to deference.

The commenters noted, "[W]hen an agency-administere d 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, cou rts will defer to an agency's "permissible construction of the statute." Commenters said, the agency's interpretation must be "reasonable," however. Commenters said, even where Congress has e xplicitly directed the agency to promulgate rules, courts will not give "[s]uch legi slative regulations ...controlling weight [if] they are arbitrary, capricious, or manifestly contr ary to the statute." Commenters said, courts will not defer when "the statute simply will not bear th e 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 interpre tation, the court "must be guided to a degree by common sense as to the manner in which Congress is likely to delegate a policy decision of [significant] economic and political magnitude to a n administrative agency." Commenters said, reviewing courts "expect Congress to speak clearly if it wishes to assign an agency decisions of vast 'economic and political significance.'" Commen ters 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." Comme nters said, an agency interpretation that243

"would bring about an enormous and transformative e xpansion in [its] regulatory authority without clear congressional authorization will be r ejected as unreasonable."

Response 2 : The agency disagrees. As discussed in the Legal M emo, its interpretations 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, in cluding 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 thatgreenhouse gases like carbon dioxide are “atypical pollutants” that are emitted in “vast qua ntities.” Id. at 2442; see also AEP v.

Connecticut , 131 S. Ct. 2527, 2538 (2011) (“Congress could har dly preemptively prohibit every discharge of carbon dioxide unless covered by a per mit.”). Notably, the Court in UARG recognized, and did not disturb, the agency’s concl usion that greenhouse gases are a pollutant under the CAA because they endanger public health a nd welfare by fostering global climate change. See UARG , 134 S. Ct. at 2436-37. Moreover, the Supreme Cour t has repeatedly affirmed the authority and responsibility of the agency, cha rged with implementing the Clean Air Act, to deploy its expertise and the exercise of its discre tion to fashion workable regulatory frameworks 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 wheth er 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 wit h clear statutory text like numeric thresholds and would be recognizable to the Congress that enac ted 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 lar gest quantity of its emissions in the United

States.

Comment 3 : Several commenters stated that the proposal is ar bitrary and capricious.

Commenters provided comments identifying aspects of the Proposed Regulation that, as currently drafted, are arbitrary, capricious, unsup ported, and 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 is riddled with contradictions and inconsistencies. Commenters said, therefore, as pro posed, it is arbitrary and capricious.

Commenters stated, an EPA rulemaking may be invalid ated if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," or is "in excess of statutory jurisdiction, authority, or limitations, or short o f statutory right." Commenters said, a rulemaking244

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." C ommenters said, and it is arbitrary and capricious if, among other things, its terms or app lication are premised upon a fact or factor that "Congress has not intended [EPA] to consider," or f ails to articulate a "rational connection

between the facts found and the choice made."

Response 3 : The agency must disagree: our action is lawful a nd reasonable. Blanket, conclusory assertions that the agency’s action is arbitrary an d capricious or unlawful, without further detail, do not give the agency a basis to evaluate a partic ular 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-sp ecific conditions

Commenters stated, in the proposed rule, EPA conduc ts its BSER analysis on what is essentially a uniform national level, using State electricity g eneration data from 2012 as a starting point. Commenters said, thus, aside from plugging State-sp ecific generation data into a national uniform model, EPA fails to address a single State specific condition that may warrant additional scrutiny and, in some cases, a departure from EPA's generally applicable BSER analysis. Commenters said, unless EPA addresses the practical reality that the nation's energy infrastructure is highly dependent upon State speci fic issues in virtually every instance, EPA's BSER analysis will be arbitrary and capricious.

Commenters stated, first, for example, EPA's treatm ent 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 sourc es other than hydroelectric power, EPA includes all electricity generation, including futu re generation from new sources. Commenters said, for nuclear energy, EPA includes all electric ity generation from sources under construction and six percent of electricity generation from exis ting sources. Commenters said, for hydroelectric power, EPA excludes all existing elec tricity 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 targ et that EPA proposed for the State through its BSER analysis.

Commenters stated, second, by conducting a State-le vel BSER analysis that assumes a perfectly fungible electricity generation and transmission sy stem, 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 differen t regulators for different parts of the State and electricity may not be able to move easily betw een 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 renewable 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 throu gh the SPP, and the coal-fired Big Stone245

plant, which is dispatched through MISO. Commenters said, despite the fact that these facilities serve different customer bases and are subject to d ispatching by different system operators, EPA assumes that because they are located in the same S tate, electricity can be shifted seamlessly from Big Stone to Deer Creek. Commenters said, simi lar problems may exist in other States, such as Arkansas, where electricity is managed by m ultiple ISOs or RTOs. Commenters said, thus, for States with multiple ISOs or RTOs, the ab ility 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 setState emission reduction goals on a system basis without considering how the electricity system in e ach State is managed.

Commenters stated, third, EPA has failed to accountfor 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 e nacted RPS standards and EERS programs and have made strides in implementing those program s. 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 cred it 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 stringent baseline for early acting States and is demanding m ore, rather than less, in the form of future emission reductions. Commenters said, in this manne r, EPA is treating different States in an arbitrary and capricious manner.

Response 4: We disagree with commenters. While the EPA is setti ng a uniform CO 2 emission performance rate for each of two affected source su bcategories, there is flexibility in the final rule with respect to how states and affected EGUs m eet the final rule requirements. That is, EPA is responsible for determining the level of emissio n limitation from the source category, while states have the responsibility of assigning emissio n requirements to their sources that will ensure

their achievement of that level of emission limitat ion. States may fulfil their responsibility by establishing emission standards or creating plans c onsistent 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 i nto account the unique circumstances, set of resources, and infrastructure within their own stat es. Additionally, trading of ERCs or allowances provides affected EGUs with an additiona l way to comply with final rule requirements.

We note that with respect to the nuclear issue rais ed 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 resu lting from a relicensing process. We are also not including existing RE (including hydropower) in the BSER calculation. However, we are including new RE as BSER. This includes capacity up rates at an existing RE facility. For a more comprehensive discussion of these issues, please se e preamble section V.E. and the GHG Mitigation Measures TSD.246

The EPA recognizes the importance of early actions taken by states and industries to reduce emissions of greenhouse gases and the effect these actions have had on global emissions. However, the CAA does not require that emission gui delines 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 th e CAA to support this contention. While technology-based standards may sometimes result in early-acting facilities being deemed in compliance without further action, this is not a ma ndatory 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 opport unities available to states and sources through the application of the BSER. For a discussion of th e EPA’s approach to early actions taken by states or affected entities after promulgation of t he final rule but before the first compliance period, see the final rule 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-sp ecific conditions

Response 5: The final guidelines took into account this and si milar 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 agenc y calculated state-specific equivalent goals to the performance rates that reflect the unique mix o f affected EGUs in each state. And we are allowing states to design state plans that take int o account state-specific issues.

Comment 6: Commenters stated, first, for example, EPA's treatm ent of different types of zeroemission sources in conducting its BSER analysis re sults in arbitrary and disproportionate treatment of States. Commenters said, for renewable energy sources other than hydroelectric power, EPA includes all electricity generation, inc luding future generation from new sources. Commenters said, for nuclear energy, EPA includes a ll electricity generation from sources under construction and six percent of electricity generat ion from existing sources. Commenters said, for 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 targ et 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 whi le certain hydroelectric is included; both of course, may be used to contribute toward meeting th e emission performance level. In general, the agency set goals that are based on achievability wh ile avoiding extremely disproportionate emission reduction targets that would vary dramatic ally according to which state a unit is located

in. We note that comments such as in 14.1 are in te nsion with comments such as in 14.2. On the one hand, some commenters complained that the agenc y was not focused on unique state and247

facility-specific circumstances. On the other hand, other commenters complained that the agency proposed emission reduction goals that varied too w idely from state to state. Our final rule strikes a balance between these two equally valid c oncerns and produces an emission performance rate that could be applied uniformly na tionwide, but which also provides for equivalent expression as state-level rate or mass-b ased goals but which do not vary too wildly from one state to another. Ultimately, of course, s tates 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-l evel BSER analysis that assumes a perfectly fungible electricity generation and transmission system, EPA failed to consider the challenges faced by States which are m embers 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 able to move easily between RTOs. Commenters said, thus, NGCC facilities located in one RTO may not be capable of substituting for a coalfired EGU located in a different RTO. Commenters sa id, in the same manner, portions of a State with potential for new renewable energy capacity ma y not be able to serve growing demand in a different RTO. Commenters said, South Dakota, for e xample, has two fossil fuel-fired EGUs: the gas-fired Deer Creek Generating Station, which is d ispatched through the SPP, and the coal-fired Big Stone plant, which is dispatched through MISO. Commenters said, despite the fact that these

facilities serve different customer bases and are s ubject to dispatching by different system operators, EPA assumes that because they are locate d 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 mana ged 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 electric ity 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 misunderstand that the agency is not mandating implementation of the building blocks. States and sources have flexibility to achieve their targets through BSER a nd non-BSER measures.

Comment 8: Commenters stated, third, EPA has failed to accoun t 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 Pennsy lvania have already enacted RPS standards and EERS programs and have made strides in implemen ting 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 th e 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 sa id, instead, EPA has used those early actions to set a more stringent baseline for early acting S tates and is demanding more, rather than less, in248

the form of future emission reductions. Commenters said, in this manner, EPA is treating different States in an arbitrary and capricious man ner.

Response 8: EPA has addressed these comments to some extent in the final determination of the BSER, by reducing the disparity in goal-setting bet ween 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 perfor mance period in 2022.

Comment 9: Commenters stated, fourth, EPA is treating differe nt States differently by requiring emission reductions that vary dramatically with res pect to the amount of GHGs currently emitted by affected EGUs in the State. Commenters said, for example, Texas is responsible 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 f rom fossil fuel-fired EGUs nationwide. Commenters said, the reductions required by sources within a State should bear some

resemblance to the CO2 emissions for which that Sta te is responsible. Commenters said, it is arbitrary and capricious for EPA to require some St ates 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 determin ation of what is achievable. The final numbers have changed from the proposal to reduce disparitie s between states. However, ultimately, the agency is not charged under section 111(d) to achie ve perfect equality among states but to determine the degree of emission limitation that is achievable using the best system of emission

reduction.

Comment 10 : Several commenters suggested that 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 w hich may not prove to be true in the final Rule. Commenters said, this concern stems from thre e 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 significan tly, underlying principles that are fundamental to how the Rule will be implemented. Commenters sai d, 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 st andard based on assumptions of state actions that may not come to pass - calling into qu estion compliance pathways to meet EPA's goals. Commenters said, finally, as affected entiti es that will have a significant compliance obligation, the setting of goals based on actions t hat lie well outside our sphere of influence calls into question our ability to comply.249

Commenters stated that the high degree of uncertain ty in how EPA might choose to finalize this rule suggests EPA has an obligation to offer an add itional round of comments on a more focused

rule. The commenters stated that the EPA should rei ssue 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 entit ies. 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. Comme nters stated that the EPA should withdraw this Rule and re-propose the Rule based on firmer l egal grounds and inside the fence emissions reductions. The commenters acknowledging that EPA m ay be reluctant to limit reductions to inside the fence actions, we raise the concern thatEPA's Rule is insufficiently developed to be finalized, even after comments are filed. The comme nters stated that given the number of unresolved issues and questions posed for comment b y EPA, the Proposed Rule should at the very least be re-proposed after EPA has had the opp ortunity to evaluate the first round of comments and refine the proposal. The commenters st ated, however, EPA must be advised that

failure to withdraw the Rule and reissue it based o n inside the fence reductions will inject enormous regulatory and legal risk into a system th at 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 translation of emission rate-based CO 2 goals to mass-based equivalents (TSD on Rate to Mass). Commenters said, when EPA issued its TSD on Rate to Mass, it set new massbased limits for each state. Commenters said, these new limits effectively revised the CPP. Commenters said, however EPA neglected to re-propos e 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. Comment ers said, EPA is sidestepping the procedures that were established to ensure that the regulated community has adequate time to provide meaningful comments on proposed rules. Comm enters said, eighteen days is not sufficient time to provide in depth analysis and co mment on this critical revision to the CPP. Commenters said, EPA must re-propose the CPP with t he revised limitations from the TSD on Rate to Mass and allow adequate time for comment.

Commenters said this rule proposal is more appropri ately a pre-proposal, given the many uncertainties within the proposal itself and the ro ughly 200 instances in which EPA requested comments on its proposed approach. Commenters said, with this late publication of the "Additional Information Regarding the Translation o f Emission Rate-Based CO2 Goals to MassBased Equivalents," coupled with the recent publica tion 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 a nd provide comments. Commenters said, given these deficiencies, the Rule Proposal does not comp ly 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 new p roposal 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, a dditionally, if the proposed rule is adopted250

as is, it will not only be violative of the APA, bu t 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 no t propose a clear method to determine compliance with the proposed goals, which is necess ary 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 proposed rul e and subsequent notices satisfy the procedural requirements of the CAA and/or the APA b y providing meaningful notice and gave giving commenters an adequate basis on which to com ment. In addition to providing notice and soliciting comment in the Federal Register, EPA con ducted an extensive outreach effort including numerous meetings with stakeholder groups . Many of commenters’ suggestions have been reflected throughout the final rule. With resp ect to the Fifth Amendment due process clause assertion, the agency notes that in addition to its legal disagreement with this comment, we believe such a comment may reflect a misunderstandi ng of the rule. The agency is issuing emission guidelines for states to follow in the des ign of approvable state plans. Where the commenter sees “vagueness” the agency sees a high d egree 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 pr oviding 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 f easibility or costs. Commenters said, if EPA is 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 s upporting data, analysis, legal support, and adjusted goals so that states may provide meaningfu l comments.

Commenters stated, the inadequacy of EPA's public c omment 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 Power Plan Emission Rate-b ased CO2 Goals to Mass-Based Equivalents Technical Support Document ("Rate to Ma ss TSD") on November 6, 2014, a mere thirty-four and twenty-five days prior to the comme nt deadline, respectively. Commenters said, these documents raise numerous additional issues, a lternatives, and methodologies, and the public needs additional time to prepare fully infor med 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 variou s alternative approaches the Agency provided for the first time in the NODA could funda mentally alter the proposed emission guidelines and lead to more stringent goals for all or some states. Commenters said, EPA also recognizes that many issues in the NODA - and the f our Building Blocks generally - "interact with each other." Commenters said, and, realistical ly there is no way to assess how stringent any state's goals will actually be unless EPA provides additional data and support for these new alternatives and methodologies. Commenters said, be cause of these gaps, EPA cannot finalize any of the changes discussed in the NODA without is suing a supplemental proposal that clarifies251

the Agency's position, provides the basis and purpo se for its approach pursuant to CAA section 307(d)(3), provides specific details of how each st ate would be affected, provides sufficient economic analysis of the changes, and provides prop osed regulatory text. Commenters said, none of these things are present in the NODA.

Commenters stated, CAA section 307(d)(3) requires E PA to include in its rulemaking docket on the date of publication of a proposed rule "[a]ll d ata, information, and documents . . . on which the proposed rule relies." Commenters said, EPA's f ailure to provide the Rate to Mass TSD at the time of proposal violates this requirement and demo nstrates that EPA's proposal remains a work in progress that is more akin to an Advanced Notice of Proposed Rulemaking than a proposed rule. Commenters said, even more fundamentally, EPA 's issuance of the Rate to Mass TSD twenty-five days prior to the comment deadline flie s 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, repropose 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 virtually every aspect of the Rule inclu ding, most significantly, underlying principles that are fundamental to how the Rule wil l be implemented. The commenters stated that the EPA has chosen to set mandated state goals based on assumptions of state actions that may not come to pass, and that affected entities th at 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 E PA might choose to finalize this rule suggests EPA has an obligation to offer an opportunity for a n additional round of comments on a more focused rule that meets all section 111(d) requirem ents. The commenters asserted that the EPA should issue a revised proposal for public comment, 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 an d re-propose the Rule based on firmer legal grounds and inside the fence emissions reduct ions. 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 iss ues 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. 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 lega l risk into a system that already is under

considerable strain due to other environmental and market constraints.252

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 pub licly available. The agency has been committed to transparency and public engagement thr oughout the rulemaking process. The proposed rule and subsequent notices satisfy the pr ocedural 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 solici ting comment in the Federal Register, EPA conducted an extensive outreach effort including nu merous 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 p rovide opportunity for further public evaluation and comment of these interrelated propos ed 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 notice of propo sed rulemaking. Commenters said, in addition to the challenge of assessing a lengthy ru le proposal of such premature condition, WDEQ had little time to fully evaluate the subseque nt NODA published on October 28, 2014, nor the Technical Support Document (TSD) on convers ion 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 anticipat es that the EPA will receive extensive comments and data, which will likely influence and change the rule. Commenters said, moreover, the interdependency of all three rule pro posals does not allow them to be severable. Commenters said, fundamental pieces of these rules are dependent on each other, and a decision made for one rule could have consequences in anothe r. Commenters said, as such, this and the 111(b) rule proposals should be changed to foll ow the intent and authority as specified in Section 111 of the CAA and re-proposed jointly.

Commenters stated that considering the numerous req uests 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 differen t 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 comme nt unless EPA provides an additional comment period. The commenters stated that one opti on is for EPA to release a revised Proposed Rule with an appropriate comment period before rele asing the Final Rule. The commenters stated that an alternative is to continue ongoing o utreach 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 com pliance options available to states. The commenters stated that if the Final Rule is signifi cantly different from the Proposed Rule, they recommend the first option - releasing a revised Pr oposed Rule with an appropriate comment period to allow states and other stakeholders to an alyze the changes. Commenters continued that253

the ambiguity in the Proposed Rule, the current dat a gaps, and the lack of time to fully analyze the data create uncertainty which may lead to unint ended consequences.

Commenters stated that the authority required to im plement BB #3 and BB #4 and likely BB #2 appear to be well beyond the authority granted to E PA 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 c ommenters 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 temperature reduction. The commenters stated that the EPA should withdraw this rule and re-propose it based on its s tatutory authority under the CAA and "inside the fence" emissions reductions. The commenters arg ued that EPA should also be more transparent with the American public as to the actu al miniscule impact this proposed rule will have on global climate temperature change in 2050 a nd 2100 as well as the rule's massive economy-wide economic impact.

Commenters stated, if EPA makes any major changes t o the proposed rule through this NODA, EPA must re-issue the rule with those proposed chan ges 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 inform necessary technical analyses, modeling, or o therwise be adequately reviewed. Commenters said, this lack of timely information on important elements of the proposal is unacceptable. Commenters said, the NODA offers addi tional alternatives to EPA's original proposal which, if adopted, would impact other impo rtant elements of the proposal. Commenters said, therefore, it is critical that EPA provide th e public with the opportunity to comment on the next version of the Clean Power Plan proposal, in i ts entirety, 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 considerati on, 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 penalizes tho se who have taken early action. Commenters said, EPA's proposal does not comply with the CAA s ection 111(a)(1) requirements that the standards of performance take into account "cost" a nd "energy requirements" (in the form of energy diversity) and 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 ex isting unit into consideration. Commenters said, EPA should withdraw the subject proposal, work with states to develop a workable standard as intended by the CAA, and reissue the proposal fo r comment.

Commenters stated, the vagueness and uncertainty of this Proposed Rule, as well as the absence of a BSER analysis relevant to Alaska, dictates an additional opportunity to evaluate and254

comment on a revised and re-published rule. Comment ers stated Alaska has spent considerable resources studying and analyzing the Proposed Rule designed for states with highly interconnected electricity systems. Commenters adde d 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 stated a thorough evaluation of the Proposed Rule proved challenging within even the extended commentperiod. Commenters stated the absence of a relevant BSER analysis and the sheer volume of in formation, compounded by the release of additional data late in the comment period, contrib uted 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 Prop osed Rule for existing units. If EPA does not withdraw the Proposed Rule or exempt Alaska, the co mmenters urged EPA to re-publish a more concrete Proposed Rule with some analysis of the re levant impacts on Alaska to allow for meaningful comment.

Commenters urged the EPA to carefully consider comm ents and re-propose the rule applying a

definition of BSER that is consistent with its auth ority 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 Proposed Rule through amendme nts to its Proposed Rule. However, if EPA continues down its current path, the commenters sta ted that at a minimum, EPA must: (1) properly evaluate resource adequacy and potential r eliability impacts; (2) provide states with additional time to craft implementation plans that address all factors identified under Section 111, including remaining useful life; (3) correct t he data errors in the Building Blocks; and, (4) take steps to mitigate the consequences of EPA's go al-setting methodology.

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, further more, the methodology for assessing both costs and benefits is deeply flawed where informati on is present to be evaluated. Commenters said, the following areas have been identified as h aving either inadequate and incomplete information or information which was misinterpreted and/or misused within EPA's assessment of the potential cost, impacts and benefits of the pro posed rule:

- Lack of Information on State Compliance Actions - Conflicts Between Results and Purported BSER Elem ents - Incomplete and Improper Assessment 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 Expenditur es/Costs

Commenters stated, EPA should provide another oppor tunity for comment before issuing its final rule. Commenters said, the Proposed Rule is v ery broad in scope and would have an extensive impact affecting a host of regulatory, co mpliance and operational issues. Commenters255

said, the EPA has solicited comment on a large numb er of issues associated with assumptions used in developing the Proposed Rule, making the pe rmutations of the possible final rule unmanageable. Commenters said, after EPA has reache d a conclusion on these issues, the Proposed Rule should be reissued in a more definiti ve form to permit more specific evaluation and comment prior to the issuance of the final rule

.

Commenters stated, EPA should return the 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 pre pares the way for more significant carbon emission reductions in the future by relying much m ore heavily on renewable energy sources.

Commenters requested that EPA issue a second propos ed rule after incorporating comments received on this initial proposal and after prepari ng 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 stated, EPA should consider additional o pportunities 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 issues. Commenters said, the Notice of Dat a Availability (NODA), released on October 28, 2014 provided new information and requested add itional comment. Commenters said, in addition, during various conference calls, EPA's an swers to States' questions were often not definitive, with EPA inviting comment on how the qu estions should be resolved. Commenters said, further, the NODA's late release date allows insufficient time for states to analyze the information presented and to respond appropriately. Commenters said, finally, EPA did not release the rate-to-mass translation methodology an d presumptive mass-based state goals (critical elements of the Proposed Rule) until November 6, 20 14, less than one month from the end of the comment period.

Response 12 : The EPA disagrees with that its rulemaking proce ss was inadequate. The agency has been committed to transparency and public engag ement throughout the rulemaking process. The proposed rule and subsequent notices satisfy th e procedural requirements of the CAA and/or the APA by providing meaningful notice and gave giv ing commenters an adequate basis on which to comment. In addition to providing notice a nd soliciting comment in the Federal Register, EPA conducted an extensive outreach effor t 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 su ch as the NODA and TSD released late in the comment process are not substitutes for regulat ory language. Noting the Administrative procedures Act, the commenters stated that EPA mustre-issue draft regulations.256

Commenters stated, EPA's regulatory language and st ructure - 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 documen ts, legal justifications and questions to elicit input from the regulated community to propose a wel l-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 comp rehend and comment on actual regulation. Commenters said, an agency cannot substitute guidan ce and support documents for wellreasoned regulatory language. Commenters said, to d o so obfuscates the transparency in regulation that this Administration has so champion ed. Commenters said, such support documents, whatever their merit, do not constitute legally enforceable Agency determinations and certainly are not binding on any court that wou ld 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 rulemakin g is dictated by the requirements set forth in the APA. Commenters said, EPA must publish a notice of proposed rulemaking in the Federal Register. Commenters said, this notice mustcontain the "terms or substance of the proposed rule." See 5 U.S.C. section 553(b). Commen ters said, more specifically, NSPS rulemakings are subject to section 307(d) of the CA A. CAA section 307(d)(1)(C). Commenters said, among other requirements, the rulemaking prop osal must "be accompanied by a statement of its basis and purpose," that includes: (A) the f actual 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 underlyin g the proposed rule. Id. section 307(d)(3). Commenters said, after consideration of public comm ents, EPA may then publish a final rule. Commenters said, the final rule incorporates a gene ral statement of its basis and purpose. 5 U.S.C. section 553(b).

Commenters stated, the APA's notice-and-comment rul emaking 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 'propo sed 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 regul ated community necessary to propose a well-reasoned CPP rule. Commenters stated, EPA reco gnizes as much. Commenters said, in 2008, the Agency issued an ANPR associated with gre enhouse gas regulation. See ANPR for Regulating Greenhouse Gas Emissions Under the Clean Air Act, EPA-HQ-OAR-2008-0318 (July 11, 2008). Commenters said, EPA rationalized that issuance of the ANPR was appropriate "on matters of great complexity, controversy, and a ctive 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 Adm inistrator of the EPA on the ANPR for257

Regulating Greenhouse Gas Emissions Under the Clean Air Act, RIN 2060-AP12, at 2 (July 11, 2008). Commenters said, indeed, the EPA Administrat or explained that significant public input was required before issuing a draft rule addressing greenhouse gas emissions because "the Clean Air Act, an outdated law originally enacted to cont rol regional pollutants that cause direct health effects, is ill-suited for the task of regulating g lobal greenhouse gases. Based on the analysis to date, pursuing this course of action would inevitab ly result in a very complicated, timeconsuming and, likely, convoluted set of regulation s." Id. at 5.

Commenters said, for example, nowhere in the rule d oes 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 in tegral to an understanding of what states, and the existing EGU source category, are expected to d o. Commenters said, relying solely on the proposed rule and without reviewing the TSDs, no on e could possibly understand the CPP as

EPA has defined it.

Commenters stated, further, the process by which EP A has proposed the CPP makes a mockery of the rulemaking process. Commenters said, since i nitiating 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 it s October 28, 2014, Notice of Data Availability ("NODA"), EPA again floated a series o f 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 not 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?

Commenters Commenters said, this is insufficient an d contrary to the APA. Commenters said, Ameren, as well as the rest of the regulated commun ity must have an opportunity to comment on the rule as proposed, not the rule as it might poss ibly exist. Commenters said, for these reasons, Ameren believes the CPP does not constitute proper notice-and-comment rulemaking sufficient to support the issuance of final regulations. Comme nters said, rather, EPA should give due consideration to the comments that thousands of par ties have spent countless hours preparing, engage in proper stakeholder and sister agency cons ultation, and reissue draft regulations for comment that embody the actual structure and compon ents of the regulatory program.

Response 13 : The agency has been committed to transparency an d public engagement throughout the rulemaking process. The proposed rul e and subsequent notices satisfy the procedural requirements of the CAA and/or the APA b y providing meaningful notice and giving commenters an adequate basis on which to comment. I n addition to providing notice and soliciting comment in the Federal Register, EPA con ducted an extensive outreach effort including numerous meetings with stakeholder groups . Many of commenters’ suggestions have been reflected throughout the final rule. Further, this comment is based on a misunderstanding that the rule would directly apply the building blo cks through regulatory text. The BSER is a technical determination. The regulatory text of the guidelines does not need to discuss the building blocks because it does not mandate that st ates implement the building blocks. Rather,258

the final guidelines provide states the emission pe rformance levels or state-goal equivalents that their sources are to achieve via state plans. To so me degree, the lack of specific in the rule text at proposal is a reflection of that flexibility provid ed to states. The regulatory text of the final rule is is a logical outgrowth of the proposed rule, and wh ile more detailed in some respects, maintains a great deal of flexibility for states. The require ments for what states must submit in order to have an approvable plan are clearly set forth in th e final rule.

Comment 14 : Some commenters indicated that states need more prescriptive guidance (for different reasons).

Commenters stated that, as presently structured, th e rule is prone to failure and unlikely to achieve meaningful results. The commenters stated t hat granting excessive flexibility to states (or groups of states), the rule lacks clear, consis tent, and enforceable criteria to evaluate emission reductions or the wide variety of substitute action s contemplated in lieu of reducing existing facility emissions. The commenters contended that t his is an open invitation to develop vague requirements, questionable metrics, and convoluted methods for assessing reductions that could occur (or supposedly already have occurred), partic ularly in states hostile to taking action on climate change.

In addition, commenters charged that the rule promo tes inequitable standards, 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 cli mate consequences of continuing to let some facilities pump high levels of greenhouse gas into the atmosphere while others conform to a higher standard, this inconsistency regarding what is expected of facilities complicates compliance, monitoring, and enforcement. The commen ters stated that vague provisions that allow for demand-side action instead of reducing po wer plant emissions also invite questionable hand-waving or the counting of consumer actions tha t would likely occur without the rule. Because individual state targets are very weak, the commenters stated that the rule could even encourage 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-com pliance" 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 legislatur es, lack of clear enforcement responsibility, and severely misguided strategies for natural gas and r enewables 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 guidan ce possible.

Similarly, commenters asked for strong federal enfo rcement 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 commen ters stated that a regulatory agency must provide adequate notice and a fair opportunity to b e heard by those it regulates. [K. Davis,259

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 r ule (approximately 150), it is unclear whether the final rule will remotely resemble the P roposal 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 compliance approaches to address these

uncertainties. The commenters noted that one area o f uncertainty is how a State will convert its proposed emission rate-based target for all affecte d 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 i n order for a State to be able to understand the implications of complying with its proposed State g oal. Specifically, the commenters stated that there should be no ambiguity as to a State's mass-b ased goal, because a State must be able to look at this mass-based goal relative to the variou s Building Blocks to determine the feasibility of achieving its mass-based goal. The commenters no ted 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 comme nters noted that the Proposal touts the flexibility given to the States vis-a-vis the vario us 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 regul ated industry should not be placed in the untenable position of speculating on the ramificati ons of compliance with the Proposal based on an uncertain mass-based compliance target. Here aga in, the commenters requested that a template State plan be provided, which would descri be how a model State would achieve its State goal if it were to take either a rate-based o r mass-based approach. The commenters noted that the EPA's recent TSD on converting a rate-base d target to a mass-based target, due to its vague nature, falls short of providing States with adequate guidance on this critical aspect of the CPP. The commenters stated that a template plan sho uld also illustrate how a State could participate in a multi-state plan.

Response 14 : The EPA is confident that the final rule provide s 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 required to have a backstop in place to ensure they are meeting their goals. Ot her forms of state plan will be based on federally enforceable emission standards. EPA is ta king additional steps for rate-based emission standard plans to ensure that ERCs are permanent, n on-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

enforceable emission standards on the affected EGUs . The federal plan will also serve as a model rule, satisifying this, and many other commenter’s concerns, that the agency should provide additional support for states on the design of appr ovable plans. EPA’s action goes beyond a BAU

scenario and will achieve real and additional reduc tions in carbon pollution.

Comment 15 : Several commenters noted that EPA has allowed in sufficient time for rule development and implementation.260

Commenters were concerned that the time set aside f rom 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 Pres ident Obama's timeline may not adequately account for the magnitude of this rule. Commenters said, the complexity of the Rule has required considerable analysis and even with the 16 5 days allowed for comment, significant uncertainty remains as to the real impact of the pr oposal on the electric sector given the inability to fully analyze how individual states may act unde r the rule.

Commenters stated, unfortunately, because energy ef ficiency is such a large part of the overall compliance regime, leaving this for resolution unti l after the state goal is set virtually assures tha t affected entities cannot adequately comment on EPA' s proposed goals. Commenters said, utilities, regulators and states continue to grappl e with these and a host of other questions. Commenters said, FERC is just beginning to assess the reliability impacts of the rule on the electric grid. Commenters said, a North Ame rican Electric Reliability Coordinating Council (NERC) report released on November 5th clearly states that the industry has had insufficient time to develop analysis of the propos al and that EPA has failed to adequately assess reliability concerns.

Commenters were concerned that EPA will have insuff icient 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 d eadline, 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 matter s raised, revise the rule in a manner consistent with the CAA that can be attained without jeopardiz ing 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 proposal ant icipates incorporating the application of CAA authorities over large segments of the economy heretofore never regulated, this is no small

endeavor.

Commenters stated, finally, the state process is co mpressed to a degree as to virtually assure regulatory 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 econo my) 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 "affected en tities" in advance of submission of a final rule, major investments may not be prudently undert aken until such time as the State Plan is complete and approved by EPA. Commenters said, for electric utilities, whose investments generally require significant planning, design, eng ineering, financing and permitting even before construction begins, 18 months is a blink of an eye

.

Commenters stated, six months is an insufficient ti me period for EPA to review and incorporate the comments provided into a final rule.261

Response 15 : The EPA disagrees with this commenter regarding the timelines for this rulemaking. However, we note that the agency has ad dressed concerns about time needed to develop state plans and meet interim performance le vels. Thus, with initial submittals, all states will have until September 6, 2018 to submit final p lans, and the interim performance period will not begin until 2022. Additionally, the final rule adjusts the interim goals to provide a gradually phased-in initial reduction requirement and a more gradual glide path to the final 2030 goals. This more gradual 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 that period.

Comment 16 : Commenters stated that the Proposed Rule goes be yond 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 ann ounced the Administration's "Climate Action Plan." [http://www.whitehouse.gov/climate-ch ange] The commenters stated that this speech cannot provide EPA with the authority to pro mulgate the Proposed Rule. The commenters stated that Presidential speeches do nothave the force 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 P resident's public speech "is an insufficient basis for the exercise of lawful authority by execu tive 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 beliefs 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 international agreement entered into unilaterally b y the President create the basis for a sweeping regulation like the Proposed Rule. [See Laurence H. Tribe, Taking Text and Structure Seriously:

Reflections on Free-Form Method in Constitutional I nterpretation, 108 HARV. L. REV. 1221, 1249-77 (1995).]

The commenters stated that policymaking-by-speechif ying is an inherently arbitrary process, because the policy can be reversed by another speec h, 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 asse rts 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 horizo n. 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. Th e commenters stated that an executive regulation - let alone a speech or announcement - " altering future regulation in a manner that makes worthless substantial past investment incurre d in reliance upon the prior rule" "may for262

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 "fundamen tal notions of justice" that have been recognized throughout history. [Kaiser Aluminum & C hemical 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 citi zens of legitimate expectations and upset settled transactions." [General Motors Corp. v. Rom ein, 503 U.S. 181, 191 (1992)] The

commenters stated that the Administration's cavalie r disregard for the well-settled expectations of millions of Americans underscores why any defere nce to the "Climate Action Plan" would be inappropriate.

Response 16 : The EPA’s action is under the statutory authorit y Congress provided in the Clean Air Act. The fact that it is consistent with, and c arrying out, the policy of the Executive Branch as directed by the President, does not somehow make the action any less lawful 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 f itting that Congress designated an expert agency, here, EP A, 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 u pset well-settled investmentbacked expectations developed in reliance on longst anding federal policy and would single out a

few to bear burdens that in fairness should be born e by society as a whole.

The commenters stated that the Proposed Rule repres ents a radical shift in federal policy that would upset settled, investment-backed expectations , with no corresponding climate or

environmental benefits. The commenters noted that t he agency does not contend that the proposal would affect the climate in any way. The c ommenters stated that the EPA has sought to justify the EPA Power Plan as an economic measure, not a "pollution control" plan. The

commenters stated that the EPA Administrator Gina M cCarthy 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 invest ment opportunity. This is not about pollution control. It's about increased efficiency at our pla nts, 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://energ ycommerce.house.gov/pressrelease/pollution-vsenergy-lacking-proper-authority-epa-can%E2%80%99t-g et-carbon-message-straight (emphasis added)]263

The commenters argued that the Proposed Rule repres ents the epitome of arbitrary decisionmaking because the Proposed Rule will entail significant harm to society and disruption of wellsettled reliance interests that are not counterbala nced by any gain. The commenters stated that the Proposed Rule is different from other regulatio ns by EPA under the Clean Air Act, in that it is a constitutionally infirm agenda-driven regulati on 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 enti rely supportable on the basis of the degree of emission limitation of GHG air pollutants, here, CO 2 as determined by application of the BSER and taking into account factors such as cost, ident ified in section 111(a)(1). As explained in the preamble, the rule will have economic and public he alth co-benefits. Consistent with longstanding practice across the federal government , the agency discloses those benefits, along with information regarding costs, to inform the pub lic of the impacts of its actions. We address allegations regarding stranded assets in the preamb le at VIII.B.1 . Insofar as this comment’s reference to investment-backed expectations is inte nded 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 clearl y violates the Tenth Amendment which defines the respective roles of the federal government and the states.

According to the commenters, the Tenth Amendment ma kes it abundantly clear that the federal 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; Print z v. United States, 521 U.S. 898, 918-19 (1997) (quoting U. S. Const. Amend. X. ("Residual s tate sovereignty ... 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 indicated that while Con gress has authority to regulate interstate commerce via U.S. Const. Art. I, section 8, the sta tes retain authority over intrastate commerce and general police powers, including the power to r egulate electric utilities. Bond v. United States, 134 S. Ct. 2077, 2086 (2014) (citing United States v. Lopez, 514 U.S. 549, 567 (1995). According to the commenters, consistent with the Te nth Amendment, Congress recognizes in section 101 of the Act that "air pollution preve ntion . . . and air pollution control at its source is the primary responsibility of the States and loc al governments." 42 U.S.C. section 7401(a)(3). The commenters stated that section 111(d) establish es a clear division of authority between EPA and the states in setting performance 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 violate the Tenth Amend ment and well recognized federalism

doctrines. The commenters stated that the EPA not o nly strips state environmental agency authority in setting binding performance standards under section 111(d), but it also mandates that state legislatures and public service commissioners set energy policy according to these new264

EPA standards. The commenters noted that Mississipp i elects, rather than appoints, its public

service commissioners. The commenters stated that t he EPA cannot, in the guise of CO2 standards, effectively require any elected official s, including our PSC Commissioners, to revise long-range energy policies and resource plans to ac commodate EPA's vision of what a 2030

electric sector should look like. The commenters ar gued that this 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 offi cials to the voters in our states. See New York, 505 U.S. at 169 (stating that "when due to fe deral coercion, elected state officials cannot regulate in accordance with the view of the local e lectorate," "[accountability is thus diminished").

The commenters stated that the Act establishes a cl ear division of authority between EPA and 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 rese rved for the states the authority to set binding standards for existing sources under sectio n 111(d). In fact Section 111(b) provides that "the Administrator shall publish proposed regulatio ns establishing Federal standards of performance for new sources...." 42 U.S.C. section 7411(b)(1)(B). The commenters stated that section 111(d), however, only authorizes EPA to iss ue 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 standard s of performance. 42 U.S.C. section 7411(d)(1)(A). The commenters stated that the statu te is clear on its face that Mississippi and thus MDEQ, not EPA, has the authority for individua l facilities within its jurisdiction to "establish" standards of performance. The commenter s noted that Congress also provided flexibility to the states in terms of how those sta ndards are applied to individual sources within their borders. Section 111(d)(1) provides that "the Administrator shall permit the State in applying standards of performance to any particular source .... to take into consideration, among other factors, the remaining useful life of existin g source to which the standard applies." 42 U.S.C. section 7411(d)(1)(B). The commenters noted that Congress authorized "EPA to set 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 implementi ng regulations confirms its role under section 111(d) because those regulations provide th at 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 guidel ine ...which reflects the degree of emission reduction achievable through application of the bes t 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 establish legal ly enforceable ("binding") allowable emissions rates for existing sources on a state-wid e basis for each state. 79 FR 34892 ("As promulgated in the final rule following considerati on of comments received, the interim and final goals will be binding emission guidelines for state plans."). According to the commenters, the proposal establishes "emission standards," not guid elines, which clearly violates EPA's own role

under 40 CFR 60.22. The commenters asserted that in no regulation has EPA ever set binding265

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 ta ke 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 pr ovided for in the statute, and 60.21 and .22: it has determined the degree of emission reduction ach ievable through the application of the BSER. States now have the opportunity to develop state pl ans that achieve that degree of emission performance, and have flexibility in the manner in which they set unit-level standards of performance. Further, these commenters misunderstan d the nature of the emission performance levels or state goals EPA is finalizing. They are o nly “binding” in the sense that the state must develop a plan that meets them, should the state wi sh to do so. They are not enforceable CAA obligations 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 aff ected EGUs, the consequence is that EPA disapproves the plan and promulgates a federal plan . EPA has always interpreted section 111(d)(2) as giving it authority to review the subs tantive 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 t hat favor certain fuel sources.

Commenters argued that there is no state "flexibili ty" in the rule or any discretion provided to states to develop their own standards of performanc e or develop variances and exceptions to the standards, as required by the Act. The commenters s tated that the EPA's own modeling shows many of the coal-fired units that will be forced in to 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 A ct included as one of its purposes "to encourage and foster the greater use of coal and ot her alternate fuels, in lieu of natural gas and petroleum, as a primary energy source." [Id] The co mmenters stated that for EPA to undermine

the hundreds of millions of dollars investment thatresulted 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.

Commenters stated that even where the Proposal's st ate goals would not require coal-fired EGUs to shut down entirely, the goals are based on reduc ed utilization of these units, which could limit their ability to recover the costs of installing em ission controls.

Commenters stated that the Clean Power Plan's metho dology 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 r ole of federal agencies to use regulatory authority to force states to adopt policies that fa vor specific energy sources. The commenters noted that such tactics set a dangerous precedent f or future regulation of energy production.266

Response 3 : Section 111(d) of the Clean Air Act does not cre ate exemptions for facilities on the basis of whether they received federal support in a ny way under other laws. Furthermore, for the reasons discussed in section 1.2 of this response t o comments document, this rule provides states significant flexibility and meaningful choice consi stent 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 state s into implementing a federal regulatory program in violation of the Tenth Amendment.

Comment 4 : Commenters stated that the CPP undermines the se paration 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 fa iled, and that the CPP is an attempt to circumvent the democratic process.

Commenters stated that the CPP undermines the separ ation of powers. The commenters stated that, even assuming for the sake of argument that t he CAA authorizes EPA to regulate CO2 as an "air pollutant," the EPA stretches section 111(d) b eyond all recognition.

The commenters argued that states cannot meet their CPP emission-reduction requirements by applying demonstrated emission-control technology t o existing 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 history that Congress a uthorized 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 maki ng law rather than implementing it.

The commenters 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 regu latory authority without clear congressional authorization." The commenters stated that the CPP runs afoul of the Supreme Court's admonition that "Congress does not hide ele phants in mouse holes."

The commenters stated that Congress, after all, deb ated and declined to approve similar policies during the first Obama administration. The commente rs 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 A merican 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-M arkey 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 Pol lution Standard (CPS) rule. The commenters stated that the EPA anticipates no CO2 emission red uctions or climate benefits from the CPS rule, since the agency assumes no new coal power pl ants would be built anyway. The commenters noted that the CPS rule is a regulatory stepping stone to the CPP. The commenters267

stated that under the CAA, 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 authori ty 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 statutory context and a variety of important policy considerations. EPA disagrees with this comment insofar as it claims that EPA may not promu lgate regulations addressing CO2 emissions from existing power plants under section 111(d); EPA’s discussion of that 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, o ur 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 reflect an ac hievable emissions limit through the application of the BSER and do not in themselves re quire states or sources to implement the BSER. Moreover, these emission guidelines provide s tates with the flexibility to establish, implement, and enforce standards of performance and do not intrude on the regulatory domain of

FERC 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 C AA Amendments, Congress expressly identified power plants as a priority source category for regu lation 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.

Commenters stated that the EPA's proposed regulatio ns are unlawful at the most fundamental

level. The commenters stated that the Administratio n has decided to bypass Congress in implementing far-reaching Executive Branch energy a nd environmental policy goals. The commenters stated that basic Separation of Powers p rinciples, however, prohibit the Administration from doing so. The commenters stated that the EPA should withdraw this rule and abandon its attempt to remake the US electricit y system by a misguided and highly flawed executive fiat, and limit itself, at most, to allow ing the states to determine what reductions can be made through realistic efficiency improvements on a case-by-case basis at individual existing

sources.

Response 5 : We disagree with this comment. With respect to t he separation of powers aspect of this comment, EPA may promulgate regulations addres sing CO2 emissions from existing 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 histor y.268

Our emission guidelines simply reflect an achievabl e 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 f lexibility 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 requireme nts may have an effect on the wholesale energy market that the EPA is therefore intruding i nto energy regulation. Certainly, in the legislative history of the 1970 CAA Amendments, Con gress 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 autho rity under the Clean Air Act in contravention

of UARG v. EPA. Additionally, for the reasons stated in the Legal Memorandum, thi s 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 re cently 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 d oing so, the Court provided valuable lessons that EPA should heed in these proceedings. The commente rs noted that the Supreme Court made clear that regulation of greenhouse gases, includin g CO2, cannot be "'extreme,' 'counterintuitive,' or contrary to 'common sense.'" Id. at 2441 (quoti ng 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 st atute in a way that "would ... bring about an enormous and transformative expansion in [its] regu latory 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 an agency claims to discover in a long-extant statute an unheralded power to regulate a 'significant portion of the American economy,' ... we typically greet its announcement with a measure of skepticism." Id. at 2,444 (quoting Brown & William son, 529 U.S. at 159).

The commenters argued that the EPA lacks the author ity under the CAA to advance this 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 s tated that CAA section 111(d) does not allow EPA to set the CO2 reduction goals of each st ate 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 perf ormance for any existing source. Id. (emphasis added).

The commenters stated that the proposal blatantly d isregards the mandate that EPA must explicitly take into account the remaining useful l ife of the sources being regulated, i.e. power269

plants. The commenters noted that CAA 111(d)(2)(B) states "... the Administrator shall take into consideration, among other factors, remaining usefu l lives of the sources in the category of sources to which such standard applies." Id. (emph asis 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 plan to take into accoun t 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 determi ne how to achieve reductions ... and to adjust the timing in which reductions are achieved in order to address key issues such as cost to consumers, electricity system reliability and the remaining us eful life of existing generation assets[,]" it is a
baseless assertion. 79 FR 34836.

According to the commenters, first, the statute req uires 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 th at it does not give states meaningful control 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 whe re a state could potentially consider remaining useful life. 79 FR 34926. The commenters contended that there is virtually no way that a state plan can take into account remaining u seful 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, th e commenters stated that 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 li ves of coal plants.

Commenters stated that the CPP is unconstitutional and should be withdrawn. The commenters

contended that the CPP violates the Article I Contr acts 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 thatit is likely that additional constitutional issues, including possible Commerce Clause, and Sep aration of Powers claims, among others may prove fatal to the CPP because the proposed rul e 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 p rohibits 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 fi nal 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 Re duction" that arbitrarily includes factors well beyond the EGUs themselves and which has not b een adequately demonstrated. Finally, the270

commenters stated that contrary to the clear mandat es of the Federal Power Act and the principles of federalism, the proposed existing-sou rce rule extends the EPA's authority to reach

Ohio's fundamental economic structures and unlawful ly usurps authority from the State of Ohio to control its distribution of electricity.

Response 6 : We disagree with this comment. As an initial mat ter, Commenters’ citation of section 111(d)(2)(B) is beside the point; that prov ision applies to federal plans, not these emission guidelines. 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 reas onable mechanisms. We respond there to comments about adjusting the goals. We respond else where 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 the reasons stated in section IV of the final rule prea mble. Furthermore, for the reasons discussed in section V.A. and V.B. of the preamble and in the Le gal Memorandum, our interpretation of the BSER is reasonable and within the scope of EPA’s au thority in light of the statutory text, statutory context, statutory purpose, and legislati ve history. Our emission guidelines simply reflect an achievable emissions limit through the a pplication of the BSER and do not in themselves require states or sources to implement t he BSER. Moreover, these emission guidelines provide states with the flexibility to e stablish, implement, and enforce standards of performance and do not intrude on the regulatory do main 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 regulati on. 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. Acco rdingly, commenters are incorrect to claim that this rule expands EPA authority under the Clea n Air Act in contravention of UARG v. EPA. Finally, the Legal Memorandum accompanying the fina l rule responds to commenters’ concerns about the constitutional implications of this rule under the Contract Clause, Takings Clause, and

Tenth Amendment.

Comment 7 : Commenters stated that states cannot implement b uilding block 3 without arbitrarily penalizing in-state generators or viola ting the contracts clause.

The commenters stated that there is no feasible mea ns for states to incorporate renewable energy into the state compliance plans without penalizing electric generating companies operating within their borders or illegally disrupting existi ng contracts. The commenters mentioned that the Proposed Rule uses all existing renewable generatio n within a state to set emission rate goals, but states may not be able to utilize the portion of re newable generation sold out of state toward compliance. The commenters stated that most contrac ts for renewable generation also contract

for the environmental attributes associated with th e generation and states do not have the authority to abrogate these contracts in order to c omply with the proposed emission rate goals. The commenters stated that any attempt to do so wou ld violate the Contracts Clause in the constitution. The commenters stated that exporting states like Oklahoma are placed in the271

untenable position of needing to make additional re ductions in state to offset the portion of renewable generation embedded in the state goal tha t is sold out of state, as a result.

Response 7 : We disagree with this comment. For the reasons s tated in the Legal Memorandum accompanying this rule, state implementation of bui lding 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 Ame ndment ("The powers not delegated to the United States by the Constitution, nor prohibited b y it to the States, are reserved to the States respectively, or to the people.")

Response 8 : For the reasons stated in the Legal Memorandum, the EPA disagrees that this rule

coerces or commandeers states in violation of the T enth 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 preferentia l bus and carpool lanes. The commenters noted that the Courts of Appeals for the Fourth and Ninth Circuits invalidated the regulations on statutory grounds in order to avoid what they perce ived to be grave constitutional issues, and the District of Columbia Circuit invalidated the regula tions on both constitutional and statutory grounds. According to the commenters, after [the Co urt] 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 the invalidity of those that remained, leaving [the Court] to vacate the opinions below and remand for considerat ion of mootness. [Printz, 521 U.S. at 925 (internal citations omitted).]

The commenters stated that the history of this overreach had developed as follows:

• In 1970, Congress passed the Clean Air Amendments.

• In 1971, EPA promulgated the first rule requiring s tate air quality plans under the new

amendments.

• On December 6, 1973, EPA promulgated regulations to reduce motor vehicle emissions through tailpipe controls, but also mandated outside-the-ve hicle conservation measures such as express bus lanes, bicycle concourses, inspection programs and commuter surcharges.

The commenters stated that the EPA purported to req uire the States to enact laws and appropriate monies to guarantee enforcement of these regulation s in their CAA state plans. The commenters stated that the D.C. Circuit, in District of Columb ia v. Train, rejected EPA's rule, however, finding that Congress did not delegate to EPA the p ower to require States to adopt and enforce the changes that the Agency wanted to implement, an d 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 Circ uits, which had struck down EPA's vehicle272

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 problems," the D.C. Circuit also invalidated EPA re gulations on both statutory and constitutional grounds. [District of Columbia v. Train, 521 F.2d 9 71, 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 reg ulatory powers of the states, along with their personnel and resources, for use in administe ring and enforcing a federal regulatory program." [Train, 521 F.2d at 992.] The commenters stated that the Train Court further repudiated "the novel approach of empowering a fede ral agency to order unconsenting states to enact state statutes and regulations, thereby conve rting state legislatures into arms of the EPA ...." [Id. at 984; see 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-comm andeering doctrine has an historical

association with the CAA. The commenters stated tha t 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 acceptab le 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 the commenters, under the commandeering doctrine, EPA c annot order an unwilling State to issue a

SIP in the first instance nor command that it use i ts police power - a power not possessed by EPA - to continue enforcement of a SIP it initially agrees to issue.

The commenters stated that the latter situation was recently addressed by the Sixth Circuit in Sierra Club v. Korleski. [681 F.3d 342] The comment ers explained that in 1980 the Sixth Circuit, in a 2-1 decision, in United States v. Ohio Departm ent of Highway 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 to adopt implementing legislation. The commenters note d that Korleski reversed Highway Safety with the observation that Highway Safety "came duri ng an era whose conception of the statefederal relationship has been superannuated by the Supreme Court's later decisions in New York and Printz." [681 F.3d at 351-52] The commenters no ted, 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 respectto a State, however, the commenters noted "the EPA can [only] engage the State directly throu gh the process of dialogue and inducement so plainly contemplated by the Act's sanctions provisi on, section 7509." [Id.] The commenters noted that sanctions provision permits a partial wi thholding 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.273

The commenters explained that although EPA may try to convince the States to cooperate, it may not resort to "outright coercion." [Virginia v. Bro wner, 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 w hether to conform to federal desires. [See United States v. Dole, 483 U.S. 203, 211-12 (1987) (upholding five percent reduction in highway funds as representing "relatively mild encouragemen t 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 th e 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 comme nters stated that regulating greenhouse gas emissions beyond the fence line of existing sources , including by mandating the establishment of renewable energy portfolios and the imposition of c onservation programs upon the State's citizenry, is the same sort of programmatic shift a nd very far removed from the agreed terms under which highway funds were originally accepted.

Response 9 : For the reasons stated in the Legal Memorandum, th e EPA disagrees that this rule

coerces or commandeers states in violation of the T enth Amendment.

1.15.4 General illegality/exceedance of EPA authori ty

Comment 1 : Commenters stated, as proposed, the guidelines w ould allow environmental regulatory agencies to establish programs that are more related to achieving desired social and economic outcomes rather than developing and implem enting performance standards to achieve emission reductions. Commenters said, Pennsylvania believes 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. The commenters 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 promulgated as a result of federal rules. The commenters expressed concern that the Proposed Rule is just co ming from a Federal agency without the support of the elected officials in D.C.

Commenters stated, because stabilizing the concentr ations of GHGs in the atmosphere will require the transformation of our energy, transport ation and manufacturing systems, they believe that the existing Clean Air Act (CAA) is not the ap propriate vehicle for regulation toward that goal. Commenters said, rather, Congress should craf t national climate legislation that balances multiple national priorities, including economic st ability, energy independence, national security and defense, and energy reliability and affordabili ty, in addition to environmental goals, and that assigns responsibility across federal departments a nd agencies according to their respective expertise. The commenters recognized, however, thatsuch an ambitious, coordinated approach is274

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 pro ceed with certain rulemakings. Commenters also recognized that states and regions already are developing significant regulatory programs to address GHG emissions and that prompt EPA action, i f structured appropriately and designed to avoid harmful impacts, may provide a useful nationa l framework for action in the form of a federal program that could avoid difficulties likel y 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, sho uld determine the framework to address greenhouse gases and ensure the balance of affordab le and reliable electricity from a variety of

fuels and sources. Commenters asked the EPA to with draw or reconsider its proposed rules for regulating carbon dioxide emissions from existing E GUs. Commenters said, the complex and far-reaching issue of reducing greenhouse gas emiss ions is best addressed by Congress and the states. Commenters said, the proposal is legally an d 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 at tempts to establish climate change policy not yet approved through an act of Congress. Commen ters 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 Congress to m ake 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.

Commenters stated, national energy policy should be determined by Congress, not by EPA. Commenters said, if Congress decides that transitio ning to a lower-carbon economy is the energy policy path to pursue, then that transition should be done in an orderly and cost-effective fashion - one that recognizes reliability concerns and real istic time horizons and considers the useful life that remains in the valuable generating resources t hat currently exist.

Commenters stated, if enacted, the proposed rule wo uld, in effect, set energy policy for the

United States. Commenters contended that such an im portant socioeconomic decision should be made by the legislative branch of government, espec ially so given that, by EPA's own admission, this effort is symbolic. Commenters said, if the Un ited 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 with 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.275

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 unpreceden ted effort is indeed clear through the large body of work that comprises the proposed Clean Powe r Plan. Commenters said, the City of Tallahassee aligns with the EPA in their significan t efforts to address climate change through responsible regulation, and appreciates the EPA's d edication 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 s tatutory basis noted above, that this 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 en ormous 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 addres s climate change is present, the need to get a final regulation correct based on accurate data, sc ience, and statistics is even greater. Commenters said, an accurate and appropriate regula tion 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 suc h, the City of Tallahassee suggests that an additional re-proposal is necessary after resolving these and others' comments, and that a final rule promulgated by June 1, 2015 under a politicall y-imposed-only deadline would not allow the necessary input from all stakeholders to ensure EPA 's updates 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. Commenters said, the n ew proposal can then be derived from a statute designed to address the challenges of climate chang e regulation, and not rely on a creative redefinition of a 44-year old statute.

Commenters stated, as proposed, the guidelines woul d allow environmental regulatory agencies to establish programs that are more related to achi eving desired social and economic outcomes rather than developing and implementing performance standards to achieve emission reductions. Commenters said, Pennsylvania believes 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, Congress empowered the agency through the Clean Air Act to address air pol lution problems in the United States, including the problem of GHG pollution. The final r ule does set energy policy for the country. It sets an achievable level of emissions performance f rom the affected EGUs and gives states the opportunity to design state plans in the first inst ance to achieve these emission reductions. The EPA itself could implement emission standards itsel f 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 fro m coal to NGCC exceeds EPA's authority.276

Commenters stated that the dramatic increase in NGC C utilization set forth in the Proposed Rule would require a fundamental redesign of the existin g electric grid and force substantial changes in how the natural gas industry and organized marke ts operate, both of which are outside the scope of the Proposed Rule and EPA's lawful authori ty 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 t hat even if these shifts in generation in lowNGCC states do contribute to a reduction in the str ingency 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 requireme nts, this sort of forced operational/construction changes are not allowed by the CAA - they are beyon d-the-fence requirements that are not "systems of emissions reductions." See 42 U.S.C. 74 11(a)(1). The commenters asserted that this existing-source 111(d) Rule Proposal is in dir ect conflict with the CAA to mandate the construction of new sources to comply with an exist ing-source rule.

Commenters stated concerns about the significant im pact of the very recent additional EPA proposal for creating a minimum value of re-dispatc hed coal to non-existent NGCC power plants or to co-firing natural gas in existing coal-fueled boilers. The commenters mentioned that EPA is further proposing another potential means for incre asing the stringency of a state "goal" by adding incremental renewable energy and energy effi ciency to the "goal" which replaces coalfueled generation pro-rata or prioritizes there-dis patch 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 und er building block 2 are inconsistent from state

to state because certain states have little or no N GCC affected EGUs. The commenters stated that EPA then asserts that one way to address this discr epancy would be to require a floor on the amount of re-dispatch in each state, and finally ar gued that for states with little or no existing NGCC units this floor could be achieved through the construction and utilization of new NGCC units. The commenters noted that there is nothing i n the text of CAA 111(d) that even remotely suggests that EPA has the authority to set limits o r require emission 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 thatEPA 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 commente rs noted that EPA merely states "this adjustment to goal-setting formula would yield more stringent state goals" instead.

Response 2 : The EPA disagrees with this commenter. Section 1 11(d) does not specify which technologies or measures may comprise a “system of emission reduction.” The term is intentionally very broad. The legal authority for t he rule is explained in the Legal Memo and Section V of the preamble. The authority of the age ncy to directly order dispatch is irrelevant277

and misunderstands the rule, as explained in Sectio n VII of the Legal Memo. In addition, the agency believes the NODA process, including opportu nity to comment, satisfies procedural requirements.

Comment 3 : Commenters asserted that the EPA is mandating th at states impose a carbon tax which the federal government is not itself authoriz ed 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 notpoint 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 arg ument 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 : This comment is incorrect. Nowhere do the emissi on guidelines direct states to establish a carbon tax; nor is EPA proposing a carb on tax in the proposed federal plan.

Comment 4 : Commenters stated that the Administration has dis regarded whether EPA even has the legal authority under the Clean Air Act to move forward with this proposal.

The commenters stated that the existing source prop osal goes beyond the plain reading of the Clean Air Act, and it includes failed elements from the cap-and-trade program rejected by the

United States Senate in June 2008.

Response 4 : The commenter is incorrect that the agency has d isregarded whether it has legal authority. It has provided extensive analysis of it s authority for the public to comment on in the Legal Memo at proposal, and it is issuing its updat ed 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 authority. As discussed at length in the Legal Memo, EPA’s authority is locate d in the Clean Air Act as enacted by Congress, and interpreted by the Supreme Court.

Comment 5 : Commenters stated that the proposed rule establi shes new energy policy, exceeds EPA's authority, and will result in prolonged legal battles

Commenters stated that EPA is essentially establish ing new national energy policy by setting emission goals that are so stringent that they cann ot be accomplished by end-of-stack control or internal source process changes. The commenters not ed 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 comme nters stated that in effect, the rule is controlling, not merely CO2 emissions, but the amou nt of energy on the grid and the means of energy generation which the commenters argued excee ds EPA's traditional authority as given it by the Clean Air Act of 1970.278

The commenters asserted that by delving into the re alm of energy generation and dictating its means, the Clean Power Plan proposal expands the pr eviously-recognized bounds of regulatory authority beyond that of emissions controls for an emissions unit (in this case a fossil fuel fired power plant) and into that of micro-management of a n entire industry. The commenters stated that the proposed rule would essentially create a b rand new paradigm for how electrical generation is dispatched in the United States. Acco rding to the commenters, under the Clean Power Plan, the EPA may now have final authority no t only on what electrical generation can be dispatched throughout the year, but also when exist ing 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 aver age down a utility's overall carbon intensity and achieve compliance with the rule limits, even t hough additional power is not actually needed at the expense of utility customers and other poten tial 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 generatio n, 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 combi nation of environment, economics and reliability. In addition, the commenters stated tha t this authority overlaps the jurisdiction of traditional state agencies such as the Florida Publ ic Service Commission which regulates the state's energy market, and may be viewed by rule op ponents as outside the allowable limits of EPA's current authority. The commenters expressed c oncern that the proposed rule, and particularly several of the building blocks, are fo unded 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 pe rformance 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 rul e does not intrude on the regulatory domain

of FERC or the states. It cannot be said that becau se environmental requirements may have an effect on the wholesale energy market that the EPA is therefore intruding into energy regulation. Certainly, in the legislative history of the 1970 C AA Amendments, Congress expressly identified power plants as a priority source category for regu lation under CAA section 111. The agency explains it role vis-à-vis states and the affected EGUs, and how this is consistent with congressional intent and longstanding agency interp retation 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 service s because it will result in the significant reduction in operation of or retirement of nearly a ll 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, y et EPA determines that the BSER for CO2 emissions from EGUs is primarily the reduction or e limination of coal generation. The commenters explained that grid reliability is threa tened with coal generation, and that coal279

generation is essential to serving this county's el ectric load, ensuring that the owners and operators of coal generation remain viable and prev enting dramatic increases in electricity rates. The commenters noted that rural electric cooperativ es are particularly vulnerable to the impacts of reduced coal generation, and these impacts will unacceptably fall on the poorest electric consumers in the country. Because of the CPP, the c ommenters contended that the CAA and the REA (and it progeny) can no longer be read and appl ied harmoniously. The commenters stated that the CPP and EPA's promulgation of the CPP is, therefore, illegal and must be withdrawn. The commenters noted that the NODA published on Oct ober 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 performance lev els it is establishing are in general affordable, achievable, and will not pose r eliability issues for the power sector, including in rural areas. Section VIII.G.2 of the preamble an d section 9.8 of the RTC discuss the agency’s treatment of reliability 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 1 936 was intended to trump the agency’s authority and responsibility under the Clean Air Ac t with respect to air pollution control, and the commenter has not pointed to any specific provision s 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 federa l 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 all ow: improved coordination with other federal agencies, such as FERC, which may be involv ed in future licensing actions; assessment of the large-scale environmental impacts that may r esult from the build-out of the nation's energy-supply infrastructure that may arise as a re sult 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 propos ed 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 trans mission 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 so me of the impacts will fall disproportionately on minority or low-income popula tions and 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 developm ent and implementation undertaken to achieve emission standards set by state plans or a federal plan. This does not undermine in any280

way the legality of this action or the agency’s det ermination that the degree of emission limitation of the BSER is achievable. The agency in cludes robust discussion of the effects and impacts of the final guidelines in Sections IX – XI I of the Preamble, including potential impacts

on EJ and low-income communities.

Comment 9 Commenters stated that the EPA has gone far beyond simply proposing "guidelines" for the states and asserts that the em issions performance goals imposed on the states are mandatory, cannot be changed during the course of the program, and each state 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 goal s leave no room for states to treat certain units differently or otherwise to modify their plan s in a meaningful manner as provided by the

statute.

Response 9: We disagree with this comment. We discuss the lega l authority for the goals in section VII of the preamble.

1.15.5 Data and information

Comment 1 : Commenters stated, EPA's October 30, 2014 Notice of Data Availability (NODA) does not contain any specific EPA proposals or prop osed regulatory language and for the most part cannot be included in any final guidelines.

• The NODA contains virtually no "data," and is rathe r a series of questions and musings about different policies the Agency could employ. The con tent in this document is more appropriate for an advance notice of proposed rulemaking.

• EPA provided insufficient time to allow stakeholder s to provide fully informed and wellconsidered comments on the NODA. The Proposed Guide lines 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 Building Block 3 and t he 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 most part, NODA is a misnomer; it contains virtually no discussion of any relevant ne w "data," but instead is described as a means to "provid[e] additional information on several top ics raised by stakeholders.' Id. at 64,543. The NODA identifies three topics that the Agency says h ave been raised either in public or private281

meetings with certain unnamed stakeholders: (1) "th e emission reduction compliance trajectories created by the interim goal for 2020 to 2029"; (2) "certain aspects of the building block methodology"; and (3) "the way state-specific [CO2] goals are calculated." Id. Although some of the stakeholders' suggestions regarding EPA's Propo sed Guidelines might have profound effects on the requirements that states and regulated entit ies might have to meet in any final guidelines, the Agency has not budged on its December 1, 2014 d eadline 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 musings about different policies that the Agency might prefer. These seem more appropriate for an ad vance 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 30 7(d)(3).

Commenters stated, EPA acknowledges that the variou s alternative approaches the Agency is now contemplating in the NODA could fundamentally a lter the proposed emission guidelines and lead to more stringent goals for all or some st ates. 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 each other." Id. Comment ers stated realistically there is no way to assess how stringent any state's goals will actuall y be until EPA provides greater certainty on its preferred approach. Because of this fundamental am biguity, 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 pr ovides proposed regulatory text. None of these things are present in the NODA. UARG is pleas ed that EPA appears to recognize some of the legal flaws and irrational consequences inheren t in the Proposed Guidelines. For example, commenters stated EPA now appears to recognize thatthe Proposed Guidelines do not consider the remaining useful lives of existing EGUs, despit e 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 has discovered that if finalized the Proposed Guideline s would create an enormous stranded asset problem with the required shutdown of many coal-fir ed EGUs that have recently been constructed or have recently received significant c apital 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 n ow concedes that its requirement for redispatch in Building Block 2 will in many situation s distort regional electricity markets. Id. at 64,549. Finally, commenters stated the Agency now s eems 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 6 4,544. The commenters stated that the EPA should withdraw the Proposed Guidelines, resolve th e many problems that it has finally recognized, and propose a fundamentally different a pproach. The commenters stated that the EPA's scattershot efforts to date fail to satisfy t he basic elements of notice and comment rulemaking. See CAA section 307(d)(3); 5 U.S.C. sec tion 553.282

Response 1: The EPA disagrees with this comment for numerous r easons. The NODA gave the public notice of the changes it was considering mak ing from the proposal and provided an opportunity to comment on those. The agency disagre es 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 p articularly building block 2. The agency is not mandating particular building blocks be impleme nted 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 markets.” Further, the agency conducted a stranded assets analysis to accompany t he 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 propo sal, 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 F ERC regarding reliability.

The commenters stated that the EPA has not provided all critical documents necessary for a thorough review of the proposed Guidelines and shou ld provide additional time for states and

affected sources to review these new materials and for EPA to respond meaningfully to concerns raised by the recent report on reliability by the N orth American Reliability Council, and as reflected in the comments filed in this matter by t he Midcontinent Independent System Operator (MISO) and other regional transmission organization s. The commenters stated that the EPA has been adding documents to the Federal Register throu ghout the pendency of the public comment period. As an example, the commenters noted that th e EPA recently released two years of data on electric consumption - components of the modelin g 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 significa nt number of announced retirements, EPA has failed to provide sufficient guidance on how to cal culate a mass-based emissions target. The commenters stated that on November 6 EPA finally re leased a technical support document which seeks to illustrate potential methodologies for con verting a state'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 important model ing 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 reliab ility with the Federal Energy Regulatory Commission (FERC), regional reliability organizatio ns, 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 th e authority that EPA attempts to extend to itself under Section 111(d), namely regulation of r egional power markets, and implementation of renewable energy standards and energy efficiency pr ograms. The commenters stated that the FERC, through the North American Reliability Counci l (NERC), is charged under federal law283

with ensuring reliability of the electric grid. The commenters noted that on November 5, NERC issued its preliminary report on potential reliabil ity impacts from EPA's proposed Guidelines, finding that the interim 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 sho uld pause the current administrative rulemaking process to thoroughly review and address NERC's reliability concerns before going forward with the current proposal. At a minimum, th e commenters stated that the EPA should revise the interim deadlines for compliance in acco rdance with the recommendations in the NERC report.

Response 2 : We disagree with commenters. The EPA has fully c onsidered 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 e xtent possible, that actions taken by states and affected EGUs to comply with the final rule mit igate potential electric system reliability

issues. Senior EPA officials met with each of the F ERC Commissioners and EPA staff had frequent contact with FERC staff throughout the dev elopment the rule. FERC held four technical conferences to discuss implications of compliance a pproaches to the rule for electric reliability.

EPA staff attended the four conferences and EPA lea dership spoke at all of them. The EPA, DOE, and FERC will continue to work together to ens ure 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 coordinati on with both FERC and DOE, please see preamble section VIII.G.2. Finally, we note that th e agency has addressed concerns about time needed to develop state plans and meet interim perf ormance levels. Thus, with initial submittals, all states will have until September 6, 2018 to sub mit final plans, and the interim performance period will not begin until 2022. Additionally, the final rule adjusts the interim goals to provide a gradually phased-in initial reduction requirement a nd a more gradual glide path to the final 2030 goals. This more gradual application of the BSER ov er the 2022-2029 interim period provides the state with substantial latitude in selecting th e emission reduction glide path for affected EGUs over that period.

1.15.6 Economic/industry issues

Comment 1 : Commenters stated that this proposal is a preced ent for future GHG rules.

Commenters stated, EPA's regulations on power plant s 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 partn ership member organizations will be impacted twice - both as electricity customers and also as industries "next in line" for subsequent rules that EPA has committed to pursuing. Commenter s said, for example, last month EPA proposed new rules restricting emissions from munic ipal landfills, and the agency's current budget request to Congress notes it will soon begin considering new GHG regulations on the following sectors: refineries, pulp and paper, iron and steel production, livestock operations, and284

cement manufacturing. Commenters said, the substanc e, process, and ultimate outcome of the initial regulations 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 Ag ency 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 an nounced plans to further address emissions from landfills and oil and gas operations. The Agen cy disagrees that future regulations 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 a re not justified by their purported benefits when those benefits are characterized prop erly.

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 poll utants that are regulated to protective levels by other rules - there are no benefits to weigh aga inst the exorbitant costs. Commenters said, the Proposed Guidelines therefore cannot be justified a nd are thus unlawful. 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 purporte d rationale for the rule. Commenters said, while the Agency quantifies the estimated emission reductions that the Proposed Guidelines will achieve, it never makes the connection between thos e emission reductions and the resulting impact on climate change, raising questions about t he purpose of the rule. Commenters said, a "standard of performance" for purposes of section 1 11 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 red uction . . . ." CAA section 111(a)(1) (emphasis added). Commenters said, a section 111 standard tha t 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 arbi trary and capricious. Commenters said, any regulation whose costs outweigh its benefits is unl awful and is also ineffective and misguided. See CAA section 301(a) (authorizing EPA to adopt "s uch regulations as are necessary to carry out [its] functions under [the Act]"; regulations t hat 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-benefit analysis is just one tool that the Agency may use w hen considering costs. Second, the RIA for the final rule clearly demonstrates that the benefi ts of the final rule will far exceed its costs. Finally, the commenters’ critiques of the social co st of carbon are self-serving. The social cost of carbon is a well-recognized and scientifically soun d method of monetizing the damages avoided by reducing GHG emissions.285

Comment 3 : Commenters stated that the EPA has not considere d 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 installations. 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 BS ER 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" appro ach that allows the United States to modify its participation in climate actio n if the rest of the world does not follow suit and the United States is placed at an untenable economi c disadvantage. The commenters stated that the Administration's November 12, 2014 announcementof a preliminary agreement with China to cut or cap CO2 emissions in China and the United States, although on different timelines and to different extents, may develop into a multi-nati onal 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 domest ic law found within the Clean Air Act, and, while supportive of international eff orts to address the global problem of climate change, is not legally dependent on particular inte rnational obligations. The degree of emission limitation the agency determined to be achievable w as based on analysis of the domestic sector. For discussion of the relationship of this action t o international actions, see Section II.G of the

Preamble.

Comment 5 : Commenters stated that the proposed rule must ac count for unique challenges faced by utilities that do not control the units th at they own.

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 cont rol over the units they own. The commenters described partial ownership arrangements of selecte d 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 op erate at a minimum level of 500 MW. Commenters stated neither company unilaterally deci de that it does not want to run the unit. Thus, commenters added, if one party decides to run its share of the unit, the other party is obligated to run its share at the minimum level.

The commenters stated that these circumstances crea te unique challenges for the two companies in implementing the different building blocks set f orth in the Proposed Rule. Commenters stated286

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 plant, thereby precludi ng company 2's ability to run the unit, or 2) offer the required minimum generation for the co-ow ned plant and run afoul of the Proposed

Rule. The commenters stated that both outcomes are problematic. Accordingly, the commenters stated that the EPA must address in any final rule the unique challenges that co-owners face in implementing the different building blocks set fort h in the Proposed Rule.

Response 5: The agency recognizes that the compliance strateg ies for individual units may vary and is not mandating facilities use a particular te chnology or set of measures to achieve

reductions. We note that the state in which the fac ility is located will have the first opportunity to design a state plan that applies emission standards to the unit and has opportunities to provide various flexibilities. The guidelines do not requir e the implementation of the specific building blocks that constitute the BSER, rather they establ ish emission performance levels that the states implement through standards of performance.

1.15.7 State-specific issues

Comment 1: Comment 14: Commenters expressed concern that the N otice of Data Availability ("NODA'') published on October 28, 2014 did not com ply with the requirements to comply with the Administrative Procedures Act (APA), because the in formation 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 proposed 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 comme nters argued that these potential "changes" may result in a significant further increase in the stringency of any final Wyoming compliance obligation with incremental and unavoidable costs o f compliance.

The commenters expressed concerned about the signif icant impact of the additional EPA proposal for creating a minimum value of re-dispatched coal to n on-existent NGCC power plants or to co-firing natural gas in existing coal-fired boilers. The com menters also noted that the EPA is proposing another potential means for increasing the stringen cy of a state "goal" by adding incremental renewable energy and energy efficiency to the "goal " which replaces fossil generation pro-rata or prioritizes the re-dispatch of fossil generation ba sed on historic emissions. In addition, the commenters objected to the lateness of the NODA-rai sed issues in the comment 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 yiel d more stringent state goals") without providing a new proposed rule.

The commenters noted that EPA readily admits that c ertain elements proposed in the NODA could alter the stringency of the BSER. The commenters ar gued that the proposed approaches in the NODA287

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 ap ply these alternatives, additional parsed IPM results enabling states to understand the unit-by-u nit impact of these alternatives, revised regulator y impact analyses, substantial demonstration of the t echnical and economic feasibility of these alternatives as part of BSER, and a complete and tr ansparent demonstration of how renewable generation and EE measures can displace large amoun ts 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 NOD A 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 alternat ives should not be shouldered by the states; a burden which is exacerbated given the paucity of su pporting data and technical information provided by EPA. Going forward on these concepts does not pr ovide the adequate statement of basis as required by the APA.

Response 1: EPA provided adequate notice and opportunity to co mment on both the proposed rule, and the updated information provided in the N ODA. See response to Comment 1 in section

1.13.

Comment 2 : Commenters, using context from North Dakota, sug gested that EPA must repropose the rule.

Commenters stated, federal agencies are required to provide the public with adequate notice of a proposed rule and a meaningful opportunity to comme nt on the rule's content. Commenters said, with the CPP, the EPA is poised to enact the most c onsequential and expensive environmental regulation ever imposed on the electric power secto r. 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 crucia l 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. Commen ters said, after proposing a rule in June which apparently calls for no reduction in coal-fir ed power generation in North Dakota, EPA made an about-face in the last week of October, rai sing for the first time the possibility of imposing "some" required shift to natural gas. Comm enters said, any "adequacy" such an 11thhour 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 submit comm ents to know where to start with such an indeterminate rule, to say nothing of the mere 30-d ay time clock ticking against their efforts to

do so.

Commenters stated, even more recently, EPA issued i ts long-awaited technical support document for the CPP, entitled Translation of the Clean Powe r 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 a nd translate them into mass-based equivalents. Commenters said, but EPA's guidance provides little help at this juncture in the notice-and-288

comment process. Commenters said, if any changes ar e made from the goals set in the Proposed Rule that increase the stringency of the goals or o therwise 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 allo cation. Commenters said, compelling states to reduce their overall rate of CO2 emission by a part icular 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. Comme nters said, in the wake of EPA's technical support document, however, authorities are faced wi th a completely different problem. Commenters said, unlike rate-targeting regulations, it is easy for states to regulate EGUs by telling each how many tons of CO2 they can emit eac h 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 which has experienced significant growth in demand for electricity subsequent to the 2012 baseline year that is used in the CPP. Comment ers 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 insuffic ient amount of time to properly assess legitimate party concerns.

Commenters stated, if EPA wants to include signific ant limitations on operations of North Dakota's coal-fired EGUs in its final rule, it mustre-propose the CPP with those limitations and provide an adequate opportunity for comment. Commen ters said, courts have held that any final rule must, at a minimum, be a "logical outgrowth" o f its proposed rule. Commenters said, that standard 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 polic ies are reflected by this inquiry: giving the regulated a chance to voice concerns to the regulat or and ensuring that each regulator considers the full scope of relevant evidence that may bear o n its decision.

Commenters stated, under the rate-based regulatory scheme laid out in June, the primary difficulty facing state authorities was one of allo cation. Commenters said, compelling states to reduce their overall rate of CO2 emission by a part icular 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. Comme nters said, in the wake of EPA's technical support document, however, authorities are faced wi th a completely different problem. Commenters said, unlike rate-targeting regulations, it is easy for states to regulate EGUs by telling each how many tons of CO2 they can emit eac h 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 which has experienced significant growth in demand for electricity subsequent to the 2012 baseline year that is used in the CPP. Comment ers said, but authorities and interested parties are provided with just over three weeks to grapple with this issue and respond to the EPA289

with comments. Commenters said, this is an insuffic ient amount of time to properly assess legitimate party concerns.

Response 2: EPA provided adequate notice and opportunity to com ment on both the proposed rule, and the updated information provided in the N ODA. See response to Comment 1 in section 1.13. Additional opportunity to consider and commen t on this issue of rate-based versus massbased implementation will be available during the c omment period on the proposed federal plan and model trading rules. But we note that while eit her approach poses benefits and challenges, under the final guidelines, it ultimately remains i n the state’s hands to choose which approach is best for it. The agency is not mandating a particul ar form of implementation in the final rule.

Comment 3: EPA purports to offer the North Dakota Companies, and many others similarly situated, with an occasion to submit a full range o f criticisms unique to the NODA and TSD, but does not actually do so. Commenters said, a combina tion of the NODA's vague and broadly drawn guidelines and a joint comment period totalin g just over three weeks conspires to deny these parties with a true occasion to submit all "n ew and different criticisms" each may have. Commenters said, through October 29, the North Dako ta Companies had no reason to consider submitting their own comments to EPA and made no ef fort to do so. 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, an d the futility of comments on these indeterminate restrictions became even more pronoun ced with the issuance of the TSD on November 6 that presents mass-based alternatives th at do not appear to account for recent economic growth in North Dakota. Commenters said, t his abrupt and amorphous form of regulating, combined with a prohibitively short res ponse period, denies the North Dakota Companies of an opportunity to fully evaluate all q uestions, concerns, and constructive suggestions they might have and leaves 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 potent ial range of stringency of regulation under a proposed rule could vary greatly depending on the o ptions that are under consideration. Comments offered by parties in North Dakota or else where were by no means in futility, considering the variety of changes undertaken by th e agency to improve the final rule in response

to the concerns raised.

Comment 4 : Commenters urged that EPA in developing the guid elines for existing power plants, to respect the primacy of Virginia and Penn sylvania and other states and to rely on state regulators to develop performance standards 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 stat e-established performance standards undertaken at fossil-fueled power plants. Commenter s stated that EPA should allow Virginia and other states to set less stringent performance stan dards or longer compliance schedules for power290

plants within their jurisdiction; and allow stated maximum flexibility to implement CO2 performance standards for fossil-fueled power plant s within their jurisdiction.

Response 4 : We explain our authority to require that in orde r 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. State s do have considerable flexibility in the design of their plans here, to take into account local nee ds.

Comment 5 : Commenters asked that the EPA support a balance approach considering both environmental stewardship and the need for affordab le, reliable electricity.

Commenters stated, the MPUC is directed by state la w to provide retail consumers of electric service in Minnesota with adequate and reliable ser vices at reasonable rates) consistent with the financial and economic requirements of public utili ties. Commenters said, the MPUC must set rates that are just and reasonable, not unreasonabl y preferential, prejudicial or discriminatory, and, to the maximum extent possible, set rates thatencourage energy conservation and renewable energy use, and reduce the State's reliance on foss il fuels. See Minn. Stat. sections 2168.01 and 2168.03. Commenters said, these directives guide th e decisions of the MPUC as it addresses the utilities' requests to build or purchase new genera tion) refurbish or close existing facilities, develop incentives for energy efficiency, and monit or compliance with the statutory renewable energy and greenhouse gas reduction goals. Commente rs said, environmental stewardship is a key element of the Commission's decisions, balanced with the obligation to assure a reliable electric system and affordable rates. Commenters sa id, 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 to meeting carbon re duction goals.

Response 5 : The EPA has established a balanced approach to m eeting carbon reduction goals. The agency believes that state PUCs and relevant st ate laws can be supportive of, contribute to, or otherwise complementary to meeting 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 no t permit States to consider remaining useful life.

Commenters stated that the Proposed Rule does not p ermit States to consider the remaining useful life of any particular source to which the P roposed Rule will apply. The commenters stated that the EPA proposes to require that all st ates strictly adhere to a carbon emission limit on a specified schedule; however, Section 111(d) manda tes that EPA allow states to consider the remaining useful life of a source when applying sta ndards of performance to that particular source. 42 U.S.C. section 7411(d)(1). The commenter s stated that with a strict carbon emission limit in place, states cannot exercise their statut orily mandated discretion. The commenters stated291

that the EPA is without authority to deny states th is statutory right, and therefore, may not proceed with this rulemaking.

Commenters stated that the EPA claims that the brea dth 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 entitled to flexibility over time, which the Proposed Rule does not allow. The comment ers stated that to meaningfully take the remaining life of a source into consideration, stat es must be able to lengthen the compliance time to the source's anticipated retirement date. The co mmenters 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 pro posed 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 ex isting EGUs in accordance with CAA Section 111(d). The commenters argued that Congress would n ot 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 ha s not shown that all of its state emission

limits are achievable without consideration of rema ining useful life - it simply assumes this to

be so. The commenters noted that if states cannot m eet 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 autho rity to adjust their goals as necessary to reflect reality on the ground, to protect the remaining use ful 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 rem aining useful life will almost certainly result in forced early retirements which would constitute a t aking of private property in contravention of

the fifth amendment to the United States Constituti on.

Response 6 : We disagree. As explained in Section VIII.G.1 of the preamble and Section IX of the Legal Memorandum, these emission guidelines rea sonably permit States to consider remaining useful life. Most of commenters’ argumen ts are addressed there; arguments regarding the Takings Clause are addressed in section X.D of the Legal Memorandum. For responses to reliability concerns, please see Section VIII.G.2 o f 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 usef ul 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 vie w 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 retire ments of units with relatively long book lives. As explained in Section VIII.B.1 of the Preamble, w e found that this need not be the case. This292

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 comm ent asserts that there may be a potential takings claim, see the discussion 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 the source's anticipated retirement date,” we disagree. The result of length ening 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 remaining useful as not providing an outright exemption.

Comment 7 : Commenters noted that the EPA's rules specify th at states may set forth their compliance schedules for designated facilities, and the state can choose to adopt EPA's "guidelines" for implementation or can choose to ad opt its own. 40 CFR 60.24. ("Emission standards shall either be based on an allowance sys tem or prescribe allowable rates of emissions except when it is clearly impracticable." ); 79 FR 34844, n. 39 ("In the 1975 rulemaking, the EPA explained that it used the term 'emissions guidelines' -instead of emissions limitations- to make clear that guidelines would no t be binding requirements applicable to the sources, but instead are 'criteria for judging the adequacy of State plans.' 40 FR 53343." ).

The commenters noted that courts have recognized th at 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 responsibilit y regarding the means to achieve those ends through state implementation plans and timetables f or compliance.... The CAA is an experiment in federalism, and the EPA may not run roughshod ov er the procedural prerogatives that the Act
has reserved to the states...." ).

According to the commenters, one would expect the d eadlines 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 re maining useful life, energy and cost considerations. The commenters stated that yet EPA allows a 30-year averaging time frame for new coal-fired power plants to meet the stringent n ew standard, while instituting the "carbon

cliff" in the CPP. Given EPA's oft-stated rationale for the 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 reali stic rate of progress given the unique nature of each state's legislative and regulatory environmentand 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 gu idelines in the Legal Memorandum. The agency agrees with the commenter th at states should have flexibility in implementation, and has designed the final emission guidelines to provide a great deal of flexibility. Indeed EPA has provided extended timel ines for compliance in the final rule and has taken steps to address the so called “cliff” proble m. Regarding commenters’ assertions that states293

should be able to determine the degree of stringenc y, and schedule for compliance for their sources, without being subject to the EPA’s oversig ht, such assertions are simply not borne out by the text and structure of section 111(d). Congre ss twice in section 111(d) directs the agency to section 110 for guidance regarding the nature of th e section 111(d) program. This is highly instructive on the question of whether the agency h as the authority to see to it that the ultimate end is achieved—i.e., that sources achieve the emis sion performance levels the agency determines are achievable. Under the NAAQS framework, the agency establishes the NAAQS, and while states have great flexibility in designin g 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 i ssue 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 cate gories of sources, and then provide guidelines for how states may design plans to meet that end re sult. Congress authorized the agency to disapprove state plans that are not satisfactory an d, directly cross-referencing to the NAAQS program, giving the agency the “same authority to p rescribe” 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 the 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 recog nized the state is “in charge of setting its compliance timetable.” The commenter has simply mi sread the dicta 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 easily 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 given any choice as to whether they would meet this responsibility. For the first time they were requir ed 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 specify compliance d eadlines in section 111(d) simply means that Congress delegated to EPA to reasonably decide whatthose deadlines should be. (Note that plan

submittal deadlines should be “similar” to those in section 110, see Section VIII.E.9.a of the preamble.) EPA has done so here. As a result of c omments, we are permitting States to set their own glide path and we are moving the start of the c ompliance period from 2020 to 2022. We disagree with the commenter that our compliance sch edule 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 S ection IX of the Legal Memorandum, these emission guidelines reasonably permit States to con sider remaining useful life.

Comment 8 : Commenters stated that the EPA's guidance regard ing "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 i mplementers for emission sources within their jurisdictions. Specifically, the commenters noted t hat Congress found that "air pollution prevention . . . and air pollution control at its s ource is the primary responsibility of states and294

local governments" and that "Federal financial assi stance 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 inter im deadlines exists unless EPA finds that the states are not properly demonstrating reasonable pr ogress toward attainment of the goal. The

commenters noted that if it does make such a findin g, EPA has the authority to require an additional showing that the state's plan will achie ve 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 responsi bilities created by Congress in the CAA.

Response 8 : We disagree that the timelines provided in the f inal 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 tha t Congress 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 pol lution control objectives are ultimately achieved. The final rule gives states the opportuni ty to develop state plans in the first instance.

The commenter is correct that if states do not choo se to take advantage of this opportunity, then the EPA will develop a federal plan for the affecte d EGUs in that state. Far from “conflate[ing] the distinct division of responsibilities,” this fo llows the letter of section 111(d).

Comment 9 : Because of the regulatory scope of the CPP, no s ingle 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 En vironmental 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 F lorida Legislature. The elements of the four CPP building blocks are implemented/enforced by dif ferent 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 i t will be required to demonstrate compliance or demonstrate progress towards meeting goals. FDE P normally enforces EPA rules, but it has no statutory authority to enforce standards associa ted with generation re-dispatch or the development of new renewable energy (RE) sources or the level of energy efficiency (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 i f any Florida regulatory agency can direct the re-dispatch of generation. This approach will requ ire almost every state to develop a new regulatory construct to meet an unprecedented feder al rule. CPP implementation in Florida could also be hampered by state law that may require legi slative 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 politic al reality of a legislature's inability to reach consensus on a state's development and implementati on 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 the295

guidelines, the role of the states in establishing emission standards through state plans, and the responsibility of the sources in achieving them. Th ese roles are explained in Section VII of the Legal Memo. Among other things, if a state is incap able of providing itself with the legal authority to carry out an approvable state plan, th en the EPA will implement a federal plan for the sources in that state through setting emission standards on the facilities that achieve the degree of emission limitation determined to be achi evable in the guidelines. See also RTC 1.15, response 70, infra.

Comment 10 : Commenters described state legislative actions t hat would allow for less stringent standards and longer timelines that called for in t he CPP.

Commenters stated that Louisiana has legislation go verning carbon emissions regulations. The commenters stated that the EPA's proposed rule is i nconsistent with Louisiana Revised Statute Title 30 section 2060.1, which requires the LDEQ, " in collaboration with and input from the Commission" to set fossil-fueled electric generatin g 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 econo my. The commenters noted that the EPA's proposed rule is in direct conflict with the intere sts 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 m ay issue under Section 111 (d) of the Clean Air Act, the Department of Environmental Quality, i n collaboration 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 o f performance shall be based on:

(1) The best system of emission reduction, taking i nto account the cost of achieving such reduction; (2) Reductions that can reasonably be achieved thro ugh measures undertaken at each fossil fuelfired electric generating unit; (3) Efficiency improvements that can be undertaken without switching to other fuels, co-firing with other fuels, or limiting the utilization of th e unit.

The commenters noted that the Louisiana statute goe s on to provide that the Department may adopt "less stringent standards or longer complianc e schedules" than those provided in federal

rules based on:

(1) Consumer impacts, including any disproportionat e impacts of energy price increases on lower income populations; (2) Unreasonable cost due to plant age, location, o r basic process design;296

(3) Physical difficulties or impossibility of imple menting emission reduction measures; (4) Absolute cost of applying the performance stand ard to the unit; (5) Expected remaining useful life of the unit; (6) Economic impacts of closing the 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 set ting a more lenient standard and longer compliance schedule in Louisiana are based on the f ederal implementing regulations promulgated by EPA, at 40 CFR 60.24(f).

Other commenters stated that 2014 legislation in Mi ssouri exempts Missouri utilities from compliance with EPA carbon reductions. [Missouri HB 1631 crafted by the American Legislative Exchange Council (ALEC)]. The commente rs 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 commente rs stated that while it is deceptively 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 ap plicable federal emission guidelines or longer compliance schedules than those required by federal regulations." http://www.house.mo.gov/billtracking/bills141/billp df/truly/HB1631T.PDF

In other words, the commenters stated that power pl ants in Missouri would not have to comply with the new CO2 emission standards, when the EPA r ules 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 commenters stated that this embraces the utility industry's time-honored t radition of stalling progress in environmental protections by tying the rules up in court, for yea rs on end.

Response 10 : EPA thanks these commenters for the information they have provided 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 t he requirements of the federal Clean Air Act, including the requirements of the emission guidelin es. 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 authorit y to set standards more stringent than federal guidelines 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 supercede its general provisions. States may in som e cases set emission standards under 111(d), including in these guidelines, for a particular uni t that are less stringent than the subcategorized emission performance rates for the two subcategorie s of sources covered by these guidelines. However, in these guidelines, this is subject to co nditions 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 mecha nisms that provide flexibility in these guidelines.).297

Comment 11 : Commenters stated that as evidence of congressio nal intent, EPA lacks resources to develop and administer the expansive plans requi red under the proposed rule.

The commenters noted that in the event that States do not or cannot propose their own plans, Section 111(d) tasks EPA with developing those plan s instead. 42 U.S.C. section 7411(d)(2). The

commenters stated that traditional end-of-stack BSE R 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 var iety of existing EGUs and the varied circumstances in each State requires resource-inten sive analysis and the wise exercise policy discretion in deciding which commercial activities will be advantaged and disadvantaged. Beyond lacking legal authority, the commenters asse rted that the EPA simply does not have the staff or expertise or legitimacy to complete these tasks for all 50 States. The commenters stated that the fact that EPA is itself subject to these p ractical 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 wil l be proposing two separate approaches to a federal plan, each of which it is f ully 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 market s, which the Congress has widely authorized throughout the CAA and particularly in t itle I, see, e.g., CAA section 110(a)(2)(A) and section 302(y).

Comment 12 : The commenters affirmed the TVA's comments, speci fically as they pertain to TVA's future ability to comply. The commenters note d the TVA's numerous actions to reduce

carbon emissions have resulted in a more than 20% r eduction since 2005 and should be commended. However, the commenters stated that the Proposed Rule's inconsistencies and technicalities leave TVA with a limited range of fe asible actions to achieve compliance because of those same early actions. The commenters stated that companies bearing the cost of early actions to reduce TVA's carbon footprint should notnow be penalized with additional cost(s) they would not otherwise be required to bear if the se early actions had not been taken - simply 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 u nachievable because the Proposed Rule arbitrarily excludes hydropower, a zero-carbon reso urce, from inclusion in its calculation of a state's existing emissions rate, thereby unfairly d enying the State the option of counting that zero-carbon generation resource toward compliance w ith the Proposed Rule's requirements (the existing hydropower generation is not included in t he 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 pa st behavior.

The commenters argued that the exclusion is inexpli cable, as other existing zero-carbon resources (such as wind and solar) are included in the calculation. The commenters stated that298

this inconsistency unfairly punishes companies base d 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 state's capacity f or wind generation is practically non-existent, and the capacity for solar in the Tennessee is seve rely limited. The commenters stated that the rule favors generation methods that are impracticab le for them and ignores methods that would ease their compliance burden. The commenters stated that the practical application of the

calculation is to de-incentivize maintenance and ex pansion of existing hydropower facilities in favor of constructing new and much more expensive a nd limited forms of generation in lieu of the hydropower, imposing additional costs that do n othing to reduce carbon emissions.

Response 12: Nuclear has been removed from the BSER calculatio n, while certain hydroelectric power has been added. We note that under the emissi on guidelines, depending on how state plans are designed, non-carbon emitting sources of increm ental generation are generally available to states to use in meeting the emission performance r ates or equivalent state goals. EPA believes the targets in the final rule are achievable.

1.15.8 Recommend EPA delay, modify, withdraw propos al

Comment 1 : Commenters stated, the EPA appears to be picking winning and losing states for economic development. Commenters said, clearly, tha t should not be the objective and goal of the Clean Air Act or any actions to fight climate c hange. 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 understand this com ment 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 e mission performance rates, and equivalent state goals that vary less dramatically than the pr oposed rule.

Comment 2: Commenters said, section 111(d) is extremely presc riptive requiring implementation to occur inside the fenceline, using a carbon control technology that is established and feasible for existing units. Commen ters said, the CPP is too "unprecedented" for section 111(d).

Response 2: We disagree that section 111(d) is “extremely pres criptive.” Its terms are quite broad reflecting Congress’s intent that it serve to prevent serious air pollution problems that may have been unknown at the time of enactment from goi ng unaddressed under the Clean Air Act.

Comment 3: Commenters stated, EPA should withdraw the currentproposal, convene a Small Business Advocacy Review panel, and prepare a regul atory flexibility analysis before proceeding with a new proposal under Section 111(d).299

Response 3: The EGs do not directly regulate small entities an d so an SBAR Panel is unnecessary. However, the agency did convene an SBA R Panel for the proposed federal plan, and many of the Panel’s recommendations will be ref lected in that proposal.

Comment 4: Commenters suggested the EPA to withdraw the Propos ed Rule because it is not

consistent with the federal Clean Air Act. The comm enters stated that even if EPA had the authority to promulgate a final rule based on the b uilding 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 consistent with the CAA. Conclusory assertions of error do not give the agency a reasoned basis on wh ich 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 bee n put forward as an Advance Notice of Proposed Rulemaking (ANOPR). Commenters said, we fi nd 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 int o 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 emission s.

Response 5: The agency believes it followed an incredibly tran sparent 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, i ntact, proposed rule, upon which this final rule is clearly a logical outgrowth. In the course of an y rulemaking, the public is free to comment on all aspects of the proposal, whether the agency ask s for them or not. 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 a nd far-reaching rule. In addition, we note that the agency has adjusted compliance timeframes in th e final rule in response to comments.

Comment 6: Commenters stated, with respect to multi-state arr angements, the EPA acknowledges that they "could introduce novel enfor ceability 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 d emonstrates that EPA has gone beyond its authority in ways that UARG warns against. Furtherm ore, the commenters stated that under the principles of Virginia v. EPA, it is already appare nt 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 prob lems are irremediable within the framework of the Proposed Rule, it should be withdr awn.

Response 6: The final rule provides a clear set of requirement s for states in order to develop approvable plans. The agency explains its view of e nforceability in the preamble and the Legal 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 p lan. We note that the permitting300

consequences that were at issue in UARG are not present in this current rulemaking. We not e that states are given a wide range of flexibility to des ign 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 upo n 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 necessa ry to achieve the targeted emission reductions without the artificial constraints of po litical boundaries, which is an approach more consistent with the structural foundations of the p ower 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 st ates in the final guidelines a variety of methods by which to give companies flexibility with in their fleet. Section 111(d) directs the agency to work with states in a cooperative federal ism model. The agency will not circumvent the states to directly regulate owners and operator s 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 interpretatio n of CAA Section 111(a)(1) to avoid creating numerous constitutional issues. The commenters stated that courts must avoid constitutional difficulties by interpreting CAA Sec tion 111(d) narrowly, as a grant of authority to regulate only inside the fence line. Jones v. Unite d 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 que stions are avoided, our duty is to adopt the latter") (citation omitted).

Response 8: The agency disagrees that this rule of case law 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 annou nced his goal of a 17% reduction below 2005 levels by 2020, and the power industry is on track to meet its share of that target. The commenters stated that over the long te rm, 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 oth er proposed EPA rules. Given these facts, the commenters questioned the need for the c urrent 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 reduct ions and ensures they will be permanent. In addition, the rule appropriately benefits the near- term advantages of natural gas with the longterm advantages of zero-emitting resources such as wind and solar. The EPA also reasonably

concludes that business-as-usual does not achieve r eductions in the GHG air pollutant that reflect301

the application of the “best” system of emission re duction, taking into account cost and other

factors.

Comment 10 : Several commenters requested that the EPA withdr aw the proposed Rule.

Commenters stated, the proposal is based on a flawe d interpretation of the Clean Air Act, and urged EPA to withdraw the current proposal and subs tantially revise this rule.

Commenters stated, the EPA appears to be picking wi nning and losing states for economic development. Commenters said, clearly, that should not be the objective and goal of the Clean Air Act or any actions to fight climate change. Com menters 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 energ y 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 lo sers based on the desires of those who make the decisions or those who have the ability to infl uence that decision.

Commenters stated, the EPA's proposed Clean Power P lan is an assault on electric reliability and economic viability of the State of Texas and, parti cularly on Houston County. The commenters requested the EPA withdraw this version of the Clea n Power Plan until a plan can be proposed that has more realistic expectations and provides m ore actual flexibility so that the unique challenges of each Texas county can be appropriatel y considered.

Commenters suggested that the proposal should be wi thdrawn. 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 an d 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 powe r 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 proposed rule, ha s made numerous assumptions which are contrary to the facts, and has issued a Proposed Ru le which is arbitrary, capricious, an abuse of discretion, and not in accordance with law.

Commenters stated that the CPP is illegitimate and unlawful. Commenters said, its implementation costs are likely much greater than E PA estimates; it will increase electricity prices and raises reliability concerns; its putativ e climate benefits are illusory; and the regulation

should be withdrawn.

Commenters stated that the proposal is contrary to the Clean Air Act in several critical ways and

recommended that the EPA should withdraw the Sectio n 111(d) proposal. The commenters noted that if a state fails to submit a "satisfactory" pl an under 111(d), EPA is authorized to directly302

prescribe a plan itself. CAA 111(d)(2), 42 U.S.C. 7 411(d)(2). The commenters stated that the EPA lacks authority to directly regulate the substa nce of all but its first "building block" - e.g., t o require the development of new renewable generation 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 whe re Congress has expressly done so. For this reason, the commenters stated that the EPA would li kely be limited to measures under the first "block," i.e., inside-the-fenceline efficiency impr ovements 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 emission s from the power industry without regulation. Commenters said, EPA has indicated thatthis proposal "would continue progress already underway to lower the carbon intensity of p ower generation in the United States." Commenters said, therefore, this proposal is unnece ssary to continue the progress established to this point. Commenters said, EPA should consider en tering into a true partnership with states and stakeholders instead of one contrived by mandate an d driven by regulation. Commenters said, EPA should look to spearhead these collaborations a nd encourage information sharing to assist states in developing state-level energy policies th at 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 t he very restrictive mechanism of section 111(d). Commenters said, section 111(d) is extremel y 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 "un precedented" for section 111(d).

Commenters urged EPA to withdraw the current Propos ed Rule and to reissue the rule, if at all, with modifications addressing the issues and concer ns raised by these comments.

Commenters stated, EPA should withdraw the current proposal, convene a Small Business Advocacy Review panel, and prepare a regulatory fle xibility analysis before proceeding with a new proposal under Section 111(d).

Commenters stated, if the U.S. is determined to sol ve the climate change issue alone, we will be at a competitive disadvantage to other countries an d, in Arizona, we will be further hampered by a competitive disadvantage to other states. Comment ers said, our businesses, economy and community rely upon reliable and affordable electri city to provide food for the nation. Commenters urged EPA to rescind this proposal.

Commenters stated that EPA lacks the statutory auth ority to proceed and must withdraw the Proposed Rule. The commenters stated that, assuming that EPA has the statutory authority to proceed with the Proposed Rule, EPA has failed to f ollow the requirements of Section 111(d).303

The commenters noted that in the event that EPA cho oses to move forward with the Proposed Rule they must do so in a reasoned and rational man ner as outlined above.

Commenters suggested the EPA to withdraw the Propos ed Rule because it is not consistent with

the federal Clean Air Act. The commenters stated th at 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 emi ssion reductions is based on numerous

material errors.

Commenters requested that this proposal be withdraw n or considered a request for information from states and other affected parties. The comment ers invited the EPA to engage in a more constructive process led by states and Congress to find legally sound, affordable, practical and effective approaches to reducing green-house gas em issions.

Commenters stated, in addition to the burdens that the Section 111(d) proposal would place on state governments and ratepayers, the proposal is c ontrary to the Clean Air Act in several critical ways. Commenters said, individually and taken toget her, these legal infirmities mean that the Section 111(d) proposal, if finalized in a manner t hat includes one or more of these flaws, would constitute an unlawful rule. Commenters said, given the fundamental nature of these 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 medic al care and such increases in energy costs have been documented to increase illness in these p oorest of the poor. The commenters stated that the proposal is also illegal. The commenters a sked that it be withdrawn until such time as it is determined to be a legal exercise of authority u nder 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 forwar d as an Advance Notice of Proposed Rulemaking (ANOPR). Commenters said, we find the ru le 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 util ity and state planning, that we respectfully request that EPA withdraw the rule to allow for a m ore cooperative state-federal approach to rule design and addressing CO2 emissions.

Commenters stated, with respect to multi-state arra ngements, the EPA acknowledges that they "could introduce novel enforceability consideration s," 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 go ne beyond its authority in ways that UARG warns against. Furthermore, the commenters stated t hat under the principles of Virginia v. EPA, it is already apparent that there will be enough St ate nonparticipation to invalidate EPA's stateby-state target model and so invalidate the Propose d Rule. The commenters argued that because these problems are irremediable within the framework of the Proposed Rule, it should be

withdrawn.304

Response 10: As explained in the preamble and the legal memo, th is action is consistent with our authority under 111. Commenters have identifie d no material infirmity warranting withdraw or reproposal.

Comment 11 : Several commenters requested that the EPA withdr aw the proposed guidelines and issue new guidelines that allow states to estab lish policies that are in the best interest of thei r 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 establi shing compliance mechanisms.

2. Maintain an adequate, reliable, affordable elect rical generating fleet.

3. Be based on EPA guidelines for cost-effective, a chievable reductions at the affected power plant units, rather than for the state.

4. Establish emission guidelines based on adequatel y demonstrated systems that are fuel and technology specific.

5. Provide credit for significant emissions reducti ons already made or being made.

6. Avoid premature retirements and stranded assets.

7. Be fair and equitable to all electricity consume rs; and

Commenters said the EPA should adopt policies that do not conflict with the responsibility of states and their respective cities to provide affor dable and reliable supplies of electricity for thei r 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 rul e generally accomplishes these things.

Comment 12 : Commenters discussed the need for conforming chan ges to the proposed rule to accommodate the reliability safety valve (RSV) they suggest.

Commenters have identified at least three specific provisions of the Proposed Rule that should be

modified and clarified to accommodate the RSV. Comm enters said, these include:

• The provision of the Proposed Rule that once finali zed, 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 Proposed 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] and305

• 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, althou gh well-intentioned to avoid endless litigation over changes to the individual state tar gets, ignore the dynamic and ever-changing nature of the electric grid. Commenters said, as su ch, 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, prud ent planning and operation of the grid requires a discipline to "expect the unexpected" an d be able to modify course appropriately. Commenters said, the above provisions, as written, are simply too sweeping in their reach and could unintentionally hamper efforts to provide a r ule that ensures compliance progress while being flexible enough to adapt to reliability issue s 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 r esponse to concerns about flexibility and reliability, and believes the final rule adequately addresses the concerns raised by the commenter, while ensuring that the emission per formance levels are achieved.

Comment 13 : Commenters stated that under the proposed CPP th e City of Springfield, Missouri, and its municipal utility, City Utilities of Springfield, will lose close to one-third of it s base load generation. The commenters stated that th is would force the utility and its rate payers to buy power from another source outside of the com munity and a source that is in the business of making a profit, not providing reliable and econ omical electricity to the rate payers and citizens of the community. The commenters asked tha t the EPA not sacrifice our nation's economy and electric reliability by developing a ru le that does not take into account current commercially-proven and economically-viable technol ogy to reduce CO2 such as an American Electrical Power Turk plant in Fulton, Arkansas. Th e commenters 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 ut ilities adequate time to develop and implement compliance strategies.

Response 13 : The EPA disagrees that the final rule will necess arily 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 thattake into account various facility-specific factors, so long as overall emission performance le vels are met. Even under a federal plan that utilizes trading, facilities and utilities will hav e 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 ex hausted.

Commenters stated, Murray Energy Corporation has as ked the U.S. Court of Appeals for the District of Columbia Circuit to grant a writ of pro hibition against EPA declaring the proposed rule for existing stationary source electric genera ting units is ultra vires, i.e. a prohibited act under the Clean Air Act. Commenters said, for the r easons given below, it is. Commenters said,306

EPA claims otherwise and has stated unequivocally t hat they have the power to interpret the Clean Air Act as they have, under the Chevron doctr ine, and that they have done so. Commenters said, final briefs on this matter are du e in March, 2015. Commenters said, in the meantime, the states, utilities and utility custome rs must proceed under an unreasonably short schedule to determine what steps must be taken to c omply with the law - a costly set of planning activities with the effect of having to make engine ering decisions long before any Clean Power Plan would actually take effect. Commenters said, t his is known as anticipatory regulation. Commenters said, it is costly, it limits the econom ic freedom of states, utilities and customers to make investment decisions, and these constitute irr eversible harms that can only be remedied if EPA withdraws the proposal until such time the Cour t determines whether the proposed rule is or is not legally authorized under the Clean Air Act. Commenters said, anticipatory regulation has legal consequences on the regulated industry and on others inexorably tied to the directly regulated industry. Commenters said, the Oil and Ga s industry is so tied to the electric generating industry because electricity is such a large input to industry production. Commenters said, in order for a State to prepare a plan under the propo sed rule, the states will be forced to reach agreements with companies who must therefore make p roduction and investment decisions associated with the plan. Commenters said, this fac t 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. Commente rs said, EPA should withdraw this proposed rule, or at least suspend all planning unt il the Courts have fully resolved the issues at

law.

Commenters encouraged EPA to delay implementation o f the Final Rule until litigation is resolved. Commenters said, compliance with the Fina l Rule will result in significant expenditures that will be borne by utility ratepaye rs. Commenters said, to the extent compliance requires the early retirement of electric facilitie s or earlier-than-planned construction of new facilities, the uncertainty of litigation places ra tepayers at risk. Commenters said, investment to comply with portions of the Final Rule that are lat er vacated by a court will result in stranded assets and wasted costs that will be borne by ratep ayers. Commenters said, the planning horizon for 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 propos ed rule, history shows us that the courts do not always agree. Commenters said, in light of the pote ntial for significantly stranded compliance costs associated with Building Blocks 2, 3 and 4, i t is prudent to delay and/or extend compliance requirements until litigation 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 said, Color ado'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 w ith initial rules that were overruled through judicial challenges. Commenters recognized EPA's in terest in moving to implement this program expeditiously, but appeals to its sense of pragmati sm to recognize that changes to the program as a result of judicial review are a reasonable possib ility. Commenters said, as such, to conserve307

resources of the Agency, state environmental agenci es, 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 res ources. Commenters said, if this rule is finalized in its current form, states will be immed iately required to amend not only their state air programs, but will be required to fundamentally res tructure the state's entire energy generation and delivery system. Commenters said, this signific ant 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. Comme nters said, look no further than the Clean Air Mercury Rule (CAMR) and the Clean Air Interstate Ru le (CAIR). Commenters said, a more recent example is the Prevention of Significant Det erioration (PSD) Tailoring Rule for GHG permitting.

Commenters stated, the final rule, whatever form itultimately takes, should not require states to begin taking action until the completion of judicia l review. Commenters said, this is to preserve

the state's limited resources and ensure that actio ns taken in response to the EPA rule will not be for naught. Commenters stated they call this approa ch a "legal trigger" deadline, and urged the EPA to respect their state partners and include thi s provision in the final rule's implementation schedule. Commenters said, finally, urged that the final compliance deadline be tolled by the litigation timeframe, similar to how EPA handled th e implementation of the Cross State Air Pollution rule following the U.S. Supreme Court dec ision.

Commenters stated, considering the resources that w ill be required by states to implement this rule as proposed and given the high likelihood thatany final rule promulgated by EPA will be litigated, EPA must delay implementation of the rul e until 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 Flori da's families have an affordable and secure source of energy. 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 finalize d. Commenters said, as with EPA's relatively recent Clean Air Interstate Rule (CAIR) and the Cro ss-State Air Pollution Rule (CSAPR) challenges, there will be significant uncertainty f or states and potentially a huge state investment being put at risk. Commenters said, given these con cerns, EPA should consider voluntarily suspending the aggressive implementation deadlines pending the outcome of the challenges to

avoid the incredible inefficiencies that could resu lt if the rule is not upheld.

Response 14 : The EPA disagrees with comments that it should d elay 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 au thority to issue the rule and to see it implemented.308

Comment 15 : Commenters noted that the Administration announc ed 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 that the only rulemaking currently underway or officially proposed to limit such emissions is the current Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Uni ts. Commenters stated that not only does this international agreement propose a new range of date s 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 belie ved that because the announcement came directly from the President of the United States, t he President has improperly prejudiced the process for this rule. Commenters stated that the o nly 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 E GUs 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 satisf y 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 expansion with or without the policy. The commenters stated that the proposed rule assumes massive new n atural gas plants and a stall in coal-plant shutdowns, but at the same time, in the 2013 Propos ed Carbon Pollution Standard for New Power Plants [79 FR 1429] the EPA is regressive. Th e commenters stated that the 'new power plants' rule proposal creates a BAU pollution stand ard 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 commente rs stated that Carbon Capture with Enhanced Oil Recovery independent research indicate s results in a net increase in emissions (Jarmillo, Paulina. Environ. Sci. Technol. 2009, 43 , 8027-8032 http://pubs.acs.org/doi/pdf/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 202 5 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 units. Rather, ea ch state has broad flexibility to meet the rate by 2030 by lowering the overall carbon intensity of th e power sector in the state." The commenters asserted that whether in this rule or subsequent ru les, EPA has a duty to ensure the US meets309

international obligations for climate mitigation. T he commenters stated that this obligation stems not just from the fact that EPA is the logical fede ral agency to have this duty, but because it has been specifically stated in legislation including t he Clean 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. The commenters noted that some states can p ropose to achieve the targets in regional carbon trading regimes, such as the existing Region al Greenhouse Gas Initiative. However, the

commenters stated that there is no federal standard for carbon trading. According to the commenters, civil society will have to expend resou rces overseeing that the flexibility of this policy doesn't allow weaknesses to be exploited, ev en if EPA does not technically allow offsets. The commenters noted that the flexibility states wi ll have to implement requirements may not prevent loopholes and weaknesses, such as well docu mented 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 addr esses the largest polluting sector, it should be the apex of President Obama's climate action. The c ommenters noted that the 'climate action plan' announced in his fifth year in office compile d possibly everything to be achieved or implemented in the his eight years as the US Presid ent, and the 'plan' illustrates how President Obama is responsible for some territorial emissions reductions. However, the commenters noted that the aggregate mitigation achievement 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-sco2-emissions/). While the Obama administration has expanded extraction and exports of US taxpayer-owned coal oil, and gas, the commenters st ated that no policy to reduce territorial climate pollution achieves more than a few percent reduction in economy-wide greenhouse gas mitigation by any end date. The commenters noted th at this proposed rule may be the last chance

for President Obama to demonstrate he understands t he seriousness of short to medium term action to avoid runaway climate disruption.

Response 1 : The final EGs cover 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 perfo rmance levels being finalized reflect the agency’s determination of the BSER under section 11 1(d). The agency disagrees with this commenter to the extent that they are suggesting th e rule should require greater emissions

reductions from the affected EGUs than has been det ermined by the agency.

Comment 2 : Commenters 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 th e Clean Power Plan. The commenters stated that it is clear that EPA continues to respond to c omments from affected stakeholders as well, evident for example in the November 6th Technical S upport Document. However, the310

commenters stated that the draft standards can and should be strengthened, with respect to emissions targets, compliance timelines, as well as the addition of clarifying guidance for designing and implementing regional compliance path ways.

Other commenters supported the EPA's Clean Power Pl an, and commented on seven areas where EPA's proposal can be strengthened and improved.

Commenters supported the EPA's Clean Power Plan, an d commented on seven areas where EPA's proposal can be strengthened and improved.

1. The commenters suggested to encourage additional flexibility by clarifying 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 ca lled the Carbon Reduction Credit Program which we believe is a means by which states can efficiently 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 energ y used by states in their compliance plans, encourage a nationwide market for the trading of re newable energy, and accelerate the growth of renewable energy in the United States.

3. The commenters suggested to adopt the "alternati ve methodology" to computing renewable energy for building block 3, with a modification wh ich we believe addresses a shortcoming in that methodology.

4. The commenters suggested to develop a way for mu lti-state plans to be organized so that participating states do not have to adopt a single emissions goal.

5. The commenters suggested to modify or eliminate EPA's proposed inclusion of 6 percent of nuclear capacity in setting the state emission goal s and in calculating state annual emission rates.

6. The commenters suggested to assure that credit for early actions, if given, is not "cherrypicked" and does not compromise emission outcomes.

7. The commenters suggested to preserve the interim targets.

Response 2 : The agency is reflecting a number of these comme nts in the final rule. The agency is not adopting the suggested CRCP or RECA programs . However, two approaches to the federal plan, which can also be used as a model trading rul e, 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 properly re viewed whether the NCA3, the IPCC AR5 assessment, the CCSP assessments, and othe r assessments met Information Quality311

Act (IQA standards). Commenters stated that while t he peer review of the NOAA assessments did not meet IQA standards, NOAA certified 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 d isclosed in accord with IQA requirements. Specifically, commenters highlighted that contribut ors and reviewers of these assessments were

sometimes based at universities or other institutio ns that had received funding from NOAA or EPA, or that reviewers were based at the same unive rsities or government agencies that had also provided contributors to the assessments. Commenter s stated that because of these claimed IQA violations that EPA is precluded from relying on th ese assessments as support for rulemakings until the EPA develops a new peer review that meets IQA standards.

Validating IQA compliance

Commenters stated that EPA should have validated "w hether other federal agencies, the NRC and IPCC vigorously peer reviewed the "major assess ments"...which the agency now cites as primary scientific support for its proposed power p lant rule."

Commenters said that NOAA developed the Third Natio nal Climate Assessment (NCA3-2014) report which NOAA claims is compliant with the Info rmation Quality Act (IQA) but commenters said it is not compliant because the doc ument fails to discuss the actual peer review process, and three documents listed in Appendix 2 t hat address IQA compliance are not publically assessable.

Commenters emphasized that EPA still needs to relea se many records to prove that EPA satisfied level one, two, and three IQA obligations including the records validating the assumptions that support the computer models and datasets for the Hi ghly Influential Scientific Assessments (HISAs). Commenters stated that "EPA ultimately was legally responsible for validating the IQA compliance of the NCA3-2014."

EPA & DOC-NOAA Failed to Validate the IPCC AR5 and NCA3-2014 in Conformance With the IQA

Commenters stated that relevant data quality requir ements of the Information Quality Act have

not been achieved for the IPCC's 2013-2014 Fifth As sessment Report (AR5) or the USGCRP's 2014 "Climate Change Impacts in the United States" (Third National Climate 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 environme ntal nongovernmental organizations whose

scientists made "substantive contributions to IPCC AR5 and/or NCA3-2014" and claims that "NRC, and by extension, NOAA and EPA" did not discl ose or properly address instances of conflict-of-interest that violate the Information Q uality Act.312

Commenters presented the argument that a conflict o f 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 peer review, supporting their statements with a recent a rticle 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 institu tion 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 st udies about climate change and climate change mitigation. Commenters discussed institution al and individual forms of conflict of interest and subject matter bias, and connected the se 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 NR C'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 and properly address apparent, and to the commenter, possibly real, incidents of institutional conflicts-of-interest, s ubject matter bias and lack of intellectual independence, constituting clear violations of the Information Quality Act and relevant OMB and EPA IQA-implementing guidelines. Commenters inc luded eight appendices that connected reviewers with potential conflicts of interest. Com menters assumed in their discussion that any potential conflict of interest was proof that the c onflict occurred.

Commenters further stated that the reviewers charge d with reviewing the NRC NCA3-2014 Peer Review Panel report, was not likely well-balanced w ith an equal number of members holding majority/popular and minority/unpopular views regar ding 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-implem enting guidelines.EPA is Precluded from Relying Upon Ten NOAA-Developed Highly Influen tial Scientific Assessments Not Peer Reviewed in Conformance With Information Quality Ac t Standards

Commenters stated, since the time of ITSSD's August13, 2014 filing of public comments for inclusion in Docket ID No. EPA-HQ-OAR-2013-0602, IT SSD filed with NOAA a new FOIA request (Request No. DOC-NOAA-2014-000714) on Septe mber 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 high ly influential scientific assessments ("HISAs") which, in turn, is relevant and germane t o 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 Section 202(a) GHG Endangerment Findings and the "Clean Power Plan Proposed Rule." Commenter s 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 Informat ion Quality Act's peer review conflict-ofinterest, independence and panel balance standards applicable to HISAs. Commenters said,313

media outlets had previously taken notice of EPA's failure to ensure that the highly influential scientific assessments supporting the Administrator 's CAA GHG Endangerment Findings had been peer reviewed/validated in conformance with ap plicable Information Quality Act standards, and how EPA can no longer rely upon them as supportfor the "Clean Power Plan Proposed Rule." Commenters said, media outlets also reported about ITSSD's subsequent NOAA FOIA request filing which further substantiates these fi ndings.

Commenters stated, as ITSSD's new NOAA FOIA requestmakes abundantly clear, NOAA had failed to ensure these ten (10) assessments had bee n internally or externally peer reviewed (by NOAA, NOAA-established federal advisory committees, interagency committees or by the National Research Council/National Academy of Scien ces) in conformance with the welldefined OMB and NOAA Information Quality Act-implem enting conflicts-of-interest, financial and intellectual independence and panel imbalance s tandards 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 certifi cation without performing any further validation of said practices when it publicly disse minated such assessments as the scientific foundation for both its Endangerment Findings.

Commenters stated, ITSSD's August 13, 2014 comments make clear that EPA again relied upon said assessments as the scientific foundation, in p art, of the "Clean Power Plan Proposed Rule," but did so without validating whether the peer revi ews of such assessments conformed with applicable IQA conflict-of-interest, financial and intellectual independence and panel balance

standards.

Commenters stated, as with the three (3) EPA-develo ped HISAs, applicable EPA and OMB IQA-implementing peer review conflict-of-interest g uidelines preclude EPA from using these ten (10) NOAA-developed assessments as the scientific f oundation for the "Clean Power Plan Proposed Rule," unless and until EPA peer reviews t hese assessments once again in conformance with such IQA standards.

EPA is Precluded from Relying Upon Three EPA-Develo ped Highly Influential Scientific

Assessments Not Peer Reviewed in Conformance With I nformation Quality Act Standards: The IQA Nonconformance of USGCRP/CCSP SAP4.1

Commenters stated, in accompanying Appendix 7A: "Au thor-Contributors, EPA-Developed USGCRP/CCSP SAP4.1" and 7B: "Technical Expert Revie wers, EPA-Developed USCRP/CCSP SAP4.1," please note that at least six peer reviewe rs had some institutional affiliation with either SAP author-contributors or a university or nonprofi t institute receiving EPA grant funding.

EPA is precluded from relying upon three EPA-develo ped highly influential scientific assessments not peer reviewed in conformance with I nformation Quality Act Standards: The IQA Nonconformance of USGCRP/CCSP SAP4.6314

Commenters stated, in Appendix 8A: "Author-Contribu tors, 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 leas t six peer reviewers had some institutional

affiliation with either SAP author-contributors or a university or nonprofit institute receiving EPA grant funding. Commenters stated, in Appendix 8 A: "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 not e that at least six peer reviewers had

some institutional affiliation with either SAP auth or-contributors or a university or nonprofit institute receiving EPA grant funding.

EPA is precluded from relying upon three EPA-develo ped highly influential scientific assessments not peer reviewed in conformance with I nformation Quality Act Standards: The IQA Nonconformance of USGCRP/CCSP SAP4.4

Commenters stated, in Appendix 9A: "Author-Contribu tors, USGCRP/CCSP SAP4.4" and Appendix 9B: "EPA External Peer Review Panel/ASCERA C Federal Advisory Committee For USCRP/CCSP SAP4.4," please note that at least six p eer 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 th e IPCC and the reliance upon the assessments in both the Response to Comments for th e 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 t he major assessments go through, and the

numerous levels of review that these assessments un dergo make them appropriate sources of scientific information. The approach taken by the E PA 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 Budge t and federal agencies to issue guidelines that “ensur[e] and maximize[e] the quality, objecti vity, utility, and integrity of information (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 agen cy “issue guidelines” ensuring data quality. Following guidelines issued by the Office of Manage ment and Budget, EPA released its own guidelines to implement the IQA ( http://www.epa.gov/QUALITY/informationguidelines/do cuments/EPA_InfoQualityGuidelines. pdf (PDF) (61 pp, 896K)). NOAA’s guidelines to impleme nt the IQA are available at: http://www.cio.noaa.gov/services_programs/IQ_Guidel ines_011812.html . These guidelines describe thorough mechanisms under which the Agenci es may review data quality. The commenter did not provide evidence to support their assertion that NOAA did not act consistently with its information quality guideline s when certifying the Third National Climate Assessment, and the EPA has no reason to believe th at NOAA’s certification was inadequate.315

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 Sciences have been adequately peer reviewed in a ma nner commensurate with the guidelines in OMB’s Final Information Quality Bulletin for Peer R eview for Highly Influential Scientific Assessments (HISAs). The IPCC reports undergo multi ple rounds of expert review, engaging

hundreds of scientists from around the world to com ment on “the accuracy and completeness of the scientific, technical and socio-economic conten t 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, governanc e 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 document ed and made publically
available. 8

According to the OMB Final Information Quality Bull etin for Peer Review and guidelines in the EPA's Peer Review Handbook, if the Agency has deter mined that information has already been subject to adequate peer review, then it is not nec essary to have further peer review of that information. For the NRC assessments in particular, the OMB Final Information Quality Bulletin for Peer Review states that an agency may, “rely on scientific information produced by the National Academy of Sciences,” and that “agencies s hould presume that major findings, conclusions, and recommendations of NAS reports mee t the performance standards of this

Bulletin.” 9 Alternatively, an agency may “commission the Natio nal Academy of Sciences to peer review an agency draft scientific information produ ct” 10 in order to meet the performance

standards of the OMB Bulletin. Because the USGCRP c ommissioned NAS to peer review its Third National Climate Assessment (NCA3) 11 , EPA determined that NCA3 has been subject to adequate peer review and it is not necessary to hav e 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 gover nment agency or university of thousands of

6 http://www.ipcc.ch/pdf/ipcc-principles/ipcc-princip les-appendix-a-final.pdf

.

7 http://www.ipcc.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-dis claimer

9 OMB Final Information Quality Bulletin for Peer Re view, page 27.

10 Ibid.

11 http://www.nap.edu/catalog/18322/a-review-of-the-dr aft-2013-national-climate-assessment

.316

individuals does not have a conflict of interest wh en reviewing an assessment where one of several dozen coauthors also happened to be a membe r of that agency or university. Similarly, a reviewer affiliated with a university that has rece ived at some point a grant (on an unrelated matter) from an agency that was leading the develop ment of an assessment report does not have a conflict of interest when reviewing that assessme nt.

Therefore, EPA has considered these comments and fi nds 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 model ing for PM2.5 and ozone used as a basis for the endangerment finding and the dev elopment of the Social Cost of Carbon.

Commenters stated that the EPA has violated the req uirements of the Information Quality 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 ori ginal data (the Harvard Six Cities Study and the American Cancer Society CPS II Study) reque sted 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 th e proposed rule, must be suspended or retracted until EPA can provide the public with com plete 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 hea lth effects data in the Endangerment Finding and the Social Cost of Carbon used to justi fy this rule.

Commenters stated that while the OMB is in the proc ess of reviewing public comments on the SCC, any use of the SCC to justify the proposed rul e is not valid, and stated that the EPA should terminate the proposed rule proceeding until the OM B 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 meetIQA requirements for process or transparency, does not comply with OMB's guidance f or developing influential policy-relevant information under the Information Quality Act, espe cially for a Highly Influential Scientific Assessment (HISA).

Commenters stated that his comments are an IQA peti tion to correct the record in all regulatory

actions of EPA that either used or cited the SCC201 0, SCC2013, or SCC2013r since January 2009. Commenters provided a list of information tha t the commenters stated was necessary to meet IQA 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 American317

Trucking Assn’s v. EPA , 283 F. 3d 355, 372 (D.C. Cir. 2002). The court t here 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 scie ntific information .... unavailable” .

The commenters specifically address the American Ca ncer Society and Harvard 6 Cities Study. These studies have been not only peer reviewed mult iple times, but have also been replicated.

See :

• Original analysis: Dockery DW, Pope CA III, Xu X, S pengler JD, Ware JH, Fay ME, Ferris BG Jr, Speizer FE (1993). An association between air p ollution and mortality in six US cities. NEJM 329: 1753-1759. Dockery DW, Pope CA III, Xu X, Spen gler JD, Ware JH, Fay ME, Ferris BG Jr, Speizer FE (1993). An association between air pollu tion and mortality in six US cities. NEJM
329: 1753-1759.

• Reanalysis: Krewski D, Burnett RT, Goldberg MS, Hoo ver 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 po llution and mortality. A special report of the Institute’s particle epidemiology reanalysis projec t. 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 revie w studies which not only have been peer reviewed already but moreover have been successfull y replicated multiple times.